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MERC Order [ Case No.50 of 2012] Page 1 of 67
Before the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
World Trade Centre, Centre No. 1, 13th
Floor, Cuffe Parade, Mumbai - 400 005
Email: mercindia@mercindia.org.in
Website: www.mercindia.org.in /www.merc.gov.in
Case No. 50 of 2012
IN THE MATTER OF
Suo Motu Proceedings on the ‘Issues on Open Access’ for solicitation of views and
suggestions from the members of Public and all Stakeholders in the State of
Maharashtra, regarding the action suggested vide Letter dated 30 November , 2011 of
the Ministry of Power on operationalisation of Open Access (1 MW and above
consumers) in Power Sector
Shri V. P. Raja, Chairman
Shri Vijay L. Sonavane, Member
Dated: 2 January , 2013
1. The Ministry of Power, Government of India, vide its letter dated 30 November ,
2011, has inter alia requested all Electricity Regulatory Commissions that necessary
steps for implementing the provisions relating to Open Access under the Electricity
Act 2003 (hereinafter referred to as ‘Act’ or ‘EA 2003’) be intiated based on the
opinion from M/o Law and Justice on Opetainalisation of Open Access in Power
Sector.
2. The Commission issued a Public Notice, dated 18 May, 2012, pursuant to the letter
from Ministry of Power, seeking written comments on the issues of Open Access and
other relevant issues from the members of Public and from all Stakeholders in the
State of Maharashtra.
3. In the Public Notice issues were identified in light the of the opinion from M/o Law
which are as under :
MERC Order [ Case No.50 of 2012] Page 2 of 67
a) As per the provisions of the Act, bulk consumers (above 1 MW) shall be
deemed to be Open Access consumers with effect from January 2009, in terms
of the proviso to Section 42(2);
b) Once a consumer becomes an Open Access consumer, the State Commission
can no longer fix the energy charges to be paid by such a consumer, but will
continue to fix the wheeling charges and surcharges in accordance with the
provisions of the Act;
c) An analysis of the various provisions of the Act (particularly Section 49)
shows that if certain consumers want to have the benefit of the option to buy
power from competing sources, then it is logical that DISCOMS/Distribution
Licensees do not have an obligation to compulsorily supply power to such
consumers. If such consumers want power from the DISCOM, then the terms
and conditions of the supply would be determined in terms of section 49;
d) A notice under Section 42(3) is not a precondition for the implementation of
Open Access as such a notice is not for seeking permission to use the
distribution licensee’s network, but only to communicate the Open Access
consumers’ intention of using such a network.
4. A Public Hearing in the present Case No. 50 of 2012 was held on 12 October, 2012
vide Public Notice dated 18 August, 2012 published in English news papers viz Times
of India and DNA and in Marathi news papers viz Sakal and Maharashtra Times.
MERC Order [ Case No.50 of 2012] Page 3 of 67
Organisation of the Order
1. Summary of Suggestions: ................................................................................................ 5
1.1 Prayas Energy Group (PEG) – ( Consumer Representative ) .................. 5
1.2 Thane Belapur Industries Association (Consumer Representative) ........ 7
1.3 Vidarbha Industries Association (Consumer Representative) ................. 7
1.4 Maharashtra State Electricity Distribution Company Ltd. ...................... 8
1.5 Tata Power Distribution Company Ltd. (TPC-D).................................. 13
1.6 Brihan Mumbai Electric Supply and Transport Undertaking (BEST)... 16
1.7 Essar Power Ltd. (Essar) ........................................................................ 16
1.8 General Carbon Advisory Services Pvt. Ltd. (GCAS) .......................... 18
1.9 Indian Wind Power Association(IWPA) ............................................... 20
1.10 Gensol Consultants Pvt. Ltd. (Gensol) .................................................. 21
1.11 Maharashtra Veej Grahak Sanghatana (MVGS).................................... 22
1.12 Bharatiya Udhami Avam Upbhokta Sangh (BUAUS) .......................... 22
1.13 Central Railways .................................................................................... 23
1.14 Tata Motors Ltd. .................................................................................... 24
1.15 Enercon India Ltd. (Enercon) ................................................................ 24
1.16 Maharashtra State Load Despatch Centre (MSLDC) ............................ 25
1.17 Mahindra & Mahindra Ltd. (M&M) ...................................................... 26
1.18 Indian Energy Exchange ........................................................................ 27
MERC Order [ Case No.50 of 2012] Page 4 of 67
1.19 Shri. N.Ponrathnam ................................................................................ 28
1.20 Shri. Aditya Bedekar .............................................................................. 28
1.21 Shri. Vinod Manikchand Shrishrimal .................................................... 29
1.22 Shri. D. Radhakrishna ............................................................................ 29
1.23 Shri George John.................................................................................... 29
1.24 Mahratta Chamber of Commerce, Industries And Agriculture (MCCIA)29
1.25 Finolex Industries Limited (FIL) ........................................................... 30
1.26 Maharashtra State Electricity Transmission Company Ltd. (MSETCL)30
1.27 Captive Power Producers Association (CPPA) ..................................... 31
1.28 Bajaj Finserv Ltd. (BFS) ........................................................................ 31
1.29 UltraTech Cement Ltd. .......................................................................... 32
1.30 Reliance Industries Ltd. (RIL) ............................................................... 33
2. COMMISSION’S RULINGS ........................................................................................ 35
MERC Order [ Case No.50 of 2012] Page 5 of 67
1. SUMMARY OF SUGGESTIONS:
5. The Commission has received twenty nine (29) written comments/suggestions from
various stakeholders including three (3) consumer representatives. Besides, one (1)
written suggestion was received post Public Hearing. The list of the persons who
partcipated in the Public Hearing is attached as Annexure–I to this Order. The
Commission noted that there are some suggestions on the issues as a part of the
proceedings which are not directly related to the questions raised in the Public Notice,
viz., reduction in Contract Demand, etc., and same has not been considered as a part
of this Order. Brief details of the submissions made by various stakeholders are
summarised in the following paragraphs:-
1.1 Prayas Energy Group (PEG) – ( Consumer Representative )
6. Ms Ashwini Chitnis, appeared on behalf of Prayas Energy Group (PEG), an
authorised Consumer Representative. She submitted that the 2003 Act envisages
Open Access mechanism as the direction of increasing role of competition and
markets in the Power Sector. PEG submitted that there is a need to calibrate the
introduction of Open Access mechanism so as to take care of interests of small
consumers.
7. PEG suggested that the Commission may consider the following factors before
implementing Open Access mechanism:
a) Economic rationale: The mechanism should make economic sense for both
Open Access as well as the rest of the Distribution Licensee’s consumers.
b) Well rounded/holistic interpretation of legal and policy mandate: Policy
changes should not lead to reduction in cross subsidies causing tariff shock for
small consumers. However, good quality of service for all consumers needs to
be ensured by Distribution Licensee.
c) Principles of market mechanism: Open access consumers should accept
both risks and rewards of the market mechanism.
MERC Order [ Case No.50 of 2012] Page 6 of 67
d) Operational transparency and accountability: There is a need to adopt
advance metering and billing mechanisms to ensure transparency and
accountability of Distribution Licensee in its transactions with deemed Open
Access consumers.
8. PEG also suggested approaches that can be adopted by the Commission in the
implementation of Open Access as given below:
a) Separation in ARR and business plans: In the filing of Aggregate Revenue
Requirement (ARR) process or Business Plan of any Distribution Licensee, all
the deemed Open Access consumers should be separated from the rest of the
consumers.
b) Obligation to serve non-Open Access consumers on priority: The licensee
should be obligated to meet the demand of its non Open Access consumers on
priority.
c) Separate tariff category for deemed Open Access consumers: A separate
tariff category should be created for all deemed Open Access consumers. The
tariff for this category should include a premium in addition to cross-subsidy
surcharge and wheeling charge. Premium might be calculated based on the
stand by support and better supply service quality enjoyed by these consumers.
d) Contracts with deemed Open Access consumer: Any deemed Open Access
consumer who do not opt for Open Access may be asked to sign at least one
(1) year contract with the Distribution Licensee for this purpose. If any Open
Access consumer who has not signed contract but wants to avail supply from
Licensee may be charged higher tariff comparable to temporary charges.
e) Metering and billing of all Open Access consumers: All Open Access
consumers (deemed or otherwise) may be mandated to install Special Energy
Meters (SEMs).
f) Regulations for monitoring Intra-State Power Trading: The Commission
may like to issue Regulations for monitoring intra-State Power trading.
g) Intra-state transmission pricing framework: There is a need to expedite
implementation of Final Balancing and Settlement Mechanism (FBSM) for
energy accounting and settlement on 15-minute basis under intra-State ABT
regime.
MERC Order [ Case No.50 of 2012] Page 7 of 67
h) Finalise Transmission and Distribution Open Access Regulations: The
Commission may like to modify the proposed draft Regulations for
Transmission and Distribution Open Access 2011 and fresh round of Public
Consultation process should be undertaken to finalise these draft Regulations.
1.2 Thane Belapur Industries Association (Consumer Representative)
9. Dr Ashok Pendse, appeared on behalf of Thane Belapur Industries Association
(TBIA), an authorised Consumer Representative and submitted that:
i. The concerns of MSEDCL that there would be loss amounting to Rs. 5580
Crore on account of granting Open Access to 1 MW and above consumers
may not be entirely true. As even with zero CSS, till date only three (3)
consumers have co-opted for Open Access namely Lavasa (2 MW),
Maharashtra Electro Smelters Ltd.(3 MW) and Indorama (10 MW), out of
9000 MW.
ii. MSEDCL should reduce the high cost of power purchase and load shedding in
Districts and Tahasil areas.
iii. There would be net savings to MSEDCL by allowing Open Access to the
consumers.
1.3 Vidarbha Industries Association (Consumer Representative)
10. Shri R.B.Goneka, appeared on behalf of Vidarbha Industries Association (VIA), an
authorised Consumer Representative, and submitted that:
i. Determination of tariff for Open Access consumers except the wheeling
charges is not within the jurisdiction of the Commission.
ii. Consumers with load of one (1) MW and above should be considered as
deemed Open Access consumers. Small consumers who are not able to
arrange electricity to meet their requirements from open market or power
producers need to approach Distribution Licensee and shall pay according to
the tariff determined by the Commission.
iii. Cross-subidy surcharge (CSS) is not payable by Open Access Consumers, as
they are not consumers of Distribution Licensee and similarly Distribution
MERC Order [ Case No.50 of 2012] Page 8 of 67
Licensee also do not have Universal Service Obligation (USO) for consumers
having load more than one (1) MW.
iv. Difficulties in implementation of Open Access in the State regarding
availability of ABT meters, proper infrastructure at SLDC and NLDC to
handle large Open Access Consumers, etc., needs to be looked into.
11. VIA presented its calculations for estimating impact of implementation of Open
Access on revenue of Maharashtra State Electricity Distribution Company Ltd.
(MSEDCL), based on certain assumptions and submitted that MSEDCL would gain
on account of allowing Open Access.
1.4 Maharashtra State Electricity Distribution Company Ltd.
12. MSEDCL summarised its suggestions under six broad issues which are as under:
Issue No-I :- Nature of declaration/direction contained in MoP letter
13. MSEDCL submitted that the MoP letter:
a) is ultra vires’ the 2003 Act and not based on any Authority of Law;
b) seeks to interfere in the Commission’s performance of statutory obligations in
accordance with the 2003 Act;
c) is, in any event, contrary to the express provisions of the 2003 Act; and
d) does not bind the Commission in any manner.
14. MSEDCL further submitted that:
a) the MoP letter is not in nature of a request or suggestion, but in the nature of a
direction or declaration, which purports to take effect immediately;
b) No reference of provision of law has been provided under which it has been
issued as there exists no such provision;
c) Under Section 42(2) of Act, it is the Commission’s exclusive statutory
obligation to introduce Open Access and that the 2003 Act does not envisage
the exercise of this obligation by the MoP, either directly or indirectly;
d) Section 86(4) of the Act mandates State Commission in discharge of its
functions, to be guided by National Electricity Policy, National Electricity
MERC Order [ Case No.50 of 2012] Page 9 of 67
Plan and Tariff Policy. The MoP letter is neither a part of the three mentioned
policies/plan and cannot seek to interfere in the Commission’s performance of
its statutory obligations in accordance with the law.
e) MoP letter neither makes nor purports to make rules as contemplated in
exercise of powers under Section 176 of the Act.
f) The State Commission has to be guided by the State Government under
Section 108 of the Act. MoP, GoI cannot issue directions to the Commission
either directly or indirectly.
g) MoP letter cannot be even legally interpreted as an order under Section 183 of
the Act. MoP letter purports to make declaration/decision which is contrary to
the express provision of the Act, as it has been issued more than 2 years after
date of commencement of the 2003 Act and does not satisfy the other
procedural requirements.
h) The Commission has fully discharged its statutory obligations to implement
Open Access, as per provisions of Act by framing Maharashtra Electricity
Regulatory Commission (Distribution Open Access) Regulations, 2005.
