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Tariff Related Issues Some Tariff related issues have been raised by various Consumers/Consumer Organizations. The Commission has examined all these issues along with responses of the Board thereto. These issues are discussed below: 8.1 TWO PART TARIFF AND MONTHLY MINIMUM CHARGES PSEB has proposed to introduce two part tariff for all categories of consumers except agricultural pumpset and temporary supply consumers. Fixed/demand charges for Large Supply industrial consumers, Railway Traction, MES and Bulk Supply are proposed to be levied on the sanctioned contract demand and for other categories namely Medium Supply, Small Power, Domestic Supply, Non-Residential Supply and Public Lighting fixed/demand charges are proposed to be charged on the basis of sanctioned load. Energy charges are proposed to be continued to be levied on energy consumption by the consumers of all categories. With this proposal for introduction of two part tariff, the Board has also proposed to discontinue the recovery of monthly minimum charges applicable to these categories. The Commission in its first two orders has been directing the Board to consider introduction of two part tariff for at least Large Supply and Medium Supply industrial consumers. In its latest Tariff Order for 2004-05, the Commission had directed the Board to prepare a detailed and well considered proposal for introduction of two part tariff for Large Supply and Railway Traction consumers. It was further directed that the proposal should cover other categories as well especially Medium Supply and Small Power if not some others also. Various consumers? associations have objected to the proposal of the Board for introducing two part tariff. The following issues have been raised in this context: (i) It has been pointed out that fixed/demand charges proposed at Rs.150/- per KVA for PIUs/arc furnaces and Rs.100/- for general industry should be the same and there is no justification for levying higher fixed/demand charges on PIU/arc furnaces. (ii) Rate of fixed/demand charges is high and the consumers having low consumption/load factor would be hard hit as their average rate would increase substantially. (iii) The levy of fixed/demand charges in case of general consumers would be an additional burden on the consumers. This should not be levied. (iv) Demand/fixed charges should be leviable on actual maximum demand and not on sanctioned contract demand in case of Large Supply and Railway Traction consumers. (v) At the time of power cuts, the per unit cost of the industrial consumers would increase substantially as industrial consumers may not be able to consume even the energy required to recover fixed charges. It has been emphasized that in case two part tariff is to be introduced then there should be provision for reduction of fixed charges proportionate to power cuts. (vi) There should be provision for maximum overall rate to check abnormal increase in average rate as was prevalent when two part tariff was in force for Large Supply and Medium Supply consumers a few years back. (vii) Various consumers? associations/forums have in general appreciated the proposal to discontinue levy of monthly minimum charges but have opposed the proposal for levy of fixed/demand charges. PSEB in its reply has stated that: (i) Fixed/demand charges for PIUs/Arc Furnaces are proposed to be at higher rates due to higher utilization of assets/infrastructure by them as their load factor is much higher as compared to general industry. Demand factor in respect of PIUs is also higher. (ii) The Board?s fixed costs are about 40% and it has been proposed to recover only 19% of this cost through revenue from fixed/demand charges. The Board would gradually increase the fixed charges to the level of 40% in the coming years as fixed costs of the Board are about 40% of total revenue expenditure/costs. Also the average rate for single part tariff would be equal/comparable to average rate under two part tariff. (iii) The tariff is designed in such a way that overall level of revenue recovery through two part tariff structure is the same as it would have been under the single part tariff. (iv) Fixed charges are leviable on the basis of commitment made by the Board and consequent reservation of capacity by the Board. (v) No relief in demand/fixed charges proportionate to power cut is feasible as there is no saving in fixed costs of the licensee during power shortage. (vi) Provision of maximum overall rate would lead to complicated billing procedure besides having financial implications. (vii) For any utility some minimum revenue inflow is essential to meet with its fixed charges. It could be recovered either through minimum charges or through fixed charges. The Commission notes that various issues in implementing two part tariff need detailed examination. This is especially important in view of vastly different views of the consumers on the subject. Moreover the issue needs a detailed study as the Board had earlier changed over from two part tariff to single part tariff for Large Supply and Medium Supply categories. The Commission, however, observes that almost all States (except Punjab, Haryana and Goa) have introduced two part tariff for Large Supply category and most of the states have introduced two part tariff for Railway Traction category. The Commission, therefore, decides to continue with the present system of single part tariff for the current year and levy of monthly minimum charges at the rates approved by the Commission as heretofore. The Commission further decides to introduce two part tariff for Large Supply and Railway Traction categories from the year 2006-07. The Commission, therefore, directs the Board to prepare a detailed and well considered proposal in this regard and submit the same to the Commission within 3 months of this order. The Board should keep in view the problems quoted by the objectors while framing the proposal. The proposal should contain load and contract demand profiles of different types of industries under Large Supply category and Railway Traction consumers. The proposal should bring out the reasons for reverting back from two part tariff to single part tariff earlier, revenue implications on the consumers and for the Board as well. 8.2 SLABS IN DS CATEGORY PSEB has proposed introduction of a new slab of 0-30 units under DS category so that marginal/economically weaker consumers alone get the benefit of substantially subsidized tariff of Rs.2/- per unit. The Board has proposed to modify the existing slabs. The existing and proposed slabs are as under:
