Regulatory Challenges in
Reforming
Indian Power System
by
Vijay L Sonavane
Member, MERC Mumbai
NPTI Nagpur , Date: 25 th FEB 2011
Reform Agenda…
• Indian Power System
• Open access in T&D
• Parallel Licensing
• Cross Subsidy Reduction
Edison’s Dream
“We will make Electricity so
cheap that only the rich
will burn candles”
- Thomas Alva Edison
(1847 - 1931)
3
History of Indian Power System

18th Nov.1897 first generating station in India (Asia)
commissioned at Sidrapong (Darjeeling) .

Installed capacity on 15th Aug 1947: 1362 MW.

Electricity: Prime mover for economic
development, Industrial & Green Revolution.

Installed capacity :1,67,077 MW (30 /11/2010)
• AI Energy & Peak Load Shortages: 11.1% & 11.9%
• Per capita: 734 U/year (FY 08) Target: 1000 U (Mar 12)
Indian Power Sector
•
•
•
•
Total No. of consumers: Over 130 million.
Revenue: Rs 350,000 CR/year
T&D losses: 18 to 62% in various states.
35% of Indians do not have access to Electricity.
• Use: Industries: 42%, Domestic: 25%, AG: 24%, RLY: 3%
• As on 31/10/10: 5,08,992 villages electrified ( 85.7%)
• 1,68,33,575 Nos (85.2%) of AG pumps energized
• India is 6th Largest electricity utilizing country next to USA,
China, Japan, UK & France. By 2014 we will be fourth
5
Indian Power System –
Challenges in Transition Stage
• To Reduce Distribution Losses.
• Reduce Shortage of power by
effective Load Management .
•Promote and Develop Competition
• Promote DSM/EE activities.
•Promote RE Generation
6
Highlights of Indian Gen Sector
• Coal/ Gas/ Diesel: 108,362 MW : (64.9%)
•
•
•
•
Nuclear: 4,560 MW
: ( 2.7%)
Hydro: 37367
: (22.4%)
RES : 16,799
: (10.0%)
Total: 1,67,077 MW (MU: 8,30,757 in FY 2010-11)
• AI PLF: 2009-10: 77.48%
• Coal: 2009-10: 341 MT
• Growth: 31/03/85: 42,584 31/03/97: 85,795 MW
31/03/2007: 132,329 MW 31/11/2010: 167,077 MW
Renewable Generation
RE Source: Wind/ Solar/ Bio-Gas/ Small Hydro (Mini, Micro Run
Of River Projects)/ Baggase/ Bio mass: Infirm sources
Issues in RE Sources:
• Site Selection/
• Grid Connectivity / Storage
• Non Schedulable resource/
• Low Plant load factor
Satara, Maharashtra
AI Transmission Network…
• 400 KV Lines: 102,166 Km, 220 KV Lines: 196,355 KM
• 400KV S/S: 124,676 MVA 220KV: 196,355 KM
• 765KV Lines: 3910 KM & S/S: 4500 MVA
• EHV: 765 KV/ 400KV/ 220 KV/ 132 KV/ 110 KV /(+/-) 500 KV
HVDC
• In 11th Plan JV/Private Sector Transmission projects
(1200KV/765 /400/ 220KV) are being developed
• During 2009-10, 765KV Seoni-Bina S/s line & second circuit
of Bina- Gwailor have been commissioned.
Evolution of National Grid
• State grids ( 1948+)
• Regional Grids (1970+)
• National Grid (2003+)
What are the advantages of Interconnections?
