Open Access in Electricity Distribution

The Electricity Act, 2003 allows open access to the T&D networks of the licensees with the payment of a surcharge (over the wheeling charge) to compensate them for the loss of revenue. The surcharge will play a critical role in managing the transition to competition as the electricity regulatory commissions try to balance the conflicting requirements of making open access economically attractive for HT consumers and protecting the financial health of licensees. This paper presents an overview of the recommendations made by various parties regarding the calculation of the surcharge and discusses some concerns about their application. The likely revenue loss for the licensees and the extent to which the various recommended methods compensate the utilities for the revenue loss are also assessed. There is a need to refocus on broader concerns if the transition to competition is to be made a little easier.