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PRESENTATION BYREGULATORY & COMMERCIAL
DEPARTMENT
HARANE A.ASUPDTG. ENGR.
REGULATORY CELL
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Edisons Dream
We will make Electricity socheap that only the rich will
burn candles
- Thomas Alva Edison
(1847 - 1931)
2
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Power Scenario . . . 3
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Mahagecos business
Mahagencos Generation Business regulated by
CERC (Central Electricity Regulatory Commission)
MERC (Mahrashtra Electricity Regulatory Commission)
CEA (Central Electricity Authority)
MoP (Ministry of Power)
Appellate Tribunal for Electricity
Supreme Court
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LEGAL
STATUS OF
MERC
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All proceedings before MERC are
deemed judicial proceedings within the
meaning of IPC sections 193 & 228
MERC is a deemed civil court for the
purposes of sections 345 & 346 of the
Code of Criminal Procedure, 1973. (95).
LEGAL STATUS OF MERC. . . 1
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MERC has the same powers as are vested in a civilcourt under the Code of Civil Procedure, 1908 for --
Summoning any person and examining him on oath;
Discovery and production of any document producible as
evidence
Receiving evidence on affidavits;
Requisitioning of any public record;
The examination of witnesses; Reviewing its decisions, directions and orders (94. (1))
LEGAL STATUS OF MERC . . . 2
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MERC has the powers to pass interim order inany proceeding, hearing or matter before it. (94(2))
MERC may authorize any person, to represent
the interest of the consumers in the proceedings
before it. (94(3))
LEGAL STATUS OF MERC . . . 3
Prayas, Pune
Thane Belapur Industries Association, Thane
Mumbai Grahak Panchayat, mumbai
Vidarbha Industries Association Nagpur
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FUNCTIONS
OF MERC
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Approval of Power purchase agreement between a Generating
Company and a Licensee
FUNCTIONS OF MERC . . . 1
safeguarding of consumers' interest & ensures recovery of the cost of electricity in a
reasonable manner
Intra-State transmission of electricity;
Rates of transmission charges,
Wheeling of electricity;
Retail sale of electricity:
Surcharge for wheeling in accordance with the Distribution Open
Access Regulations; 10
To determinetariff
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FUNCTIONS OF MERC. . . 2
MERC shall ask the generating company to furnish separate details
for determination of tariff. (62. (1) ,(2),(5))
MERC may ask the generating company to comply with specified
procedures for calculating the expected Aggregate Revenues from the
tariff permitted to recover.
An application for determination of tariff shall be made by a
generating company or licensee accompanied by appropriate fee.
Every applicant shall publish the application, in form and manner, as
specified by MERC.(64. (1), (2))
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FUNCTIONS OF MERC. . . 3
Declare different regulations with respect to determination of tariff
Formulate State grid Code
Formulate scheduling and despatch code
Formulate norms for performance parameters
Formulate norms for depreciation, O&M expenses
Monitoring the performance vis--vis the norms
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FUNCTIONS OF MERC . . . 4
Maintain Transparency in process
Public hearings for most important matters
Form State Advisory Committee.
Issue Consultative papers on key Issues.
Issue Orders spelling out the policies of the
Commission.
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Data submission
Data regarding Aggregate Revenue Requirement (ARR) and
Annual Performance Review (APR)
Accounts data and Technical Performance data
FY 07- 08 FY 09 - 10
True up APR ARR
FY08 - 09
EstimatesEstimateActualsActuals
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Data submission
Technical & accounting Data required for tariff determination is
to be furnished to MERC as per --
MERC (Uniform Recording, Maintenance and Reporting of
Information) Regulation 2009 (URMRI) (20th April 2009)
Submission on quarterly basis in specified formats
Information based on actuals
Basis of allocation in case of common items
Transparency
Credibility to the Utilities
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Data submission .. .. URMRI
Generation companies in Maharashtra
Maharashtra State Power Generation Company Ltd (MSPGCL),
The Tata Power Company Limited (TPC)
Reliance Infrastructure Limited (RIL) Transmission companies
Maharashtra State Electricity Transmission Company Ltd (MSETCL)
The Tata Power Company Limited (TPC)
Reliance Infrastructure Limited (RIL) Distribution companies
Maharashtra State Electricity Distribution Company Ltd (MSEDCL),
The Tata Power Company Limited (TPC)
Reliance Infrastructure Limited (RIL)
Brihan Mumbai Electric Supply & Transport Undertaking (BEST).