Many consumers? associations have objected to the proposal of PSEB for restructuring the slabs. It has been pleaded that the proposal is not in conformity with the objectives of the new society to be built. The Board in its response has stated that it agrees in principle that the proposal of two slabs i.e. 0-100 and above 100 units is for the purpose of simplicity. However, the slab of 0-30 units has been proposed to provide lower tariff to the weaker sections which is in conformity with the provision in the draft National Tariff Policy. The Commission notes that the addition of 0-30 units slab is statedly proposed by the Board to protect the interests of the poorest consumers. The Commission further notes that the draft National Tariff Policy provides that the consumers below poverty line, who consume below specified level, say 30 units per month, may receive a special support through cross subsidy. It further provides that tariff for such designated group of consumers would be atleast 50% of the average cost of supply. A similar provision exists in the National Electricity Policy notified by the Ministry of Power, GOI. The Commission also notes that the draft National Tariff Policy is still under discussion and may take some time before it is notified by the Govt. of India. In the State of Punjab the tariff rate applicable to this category with monthly consumption of 0-100 units is about two third of average cost of supply. The Commission also notes that there is no demand from the consumers for introduction of a new slab for economically weaker consumers as proposed by the Board. The Commission further observes that presently domestic SC consumers having load upto 300 watts are allowed free supply upto 50 units per month. The Commission also observes that consumption of 30 units per month is not adequate even for poor sections of the society. Also change in existing slab would effect some consumers very adversely. The Commission considers it not advisable to change the slabs at this stage especially in the current year in view of increase in tariff. The Commission further observes that the present slab system under Domestic Supply category had been reviewed very recently in the Commission’s Tariff Order for 2004-05 and it was decided to maintain status quo. The Commission, therefore, decides to continue the existing slabs in Domestic Supply category. 8.3 TWO OR MORE CONNECTIONS IN ONE PREMISES Some consumers? forums have objected to the policy of the Board for not allowing more than one connection in a Domestic Supply consumer premises where such additional connection(s) are required due to social problems like family partition or a portion being let out to a tenant. It has been brought out that the Board has been insisting upon billing the entire consumption as a single consumer under DS category and denying the benefit of slab system to each family unit. It has further been brought out that the Board has been frequently changing the policy in this regard and the excess money recovered from the effected consumers during transition period is not being refunded by the Board. The issue of defining the premises and releasing one or more than one connection in the same premises has been laid down in the Sales Regulations of the Board. It has also been laid down that where more than one connection (other than that of Domestic consumers) is detected in the same premises, the connections are required to be clubbed into one connection. In respect of DS categories, the Board is permitting release of a separate DS connection for each family unit in one house/premises where many families live and are having separate kitchens. Similarly separate connection is allowed to be released to the authorized tenant(s) subject to completion of certain formalities/receipt of undertaking etc. from the landlord. These instructions are also applicable to the existing consumers. Further in all such (existing as well prospective) cases meters are required to be installed at an accessible place near the gate of the premises to avoid any chance of theft of energy. The Commission notes that the definition of premises reading as ‘premises is a unit of building complex, which has separate entry, and is appropriately partitioned from the neighbouring premises in a manner that electric connection running in the said premises can not be used in the neighbouring premises and vice-versa’ provided in the Sales Regulations of the Board is quite clear. The Commission observes that in respect of Domestic Supply consumers, ground realities vis-à-vis problems of Domestic Supply consumers of the State have to be kept in view. The Commission observes that under the present social customs/practices prevailing in the State wherever there is genuine division/partition of a family, separate portions of the same house/premises are used by the newly formed individual family units. The Commission further observes that as such it is essential to allow running/release of separate connection for each family unit having separate kitchen