Distribution, the Duty to Supply and Open Access

In one line

The distribution licensee must supply everybody within a month, must let paying customers leave over its own wires, and the gap between those two duties is where the Indian power sector loses its money.

Section 42(1): the duty, stated once

It is the duty of a distribution licensee to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the Act.

Everything else in this chapter is a qualification of that sentence.

Section 42(2): open access, and the surcharge

The State Commission shall introduce open access in such phases and subject to such conditions, including the cross subsidies and other operational constraints, as it specifies within one year of the appointed date; and in fixing the extent of open access in successive phases and determining the charges for wheeling, it must have due regard to all relevant factors including such cross subsidies and other operational constraints.

Then five provisos, and they are the working law.

First, open access shall be allowed on payment of a surcharge in addition to the wheeling charges, as determined by the State Commission.

Second, the surcharge shall be utilised to meet the requirements of current level of cross subsidy within the area of supply of the distribution licensee.

Third, the surcharge and cross subsidies shall be progressively reduced in the manner specified by the State Commission.

Fourth, no surcharge is leviable where open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use.

Fifth, the State Commission shall, not later than five years from the commencement of the Electricity (Amendment) Act, 2003, by regulations, provide open access to all consumers who require a supply where the maximum power to be made available at any time exceeds one megawatt.

That one megawatt figure is the most examinable number in the Act. It is the statutory line between the consumer who may shop and the consumer who may not.

Section 42(3) and (4): the common carrier, and the additional surcharge

Section 42(3) says that where a person whose premises are within the licensee's area of supply, not being a local authority engaged in distribution before the appointed date, requires supply from a generating company or any licensee other than that distribution licensee, he may by notice require the distribution licensee to wheel that electricity in accordance with the State Commission's regulations, and the duties of the distribution licensee with respect to such supply shall be of a common carrier providing non-discriminatory open access.