CERC ac­cess rate hike plan clouds power mar­ket

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The Cen­tral Elec­tric­ity Reg­u­la­tory Com­mis­sion (CERC) has pro­posed to in­crease the short—and medium-term trans­mis­sion cor­ri­dor charges (STOAS and MTOAS) for open ac­cess by 35% and 25%, re­spec­tively, from the cur­rent lev­els.

The Cen­tral Elec­tric­ity Reg­u­la­tory Com­mis­sion (CERC) has pro­posed to in­crease the short and medium-term trans­mis­sion cor­ri­dor charges (STOAS and MTOAS) for open ac­cess by 35% and 25%, re­spec­tively, from the cur­rent lev­els. While the reg­u­la­tor says this would com­pel par­tic­i­pants to move to­wards long-term ac­cess (LTA), which is crit­i­cal for ef­fi­cient plan­ning of trans­mis­sion net­works, many stake­hold­ers in­clud­ing power ex­changes, pri­vate trans­mis­sion com­pa­nies and gen­er­a­tors con­tend that the move could deal a blow to the thriv­ing short-term elec­tric­ity mar­ket. LTAS, they say, are not hap­pen­ing be­cause states’ power de­mand hasn’t grown as an­tic­i­pated.

The CERC in­vited pub­lic com­ments on the draft reg­u­la­tions and is be­lieved to be work­ing on the fi­nal ver­sion. Trans­mis­sion plan­ning in the coun­try is done by the cen­tral trans­mis­sion util­ity (CTU), Power Grid Cor­po­ra­tion.

How­ever, in the last few years, the de­mand for short-term and medium-term power has spiked. The vol­ume of short-term trans­ac­tions has in­creased from 24.69 bil­lion units (BUS) in 200809 to 63.96 BUS in 2014-15. How­ever, the price of elec­tric­ity in short-term trans­ac­tions has come down from about Rs 7.29 per unit to Rs 4.28 per unit over the same pe­riod; in May this year, the price was even lower at Rs 2.50 per unit.

“(The vol­ume of short-term trans­ac­tion could rise fur­ther in fu­ture). In this sce­nario, it is likely that gen­er­a­tors may not ap­ply for LTA and evac­u­ate power un­der STOA/MTOA or it is likely that there is less long-term PPAS (power pur­chase agree­ments) lead­ing to lack of LTAS, thereby in­ef­fi­cient trans­mis­sion plan­ning,” the draft reg­u­la­tions said, ex­plain­ing the ra­tio­nale be­hind jack­ing up charges for STOA and MTOA con­nec­tions.

Cur­rently, the charges for all types of con­nec­tion are the same. While the du­ra­tion for LTA is from 7 to 25 years, MTOA is given for 1-7 years. The STOA is for any du­ra­tion less than a year but no spe­cific ca­pac­ity is built to cater to STOA, in­stead mar­gins available in LTA are used for the same.

While of­fi­cials from Power Grid and its sub­sidiary Posoco, which man­ages the na­tional and re­gional grids, de­fended the CERC’S pro­posal, elec­tric­ity ex­changes, pri­vate trans­mis­sion play­ers and gen­er­at­ing com­pa­nies are crit­i­cal of the move.

“With more power be­ing con­tracted on short- and medi­umterm ba­sis, any in­crease in charges for open ac­cess would be a re­gres­sive step. In­stead, the CERC should be look­ing for­ward to con­sid­er­ing ac­cess on the ba­sis of gen­eral net­work ac­cess (GNA) — with long, medium and short term rolled into one sys­tem — from point of in­jec­tion to point of any drawal, in the true sense of a uni­fied grid,” Ashok Khu­rana, di­rec­tor gen­eral of As­so­ci­a­tion of Power Pro­duc­ers, said. GNA is a trans­mis­sion net­work plan­ning process whereby the op­er­a­tor doesn’t nec­es­sar­ily need the in­for­ma­tion about ac­tual gen­er­a­tion and de­mand but can de­sign and build a sys­tem through fore­cast­ing while en­sur­ing enough re­dun­dancy in the sys­tem to avoid any con­ges­tion.

The pro­posal, ac­cord­ing to in­dus­try sources, also con­tra­dicts the CERC’S own ob­ser­va­tions on trans­mis­sion plan­ning and the Elec­tric­ity Act, which calls for non-dis­crim­i­na­tory open ac­cess to be pro­vided to all the con­sumers. “The CERC has also said that trans­mis­sion plan­ning was pos­si­ble with­out prior knowl­edge of points of in­jec­tion and drawal us­ing the GNA es­pe­cially af­ter 201617, once a strong all-in­dia net­work had emerged but the pro­posal con­tra­dicts the ear­lier stand,” Pur­nendu Ku­mar Chaubey, vi­cepres­i­dent, Kal­pataru Power Trans­mis­sion, told FE.

On con­di­tion of anonymity, an of­fi­cial from the elec­tric­ity ex­change said that charg­ing a pre­mium for STOA and MTOA was un­jus­ti­fied as there are no sep­a­rate ca­pac­ity cre­ated for these con­nec­tions. While trans­mis­sion cor­ri­dors are made ac­cord­ing to LTA re­quire­ments, other con­nec­tions only use the un­der­utilised ca­pac­ity, thus gen­er­at­ing rev­enue for the op­er­a­tor. The of­fi­cial added that STOA and MTOA were dom­i­nat­ing the con­nec­tions as most states do not re­quire long-term PPAS. The thriv­ing mar­ket for STOA and MTOA is a re­sult of tepid elec­tric­ity de­mand. While the Cen­tral Elec­tric­ity Author­ity had es­ti­mated that the power de­mand would be around 200 GW by 2017, the same has been hov­er­ing around 150 GW.

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