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Data submission .. .. URMRI
Few entities manage regulated businesses viz. generation,
transmission, distribution, etc as well as non-regulated businesses out
of the purview of the Commission. Few entities operate in Maharashtra and also other states which fall
outside the jurisdiction of the Commission.
Few companies have integrated bundled electricity business within
the State.
These companies maintain their annual books of accounts as
per respective Acts like
Companies Act, 1956,
Electricity (Supply) Annual Accounts Rules (ESSAR),
1985
National Municipal Accounts Manual.
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Data submission .. .. URMRI
Formats to be filled up
Format 1 : Balance Sheet
Format 2 : Accumulated Depreciation
Format 3 : Current Assets
Format 4 : Loans
Format 5 : Current Liabilities
Format 6 : Profit and Loss Statement
Format :Cost of Fuel
Format 7 :Cost of Power Purchase
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Data submission .. .. URMRI
Format 8.1: Administrative and General Expenses Format 8.2 :Repair and Maintenance Expenses
Format 8.3 :Employee Expenses
Format 9: Long Term Interest Charges
Format 10: Interest on working capital
Format 11 :Income Tax
Format 12 :Return on Equity
Format :Cash Flow Format :Capex Format
Format :Operational Parameter Format- Generation
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Data submission
Regulatory Information Management System (RIMS)
Online uploading of data on monthly basis in specified
formats
Information based on actuals
Basis of allocation in case of common items
Accounting data and technical performance data
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Fixing of norms for performance parameters
Technical Performance parameters
Station Heat Rate,
Auxiliary consumption,
Secondary oil consumption :
Coal Transit loss :
Availability :
2ml/kWh
80%
0.8%
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Fixing of norms for performance parameters
Financial Performance parameters
Depreciation & advance against depreciation
O & M Expenses
Interest on long term loan capital
Interest on working capital
Return on equity :
Sharing of profit or loss
14%
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SCHEDULING
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Scheduling
Scheduling is the procedure used to formulate the order
in which generating units are to be loaded for the following
day in accordance with certain methodology
Scheduling is carried out based on economic dispatch
principles and satisfying various constraints
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The State Load Dispatch Centre (SLDC) shall be responsible for optimum
scheduling and dispatch of electricity within a State, in accordance with the
contracts entered into with the licensees or the generating companies
operating in that State.
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REGULATORY ASPECT
Section 32 (2) of EA 03 statesthat --
The State Grid Code (Part E) provides for a Scheduling and Dispatch
Code to be prepared by MSLDC.
The State Grid Code further specifies that the provisions of the
Scheduling & Dispatch Code shall be consistent with the Scheduling and
Dispatch Code under IEGC specified by CERC under clause (h) of
Section 79 of the Act
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PROCESS OF SCHEDULING AND DISPATCH
The scheduling period comprises of 96 time blocks of a day, each of 15-
minute duration, starting from 00:00 hours ending with 24:00 hours.
All Generating Stations (with unit size > 50 MW) to furnish their forecasted
unit-wise availability schedule to MSLDC on day-ahead basis for every 15-
minute block.
The Generation Schedules of all generating stations in the state and drawal
schedules of Distribution Licensees/Discoms shall be prepared by MSLDC
on 15 minute block basis.
In case the day ahead schedule is not received by 10 AM the schedule
assigned for the previous day shall be the schedule for next day.
