CMIA CONFERENCE ON 14TH SEP, 2013 AT

AURANGABAD

ASHOK PENDSE,TBIA

CHALLENGES BEFORE INDUSTRY IN RESPECT OF

ELECTRICITY TARIFF

TARIFF When the electricity tariff is substantial with

respect to cost of production it makes large impact.

Eg:- Metal processing, Plastic, Ice, The Case of Ice factory The Case of Dubai

TARIFF COMPARISON NOV’12

INDUSTRIAL CONSUMPTION OF MSEDCL(MU) FOR 13-14

INDUSTRIAL CONSUMPTION

HT INDUSTRY (35%)LT INDUSTRY (5%)OTHER (60%)

INDUSTRIAL CONSUMPTION OF MSEDCL(MU) FOR 14-15

INDUSTRIAL CONSUMPTION

HT INDUSTRY (34.5%)LT INDUSTRY (5.4%)OTHERS (60.1%)

INDUSTRIAL CONSUMPTION OF MSEDCL(MU) FOR 15-16

INDUSTRIAL CONSUMPTION

HT INDUSTRY (35.2%)LT INDUSTRY (5.2%)OTHERS (59.6%)

TARIFF As it can be seen almost 40% of consumption

comes from industry, which contributes to largest chunk of Rs. 9000/- crores cross subsidy and hence,

MSEDCL and GOM should be concerned about health of industry.

WHY THE TARIFF IS HIGH?YEAR 13-14 14-15 15-16

POWER PURCHASE COST (Rs. Crores)

41078 53329 62325

Average Revenue requirement (Rs. Crores)

57839 64705 72761

Power purchase cost (%)

71% 82% 85%

Average cost of supply (Rs/Unit)

6.34 6.57 6.84

POWER PURCHASE SCENE13-14 14-15 15-16

MU Rs/Unit MU Rs/Unit MU Rs/UnitMSPGCL 47675 4.11 56370 4.49 65278 4.70

NTPC 22882 2.56 24728 2.83 26424 2.98NPCIL 5070 2.67 5070 2.81 5070 2.95RGPPL 3119 4.43 1723 7.51 1723 7.51

JSW 2048 3.70 2048 3.95 2048 4.24MUNDRA 5480 2.78 5480 2.87 5480 2.98

ADANI 8394 2.83 17390 3.01 5473 3.02INDIA BULLS

2736 3.26 8108 3.92 8108 4.00

CAPTIVE 1600 3.58 1600 3.50 1600 3.50

TRADERS 2197 3.65 - 3.92 - 4.10

POWER PURCHASE SCENEYEAR 13-14 14-15 15-16

MSPGCL 42% 41% 43%

NTPC + NPCIL 25% 22% 21%

JSW + MUNDRA + ADANI + INDIA BULLS + CPP +

TRADERS

20% 26% 23%

OTHERS 13% 11% 13%

POWER PURCHASE SCENE Hence, the power purchase from

MAHAGENCO is quite high than the market scene. Also, it constitutes almost more than 40% power purchase.

So the question comes, what is happening in MAHAGENCO?

There are three sets of stations :- 1) Older Stations 2) Stations synchronized in 12-13 & 13-14 3) Stations which are likely to come in 13-14

& 14-15

OLDER STATIONSYEAR 13-14

Net Gen. (MU’s)

ARR (Rs.Crores)

Bhusawal 2498 863Chandrapur 13631 3611

Nasik 3825 1756Koradi 3173 1418Parli 2362 968

Khaperkheda

4818 1587

Total 30607 10203 Rs. 3.33

RECENT STATIONS13-14

Net Gen. (MU’s)

ARR (Rs. Crore)

Paras 3&4 3171 1192Parli 6&7 2352 1217

Khaperkheda 5 3499 1572

Total 9022 3981 Rs.4.44/ Unit

UPCOMING STATIONS13-14 & 14-15 Rs/Unit

Bhusawal 4 500MW 4.26/-

Bhusawal 5 500MW 4.28/-

Chandrapur 8 500MW 5.09/-

Parli 8 250MW 4.71/-

Koradi 8 660MW 5.22/-

POWER PURCHASE SCENE Hence it can be seen that all the recent and

upcoming stations of MAHAGENCO is the major issue as far as unit rate is concerned.