• Higher Moment of Inertia (Stable system)
• Higher Power Number
• Mumbai (60MW/HZ) /Maharashtra (400MW/HZ)/
Western Region (800 MW/HZ)/ India (2100 MW/HZ)
Regional Grids of India
August 2006
North synchronized
With Central Grid
March 2003
West synchronized
With East & Northeast
NEW Grid
October 1991
East and Northeast
synchronized
Five Regional Grids
Five Frequencies
South
Grid
Central Grid
North
West
South
East
Northeast
Merging of markets along with
synchronization of regions
11
Maharashtra Load Curve and Demand Management
14
MW
12
10
8
6
4
BASE LOAD
BASE LOAD
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hours
Base Load – Managed through Long Term PPA’s
Seasonal Variations – Managed through Short Term trades, by
1) Traders, 2) Bilateral Contracts or 3) Banking Arrangements
Daily Variations – Managed through
1) Day ahead Power Exchange or 2) UI Balancing
12
DEMAND in MW
Mumbai Load curve as on 10/05/2010
3000
2900
2800
2700
2600
2500
2400
2300
2200
2100
2000
1900
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
REL-D
TPC-D
BEST
Mumbai
TIME BLOCK
13
Functions of Distribution Utilities
To Give
– Good quality supply / services
– Continuous Supply
– At an Affordable Cost
Issues
– We cannot store electricity in bulk
– Control switches with consumers
– Payment Afterwards
14
Main issues with Distribution System
• Distribution Losses: Technical ( I Square R) & Non-Technical
(Commercial) losses (Theft, faulty/ Slow meters)
• Solution to Theft: Areal Bunched Conductors (ABC)/ High Voltage
Distribution Systems (HVDS)
• High Distribution Transformer failure rate (13.4%)
• Consumer Metering:
Automated Meter Reading (AMR) system
Time of Day (TOD)/ Time of Use (TOU) metering
• Challenge: Demand Side Management (DSM)/ Energy Conservation
Aggregate Revenue Requirement
Sr. Paerticulars
No
.
1 Power Purchase
Approved % of total
ARR (Rs
ARR
Cr)
24213
76.3%
2591
8.2%
3 A&G and R&M
772
2.4%
4 Depreciation
458
1.4%
5 Interest
6 Other Exp
640
661
2.0%
2.1%
1879
5.91
7 Total expenses
8 ROE
31214
533
98.3%
1.7%
9 Total ARR
31747
100.0%
2 Employee Expenses
7 Transmission charges
10 Non-Tariff Income
11 ARR from Tariff
1450
30297
Tariff Setting
17
•
Consider a Utility purchasing 8000 MUs from Genco
– (Rs 1.50 P.U.) & 2000 MUs from Traders (Rs 4.0 P.U.)
•
P.P. Cost = 8000 * 1.5 + 2000 * 4
= 1200 + 800
= Rs. 2000 Cr. for 10,000 MU
– i.e. P.U. input cost = Rs 2 / Unit
•
Consider the Utility has Fixed Expenditure = Rs. 800 Cr.
– i.e. Total Input Cost = Rs. 2800 Cr. for 10000 MU input
– (i.e. Per unit Cost = Rs 2.80)
Tariff Setting...
• If Distribution loss is 30% ,One unit of Input means, 0.7 Unit Sold.
• i.e. Rs 2.80 have to be recovered from 0.7 Unit sale
• i.e. P.U. Sale Cost = 2.8 / 0.7 = Rs 4 P.U. at consumer end
• If the losses are 20%, i.e. 0.8 P.U. sold per unit Input
• i.e. P.U. Sale Cost = 2.8 / 0.8 = Rs 3.50
• If Losses are 40%, i.e. 0.6 unit sold per unit Input
• P.U Sale Cost = 2.8 / 0.6 = Rs 4.58
• Distribution loss is Integral Component of Retail Tariff
18
What is Success?
“
“In
1988 Tendulkar failed in
English in 10th standard
Now, in 2011 for
10th Standard English book
the first lesson is about
Sachin Tendulkar…..”
This is Real SUCCESS!!!!
Open Access, Parallel Licensee
Electricity Act 2003
Mandate for Reform
• Promoting competition/ Protecting
consumers’ interest / Providing power to All
• Consolidation of Laws in G/T/D/ Trading
• Gen is decentralized but Regulatory freedom
needed for accessing the market
• Transmission: Licensed activity. Regulatory
framework necessary for competitive &
transparent operation
Buying/Selling commodity
named Electricity…..
