Spot market power is set to become costlier as state-owned power distribution companies have proposed a hefty increase in levies imposed on openmarket consumers in their tariff petitions for the coming year.
Distribution companies (discoms) have proposed raising multifold cross-subsidy surcharges, network usage charges and imposing additional surcharges that could increase electricity bills of large consumers by upto 40 per cent.
Experts say imposing high charges on spot market purchases will hurt growth of industries, rendering them uncompetitive and hurt the government’s Make In India campaign.
State power discoms of Odisha have recommended raising network-wheeling charges on commercial consumers in FY18 to Rs 2.26 per unit from Rs 0.63 per unit. The cross-subsidy charges for large industrial consumers are proposped to be raised from Rs 1.91per unit to Rs 3.61per unit.
The tariffs for large consumers in the state purchasing electricity from spot market are likely to rise by over 40 per cent.
Karnataka power distribution companies propose to increase energy charges, wheeling charges and cross-subsidy charges on open market power consumers by close to 22 per cent.
Power utilities of Madhya Pradesh seek to introduce an additional surcharge of Rs 1.2 per unit on the power procured form other sources, making such purchases costlier by about 24 per cent. Delhi discoms have proposed raising cross-subsidy charges but decreasing additional surcharges on open-market electricity deals, leading to a net increase of 30-40 paise per unit.
The power distribution companies of Daman and Diu have proposed 36 paise increase in cross-subsidy charges and 11 paise increase in wheeling charges leading to a 12 per cent raise in cost of spot market power purchase by industrial and commercial consumers.
Most states including Punjab, Maharashtra, Rajasthan and West Bengal already levy charges called ‘open access charges’ on their industrial and commercial consumers to deter them from buying from spot markets, and protect their power distribution companies. Open access is a reform announced in the Electricity Act 2003 that refers to enabling buyers to choose source of electricity and giving them right on transmission and distribution system for transfer of power. Stateowned power distribution companies fear losing their high-paying industrial consumers to spot markets though such transactions constitute only 1 per cent of the country’s total power consumption.
The Economic Survey of 2016 had recommended that Indian industries should be relieved of the burden of subsidising electricity supply for agricultural and domestic consumers and allowed to procure power from the open market.
India Energy Exchange director (business development) Rajesh K Mediratta said that in the long run, it is imporant for states to let the industries survive. “At this stage, it is not good to discourage open access if the country wants to encourage domestic manufacturing.”
Electricity prices for industries in India are the highest in world as states offer free power to agricultural consumers and subsidised power to residential units. Adrian Clayborn JerseyShare This