Issue No-II :- 1 MW and above are Deemed Open Access Consumers
15. MSEDCL submitted that :
a) The State Commission is obliged to provide Open Access to all consumers
who require it and expressly opt for such Open Access to all consumers “who
require” the supply of electricity of 1 MW and above. The fifth proviso to
section 42 of the Act, i.e., reads as under:
“ Provided also that the State Commission shall, not later than five years from
the date of commencement of the Electricity (Amendment) Act, 2003 by
Regulations, provide such Open Access to all consumers who require a
supply of electricity where the maximum power to be made available at any
time exceeds one megawatt.” [Emphasis added]
b) There is no concept of “deemed Open Access” under the Act and the Act does
not mandate any specific category of consumers to be automatically “deemed”
Open Access consumers.
c) Conjoint reading of various provisons of the Section 42(2) of the 2003 Act
leads to the conclusion that the State Commission is obliged to provide Open
MERC Order [ Case No.50 of 2012] Page 10 of 67
Access to all consumers who require it and who expressly opt for such Open
Access, and not to automatically treat each and every consumer who needs
more than 1 MW of electricity as an Open Access consumer.
d) Reading a “Deemed fiction” in to the provisions of Act would render words
contained in Section 42(2) of the Act“in specifying the extent of Open Access
in successive phases and in determining the charges for wheeling, it shall have
due regard to all relevant factors including such cross subsidies, and other
operational constraints:” and specific requirement of notice under Section
42(3) of Act, completely irrelevant and otiose.
e) Section 42(3) of the Act requires a formal notice to be sent by Open Access
consumer which contradicts “deemed Open Access” concept.
f) The Commission has discharged its statutory obligations to provide Open
Access to consumers having load of 1 MW and above, who require a supply
of electricity, by framing Maharashtra Electricity Regulatory Commission
(Distribution Open Access) Regulations, 2005.
g) Regulation 3 of MERC (Distribution Open Access) Regulations, 2005
specifically states that this Regulation has been framed by the Commission in
discharge of its obligation under Section 42 of the Act.
16. MSEDCL summarised by submitting that the MoP letter erroneously declares /directs
that all consumers who require supply of electricity in excess of 1 MW, will be
“Deemed Open Access”.
Issue No-III:- Whether the State Commission can fix tariff for Open Access
Consumer?
17. MSEDCL submitted that the once an eligible Open Access consumer, i.e., a consumer
whose consumption of electricity exceeds 1 MW, opts or avails for Open Access in
terms of the Electricity Act 2003 and the relevant Regulations made therein, then
under the proviso to Section 86(1)(a), the State Commission will not have the
jurisdiction to determine tariff for those consumers who have actually migrated to the
Open Access regime.
MERC Order [ Case No.50 of 2012] Page 11 of 67
18. The entire scheme of the Act as envisaged read along with Sections 49 and 86(1) (a)
gives rise to interpretation that tariff fixation is to be gradually phased out in line with
phasing of Open Access.
19. Interpretation of words “a category” and “the said category” used Section 86 (1) (a)
of the Act, refers to all consumers who are eligibile for Open Access and those who
have already migrated to Open Access regime, resepectively.
20. The consumers who do not opt to avail or exercise their right to avail Open Access
will continue to be regulated by the Commission.
Issue No-IV:- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
21. MSEDCL opines that the opening words of the section 43 “Save as otherwise
provided in this Act”, imply that there are exceptions to the obligations. These
exceptions are the ones contained in the Section 42(2) dealing with Open Access.
22. MSEDCL submitted that the categories entitled to Open Access have been carved out
from the Universal Service Obligation in the Act. MSEDCL submitted that once a
category becomes entitled to Open Access, distribution licensee is released of its
obligations under Section 43.
23. Being a free market phenomenon the Distribution Licensee is released from any
binding obligations to provide stand-by power etc., except as may be agreed between
the parties through agreements in terms of Section 49 of the Act.
Issue No-V:- Notice under Section 42(3) is not a precondition for implementation
of Open Access- Notice is not for seeking permission to use distribution
Licensee’s network but only to communicate intention of using such network.
24. MSEDCL submitted that:
a) Suggestion from MoP would lead to immediate collapse of grid, as Open
Access is always subjected to availability of transmission capacity and various
other parameters to have stable grid frequency.
MERC Order [ Case No.50 of 2012] Page 12 of 67
b) The consumer has to comply with the Provisions of the MERC Distribution
Open Access Regulations, 2005 framed by the Commission for seeking Open
Access.
c) MERC Distribution Open Access Regulations, 2005 provide for a
comprehensive procedure for all concerned , i.e., the Open Access consumer,
the Distribution Licensee and Generating Company, for implementation of
Open Access in the State as per the Provisions of the Act.
d) Tri partite-Connection and use of Distribution System Agreement which is
binding on all concerned.
Issue No-VI:- Technical and Operational constraints in implementing directives
of MoP letter
25. MSEDCL submitted that the interpretation of the Act in line with the letter from MoP
would raise various technical and operational issues. Some of the key points are
summarised below:
i. Open Access consumers need to comply with the various provisions of the MERC
Distribution Open Access Regulations, 2005 regarding eligibility criteria,
reduction of contract demand, execution of connection, installation of Special
Energy Meters, wheeling charges, payment of cross subsidy surcharge, etc.
ii. Open Access cannot be permitted beyond the contracted demand capacity of the
consumer in order to ensure reliable operation and safety of the system. Thus, the
prevalent practice of Open Access permission to be given by Distribution
Licensee after receipt of application from Open Access consumer should be
continued.
iii. The type of Open Access consumer whether captive or not needs to be ascertained
by the Distribution Licensee prior to giving permission as it is linked to payment
of CSS.
iv. All Open Access consumers may not be well versed with the procedures of Open
Access, scheduling of power and other activities. Due to absence of such expertise
and reassurance of continuous power from MSEDCL, it will be beneficial for
certain consumers to continue with MSEDCL. However, they have to follow the
Open Access procedures as determined by the Commission.
MERC Order [ Case No.50 of 2012] Page 13 of 67
v. Bulk Consumers might need separate feeders for reliable power supply, for which
MSEDCL may assist in setting up infrastructure for them.
vi. Installation of SEM/ABT meters by all consumers above 1 MW. Intra State ABT
would be applicable to all Open Access consumers.
vii. Need for proper mechanism to ensure coordination between all concerned
Distribution Licensee, State Transmission Utility, Open Access Consumer,
Generator, Load Despatch Centres at various levels, etc.
viii. In case of failure of Open Access generator, SLDC must direct concerned host to
limit its load to that extent in order to ensure smooth grid operation. Such real
time communication is not available for Open Access consumers with SLDC
currently.
ix. Clarity required on the recovery of expenditure, due to creation of infrastructure,
incurred by MSEDCL for new consumer who after availing MSEDCL's supply
opts for Open Access.
x. There would be huge revenue loss due to migration of consumers (1 MW and
above) as they are subsidising consumers for consumers with less financial
potency. The effect of such migration would result in increase in tariff.
xi. Clarity required as to whether Distribution Open Access Regulations will be
applicable to those consumers who source power from the source other than
Distribution Licensee.
xii. Existing MERC Distribution Open Access Regulations, 2005 do not provide Open
Access transactions through Exchanges and it must be included in the upcoming
Open Access Regulations.
xiii. In case of overdrawl by Open Access consumer from the State Grid should be
treated as stand by supply. There must be simple billing methodology and
software program needs to be developed for Open Access transactions.
1.5 Tata Power Distribution Company Ltd. (TPC-D)
26. TPC-D has commented upon two of the issues mentioned in the Suo motu notice of
the Commission, which are as under:
MERC Order [ Case No.50 of 2012] Page 14 of 67
Issue No-I :- 1 MW and above are Deemed Open Access Consumers
27. TPC-D submitted that:
a) As per Section 62 that deals with determination of tariff, there is no
differentiation provided between consumer having load of 1 MW or otherwise.
b) Choice of availing supply on Open Access is addressed under proviso 5 of
Section 42(2) of the Act.
c) Section 49 of the Act provides that the Open Access is given as a choice to the
consumers having load above 1 MW and not a compulsion. The term “may”
used in the Section 49 supports the view that Open Access is “Choice” not a
“Compulsion”.
28. TPC-D inferred from the above that the Act does not envisage a deemed Open Access
consumer.
Issue No-II :- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
29. TPC-D submitted that:
a) In India the Connectors and Suppliers are the same (except Mumbai only
location to have Parallel Licensees). The obligation cast under Section 43 of
the Act can be met only through connection to consumer.
b) For giving supply to consumers, it is necessary to connect the distribution
network to the consumers and hence the USO effectively means connect and
supply.
c) Interpretation that the Distribution Licensee is obliged to supply power to the
consumer at negotiated terms to comply with Section 60 of the Act and to
avoid market dominance by the Distribution Licensee. The Distribution
Licensee may not be in a position to reject supply of power to the consumers
as long as the negotiated terms are agreed between the parties.
MERC Order [ Case No.50 of 2012] Page 15 of 67
Implementation Issues
30. TPC-D submitted that:
a) Partial Open Access to consumers should not be allowed and in case if such
consumers wish to procure power on Open Access to meet part of their load
then this should be done through bifurcating the consumers premises and load
into two separate consumers through separate meters.
b) Additional surcharge due to fixed charges paid by Distribution Licensee's
needs to be recovered from all the Open Access consumers, otherwise it will
lead to undue burdening of existing less than 1 MW consumers of Licensee.
These charges need to be paid till the time Distribution Licensee is obligated
to its existing Power Purchase Agreements.
c) There is decrement in load even below the Technical Minimum Generation
levels for a short period of 1 to 2 hours of Mumbai during Night hours
especially in Winter Season and if large number of Open Access consumers
move out, it would result in drop of load below Technical Minimum
generation for longer durations. Generators will continue to produce power
during this time as they are already at Technical minimum generating levels.
The same effect has been plotted by the TPC is as shown below:
0
500
1000
1500
2000
2500
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
M
W
H
Time Period
Mumbai Area Load Curve for Winter
Normal Winter Load curve for Mumbai
Assuming 10% drop in demand as OA consumers move out
Technical Minimum Generation for Mumbai
MERC Order [ Case No.50 of 2012] Page 16 of 67
d) Distribution Licensee may declare Day-ahead (Spot Prices) as an alternative to
stand-by power for the consumers who are not able to tie up power on short-
term basis.
e) The Commission needs to specify Distribution Grid Code and should provide
‘DISCOM Load Management Centres’ with necessary powers for
implementing suitable disciplinary actions for repeat/regular offenders whose
actions lead to grid imbalance. Wheeling charges to be levied as per tariff
orders while surcharge can be levied as appropriate and provided for in the
Act.
1.6 Brihan Mumbai Electric Supply and Transport Undertaking (BEST)
31. BEST submitted that:
a) It is exempted from providing Distribution Open Access to its consumers.
b) All consumers having load of 1 MW and above, do not become mandatorily
distribution Open Access consumers, unless such consumers specifically opt
for such distribution Open Access under the MERC Distribution Open Access
Regulations, 2005.
c) Universal Service Obligation under Sections 43(1) and 42(1) of EA 2003 is
not negated or overridden by Section 49 of the EA 2003. BEST submits that
said Sections 43(1) and 42(1) of the Act are substantive and mandatory,
whereas, said Section 49 of the Act is enabling and discretionary.
d) Proviso to Section 86(1)(a) of the Act read with Section 42 of the EA 2003
provides that the Commission is necessarily required to determine only the
wheeling charges and surcharge thereon.
1.7 Essar Power Ltd. (Essar)
Issue No-I :- 1 MW and above are Deemed Open Access Consumers
32. Essar submitted that:
a) All consumers of 1 MW and above should be deemed to be Open Access
customers, unless these users are getting power only from the CPP/CPPs
MERC Order [ Case No.50 of 2012] Page 17 of 67
(Captive Power Plants) and/or GCP/GCPs (Group Captive Plant) through their
own transmission line / cables.
b) Section 42 (2) of the Act casts obligation on the State Commission to
introduce Open Access to the distribution network in phases. By amendment
dated 27 January, 2004 to the Electricity Act, 2003, it is provided that State
Regulatory Commission shall provide Open Access to all consumers who
require supply of electricity where the maximum power to be made available
at any time exceeds one megawatt, not later than five years from the date of
commencement of the Act.
Issue No-II :- Whether the State Commission can fix tariff for Open Access
Consumer?
c) Regulatory Commission shall determine only Transmission and Distribution
charges and losses payable by Open Access consumers to get its power
requirement from generation sources and energy charges for such Open
Access customers shall not be determined by the Regulatory Commission.
Issue No-III :- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
d) Section 43 (1) of the Act casts obligation to supply on Distribution Licensees
to supply power to consumers on demand of its license area. However, when a
consumer is procuring power from other source under Open Access, it shall
not procure power from Distribution Licensee of the area and hence
Distribution Licensee of the area has no obligation to contract power for such
consumers.
e) Further, Open Access consumers have freedom to contract power from
competing sources and one of such competing source is the distribution
licensee of the area. As consumer enters into agreement with other source for
procuring power under section 49, similarly Open Access consumer shall enter
into agreement with Distribution Licensee of the area for procuring power and
MERC Order [ Case No.50 of 2012] Page 18 of 67
under such circumstances, the terms and conditions of the supply would be
determined in terms of Section 49.
Issue No-IV:- Notice under Section 42(3) is not a precondition for
implementation of Open Access- Notice is not for seeking permission to use
distribution Licensee’s network but only to communicate intention of using such
network.
f) Essar submitted that Section 42 (3) provides for the responsibility of the
Distribution Licensee of the area to allow usage of its network as common
carrier allowing non-discriminatory Open Access. Notice provided in such
case, is just procedural to provide that the consumer will have to inform
distribution licensee of the area its intention to make use of its network.