• Which cannot be seen, counted in numbers,
or measured in Kilos, liters or meters
• Which cannot be put into container with
forwarding address, on a particular truck
taking a particular route, but flows as per
laws of Physics
• Which cannot be stored and whose
availability and cost keep changing widely
Buying /Selling of Electricity….
• Which intermingles with other supplies in an
inevitable pool & cannot have an owner’s
name tag
• Buyer has no control over what seller
supplies &seller has no control over what
buyer draws from the pool & the two may
not match all time
• Thus, it is necessary to have mechanism for
commercial handling of mismatches
Solution ????
• Power trading has to be notional : the buyer
has to pay the agreed amount to the supplier
for scheduled quantum of power
• Payment for variations from the schedule
through a common mechanism called UI
(Unscheduled Interchange)
Concept of Unscheduled Interchange
State Load
12500 MW
CS Schedule 2000
MW
Drawl from CS 2500
MW
Gen 10000 MW
CS UI 500
MW
If System frequency is 49.5 Hz, the State has to pay ar Rs 8.73 PU is Rs.10,18,250 in 15
minutes! (500 MW: Rs. 1.018M)
Cost of 12000 MW scheduled generation for 15Min at Rs 3 PU is
Rs. 12000/4 X 3 i.e. 90,00,000 in 15 minutes! (12000 MW: Rs.9.0 M)
(For only 4% Energy: Price is over 10% : Avoid overdrawing)
25
UI rate in Paisa
Revised UI Curve w.e.f 3rd May 2010
20.000
18.000
Rs.17.46
16.000
14.000
12.000
10.000
Rs.12.22
UI rate 15.50
paisa for each
step of 0.02 Hz.
8.000
Rs.3.88
6.000
4.000
UI rate 47 paisa
for each step of
0.02 Hz.
Rs.8.73
49.20 Hz.
.49.70 Hz.
50.20 Hz.
49.50 Hz.
2.000
0.000
Freq in Hzs
26
Electricity Markets
• More private sector participation needed
• Need to unbundle supply system & start
multi-seller, multi-buyer model
• Basic need: consensus building in various
stake holders
Competition:
• Open access (using existing DL’s wires & paying wheeling
charges)
• Parallel Licensing (New DL to lay the network & give supply)
We should see competition as an opportunity & not as a threat
Open Access
• OA means that customer can pick & choose their supplier &
any supplier can use existing lines to reach any customer.
• On payment of wheeling charges, CS surcharge & additional
surcharge wherever applicable. (S 42(2), 42 (4))
• Open access means enabling Sale/ purchase of energy
between two parties utilizing the system of an (in-between)
third party & not blocking it on any unreasonable grounds.
• Implications: Competitors may cherry pick high revenue
customers but Cross Subsidy & Stand by issues
More clear definition
• Open
access
means
enabling
non-discriminatory Sale/ purchase of
electrical energy between two parties
utilizing the system of an (in-between) third
party
& not blocking it on any unreasonable grounds
Example of OA
Tata Power wants to sell 100 MW to Discom A
in Andhra
• TPC & Discom A agree on terms & conditions
of sale
• TPC to get consent from MSETCL /STU & no
objection from SLDC Kalwa
• Discom A to get consent from APTRANSCO
and APSTU and no objection from AP SLDC
Example (contd)
• Both SLDCs after ascertaining transmission
adequacy agree to arrange for necessary
metering, scheduling, EA, UI settlement
• All concerned to have a common
understanding about treatment/ sharing of
transmission losses, levy of transmission/
wheeling charges for use of intra-state &
inter-state system
OA REGULATIONS OF MERC
• MERC has formulated two Regulations:
Transmission OA 2005 & Distribution OA , 2005
• Distribution OA Regulations permit consumers
with contract demand >= 1 MVA are eligible to
avail OA from by 1st April 2007
• Draft for OA Regulations were finalized &
uploaded on MERC website for comments by
stakeholders & consumers up to 11th
Feb.2011.Final Version is getting ready
Categorization of OA Customers
Long term Open Access customers
• OA for a period >= 12 years but not exceeding 25 years
Medium term Open Access customers
 OA for a period < 3 years & > 3 months
Short-term Open Access customer
• OA for a period up to one month, at a time.