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TIMELINE OF SCHEDULING
By 10 AM each day, InSGS shall furnish to MSLDC, their availabilityschedule in MW and MU on day ahead basis taking into consideration any
outage of its generating unit for the next day, in 15 minute blocks
By 2 PM MSLDC shall receive the revised demand forecast from
licensees and revised availability forecast from generators.
By 3 PM MSLDC shall intimate the generation schedule to InSGS.
By 6 PM, the MSLDC shall finalise target dispatch schedules forgenerators and target drawal schedules for licensees.
At 11 PM, MSLDC shall release final generation schedules to InSGS
and drawal schedule to each Distribution Licensees/ Discom.
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RESCHEDULING
Revision of final generation and dispatch schedule issued by MSLDC
may be necessitated on account of --
Reduction of Generation from ISGS or InSGS due to tripping of
units or caused by loss of auxiliaries or due to re-start restrictions of
a Thermal unit following a grid disturbance.
Constraints in interstate / intrastate Transmission System
Hydro station constraints
Movement of system frequency outside the band of 49 Hz to 50
Hz
Scheduling is day ahead, whereas rescheduling is same day
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RESCHEDULING
In case offorced outage of an InSGS, MSLDC will revise the schedules
on the basis of revised generation schedule of the InSGS.
The revised schedule will become effective from the 4th time block after
the time block in which the revision is advised by the InSGS.
During the 1st , 2nd and 3rd time blocks of such an event, the scheduled
generation of the InSGS shall be deemed to have been revised to be
equal to actual generation.
In case ofany grid disturbance, the scheduled generation of all thegenerating stations shall be deemed to have been revised to be equal to
theiractual generation for all the time blocks affected by the grid
disturbance.
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RESCHEDULING.
If, at any point of time, MSLDC observes that there is need forrevision
of the schedules forbetter system operation, it may do so on its own, and
in such cases, the revised schedules shall become effective from the 4th
time block, after the time block in which the revised schedule is issued by
the MSLDC.
MSLDC shall permit the revision of generation schedule by InSGS for
the remaining period of the day/block with advance notice of6 time
blocks. Revised generation schedules in such cases shall becomeeffective from the 6th time block after the time block in which the request
for revision has been received by MSLDC.
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As per MERC order(Case No. 77 of 2006) for approval ofSLDC Budgetfor FY 2007-08 SLDC is entitled to levy Rescheduling Charges on
generating companies, distribution licensees, trading companies,
transmission OA users, as the case may be, at the rate of Rs 3000/-
1. for each revision in schedule after finalization of schedules by
MSLDC on day-ahead basis,
2. for non submission of schedule as per State Grid Code
requirements.
RESCHEDULING CHARGES
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RESCHEDULING CHARGES: Issues
As per CERC terms and conditions of tariff Reg. 24(2):
(i) Any generation up to 105% of the declared capacity in any time block
of 15 minutes and averaging up to 101% of the average declared
capacity over a day shall not be construed as gaming..
(ii) For any generation beyond the prescribed limits, the Regional LoadDespatch Centre shall investigate so as to ensure that there is no
gaming.
If gaming is found by the Regional Load Despatch Centre, the
corresponding UI charges due to the generating station on account of
such extra generation shall be reduced to zero and the amount shall be
adjusted in UI account of beneficiaries in the ratio of their capacity share
in the generating station.
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The practical experience only can be used to resolve theseissues.
Variation in coal quality is one of the reasons for
rescheduling.
Generally, coal quality of a particular mine is fairly constant
& known to our operating engineers. If source of coal is
intimated to operating staff, decision about loading the unit
can be taken accordingly. This practice is being used
successfully at NTPC for rescheduling.
RESCHEDULING CHARGES: Issues
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Improvement in Communication between
CHP personnel who knows the source of
coal rake,
person who is bunkering the coal and
the shift in charge of the unit which is being
fed
will certainly help in rescheduling.
