CERC to Hike Transmission Fees to Avoid Grid Congestion

In an amendment of its regulations, the Central Electricity Regulatory Commission (CERC) has proposed to increase transmission charges on medium and short-term electricity transactions. This is the sixth amendment of the CERC Regulations relating to connectivity, long-term access and medium-term open access in inter-state transmission and related matters. Short-term transactions will see a hike of close to 35 percent and medium-term transactions will witness a hike of 25 percent.

This development comes on the backdrop of short-term transaction volumes which have increased from 24.69 billion units in financial year (FY) 2008-09 to 63.96 billion units in FY 2014-15. The prices of electricity for short-term transactions have come down from about Rs.7.29 (~$0.1074)/unit in FY 2008-09 to Rs.4.28 (~$0.0631)/unit in FY 2014-15 and to Rs.2.5 (~$0.0368)/unit in May 2016, according to the CERC statement.

Transmission planning is typically based on long-term access. With more and more short-term transactions taking place, transmission capacity is likely to get more congested. To avoid this situation, the CERC has proposed to increase open access charges on short-term transactions by 35 percent and on medium-term transactions by 25 percent.

An official at the CERC confirmed the proposed hike in transmission fees and commented, “to boost transmission capacity and capability, this is a necessary step. There have been dissidents and we received negative comments on the proposed amendments, but as consumers are moving to short-term access, the CERC has to be a step ahead.”

Another CERC official said, “Recently ISTS charges for renewable energy have been removed. If the sector is subsidized to this extent, a robust transmission network cannot be developed. The current amendments will prove beneficial in the long-term as more renewable capacity is allocated and added to the grid.”

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