“Limited Short term OA customer” means consumer, who has a
supply agreement with the DL & avails OA only during prescheduled LS period”
Open Access: issues
• Cross subsidy: To compensate full/partial
revenue loss of existing DL
• Apportionment of losses
• Shortage scenario: load shedding
• State of Art Energy metering & EA system
Despite none of these issues, most countries took
over ten years to implement full OA
Charges for Open Access Customer
Charges payable by OA customers:
• Transmission charges & Wheeling charges
• Cross Subsidy Surcharge (CSS)
• Additional Surcharge (ASC)
• Standby Support charges (SBSC)
• Scheduling & System Operation Charges
payable to SLDC
Why Cross Subsidy Surcharge(CSS)?
• In current tariff orders, CSS & ASC are
identified as NIL from 1st April 2007 (due to
negative values)
• Study
Committee
re-examined
approach towards CSS & ASC.
• By identifying a value for CSS & ASC,
prospective OA applicant would share
burden of Cross Subsidy.
Cross Subsidy Surcharge NTP formula
S = T – [ C (1+ L / 100) + D ]
• S: Surcharge
• T: Tariff payable by relevant category of consumers;
• C: Weighted average cost of PP of top 5% at the margin
excluding liquid fuel based Gen. & renewable power
• D: Wheeling charge
• L: % System Losses for applicable voltage level
( In case the formula gives negative value of surcharge, ‘C’ in
the formula needs to be redefined (????))
Cross subsidy surcharge
• Surcharge formula (NTP)
S = T – [C (1+L/100) + D]
C Costliest long term contracted PP cost
excluding liquid fuel generation may be
considered
Example:
If C Rs.4.26 PU (for costliest LTPP) then
S = 67 PS/Unit for IND consumer @ 33KV &
above
OA CSS IN Various States
State
Punjab
Cross Subsidiary in Paise/Unit
0
Haryana
72
Uttrakhand
38
Himachal Pradesh
20
Madhya Pradesh
Rajasthan
84 at 66/33 KV and 62 at 132 KV
13
Additional Surcharge: Stranded costs
• OA customer, receiving supply from a person other than DL
of his area of supply, shall pay to the DL, an additional
surcharge, in addition to wheeling charges & CSS, to meet
out the fixed cost of such DL, arising out of his obligation to
supply as provided under Section 42(4) of EA 2003.
• Additional surcharge shall become applicable only if, the
obligation of DL in terms of LTPP commitments has been
stranded.
• Fixed costs related to network assets are recovered through
wheeling charges.
Additional Surcharge (ASC)
• DL should be required to demonstrate
stranded cost, if any, every six months to
SERC.
• On being satisfied, SERC would determine
additional surcharge (Ps/KWH)
• Such ASC should be levied only on new open
access applicants.
• No ASC for captive GEN plant for carrying
electricity to destination of his own use.
Treatment of S/B Supply (Our Views)
• In case consumer meets part of his demand through
OA & if the supplier defaults to supply power or
• In case of failure by OA supplier & the consumer
meeting all his requirement from DL,
Energy settlement would be at highest of the following :
• UI charge
• At SMP levied under Intra State ABT mechanism
• Temporary tariff as permitted in NTP
Unscheduled Interchange
• If an OA consumer is unable to draw scheduled
energy due to failure of InSTS &/or network of
DL, power injected may be treated as Banked
Power & OA consumer may be allowed to draw
the same within a period of 3 months with an
advance notice of 24 hours to DL.
• Beyond 3 months, energy would be treated as
lapsed.
Metering
 For OA consumer having load of >= 10 MW & all Gen
Stations irrespective of capacity, Special Energy Meters
shall be installed by STU or DL as the case may be, for &
at the cost of the customer.
