BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION AT AHMEDABAD

Suo-Motu Petition No.1226/2012 In the matter of: Implementation of Intra-State Open Access in the distribution system. Respondent No.1: Gujarat Urja Vikas Nigam Ltd. (GUVNL) Sardar Patel Bhavan, Race Course Road, Vadodara 390007.

Respondent No. 2 : Madhya Gujarat Vij Company Ltd. (MGVCL) Sardar Patel Vidhyut Bhavan, Race Course, Vadodara 390007 Respondent No.3 : Dakshin Gujarat Vij Company Ltd. (DGVCL) Corporate Office, Nava Varachha Road, Kapodara, Near Petrol Pump, Surat. Respondent No.4 : Uttar Gujarat Vij Company Ltd. (UGVCL) Regd. & Corporate Office, Visanagar Road, Mehsana 384001. Respondent No.5 : Paschim Gujarat Vij Company Ltd. (PGVCL) Laximi Nagar, Nanamava Main Road, Raj kot Respondent No.6 : State Load Despatch Centre (SLDC) Gujarat Energy Transmission Co. Ltd. 132kV Gotri Sub Station Compound, Near TB Hospital Gotri Road, Vadodara 390021, Gujarat, INDIA

Respondent No.7 : Torrent Power Ltd., Ahmedabad (TPL-A) Torrent House, Off. Ashram Road, Ahmedabad -380009 Respondent No.8 : Torrent Power Ltd., Surat (TPL-S) "Torrent House", Station Road, Surat - 395 003
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Represented by:

Learned Advocate Shri M.G.Ramchandran with S/Shri K.P.Jangid and V.T.Patel for respondent No.1 S/Shri Y.B.Sukhadia, N.V.Vaidya and M.P.Trivedi For respondent No.2 S/Shri B.V.Shah and K.M.Patel respondent No.3 S/Shri A.M.Patel, D.C.Parmar and K.L.Jani for respondent No.4 S/Shri J.J.Gandhi for respondent No.5 S/Shri P.A.Patel, N.N.Shaikh and K.J.Bhuva for respondent No.6 S/Shri Samir Shah and Chetan Bundela for respondent No.7 & 8

Dr, P.K. Mishra, Chairman Shri Pravinbhai Patel, Member (1') Dr. M.K. Iyer, Member (F) ORDER
[I] The preamble to the Electricity Act, 2003 specifies "promotion of competition in the electricity industry" as one of the main objectives of the Act. In order to provide competition in the retail sector, section 42 of the Act enjoins the State Commission to introduce Open Access in the distribution systems and at the same time mandates the distribution licensee to provide non-discriminatory Open-Access through its distribution network. 1.1

In order to fulfill its above obligations and in exercise of powers conferred by section 181 of the Act, the Commission has notified the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011 on 6 th June, 2011. Under these regulations, Open Access is permissible to the consumers seeking Open Access for a capacity of 1 MW and above, subject to terms and conditions specified in the regulations.

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1.2

It had come to the notice of the Commission that even after lapse of a period of about 1 year from the notification of the above Open Access regulations, not even a single case of Open Access to the consumers connected to distribution licensees in the State of Gujarat has materialized. On the other hand, some of the consumers/consumer organizations informed the Commission that the licensees, on some pretext or other, are discouraging such consumers from availing OpenAccess.

1.3

One of such practices that came to the notice of the Commission is that certain distribution licensees are forcing the consumers to avail Open Access on round the clock basis. This condition defeats the basic premise of the Open Access that the consumer has a right to avail power supply at the most economical rates. Moreover, this condition is also against the provisions of the Open Access regulations notified by the Commission, which provides that a consumer can avail Open Access even for a part of a day.

1.4

It was also brought to the notice of the Commission that the consumers are required to furnish undertaking in the formats specified by the licensee mentioning various conditions to be met prior to granting of Open Access.

1.5

The Commission took a serious view of the slow pace of implementation of Open Access in the distribution systems in the State of Gujarat and anticonsumer attitude of the distribution licensees. It, therefore, decided to initiate suo-motu proceedings to monitor the implementation of the Open Access regulations in the distribution systems. All the distribution licensees in the State were directed to furnish the following information, within 15 days.
i.

