Presentation at MERC Presentation at MERC Public Hearing for case 13 0f 2010 dated Public Hearing for case 13 0f 2010 dated
28-6-201028-6-2010
byby
N. PonrathnamN. [email protected]@yahoo.com
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The Presentation isThe Presentation isBy an Electrical Engineer , a spirited Indian By an Electrical Engineer , a spirited Indian
having having Adequate Adequate knowledge of Electricityknowledge of ElectricityAs a consumer of Electricity for residence / As a consumer of Electricity for residence / works in Chembur (in Mumbai Suburb ) and works in Chembur (in Mumbai Suburb ) and for Agriculture (in India) as defined in for Agriculture (in India) as defined in 2(15) 2(15)
of EAof EA 20032003As As Consumer Representative appointed by Consumer Representative appointed by
MERC U/S 93(4) of EAMERC U/S 93(4) of EA 20032003 and and
As amicus curie for this issue.As amicus curie for this issue.
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The issues for Public Hearing
• Requirement of PPA • Regulation of Purchase by MERC • Black Marketing of Electricity• Manipulation by distribution companies
Examples• Tariff• Suggestion
Power Purchase Agreement (PPA) • Power Procurement plan (long term short Power Procurement plan (long term short
term / standby etc ) to be in place to supply term / standby etc ) to be in place to supply uninterrupted power to the Consumers as uninterrupted power to the Consumers as enumerated in enumerated in MAHARASHTRA ELECTRICITY MAHARASHTRA ELECTRICITY REGULATORY COMMISSION (TERMS AND REGULATORY COMMISSION (TERMS AND CONDITIONS OF TARIFF) REGULATIONS 2005.CONDITIONS OF TARIFF) REGULATIONS 2005.
• Have been deliberately not place in any of Have been deliberately not place in any of the ARR tariff by few distribution companies the ARR tariff by few distribution companies and MERC has also failed to notice while and MERC has also failed to notice while determining the tariff.determining the tariff.
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Power Procurement Plan • 23.1 The Distribution Licensee 23.1 The Distribution Licensee shall shall prepare a five-prepare a five-
year plan for procurement of power to serve the year plan for procurement of power to serve the demand for electricity in his area of supply and demand for electricity in his area of supply and submit such plan to the submit such plan to the Commission for approvalCommission for approval::
• Provided that such long-term power procurement Provided that such long-term power procurement plan shall be an annual rolling plan and the first plan shall be an annual rolling plan and the first plan period shall commence on April 1, 2006:plan period shall commence on April 1, 2006:
• Provided further that the long-term power Provided further that the long-term power procurement plan shall be submitted procurement plan shall be submitted along with along with the application for determination of tariffthe application for determination of tariff, in , in accordance with Part B of these Regulations.accordance with Part B of these Regulations.
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Power Procurement Plan • 23.2 The long-term power procurement plan of 23.2 The long-term power procurement plan of
the Distribution Licensee shall comprise the the Distribution Licensee shall comprise the following:following:
• (a) A quantitative forecast of the unrestricted (a) A quantitative forecast of the unrestricted demand for electricity, within his area of supply, demand for electricity, within his area of supply, from each tariff category over the plan period;from each tariff category over the plan period;
• (b) An estimate of the quantities of electricity (b) An estimate of the quantities of electricity supply from the approved sources of generation supply from the approved sources of generation and power purchase;and power purchase;
• (c) Standards to be maintained with regard to (c) Standards to be maintained with regard to quality and reliability of supply, in accordance with quality and reliability of supply, in accordance with the Standards of Performance Regulations;the Standards of Performance Regulations;04/20/23 6
Power Procurement Plan (d) Measures proposed to be implemented as (d) Measures proposed to be implemented as
regards energy conservation and energy efficiency;regards energy conservation and energy efficiency;(e) The requirement for new sources of power (e) The requirement for new sources of power
generation and/ or procurement, including generation and/ or procurement, including augmentation of generation capacity and augmentation of generation capacity and identified new sources of supply, based on (a) to identified new sources of supply, based on (a) to (d) above;(d) above;
(f) The (f) The plan for procurement of powerplan for procurement of power including including quantities and cost estimatesquantities and cost estimates for such for such procurement:procurement:
