TANGEDCO to collect surcharge from industries using open access power

The Tamil Nadu Electricity Regulatory Commission (TNERC) has ordered TANGEDCO to collect additional surcharge from industries, which use open access to purchase power outside the TANGEDCO grid.

The TNERC has fixed ₹0.70 per unit as additional surcharge, from October 1, 2021 to March 31, 2022. The additional surcharge is applicable to open access consumers, who purchase power through third party sale and from power exchanges.

The Electricity Act, 2003 has provided the liability for payment of additional surcharge by a class of consumers, to meet the fixed cost of the distribution licensee arising out of its obligation to supply.

The rate of additional surcharge is similar to what was determined for the earlier six-month period from April 16, 2021 to September 30, 2021, though in its petition, TANGEDCO had sought to fix the additional surcharge at ₹0.85 per unit.

The open access allows consumers, such as industrial users and commercial buildings, to buy cheaper power directly from private power generators. The move was aimed at increasing competitiveness and efficiency in the power sector, and the loss of revenue suffered by TANGEDCO due to open access, was compensated through the levy of a cross-subsidy surcharge.

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The TNERC noted that the additional surcharge shall become applicable only if the obligation of the licensee in terms of power purchase commitments has been and continues to be stranded, or if there is an unavoidable obligation and incidence to bear the fixed costs consequent to such a contract.

Based on data furnished by TANGEDCO from October 2020 to March 2021, the TNERC arrived at the actual stranded capacity due to open access consumers as 597.11 MW. “The fixed cost obligation on such stranded capacity is calculated as ₹406.47 crore,” TNERC said, and allowed the levy of an additional surcharge of ₹0.70 per unit.

Among the states, Maharashtra has the highest additional surcharge of ₹1.29 per unit, while in Haryana it is ₹1.15 per unit, in Gujarat it is ₹0.69 per unit and in Karnataka it is ₹0.80 per unit.

The Commission has calculated the fixed capacity charges for the determination of additional surcharge; and in future, if any variation is found in the fixed cost calculated above at the time of final true up of accounts of concerned period, the same will be considered appropriately in the subsequent petition for determination of additional surcharge.