Details of Open Access applications received from the consumers connected to the distribution network since issuance of the notification of GERC (Terms and Conditions of Intra-State Open Access) Regulations,

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2011 stating details of name of applicant, quantum and period for which open access has been applied and source of power supply. ii. Action taken by the licensee in each of these cases and present status of the application, i.e. whether approval granted or rejected. In case of rejection, reasons for the same shall be furnished. iii. Performa prescribed by the licensee for undertaking to be given by the applicant. [2]

In response to the above, DGVCL, PGVCL, UGVCL and MGVCL submitted the status of open access applications including approvals granted and reasons for non-granting of approval, if any. The main reasons for non-granting of open access to the consumers stated by the above licensees is that ABT meter was not provided by the consumers. In some of the cases, it is approved by the distribution licensees but the meters were not provided by the consumers. DGVCL has submitted that since June, 2011, it has received 3 applications for open access, out of which one application was rejected due to non-availability of ABT meter. Similarly, in case of UGVCL, it has received 23 applications, out of which, UGVCL has given consent for open access for 7 applications and 16 cases were rejected. In case of PGVCL, it has received 11 applications, out of which 8 applications were rejected due to non-providing of ABT meters and one application for open access is not granted due to pending dues of the licensee. The MGVCL has received 5 applications for open access, out of which 2 open access is granted while in case of 3 cases, due to non-availability of ABT compliant meters, the open access is not granted.

2. 1

It is further submitted that the licensees are demanding undertaking from the open access customers in accordance with the provisions of the Open Access Regulations, 2011 notified by the Commission. The conditions specified in the undertaking do not defeat the premise of the open access which the consumer is entitled under the Electricity Act, 2003. The conditions specified are essential for

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proper administration of open access and in the absence of such conditions, there will be serious consequences in the operation of the power system. It is further submitted that the issue of legality and validity of the undertaking taken by the
distribution licensees was the subject matter of the proceedings in case No.1101 of 2011 i.e. Multi-year Tariff Petitions filed by one of the distribution licensees. In the said petition, the Commission passed order on 6.9.2011 with observation on objections raised by Surat Citizen Council that the licensees and open access consumers should be fair towards each other. Hence, any further objection, by the consumer taken on the same ground, is unfair and unjust.

2.2

The above licensee further submitted that section 32(2)(e) of the Electricity Act,2003 casts the responsibility on the SLDC to carry out real-time operation for the grid control and dispatch of electricity within the state through secured and economical operation of the state grid. The open access customer are not allowed to take benefit at the cost of other general consumers and adversely affecting the operation of power system which is meant to supply the electricity to the public at large. The Open Access Regulations notified by the Commission provide that prior to granting open access, it is necessary to verify the availability of capacity in the distribution network by the distribution licensees. The distribution licensees are eligible to decide grant or refusal of open access depending upon the impact on the infrastructure and facilities as a whole. The distribution licensee is required to procure the power from various generating sources within and outside the state. Many of the generators are baseload station and the coal based power station which form part of merit order for purchase of electricity by the distribution licensees. Such power stations have to operate throughout the day at a minimum generation level due to technical requirements. Moreover, during high frequency of the grid, it requires backing down of the generating station to reduce the injection of the generating units into the power system. It is not possible to back down such generating station in a manner that it

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generates electricity of the required PLF during a part of the day i.e. peak hours and thereafter generate much less than technical minimum requirement.

2.3

When the consumers are allowed open access for a part of the day and not for the whole day and the supply taken by such consumer from the distribution licensees during non-peak hours is less than the supply taken during the peak hours, it creates serious issue of backing down of base load generating stations to the extent affecting stable operation of such stations.

[3]

M/s. Torrent Power Ltd. submitted that six consumers of its license area have approached for open access. Out of six, two consumers have made payment for CT/PT and meters required as per the Regulations and also submitted the undertaking and given their consent, while four consumers have not given undertaking. Therefore, the applications are kept as awaiting the undertaking. It is further submitted that the provisions in the undertaking are made in accordance with the provisions of the Electricity Act, 2003.

[4]

SLDC has submitted the details of open access applications in the area of various distribution licensees. Against the 44 applications for open access, only 7 cases have been granted open access so far. Open access was not granted in the remaining cases mainly due to non- providing of ABT compliant meters at consumer's premises. In case of TPL, six consumers had applied for open access but none of them was granted open access, as licensee insisted that the consumers should surrender their existing contract demand.

[5]

The matter was heard by the Commission on 10.7.2012. Learned Advocate Shri M.G.,Ramachandran, on behalf of the respondents GUVNL, DGVCL, PGVCL, MGVCL and UGVCL reiterated the facts as stated in para 2 above. He further submitted that the above respondents have prepared an undertaking to be taken from the consumers in accordance with the provisions of the Electricity Act,2003