1.8 General Carbon Advisory Services Pvt. Ltd. (GCAS)
33. GCAS submitted that issues in operationalising of Open Access for all bulk
consumers as given below:
a) Capacity building at SLDC: Does SLDC have the necessary technology,
expertise, manpower to handle such large number of Open Access approval
requests.
b) Ring-fencing of SLDC: SLDC would have to be impartial when executing its
authority of scheduling Open Access requests. It should not gravitate towards
government controlled distribution licensees. For this reason, control of
Distribution Licensee and SLDC should be segregated.
c) Cross Subsidy Surcharge: In Act, it was mandated to progressively reduce
cross subsidy surcharge. It was to be contained within limit of +/- 20% by
2011. However, this has not been achieved until now. It would be a great
dampener for bulk consumers if they have to pay high cross subsidy
surcharge.
d) Wheeling Capacity: For the purpose of Open Access only spare capacity by
inherent design margin and variation in power flow is available for Open
MERC Order [ Case No.50 of 2012] Page 19 of 67
Access. This does not assure Open Access consumer for continuous supply. It
is a big concern in putting mandatory Open Access in practice.
e) Rationalisation of Open Access charges: Cost for wire business and power
supply business should be properly segregated so as to arrive at a consistent
wheeling charge. Wheeling losses should be calculated only corresponding to
technical losses and must exclude commercial losses as most of the bulk
consumers are connected at 11 kV and above, whereas most of the
commercial losses occur at below 11 kV level.
f) Standby Power Charges: The Commission should try to arrive at a optimum
standby Charges which should not act as an impediment to companies going
for Open Access from sources other than Distribution licensee and at the same
time should discourage liberal use of standby power of Distribution Licensee.
g) Availability of Non Bonded Power: There should be availability of power
which has not been committed for long term PPA. Since most of the
generators have tied up their power on long term basis with the Distribution
Companies, a very limited capacity is available for merchant transactions. If
availability of non-bonded power does not materialise it would completely
distort demand supply equation in favour of power producer and will put
undue pressure on Open Access consumers. If Discoms are not obligated to
supply power to bulk consumers, they will have huge amount of excess
capacity and thus will monopolies the market as major sellers of power.
h) Futures trade- Power exchange: In the absence of possibility of longer
period transactions (i.e. month ahead / half yearly / yearly / etc.), the bulk
consumers of power may not be able to plan their long term requirements.
Until longer period transactions are materialised, the bulk consumers would
have limited options and consequently would have to face the uncertainty of
power prices.
MERC Order [ Case No.50 of 2012] Page 20 of 67
1.9 Indian Wind Power Association(IWPA)
Issue No-I :- 1 MW and above are Deemed Open Access Consumers
34. IWPA submitted that a conjoint reading of Sections 38, 39, 40 and 42 shows the need
to provide Open Access to consumers who exercise their right to get electricity from
both the Distribution Licensees as well as other than Distribution Licensees for
meeting their total requirement and there is no provison of consumers having load of
1 MW and above consumers to be deemed to be Open Access consumers.
Issue No-II :- Whether the State Commission can fix tariff for Open Access
Consumer?
35. IWPA submitted that:
a) the Act is unambiguous in dealing with the functions of State Commission as is
enshrined in Section 86 of the Act.
b) And if the interpretation as given in MoP letter is taken and the Distribution
Licensees are enthrusted with the responsibility of deciding the tariff, it might
lead to total breakdown of Open Access process in the State and further would
lead to multitude of disputes between the Distribution Licensees and the
consumers.
c) Further, the Commission would remain a mute spectator in the event of unfolding
in administration of Open Access regime in the State especially when it is deemed
that it has no role but only the duty to fix wheeling and transmission charges and
loss.
Issue No-III :- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
36. IWPA submitted that:
a) Sections 43 and 44 of the Act provide for statutory mandate of Distribution
Licensee to supply electricity subject to payment of charges approved by the
Appropriate Commission.
MERC Order [ Case No.50 of 2012] Page 21 of 67
b) APTEL judgement dated 11 July, 2006 and Order of Rajasthan Electricity
Regulatory Commission on 24 July, 2012, both provides that the Distribution
Licensee has obligation to supply on request to all consumers.
1.10 Gensol Consultants Pvt. Ltd. (Gensol)
Issue No-I :- 1 MW and above are Deemed Open Access Consumers
37. Gensol submitted that all the consumers with connected load of 1 MW and above are
deemed to be Open Access consumers, in a sense that they have the freedom to
procure power through Open Access, by paying the requisite surcharges as stipulated
by the appropriate Commission.
Issue No-II :- Whether the State Commission can fix tariff for Open Access
Consumer?
38. Gensol submitted that for the consumers who avail Open Access the Commission's
jurisdiction would be limited to determining only the wheeling charges and
surcharges and if the bulk consumer wishes to procure power from the local
Distribution Licensee by not opting for Open Access, then the tariff would be
determined by the State Commission.
Issue No-III :- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
39. Gensol submitted that under Section 43 of the Act, the Distribution Licensee is
obligated to supply electricity when requested by the consumer.
MERC Order [ Case No.50 of 2012] Page 22 of 67
1.11 Maharashtra Veej Grahak Sanghatana (MVGS)
40. MVGS submitted that:
a. Mandatory - The interpretation by the Government of India regarding the
implementation of Open Access is mandatory and binding on all Regulatory
Commissions.
b. Consumers - Open Access should be a legal and rightful choice to the
consumers. It should not be a compulsion on the consumers
c. Utilities - There is an obligation on the Utilities to supply power to those
consumers, who do not wish to opt for Open Access.
d. Regulators - In case of the consumers those who are above 1 MW and do not
want to opt for Open Access, the tariff of such consumers should be decided
by the Regulators, and not by the Distribution Licensees. In case of consumers
opting for Open Access, the Regulators should fix only wheeling charge and
other charges/surcharge for such consumers.
e. Operational Constraints- MVGS also submitted various operational
constraints pertaining to Open Access as given below:
1) Open Access should be allowed to those consumers, who are having
express feeders or those who are in MIDC areas to avoid the uncertainty,
meshed network or load shedding problems.
2) ARR and Tariff should be determined by the Regulator considering all
the embedded consumers including the embedded consumers above 1
MW who have not opted for Open Access.
3) SLDC should be independent and impartial to grant Open Access and it
should be strictly observed and exercised by the Regulator.
1.12 Bharatiya Udhami Avam Upbhokta Sangh (BUAUS)
41. BUAUS submitted that the State Commission must introduce Open Access in phases.
42. BUAUS further submitted that the State Commission has to discharge the functions as
enumerated in Section 86 of the Act.
43. BUAUS also submitted that the Distribution Licensee has to allow the consumers to
use its system after the payment of wheeling charges and other charges as determined
MERC Order [ Case No.50 of 2012] Page 23 of 67
by the Commission and also to provide Stand by supply as per the agreement entered
between the parties.
1.13 Central Railways
Issue No-I :- 1 MW and above are Deemed Open Access Consumers
44. Central Railways submitted that there is no mandatory obligation of Open Access, the
choice remains to the consumers as opined by Solicitor General of India.
Issue No-II :- Whether the State Commission can fix tariff for Open Access
Consumer?
45. Central Raliways submitted that it is in agreement with the Attorney General of
India’s opinion as once a consumer becomes an Open Access consumer, the State
Commission can no longer fix the energy charges to be paid by such a consumer, but
will continue to fix the wheeling charges and surcharges.
Issue No-III :- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
46. Central Railways submitted that USO is essential for proper running of train services
in the remote areas of the Country. Without this obligation, power will not be
available for extension of these services.
Issue No-IV:- Notice under Section 42(3) is not a precondition for
implementation of Open Access- Notice is not for seeking permission to use
distribution Licensee’s network but only to communicate intention of using such
network
47. Central Railways submitted that it is in agreement that notice under Section 42(3) is
just to communicate that the Open Access consumers’ intention of using distribution
licensee’s network.
MERC Order [ Case No.50 of 2012] Page 24 of 67
1.14 Tata Motors Ltd.
48. Tata Motors submitted that:
a) Before the Electricity Act, 2003 was enacted and came into force the Distribution
Licensee had an obligation to maintain the distribution lines and system and
supply electricity to all consumers within its area of supply in terms of the
provisions of the Indian Electricity Act, 1910 and the Electricity (Supply) Act
1948.
b) Further, the Distribution licensee is required to maintain tariff as determined under
the provisions of the Act and not by bilateral arrangements. there must not be any
distinction between the supply to consumers having or becoming entitled to Open
Access and consumers not having or not being entitled to the same.
c) Section 43 provides for the Universal Service Obligation and a mandate on the
distribution licensee to supply electricity to the premises within a specified time
on an application made by the owner of the premise requiring such supplies from
the Distribution Licensee. If the intention of the Parliament was to restrict the
USO of the distribution licensee for connection up to 1 MW, the same would have
been expressly and specifically provided for in Section 43 of the Act.
d) As per the inference from Section 42 (2) of the Act gives an option to the
consumers to avail Open Access and not a compulsion to avail such Open Access
and source their power purchase directly.
1.15 Enercon India Ltd. (Enercon)
49. Enercon submitted that:
a) Conjoint reading of Section 42(2) and Section 42(3) of the Act provides a clear
mandate that all consumers who require a supply of electricity where the
maximum power to be made available at any time exceeds one megawatt have a
right to choose their supplier of electricity.
b) As per Section 43 of the Act, USO is the duty of the Distribution Licensee. The
Distribution Licensee has a duty to supply power to the all consumers provided
the consumers pay the charges as specified by the respective Commission.
MERC Order [ Case No.50 of 2012] Page 25 of 67
c) Further, as per Section 43 (2), even if deemed Open Access consumer opts for a
partial supply of electricity from a source of his choice (other than distribution
licensee of his area) the incumbent Distribution Licensee has to provide him
separate supply. However the deemed Open Access consumer has to pay licensee
the applicable tariff determined by the Appropriate Commission.
d) The tariff for all the consumers having load exceeding 1 MW should be
determined by the respective State Regulatory Commissions
1.16 Maharashtra State Load Despatch Centre (MSLDC)
50. MSLDC submitted various implementation issues which are summarised below:
a) Before the commencement of Open Access, proper infrastructure and human
resources should be in place.
b) If Open Access consumers do not take standby power from Discoms, rather they
draw power from Grid in case of failure of their Supplier's Generator. Such power
will flow through UI and many times, system conditions may not permit drawal of
power through UI. There will implication of such drawal of power on
1. Transmission deviation charges by the State.
2. Congestion charges implications on the State.
c) Requirement of proper Monitoring infrastructure (SCADA to be in place.
d) As per CERC (Terms and Conditions for Tariff determination from Renewable
Energy Sources) all non-solar generators below 10 MW and solar generators
below 5 MW are not be subjected to scheduling and UI. However, deviations of
these generators will have impact on State UI. State UI cannot be apportioned to
them, as their deviations will not be captured. This issue will be needed to be
handled in Intra-State ABT mechanism.
e) In the apportionment of State UI charges, Open Access generators are not
covered. In case of FBSM, impact of any deviations of generators (having
contracts with Open Access consumers) will be on State UI. Hence, this would
result in unfair apportionment of State UI charges.
f) In case there is a revision in availability of the generator (having contract with
Open Access consumers), the rescheduling will be intimated to Discoms/SLDC
and its consumers by the generators. It will be the generator’s responsibility to co-
MERC Order [ Case No.50 of 2012] Page 26 of 67
ordinate with its consumers. In case the buyer desires a revision, it will co-
ordinate with the generator only and the generator will issue a revised schedules.
g) In case if there is unavailability or constraints in the Transmission/distribution
network, which may be either at generator, end or consumer end, the schedules
will be suitably revised by the coordinator.
h) SLDC would have no role in scheduling, energy accounting and UI settlement of
these consumers for embedded consumers of Discoms. For un-embedded
consumers of Discoms, such consumers will be treated as “deemed discom” in the
State energy accounting and scheduling and BSM settlement be done by SLDC.
i) There are issues associated with one generator selling power to number of
consumers through Open Access. Scheduling and commercial settlement of such
generator’s energy would be a challenging task whether done by Discoms or
SLDC. Hence, SLDC requested Commission to introduce Open Access in phased
manner.
1.17 Mahindra & Mahindra Ltd. (M&M)
51. M&M submitted that the:
a) As per the Act, Open Access is allowed for consumers having demand above 1
MW, in this view any Discom should grant the Open Access to consumers
immediately whether it is Partial or Full.
b) Consumers should be allowed to choose their suppliers.
c) Present scenario in Maharashtra indicates that there is shortage of power
availability in power of Discom; in this case Open Access is indirectly helping
the Discom to reduce the supply and demand gap. So Open Access should be
encouraged more.
d) Open access will increase competition among Discoms which would lead
them to take steps towards efficient operation and to stay in competition.
e) For partial Open Access, present incentives from Discoms should continue on
consumption utilised from Discoms.
f) The Commission should provide guidelines to encourage Discoms to facilitate
Open access & continue to regulate tariff even if for 1MW consumers
MERC Order [ Case No.50 of 2012] Page 27 of 67
1.18 Indian Energy Exchange
Issue No-I :- 1 MW and above are Deemed Open Access Consumers
52. IEX submitted that as per the provisions of the Act, Section 42(2) first proviso has
been amended by Sec. 7 (i) of the Electricity Amendment Act, 2007 where the words
“such Open Access may be allowed before the cross subsidies are eliminated on
payment of a surcharge” have been substituted with the words “such Open Access
shall be allowed on payment of a surcharge”.
53. IEX further submitted that as such a deeming intention has been cast upon the Act
with the substitution of the word “may” with the word “shall.” IEX also submitted
that it could therefore be inferred that all such consumers who are eligible to avail
Open Access become deemed Open Access consumers by virtue of the amendment in
the Act. IEX submitted that it is in agreement with the MoP view on this issue.
Issue No-II :- Whether the State Commission can fix tariff for Open Access
Consumer?
54. IEX submitted that the consumers of 1 MW and above need to procure power as per
Section 49 of the Act under which they may enter into an agreement with the Discom
for supply or purchase of electricity on such terms and conditions (including tariff) as
may be agreed upon by them. IEX further submitted that the Discom is free to
determine energy rate at which they want to sell their power to such Open Access
consumers. IEX also submitted that the the Commission may issue guidelines in
accordance with Section 45(2) for determination of such energy charges and prescribe
a ceiling rate so that the Open Access consumer will not suffer as the Discoms enjoy a
virtual monopoly in the market.
Issue No-III :- Where consumer have an option to procure electricity from
competing sources, then terms of Supply from Distribution Licensee to be as per
Section 49 of Act.
55. IEX submitted that the USO under Sec. 43(1) of the Act continues to prevail for all
consumers.