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23.9 23.9 The Commission shall reviewThe Commission shall review the long-term power the long-term power procurement plan of the Distribution Licensee, or any proposed procurement plan of the Distribution Licensee, or any proposed modification thereto, and upon such review being completed, modification thereto, and upon such review being completed, the Commission shall either-the Commission shall either-
(a) pass an (a) pass an order approving the long-term power procurement order approving the long-term power procurement plan,plan, or modifications thereto, subject to such modifications or modifications thereto, subject to such modifications and conditions as it may deem appropriate; orand conditions as it may deem appropriate; or
(b) (b) reject the long-term power procurement planreject the long-term power procurement plan or application or application for modification thereto, for reasons recorded in writing, if such for modification thereto, for reasons recorded in writing, if such plan is not in accordance with the guidelines contained in this plan is not in accordance with the guidelines contained in this Part and directing the Distribution Licensee to submit a revised Part and directing the Distribution Licensee to submit a revised plan based on such considerations as it may specify: plan based on such considerations as it may specify:
Provided that the Distribution Licensee shall be given reasonable Provided that the Distribution Licensee shall be given reasonable opportunity of being heard before his long-term power opportunity of being heard before his long-term power procurement plan is rejected.procurement plan is rejected.
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Regulation at Power Procurement86. (1) The State Commission shall discharge 86. (1) The State Commission shall discharge
the following functions, namely: -the following functions, namely: -(a)……………(a)……………(b) (b) regulate electricityregulate electricity purchase and purchase and
procurement process of distribution licensees procurement process of distribution licensees including the including the price price at which electricity shall at which electricity shall be procured from the generating companies be procured from the generating companies or licensees or or licensees or from other sourcesfrom other sources through through agreements for purchase of power for agreements for purchase of power for distribution and supply within the State;distribution and supply within the State;04/20/23 9
Average Cost of Supply Should be The Actual Cost of supply
This issue have been unnoticed by the This issue have been unnoticed by the Watchdog Watchdog (MERC) and the consumer is (MERC) and the consumer is made to made to bleed bleed deliberately by the deliberately by the Distribution Companies.Distribution Companies.
Issues unnoticed by MERC is Explained Issues unnoticed by MERC is Explained taking example of RINFRA. taking example of RINFRA.
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Categorisation at the time of Categorisation at the time of Bombay Suburban Electric Supply LimitedBombay Suburban Electric Supply Limited
LF1- Light & Fan Applicable to residential, religious, LF1- Light & Fan Applicable to residential, religious, Charitable and educational institution Charitable and educational institution
DS- heating, cooking & refrigeration Applicable to DS- heating, cooking & refrigeration Applicable to residential, religious, Charitable and educational residential, religious, Charitable and educational institution institution
LF2- Light & Fan Applicable to commercial, club, hotel LF2- Light & Fan Applicable to commercial, club, hotel restaurant business premises restaurant business premises
CS- heating, cooking & refrigeration Applicable to CS- heating, cooking & refrigeration Applicable to commercial, club, hotel restaurant business premises commercial, club, hotel restaurant business premises
Temporary supplyTemporary supply
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Categorisation at the time of Bombay Suburban Electric Supply Limited
C-1 Cinemas and theaters C-1 Cinemas and theaters LTP-1 Motive Power up to 15BHP Connected LoadLTP-1 Motive Power up to 15BHP Connected LoadLTP-2 Motive Power above 15BHP up to 50BHP LTP-2 Motive Power above 15BHP up to 50BHP
Connected LoadConnected LoadLTP-3 Motive Power above 50BHP Connected LoadLTP-3 Motive Power above 50BHP Connected LoadCharged with Demand Charges.Charged with Demand Charges.High Tension supply did not existHigh Tension supply did not exist
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Categorisation at the time of B S E S Limited and first Tariff order 2004
There was tariff hike in 01-08-1994 & 01-03-1997There was tariff hike in 01-08-1994 & 01-03-1997High Tension supply did not existHigh Tension supply did not existThere was no There was no HT Housing Colonies HT Housing Colonies MERC had MERC had
violated section 61 (g) of EA 2003 by creating this violated section 61 (g) of EA 2003 by creating this subsidised tariff category.subsidised tariff category.
