NEW DELHI:Power regulator Central Electricity Regulatory Commission (CERC) has proposed raising transmission charges on short-term and mediumterm electricity transactions by up to 35%, a move seen by industry as detrimental to the sector.

The move will hurt large industrial consumers the most as they will not be able to source cheaper power from spot markets or through other short-term arrangements.

In the draft regulations on sharing of inter-state transmission charges and losses, the regulator has proposed to increase open access charges on shortterm transactions by 35% and on medium-term transactions by 25%. The commission has expressed concern over the trend of increase in short-term power contracts that could result in inefficient transmission planning and increase congestion in the system.

The volume of short-term transactions has increased from 24.69 billion units in year 2008-09 to 63.96 billion units in year 2014-15. However, the prices of electricity of short-term transactions has come down from about Rs 7.29/unit in year 2008-09 to Rs 4.28/unit in year 2014-15.

“This trend may increase the volume of short-term transactions in future. In this scenario, it is likely that generators may not apply for LTA (long term access) and to evacuate power under STOA (short-term open access)/ MTOA medium term open access or it is likely that there is less long term PPAs leading to lack of LTAs thereby inefficient transmission planning,” CERC has said in the draft.

Majority of stake holders, including conventional and renewable power generators, industry associations, consultants and discoms, who responded to the draft guidelines, opposed the move.

India Energy Exchange said the rise in charges was irrational as transmission capacity is not reserved for short-term electricity trades that use residual capacity in the system.

ET View: Keep transactions costs reasonable

For a thriving national market for power, we do need to keep transactions costs low and reasonable, so as to boost electricity exchange nationally. It would also be for the greater good to boost long-term cross-country transactions in power, so that players in the marketplace are in a position to reap both economies of scale and scope. And the hike in short-term transmission charges seems designed to disincentivise such transactions. However, high unreasonable charges are also unwarranted, and they can disrupt and even short-circuit the national market for power, which remains work in progress.