 SEM can be inspected by any person authorized by STU/
SLDC.
 As regards OA consumers having load < 10 MW, the TOD
meter shall be installed by DL concerned.
 All OA customers shall follow Metering Standards of CEA.
States Allowing OA Power Procurement
through Power Exchanges
•
•
•
•
•
•
•
Punjab
Haryana
Uttarakhand
Himachal Pradesh
Madhya Pradesh
Rajasthan
Tamil Nadu
Volume on Power Exchanges
Average Volume(MUs)
50.00
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
Jan'10
Feb'10
Mar'10
Apr'10
May'10
Jun'10
Jul'10
Aug'10
Sep'10
Oct'10
Nov'10
Dec'10
Price on Power Exchange
Market Clearing Price(Rs/Unit)
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Jan'10
Feb'10
Mar'10
Apr'10
May'10
Jun'10
Jul'10
Aug'10
Sep'10
Oct'10
Nov'10
Dec'10
BENEFITS OF OPEN ACCESS
• Maharashtra is facing peak & energy deficits, even after
subsequent reforms programs, the utilities are not unable to
bridge the gap and provide quality & reliable power supply
to consumers.
• With OA, consumers are will get alternative sources of
power from Market, may be, at a lower cost, & can have
assured availability of power on demand
• Purchase of costly power to meet demand can be avoided,
which will actually result in lower PP cost for DL, leading to
lower tariffs for remaining utility consumers.
• However, Revenue of DL will get affected (CSS/ASC/SBC)
“If it is to be
It is up to me!!”
Thanks!!
(Contact me vlsonavane@gmail.com)
49
Parallel Distribution Licensee
• MERC can grant distribution license to more
than one persons for distribution through
their own networks in same area (6thproviso
of S14)
• Implications: DL will face Competition in its
HT & High Revenue Customers.
Determination of tariff
Section 62 (1) proviso 1 (d)
• The appropriate Commission may determine
tariff in accordance with provisions of this
Act for (a) Generation (b) Transmission (c)
Wheeling (d) retail sale of electricity
PROVIDED that, in case of distribution of
electricity in the same area by two or more
DL, the Commission may, for the purpose of
promoting competition, among DLs, fix only
maximum ceiling of tariff for retail sale of
electricity.
Competition through parallel
licensee
• SERC to grant License if investment meets
GoI stipulated norms (S 14/Proviso 6)
• Tariff ceiling may be set by Regulator(S
62(1d))
• No time frame issue unlike OA:
Commencement of operation by time & cost
of roll out plan
Competition in retail through parallel
network is an immediate possibility.
Main Difference
• OA: On incumbent licensee’s Network
• CSS/SB-Charges/ASC to be decided as the network
of incumbent Licensee is used
• Parallel Licensee: DL will have to lay the network.
• Ceiling Tariff concept.
Case study: TPC-D and R Infra-D
• M/s Tata Cos had four licenses: 1907/1919/ 1921/
1953 for sell, supply & distribute power to Bulk as
well as retail consumers. GOM on 12/07/2001
transferred these to Tata Power.
• M/s BSES Ltd had license from 29/05/1926 &
13/05/1926 as DL in suburban Mumbai. R-Infra has
taken over BSES.
• In Mumbai City: Four DLs : TPC-D (bulk Consumers
& few Retail) /R-Infra-D (North Mumbai up to
Vikhroli /BEST (South Mumbai )/MSEDCL
(Mulund/Bhandup)
Case study: TPC-D and R Infra-D
• Hon. Supreme Court Order dated 8th July 2008 allowing
supply of electrical energy in retail by TPC-D utilizing
distribution network of the other licensee present in the
area.
• “and allow these three appeals upon holding that under the
Terms & Conditions of the licenses held by it ‘Tata Power Co.
Ltd. Is entitled to effect supply of electrical energy in retail
directly to consumers, whose MD is less than 1000 KVA,
apart from its entitlement to supply energy to other
licensees for their own purpose, and in bulk, within its area
of supply as stipulated in its licenses.”
