Power: Industries in UP denied access to cheaper power

UPPCL is obligated by law to allow consumers to buy power from open market

Noor Mohammad Delhi

Although Uttar Pradesh is facing unprecedented power shortages, industries here are not being allowed to source electricity on their own from outside and beat frequent power cuts. This despite the fact that the open access regulations are already in place to enable such transactions in an institutionalised manner.

According to the Central Electricity Authority, electricity availability to the state during April-August 2015 was nearly 18 per cent, or roughly 3,000 mw, less than what would be needed for it to avoid loadshedding during these sweltering hot months.

The state utility Uttar Pradesh Power Corporation Limited (UPPCL) is obligated by law to allow consumers with more than 1 mw of load to meet their electricity requirements from wherever they want on payment of wheeling charges and cross-subsidy surcharge. But moves by industry to seek open access are being frustrated by the discom.

Industry sources told Hardnews that applications seeking open access are always rejected by the discom officials citing one or other reason.

According to power market analysts, electricity is available for contracting via power exchanges at the delivered price of Rs 5-5.50 a unit, compared with Rs 6.65 a unit charged by UPPCL from industrial and commercial consumers.

So if industries are allowed to buy electricity under open access arrangements, they would save more than a rupee per unit. Supply relinquished by industries can then be diverted to other categories of consumers, a move that would help ameliorate power shortages in the state.

But UPPCL, which is reeling under losses due to persistent revenue gaps, has been resorting to frequent and prolonged power cuts to deal with shortages rather than letting bulk consumers buy electricity from the open market.

States like Punjab, Haryana, Rajasthan and Uttarakhand have extended open access facility to their industries in a bid to relieve pressure on their utilities. This has helped industries gain access to uninterrupted and economical electricity supply when home state utility has to resort to power cuts.

As per data available with Indian Energy Exchange, in August 416 industrial/commercial entities from Punjab procured electricity via the power exchange, 302 from Haryana, 248 from Rajasthan and 88 from Uttarakhand. However, there was not a single buyer from UP.

Significantly, UP has signed up for the Centre’s Rs 1.93 lakh crore-Financial Restructuring Plan but its discom is facing difficulties in replaying loans as per the agreed schedule. The state has pleaded for further extension of the repayment schedule.

UP is home to a large number of small and medium enterprises which are having to use costly diesel-generated electricity to tide over loadshedding by UPPCL . Most of these companies cater to the export market where cost competitiveness is critical. High electricity costs could erode their competitiveness.

The power scenario in the state is abnormally bleak given that the overall electricity shortage in the country during the same period worked out to just 2.3 per cent. With UPPCL’s finances in mess, it is unlikely that power situation will improve anytime soon. So allowing industrial and commercial consumers to meet their power requirements on their own is an advisable option for the state.