CII expresses concern over disallowing electricity sale through open access by Gujarat and Karnataka

The Confederation of India Industry (CII) expressed deep concern over the recent decision by two state governments of Gujarat and Karnataka to disallow sale of electricity through Open Access. This decision could negatively impact operations of close to 200 industrial consumers.

With this decision coming into effect, industrial electricity consumers (consumption of over 1 MW) in Gujarat will now buy power from within the state at Rs 6-7 per unit as opposed to the Rs 4-4.5 per unit charged by power exchanges.

On similar lines, in Karnataka, the choice of power generators to sell power to consumers outside the State has been curbed with the State restricting power sales within the boundaries of the State.

While the State of Gujarat has been facing short term challenges on their transmission system due to grid disturbances faced in recent times and has thus restricted consumers in two of their distribution companies from buying electricity under short-term open due to technical constraints in transmission segment, the Karnataka Government has invoked Section 11 of the Electricity Act 2003 to enforce this.

This decision challenges the principles of open access in the Electricity Act.

"The States need to promote the spirit of competition and choice to customers. Open access is at the center of the new Electricity Act 2003 and must therefore be supported and pursued by all stakeholders in the Electricity business. The consumer's choice to explore competitive electricity price thereby contributing to economic competitiveness of their products and services is an important aim of the Act. It is hoped that such competitive spirit shall be maintained duly tiding over short term challenges of capacities in Transmission system, etc" said Anil Sardana, Chairman, CII National Committee on Power and Managing Director, Tata Power Company Ltd, while expressing his views on the matter.

Currently, over 2400 industrial and commercial consumers - steel, aluminum, textile, glass, commercial complexes, malls, etc. - have been procuring electricity from the power exchanges leveraging open access.

Open Access, is seen by many as a very important provision that was introduced in the Landmark Electricity Act 2003. The provision is intended to unshackle the power sector by fostering competition, transparency and efficiency for the ultimate good of the consumer as well as the sector.