in the same house and all these connections in one premises need to be treated as independent connections for billing purposes under DS category i.e. tariff applicable for each individual connection would be as per slabs provided under DS category. The Commission also observes that the tenants would furnish requisite affidavit for having hired the said portion as heretofore so that benefit of being billed in lower slab is not misused. The tenants would also furnish an affidavit from the landlord that the landlord would clear all the liabilities, if any outstanding against the tenant, as per prevailing instructions. All these connections shall be metered and consumers would pay ACD/Security, Service Connection Charges as one time charges besides paying meter/MCB rentals, service charges and electricity bill etc. However, energy meters would be installed at an accessible place near the gate to avoid chances of theft of energy and to facilitate the same being read conveniently. The Commission further observes that all decisions would have prospective effect only. The Commission, therefore, decides to uphold present policy of the Board in respect of premises/houses of DS consumers and the existing instructions permitting release/running of more than one connection for each family unit(s) having separate kitchen/tenant subject to completion of requisite formalities and providing energy meter(s) at an accessible place near the gate, shall continue. These new connections for the family units/tenants would be treated as separate connections for all intents and purposes. 8.4 PENALTY FOR UNAUTHORISED LOADS PSEB has requested for revocation of suspension of the checking of
connected load for Domestic Supply consumers. It has been brought out that with
the rapid urbanization in the State of Punjab, there has been
consequent growth in per capita consumption of domestic consumers and installation
of unauthorized loads by the consumers. It has further been brought out that
unauthorized loads in domestic sector have potential to cause frequent interruptions
and outages to the distribution system leading to overloading of transformers/lines,
cables and service lines etc. resulting in deterioration of quality of supply.
It has also been brought out that continuation of suspension of checking of
connected load would have serious implications on the overall loss reduction
and revenue enhancement programme. The Commission in its Tariff Order for 2004-05 had decided to suspend checking of connected load by the Board for Domestic Supply consumers. The Commission had also directed the Board to come up with a suitable and practical proposal in this regard alongwith ARR and Tariff Application for the next year. Various consumers? organizations and chambers of industrial consumers have brought out that there should be no checking of connected load as it leads to harassment of consumers. They have also brought out that some times additional loads/points are installed by the consumers to meet their urgent requirement. The Commission notes that checking of loads for domestic consumers leads to harassment of consumers and consequential complaints/disputes. On the other hand, there is no revenue gain to the Board on this account. The Commission however observes that whenever any Domestic Supply consumer is caught stealing/abstracting energy either by tampering the meter or bypassing the meter or kundi connection or directly hooking Board’s lines, then checking of load of the consumers is essentially required for determining quantum chargeable from the consumers. The Commission, therefore, decides that suspension of checking of load of domestic consumers would continue for the current year also. However, the Board would be at liberty to check the connected load of Domestic Supply consumers who are found abstracting energy illegally either through kundi connection/hooking Board’s distribution line/cable or by tampering or bypassing the meter etc. The Commission also decides that the Board should immediately introduce a scheme of ‘Voluntary Disclosure of Connected Load and Meter Status’ for Domestic and Non-Residential Supply consumers. 8.5 METER RENTALS Some general category consumers/consumer forums have objected to the Board’s present system of charging meter rentals on account of provision of meter/metering equipment/MCB etc. by the Board at the premises of the consumers. It has been brought out that due to substantial reduction in cost of meters/metering equipments and interest rates, the present rates of meter rentals need immediate substantial reduction. It has also been submitted that the Board is charging rentals @ 1.6 paise per rupee cost of meter/metering equipment per month and full cost of meter/metering equipment is recovered in a period of about 62 months.. It has also been stated that there is also need for reduction of security deposit rates for meter/metering equipment. It has further been brought out that whenever meter/metering equipment gets damaged due to negligence on the part of consumers, the cost of meter recoverable as per Schedule of General Charges fixed in April 2000 needs immediate review for reduction as there is substantial decrease in cost of meter/metering equipments. Presently meter rentals are determined @ 1.6 paise per rupee cost of meter/metering equipment where meter/metering equipments are provided by the Board at the consumers’ premises. For single phase and three phase whole current meters, the rates of meter rentals have been worked out in absolute amounts and have been specified by the Board for different ratings in Schedule of General Charges/Sales Regulations. For equipments not so covered, monthly rentals are to be calculated in absolute terms by the field officers of the Board with the same formula @ 1.6 paise per rupee cost of meter/metering equipment. The