Power News We love to talk!

JUL 16 2012

Open access can help in reducing power tariffs: IEX

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 16th JUL 2012

Faster implementation of open access system, where consumers of over 1-MW power can choose their supplier, would help in significantly reducing overall electricity tariffs, according to Indian Energy Exchange.

A leading power bourse, IEX has about 95 per cent share of the power trading market in the country.

“Faster implementation of open access would help in bringing down overall electricity tariffs,” IEX Managing Director and Chief Executive Officer Mr Jayant Deo told PTI.

Once open access is implemented, bulk consumers would be out of regulated tariff regime in phases, thereby effectively insulating retail consumers from paying higher cost, he noted.

Earlier this year, the Power Ministry issued directives towards implementation of open access system.

As per the directives, state regulators would not have any control on fixing the energy charges for consumers of 1 MW and more power, who are deemed to be open access consumers.

The concept of open access was introduced in the Electricity Act 2003, with the aim of promoting competition and providing choice to consumers.

Mr Deo pointed out that demand for electricity is going up not because of higher consumption by ordinary consumers but due to “increased demand from industrial users”.

Further, he said, average cost of power procurement has gone up due to bulk consumers. Based on 2008-09 data from the Central Electricity Authority, IEX has calculated that average cost of power went up by at least 55 paise if 30 per cent of the buyers were considered as bulk consumers. This was on the premises that country’s power requirement, during that time, was 117 GW.

In a recent communication to the Power Ministry, IEX suggested creation of a “National Bulk Market” for electricity whereby “the 15,000 bulk consumers (1 MW+) are brought into the market and supplied power through the day-ahead-market where prices are realised on the prevalent market forces”.

Presently, the prices of electricity on the power exchanges are discovered on a day-ahead-market basis. The price is discovered every 15 minutes.

“The present situation where consumers are forced to use back up diesel-generator sets at Rs 13/unit while cheap power at approximately Rs 4/unit is not utilised is putting lenders, developers and the Indian economy as a whole at peril,” the communication said.

In recent times, many power distribution companies due to their poor financial health are finding it difficult to purchase electricity from the exchanges.

“Over the past three years we have seen that while power has been available at IEX at less than Rs 4 per unit, a significant quantum (700 MW to 2000 MW) could not be cleared as the state utilities preferred to shed load rather than purchase cheap power,” Mr Deo said.


India Energy Exchange Ltd. India Energy Exchange Electricity Act Energy Central Electricity Authority Power IEX

Related News

  • India to complete process of placing nuclear power reactors under IAEA safeguards  Read more
  • Banks, NBFCs to finance 76,000 MW clean energy projects  Read more
  • CERC determines transmission tariff for Powergrids high-voltage transmission assets  Read more
  • Alstom T&D India sees 30% of order book moving slow  Read more
  • Indias Tata Power To Float Separate Company For Renewable Energy Assets  Read more
  • Maharashtra seeks Rs 10,000 crore from Centre for power infrastructure  Read more
  • Rain Cements plans 22 MW solar power unit in AP  Read more
  • Coal supply to power sector up 6 per cent at 370 MT in Apr-Feb  Read more
  • Indian OVL led consortium bids for energy assets of UAE company  Read more
  • Hindustan Power commissions 30 MW solar farm in Punjab  Read more