MERC Order [ Case No.50 of 2012] Page 28 of 67
1.19 Shri. N.Ponrathnam
56. Shri. Ponrathnam submitted that:
a) the MoP letter is an opinion not a direction;
b) Standby arrangement for Open Access consumer has to be provided by the
Distribution Licensee;
c) USO is applicable to the Distribution Licensee.
1.20 Shri. Aditya Bedekar
57. Shri Bedekar submitted that:
a) conjoint reading of Sections 42(2), 42(3), 49 and 86 provides that when a
consumer (as defined in Section 2(15)) who's requirement of power is more
than 1 MW (as per proviso 5 to Section 42(2)) and who gives a notice to a
licensee about his intention to opt for Open Access (as per Section 42(3)) and
who may have entered into an agreement with any person for supply of
electricity (as per Section 49) then the distribution licensee is duty bound to
provide non-discriminatory Open Access (as per Section 42(2)) and in such
cases the State Commission shall only determine wheeling charges and
surcharge thereon (as per proviso to Section 86(1)(a)).
b) Open Access is the right or option given by the Act to eligible consumers and
does not make any compulsion on a consumer to buy power from third parties.
So if a consumer finds the tariff of a licensee (determined by the State
Commission) beneficial than sourcing power from third parties he may not
exercise the option of Open Access.
c) To bring competition in the electricity market there must not be forcing of
eligible consumers to scout for the supplier in the open market as this may
lead to cartelization and undue harassment by the local distribution licensee.
To make electricity market conducive for competition, wire and supply
businesses need to be separated, cross subsidy surcharge needs to be
rationalized and Open Access procedure needs to be made easy.
MERC Order [ Case No.50 of 2012] Page 29 of 67
1.21 Shri. Vinod Manikchand Shrishrimal
58. Shri. Shrishrimal submitted that that Price of Electricity should not be unreasonable. It
should only reflect Generation, Transmission and Distribution Cost and no extra cost
should be charged from consumers. Shri. Shrishrimal also submitted that electricity
must be used efficiently.
1.22 Shri. D. Radhakrishna
59. Shri Radhakrishna submitted that the Open Access cannot be opertaionalised unless
there is unbounding of eligible consumers. Shri Radhakrishna also submitted that all
bulk consumers must be mandated to procure power form open market which includes
the embedded distribution company. Energy charges can be excluded for the
embedded consumers having more than 1 MW and distribution company be guided to
initiate proper price of the surplus power available to them.
1.23 Shri George John
60. Shri John submitted that the State Commission should have no role to fix the energy
charges of Open Access customers but should continue to fix only wheeling charges
and surcharges. Shri John also submitted that the Commission should also pass on the
liability of wheeling losses to such consumers who are buying power from
competitors to Distribution Licensees.
61. Shri John also submitted that it is not in agreement with MoP view on USO and
mentions that such riders will only benefit the DISCOMS/Distribution Licensees and
will defeat the purpose of Open Access.
1.24 Maratha Chamber of Commerce, Industries And Agriculture (MCCIA)
62. MCCIA, agreed to the views expressed by Attorney General for India especially on
point No.5 which is as under:
MERC Order [ Case No.50 of 2012] Page 30 of 67
“5. In my opinion, the provisions of section 42(3) are important. Even after
Regulations are framed a person may continue to avail of electricity from a
distribution licensee. A person can require supply of electricity under Open Access
other than from a distribution licensee but such person has to give notice requiring
such supply. Further, such consumers have to enter into an agreement with .the
supplier in terms of section 49.Where there is no such notice and there is no such
agreement,……”
1.25 Finolex Industries Limited (FIL)
63. The FIL submitted that::
a) Need for NOC from distribution utility: FIL submitted that the process of
getting NOC even for captive consumption is very long-winded and subject to
arbitrary restrictions hence the same need to be simplified.
b) Open Access from Power Exchange: FIL suggested that Open Access from exc
c) hanges needs to be codified so that all eligible consumers may be able to get
benefit of this procedure.
d) Nature of short-term Open Access: FIL submitted that there must be provision
of annual short term transaction.
e) Open Access for consumers with contract demand less than 1MVA: FIL
submitted that Open Access must be available to consumers having Contract
Demand of above 500 KVA.
1.26 Maharashtra State Electricity Transmission Company Ltd. (MSETCL)
64. MSETCL submitted various suggestions/views are as under:
a) All consumers of 1 MW and above should install Special Energy Meters (SEM)
along with SCADA data communication and availability of data to SLDC.
b) Open Access consumer should be responsible for Grid support and must take
additional power from other sources as the Distribution Licensee is not under
obligation to supply power to such consumer.
MERC Order [ Case No.50 of 2012] Page 31 of 67
c) As per clarification by MoP, it is felt that Open Access applicant may be required
to terminate the existing contract with existing Distribution Licensee and enter
into new contracts for availing Grid support and additional power required other
than the quantum of Open Access availed.
d) The Bulk Consumers should also share the proportionate Regional Transmission
Deviation Account Bills of CTU on account of deviation caused by them due to
overdrawl/underdrawl.
1.27 Captive Power Producers Association (CPPA)
65. CPPA submitted that:
a) the jurisdiction of the State Commissions in relation to bulk consumers, who opt
for Open Access, is limited to determination of wheeling charges, surcharge and
standby charges, but not fixation of the tariff.
b) The responsibility for the determination of tariff must continue with the State
Commissions. If it is left to the Discoms they may act in an arbitrary and
monopolistic fashion and jeopardize the business operations of a "bulk consumer”
or a partially Open Access consumer.
c) All bulk consumers should not be deemed to be Open Access consumers, but only
those that opt for the facility. The methodology of the implementation of Open
Access, including the metering arrangement and billing procedure by Discoms
have to be made simple and transparent.
1.28 Bajaj Finserv Ltd. (BFS)
66. BFS submitted that:
a) Bulk consumer of 1MW and above deemed to be Open Access does not mean
that they are disconnected from Discom. The State Commissions are mandated
to regulate and provide Open Access to all consumers who require power of 1
MW and more with same terms of prevailing agreements with Discom w.r.t.
minimum supply tenure, compensation, contract demand, connected load
sanction etc.
MERC Order [ Case No.50 of 2012] Page 32 of 67
b) Open Access consumer is paying energy charges to his supplier at mutually
agreed price, so the State Commissions can only determine wheeling charges
and surcharges.
c) Act envisaged, obligation on Discom to supply power to Open Access
consumer connected to Discom, if desired by him. With the opinion of MoP, if
Discom starts negotiation with individual bulk consumers, deemed to be Open
Access then, it is natural, Discoms owned by the State Government might
distribute power under the State Government’s political directions and private
Discoms may dictate higher pricing for supply of electricity. Therefore, the
opinion of MoP is destroying the base of the Act.
d) As per MoP letter which called for notice for not seeking permission to use
Distribution Licensee's network under Section 42(3) is harmful to the system
because this section of Act is related to a person and not consumer, who needs
non discriminatory Open Access through common carrier. Hence, permission
instead of notice is necessary.
1.29 UltraTech Cement Ltd.
67. UltraTech submitted as under:
a) The term “bulk consumer” is not defined under the Act;
b) For bulk consumers to be deemed Open Access consumers is against the Rules
of Natural Justice and devoid of legal backing hence it was seriously objected;
c) Even surcharge could not be determined by the State Commission as
electricity is not being used by the consumer. Only wheeling charges are
applicable; and
d) Notice under section 42(3) is not a precondition for implementation of Open
Access but such notice intimates to Distribution Licensee about his readiness
to work on other power supply as after the said intimation, the distribution
licensee is not under obligation to compulsorily supply power to such
consumers.
MERC Order [ Case No.50 of 2012] Page 33 of 67
1.30 Reliance Industries Ltd. (RIL)
68. RIL submitted as under:
a) As per Sections 2(15), 42(2), 42(3), Open Access merely means provision for
the use of transmission or distribution lines/system by any consumer in
accordance with the Regulations specified by the Appropriate Commission
and through this option consumer receives electricity from a generating
company or licensee other than distribution licensee ( to whom consumer’s
premises are connected for the purpose of receiving electricity with the works
of a distribution licensee). In case such consumer wants to receive electricity
from a person other than the Distribution Licensee, he has to give a notice
requiring the distribution licensee to wheel such electricity in accordance with
the Regulations made in that behalf.
b) If after such notice, the consumer actually receives electricity from a person
other than the Distribution Licensee, he becomes an Open Access consumer to
the extent of the electricity so received, whereas to the extent of the electricity
which he continues to receive from the Distribution Licensee, he continues to
be a 'consumer of the Distribution Licensee.
c) The expression “deemed Open Access consumer” is a misnomer and there is
no concept in law of any such deemed oven access consumer. There is
absolutely no warrant in law to treat bulk consumers as a deemed Open
Access consumer or as ineligible to be a consumer of the distribution licensee,
simply because there is a provision under the Regulations to enable him to
receive electricity from a person other than the Distribution Licensee.
d) Thus, bulk consumer (above 1 MW) cannot be deemed to be an Open Access
consumer or prevented from being a consumer of the distribution licensee.
e) Regarding the fixing of energy charges, for an Open Access consumer the
State Commission only has power to fix the tariff of electricity sold to a
consumer by a distribution licensee and not by a person other than the
distribution licensee upon Open Access. The energy purchase in case of the
latter sale is a bilateral agreement between the seller and the buyer and the
Commission cannot fix the energy charges. As empowered by Section 86 (1)
(a) the State Commission shall continue to determine the wheeling charges
and surcharge for Open Access consumer. The State Commission shall
MERC Order [ Case No.50 of 2012] Page 34 of 67
continue to determine the tariff of the consumers, if and to the extent they
have not opted for Open Access.
f) USO has to be provided by the Distribution Licensee.
g) APTEL judgement dated July 11, 2006 in the matter of Hindalco v/s WBERC
regarding Universal Service Obligation of a distribution licensee is as under:
“ ……. So long as an Open Access consumer abides by the subsisting
terms and conditions as are applicable to identical industries the
Discom is obliged to supply and the standby energy has to be supplied
subject to terms to be agreed between Discom and the OA consumers”
h) RIL submitted that the notice under Section 42 (3), which is a precondition for
availing of Open Access, is not 'for seeking permission to use the Distribution
Licensee's network but for requiring the Distribution Licensee to wheel
electricity supplied by a person other than the Distribution Licensee to Open
Access consumer.
i) The reason for the addition of the words “save as otherwise provided in this
Act” at the opening of Section 43 of the EA 2003 by Electricity (Amendment)
Act, 2007 (Act of 26 of 2007) and whether any reference of the same can be
provided through Statement of Objects and Reasons of the Amended Act.
j) Statement of Objects and Reasons of the Electricity (Amendment) Act, 2007
(Act of 26 of 2007) does not highlight the amendment of Section 43 brought
in the Amended Act.
k) The words “save as otherwise provided” in statutory provision have been
interpreted by the Hon’ble Supreme Court to mean that the provision of law is
made subject to whatever is provided otherwise.
l) RIL also annexed various cases in this regard namely Punjab Sikh Regular
Motor Service vs. Regional Transport Authority, Raipur (AIR 1966 SC 1318),
South India Corporation (P) Limited vs. Secy. Board of Revenue, Trivandrum
(AIR 1964 SC 207) and Lalu Prasad Yadav vs. State of Bihar (AIR 201O SC
1561).
m) Various provisions of the Act which “otherwise provide” or are exceptions to
the Universal Service Obligation of the Distribution Licensee are as given
below:
MERC Order [ Case No.50 of 2012] Page 35 of 67
a) Sub-section (2) of Section 43
b) Sections 42(2) and (3) read with Section 2(47)
c) Section 44
d) Section 47
e) Section 41
f) Section 56 and
g) Section 163
n) There is no provision of the Act by which any consumer can be denied the
benefit of the Universal Service Obligation of the Distribution Licensee.
o) The Distribution Licensee is mandated to supply stand-by power to the Open
Access consumers at Commission determined tariff.
2. COMMISSION’S RULINGS
69. The Commission has anlaysed the various suggestions by various stakeholders and
ruled on the following issues:
1) Whether all bulk consumers (above 1MW) shall be deemed to be open access
consumers with effect from January 2009 in terms of the last proviso to sub-
section (2) of Section 42?
70. The provisions relating to the providing of open access on the distribution system are
contained in sub-sections (2), (3) and (4) of Section 42 of the 2003 Act.
71. Sub-section (2) of Section 42 states “The State Commission shall introduce open
access”.
72. The introduc[tion] [of] open access”is to be “as may be specified”.
73. Under Section 2(62) "specified" means specified by Regulations made by the
Appropriate Commission ….under this Act”.
74. Under Sub-section (2) of Section 42 open access is to be introduced “in such phases
and subject to such conditions, (including the cross subsidies, and other operational
MERC Order [ Case No.50 of 2012] Page 36 of 67
constraints) …..[having] due regard to all relevant factors including such cross
subsidies, and other operational constraints:”
75. Therefore, the State Commission is to introduce open access by notifying
Regulations-
1) in phases
2) subject to such conditions, (including
a. the cross subsidies, and
b. other operational constraints
c. [having] due regard to all relevant factors including such cross subsidies,
and other operational constraints:
76. The wheeling of electricity by a person, whose premises are situated within the area
of supply of a distribution licensee, under sub-section (3) of Section 42, is to be in
accordance with the aforesaid Regulations made by the State Commission.
77. Sub-section (4) of Section 42 states that “Where the State Commission permits a
consumer or class of consumers to receive supply of electricity from a person other
than the distribution licensee of his area of supply…”.
78. Thus, under Sub-section (4) of Section 42 the State Commission is to permit open
access to consumers.
79. It can be clearly seen from the above, that grant of or the provision of open access to
the distribution system is the sole prerogative of the State Commission.
80. If the State Commission does not introduce open access”, or does not “permit” open
access, then consumers / persons cannot take open access.