TPC Petition dated 30th August 2009
• R-Infra’s area of supply forms the part of
TPC’s area of supply. Both have common
areas to the extent of R-Infra’s area of supply
.
• TPC proposes to use R-Infra’s existing Dist
network system to ensure smooth Change
over.
• Public Hearing on TPC’s petition 30th Sept
2009 & 8th Oct 2009 (136 persons present)
MERC Order..
• Noting the consumer interest & their keenness to exercise
the choice of supplier on immediate basis, MERC decided to
issue interim order.
• Order issued on 15th Oct 2009 as per powers vested under
Section 94(2) of EA 2003:
• “The appropriate Commission shall have powers to pass
such interim order in any proceeding, hearing or matter
before the Commission, as that Commission may consider
appropriate.”
• No reference has been drawn to Section 42 of EA 2003 &
Regulations issued there under, to avoid the applicability of
Section 86(1)(a).
Some issues about change over
• Period for change over: shall not exceed 30
days from the date of receipt of complete
change over application form by TPC.
• Past Dues/liabilities & disconnection: As per
Section 56 of EA. (Disconnection of supply in
default of payment).
• Migration is not allowed to consumer who is
in arrears, without clearing his dues or for a
disconnected consumer (in arrears)
Shifting : Energy Meter Issues
• Ownership of Energy Meters: Consumers have a
choice to continue with the existing meter of RInfra/ Opt for meter from TPC / Purchase his own
meter from third party
• Joint testing of meter at the time of migration
• Meter for changeover consumers
to have downloadable capability
• Common meter specifications
for third party meter purchase
Shifting of consumers
from RIL To TPC
• Meter reading for consumers to be done by TPC . As
TPC will be responsible for Billing/ Collection &
meter reading is an integral part of bill preparation.
• TPC will provide meter reading info to R-infra on
daily basis along with the date& time
• TPC shall pay R-Infra wheeling charges within 21
days from date of bills raised on changeover
consumers ,irrespective of payment of WC by
consumers.
Security Deposit & Theft detection
• Security Deposit: Last month bill will be issued by RIL In case
of non-payment of dues, RIL after deducting the SD available
with them can disconnect the consumer, if the consumer
does not pay the balance amount in time
• Theft & inspection: Any theft by meter tampering or
bypassing meter leads to increased distribution losses for RInfra and requires R-Infra to pay for this energy, in intra State
pool at System Marginal price. To ensure that wheeling DL is
able to manage distribution losses, it should have the RIGHT
TO INSPECT and READ Consumer METER from time to time
for detection & investigation of theft by way of meter
tampering or bypassing the meter
Retail tariffs
(Energy Charges in PS/ per Unit)
Category
Consumption
TPC-D
R-Infra-D
BEST
LT Res
0-100
105
296
155
101-300
250
556
330
301-500
440
916
530
>500
530
1061
680
0-20 KW
425
795
400-760
20-50 KW
480
1026
730
>50 KW
505
1091
755
0-20KW
450
776
370-595
> 20 KW
460
1077
640-700
HT IND
500
756
505
HT Com
485
841
715
LT Com
LT IND
Calculation of tariff for
Change-over consumers
• Tariff for Change-Over consumers
= Charges based on tariff of supply DL
(-) Wheeling Charges of Supply DL
[a]
(+) Wheeling Charges of wheeling DL [b]
(a) HT = 18 Ps/KWH & LT = 37 Ps/KWH
(b) HT = 46 Ps/KWH & LT = 88 Ps/KWH
 Two DL: Supply (Tata), Wheeling: R-infra
• About 90,000 Consumers shifted from R-Infra to TPC. Applications
received 50,000 (+) MIAL Case: Daily savings Rs 10.5 Lakh
• Residential (monthly bill in Rs) : Savings :13.5% to 31.2%

Conclusions
• EA 2003: Engineers/Economists/Lawyers
Engineers: like to operate sophisticated PS
Economists: like to work on optimal incentives
Lawyers:
like to write rules & agreement
Power sector reform brings all of them
into close contact. But None of them can
succeed at their chosen tasks, unless they work
together in designing sustainable solutions
for the Customers”
Important issues in
Cross Subsidy Reduction
• Analysis of various MERC tariff orders: No definite
pattern for CS is being followed.
