As per Electricity Act 2003 Open Access is
“Non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission”.
The power market may be defined as a system for effecting purchases and sales through available options based on demand-supply dynamics. The Indian power market initially had only limited players. It has now opened to a lot of private players. This has made it a dynamic and vibrant market with a large number of players and rapidly rising volumes.
All 1 MW and above consumers are eligible for open access and it ends the regulators jurisdiction on fixation of energy charges—the power market is heading towards a major transformation.
Open access is one of the key measures to bring about competition in electricity, whereby large consumers have access to the transmission and distribution (T&D) network to obtain electricity from suppliers other than the local distribution company (DISCOM).
Through Open Access, electricity consumers have an option to procure power from alternate sources at competitive prices. Presently, consumers with contract demand of 1 MW and above are eligible for open access. As per the Act, a consumers’ bill will have three parts – wheeling charge, cross subsidy charge and energy purchase charge. While the first two shall remain fixed, consumer could base his decision of procurement as per variable energy purchase charges from suppliers.
The whole concept of Open Access is the consumer exercising choice. There would be multiple vendors of electricity in the market among which the consumers can choose their electricity provider.
On the basis of location of buying and selling entity, the open access is categorized as:
- Inter State Open Access:When buying and selling entity belongs to different states. In this case CERC regulations are followed. It is further categorized as:
- Short Term Open Access (STOA): open access allowed for the period of less than one month.
- Medium Term Open Access (MTOA): open access allowed for a period of 3 months to 3 years.
- Long Term Open Access (LTOA): open access allowed for a period of 12 years to 25 years.