The State Electricity Regulatory Commission (ERC) is meant for the promotion of competition, ERC, West Bengal speak on an important but controversial issue of open access policy of Electricity Act 2003. In an exclusive interview with BE’s Kishore Kumar Biswas, R. N. Sen, Chairman, State ERC, touches upon important issues related to the sector.
Q. Introduction of competition has been one of the main objectives of reforms in the Electricity Act 2003. But its success of open access (OA) policy has been limited as having cheap power from any source is not happening properly. Please give us your opinion on this.
A. Open access means ability to purchase power or energy from any source wherever it is cheaper. But the question is how to bring it at the point of factory or other place of utilization. But to transport power many things are needed. One has to pay money for that. This is known as transportation charge. The licensees may already have already have power purchasing agreements (PPA) with other power generating companies that has a cost. This is because to supply 24x7 continuous power supply, the licensees have to pay a sum of money to the power generating companies whether or not they buy power. This is because transport infrastructure also needs a cost. There are other fixed costs.
A cost relating to transportation and distribution loss is also another factor. So, a lot of cost is involved in bringing power from a long distance. Therefore, when both variable costs, that is, power cost and other fixed costs are added to it, the total cost of power goes up. The OA does not mean having power at low cost from any source. The cost of power increases to transport it.
Q. Then what can be done?
A. You have to get as low priced power as possible. In that case even after adding different costs mentioned earlier, the energy cost may be lowered. The main thing in this case is to access very cheap power from any source whether be it hydro power or wind power or any other conventional energy.
Q. Why is a section of big power consumers not enthusiastic about the OA system?
A. I think a myopic vision is there. When a power consumer (with 1 MW or more) finds that power is available at a very low price, he thinks that he is a gainer. But when he brings it through the central transmission, there must be a price at the outset. When it comes through the state transmission, he has to pay another price. There is also distribution prices and costs related to loss in transmission. In such a situation, the price of energy at the factory increases.
Q. A few surveys point out that there are some willful obstacles imposed by individual states not to transport power when there is shortage and import, when there is surplus in those states. The state transmission cost are also kept at a high level to check the OA. What is your take on this?
A. I do not think that there is any artificial restriction in the system. Regarding transmission price I can tell you that these are all done on the basis of a formula. Here how one can manipulate the transmission prices?
This is more or less the same all over India. Some value of the components may slightly vary but the formula is the same. The prices of power in different sectors of the states vary.
Q. It is said that in the power sector there is a dichotomy of attitude between the Centre and the states. Centre wants to make a vibrant power sector in India whereas the states are mainly interested in profit? Is there any real difference in their targets?
A. I do not think so. Strengthening the power sector in the state is possible only when there has been a vibrant power sector in India.
But at the same time, the states have to take responsibility when it comes to generation, transmission, and distribution of power. Distribution of power is the end point. The distribution sector is the most sensitive. In this sector, the realisation of prices is crucial. Here the state has to face the people’s resistance on pricing, power supply, etc.
Q. Do you have any plan to help industrialisation with affordable energy supply?
A. We have a plan but this has not yet been met properly. The plan is to make differential tariff rates according to high or low voltage. For example, consumers of high voltage, say, above 1MW, will be charged less. It may help the industry.
Q. In the coming days what may be the demand for power and what can be the price?
A. The demand for power will be rising. At present it is difficult to purchase power at any price much below Rs.3.5. But earlier power could be had even at little above Rs.2. Gradually, the demand for energy is increasing and price is also rising. The distribution companies are under heavy financial stress. Therefore, they are not buying power from the market. When they start pur- chasing power, the price will be rise. Then energy will be a high priced item.
Q. What is the picture of power consumption in the West Bengal?
A. Demand for power grew in the last five years on an average of 9.69% annually in the household sector. In the commercial sector it grew by 3.53%. But in the industrial the growth was negative. At present, about 50% of the power in the state is consumed by households. Its share is about 15% and 35% of commercial and industrial sectors, respectively. The present power price (as on June 07) is Rs.3.43 per unit.