rentals being charged for meter/metering equipment/MCB etc. are a part of non tariff income of the Board. Security deposit rates are presently covered under Sales Regulations of the Board and the same would be covered under Supply Code being finalized by the Commission. Regarding recovering the cost of meter, the procedure is laid down in Sales Regulations of the Board and separate rates have been specified for meter/metering equipment damaged due to the fault/negligence of the consumers in case meters are irreparable and separately for those repairable.. The cost being recovered for meters damaged due to the fault/negligence of the consumers is a part of existing Sales Regulations/Schedule of General Charges which are yet to be submitted alongwith justification by the Board for approval of the Commission. The Board in its response dated May 17, 2005 has stated that the issue is being examined in the Board and the Board would submit its proposal shortly for approval of the Commission. The Commission notes that there is a case for reduction in meter rentals and security deposits due to substantial decrease in the cost of meters and interest rates. The Commission also notes that the cost of meter/metering equipment recoverable from the consumers, wherever meter/metering equipment is damaged due to fault/negligence of the consumer, also needs to be reviewed. The Commission further notes that in the absence of details and detailed proposal from the Board, the decision on the same can not be taken by the Commission. The Commission, therefore, directs the Board to submit a detailed proposal for revision of rentals for meter/metering equipment/MCB etc, rates of security deposit and cost recoverable from the consumers in case of damage of meter. The Board should submit appropriate proposal within 2 months from the date of issue of order to enable the Commission to review the same and take a decision. The Commission further decides that in the meanwhile existing system of the Board may continue. 8.6 RECEIVABLES Some industrial consumers? associations have brought out that receivables/defaulting amount of the Board are rising substantially and the Board is not indicating the figures of defaulting amount in its ARR. It has further been brought out that defaulting amount against the State Government Departments is rising and the Board is not taking any action to disconnect supply/recover the outstanding amount which is contrary to the instructions of the Board, according to which defaulting consumers are to be disconnected. They have also pointed out that the Board is giving a discriminatory treatment to them vis-à-vis departments of Govt. of Punjab and have requested the Commission to direct the Board to furnish figures of defaulting amount in the ARR/Tariff Application and also take immediate action to reduce the outstandings. The Board has intimated that collection efficiency of the Board is 99% and is almost the highest amongst all the SEBs/distributions licensees of the country. The Board has also supplied details of the receivables. The Commission has studied the data pertaining to receivables/defaulting amount and observes that the defaulting amount of the Board can be classified under 4 categories: (i) Amount involved in court cases/litigation/cases pending before Board’s various review channels. (ii) Amount outstanding against Government Departments where disconnection of supply may lead to inconvenience for the general public and law & order problem in certain cases; (iii) Old cases where permanent disconnection orders have been effected; (iv) Other consumers. The Commission notes that there is increase in outstandings against Govt. departments and other consumers. The Commission also notes that the Board has little control on clearance of defaulting amount involved in litigation. However the Board should take up with the concerned Government departments for expeditious clearance of outstandings and payment of current bills. The Commission further observes that the Board has to be very vigilant so that outstandings against other consumers are not allowed to increase and efforts are made to recover outstanding amount from the consumers whose premises have been disconnected by way of adjustment of their security/ACD and filing recovery suits. The Commission notes that the position of receivables for the last 4-5 years is as under: (Rs. in crores)
The Commission also notes that the comparative position of 5-6 major Electricity Boards/Utilities (Ref. Tata Energy Data Directory and Year Book 2002/03) for the year ending March 31,2000 is as under: (Rs. in crores)
The Commission notes that there is a minor difference between the figures of receivables as contained in the balance sheets of the Board and as given in the compilation by TERI. The Commission observes that collection efficiency of the Board is about 99% and the receivables are equal to less than 40 days revenue in the last 4 years. The Commission also observes that position of the Board is almost at the top as far as receivables are concerned and can further improve if the receivables from State Government departments are cleared and outstandings against other consumers are not allowed to increase. The Commission decides that the Board should take up the matter with the State Government at the appropriate level for immediate clearance of outstandings. The Commission also directs the Board to take effective steps to reduce outstandings against other consumers and the Board should furnish age analysis of the receivables alongwith the next ARR. 8.7 DEPRECIATION RESERVE FUND PSEB has requested the Commission for revoking its directive for creation
of Depreciation Reserve Fund. It has been brought out that it has not come across
any instance of such a Depreciation Reserve Fund in any corporate or State entity.
