State governments make it tough for private cmpanies to bag parallel power licences

Parallel power licences were allowed under the Electricity Act of 2013 but getting them isn’t easy with state governments appearing to regard applicants as competition for their own utilities, say private operators.

Such permits allow power companies to distribute electricity to consumers seeking an alternative to the utility that’s licensed to service the area. Depending on expertise and subject to approval, private power companies can distribute power and usually at a lower cost than state utilities as their aggregate technical and commercial losses are less. In this regard, private firms have been targeting industrial consumers the bulk customers who contribute a majority of revenue and typically subsidise household consumption.

“Private players applying for distribution licences have turned out to be major potential competitors to state distribution companies which have been reeling under financial stress,” a senior power sector official said. “Under such circumstances, if the premium customers are taken away, the utilities will have to rework their subsidy pattern as bulk customers in most cases subsidise retail consumers.”

India Power is seeking to enter retail power distribution in the industrial hubs of East Midnapore in West Bengal and Gurgaon. That makes it a possible rival to the government-owned power distribution companies in those states.

The application for Gurgaon was rejected by Haryana Electricity Regulatory Commission (HERC), prompting the company to move the appellate tribunal. Its application for East Midnapore has been up for public hearing a number of times, a final decision is yet to be taken. “We had applied for Gurgaon on January 9, 2014, while for East Midnapore it was November 30, 2015,” said Hemant Kanoria, chairman, India Power.

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