RESCHEDULING CHARGES: Issues
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As per MERC tariff regulation 40,
Declared capacity to be demonstrated as and when required by theSLDC.
Penalty for every mis-declaration for any duration/block in a day isreduction in Fixed cost.
Where the declared capacity is lower side than actual generation, thenany UI charges shall be reduced to zero. 40.3
The operating log books of the generating station shall be available forreview by the Commission
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Mis-declaration Penalty
First 2 days Fixed charges
Second 4 days Fixed charges
Subsequent In Geometrical Progression
Rescheduling
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Station heat rate
Coal firedmachines
200/210/250 MW 500 MW & above
DURINGSTABILISATION
AFTERSTABILISATION
DURINGSTABILISATION
AFTERSTABILISATION
MotorDriven BFP
2600kCal/kWh
2500kCal/kWh
2510kCal/kWh
2410kCal/kWh
TurboDriven BFP
- - 2550kCal/kWh
2450kCal/kWh
Open /Combinedcycle gas
turbines
Advanced classmachines
E/EA/EC/E2 classmachines
Open cycle Combined
cycle
Open cycle Combined
cycle
Large size 2685
kCal/kWh
1850
kCal/kWh
2830
kCal/kWh
1950
kCal/kWh
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Norms of Auxiliary consumption
Coal-based generating stations With cooling
tower
Without
cooling
tower
200 MW series 9.0% 8.5%
500 MW series Steam driven
boiler feed pumps
7.5% 7.0%
Electrically drivenboiler feed pumps
9.0% 8.5%
Gas Turbine/
Combined Cyclegenerating stations
Combined cycle Open cycle
3.0% 1.0%
31.1.2
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Straight line method 90% depreciation till end of life
of asset
Advance against depreciation = (actual amount
payable allowable depreciation )
limited to 1/10 of Principle amount of loan
allowable depreciation
Norms for Depreciation
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DEPRECIATION
Life span of the asset
Annualpremium
of loan
Advance against
depreciationInitialvalueof theasset
Residualvalue of
asset
Repaymentperiod of loan
Annualdepreciation
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Norms for O & M Expenses
Existing generating stations34.6.1
Average of the actual O&M expenses for the five (5) years ending March
31, 2004 shall be considered as O&M expenses for FY 2002 and
escalated at 4 % to arrive at O&M expenses for the base year
commencing April 1, 2005 & further escalated at 4 % per annum
New generating stations34.6.2
200/210/250 MW sets : Rs. 10.82 lakh/MW
500 MW and above sets : Rs. 9.73 lakh/MW
Weighted average for stations with combination of 200/210/250 MW sets
and 500 MW & above set
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Working capital:
cost fuel for 2 months corresponding to target availability.
O&M expenses for 1 month
Maintenance spares @ 1% of historical cost
Receivables towards sale of electricity (fixed cost + energy
cost) for 2 months
Minus fuel cost for 1 month corresponding to target
availability.
Interest on working capital @ Prime Lending Rate of SBI
Norms for Interest on working capital
Sharing of profit / loss on account of controllable /
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Sharing of profit / loss on account of controllable /uncontrollable factors
Uncontrollable factors
Force Majeure Events
Changes in Law, Judicial pronouncements and ordersof Central Govt., StateGovt. or Commission
Economy-wide influences such as unforeseen
changes in inflation rate, market interest rate, taxes and
statutory levies.
Sharing of profit / loss on account of controllable /
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Sharing of profit / loss on account of controllable /uncontrollable factors
(Reg.18,19) GAIN LOSS
Due toControllable
factors
Due toUncontrollable
factors
Due toControllable
factors
Due toUncontrollable
factors
MAHAGENCO 2/3 0 2/3 0
Consumer 1/3 1 1/3 1
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Working Approach Effective submissionIn view of the need of the hour to work under regulatoryregime, Regulatory Cell was formed in FY 2005 afterformation of Mahagenco.Later on it was envisaged that since the regulatory activitiesare more related to the revenue to the company , it will be
more useful if the billing related work is also carried by thesame dept.So in 2010, in order to enhance a commercial approach in
companys working , Commercial activities were added tothe portfolio of Regulatory Dept.
