Discussion on Power Tariff in Delhi

1
Discussion on Power Tariff in Delhi
energywatch
By Sunder Lal
Jointly organized by Rajiv Gandhi Institute for
Contemporary Studies (RGCIS) energywatch 6th
May 2003, New Delhi
2
Overview of presentation
energywatch

• 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 Courts judgment)
• Suggestions for Power Tariff

3
Regulation of Electricity in India a background
-I
energywatch

• 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

4
Regulation of Electricity in India a background
-II
energywatch

• 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

5
Experience Independence till pre-reform period-
I
energywatch

• 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

6
Experience Independence till pre-reform period
energywatch

• 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

7
Post-reform Period- I
energywatch

• 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

8
Post-reform Period- II
energywatch

• 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

9
Experience Post-reform Period (Delhi)
energywatch

• 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

10
Issues Formulation of Electricity Supply Tariff
- I
energywatch

• Characteristics of Electricity
• To be generated as used
• Cant be stored
• Peak demand provisions
• Cost (Running cost Standing cost)
• Hopkins Principle
• Load factor/ Power factor/ manner quantum of
  consumption

11
Issues Tariff formulation of Electricity - II
energywatch

• Two part Tariff
• Block Rate Tariff
• Flat Rate Tariff
• Power Factor Tariff
• KVA Max. Demand
• Sliding Scale Power Factor Tariff
• KWH and KVArh/ KVAhTariff

12
Mandate of the Acts (Apex Courts judgment)
energywatch

• 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 cant be transferred entirely to consumers
  
• Watch consumer interests

13
Suggestions for Power Tariff - I
energywatch

• Premise
• Because
• 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

14
Suggestions for Power Tariff - II
energywatch

• Suggestions for Power Tariff - II
• Need 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.

15
Thank you
energywatch

• You are welcome
• to see details of energywatchs response on
• ARRs of DISCOMS and
• suggestions forwarded to DERC on Tariff
• at http//www.energywatch.org.in