• CSR plan for each utility, to be prepared, separately.
• We are in the process of finalizing the Roadmap &
simultaneously preparing the draft Regulations.
ACOS for various utilities
•MSEDCL:
•BEST:
•TPC-D:
•R-Infra-D:
455 P/U
575 P/U
520 P/U
635 P/U
Categories having >1% of total Sale AND /OR
>1% of total consumers AND > 1% Revenue
Utility
ACOS
(Ps/Unit)
Min ABR (Ps/U)
Categories
Max ABR (Ps/U)
Category
MSEDCL
455
210(46%)
LT V- AG
845 (186%)
HT-Com
BEST
575
368 (64%)
Res
LT-
755 (131%) HTCom
R-Infra (*)
706
524 (74%)
I- Res
LT-
952 (135%) LT-IICom
TPC-D
520
395 (76%)
I- Res
LT- 551 (106%)
Com
HT-
Three step in Cross subsidy Reduction
• Step I: Inter category Cross subsidy Reduction
based on Average cost of supply for utility
• Step II: Inter category Cross subsidy
Reduction based on cost to serve for each
category
• Step III: Intra category (sub-category wise)
cross subsidy reduction
Tariff Subsidy by GOM
(Consumers to pay at a lesser tariff than approved by
MERC)
Financial Year
AG Consumers P/L
(Rs CR)
Consumers
(Rs CR)
Total Subsidy
(Rs CR)
FY 2005-06
FY 2006-07
FY 2008-09
FY 2009-10
1309
1229
1305
1397
333
484
471
485
1642
1713
1776
1882
FY 2010-11
1865
658
2523
Important issues
• Categories having Sale <1% of total Sale AND/OR Consumers <1%
of total consumers AND Revenue <1% of total Revenue are not
considered in study at the initial stage
•
Utilities need to carry out Cost to Serve (Cost of Service) studies
for various category of consumers. (Within 24 months)
• Initially, roadmap based on ACOS (five year road map)
•
After the results of Cost to Serve studies for each category,
roadmap modification will be taken up. Finally, intra-category CSR
can be taken up
CS IN MSEDCL (FY 2010-11)
SUBSIDIZING CATEGORIES
ACOS= RS.4.55/KWH Total CS = Rs. 5020 Cr in total ARR of Rs
32056 Cr (15.7%)
[64% from IND & 31% from COM]
CATEGORY
SALE
MU
ABR
% of
ACOS
CS=
(ABRACOS)
CS IN
RS. CR
% of
Total
CS
LT-COM
3814
686
151% (*)
231
881
18%
LT IND
4549
537
118%
82
373
7%
HT IND
25024
570
125% (*)
115
2878
57%
HT-COM
1620
845
186% (*)
390
632
13%
RLYS
1427
604
133% (*)
149
212
4%
CS IN MSEDCL (FY 2010-11)
Subsidized Categories
[71%to AG & 19% Domestic]
CATEGORY
LT-Res
SALE MU
ABR
% of
ACOS
CS=
CS IN RS.
(ABR- CR
ACOS)
% CS of
TTL CS
12478
379
83%
76
948
19%
591
226
50% (*)
229
135
3%
LT Ag
14057
210
46% (*)
245
3444
69%
HT Ag
496
248
54% (*)
207
102
2%
1190
417
92%
38
45
1%
743
296
65% (*)
159
118
2%
LT PWW
HT PWW
MPECS
Other SERCs….
• Karnataka: No CSR Road map. ACOS approach in
tariff Order. No intra class CSR.
• Punjab: CSR Regulations in place. ACOS approach
followed. Discoms directed to carry out category
wise Cost of supply. No mention of intra class CS.