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read with Intra-State Open Access Regulations notified by the Commission. He submitted that if the consumers are allowed to purchase the power only during off peak hours when the demand of the distribution licensees are quite low, it will badly affect the load curve which is maintained as flattened by the distribution licensee by managing their power system demand. Moreover, the generating stations are required to back down, which will adversely affect the generation cost per unit of the generating station. Similarly, during the peak hours when the price in the exchange is higher, the open access customer desires not to purchase power from the market and try to remain dependent on the utilities, which also affect the utilities by way of paying higher charges for Unscheduled Interchange (UI) and peak hours charges which are higher in comparison to pricing in the normal hours of electricity purchase. The above facts will lead to increase in power purchase cost of the distribution licensees. Moreover, the variation in the power flow affects the operation and maintenance of the instruments of the distribution system which is created for reliable supply to the licensee as well as consumers. Considering the above facts, the respondents have stipulated that the open access consumers that have to procure the energy from the market throughout the day at constant level so that the load curve of the distribution licensee as well as infrastructure of the licensee will not be affected and distribution licensee should not be burdened with higher power procurement price. [6] Shri Chetan Bundhela, on behalf of TPL, Ahmedabad submitted that the TPL accepted the argument of Learned Advocate Shri M.G.Ramachandran. Moreover, he added that the open access has to be promoted with consideration of the interest of the distribution licensee as well as consumers. The respondent TPL has prepared the undertaking having clauses which are in accordance with provisions of Intra-state Open Access Regulations notified by the Commission. He further added that the consumer is required to procure the power uniformly for 24 hours from the power exchange or bilateral arrangement made by him.

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Otherwise, it will affect the load pattern of the distribution licensee. lie further submitted that the TPL has kept the provisions for surrendering the existing contract demand by the consumer as per the decision of the competent authority and the same is as per the provisions of the Regulations. Similarly, the undertaking that the total drawal in megawatt shall not exceed the contract demand with TPL is based on the agreement between the parties and also in accordance with the provisions of the regulations notified by the Commission.

[7]

Shri P.A.Patel, on behalf of SLDC, reiterated the facts as stated in para 4 above. He submitted that as regards the open access applications with public sector distribution licensees, the same were rejected by the licensees mostly on the ground of non-availability of AI3T meters by the consumer and in some cases dues of the distribution licensees are pending. Seven applications of open access were granted by the distribution licensees, while in case of TPL, no application has been granted.

[8]

We have carefully considered the submissions made by the parties. Sections 38, 39, 40 & 42 of the Electricity Act, 2003 mandate the transmission and distribution licensees to provide non-discriminatory open access to transmission/ distribution network as the case may be, to the open access customers. Open access is the tool for creating competition in the electricity sector which is also emphasized in the Act. The Commission had earlier notified GERC (Open Access) Regulations, 2005 which was repealed by the GERC (Terms and Conditions of 1i-10'a-state Open Access) Regulations, 2011 dated 1.6.2011. However, it is observed that. in the distribution network, open access has not fructified so far to the desired extent. Therefore, the Commission decided to verify the status of Open Access applications received and approved by the licensees, the reason for non-granting of open access and its validity in order to review the matter in light of provisions of Electricity Act, 2003 read with lntra-

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state Open Access Regulations, 2011 notified by the Commission. Hence, the present suo motu petition was initiated by the Commission.
-

8.1

From the submissions made by the parties, it appears that the open access applications received by the distribution licensees were 44. However, only 7 applications were granted approval for open access. The main reason for nongranting of open access is lack of ABT compliant meters at the consumer's premises. It is also observed that in case of TPL, there is not a single application for open access has been approved so far.

8.2

In this connection, the Commission decided to explore the reasons behind poor response to the open-access regulations. One of the reasons advanced by the distribution licensees is lack of ABT compliant meters at the consumers' end. It was submitted that initially there were issues regarding specifications and availability of these meters. However, of late these issues have been resolved and open access is being granted as soon as the consumers are ready with ABT compliant meters.

8.3

One of the issues brought to the notice of the Commission was regarding unreasonable undertaking sought by the distribution licensee from the prospective open-access customers. Some of the clauses in the undertaking are deterring the consumers from applying for openOaccess and as such the number of applications received so far does not depict the correct picture of open-access desired by the consumers. The Commission, therefore, decided to examine the formats of undertaking prescribed by the licensees. Clause no. 1 of the undertaking prescribed by the state owned utilities and clause no. 2 of the undertaking prescribed by the TPL are identical and stipulate that either the quantum of power to be procured through open-access will be uniform throughout the day or the drawal of the open-access consumer from the distribution licensee during the time-blocks when there is no schedule under

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open-access shall not be more than the time-blocks when there is power in scheduled from any other source under open-access. The Commission enquired from the licensees as to why this clause should not be treated as restrictive and stuck down?

