In an amendment of its regulations, the Central Electricity Regulatory Commission (CERC) has proposed to increase transmission charges on medium and short-term electricity transactions. This is the sixth amendment of the CERC Regulations relating to connectivity, long-term access and medium-term open access in inter-state transmission and related matters. Short-term transactions will see a hike of close to 35 percent and medium-term transactions will witness a hike of 25 percent.

This development comes on the backdrop of short-term transaction volumes which have increased from 24.69 billion units in financial year (FY) 2008-09 to 63.96 billion units in FY 2014-15. The prices of electricity for short-term transactions have come down from about Rs.7.29 (~$0.1074)/unit in FY 2008-09 to Rs.4.28 (~$0.0631)/unit in FY 2014-15 and to Rs.2.5 (~$0.0368)/unit in May 2016, according to the CERC statement.

Transmission planning is typically based on long-term access. With more and more short-term transactions taking place, transmission capacity is likely to get more congested. To avoid this situation, the CERC has proposed to increase open access charges on short-term transactions by 35 percent and on medium-term transactions by 25 percent.

An official at the CERC confirmed the proposed hike in transmission fees and commented, “to boost transmission capacity and capability, this is a necessary step. There have been dissidents and we received negative comments on the proposed amendments, but as consumers are moving to short-term access, the CERC has to be a step ahead.”

Another CERC official said, “Recently ISTS charges for renewable energy have been removed. If the sector is subsidized to this extent, a robust transmission network cannot be developed. The current amendments will prove beneficial in the long-term as more renewable capacity is allocated and added to the grid.”