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Categorisation as on 2004TPC categories for low tensionTPC categories for low tensionResidentialResidentialLT1- non residential upto 100kWLT1- non residential upto 100kWLT2- non residential above 100kW (demand LT2- non residential above 100kW (demand
based Tariff)based Tariff){LT1<2} of TPC and {LTP1& LTP2} of REL had {LT1<2} of TPC and {LTP1& LTP2} of REL had
identical rateidentical rateResidential & commercial tariff had max 10% Residential & commercial tariff had max 10%
differencedifference04/20/23 14
Categorisation of LTP2 as on 2004REL had REL had Forced the consumers to pay demand Forced the consumers to pay demand
charges on consumers below 50 BHP charges on consumers below 50 BHP blaming blaming MERC for the tariff shock.MERC for the tariff shock.
MERC reverted the order in retroscopic effect MERC reverted the order in retroscopic effect considering the considering the wind fall revenuewind fall revenue made by REL. made by REL. however however REL did not refund to some of the REL did not refund to some of the consumers arbitrarily Violating MERC directionconsumers arbitrarily Violating MERC direction..
Changed the category from LF2 (commercial to Changed the category from LF2 (commercial to Industrial) to LTP2 for some consumersIndustrial) to LTP2 for some consumers
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Categorisation of LTP2 as on 2006MERC decides to levy Demand charges to above MERC decides to levy Demand charges to above
15BHP against its own decision in the previous 15BHP against its own decision in the previous year.year.
This illegality was uniformly inducted in other This illegality was uniformly inducted in other Distribution company also.Distribution company also.
Levy of demand charges above 100kW for TATALevy of demand charges above 100kW for TATALevy of demand charges above 50kW for MSEDCL Levy of demand charges above 50kW for MSEDCL Changed to 15BHP violating its own Regulation.Changed to 15BHP violating its own Regulation.
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Categorisation as on 2006Advertisement & hoarding Advertisement & hoarding category created category created
not complying to EA2003not complying to EA2003Temporary Temporary religious religious / other purposes created / other purposes created
not complying to EA2003not complying to EA2003BPL category was also createdBPL category was also created Residential tariff of REL & TATA was sameResidential tariff of REL & TATA was sameThe industrial tariff of REL marginally higher The industrial tariff of REL marginally higher
than TATA (within 10% )than TATA (within 10% )
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Issue of Educational and Charitable Organisation
The tariff for residential above 300 units were raised The tariff for residential above 300 units were raised from 440 Paise to 575 Paise from 440 Paise to 575 Paise 30% 30% raise.raise.
Increasing the cross subsidy & violating section 61 Increasing the cross subsidy & violating section 61 (g) of EA 2003 in the order passed by MERC.(g) of EA 2003 in the order passed by MERC.
Residential category Residential category Educational & Religious Educational & Religious institutioninstitution which have to consume more than which have to consume more than 300units300units became became subsidisingsubsidising category. category.
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Issue of BPLBelow poverty line consumers are not Below poverty line consumers are not
benefited as envisaged by NTP. The benefited as envisaged by NTP. The consumption is always more than 30 consumption is always more than 30 units.units.
This category has been used to manipulate This category has been used to manipulate the accounts by REL for better recovery. the accounts by REL for better recovery.
The issue of high Aggregate Technical & The issue of high Aggregate Technical & commercial losses is also used to recover commercial losses is also used to recover more from the consumers.more from the consumers.04/20/23 19
Categorisation as on 2007LT9 Multiplexes and Shopping Malls LT9 Multiplexes and Shopping Malls
category created not complying to EA category created not complying to EA 20032003
The limit of The limit of 15BHP15BHP changed to changed to 20kW 20kW for for levy of Demand charges and charges levy of Demand charges and charges reduced from reduced from 374Rs/kVA/month374Rs/kVA/month to to 60% 60% of 300Rs/kVA/month of 300Rs/kVA/month still most of the still most of the consumers have not able recover the consumers have not able recover the Tariff Shock. Tariff Shock.
