Open Access Power Consumers to Pay Additional Surcharge Regardless of Voltage Level

The Tamil Nadu Electricity Regulatory Commission (TNERC), in a recent order, ruled that open access consumers with drawal voltage over and above 66 kV cannot seek exclusion or exemption from payment of an additional surcharge.

RS Yarns and Power filed a petition seeking clarification as to whether an additional surcharge was applicable for open access consumers with drawal voltage over and above 66 kV who sourced electricity from third party power generators having injection voltage over and above 66 kV.

Background

RS Yarns and Power is a private power generation company with a license for the trading of electricity issued by the Commission.


Last April, the Commission imposed an additional surcharge for open access consumers who buy electricity from the Indian Energy Exchange (IEX) and any third party.

The company said that it was clear from the submissions of the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) that wheeling charges would apply to open access consumers of the distribution network of TANGEDCO, who source electricity at 66 kV, 33 kV, 22 kV, and 11 kV, and not to the open access consumers having drawal voltage over and above 66 kV, and source electricity from a third party whose injecting voltage is over and above 66 kV.

Based on this, the petitioner argued that wheeling charges should not apply, and an additional surcharge should not be levied.

TANGEDCO, in its reply, stated that open access consumers were liable to pay an additional surcharge on the charges of wheeling.

Section 42 (4) of the Electricity Act implies that all consumers availing power other than the distribution licensee have to pay an additional surcharge irrespective of the voltage drawal. There is no such category of consumers which is exempted from paying the additional surcharge since it is the recovery of stranded capacity charges.

The distribution company (DISCOM) added that the levy of additional surcharge was different from cross subsidy and wheeling charges. The stranded capacity charge is common for the consumers who are availing power through open access by using its network irrespective of the voltage level.

The levy of additional surcharge is different from cross subsidy and wheeling charges. The stranded capacity charge is being recovered through an additional surcharge.

Commission’s analysis

The Commission observed that a consumer or class of consumers who obtained a connection from the distribution licensee could purchase power from any person other than the DISCOM, and such consumer was liable to pay an additional surcharge to meet the fixed cost of the distribution licensee arising out of their obligation to supply.

The Commission noted that the petitioner could not carve out a distinction between the open access consumers regarding payment of the additional surcharge, and too much reliance was placed on the question of wheeling charges to challenge the additional surcharge.

The mere fact that the language in section 42 (4) suggests levy of the additional surcharge as the charge on wheeling would not deny the DISCOMs to levy an additional surcharge on those consumers who are not wheeling but only transmitting.

Further, the purpose of wheeling and additional surcharge being entirely different, they cannot be interlinked to make a case solely based on section 42 (4) and conclude that the levy of an additional surcharge survives on the concept of wheeling.

Considering the facts, the Commission concluded that the drawal of power by consumers over and above 66 KV voltage level could not seek exclusion or exemption from the payment of an additional surcharge.

The Commission clarified that if the fixed cost incurred by the distribution licensee towards its power purchase was found to be stranded due to the option of the open access consumer to purchase power from a source other than the distribution licensee, there was a need to recover such cost from the consumer.

In February this year, TNERC ruled that the additional surcharge should be levied only on the quantity of the actual drawn open access power in line with the TNERC Intrastate Open Access Regulation 2014.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.