A brief history of RCD
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Co-ordination for Data collection from power stations
Data compilation and preparation of petition with proper
justification for further submission to MERC
Promptly fulfilling the data gaps.
Capex & DPRs submission to commission & follow up for In
principle approval.
Justifying the need of the of the scheme and co-ordination
with the stations for Cost Benefit Analysis and related
submission for the capex scheme.
Pre-submission activities
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Hearing at MERC
Meeting with Regulatory Experts of MERC to resolve the
issues
Public Hearing for tariff determination
Analysis of orders received from MERC
Post-submission activities
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Analysis of Orders received from MERC and according to
decide on way ahead( to file Review before MERC or Appeal
at Appellate Tribunal (APTEL) New Delhi or alternatives
available)
Hearing at APTEL
Matters in supreme court if any.Providing guidelines/suggestions to stations/ concerned
authorities as per the MERC/APTEL orders
Post MERC order activities
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Power purchase agreement for the generating stations.
Raising monthly bills to MSEDCL on 1st of every month.
Calculations for FAC (Fuel Adjustment Change) for every
station & submit up to 22nd of every month .
Other billing related activities like reconciliation, co-
ordination with stations for documentation regarding billing.
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Discuss various important issues in different forums like
Backing down, FAC calculation, merit order dispatch.
Keeping in touch with other generating utilities performance
& regulatory matters.
Study of emerging energy trading market scenario and
prepare our self ready for the future.
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E l f t d t filli
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In the ARR formats in Excel there is inter-linking for many cells.
Also at many locations it is expected that the figures should be reached
through the formulas for the concerned cell.
While giving the order ,MERC people follow the inter-links and formulas
only.
If some figures are directly punched this may create problems when MERC
finalises the order.
This is especially important for truing up year data.
Excel format data filling
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In case of Uran , during FY 08-09 true up, the total fuel quantity and cost
in Form 2.1 was directly punched.
The fuel rates in Form 2.1 and 2.2 were given in $/MMBTU as per
contract.There were some purchases at spot price but this was not considered in
Form 2.2 information.
Resultantly the rates were less than actual .
MERC people simply took the quantity and rate as per format to
arrive at true up fuel cost and ultimately we lost Rs.90 Crs. on true up
( which we regained through APTEL but it took six months)
Example
Ti l it li ti f C dit
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The timely capitalisation of the CAPEX investment is essential.
Generally such works are carried out in the O/H or shutdown and
technical people declare that the scheme is implemented as we
complete the actual installation/commissioning work during the
O/H or shutdown.
But the work completion certification and its cognizance by
Accounts people is much delayed.
This results in delay in capitalization, increase in
IDC,unnecessary comments from MERC for our delays in
implementation.
Timely capitalization of Capex expenditure
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Reform Agenda
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Reform Agenda
Indian Power SystemOpen access in T&D
Parallel Licensing
Cross Subsidy Reduction
History of Indian Power SystemHistory of Indian Power System
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History of Indian Power SystemHistory 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
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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
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Indian Power SystemIndian Power System Challenges in Transition StageChallenges 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
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Highlights of Indian Gen Sector
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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
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Renewable Generation
RE Source: Wind/ Solar/ Bio-Gas/ Small Hydro (Mini, Micro Run Of RiverProjects)/ 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
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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
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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 August 2006
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Regional Grids ofIndia
Merging of markets alongwith synchronization ofregions
NEW Grid
SouthGrid
South
West
North
East
Northeast
FiveRegional GridsFive Frequencies
October 1991East and Northeast
synchronized
March 2003
West synchronizedWith East & Northeast
gNorth synchronized
With Central Grid
Central Grid
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harashtra Load Curve and Demand Manageme
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1 2 3 4 5 6 7 8 9 10 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 PPAs
Daily Variations Managed through
1) Day ahead Power Exchange or 2) UI Balancing
Seasonal Variations Managed through Short Term trades, by
1) Traders, 2) Bilateral Contracts or 3) Banking Arrangements
14
12
10
8
6
4
Hours
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Mumbai Load curve as on 10/05/2010
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Functions of Distribution Utilities
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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
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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 DistributionSystems (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
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Aggregate Revenue Requirement
Sr.No.
