PPAs and Open Access

Open access allows large users of power — typically having connected load of 1 megawatt (Mw) and above — to buy cheaper power from the open market. The idea is that the customers should be able to choose among a large number of competing power companies–instead of being forced to buy electricity from their existing electric utility monopoly. It helps large consumers particularly the sick textile, cement and steel industrial units by ensuring regular supply of electricity at competitive rates and boost business of power bourses.

Open Access on Transmission and Distribution on payment of charges to the Utility will enable number of players utilizing these capacities and transmit power from generation to the load centre. This will mean utilization of existing infrastructure and easing of power shortage. Trading, now a licensed activity and regulated will also help in innovative pricing which will lead to competition resulting in lowering of tariffs.

THE ELECTRICITY Act 2003 is a landmark legislation in that it opens the power sector to a number of players by laying down provisions for a power market and competition.

As per Electricity Act 2003 Open Access is“Non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission”.

Categorization

On the basis of location of buying and selling entity, the open access is categorized as:

1. Inter State Open Access:When buying and selling entity belongs to different states. In this case CERC regulations are followed. It is further categorized as:
   1. Short Term Open Access (STOA): open access allowed for the period of less than one month.
   2. Medium Term Open Access (MTOA): open access allowed for a period of 3 months to 3 years.
   3. Long Term Open Access (LTOA): open access allowed for a period of 12 years to 25 years.

** If suppose you require open access for two months, then you should re – apply for STOA before the expiry of first month.

1. Intra State Open Access: When buying and selling entity belongs to same state. In this case SERC regulations are followed. It is further categorized as STOA, MTOA, and LTOA and the duration of which depends on the respective state open access regulations.

Types of Transactions:

In general the buyer and seller of electricity can go for bilateral or collective transactions. In bilateral transactions a PPA is signed between the buyer and seller, which is generally facilitated by a trader for a little margin. In case of collective transactions the electricity is traded through exchanges, by exchange members for a very small margin fixed by commission. Currently India has two exchanges PXIL and IEX.

Open Access Charges:

There are several charges to be paid by open access consumers to distribution licensee, transmission licensees and other related entities, other than the power purchase cost paid to the generator or supplying entity. These charges include:

i.        Connectivity Charges

ii.        PoC Charges

iii.        Transmission Charges

iv.         Transmission Losses

 v.          Wheeling Charges

 vi.          Wheeling Losses

 vii.          Cross Subsidy Surcharge

 viii.          SLDC Charges

  ix.        RLDC Charges

** In addition to these charges the open access consumers has also to fulfil the renewable purchase obligation (RPO), in which they have to purchase a part of their total consumption through electricity generated from renewable energy.