• Gujrat: CSR road map not issued. Study is being
taken up
Other SERCs…
• AP: No specific road map & just trying CSR. COS approach to
be used. CS to be brought into +/-20 % level
• Delhi: Does have specific CSR Road map. But decided to use
ACOS approach (No specific mention of intra-class CSR)
• Orissa: Tariff Policy being followed for deciding allowable
level of CS. There is an intra- Discom CS. No specific mention
about the method/Road map for CSR. (No mention about
Intra-Class CSR)
MPERC Notification: 06/10/2010: LT
(ABR as % of ACOS of that FY)
Category
FY 08-09
FY 09-10
FY 10-11
FY 11-12
Dom
93
93
94
95
Non-Dom
152
140
130
120
PWW
86
90
92
95
IND
121
121
121
120
AG Met
67
67
73
80
St Light
100
100
100
100
MPERC Notification: 06/10/2010: HT
(ABR as % of ACOS of that FY)
Category
FY 08-09
FY 09-10
FY 10-11
FY 11-12
RLY
128
123
123
120
Coal mines
149
140
130
120
PWW
88
90
92
95
IND
125
124
122
120
Non-IND
136
131
126
120
Seasonal
179
160
140
120
Bulk-Res
97
97
97
97
Bulk supply
80
85
90
95
CS Reduction: Rs 341 CR to be reduced per year
(considering
Category
ACOS remains constant for 5 years)
Present
ABR %
Year 1
Year 2
Year 3
Year 4
Year 5
LT –COM
ABR
CSR in Rs Cr
151%
685
145%
660
-107
139%
632
-107
-132%
610
-107
126%
573
-107
120%
546
-107
HT-IND
ABR
CSR
125%
570
124%
565
-120
123%
560
-120
122%
555
-12
121%
550
-120
120%
546
-120
HT-COM
ABR
CSR
186%
845
173%
786
-97
160%
727
-97
147%
668
-97
134%
609
-97
120%
545
-97
RLYS
ABR
CSR
133%
604
130%
590
-16
127%
576
-16
125%
568
-16
122%
554
-16
120%
545
-16
CS : Rs 252 CR to be increased per year
(considering
Category
ACOS remains constant for 5 years)
Present
ABR %
Year 1
Year 2
Year 3
Year 4
Year 5
LT –PWW
ABR
CSR in Rs Cr
50%
226
56%
253
16
62%
280
16
68%
307
16
74%
334
16
80%
363
17
LT-Ag
ABR
CSR
46%
210
49%
221
217
53%
239
217
57%
257
217
61%
275
217
65%
293
217
HT-Ag
ABR
CSR
54%
247
58%
265
9
62%
284
9
66%
302
9
70%
321
9
74%
339
9
MPECSL
ABR
CSR
65%
295
68%
309
10
71%
322
10
74%
336
10
77%
349
10
80%
363
10
Some imp issues….
•
•
•
•
•
•
•
•
LT AG tariff: 46% to 65% in 5 years (CSR in 10 years)
HT AG tariff: 54% to 74% in 5 years (CSR in 7 years)
CSR/ Year: Rs. 340 Cr/year
Rise: 252 Cr/year
Balance amount to be increased in categories with
ABR>80 & <100%, e.g. LT-I
Main issues: Fuel prices rising, sales is also rising
ACOS = Total ARR/Sale will accordingly change.
Category wise sale is also changing, ABR will accordingly
go up or down
CSR Model needs to take care of these issues & based
on the trajectory, the revised tariff needs to be fixed.
Conclusions…
• CS reduction roadmap being prepared & CSR
regulations being prepared
• Final draft under preparation
• CS Surcharge for each utility will be
computed & computations will be sent to
stakeholders for comments.
Reforming the Existing system
“Many of the
important things in
the world have been
accomplished
by the people,
who kept on trying,
even when
there seem to be
no hope at all”
Dale Carnegie
Thank You
(vlsonavane@gmail.com)
82