Paerticulars ApprovedARR (Rs Cr)
% of totalARR
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
Tariff Setting
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71
TariffSetting
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. for10000 MU input
(i.e. Per unit Cost = Rs 2.80)
Tariff Setting
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72
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 TariffDistribution loss is Integral Component of Retail Tariff
TariffSetting...
What is Success?
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What is Success?
In 1988 Tendulkarfailed inEnglish in 10th
standard
Now, in 2011 for10th Standard English
bookthe first lesson is
about
Open Access, Parallel Licensee
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Open Access, Parallel Licensee
Electricity Act 2003M d t f R f
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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 foraccessing the market
Transmission: Licensed activity. Regulatory framework
necessary for competitive & transparent operation
Buying/Selling commoditynamed Electricity
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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.
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uy g /Se g o ec c y
Which intermingles with other supplies in an inevitable
pool & cannot have an owners 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 ????
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Solution ????
Power trading has to be notional : the buyer has to pay
the agreed amount to the supplier for scheduledquantum of power
Payment for variations from the schedule through acommon mechanism called UI (Unscheduled
Interchange)
C t f U h d l d
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Drawl from CS 2500MW
Gen 10000 MW
State Load12500 MW
CS Schedule 2000MW
CS UI 500MW
If System frequency is 49.5 Hz, the State has to pay ar Rs 8.73 PU isRs.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 UnscheduledInterchange
79
UI rate in Paisa
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80
Electricity Markets
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y
More private sector participation needed Need to unbundle supply system & start multi-seller,
multi-buyer model
Basic need: consensus building in various stakeholders
Competition: Open access (using existing DLs 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
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Open Access
OA means that customer can pick & choose their supplier & any supplier can useexisting lines to reach any customer.
On payment of wheeling charges, CS surcharge & additional surcharge whereverapplicable. (S 42(2), 42 (4))
Open access means enabling Sale/ purchase of energy between two parties utilizing thesystem 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
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Open access means enabling non-
discriminatory Sale/ purchase of electrical energybetween two parties
utilizing the system of an (in-between) third party
& not blocking it on any unreasonable grounds
Example of OA
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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 APSTUand no objection from AP SLDC
Example (contd)
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Both SLDCs after ascertaining transmission adequacy
agree to arrange for necessary metering, scheduling,EA, UI settlement
All concerned to have a common understanding abouttreatment/ sharing of transmission losses, levy oftransmission/ wheeling charges for use of intra-state &
inter-state system
OA REGULATIONS OF MERC
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MERC has formulated two Regulations: Transmission OA2005 & Distribution OA , 2005
Distribution OA Regulations permit consumers with contractdemand >= 1 MVA are eligible to avail OA from by 1st April2007
Draft for OA Regulations were finalized & uploaded onMERC website for comments by stakeholders & consumersup to 11th Feb.2011.Final Version is getting ready
Categorization of OA Customers
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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 supplyagreement with the DL & avails OA only during pre-scheduled LS period
Open Access: issues
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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 tenyears to implement full OA
Charges for Open Access Customer
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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 toSLDC
Why Cross Subsidy Surcharge(CSS)?
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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
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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 theformula needs to be redefined (????))
