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<p>The objective of open access was to provide opportunity to energy intensive industry and commercial establishments to source electricity directly from the market and manage costs to remain competitive. Open Access was to also improve the economic health of the Distribution Licensees by reducing power procurement at higher marginal cost so that the non-open access retail consumers of the Distribution Licensees would not get unduly burdened.</p> <p>One of the challenges plaguing the open access market is that with prices of power plunging downward, the discoms lost the advantage of avoiding costly marginal power purchase. At the same time subsidised supply tariff did not catch up as envisaged leaving revenue gaps thus necessitating high cross subsidy charges.</p> <p>Further, there is always uncertainty about the future cross subsidy charges. There is an urgent need to rationalise tariffs as envisaged by tariff policy. This will pave the way for expanding this market without hurting the health of the discom. Most recently, there has been another challenge that is creating problems for discoms. Large consumers in some states are frequently switching between the market and discom&rsquo;s regulated tariffs even on daily basis as power procurement on exchange has been enabled for open access consumers by allowing consumers to maintain their contract demand which is not reflective of fixed cost.</p>