Open Access in Electricity

Open access is the right of eligible generators, licensees and consumers to use an electricity transmission or distribution network without discrimination, even when they do not own that network. Under Section 2(47) of the Electricity Act, 2003, access is provided according to regulations framed by the appropriate electricity regulatory commission.

Statutory framework

The Act seeks to separate network access from the choice of electricity supplier while retaining regulatory oversight.

• Under Sections 38, 39 and 40, central and state transmission utilities and transmission licensees must provide non-discriminatory open access, subject to the Act and regulations.
• Under Section 42, State Electricity Regulatory Commissions introduce distribution open access in phases, considering cross-subsidies and operational constraints.
• The Act required regulations to provide open access to consumers whose maximum requirement exceeds 1 MW; commissions may permit access more widely.
• The CERC regulates inter-state access, while SERCs regulate intra-state and distribution access.

How open access works

A consumer can procure electricity from a generator, trader or another licensee while using the existing grid for delivery. The commercial supply arrangement is distinct from the regulated use of network infrastructure.

• The user pays applicable transmission or wheeling charges and bears prescribed network losses.
• A cross-subsidy surcharge may compensate the local distribution licensee for the loss of cross-subsidising consumers; captive consumption is exempt under Section 42.
• An additional surcharge may apply when open access leaves the distribution licensee with stranded fixed costs arising from its supply obligation.
• Scheduling, metering, system security and capacity allocation remain subject to commission regulations.

Economic significance

Open access introduces competition and consumer choice into electricity supply while treating transmission and distribution networks as regulated common carriers. It can improve procurement flexibility and facilitate electricity trade, but its effectiveness depends on network capacity, predictable charges and non-discriminatory implementation.

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