Telangana: No Additional Surcharge for Availing Open Access from Captive Power Projects

The Telangana State Electricity Regulatory Commission (TSERC) directed the distribution companies to submit their filings for the determination of additional surcharge levied on open access power consumers. The surcharge helps meet the fixed cost of the distribution licensee in supplying power.

They can submit the filings for the first half of the current financial year (April to September) by November 30 and for the second half of the following financial year (October to March) by May 31.

The DISCOMs had earlier proposed to determine the additional surcharge in intervals of six months, which TSERC agreed with. The additional surcharge determined by the Commission would apply to those who avail power through open access from any entity other than their respective DISCOMs.

The order reiterated that DISCOMs are duty-bound to execute the contracts for the purchase of power to supply to the consumers under various conditions, including outages of the generating units, transmission constraints, peak demand in a particular season considering seasonal load variations, and also increase in demand due to addition of new consumers.

The DISCOMs will levy the surcharge on the electricity scheduled by such consumers. The additional surcharge would not apply to consumers availing open access to wheel power from their captive power projects.

The Mechanism for Demonstration of Stranded Capacity

The state regulatory authority stated that the distribution licensee has to contract sufficient power to meet the aggregate demands of its consumers and to provide for unforeseen outages of the generators.

However, even in a usual scenario, the full availability of such contracted capacity might not be required by the distribution licensee. Due to this, total backing down cannot be considered to determine the additional surcharge.

The state regulator said that there is a wide variation in power over a span of time. So, it would not be appropriate to consider the continuous stranding of capacity for the entire six months.

The mechanisms approved for demonstration of average stranded capacity are:

  • The 15-minute time-block data of available capacity and scheduled capacity of all generating stations having long-term PPAs with DISCOMs and the scheduled capacity of open access consumers of six months period should be taken.
  • In the case of hydel generating stations, the scheduled capacity is to be treated as available capacity in that time block.
  • The lower of the surplus capacity and capacity scheduled by open access consumers is to be considered as a stranded capacity for the 15-minute time block.

Terms & Conditions for Levy of Additional Surcharge

In the State of Telangana, the power planning for both the DISCOMs is coordinated at the level of the Telangana State Power Coordination Committee. So, the stranded capacity and the determination of additional surcharge has to be on a common basis and computed for both the DISCOMs, the state regulator clarified.

A surcharge will not apply to consumers who wheel power from their captive power projects. On the other hand, some consumers meet their demands partially from the distribution licensee and partly from their captive projects. In such cases, if the consumer avails open access to purchase power from any third party, the surcharge will be levied to the extent of power purchased from the third party.

The Commission further noted that the open access transactions amount to only 4% in the electricity market. There is a need to promote open access so that the consumers can choose their sources of power. The DISCOMs can be motivated to supply at competitive prices by increasing their efficiencies.

The fact that a consumer is connected to the transmission network does not change his relationship with the distribution licensee, and the distribution licensee is obligated to meet his demand, the order added. The contention here is that such consumers are not liable to pay additional surcharge since they are connected to the transmission network.

The regulator also added that DISCOMs should be encouraged to undertake energy portfolio management to forecast demand and supply effectively and efficiently to avoid the fixed cost of stranded capacity.

Mercom has written about the open access market in India and how it offers parallel opportunities for stakeholders, including large corporates, solar project developers, investors, and power distribution companies, to participate in India’s solar dream.

Open access policies vary across states.

For instance, a few days ago, Odisha announced that there would be no surcharge on those sourcing renewable energy through open access.

In July this year, the Gujarat Electricity Regulatory Commission announced an additional surcharge of ₹0.60 (~$0.008)/kWh for consumers’ sourcing power through open access between October 01, 2020, and March 31, 2021.

Earlier, the Maharashtra Electricity Regulatory Commission announced various charges payable by open access consumers for the financial year 2020-21 to 2024-25.

Haryana has decided to impose an additional surcharge of ₹1.15 (~$0.015)/kWh on the purchase of open access power in light of the ongoing COVID-19 crisis.

Chhattisgarh chose not to impose any cross-subsidy charges on consumers availing open access solar power.