Discussion on Power Tariff in Delhi

Jointly organized by

Rajiv Gandhi Institute for Contemporary Studies (RGCIS)

&

energywatch6th May 2003, New Delhi

BySunder Lal

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Overview of presentation Regulation of Electricity in India : a

background Budding Period Period of fast growth

Experience : Independence till pre-reform period

Post-reform Period Experience : Post-reform Period (Delhi) Issues : Formulation of Electricity Supply

Tariff Mandate of the Acts (Apex Court’s judgment) Suggestions for Power Tariff

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Regulation of Electricity in India : a background -I

Budding period ( 1910-1947) Regulation by Indian Electricity Act 1910

Objective : Licensing of Electricity Regulations of rates Protective clauses

Important Principles: Bars undue preference to any consumer Advocates Tariff to be based on :

load factor; or power factor ; or total consumption of energy during any stated period; or the hours at which the supply of energy is required

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Regulation of Electricity in India : a background -II Period of fast growth (1947- upto reforms ) Regulation by Indian Electricity Act 1910 & Electricity (Supply) Act

1948 Objective :

Industrial development advent of grid systems Development in semi-urban and rural areas

Principles: SEBs formed as autonomous bodies; quasi-commercial

to Control generation, grid systems Act as bulk licensees & licensees in areas not served by

licensees ‘Act as they deem fit’ to formulate tariff

Given un-guided and arbitrary powers

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Experience : Independence till pre-reform period- I

Achievements: Generating capacity increased from 1712

MW to 1,04,000 Gross generation 515 Billion KWh (2000-1)-

4th largest in world Transmission lines from 2708 ckm in 1950

to ~ 200,000 ckm 90% village electrified from a negligible

figure in 1947 key role in Green Revolution- 63% pump-

sets energized

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Experience : Independence till pre-reform period

Failures: SEBs lost the objective

never autonomous they usurped distributing licensees the very aim of cheapening of rates only in undeveloped areas lost loss of important sources of revenue Arbitrary Tariff formulations influenced by political considerations Became Cash starved Infrastructure became fragile for want of overhaul

Alarmed legislators amended Supply Act in 1978 and 1983 SEBs and the Electricity Sector as a whole became unviable

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Post-reform Period- I

Electricity Regulatory Commissions Act, 1998

State Electricity Regulatory Commission established to regulate & determine Tariff based on:

consumers’ interests efficiency economic use of resources performance

optimum investment

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Post-reform Period- II Delhi Reforms Act 2000

DERC established DVB unbundled into :

Generation & Transmission ( Transco) Distribution (BSES & Tata with other licensees)

Tariff to be determined by DERC on new principles

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Experience : Post-reform Period (Delhi)

Old wine in new bottle Change reflected neither in tariff nor in functioning of

DVB/ DISCOMS Irrelevant and obsolete provisions that encouraged

corruption and theft continued: Sanction of load ( e.g. requirement of MCD Licence) Misuse charges Connected Load Change from LT to HT Normative Charges Minimum Charges Surcharge Billing demand

Categorization of consumers (Commercial, residential etc) violative of Reform Act

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Issues : Formulation of Electricity Supply Tariff - I

Characteristics of Electricity To be generated as used Can’t be stored Peak demand provisions Cost (Running cost & Standing cost) Hopkins Principle Load factor/ Power factor/ manner & quantum of

consumption

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Issues : Tariff formulation of Electricity - II

Two part Tariff Block Rate Tariff Flat Rate Tariff Power Factor Tariff

KVA Max. Demand Sliding Scale Power Factor Tariff KWH and KVArh/ KVAhTariff

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Mandate of the Acts (Apex Court’s judgment)

No discrimination among consumers; No cross subsidization

Tariff formulation is duty of Regulatory Commission Return on investment to be weighed against

efficiency parameters While formulating Tariff Commissions should take

into account that : Central and State ERCs Commission is not bound by the accounts submitted by

utilities Utilities to also bear for inefficiency Losses can’t be transferred entirely to consumers Watch consumer interests

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Suggestions for Power Tariff - IPremiseBecause :

The Act bars differentiation on use of electricity supply; Pattern of use changed dramatically; Present

categorization no more based on specified electrical characteristics;

Continuous measurement of electrical characteristics possible ‘cause of Electronic meters Especially by govt. bodies or SEBs

Choice of Consumer to either purchase or hire from utility Generating companies have adopted ‘Availability Based

Tariff’

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Suggestions for Power Tariff - II

Suggestions for Power Tariff - IINeed to develop tariff :

which automatically works out different rates for different characteristics specified in Act irrespective of

the present categories. fulfills the requirement of the Law encourages consumers towards better management of

their use of energy improve efficiency of the system.

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Thank you

You are welcome to see details of energywatch’s

response on ARR’s of DISCOMS and

suggestions forwarded to DERC on Tariff

at : http://www.energywatch.org.in

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