Power ministry against restriction of open access by states

The power ministry plans to crack down on states that restrict open access in inter-state transmission of electricity citing power shortage. The move follows the failure of the open access regime due to regulatory and procedural complications. Open access means non-discriminatory provision for use of transmission lines and distribution system by companies engaged in generation or users of power.

“States can now be asked to provide non-discriminatory open access to applicants as enshrined in the Electricity Act. The arbitrary use of Section 11 has to end,” said a power ministry official.

The open access system is aimed at putting in place a transparent power market, enabling consumers to source their electricity requirements from any supplier from any part of the country without any restriction.

The law ministry has said that Section 11 does not empower states to issue orders on supply of electricity, but only gives them power to issue orders for operation and maintenance of generating stations. This means states cannot use this clause to block open access applications to meet the peak shortages.

Karnataka and Kerala have blocked open access citing shortages while West Bengal, Orissa and Tamil Nadu often cite non-availability of requisite transmission infrastructure to cater to open access customers.

While the Act supports open access, Section 11 empowers the state to block access in certain specific conditions. This has prevented generating companies from supplying electricity outside the states despite several pending applications.

Power minister Sushil Kumar Shinde has personally taken up the matter with all state governments. In a recent communication to state chief ministers, Mr Shinde has also cited the legal opinion and asked them to stop blocking open access in transmission and distribution networks.

“Section 11 contains emergency provisions provided in the Electricity Act to empower states to tackle a perceived security threat and prevent wasteful outages. Legal opinion could facilitate faster growth of open access market in the country,” said Shubhranshu Patnaik, executive director, PricewaterhouseCoopers.The power ministry earlier considered amendments to the Electricity Act to dilute the states’ powers under Section 11.

To date, applications seeking open access for over 18000 mw have been submitted, but implementation has been as low as about 2,000 mw, that too for captive power, according to the Central Electricity Regulatory Commission. Maharashtra has taken the lead with open access transactions of close to 2000 mw. In other states the quantum is negligible.