81. To appreciate this position better, it would need to be considered that the 2003 Act
nowhere states that the Distribution Licensee shall provide open access to its
consumers / persons. Unlike Section 43(1) the 2003 Act does not state that “Every
distribution licensee, shall, give open access to its distribution system to its consumers
or to any person”. Section 43(1) mandates that “Every distribution licensee, shall, on
an application by the owner or occupier of any premises, give supply of electricity to
such premises, within one month after receipt of the application requiring such
MERC Order [ Case No.50 of 2012] Page 37 of 67
supply.” However, there is no such mandating provision in regard to the provision of
open access on the distribution system.
82. If that is the position of law on a plain reading of the statute, as aforestated, then it
could be said that the entitlement of consumers / persons to seek open access on
distribution system is circumscribed by the “introduction of open access” under sub-
section (2) of Section 42 / permission to consumers or class of consumers under sub-
section (3) of Section 42.
83. There is no statutory right granted to consumers to avail open access dehors /
irrespective of:
(A) the State Commission introducing open access under sub-section (2) of Section
42.
(B) Notification of Regulations under sub-section (2) of Section 42.
(C) grant of permission to consumers or class of consumers under sub-section (3) of
Section 42.
84. On the other hand, if there was a statutory right granted to consumers to avail open
access dehors (A),(B) and /or (C) above, then such a right would defeat -
a. Introduction of open access in phases
b. Notifying conditions, (including (a) the cross subsidies and (b)other
operational constraints)
85. If there was a statutory right granted to consumers to avail open access no matter
whatever it is, then there is no need to- [have] due regard to all relevant factors
including such cross subsidies, and other operational constraints. Then there is no
need to introduce open access in phases. Then there is no need to “[notify]
conditions” other than “cross subsidies, and other operational constraints”.
86. The conditions to be notified by State Commissions before introducing open access
include cross subsidies, and other operational constraints. It is an inclusive provision
in the language in sub-section (2) of Section 42. Therefore, the conditions to be
notified by State Commissions before introducing open access may be conditions not
necessarily limited to cross subsidies, and other operational constraints but may be
MERC Order [ Case No.50 of 2012] Page 38 of 67
such other conditions that the State Commission may deem fit in the circumstances
that are prevailing or are relevant.
87. Therefore, the legislature has stated that the State Commissions are to specify by
Regulations “the extent of open access in successive phases”.
88. Nextly, the first proviso to sub-section (2) of Section 42 before it was amended by Act
26 of 2007, stipulated that “such open access may be allowed before the cross
subsidies are eliminated on payment of a surcharge”. This means that even if cross
subsidies are not eliminated open access may be allowed. The words in italics were
substituted by the words “such open access shall be allowed on payment of a
surcharge”. This can only mean that if a consumer / person pays surcharge then open
access may be allowed. If the provision was to mean that open access must be
allowed or is to be mandatorily allowed “on payment of a surcharge”, then there is no
question of the State Commission to (A) Introduce Open Access in phases; (B)
notifying conditions including cross subsidies and other operational constraints; (C)
permitting open access. The words “such open access shall be allowed on payment of
a surcharge”, cannot be read to imply that the State Commission is not entitled to
introduce open access in phases by notifying Regulations or that open access is not to
be circumscribed by its introduction in phases, or not to be subject to conditions
including cross subsidies and other operational constraints, etc. . If open access must
be allowed then there is no need of a regulatory framework to be notified under sub-
section (2) of Section 42.
89. The mandate under the last proviso to sub-section (2) of Section 42 to provide open
access to all consumers who require a supply of electricity where the maximum power
to be made available at any time exceeds one megawatt, is subject to and
circumscribed by –
(A) The conditions which may be imposed by the State Commission including
cross subsidies and other operational constraints because of the words “such
open access”. The first proviso to sub-section (2) of Section 42 also states
“such open access”. The word “such” assumes significance. The words
“such open access” is the open access that has been introduced by the State
Commission in phases and which is subject to conditions including the cross
subsidies and other operational constraints;
MERC Order [ Case No.50 of 2012] Page 39 of 67
(B) Notification of Regulations.
90. The mandate under the last proviso to sub-section (2) of Section 42 is not dehors of
the mandate on the State Commission to introduce open access in phases; notification
of Regulations; and laying down conditions.
91. It is not a unbridled mandate under the last proviso to sub-section (2) of Section 42.
92. Even the last proviso entitles the State Commission to “provide .. open access”.
93. The fifth proviso to sub-section (2) of Section 42 state as follows -
“Provided also that the State Commission shall, not later than five years from
the date of commencement of the Electricity (Amendment) Act, 2003, by
regulations, provide such open access to all consumers who require a supply
of electricity where the maximum power to be made available at any time
exceeds one megawatt.”.
Conclusion – Bulk consumers (above 1MW) are not deemed to be open access
consumers with effect from January 2009 in terms of the last proviso to sub-section
(2) of Section 42.
2) Whether State Commissions can continue to regulate the tariffs for supply of
electricity to the open access consumers after January 2009 ?/ Whether the
jurisdiction of State Commissions in respect of the bulk consumers is limited to
fixing the wheeling charges and surcharge thereon in accordance with the
provisions of Sections 49 and 86(1)(a)?
And
3) When a person gives a notice under Section 42(3) to require the distribution
licensee to wheel electricity, such a person is exercising a right /entitlement/
option. If ‘open access’ were an obligation on such a person or if open access is
mandatorily to be taken by such a person, then where is the question of such a
person to give any notice to the distribution licensee under Section 42(3)?
MERC Order [ Case No.50 of 2012] Page 40 of 67
94. The edifice of the argument that once “open access has been permitted to a category
of consumers under section 42”, then such consumers are mandated to only use the
wires of its incumbent distribution licensee but not take supply from the said
incumbent distribution licensee hits at the fundamental question as to whether ‘open
access’ is a right / entitlement / option or an obligation. Is ‘open access’ the exercise
of a right / entitlement or the ‘open access’ is to be mandatorily taken? These
questions need to be considered are as follows:-
95. Open Access is defined as under in the Electricity Act, 2003:
Section 2 (47) “ open access” means the non-discriminatory provision for the
use of transmission lines or distribution system or associated facilities with
such lines or system by any licensee or consumer or a person engaged in
generation in accordance with the regulations specified by the Appropriate
Commission;”
96. The words “non-discriminatory” suggests that ‘open access’ is a right / entitlement /
option.
97. The words “shall be allowed” in the first proviso to Section 42 implies that ‘open
access’ is a right / entitlement / option not an obligation. Open access is the exercise
of a right / entitlement / option when allowed or permitted by the State Commissions
but ‘open access’ is not to be mandatorily taken once allowed or permitted. How can
‘open access’ be a mandatory obligation if ‘open access’ is to be allowed? If
something is to be allowed then the sequitur is that it becomes an entitlement / option
not an obligation.
98. When a person gives a notice under Section 42(3) to the distribution licensee for
wheeling of electricity, such a person is exercising a right /entitlement/ option. If
‘open access’ was an obligation on such a person or if open access is mandatorily to
be taken by such a person, then where is the question of such a person to give any
notice to the distribution licensee under Section 42(3)?
99. The permission to be given by State Commissions under Section 42 (4) “to receive
supply of electricity from a person other than the distribution licensee of his area of
supply” can never imply that ‘open access’ is an obligation. A permission is not
accorded for self imposition of an obligation. A permission is accorded to have / take
MERC Order [ Case No.50 of 2012] Page 41 of 67
a right or an entitlement. The language of Section 42 (4) is clear – “Where the State
Commission permits a consumer or class of consumers…”.
100. The underlined words in Section 39(2)(d)(ii) also make it clear that ‘open access’ is
the exercise of an entitlement not a mandatory obligation on the consumers to seek
‘open access’ – (ii) any consumer as and when such open access is provided by the
State Commission under sub-section (2) of section 42..”. The same words also appear
in Section 40(c)(ii).
101. Section 9(2) expressly uses the word “the right to open access”. Though, Section
9(2) does not apply to consumers but applies to captive power plants, yet in concept
‘open access’ has been explained in the said Section as a “right”.
102. Nowhere, in the 2003 Act, it is stated that ‘open access’ shall be mandatorily taken or
obtained by consumers.
103. By Act 26 of 2007, there was an amendment made in the first proviso to S. 42(2) to
the effect that the words “such open access may be allowed before the cross subsidies
are eliminated on payment of a surcharge” were substituted by the words “such open
access shall be allowed on payment of a surcharge”. This nowhere implies that ‘open
access’ becomes an obligation on consumers. It does not imply that ‘open access’
ceases to be an option but becomes an obligation.
104. As regards Section 49 of 2003 Act, the said Section can only mean that when a
consumer has been permitted open access to seek supply of electricity from a
generating company or any licensee other than the incumbent distribution licensee,
then such a consumer has an option to enter into an agreement with the “generating
company or any licensee” from whom a such a consumer is to seek supply of
electricity by using the distribution system of the incumbent distribution by wheeling
such electricity.
105. Section 49 uses the word “may enter into”. It does not state “shall enter into”. So
therefore, such consumers may, instead of paying regulated retail tariffs under clause
(d) of sub-section (1) of Section 61, pay mutually agreed tariff. Obviously, such a
tariff under Section 49 is to be paid to the generating company or the licensee from
whom the open access consumer would take the supply. Section 49 cannot mean that
such consumer has the option to pay mutually agreed and unregulated tariff to the
incumbent distribution licensee. The context in which Section 49 uses the words “on
such terms and conditions (including tariff) as may be agreed upon by them” is only
MERC Order [ Case No.50 of 2012] Page 42 of 67
qua the generating company or the licensee from whom the consumer would take the
supply using the wires of the incumbent distribution licensee.
106. The words “any person” in Section 49 can only be the generating company or the
licensee from whom the consumer would take the supply using the wires of the
incumbent distribution licensee. The words “any person” in Section 49 cannot be the
incumbent distribution licensee.
107. In support of the contention that the proviso to Section 86(1)(a) excludes the
jurisdiction of the State Commission to determine the retail tariffs of consumers who
have been permitted to take ‘open access’ a concern has been put forth that such an
exclusion of jurisdiction is justified on the ground that there should be a definitive
obligation on ‘open access’ consumers not to take supply from the incumbent
distribution licensee, because in that case the incumbent distribution licensee could
plan its power procurement in a better fashion. This could be answered in terms of the
following aspects: (1) the incumbent distribution licensee is a deemed trader and can
sell to any source the excess / surplus power that is available with the incumbent
distribution licensee if open access consumers were to exercise the choice to take the
supply using the wires of the incumbent distribution licensee; (2) the incumbent
distribution licensee could sell the excess / surplus power to its existing consumers
who are subject to load shedding; (3) Moreover, Section 42(4) states that open access
consumers shall be liable to pay an additional surcharge to meet the fixed cost of
such distribution licensee arising out of his obligation to supply.
108. The Tariff Policy states at para 8.5.4 that the additional surcharge for obligation to
supply as per section 42(4) of the Act should become applicable only if it is
conclusively demonstrated that the obligation of a licensee, in terms of existing power
purchase commitments, has been and continues to be stranded, or there is an
unavoidable obligation and incidence to bear fixed costs consequent to such a
contract. The fixed costs related to network assets would be recovered through
wheeling charges.
109. Thus, the above could dispel the concern of avoidable power purchase costs.
110. One cannot possibly in regard to the proviso to Section 86(1)(a) contend that “where
open access has been permitted to a category of consumers” such consumers must buy
only at the prices to be determined by mutual agreement between the buyer and the
seller as contemplated in Section 49.
MERC Order [ Case No.50 of 2012] Page 43 of 67
111. This contention would suggest that open access is an obligation on the consumer. That
the consumer has to mandatorily take open access where open access has been
permitted to a category of consumers. It is an obligation imposed upon the consumer.
This will not be a correct way of reading the proviso to Section 86(1)(a) and Section
49.
112. Open access is a right (subject to Regulations) but not an obligation. No one can be
forced to take open access.
113. In case the word “only” appearing in the said proviso implies that the State
Commission is not to determine the retail tariff for the category of consumers who
have been permitted open access it would consequently imply that the distribution
licensee of their area of supply would no longer have the obligation to supply to these
consumers. This would militate against the requirements of Section 43 (Duty to
supply on request).
114. Section 86(1)(a) lays down the function of the State Commission to determine the
tariff for generation, supply, transmission and wheeling of electricity. Such a function
has to be exercised from the parent Section that is Section 62(1). In the case of
Shri. Gajendra Haldea vs CERC and others, Hon’ble APTEL held in its judgment
dated December 22, 2006 that Section 86(1)(a) takes colour from Section 62(1). Some
passages are extracted as follows -
“34. It appears to us that the general words in Sections 79 (1) (a) & (b) and
86(1) (a) must take colour from the words used in Section 62 (1), particularly
Section 62 (1) (a). Otherwise, it is not possible to reconcile the provisions of
Section 62(1) on the one hand and Section 79 (1) (a) & (b) and Section 86(1) (a)
on the other.
Section 86(1)(a), which requires determination of tariff, inter alia, for ‘supply
and generation of Electricity’ must be construed with reference to Section
62(1),..
36. In case the Parliament intended the tariff to be determined under Section
79(1)(a) & (b) for generation and under Section 86 (1)(a) for generation and
supply independently of and dehors Section 62(1), Section 64 would have
authorized the concerned party to file an application under Section 79(1)(a) &
MERC Order [ Case No.50 of 2012] Page 44 of 67
(b) and Section 86(1)(a) for determination of tariff. The fact that the statute
prescribed filing of an application under Section 62 before the Commission for
determination of tariff shows that the provisions of Sections 79(1)(a) & (b) and
Section 86 (1)(a) must take colour from the provisions of Section 62(1) of the
Act. In this view of the matter, there would be no need for a separate provision
for filing an application for determination of tariff under Section 79 (1)(a) & (b)
and Section 86 (1)(a). Therefore, the statute did not provide for a provision for
filing an application for determination of tariff under Section 79(1)(a) & (b) and
86(1)(a) of the Act.”