It is worth going to market and buying power rather than buying it from MAHAGENCO.

CAPITAL EXPENDITURE OF MSEDCL

For feeder separation Rs.2000 Crores already spent. Hence the demand has been controlled. It virtually means load shedding being done through agricultural pumps.

So far about Rs.3500 Crores have been spent. Whereas the total outlet is about Rs.14000 Crores.

The main objectives of Capex are :- 1) Improvement in the quality of supply. 2) Reduction in loss. 3) Catering to increased demands to existing

customers. 4) Meeting the demand of newer customers.

PASSIVE ROLEStay with MSEDCL , and pursue reduction and minimum increase in the

tariff for present and future years. To do this :- A) Participate in public hearing and specific

hearing of not only MSEDCL but also generation. B) With the help of media, newspapers, forums, etc. bring to the notice of common man

regarding high electricity tariff. C) Bring to the notice of the govt. the unviable

tariff of industry as compared to other states. D) Make efforts with MERC to bring down the

open access limit from 1MW to 100 KVA.

ACTIVE ROLEGo away from MSEDCL, The two choices : A) Captive power plant. B) Open Access. There are four components which need to be

addressed in both the cases: 1) Power purchase cost 2) Wheeling charges 3) System Loss 4) Cross subsidy surcharge In case of captive CSS is not applicable.

CAPTIVE POWER PLANT “Captive generating plant” means a power plant

set up by any person to generate electricity primarily for his own use and includes a power plant set up by any co-operative society or association of persons for generating electricity primarily for use of members of such cooperative society or association of person

13 “company“ means a company formed and registered under the Companies Act, 1956 and includes anybody corporate under a Central, State or Provincial Act;

(49) “person” shall include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person

CAPTIVE POWER PLANT i) not less than twenty six percent of the ownership is held

by the captive user(s), and (ii) not less than fifty one percent of the aggregate

electricity generated in such plant, determined on an annual basis, is consumed for the captive use:

Provided that in case of power plant set up by registered cooperative society, the conditions mentioned under paragraphs at (i) and (ii) above shall be satisfied collectively by the members of the cooperative society: Provided further that in case of association of persons, the captive user(s) shall hold not less than twenty six percent of the ownership of the plant in aggregate and such captive user(s) shall consume not less than fifty one percent of the electricity generated, determined on an annual basis, in proportion to their shares in ownership of the power plant within a variation not exceeding ten percent

CAPTIVE POWER PLANTThree points emerge:1) All put together 26% equity minimum

2) They must consume minimum 51% generation

3) The consumption should be proportional to equity, in a financial year, with (+/-10%) variation allowed.

CAPTIVE POWER PLANT Eg:1

Consumer 1

6% Equity 6 / 26 = 23% Equity

51 x 0.23 = 11.73%

generation

12.92 – 10.56

Consumer 2

5% Equity 5 / 26 = 19.2% Equity

51 x 0.192 = 9.79%

generation

10.77 – 8.81

Consumer 3

6% Equity 5 / 26 = 19.2% Equity

51 x 0.192 = 9.79%

generation

10.77 – 8.81

Consumer 4

6% Equity 5 / 26 = 19.2% Equity

51 x 0.192 = 9.79%

generation

10.77 – 8.81

Consumer 5

6% Equity 5 / 26 = 19.2% Equity

51 x 0.192 = 9.79%

generation

10.77 – 8.81

26% Equity

%Equity distribution

Generation distribution

Variation allowed

CAPTIVE POWER PLANT Eg:2Consumer

151%

Equity6 / 26 = 51%

Equity51%

generation45.9 – 56.1

Consumer 2

5% Equity No relevance No relevance No relevance

Consumer 3

6% Equity No relevance No relevance No relevance

Consumer 4

7% Equity No relevance No relevance No relevance

Consumer 5

8% Equity No relevance No relevance No relevance

TO CONCLUDE If you stay with MSEDCL then go to passive role to control the cost.

If you go away from MSEDCL do active role, one of them is captive power plant.