Upward Pressure on Open Access Charges May Continue: ICRA

Posted By: Religare
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Owing to lack of progress in tariff rationalisation and sustained gap between average cost of supply and average tariff realisation for the distribution utilities, pressure on open access (OA) charges is likely to continue, said rating agency ICRA.

Upward Pressure on Open Access Charges May Continue: ICRA

With the overall open access charges ranging between Rs 2.5 and 5 per unit combined with imposition of additional charges levied by electricity regulatory commissions of different states, the procurement of power through OA by high tension (HT) consumers is being adversely affected.

"The high open access charges across the key states largely offset the positive impact of availability of power at reasonable tariffs in the short-term power market," ICRA Ratings Senior Vice President and Group Head Sabyasachi Majumdar said in a statement issued here.

He said the impact of increase in these charges is further compounded by the risk of restrictions like refusal of the permissions or consent by nodal agency as seen in the past in few states for availing open access, thus impeding the growth of the open market.

Open access charges primarily comprises cross subsidy surcharge (CSS), additional surcharge, wheeling and transmission charges and transmission and distribution losses in kind.

ICRA said the National Tariff Policy prescribes that the amount of CSS and the additional surcharge to be levied on large consumers procuring electricity under open access should not be so burdensome that it eliminates competition.

While a gradual reduction in cross subsidy levels has been suggested, the progress with respect to tariff rationalisation by SERCs across states has been modest so far.

"In this context, the measures for tariff rationalisation and the approach for calculation of open access charges as proposed by the Ministry of Power, if implemented, could bring consistency in the levels of open access charges across the states.

"However, it may not lower the open access charges in the near term," Sabyasachi added.

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