115. When in pursuance of Section 49 of the 2003 Act, consumers “enter into an
agreement with any person for supply or purchase of electricity on such terms and
conditions (including tariff) as may be agreed upon by them” there would be no
determination of tariffs by the Electricity Regulatory Commissions in such an event.
However, while exercising such a choice the consumers would have to give a notice
to the local incumbent distribution licensee requiring the distribution licensee to
wheel such electricity and the duties of the distribution licensee with respect to such
supply shall be of a common carrier providing non-discriminatory open access. Thus,
open access is a right or an option given to eligible consumers. A consumer who is
eligible for open access may for various techno-commercial reasons choose not to
avail of this facility and opt instead to purchase electricity from the local incumbent
distribution licensee. That option cannot be taken away from the consumer. When it
chooses to purchase electricity from the local incumbent distribution licensee, the
usual retail tariff as determined by the State Commission will have to apply. In regard
to the word “only” appearing in the proviso to Section 86(1)(a) the correct
interpretation of the proviso is that when eligible consumers actually avail of open
access, i.e., they purchase electricity from a source other than the local incumbent
distribution licensee, wheeling charges alone would be payable by them to the local
incumbent distribution licensee as determined by the Commission. But if they do not
wish to take supply through open access they would still have the choice to take
supply from the distribution licensee of their area of supply by paying the retail tariffs
determined by the Commission, and the proviso to Section 86(1)(a) would not come
in the way of such determination. In fact, the Commissions must determine retail
tariffs for all categories of consumers including those eligible for open access.
MERC Order [ Case No.50 of 2012] Page 45 of 67
116. The open access option, in this context, implies freedom to get supply from a person
other than the distribution licensee of his area of supply. Section 42 being an enabling
provision should not be interpreted to mean that all consumers satisfying the condition
under Regulations must necessarily avail open access. Sub-section (3) of section 42 of
the Act, further makes it clear that consumers seeking open access can do so after
giving notice. The distribution licensee will be mandated to provide non-
discriminatory access to his network for such wheeling. As per the provisions of
Section 43 the distribution licensee is under an obligation to supply electricity as and
when requested to do so, implying that the option and choices remain open to the
consumers.
117. Under Section 43 the distribution licensee has a fundamental obligation to provide
supply of electricity when requested for such supply. The eligible consumers in the
area of supply have an option to take supply either from the distribution licensee or
sources other than the distribution licensee. Being eligible to seek supply of electricity
from a source other than the distribution licensee does not bar the consumer in the
area of supply to instead opt to take supply from distribution licensee and does not
relieve the distribution licensee of the obligation to supply.
118. The Commission also analysed the implementation issue involved in mandating Open
Access for the consumers requiring power in excess of 1 MW. It would not then be
possible to work out the surcharge in accordance with the formula provided in the
Tariff Policy at clause 8.5.1. As per the formula, the surcharge cannot be determined
if there is no tariff determination for that consumer category. Further, the Commission
has to follow the provisions of Section 61 of the Act for framing and notifying
appropriate Regulations for determination of the tariff by the Commission. The
Section clearly indicates that for specifying the terms and conditions for
determination of the tariff, the Commission shall be guided by, among other items, the
National Electricity Policy and tariff policy. Since, there has not been any amendment
in Section 61 of the Act, the cross subsidy surcharge cannot be determined if the tariff
for the consumers of load in excess of 1 MW is not determined.
MERC Order [ Case No.50 of 2012] Page 46 of 67
Conclusion -
a) The jurisdiction of the State Commissions to determine retail tariffs under
Section 62(1)(d) is not ousted by the proviso to Section 86(1)(a) because the
proviso to Section 86(1)(a) is triggered only when the consumers exercise the
entitlement / option to seek open access.
b) As per the formula provided in at clause 8.5.1 of Tariff Policy, the surcharge
cannot be determined if there is no tariff determination for that consumer
category. Since, there has not been any amendment in Section 61 of the Act, the
cross subsidy surcharge cannot be determined if the tariff for the consumers of
load in excess of 1 MW is not determined.
4) Whether obligation cast on Distribution Licensee to supply on request under
Section 43 of Act, is also applicable to the Open Access Consumer?
And
5) Where consumer have an option to procure electricity from competing sources,
then terms of Supply from Distribution Licensee to be as per Section 49 of Act.
119. The Commission for the purpose of deciding objectively, has analysed various
provisions of the Act and considered the following definitions/ Sections of the Act:
Section 2(17) of Act:"distribution licensee" means a licensee authorised to operate
and maintain a distribution system for supplying electricity to the consumers in his
area of supply” (emphasis supplied)
Section 42 of Act: “42. Duties of distribution licensees and open access
(1) It shall be the duty of a distribution licensee to develop and maintain an efficient,
co-ordinated and economical distribution system in his area of supply and to supply
electricity in accordance with the provisions contained in this Act.” (emphasis
supplied)
Section 2(70) of Act:"supply", in relation to electricity, means the sale of electricity
to a licensee or consumer;
Section 2(15) of Act: “consumer" means any person who is supplied with electricity
for his own use by a licensee or the Government or by any other person engaged in
the business of supplying electricity to the public under this Act or any other law for
the time being in force and includes any person whose premises are for the time
MERC Order [ Case No.50 of 2012] Page 47 of 67
being connected for the purpose of receiving electricity with the works of a licensee,
the Government or such other person, as the case may be” (emphasis supplied)
Section 43 of Act: “43. Duty to supply on request
(1) Every distribution licensee, shall, on an application by the owner or occupier of
any premises, give supply of electricity to such premises, within one month after
receipt of the application requiring such supply:
...
PROVIDED that no person shall be entitled to demand, or to continue to receive,
from a licensee a supply of electricity for any premises having a separate supply
unless he has agreed with the licensee to pay to him such price determined by the
Appropriate Commission.”(Emphasis supplied)
Section 44 of Act: “44. Exceptions from duty to supply electricity
Nothing contained in section 43 shall be taken as requiring a distribution licensee to
give supply of electricity to any premises if he is prevented from so doing by cyclone,
floods, storms or other occurrences beyond his control.” (emphasis supplied)
Section 49 of Act: “49. Agreements with respect to supply or purchase of electricity
Where the Appropriate Commission has allowed open access to certain consumers
under section 42, such consumers, notwithstanding the provisions contained in clause
(d) of sub-section (1) of section 62, may enter into an agreement with any person for
supply or purchase of electricity on such terms and conditions (including tariff) as
may be agreed upon by them.”
120. The Hon’ble Appellate Tribunal for Electricity has settled the issue of USO in the
context of distribution open access by its Judgement dated 11 May, 2006 in Appeal
No. 34 of 2006 in the matter of M/s Bhushan Limited Versus West Bengal State
Electricity Board and others, as well in its judgement dated 11July, 2006 in the matter
of Indian Aluminium Company Limited (since known as HINDALCO Industries
Limited) Versus West Bengal Electricity Regulatory Commission and others. The
decisions in both of these aforesaid Judgements are extracted below:-
a) M/s Bhushan Limited Versus West Bengal State Electricity Board and others
“ 8. In this appeal, the following points arise for consideration:-
MERC Order [ Case No.50 of 2012] Page 48 of 67
i. Whether the direction of the Regulatory Commission that the appellant shall
cease to be a consumer of the WBSEB as a condition for availing open access
is sustainable in law?
ii. Whether there could be a direction to the applicant to sever its consumer
relationship with the area Discom, for grant of open access?
.........
11. In law and as per statutory provisions so long as the appellant desires to
continue its relationship with the area distribution licensee and agree to abide
by the stipulations, there can be no direction or compulsion to sever its
relationship as a consumer.
…….
12. Taking up the first point for consideration, we are to point out that Sub-
Section (2) of Section 42 of The Electricity Act 2003 mandates the State
Commission to introduce open access in such phases and subject to such
conditions, including cross subsidies and other operational constraints having
due regard to all the relevant factors including such cross subsidies. Sub-
Section (4) of Section 42 provides that where the State Commission permits a
consumer to receive supply of electricity from a person other than the
distribution licensee of its area of supply, such consumer shall be liable to pay
an additional surcharge on the charges of wheeling, as may be specified by
the State Commission, to meet the fixed cost of such distribution licensee
arising out of its
obligation to supply. Nothing in the The Electricity Act 2003 which either
directs or mandates that a consumer who applies for open access should cease
to be a consumer of the area Discom.
13. The provisions of The Electricity Act 2003 on the other hand enables a
consumer to continue as the consumer of area Discom so long as the
consumer is willing to pay the charges prescribed and comply with the terms
and conditions as stipulated. Section 43 of The Electricity Act 2003 provides
that every distribution licensee shall on an application by the owner or
occupier of any premises supply electricity within its area of supply within one
month from the date of receipt of an application in this behalf subject to the
applicant paying the requisite charges. There is no doubt that WBSEB has the
MERC Order [ Case No.50 of 2012] Page 49 of 67
universal obligation to serve all the consumers within the area of supply.
Admittedly the appellant’s plant in Bhangihatti is connected to WBSEB system
and the appellant is an existing consumer, as defined in Section 2 (15) of The
Electricity Act 2003.
14. As already pointed out, Section 43 mandates that the area licensee shall
supply power so long as the consumer remits the charges prescribed as per
Tariff Notification and as provided in Section 45 of The Electricity Act 2003.
Section 48 enables the distribution licensee to impose certain additional
conditions when open access is permitted.
Section 49 which has a bearing reads thus:-
“49. Agreements with respect to supply or purchase of electricity.-
Where the Appropriate Commission has allowed open access to
certain consumers, under section 42, such consumers, notwithstanding
the provisions contained in clause (d) of sub-section (1) of section 62,
may enter into an agreement with any person for supply or purchase of
electricity on such terms and conditions (including tariff) as may be
agreed upon by them.”
Section 49 of The Electricity Act 2003 provides for an agreement being
entered between an open access consumer and the distribution licensee for
supply or purchase of electricity on such terms and conditions, including the
tariff as may be agreed upon by them. Section 56 of The Electricity Act 2003
provides for disconnection of supply.
15. On a careful consideration of various provisions in The Act, we find that
there is no provision in the Act which mandates that the consumer, like the
appellant, should cease to be a consumer of electricity from the area
distribution licensee or sever its connection as a consumer with the said area
distribution licensee merely because open access is applied and allowed. The
appellant has unequivocally made it clear that the appellant is willing to pay
the charges prescribed by the area distribution licensee including demand
charges, energy charges and other charges for the connected load of 14.9
MVA in the same manner as in the case of identically placed industrial
consumers in the area and the appellant is ready and willing to remit the
charges payable to the area distribution licensee.
MERC Order [ Case No.50 of 2012] Page 50 of 67
16. There is no reason or rhyme to hold that the appellant on being granted
open access should sever its existing relationship with the area distribution
licensee. Section 49 of The Act provides for an agreement being entered into
when open access is allowed to consumers for supply or purchase of
electricity on such terms and conditions including tariff as may be agreed
upon. We do not find any justifiable reason for the direction issued by the
Regulatory Commission in this respect. The West Bengal Electricity
Regulatory Commission (Terms and Conditions for Open Access) Regulations
2005 also do not impose such a condition. In fact, Regulation 12 of the said
Regulations provides for entering into a commercial agreement with a
distribution licensee and abide by various conditions relevant thereto.
Regulation 13.4 also in no way provides for such a direction.
17. We are unable to appreciate the view of the Commission that the appellant
cannot demand supply of back-up power from the WBSEB as a matter of right
even though nothing could prevent the appellant to enter into a separate
agreement for supply of back-up power on terms and conditions mutually
acceptable to both. None of the provisions of The Act or the Rules framed
thereunder or the Regulations framed by the WBERC has been placed before
us to show that the appellant should sever its relationship as a consumer with
WBSEB on its being granted open access. So long as the appellant is
agreeable to pay the charges prescribed in this behalf to an identical industry,
the appellant, an existing consumer cannot be directed to sever its relationship
with area distribution licensee. The construction placed on Section 42 (3) of
The Electricity Act runs counter to the very section. The object and scope of
the provision has been lost sight and as an existing consumer the appellant
could continue its relationship. Such a construction cannot be appreciated as
it runs counter to plain meaning of the provisions of the Act.”
b) Indian Aluminium Company Limited Vs. WBERC and others.
“14. The following points are framed for consideration in this appeal:-
(A) Whether the direction of the West Bengal State Electricity Regulatory
Commission that the appellant shall cease to be a consumer of CESC limited
as a condition for availing open access is sustainable? Whether in terms of
MERC Order [ Case No.50 of 2012] Page 51 of 67
The Electricity Act, 2003 a consumer who applies for open access should
disassociate itself with the area DISCOM?
(B) Whether the appellant has to sever its existing consumer relationship with
CESC Limited, the area DISCOM for grant of open access?
(C) Whether the area DISCOM is obliged to supply standby energy to the
appellant and if so, under what conditions?
...
18. In law and as per statutory provisions so long as the appellant desires to
continue its relationship with the area distribution licensee and agree to abide
by the stipulations, there can be no direction or compulsion to sever its
contractual relationship as a consumer of the area DISCOM. In the present
case, the appellant as already pointed out, had agreed to comply with the
existing terms and conditions of supply and is ready to remit all the charges
prescribed as a consumer of electricity to CESC Limited. It is rightly pointed
out that the appellant has not sought for any variation with respect to its being
a consumer of CESC for the connected load of 8.5 MW at 33 KV nor it has
sought for any reduction in demand charges or energy charges or other
charges consequent to open access being allowed in its favour.
19......... Nothing in The Electricity Act 2003 which either directs or
mandates that a consumer who applies for open access should cease to be a
consumer of the area DISCOM.
