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Competition could devour PCL?s consumer base

THE UP Power Corporation Ltd (UPPCL) is in a fix over the proposed implementation of an open-access system under which, a consumer will be free to purchase electricity direct from any generator.

india Updated: Jan 23, 2006 00:31 IST

THE UP Power Corporation Ltd (UPPCL) is in a fix over the proposed implementation of an open-access system under which, a consumer will be free to purchase electricity direct from any generator.

The Electricity Act, 2003, provides for introduction of an open access system in the power sector, to promote real competition in the field. However, the problem of the UPPCL is that if its prime consumers like industrial consumers, who are currently with it, switch over to some other licensee under open access, it would make business unviable for it.

At present, the losses incurred due to supplying power to domestic consumers at a rate lower than the production cost, are made up by reasonable returns from industrial consumers.

The UPPCL made its apprehensions quite clear to the World Bank at a meeting here on Saturday. The World Bank officials held a meeting with the UPPCL and some generators including the Hindalco and a few sugar mills.

The World Bank made a presentation on open access and showed how the system was successfully working in many countries. It laid emphasis on the introduction of open access in UP at the earliest, to effect real competition in the power sector and provide its benefits to consumers.

Addressing UPPCL’s concerns, the World Bank officials suggested that apart from realising wheeling charges from generators, for allowing use of its transmission network to carry power to the consumers, the UPPCL could also levy some surcharge on a licensee for taking a prime consumer away from its fold. The new tariff policy, said the officials, provided for levy of such a surcharge.

However, it was felt that the open-access system would not click if the surcharge was more than reasonable. Finally, there was a consensus that UPPCL could levy surcharge anything between 75 paise to Rs 1 per unit of electricity supplied by a generator/licensee direct to a prime consumer.

A senior UPPCL official said the open access had to be introduced sooner or later, as the same was a statutory requirement under the Electricity Act.

First Published: Jan 23, 2006 00:31 IST