Cross subsidy surcharge
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Surcharge formula (NTP)S = T [C (1+L/100) + D]
C Costliest long term contracted PP cost excluding liquidfuel 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
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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
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OA customer, receiving supply from a person other than DL of his areaof supply, shall pay to the DL, an additional surcharge, in addition to
wheeling charges & CSS, to meet out the fixed cost of such DL, arisingout of his obligation to supply as provided under Section 42(4) of EA2003.
Additional surcharge shall become applicable only if, the obligation ofDL in terms of LTPP commitments has been stranded.
Fixed costs related to network assets are recovered through wheelingcharges.
Additional Surcharge (ASC)
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DL should be required to demonstrate stranded cost, ifany, every six months to SERC.
On being satisfied, SERC would determine additionalsurcharge (Ps/KWH)
Such ASC should be levied only on new open accessapplicants.
No ASC for captive GEN plant for carrying electricity to
destination of his own use.
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Unscheduled Interchange
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If an OA consumer is unable to draw scheduled energy dueto failure of InSTS &/or network of DL, power injected maybe treated as Banked Power& OA consumer may be allowedto draw the same within a period of 3 months with anadvance notice of 24 hours to DL.
Beyond 3 months, energy would be treated as lapsed.
Metering
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For OA consumer having load of >= 10 MW & allGen Stations irrespective of capacity, Special Energy
Meters shall be installed by STU or DL as the casemay be, for & at the cost of the customer.
SEM can be inspected by any person authorized bySTU/ SLDC.
As regards OA consumers having load < 10 MW, theTOD meter shall be installed by DL concerned.
All OA customers shall follow Metering Standards ofCEA.
States Allowing OA Power Procurement through Power Exchanges
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Punjab
Haryana Uttarakhand
Himachal Pradesh
Madhya Pradesh
Rajasthan
Tamil Nadu
Volume on Power Exchanges
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Price on Power Exchange
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BENEFITS OF OPEN ACCESS
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Maharashtra is facing peak & energy deficits, even after subsequentreforms 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 ofpower on demand
Purchase of costly power to meet demand can be avoided, which willactually 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
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MERC can grant distribution license to more than onepersons for distribution through their own networks insame area (6thproviso of S14)
Implications: DL will face Competition in its HT & HighRevenue Customers.
Determination of tariffSection 62 (1) proviso 1 (d)
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The appropriate Commission may determine tariff inaccordance with provisions of this Act for (a)Generation (b) Transmission (c) Wheeling (d) retailsale of electricity
PROVIDED that, in case of distribution of electricity in
the same area by two or more DL, the Commissionmay, for the purpose of promoting competition,among DLs, fix only maximum ceiling of tariff forretail sale of electricity.
Competition through parallel licensee
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SERC to grant License if investment meets GoIstipulated norms (S 14/Proviso 6)
Tariff ceiling may be set by Regulator(S 62(1d))
No time frame issue unlike OA: Commencement ofoperation by time & cost of roll out plan
Competition in retail through parallel network is an
immediate possibility.
Main Difference
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OA: On incumbent licensees Network
CSS/SB-Charges/ASC to be decided as the network ofincumbent Licensee is used
Parallel Licensee: DL will have to lay the network.
Ceiling Tariff concept.
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Case study: TPC-D and R Infra-D
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Hon. Supreme Court Order dated 8th July 2008 allowing supply ofelectrical 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 toeffect supply of electrical energy in retail directly to consumers, whoseMD 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 ofsupply as stipulated in its licenses.
TPC Petition dated 30th August 2009
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R-Infras area of supply forms the part of TPCs area ofsupply. Both have common areas to the extent of R-Infras area of supply .
TPC proposes to use R-Infras existing Dist networksystem to ensure smooth Change over.
Public Hearing on TPCs petition 30th Sept 2009 & 8th Oct
2009 (136 persons present)
MERC Order..