20. The provisions of The Electricity Act 2003 on the other hand enables a
consumer to continue as the consumer of the area DISCOM so long as the
consumer is willing to pay the charges prescribed and comply with the terms
and conditions as stipulated. Section 43 of The Electricity Act 2003 provides
that every distribution licensee shall on an application by the owner or
occupier of any premises supply electricity within its area of supply within one
month from the date of receipt of an application in this behalf subject to the
applicant paying the requisite charges. There is no doubt that CESC Ltd. has
the universal obligation to serve all the consumers within the area of supply.
MERC Order [ Case No.50 of 2012] Page 52 of 67
Admittedly the appellant’s plant in Belurmath is connected to CESC system
and the appellant is an existing consumer, as defined in Section 2 (15) of The
Electricity Act 2003. The appellant without any reservation agreed to continue
its contractual obligations with the CESC Ltd. even on its being granted short
term open access.
21. As already pointed out, Section 43 mandates that the area licensee shall
supply power so long as the consumer remits the charges prescribed as per
Tariff Notification and as provided in Section 45 of The Electricity Act 2003.
Section 48 enables the distribution licensee to impose certain additional
conditions when open access is permitted.
Section 49 which has a bearing reads thus:-
“49. Agreements with respect to supply or purchase of electricity.-Where the
Appropriate Commission has allowed open access to certain consumers,
under section 42, such consumers, notwithstanding the provisions contained in
clause (d) of sub-section (1) of section 62, may enter into an agreement with
any person for supply or purchase of electricity on such terms and conditions
(including tariff) as may be agreed upon by them.”
22. It is to be pointed that Section 49 of The Electricity Act 2003 provides for
an agreement being entered between an open access consumer and the
distribution licensee for supply or purchase of electricity on such terms and
conditions, including the tariff as may be agreed upon by them. Section 56 of
The Electricity Act 2003 provides for disconnection of supply in default of
payment by the area DISCOM, which applies to all consumers, whether the
consumer has been permitted open access or not.
23. On a careful consideration of various provisions of The Electricity Act,
2003 we find that there is no provision in the Act which mandates that the
existing consumer, like the appellant, should cease to be a consumer of
electricity from the area distribution licensee or sever its connection as a
consumer with the said area distribution licensee merely because short term
open access is applied for and allowed for interstate transmission from its
MERC Order [ Case No.50 of 2012] Page 53 of 67
CPP. The appellant has unequivocally made it clear that the appellant is
willing to pay the charges prescribed by the area distribution licensee
including demand charges, energy charges and other charges for the
connected load of 8.5 MW in the same manner as in the case of identically
placed industrial consumers in the area and the appellant is ready and willing
to remit the charges payable to the area distribution licensee.
24. There is no reason or rhyme to hold that the appellant on being granted
open access should sever its existing contractual relationship with the area
distribution licensee or shall cease to be a consumer of the area DISCOM/
Licensee. Section 49 of The Act provides for an agreement being entered into
when open access is allowed to consumers for supply or purchase of
electricity on such terms and conditions including tariff as may be agreed
upon. We do not find any justifiable reason for the direction issued by the
Regulatory Commission in this respect. The West Bengal Electricity
Regulatory Commission (Terms and Conditions for Open Access) Regulations
2005 also do not impose such a condition. In fact, Regulation 12 of the said
Regulations provides for entering into a commercial agreement with a
distribution licensee and abide by various conditions relevant thereto.
Regulation 13.4 also in no way provides for issue of such a direction.
25. We are unable to appreciate the view of the Commission that the appellant
cannot demand supply of back-up power from the CESC Ltd. as a matter of
right even though nothing could prevent the appellant to enter into a separate
agreement for supply of back-up power on terms and conditions mutually
acceptable to both. None of the provisions of The Act or the Rules framed
thereunder or the Regulations framed by the West Bengal State Electricity
Regulatory Commission has been placed before us to show that the appellant
should sever its relationship as a consumer with CESC on its being granted
open access. So long as the appellant is agreeable to pay the charges
prescribed in this behalf to an identical industry, the appellant, an existing
consumer cannot be directed to sever its relationship with area distribution
licensee. The construction placed on Section 42 (3) of The Electricity Act runs
counter to the very section. The object and scope of the provision has been lost
MERC Order [ Case No.50 of 2012] Page 54 of 67
sight and as an existing consumer the appellant could continue its
relationship. Such a construction cannot be appreciated as it runs counter to
plain meaning of the provisions of the Act. Section 42(3) enables an existing
consumer of an area DISOCM Licensee requires supply of electricity from a
generating company or any licensee other than the area licensee, such
consumer may require the Distribution Licensee for wheeling of electricity in
accordance with Regulations framed by Regulatory Commission and area
DISCOM is to act as a common carrier.
26. All that Section 42 (3) provides that a distribution licensee shall be a
common carrier providing non-discriminatory open access when the consumer
seeks for open access and wheeling power in accordance with the Regulations
made by the State Commission. Hence, we hold that the WBER Commission
has no justification nor authority nor warrant nor jurisdiction to direct the
appellant to sever its status as a “consumer” with WBSEB. Such a condition is
not contemplated to be imposed while allowing an application for open access
in terms of The Electricity Act 2003 or Regulations framed there under either
by CERC or WBERC.”
121. The position of law laid down by the Hon’ble Appellate Tribunal is clear from the
above extracts. This Commission is bound by the same. Hence, this issue is decided in
terms of the above.
122. From the conjoint reading of above mentioned provisions of Act, the following
position can be inferred:
a) The supply, as per Section 2(70)of Act, means sale of electricity to consumer,
apart from sale to any other Licensee.
b) Section 43 of Act provides for the consumers of the area of licensee having the
right to take supply from the Licensee and Licensee is under obligation to
provide that;
c) Also, it is the duty of Distribution Licensee to provide supply to the consumer
even when a consumer has opted for meeting its partial requirement from the
Distribution Licensee and which is identified in the definition of consumer in
Section 2(15) of Act. This will be in accordance with the Hon’ble Appellate
Tribunal’s Judgement dated 11 May, 2006 in Appeal No. 34 of 2006 in the
MERC Order [ Case No.50 of 2012] Page 55 of 67
matter of M/s Bhushan Limited Versus West Bengal State Electricity Board
and others, and judgement dated 11 July, 2006 in the matter of Indian
Aluminium Company Limited (since known as HINDALCO Industries
Limited) Versus West Bengal Electricity Regulatory Commission and others.
Hence, so long as the consumer desires to continue its relationship with the
area distribution licensee and agree to abide by the stipulations, the USO
cannot be exempted provided that the consumer should agree to comply with
the existing terms and conditions of supply and is ready to remit all the
charges prescribed as a consumer of electricity.
d) Distribution Licensee gets exemption from such obligations as cast in Section
43 of Act, only in two situations; one, if the consumer does not agree to pay
the price fixed by the Commission and the other being a situation like cyclone,
floods, storms or other occurrences beyond the control of the licensee; and
e) The terms and conditions of supply have to be in accordance with conditions
of its Licence and Supply Code Regulations. Distribution Licensee is also
required to follow the Standards of Performance (SoP) Regulations specified
under Section 57 of the Act.
123. From the conjoint reading of various Sections of the Act mentioned above, the
Commission notes that the USO cast on Distribution Licensee through Section 43 of
Act is applicable even when open access is being sought by a consumer.
124. The issue is where a consumer has an option to procure electricity from competing
sources, then terms of Supply from Distribution Licensee should be as per Section 49
of Act or not. Section 49 reads as follows:-
“49. Where the Appropriate Commission has allowed open access to certain
consumers under section 42, such consumers notwithstanding the
provisionscontained in clause (d) of sub-section (1) of section 62, may enter
into an agreement with any person for supply or purchase of electricity on
such terms and conditions (including tariff) as may be agreed upon by them.”
{Underlining added}
MERC Order [ Case No.50 of 2012] Page 56 of 67
125. The words “any person” in Section 49 does not oust the Distrbution Licensee. Section
49 cannot be artificially restricited to entities other than the Distrbution Licensee.
The words “any person” in Section 49 are clear and unambiguous. Hence, where the
Commission has allowed open access to certain consumers under section 42, such
consumers notwithstanding the provisions contained in clause (d) of sub-section (1) of
section 62, may enter into an agreement with the Distribution Licensee for supply or
purchase of electricity on such terms and conditions (including tariff) as may be
agreed upon by them.
126. The words “any person” in section 49 is not and cannot be restricted to a generating
company or a trader, as any such restricted interpretation would be to add words to
that effect in section 49 which otherwise section 49 does not contain. Such an
approach will be clearly impermissible in law as per well settled principles of
statutory interpretation. It is well settled that when the words of a statute are clear,
plain or unambiguous, i.e., they are reasonably susceptible to only one meaning the
Courts are bound to give effect to that meaning irrespective of consequences (Nelson
Motis v. Union of India AIR 1992, SC 1981, p, 1984; Gurudev Dutt VK SSS Mariadit
v. State of Maharashtra, AIR 2001, SC 1980 p 1991).
127. Clause(x) of para 4 of the Statement of Objects And Reasons of the Electricity Act
2003, has no connection with section 49 thereof. The said clause reads as follows:
“(x) Where there is direct commercial relationship between a consumer and a
generating company or a trader the price of power would not be regulated and
only the transmission and wheeling charges with surcharge would be regulated”.
128. Section 62(1) neither provides for determination of tariff for the supply of electricity
by a generating company to a consumer nor it provides for the determination of tariff
for the supply of electricity by a trader to a consumer. Hence clause (x) of para 4 of
the Statement of Objects and Reasons correctly states that the price of power would
not be regulated where there is direct commercial relationship between a consumer
and a generating company or a trader and that in such a situation, only the
transmission and wheeling charges with surcharge would be regulated.
129. The words “notwithstanding the provisions contained in clause (d) of sub-section (1)
of section 62” makes an express exception to the determination of tariff for “retail
sale of electricity”. The tariff for retail sale of electricity arises when a distribution
MERC Order [ Case No.50 of 2012] Page 57 of 67
licensee supplies electricity to its consumers. The non-obstante provision in Section
49 means that even though it is the function of the Commission to determine tariff for
the retail sale of electricity the same shall not apply when certain consumer who have
been allowed open access under Section 42 enter into an agreement with any person
for supply or purchase of electricity on such terms and conditions (including tariff) as
may be agreed upon by them. It is significant to note that Section 49 uses the words
“supply or purchase”.
130. The word “supply” is defined in Section 2(70) to mean the sale of electricity to a
licensee or consumer. Hence this indicates that consumers may enter into an
agreement for the sale of electricity to them. The words “any person” does not
exclude a distribution licensee.
131. The Commission can take into account the provision in Section 45(2) in terms
whereof “ the methods and principles as may be specified by the concerned State
Commission” can be employed for the charges under Section 49 for the electricity
supplied by a distribution licensee to an open access consumer. Hence, this
Commission can notify the methods and principles under Section 45(2) based on
which consumers having demand exceeding 1 MW could enter into negotiated tariffs
and other terms and conditions with their incumbent distribution licensee.
132. The interpretation that Section 49 entitles a consumer to negotiate tariffs and other
terms and conditions only where the supply is from a source other than the
distribution licensee of the area, is, ex-facie contrary to the Judgement of the Hon’ble
Appellate Tribunal for Electricity in Bhushan Limited vs. West Bengal State
Electricity Board & Ors (2007 APTEL 600). In the said judgement Hon’ble Appellate
Tribunal held inter alia as follows:
“14. ……Section 49 of the Electricity Act, 2003 provides for an
agreement being entered between an open access consumer and the
distribution licensee for supply or purchase of electricity on such
terms and conditions, including the tariff as may be agreed upon by
them.”
133. Identical decision as above has been rendered in the Judgement of the Hon’ble
Appellate Tribunal in Indian Aluminium Ltd vs. WBERC & Ors (2007 APTEL 791).
MERC Order [ Case No.50 of 2012] Page 58 of 67
Conclusion -
1. The USO cast on Distribution Licensee through Section 43 of Act is applicable
even when open access is being sought by a consumer.
2. Section 49 entitles a consumer to negotiate tariffs and other terms and conditions
only where the supply is from a source other than the distribution licensee of the
area.
6) What is the nature of declaration/direction contained in MoP letter ?
134. The Commission observed that a majority of the stakeholders were of the view that
the present system of optional Open Access should continue and the obligatory Open
Access for the consumers of load in excess of 1 MW must not be enforced. The
Commission noted the suggestions of various stakeholders on this issue.
135. The Commission also notes that the Act stipulates that under Section 108 of the Act,
the State Government may issue directions to the State Commission.
Section 108. (Directions by State Government):
“(1) In the discharge of its functions, the State Commission shall be guided by
such directions in matters of policy involving public interest as the State
Government may give to it in writing.
(2) If any question arises as to whether any such direction relates to a matter
of policy involving public interest, the decision of the State Government
thereon shall be final.”
136. The Commission is of the view that the MoP letter based on the opinion from M/o
Law and Justice on Operationalisation of Open Access in Power Sector is nature of
suggestion/advisory for development of market in the Power Sector to the State
Commissions and may be looked as ‘Policy Vision’ of the Central Government.
Conclusion - The MoP letter based on the opinion from M/o Law and Justice on
Operationalisation of Open Access in Power Sector is nature of suggestion/advisory for
development of market in the Power Sector to the State Commissions and may be
looked as ‘Policy Vision’ of the Central Government.
MERC Order [ Case No.50 of 2012] Page 59 of 67
7) Technical and Operational constraints in implementing directives of MoP letter
137. The Commission further notes that there are number of technical and commercial
constraints in implementing the MoP Letter which are as under:
i. Capacity building at SLDC: SLDC needs to have the necessary technology,
expertise, manpower to handle such large number of Open Access approval
requests.
ii. Ring-fencing of SLDC: SLDC would have to be independent while executing its
authority of scheduling Open Access requests.
iii. Wheeling Capacity: For the purpose of Open Access only spare capacity by
inherent design margin and variation in power flow is available for Open Access.
