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Regulatory Challenges in Reforming Indian Power System by Vijay L Sonavane Member, MERC Mumbai NPTI Nagpur , Date: 25 th FEB 2011
Regulatory Challenges in Reforming
Indian Power System
byVijay L Sonavane
Member, MERC Mumbai NPTI Nagpur , Date: 25th 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
Merging of markets along with synchronization of regions
NEW Grid
SouthGrid
South
West
NorthEast
Northeast
Five Regional GridsFive Frequencies
October 1991East and Northeast
synchronized
March 2003West synchronized
With East & Northeast
August 2006North synchronized
With Central Grid
Central Grid
11
1 2 3 4 5 6 7 8 910
11
12
13
14
15
16
17
18
19
20
21
22
23
24
BASE LOAD
BASE LOAD
MW
Base Load – Managed through Long Term PPA’s
Daily Variations – Managed through 1) Day ahead Power Exchange or 2) UI Balancing
Seasonal Variations – Managed through Short Term trades, by1) Traders, 2) Bilateral Contracts or 3) Banking Arrangements
Maharashtra Load Curve and Demand Management 141210864
Hours
12
Mumbai Load curve as on 10/05/2010
1:002:00
3:004:00
5:006:00
7:008:00
9:0010:00
11:0012:00
13:0014:00
15:0016:00
17:0018:00
19:0020:00
21:0022:00
23:0024:00
100200300400500600700800900
100011001200130014001500160017001800190020002100220023002400250026002700280029003000 REL-D
TPC-D
BEST
Mumbai
TIME BLOCK
DEM
AND
in M
W
13
14
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
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) systemTime of Day (TOD)/ Time of Use (TOU) metering
• Challenge: Demand Side Management (DSM)/ Energy Conservation
Aggregate Revenue Requirement Sr.No
.
Paerticulars Approved ARR (Rs Cr)
% of total ARR
1 Power Purchase 24213 76.3%
2 Employee Expenses 2591 8.2%
3 A&G and R&M 772 2.4%
4 Depreciation 458 1.4%
56
InterestOther Exp
640661
2.0%2.1%
7 Transmission charges 1879 5.91
78
Total expensesROE
31214533
98.3%1.7%
9 Total ARR 31747 100.0%
10 Non-Tariff Income 1450
11 ARR from Tariff 30297
17
Tariff Setting• 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)
18
• 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
Tariff Setting...
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)
Drawl from CS 2500 MW
Gen 10000 MW
State Load 12500 MW
CS Schedule 2000 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)
Concept of Unscheduled Interchange
25
0.000
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
20.000Revised UI Curve w.e.f 3rd May 2010
Freq in Hzs
UI rate 15.50 paisa for each step of 0.02 Hz.
UI rate 47 paisa for each step of 0.02 Hz.
50.20 Hz.
Rs.12.22
Rs.17.46
UI rate 15.50 paisa for each step of 0.02 Hz.
UI rate 47 paisa for each step of 0.02 Hz.
50.20 Hz.
49.70 Hz.
49.50 Hz.
Rs.12.22
Rs.17.46
UI rate 15.50 paisa for each step of 0.02 Hz.
UI rate 47 paisa for each step of 0.02 Hz.
50.20 Hz.
Rs.12.22
Rs.17.46
UI rate 15.50 paisa for each step of 0.02 Hz.
UI rate 47 paisa for each step of 0.02 Hz.
50.20 Hz.
.
49.50 Hz.
49.20 Hz.Rs.3.88
Rs.17.46
Rs.8.73
UI rate in Paisa
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 pre-scheduled 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
Haryana
Uttrakhand
Himachal Pradesh
Madhya Pradesh
Rajasthan
Cross Subsidiary in Paise/Unit
0
72
38
20
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
Jan'10 Feb'10 Mar'10 Apr'10 May'10 Jun'10 Jul'10 Aug'10 Sep'10 Oct'10 Nov'10 Dec'100.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Average Volume(MUs)
Price on Power Exchange
Jan'10 Feb'10 Mar'10 Apr'10 May'10 Jun'10 Jul'10 Aug'10 Sep'10 Oct'10 Nov'10 Dec'100.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Market Clearing Price(Rs/Unit)
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)
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)
• 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).
MERC Order..
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 R-Infra/ 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
• 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.
Shifting of consumers from RIL To TPC
• 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 R-Infra 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
Security Deposit & Theft detection
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
LT Com 0-20 KW 425 795 400-760
20-50 KW 480 1026 730
>50 KW 505 1091 755
LT IND 0-20KW 450 776 370-595
> 20 KW 460 1077 640-700
HT IND 500 756 505
HT Com 485 841 715
Calculation of tariff forChange-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 PSEconomists: like to work on optimal incentivesLawyers: 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: 455 P/U•BEST: 575 P/U•TPC-D: 520 P/U•R-Infra-D: 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%) LT-Res
755 (131%) HT- Com
R-Infra (*) 706 524 (74%) LT- I- Res
952 (135%) LT-II- Com
TPC-D 520 395 (76%) LT-I- Res
551 (106%) HT-Com
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 (Rs CR)
P/L Consumers (Rs CR)
Total Subsidy (Rs CR)
FY 2005-06 1309 333 1642FY 2006-07 1229 484 1713FY 2008-09 1305 471 1776FY 2009-10 1397 485 1882FY 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= (ABR-ACOS)
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 SALE MU ABR % of ACOS
CS= (ABR-ACOS)
CS IN RS. CR
% CS of TTL CS
LT-Res 12478 379 83% 76 948 19%
LT PWW 591 226 50% (*) 229 135 3%
LT Ag 14057 210 46% (*) 245 3444 69%
HT Ag 496 248 54% (*) 207 102 2%
HT PWW 1190 417 92% 38 45 1%
MPECS 743 296 65% (*) 159 118 2%
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 ACOS remains constant for 5 years)
Category Present ABR %
Year 1 Year 2 Year 3 Year 4 Year 5
LT –COMABR
CSR in Rs Cr
151%685
145%660
-107
139%632
-107
-132% 610
-107
126%573
-107
120% 546
-107HT-IND
ABRCSR
125%570
124%565
-120
123%560
-120
122%555-12
121%550
-120
120%546
-120HT-COM
ABRCSR
186%845
173%786-97
160%727-97
147%668-97
134%609-97
120%545-97
RLYSABR
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 ACOS remains constant for 5 years)
Category Present ABR %
Year 1 Year 2 Year 3 Year 4 Year 5
LT –PWWABR
CSR in Rs Cr
50%226
56%253
16
62%280
16
68%307
16
74%334
16
80%363
17LT-AgABRCSR
46%210
49%221217
53%239217
57%257217
61%275217
65%293217
HT-AgABRCSR
54%247
58%265
9
62%284
9
66%302
9
70%321
9
74%339
9MPECSL
ABRCSR
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