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Noting the consumer interest & their keenness to exercise the choiceof 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 interimorder in any proceeding, hearing or matter before the Commission, asthat 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
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Period for change over: shall not exceed 30 days fromthe date of receipt of complete change over applicationform by TPC.
Past Dues/liabilities & disconnection: As per Section 56of 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 disconnectedconsumer (in arrears)
Shifting : Energy Meter Issues
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Shifting : Energy Meter Issues
Ownership of Energy Meters: Consumers have a choice tocontinue with the existing meter of R-Infra/ Opt for meterfrom 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 consumersfrom RIL To TPC
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Meter reading for consumers to be done by TPC . As TPC will beresponsible for Billing/ Collection & meter reading is an
integral part of bill preparation.
TPC will provide meter reading info to R-infra on daily basisalong with the date& time
TPC shall pay R-Infra wheeling charges within 21 days fromdate of bills raised on changeover consumers ,irrespective ofpayment of WC by consumers.
Security Deposit & Theft detection
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Security Deposit: Last month bill will be issued by RIL In case of non-payment ofdues, RIL after deducting the SD available with them can disconnect theconsumer, if the consumer does not pay the balance amount in time
Theft & inspection: Any theft by meter tampering or bypassing meter leads toincreased distribution losses for R-Infra and requires R-Infra to pay for thisenergy, in intra State pool at System Marginal price. To ensure that wheeling DLis able to manage distribution losses, it should have the RIGHT TO INSPECT andREAD Consumer METER from time to time for detection & investigation of theft
by way of meter tampering or bypassing the meter
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Calculation of tariff forChange-over consumers
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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 received50,000 (+) MIAL Case: Daily savings Rs 10.5 Lakh
Residential (monthly bill in Rs) : Savings :13.5% to 31.2%
Conclusions
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EA 2003: Engineers/Economists/LawyersEngineers: 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 inCross Subsidy Reduction
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Analysis of various MERC tariff orders: No definite pattern forCS 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
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MSEDCL: 455 P/UBEST: 575 P/U
TPC-D: 520 P/UR-Infra-D: 635 P/U
Categories having >1% of total Sale AND /OR >1% of total consumers AND >1% Revenue
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Utility ACOS (Ps/Unit) Min ABR (Ps/U)Categories
Max ABR (Ps/U)Category
MSEDCL 455 210(46%) LTV- 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
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Step I: Inter category Cross subsidy Reduction based onAverage cost of supply for utility
Step II: Inter category Cross subsidy Reduction based oncost 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)
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Financial Year AG Consumers (RsCR)
P/L Consumers(Rs CR)
Total Subsidy (RsCR)
FY 2005-06 1309 333 1642
FY 2006-07 1229 484 1713
FY 2008-09 1305 471 1776
FY 2009-10 1397 485 1882
FY 2010-11 1865 658 2523
Important issues
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Categories having Sale
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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
% ofTotal 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]
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CATEGORY SALE MU ABR % of ACOS CS=(ABR-ACOS)
CS IN RS. CR % CS of TTLCS
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%
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Other SERCs
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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 ACOSapproach (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)
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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)
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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)
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Category PresentABR %
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
-107
HT-INDABRCSR
125%570
124%565
-120
123%560
-120
122%555-12
121%550
-120
120%546
-120
HT-COMABRCSR
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)
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Category PresentABR %
Year 1 Year 2 Year 3 Year 4 Year 5
LT PWWABR
CSR in Rs Cr
50%226
56%253
16
62%28016
68%30716
74%334
16
80%363
17
LT-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
9
MPECSLABR
CSR
65%295
68%309
10
71%32210
74%33610
77%349
10
80%363
10
Some imp issues.
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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 &
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CS reduction roadmap being prepared & CSR regulationsbeing 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
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Many of the important thingsin the world have beenaccomplished
by the people,who kept on trying, even when
there seem to beno hope at all
Dale Carnegie
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135
PERFORM OR PERISH
-Visveshwariah
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Thankyou