This does not assure Open Access consumer for continuous supply.
iv. Segregation of Wires and Supply Cost: Cost for wire business and power supply
business should be properly segregated so as to arrive at a consistent wheeling
charge. Wheeling losses should also be limited to technical losses and must
exclude commercial losses as most of the bulk consumers are connected at 11 kV
and above, whereas most of the commercial losses occur at below 11 kV level.
v. Availability of Spinning Reserve/ Non Bonded Power: There should be
availability of power which has not been committed for long term PPA or some
peaking Power Plants as a Spinning Reserve. Since most of the generators have
tied up their power on long term basis with the Distribution Companies, a very
limited capacity is available for merchant transactions. If availability of non-
bonded power does not materialise it would completely distort demand supply
equation in favour of power producer and will put undue pressure on Open Access
consumers. If Discoms are not obligated to supply power to bulk consumers, they
will have huge amount of excess capacity and thus will monopolies the market as
major sellers of power.
vi. Technical Requirements for Open Access: Open Access consumers need to
comply with the various provisions of the MERC Distribution Open Access
Regulations, 2005, as amended from time to time, regarding eligibility criteria,
reduction of contract demand, execution of connection, installation of Special
Energy Meters, wheeling charges, payment of cross subsidy surcharge, etc.
MERC Order [ Case No.50 of 2012] Page 60 of 67
vii. Nature of Usage: The type of Open Access consumer whether captive or not
needs to be ascertained by the Distribution Licensee prior to giving permission as
it is linked to payment of Cross Subsidy Surcharge (CSS).
viii. Capacity Building for Open Access Consumers: All Open Access consumers
may not be well versed with the procedures of Open Access, scheduling of power
and other activities.
ix. Separate/dedicated Feeders: Bulk Consumers might need separate feeders for
reliable power supply, for which Distribution Licensee may have to set up
infrastructure.
x. Installation of SEMs: Installation of SEM meters by all consumers above 1 MW.
Intra State ABT would be applicable to all Open Access consumers.
xi. Coordination Mechanism: Need for proper mechanism to ensure coordination
between all concerned Distribution Licensee, State Transmission Utility, Open
Access Consumer, Generator, Load Despatch Centres at various levels, etc.
xii. Connectivity with SLDC: In case of failure of Open Access generator, SLDC
must direct concerned host to limit its load to that extent in order to ensure smooth
grid operation. Such real time communication is not available for Open Access
consumers with SLDC currently.
xiii. Revenue Impact of Switching of Consumers: Recovery of expenditure, due to
creation of infrastructure, incurred by a Distribution Licensee for new consumer
who after availing Distribution Licensee's supply opts for Open Access.
xiv. Revenue Impact on account of switching of Cross-subsidising consumers:
Revenue loss due to migration of consumers (1 MW and above) as they are
subsidising consumers for consumers needs to be recovered from remaining
consumers of Distribution Licensee, which may lead to tariff increase.
xv. Futures trade- Power exchange: In the absence of possibility of longer period
transactions (i.e. month ahead / half yearly / yearly / etc.), the bulk consumers of
power may not be able to plan their long term requirements. Until longer period
transactions are materialised, the bulk consumers would have limited options and
consequently would have to face the uncertainty of power prices.
xvi. Limitation in Over Drawal: If Open Access consumers do not take standby
power from Discoms, rather they draw power from Grid in case of failure of their
MERC Order [ Case No.50 of 2012] Page 61 of 67
Supplier's Generator, such power will flow through UI and many times, system
conditions may not permit drawal of power through UI.
xvii. Communication Infrastructure: Monitoring infrastructure (SCADA) also will
have to be in place.
xviii. Scheduling of non-solar generators below 10 MW and solar generators below
5 MW: As per CERC (Terms and Conditions for Tariff determination from
Renewable Energy Sources) all non-solar generators below 10 MW and solar
generators below 5 MW are not be subjected to scheduling and UI. However,
deviations of these generators will have impact on State UI. State UI cannot be
apportioned to them, as their deviations will not be captured. This issue will be
needed to be handled in Intra-State ABT mechanism.
xix. Commercial Settlement: There are issues associated with one generator selling
power to number of consumers through Open Access. Implementation issues for
Scheduling and commercial settlement of such generator’s energy needs to be
looked in to.
xx. Switching during Off-peak hours: Swithcing by consumers during off-peak
hours to Power exchange, etc., and returning back to Distribution Licensee for
meeting their Peak requirement, shall also be looked in to.
8) Other practical issues arising out of the implementation of the MoP’s Letter:
i) In a Section 49 scenario, how will the DISCOMs, which are by and large in
public sector, fix the energy charges for the Open Access consumers who
may decide to continue with them? As the Regulator would no longer be
fixing the energy charges, the distribution licensees would have to evolve a
transparent methodology for fixing such energy charges in order to avoid the
allegations of arbitrariness or discrimination. The system would also have to
pass the scrutiny of the Regulator who would be concerned about the financial
impact of these transactions on the licensees business as it might affect the
regulated consumers.
ii) A system would have to be evolved to apportion power from the long term
PPAs for the regulated consumers and the unregulated Open Access
consumers.
MERC Order [ Case No.50 of 2012] Page 62 of 67
iii) In case of stranded capacity due to migration of Open Access consumers the
fixed liability of the distribution licensee in honoring such PPAs would have
to be passed on by way of an additional surcharge to the Open Access
consumers.
iv) In view of the 1 MW and above consumers not necessarily being on separate
feeders how would the distribution licensee manage load shedding whenever
there is a shortage?
v) In case adequate electricity is not available in the market would the Open
Access consumers resort to splitting their connected load?
vi) What would be the impact on the price of electricity if so many Open
Access consumers would be compelled to source electricity from the open
market? Will this not subject these consumers to the mercy of the market and
thereby increase the cost of electricity in running their business?
vii) Should the migration to the Open Access regime be done by providing a
period of transition during which the necessary administrative arrangements
can be put in place?
138. The Commission is of the opinion that the ‘Policy Vision’ of the Ministry of Power
for implementation of Open Access can be implemented only if technical and
commercial constraints as mentioned above are deliberated and amicable solutions are
arrived at.
139. The Commission for this purpose directs the Secretary of the Commission to form a
Open Access Committee comprising of representatives from Distribution Licensees
and other experts, to look in to the matter and submit its report within one year of its
formation.
140. The broad Terms of Reference (ToR) provided to the Open Access Committee shall
be as follows:
a) Study the technical, operational and commercial constraints in the context of
implementing the Open Access Scheme as proposed in the MoP letter;
b) Scenario Analysis of Revenue loss of the implementation of Open Access
scheme as proposed in the MoP letter on various Discoms in State of
MERC Order [ Case No.50 of 2012] Page 63 of 67
Maharashtra and also the corresponding tariff increase required to mitigate the
same;
c) Anlaysis and recommendation on the possible solutions for the constraints
identified;
d) Road map for implementing Open Access Scheme as visioned in the MoP
letter in the State of Maharashtra.
141. The Commission based on the recommendations of the Open Access Committee, shall
revisit the matter through a separate proceedings.
With this Order, Case No. 50 of 2012 stands disposed of.
Sd/- sd/-
(Vijay L. Sonavane) (V. P. Raja)
Member Chairman
MERC Order [ Case No.50 of 2012] Page 64 of 67
APPENDIX – 1
List of Persons who attended the Public Hearing held on 12 October, 2012
Sr.
No. Name Institution/Individual
Consumer Representative u/s. 94(3) of the EA, 2003 for this Case
1. Representative of Prayas (Energy
Group)
Consumer Representative u/s. 94(3) of the EA,
2003 for this Case
2. Representative of Vidarbha
Industries Association.
Consumer Representative u/s. 94(3) of the EA,
2003 for this Case
3. Representative of Thane Belapur
Industries Association
Consumer Representative u/s. 94(3) of the EA,
2003 for this Case
Other Representatives
4. Representative of Bajaj Finserv Ltd. Individual
5. Shri Rakhsapal Abrol Individual (Representative of Bharatiya Udhami
Avam Upbhokta Sangh.)
6. Representative of Central Railway Individual
7. Shri. N. Ponarathnam Individual
8. Shri. S.H. Waikar MSEDCL
9. Shri. A.V. Bute Individual
10. Shri. R.B. Kolhe Individual
11. Shri. M.Shenbagam Individual
12. Shri. M.M. Varshneya Individual
13. Shri. Ravindra Chavan Vestas
14. Shri. Mahesh Chavan Vestas
15. Shri. S.K. Parik Individual
16. Shri. S.K. Shivaraj Individual
17. Shri. B. Maharuappa Davangere Individual
18. Shri. Jagdish N. Chittpa Individual
19. Shri. S.C.Singh Individual
20. Shri. M.A. Pathan Individual
21. Shri. Harkrishnan BElectric
22. Shri. Arun Sharma Vestas
23. Shri. V H Wagle Tata Power Company
24. Manasvi Sharma Individual
25. Shital H. Khiraiya Tata Power Company
26. Shri. Amey Neid Individual
27. Adv. Dipali Sheth (Tata Motors
Ltd.)
Individual
28. Adv. Dhwani Mehta (Tata Motors Individual
MERC Order [ Case No.50 of 2012] Page 65 of 67
Sr.
No. Name Institution/Individual
Ltd.)
29. Shri. Mukund Toka Individual
30. Shri. Anil Kelkar Individual
31. Shri. S. A. Patil Individual
32. Shri. M.C. Walke MSECTL, STU
33. Shri. Dheeraj Tilwani Individual
34. Senior Adv. Gaurav Panchnanda MSEDCL
35. Adv. Rahul Sinha Advocate of MSEDCL
36. Shri. C.L. Kale Individual
37. Shri. Nitesh Chhajlr Individual
38. Shri. Atul Bachikan Ernst & Young
39. Shri. N.V. Bhandari BEST
40. Shri. N.P. Jagaldas BEST
41. Shri. M.A.Q. Siddiqui MSETCL
42. Shri. P.P. Vaidya BEST
43. Shri. A.R. Talegaonkar BEST
44. Shri. K. Vinodraj BEST
45. Shri. A.V. Kadam BEST
46. Shri. S.D. Pawar BEST
47. Shri. V.M. Kamat BEST
48. Shri. R.M. Pradhan BEST
49. Shri. S.P. Goswami BEST
50. Shri. Jayant Kulkarni MSLDC
51. Shri. B.H. Gujrati MSLDC
52. Shri. P.M. Buradkar MSLDC
53. Shri. R.S. Kapur Tata Motors Ltd.
54. Shri. V.P. Choudhari Individual
55. Shri. G.N. Kamath President, IWPA
56. Shri. Yuvaraj Ingale Individual
57. Shri. S .Ghosh Tata Power Company Ltd.
58. Shri. Manoj Vyas Mittals Group
59. Shri. Ashish Ravikiran A C Ventures
60. Shri. Arshivan Bhatnagar A C Ventures
61. Shri. Amit Mittal IMaCS
62. Shri. Himanshu Chawla IMaCS
63. Shri. Prasad G. Narnaware Individual
64. Shri. Aditya Malpa Feedback Infra
65. Shri. Nilesh C. Potphade Individual
66. Shri. Pillai Ramchandran Individual
67. Shri. Sharad Anant Bakra Individual
MERC Order [ Case No.50 of 2012] Page 66 of 67
Sr.
No. Name Institution/Individual
68. Shri. Ann Josey Individual
69. Shri. Ujvala Chavan Tata Power Company Ltd.
70. Smt. Laxmi Dodeja Tata Power Company Ltd.
71. Shri. B.N. Khosale Individual
72. Shri. U.S. Bhagat Individual
73. Shri. P.P Tendulkar Individual
74. Shri. Dayanand Suryavanshi Individual
75. Shri. S.D. Priolkar Mahindra & Mahindra Ltd.
76. Shri. Patel Mehuln Mahindra & Mahindra Ltd.
77. Shri. Polash Das PXIL
78. Shri. Himanshu Jadavn PXIL
79. Smt. Deepali Burnse Jindal
80. Shri. N.S.Q. Murty Jindal
81. Shri. C.R. Vishwanathan Kenersys India
82. Shri. R.S. Guralikar MSETCL
83. Shri. George John Individual
84. Shri. N.M. Kumar Individual
85. Shri. R. Shrivastava Individual
86. Shri. Karn Pallav Individual
87. Shri. Mahesh .S. Individual
88. Shri. R.S. Dayal Individual
89. Shri. S.C. Gupte Individual
90. Shri. T.N. Agarwal TNA & Co.
91. Shri. Satish S. Shah TNA & Co.
92. Shri. Girish Rane IEX
93. Shri. Rajiv Mesty JSW PTC
94. Shri. UdayKamat Yash Agro Energy
95. Smt. Raksha Gala Individual
96. Shri. Trimukhe GS MADC
97. Shri. Jayant Agarwal MADC
98. Shri. M. Deshpande Kirloskar Oil Engines Limited (KOEL)
99. Shri. Ajay Utsav Kirloskar Oil Engines Limited (KOEL)
100. Shri. Ashish IEX
101. Shri. Anuj Shateria ASPL
102. Shri. Sandesh Keer Finolex Industries Ltd.
103. Shri. Ravindra Sanghvi MSEDCL
104. Smt. Bridgit Hartland Johnson Energie Dynamique Pvt. Ltd.
105. Shri. Prashant Khenkhoja Global Energy
MERC Order [ Case No.50 of 2012] Page 67 of 67
Sr.
No. Name Institution/Individual
106. Shri. P.S. Kang JSW Energy
107. Shri. Siddartha Bhargava Kiran Energy
108. Shri. Lio Ambooken Ernst & Young
109. Shri. Nikhil Ved Prakash GEPL
110. Shri. Pradeep Kumar Individual
111. Shri. Ashish Chandrana Individual
112. Shri. Kuldeep Kulkarni .H SRSL
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