Electricity Act: Open access best for consumer, say experts

But, the important point was the Electricity Act and the changes it brought. It promised at that time that it will be possible for power generators to sell over the heads of SEBs directly to power consumers and the process is called open access. But, that never happened. It never got implemented.

The Electricity act also put in the State Electricity regulators - The MERCs and the CERCs who are now very important actors, were first established by the State Electricity Act 2003. The power minister Veerappa Moily is meeting the state electricity regulators to suggest some amendments to the act.

As Moily is all set to push for power reforms, the Former Power Secretary, RV Shahi believes there is nothing wrong with open access but, it has not been implemented due to the interference of state governments. According to him, the state regulatory commissions should act a little more formally with the state load dispatch centers and with state governments to roll out the process.

HD Khunteta, Former Director-Finance of REC also agrees with Shahi and says that open access would have increased competition for the discoms and made them responsible. Eventually, consumers would have benefited from it as "Consumers who wants more than 1 megawatt power would have taken it directly from the generator, developers and they would have got power at a lesser rate compared to what they are paying to the discoms," added Khunteta.

Here is the edited transcript of the interview on CNBC-18.

Q: Let us start with some of the suggested changes in the electricity act. We understand that open access will be implemented. Now you know that open access was very much put into the electricity act, wasn't it? Do you think the wording was wrong or something can be done to ensure that power generators can bypass the SEBs and directly sell to big consumers, can that be done now, will that be done?

Shahi: There is nothing wrong with open access because we framed the act in 2003 and it has given a description to the state regulatory commission to introduce open access in various phases and stages. But within a year we changed the act, we amended the act to say that by January 2009 it will be obligatory on the part of the state regulatory commissions to see that consumers of more than 1 megawatt have the option of open access. So, there is nothing wrong in the act as such.

Q: But why hasn't it happened then?

Shahi: I think state regulatory commissions should act a little more formally with the state load dispatch centers, with state governments. The state governments' interference in this matter has been defeating this purpose.

Recently, the ministry of power issued an instruction and advice that it should be allowed, it should be facilitated to be implemented. There is a provision in the law that says, the tariff of consumers using more than one megawatt would not be determined by the state regulators.

I would say that the larger portion blame for non-implementation of this open access for consumers of more than one megawatt will go to the state regulators and the state governments. It is a matter of enforcement. It is not a matter of amendment as such. There is nothing that is missing in so far as this provision is concerned.