TNERC levies surcharge on open access consumers

The Tamil Nadu Electricity Regulatory Commission (TNERC) has said that the open access consumers (who buy power directly from third parties without depending on State utility) have to pay an additional surcharge of ₹0.7 per unit to Tangedco for the period April 16-September 30, 2021.

Open access concept allows consumers like industrial users and commercial buildings to buy cheaper power directly from private generators. The move is aimed at increasing competitiveness and efficiency in the power sector and the loss of revenue suffered by Tangedco due to open access mode was compensated through the levy of a cross-subsidy surcharge. In its petition before TNERC, Tangedco said it has tied up a capacity of 21,654 MW, taking into account the overall growth, and therefore tied up power for upcoming consumers as well.

However, it pointed out that since open access consumers were not using power supply from Tangedco, some of the tied up generation capacity remains stranded, but it has to pay fixed (capacity) charges to the generators as per the power purchase agreement entered with them even if it is not utilised.

Tangedco said the stranded capacity had caused under-recovery of fixed cost. It claimed the stranded capacity to be 609.56 MW, which resulted in fixed charges of ₹8,521.41 crore for the period October 2019 to March 2020.

As per the petition, Tangedco pegged the net stranded fixed charges recoverable from open access consumers at ₹243.1 crore and sought levy of additional surcharge at ₹1.23 per unit.

After considering the plea of Tangedco and comments of various stakeholders, the TNERC said as per rules, additional surcharge shall become applicable only if the obligation of the licensee (Tangedco) in terms of power purchase commitments has been and continues to be stranded.

If fixed costs due to stranded capacity are recovered from open access consumers, that burden would be loaded on to other consumers of Tangedco through a tariff hike, which would be unfair and unwarranted, it added.

The TNERC arrived at an average stranded capacity of 557.55 MW and fixed cost of ₹7,702.27 crore and net stranded fixed charges recoverable from open access consumers of ₹190.06 crore.

Based on it, TNERC arrived at an additional surcharge of ₹0.85 per unit and said it is comparable with other States, which ranged from ₹0.52-₹1.3 per unit.

However, it said if the additional surcharge is fixed at ₹0.85 per unit, the all inclusive price of electricity may be higher than the electricity tariff now chargeable to the consumer by Tangedco. So, it decided to levy 80% of additional surcharge calculated, i.e ₹0.7 per unit which shall be recoverable from open access consumers.

The TNERC also directed Tangedco to file a petition to determine the applicability of additional surcharge on a six-month basis. It also told Tangedco to strive to maintain the optimum availability of power so as to avoid the payment of fixed charges.

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Printable version | May 9, 2021 11:24:52 PM | https://www.thehindu.com/news/cities/puducherry/tnerc-levies-surcharge-on-open-access-consumers/article34362630.ece

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