Telangana Sets ₹1.40/kWh Additional Surcharge for Open Access Power Consumers

The measure aims to fulfill the distribution licensee's fixed-cost obligations


The Telangana State Electricity Regulatory Commission (TSERC) issued an order outlining the process for identifying stranded capacity and terms for imposing an additional surcharge on open-access consumers.

The Commission sanctioned the additional surcharge claimed by Telangana distribution companies (DISCOMs), amounting to ₹1.40 (~$0.0168)/kWh. This surcharge will be effective from April 1, 2024, until September 30, 2024.

The measure aims to ensure that distribution licensees meet their fixed cost obligations resulting from supply commitments.

Earlier, the Southern Power Distribution Company of Telangana (TSSPDCL) and the Northern Power Distribution Company of Telangana (TSNPDCL) had submitted requests for an extra surcharge assessment for the first half of the fiscal year 2024-25, spanning from April to September.

This surcharge targets open-access consumers in accordance with the commission’s directive of September 18, 2020, and statutory provisions in the Electricity Act of 2003 and the Tariff Policy of 2016.

Procedure for Demonstration of Stranded Capacity

  • Data regarding the 15-minute time blocks of available capacity and scheduled capacity from all generating stations with long-term PPAs with the DISCOMs, as well as the scheduled capacity of open access (OA) consumers over a six-month period, will be utilized.
  • For hydel generating stations, the scheduled capacity will be regarded as available capacity in the respective time block.
  • The lower value between surplus capacity (i.e., available capacity minus scheduled capacity) and the capacity scheduled by OA consumers will be identified as the stranded capacity for the specific 15-minute time block.
  • Consequently, the average stranded capacity resulting from open access over a six-month period needs to be calculated.

The additional surcharge determined by the Commission will apply to DISCOM consumers who procure power through open access from any source other than their respective DISCOM.

An additional surcharge will be imposed based on the amount of electricity these consumers schedule.

The additional surcharge will not be applied to open-access consumers for their self-consumption to the extent that open access is utilized to transmit power from their own captive power projects (CPPs).

Any exemption from paying an additional surcharge for eligible open-access consumers will be in accordance with the current government policy.

DISCOMs are encouraged to address the revenue loss resulting from such exemptions by discussing the matter with the state government to ensure appropriate relief measures.

The TSDISCOMs reported the average stranded capacity resulting from open-access consumers over the six-month period (April 2023 to September 2023) is 113.89 MW.

Long-Term Availability and Stranded Capacity Due to Open Access

Upon review of the long-term availability report submitted by TSDISCOMs, it is noted that they have factored in the total capacity of solar and wind generators within Telangana when computing long-term availability.

The Commission, however, considers the actual generation from these sources, acknowledging the intermittent nature of solar and wind power. The Commission observed that TSDISCOMs utilized day-wise and month-wise averages of 15-minute time block data over a six-month period.

However, such intermittent averages are not permitted under the approved methodology.

Consequently, the Commission approves the long-term available capacity by averaging the 15-minute time block data over six months, resulting in 8,748.85 MW, differing from the DISCOM’s claim of 10,112.97 MW.

Additionally, the Commission noted that the Telangana DISCOMs procured energy through short-term agreements during specific time blocks with surplus capacity. Following the Commission’s directives, the DISCOMs deducted this capacity from their calculations of stranded capacity.

Accordingly, the Commission has approved a stranded capacity of 71.05 MW, which contrasts with the 113.89 MW initially reported by the DISCOMs.

Fixed Charges for Stranded Capacity

The DISCOMs have reported fixed charges paid amounting to ₹59.48 billion (~$715 million) for the period from April 2023 to September 2023. Upon careful examination, the Commission has determined the fixed charges paid to be ₹59.48 billion (~$715 million), considering the long-term available capacity as 8,748.85 MW.

Thus, the average fixed charges are calculated to be ₹6.8 million (~$81,765)/MW.

Consequently, the fixed charges for the stranded capacity have been calculated at ₹483 million (~$5.8 million) (i.e., 71.05 MW x ₹6.8 million (~$81,765)/MW).

The DISCOMs requested the Commission to account for any variations in fixed charges from April 2023 to September 2023 in the final audited accounts and subsequent filings of additional surcharge.

The Commission instructed the DISCOMs to specify any variations in fixed costs for the period from April 2023 to September 2023, if applicable, in their subsequent filings of additional surcharge.

They are further required to provide a detailed justification for any such variations in fixed charges. The Commission will review and consider these submissions accordingly.

Transmission Charges and Actual Energy Scheduled

The DISCOMs reported transmission charges amounting to ₹29.09 billion (~$349.7 million) from April 2023 to September 2023, which the Commission acknowledged.

The claimed scheduled energy for the period stands at 39,399.63 MU. Upon careful examination, the Commission has deemed the scheduled energy as valid, also standing at 39,399.63 MU.

Consequently, the transmission charges per unit have been calculated at ₹0.74 (~$0.008)/kWh, matching the filed value of ₹0.74 (~$0.008)/kWh.

Distribution Charges

The DISCOMs asserted distribution charges of ₹0.20 (~$0.0024)/kWh, derived by halving the distribution cost of ₹46.5 billion (~$559 million), as endorsed for FY 2023-24 in the amendment order dated March 1, 2021.

This value is then divided by the power purchased quantum of 39,399.63 MU during H1 of FY 2023-24.

The Commission factored in the HT network’s distribution cost to compute the additional surcharge. By considering the HT network’s distribution charges (excluding the LT network), the Commission calculated the distribution charges to be ₹0.2030 (~$ $0.0024)/kWh, resulting in a total of ₹1.57 billion (~$18.8 million).

The demand charges recovered by TSDISCOMs from open-access consumers amount to ₹2.11 billion (~$25.3 million). The Commission disregarded the revenue recovery related to the LT network, as the distribution charges of the LT network are not accounted for on the expenditure side.

Therefore, the Commission took into account ₹1.56 billion (~$18.7 million), excluding the demand charges recovery portion of the LT network cost. This leads to a shortfall in demand charges recovery of ₹12.7 million (~$152,702).

Based on the above considerations, the net stranded charges amount to ₹495.8 million (~$5.9 million).

The DISCOMs reported open access sales of 354.75 MU related to open access other than captive transactions for the period from April 2023 to September 2023. The Commission deemed this to be in accordance with regulations.

The open access consumer is responsible for paying the additional surcharge for the electricity quantity scheduled by them. However, the following exceptions apply:

  • The additional surcharge will not be applicable for green energy open access (GEOA) consumers if fixed charges/demand charges are paid by them.
  • The additional surcharge will not apply if power from a waste-to-energy project is supplied to GEOA consumers. It will also not apply if green energy is utilized to produce green hydrogen and green ammonia.
  • Additional surcharge will not be applicable for electricity produced from offshore wind projects commissioned up to December 2032 and supplied to GEOA consumers.
  • The surcharge will not be levied on open access consumers to the extent of open access used for wheeling power from their own captive power projects.

Recently, TSERC issued the draft Intrastate Open Access Regulations 2023, allowing consumers with a contracted demand or sanctioned load of 100 kW or higher to avail of green energy open access.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.