Powering competition through open access

The Electricity Act of 2003 introduced competition in the power sector. Demand-side competition was introduced through open access to enable consumers with above 1,000 kW consumption to source power from a supplier of their choice.

Upstream competition was enabled through de-licencing of power generation and through introduction of power markets. Almost 16 years after, competition, especially on the demand-side, is almost non-existent. We continue to struggle with downstream operational and financial inefficiencies, reflected in bad loans and NPAs as well. Power distribution continues to be monopolistic. Now, almost every entity in the power value chain is adversely impacted. So, the questions that come to one’s mind are: Why has open access not taken off despite being legislated? What is ailing demand-side competition?

The idea behind open access to large industrial consumers to choose supplier directly from among the generators, or through an intermediary such as a trading licensee or the power exchange, was to create a competitive environment that prompted state discoms, who enjoy monopoly, to get competitive and build much-needed operational and financial efficiencies.

In 2011, the power exchanges operationalised open access for retail consumers above 1,000 kW. Looking at the last nine years, it can be easily inferred that open access has not been allowed to find traction.

financial express
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