Quick definition: Additional surcharge in open access is a supplementary fee imposed on consumers who opt for open access power procurement, designed to compensate distribution companies for potential revenue loss and maintain grid stability.
Table of contents
- Understanding additional surcharge
- Regulatory framework
- India-specific context
- Practical implications
- How Neufin can help?
- Related terms
- FAQs
- Additional resources
Understanding additional surcharge
Additional surcharge represents a crucial component in the open access power framework. It serves three primary purposes:
- Compensates distribution companies for stranded capacity
- Ensures financial stability of the power distribution sector
- Maintains equilibrium in the power market
Regulatory framework
The regulatory framework for additional surcharge is governed by Section 42(4) of the Electricity Act, 2003. State electricity regulatory commissions determine the surcharge rates based on:
- Fixed cost obligations of distribution licensees
- Expected revenue loss from open access consumers
- Technical and commercial factors affecting power distribution
India-specific context
In India, additional surcharge varies significantly across states. For instance:
- Maharashtra: ₹1.25/kWh (2023-24)
- Gujarat: ₹0.69/kWh (2023-24)
- Karnataka: ₹1.15/kWh (2023-24)
These variations reflect different state-specific power sector dynamics and regulatory priorities.
Practical implications
The implementation of additional surcharge has several practical implications:
- Impacts cost-benefit analysis for potential open access consumers
- Influences investment decisions in power procurement
- Affects overall power procurement strategy for industrial consumers
How Neufin can help?
Neufin helps your company make the switch to renewable energy. We provide the fastest way for companies to buy renewable energy in India. Companies choose Neufin because we provide –
- Guaranteed cost savings – Lower your electricity bills without operational headaches.
- End-to-end execution – From feasibility to power delivery, we handle everything.
- Zero upfront investment options – Easy and flexible financing through Neufin Capital
Related terms
- Cross subsidy surcharge
- Wheeling charges
- Open access regulations
- Power purchase agreements
Frequently Asked Questions (FAQs)
How is additional surcharge calculated?
Additional surcharge is calculated based on the stranded cost of power purchase agreements, fixed costs of distribution infrastructure, and projected revenue loss from open access consumers.
Can additional surcharge be waived?
Additional surcharge waiver depends on state-specific regulations and can be considered under special circumstances, such as renewable energy procurement or specific industrial policies.
How often does additional surcharge change?
Additional surcharge rates are typically revised annually by state electricity regulatory commissions, though some states may have bi-annual revisions.
Additional resources
- Electricity Act, 2003
- State Electricity Regulatory Commission websites
- Ministry of Power guidelines
- Open Access regulations
Last updated: January 2024
Disclaimer: This information is for general guidance and may vary by state and specific circumstances. Please consult relevant authorities for the most current regulations.