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Reliability ChargeReliability ChargeReliability Charge Reliability Charge created not complying created not complying to EA2003 to EA2003 Reliability Charge Reliability Charge collected collected have to be have to be refunded refunded once Supreme once Supreme Court decides that reliability charge do Court decides that reliability charge do not complying to any of the provision of not complying to any of the provision of EA2003 upholding the decision of the EA2003 upholding the decision of the ATE order.ATE order.
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Black marketing of ElectricityBlack marketing of ElectricityGovernment of India created Electricity Act Government of India created Electricity Act 2003 for development of electricity by 2003 for development of electricity by Private Participation. Captive power plants Private Participation. Captive power plants supply electricity to grid at abnormally high supply electricity to grid at abnormally high cost and the source of generation is cost and the source of generation is concealed and normally transacted by a concealed and normally transacted by a trading company.trading company.
The existing power plants who gives power The existing power plants who gives power at the regulated price sells at marginal price at the regulated price sells at marginal price if given through a trader.if given through a trader.
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The custodians of the consumer interest failed miserably to protect
consumer interest MERC MERC have encouraged escalation of price by have encouraged escalation of price by
allowing Tri-part agreement and extracting money allowing Tri-part agreement and extracting money as Reliability Charge.as Reliability Charge.
In the transaction consumers loose and generators In the transaction consumers loose and generators benefit.benefit.
In the regulation for ceiling of the maximum price In the regulation for ceiling of the maximum price CERC CERC instead of tightening the escalating price instead of tightening the escalating price have provided a large room for the power players have provided a large room for the power players to fleece the consumersto fleece the consumers
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Fuel Adjustment ChargeFuel Adjustment Charge
All distribution licensees and the All distribution licensees and the MERC is violating the section 62 (4) MERC is violating the section 62 (4) of EA2003 by allowing cost variation of EA2003 by allowing cost variation other than Fuel (Expensive power other than Fuel (Expensive power purchase) as FAC.purchase) as FAC.
Expensive power purchase is already Expensive power purchase is already included in Reliability Chargeincluded in Reliability Charge
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Categorisation as on 2008Crematoriums and Burial GroundsCrematoriums and Burial Grounds
category created not complying to category created not complying to EA2003EA2003
MERC approved for Tariff for REL MERC approved for Tariff for REL 50%50% Higher than TATA.Higher than TATA.
The steep increase in Reliability The steep increase in Reliability (Expensive power purchase charge)(Expensive power purchase charge) charge.charge.
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Issue of Authorisation to Distribute Electricity to RINFRA
MERC vide RTI case no 25 /2008/1291 dated 24MERC vide RTI case no 25 /2008/1291 dated 24thth June June 2008 gave information that “2008 gave information that “Commission has not Commission has not authorised Reliance infrastructure for distribution of authorised Reliance infrastructure for distribution of ElectricityElectricity””I fail to understand how MERC has issued specific I fail to understand how MERC has issued specific condition of Distribution License applicable to Reliance condition of Distribution License applicable to Reliance Energy Limited Regulation on 20Energy Limited Regulation on 20thth August 2008. August 2008.Clarification sought vide letter dated case no 25 of 2008 Clarification sought vide letter dated case no 25 of 2008 dated 21.10.2008 still not received from MERC.dated 21.10.2008 still not received from MERC.
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Categorisation as on 2009
Residential category Residential category Educational & Educational & Religious institutionReligious institution which had which had became became subsidisingsubsidising category is category is further subjected to tariff shock further subjected to tariff shock by categorising them as by categorising them as Commercial.Commercial.