8.4

The respondents submitted that the distribution licensees are required to maintain their daily load curve very close to flat, to economise on their power purchase costs. It is a well established fact that cost of market power during peak hours is much lighter than that during off-peak hours. Some of the open-access consumers may like to procure the power from market only during the off-peak periods and may depend on the licensee for their peak period demands. This may lead to a situation wherein the licensee may have to back down even the cheaper generation during the off-peak period and procure costlier power during the peak periods. This would result in overall rise in the power purchase costs and pose additional burden on other consumers. The above mentioned clauses in the undertaking have been prescribed to avoid such situations which can be seen as cross-subsiding the open-access consumers by other consumers of the licensee.

8.5

Keeping in view the arguments put forth by the licensees and also the overall interest of consumers, we decide not to make any amendments to the above referred clauses in the undertaking.

8.6

Further, Clause No.3 of the undertaking prescribed by the state owned distribution licenses reads as under:

3. "That I/We unconditionally undertake for change in tariff fbr supply of power by

_ VCL to us from prospective date at the tariff mutually agreed upon between

1/ We & VCL in accordance with section 49 of the Electricity Act,2003 and in pursuance to Government of India clarification letter No.23/1/2008RCR/VoLIV dated 30 th November,2011."

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8.7

On the examination of the said clause, we observe that the aforesaid clause of the Undertaking is unilateral and without approval of the Commission. The said clause is also in violation of section 43 of the Electricity Act, 2003 read with section 62 of the Electricity Act, 2003. It is the duty of the distribution licensees to supply power to the consumers of its license area at the tariff rate determined by the Commission. If any consumer opts for open access and takes power supply partially or fully to meet his demand from a source other than the distribution licensee and desires to continue as a consumer of the distribution licensee and pay the necessary charges of tariff decided by the Commission, the distribution licensee cannot unilaterally absolve himself from his obligation of universal supply of power to the consumer and compel the consumer to procure power as per the mutual agreement between the parties. Moreover, so far as the reference of the Govt. of India letter No.223/1/2008-RCR/Vol.IV dated 30 th Novembr,201ginythdsbuolceinrd,thsame letter issued by the Ministry of Power as a clarificatory letter for which the Commission has initiated suo-motu proceeding, which is still pending and subjudice before the Commission. Hence, the contents stated in the said letter are not final. Hence, the said clause is invalid and without approval of the Commission. We, therefore, decide the above clause as void ab initio. The respondent distribution licensees are directed to remove the above clause from the undertaking.

8.8

On verification of Undertaking taken by the Torrent Power Ltd. from his consumers, we observe that clause 4 of the said undertaking reads as under: 4) In case, it is decided by a Competent Authority that I/We are required to surrender our existing Contract Demand with Torrent Power Ltd. for availing Open Access, I shall abide by the decision of the Competent Authority.

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8.9

We observe that the above clause is in contravention of the provisions of the Electricity Act, 2003. It is the duty of the distribution licensee to supply to the consumer of his license area as and when the consumer demands electricity. The distribution licensees are also cast the duty of universal service obligation by the Electricity Act, 2003. The aforesaid clause provides that the consumer shall be required to surrender his existing contract demand as and when the competent authority decides the same. The undertaking is silent about the name of the competent authority. We note that the consumers have an agreement with the distribution licensee for receiving the power from the licensee. He also agrees to pay necessary charges as decided by the Commission. Neither the Electricity Act, 2003 nor the Rules framed by the Ministry of Power and Regulations framed by the Commission empowers the distribution licensees to compel the consumers to surrender his existing contract demand as and when he avails the open access. Universal service obligation and providing non-discriminatory open-access to the distribution network, are both the duties of the distributing licensees and the licensee cannot restrict any consumer from availing both these facilities. We, therefore, decide that the aforesaid clause of the undertaking is illegal, invalid and void. The respondent is, therefore, directed to remove the above clause from the undertaking. We are of the view that the distribution licensees must ensure the objective of the Electricity Act, 2003 read with GERC (Terms and Conditions of Intra-state Open Access) Regulations, 2011 notified by the Commission while granting open access to the consumers.

8.8

In view of the above observations, we decide that clause 3 of the undertaking of the PGVCL, DGVCL, MGVCL and UGVCL are void and therefore, the respondents are directed to remove the above clause from the undertaking. Clause 4 of the undertaking of the TPL is also void and therefore, TPL is directed to remove the same from the undertaking. We also direct the respondents to grant open access to the consumers by adhering to the provisions

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of the Electricity Act, 2003 read with GERC (Terms & Conditions of Open Access Regulations),201 I notified by the Commission. [9] We order accordingly.

[10]

With this order, the petition stands disposed of.

Sd/[Dr. M. K. IYER] MEMBER (F)

Sd/[PRAVINBHAI PATEL] MEMBER (T)

Sd/[Dr. P. K. MISHRA] CHAIRMAN

Place: Ahmedabad. Date: 16/08/2012.

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