Telangana Sets Additional Surcharge for Open Access Power at ₹1.15kWh

The Telangana State Electricity Regulatory Commission (TSERC) has revised the additional surcharge to ₹1.15 (~$0.015)/kWh for consumers sourcing power through open access from April 1, 2022, to September 30, 2022. This is a 20% increase from the additional surcharge of ₹0.96 (~$0.013)/kWh applicable from January 1, 2022, to March 31, 2022.

The Southern Power Distribution Company of Telangana Limited (TSSPDCL) and Northern Power Distribution Company of Telangana Limited (TSNPDCL), the two power distribution companies in Telangana (TSDISCOMs), in their petition, had sought an additional surcharge of ₹4.06 (~$0.054)/kWh for the first half (1H) of the financial year (FY) 2022-23.

The Telangana DISCOMs sought the additional surcharge for 1H FY 2022-23 by considering the actual parameters for 1H of FY 2021-22.

The Commission noted that although Telangana DISCOMs were entitled to the additional surcharge they sought, such a high additional surcharge could hinder the competition that the Electricity Act advocates.


Background

In their petition, the DISCOMs claimed the average fixed charges amounted to ₹6.5 million (~$85,723)/MW. Accordingly, the fixed charges for a stranded capacity of 222.07 MW added up to ₹1.45 billion (~$19.12 million).

The transmission charges paid by the DISCOMs for 1H of FY 2021-22 was ₹21.37 billion (~$281.96 million) and scheduled energy for that period was 34112.66 million units (MU). Consequently, the actual transmission cost per unit worked out to be ₹0.63 (~0.0083)/kWh.

The distribution wheeling charges approved by the Commission for FY 2021-22 was ₹1.08 (~$0.014)/kWh.

Based on the above values, the Telangana DISCOMs claimed the demand charges to be recovered from open access consumers amounted to ₹1.18 billion (~$15.56 million).

Hence, net stranded charges of ₹2.62 billion (~$34.57 million) were considered to calculate the additional surcharge.

The projected open access sales for 1H of FY 2022-23 are the same as the sales recorded for H1 of FY 2021-22, i.e., 645.90 MU. Therefore, DISCOMs computed the additional surcharge to be ₹4.06 (~$0.054)/kWh.

A public notice inviting comments from the stakeholders on the DISCOMs’ petition was published.

In response to the public notice, stakeholders argued that the additional surcharge claimed by the Telangana DISCOMs is significantly higher than the per-unit fixed cost proposed by them for FY 2022-23. They argued that the inclusion of additional transmission and distribution charges in the computation of additional surcharge is not clear when the open access consumers pay the transmission and distribution charges according to the Open Access Regulations.

The stakeholders also claimed that it is unclear how the transmission and distribution network capacity is stranded due to open access when the open access consumers are using the same concurrently while paying corresponding charges.

Stakeholders stated that during 1H of FY 2021-22, open access consumers consumed 1,785 MU from the DISCOMs, while they had procured only 646 MU from others, paying 80% demand charges. However, they don’t use the full contracted maximum demand.

Stakeholders expressed that the methodology of determining additional surcharge approved by the Commission might have to be reviewed considering the Electricity Act, 2003, National Electricity Policy and Tariff Policy, 2016.

Telangana DISCOMs claimed the computation of additional surcharge is based on the stranded capacity of the generating stations. They also argued that the revenue from fixed charges of consumer tariff is less than the fixed cost of power supply incurred, which leads to under-recovery of fixed charges from open access consumers.

The stakeholders in their argument claimed any consumer availing open access to the interstate transmission system (ISTS) also pays ISTS charges for the power procured through open access, the benefit of which accrues to the state by reducing their ISTS charges. Including these charges again for computation of additional surcharge will lead to a double levy of the same charge on open access consumers. Hence, the stakeholders requested the Commission to review the point.

The DISCOMs, in response, stated that ISTS charges must be considered as they have long-term power purchase agreements with inter-state generators. Hence the backing down of generation is not limited to intrastate generators.

They also argued that ISTS charges paid by the consumer, which benefits the state, are passed on to the consumer through an annual performance review filed by Transmission Corporation of Telangana.

Commission Analysis

The Commission found that the Telangana DISCOMs have averaged the 15-minute time block data day-wise, month-wise, and for six months. As per the approved methodology, intermittent averages are not to be taken. Accordingly, the Commission approved the long-term available capacity as 9227.98 MW and capacity stranded due to open access as 222.17 MW.

The Commission considered the DISCOMs computation of fixed charges which amounted to ₹60.05 billion (~$792.41 million). Accordingly, the fixed charges for stranded capacity were computed as ₹1.45 billion (~$19.13 million).

The Commission allowed DISCOMs to separately indicate the variation in fixed charges from April 2021 to September 2021, if any, in the subsequent filings of additional surcharge for 2H of FY 2022-23 to submit the detailed justification for variation in fixed charges.

The Commission found the DISCOMs figure for open access sales of 645.90 MU pertaining to open access other than captive transactions from April 2021 to September 2021 to be in order and hence considered the same.

As per the above computations, the Commission noted the additional surcharge for 1H of FY 2022- 23 worked out to ₹3.48 (~$0.046)/kWh, to which the DISCOMs are entitled. However, a significantly higher additional surcharge could hinder the promotion of competition that the Electricity Act, 2003 advocates.

Therefore, in the interest of all the stakeholders, the Commission decided to allow an additional surcharge of ₹1.15 (~$0.015)/kWh, which is 33% of ₹3.48 (~$0.046)/kWh.

The Commission stated the new additional surcharge would apply from April 1 to September 30, 2022.

The additional surcharge determined by the Commission will apply to consumers of Telangana DISCOMs who avail power through open access from any source other than their respective DISCOMs. The additional surcharge will be levied on the quantity of electricity scheduled by such consumers.

The additional surcharge will not be levied on open access consumers who wheel power from their captive power projects. Exemption from additional surcharge payment for the eligible open access consumers will be as per the government policy. Telangana DISCOMs can take up the issue of making good of revenue loss, if any, due to such exemption with the state government for proper relief.

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