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Issues of Demand ChargesTwo-part tariff has been stipulated for all consumer Two-part tariff has been stipulated for all consumer categories for all distribution licensees. As regards categories for all distribution licensees. As regards levy of Demand Charges, the same is applicable only levy of Demand Charges, the same is applicable only for the consumers who have entered into a Contract for the consumers who have entered into a Contract Demand with the distribution licensee, irrespective Demand with the distribution licensee, irrespective of whether the connections have been released on of whether the connections have been released on the basis of Sanctioned Load or Contract Demand.the basis of Sanctioned Load or Contract Demand.Distribution licensees levy Demand Charges without Distribution licensees levy Demand Charges without entering into an agreement specifying Contract entering into an agreement specifying Contract Demand.Demand.
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Suggestion to MERC 11.1. Credibility of RINFRA should be assessed and Credibility of RINFRA should be assessed and
Authorisation with license in consultation with Authorisation with license in consultation with GOM by MERC.GOM by MERC.
2.2. PPP (Power Procurement Plan) should be in PPP (Power Procurement Plan) should be in placed before MERC along with PPA (Power placed before MERC along with PPA (Power Purchase Agreement) at the time of ARR.Purchase Agreement) at the time of ARR.
3.3. Transmission of electricity from any generator to Transmission of electricity from any generator to distributor should not be allowed without a PPA distributor should not be allowed without a PPA (Power Purchase Arrangement/Agreement) (Power Purchase Arrangement/Agreement)
4.4. MERC should direct police (law enforcement MERC should direct police (law enforcement department) to assist RINFRA in eliminating theft department) to assist RINFRA in eliminating theft and decrease distribution loss.and decrease distribution loss.04/20/23 29
Suggestion to MERC 2Suggestion to MERC 21.1. MERC Should Penalise Rinfra for the faultMERC Should Penalise Rinfra for the fault /
mistake committed because mistakes will be committed because mistakes will be repeated unless dealt with repeated unless dealt with severely. severely.
2.2. MERC should direct Rinfra to refund Excess MERC should direct Rinfra to refund Excess amount collected from the consumers once amount collected from the consumers once investigation report is received by MERC.investigation report is received by MERC.
3.3. Affected consumers should be adequately Affected consumers should be adequately compensated.compensated.
4.4. MERC strictly enforce Rinfra to comply with the MERC strictly enforce Rinfra to comply with the EA2003 and the Regulation framed by MERC.EA2003 and the Regulation framed by MERC.
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Suggestion to MERC 3Suggestion to MERC 31.1. Government should identify and give direct Government should identify and give direct
subsidy to the needy only as per Section 65 of subsidy to the needy only as per Section 65 of EA2003. Government should make system to EA2003. Government should make system to eliminate poverty of BPL consumers.eliminate poverty of BPL consumers.
2.2. MERC should fix Maximum price ceiling for all MERC should fix Maximum price ceiling for all categories as per 62 (1) of EA 2003.categories as per 62 (1) of EA 2003.
3.3. MERC should specify method and principle under MERC should specify method and principle under section 45[2(a)]to fix charges of electricity section 45[2(a)]to fix charges of electricity consumed such that the consumers willingly opt consumed such that the consumers willingly opt for efficiency and improvement in contrast to the for efficiency and improvement in contrast to the consumer penalized for the parameters he is consumer penalized for the parameters he is unable to maintain. unable to maintain. 04/20/23 31
Suggestion to MERC 4Suggestion to MERC 41.1. MERC should direct TATA to absorb the cost of MERC should direct TATA to absorb the cost of
wheeling charges and legitimate wheeling losses wheeling charges and legitimate wheeling losses so as to remove the difference of TATA so as to remove the difference of TATA consumers on TATA network and TATA consumers on TATA network and TATA consumers on REL/BEST network. consumers on REL/BEST network.
2.2. Cost of supply should be determined Cost of supply should be determined scientifically.scientifically.
3.3. Existing tariff category which is arbitral should be Existing tariff category which is arbitral should be changed. changed.
4.4. New Categories should be created complying to New Categories should be created complying to section 62(3) and 61(b) of EA2003.section 62(3) and 61(b) of EA2003.
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THANK YOUFor more details, please contact:
N. PonrathnamVel Induction Hardenings
25,Majithia Industrial Estate, Waman Tukaram Patil Marg,
Deonar, Mumbai -4000 88Cell no: 9869468816
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