It has The Commission had issued a directive to the Board in its Tariff Order for 2004-05 that the Board should submit a proposal for creation of Depreciation Reserve Fund containing a proper system to ensure that the money in the proposed Depreciation Reserve Fund is not diverted by the Board for unauthorized purposes. The Commission notes that there can be no dispute on the basic principle that the depreciation accruals are to be earmarked for the specific purpose for which these are meant. This is so in all the organizations. The Commission further notes that the depreciation can be used either for replacement of old assets or creation of new assets or repayment of loans obtained for creating assets. It is to ensure that the funds made available to the Board through depreciation are used for the purpose for which these are meant and are not diverted for any other purpose like meeting revenue deficit etc. For this purpose, the Board can come up with a suitable proposal. Regarding Board’s observation, as already stated above and in the last Tariff Order also, the money available through depreciation can be used for repaying loans taken for capital purposes. These can also be used for funding capital works even under the system being advised by the Commission. The Commission, therefore, decides that the Board should devise methodology to ensure that depreciation funds are used only for the purpose for which these are meant and are not diverted. 8.8 GENERAL PROVIDENT FUND PSEB has requested the Commission to defer the applicability of Commission’s directive for creation of a separate General Provident Fund Account till the creation of corporate entities under the proposed reforms. It has also been intimated that a part of provident fund contribution of the employees is currently being utilized by the Board to fund its capital investment plan and the approval of the Government of Punjab has already been obtained. It has also been intimated that the Board is providing interest on this amount to ensure that the assured return is provided to the employees as per the provisions of the General Provident Fund Scheme. It has further been intimated that the Board has also made investment to the tune of about Rs.151 crores (till March 2004) out of this fund, in other securities. The Board has also brought out that there has been no case of delay in payment of provident fund to any retiree/employee for shortage of funds. It is apprehended by the Board that in case a separate account is created as per directive of the Commission, then it may not be able to generate enough return to provide assured return to the employees on long term basis. Simultaneously the Board would have to find alternate sources for arranging funds to meet with capital funding requirements. The Commission had issued a directive in Tariff Order for 2004-05 that the Board should submit a detailed proposal for creation of a separate General Provident Fund Account alongwith its ARR for the year 2005-06 or during its processing. It was further provided that atleast new accretions in the General Provident Fund should be deposited every year in a separate account. The Board had also been directed to ensure that deposits in the General Provident Fund Account of the employees are deposited without any undue delay and withdrawal from account be restricted to authorized purposes only. The Commission notes that diversion of deposits in General Provident Fund for meeting the capital investment fund requirement can be made even from the separate account as approval of the State Government already stands obtained by the Board. It should, however, be treated as interest bearing loan from the proposed General Provident Fund Account. It has also to be ensured that the deposits in General Provident Fund Account are not used for funding revenue expenses. The Commission, therefore, decides that the Board should take steps to open a separate General Provident Fund Account. The new accretions in the General Provident Fund Account of the employees should be deposited in this account. In case any money is required by the Board to be utilized for funding capital investment plan requirements, the Board may take interest bearing loan from the General Provident Fund Account. 8.9 SUBMERSIBLE PUMPSETS The Board has proposed that the flat rate for AP tubewells having submersible pumpsets should be 24% higher than the flat rate for AP tubewells with monoblock pumpsets. The Board has made this proposal as according to it the energy consumption by the submersible pumps is more by 24% than the energy consumption of monoblock pumps having the same horse power rating. The Board has supplied field reports to substantiate its version. The Commission notes that the results of two studies supplied are at variance and no definite and conclusive data regarding higher consumption of submersible pumpsets has been made available by the Board. The Commission, therefore, decides not to accept this proposal of the Board for charging higher flat rate to submersible pumps and decides to continue the existing practice of charging same flat rate for all unmetered AP tubewells. 8.10 KVAH TARIFF Many industrial consumers? associations/chambers and one employees? association of the Board have suggested for introduction of KVAH consumption based tariff in lieu of KWH based tariff for atleast Large Supply and Medium Supply consumers. It has been further brought out that the suggestion if implemented would motivate the Large Supply and Medium Supply industrial consumers to have higher power factor which would in turn help in improving the system parameters and reduce technical losses. The Commission in its Tariff Order for 2004-05 had directed the Board to submit a detailed paper on the introduction of KVAH tariff atleast for Large Supply, Medium Supply and Railway Traction categories in the ARR for 2005-06. In its response the Board has stated that experience from other states which have introduced KVAH tariff for their HT consumers has revealed that it had adversely affected revenue of the power utilities of those states. It has further been stated that the Board is on the verge of unbundling and can ill-afford to experiment with the introduction of KVAH tariff which may result in loss of revenue. The Commission had decided to raise the threshold limit of power factor from 0.88 to 0.90 in respect of Large Supply, Medium Supply and Railway Traction consumers effective from July 01, 2005 in the Tariff Order for 2004-05. The Commission had also decided to introduce power factor incentive w.e.f. July 01, 2005 for those consumers who achieve higher power factor. Thus the purpose of motivating the consumers to improve their power factor is likely to be achieved with the introduction of power factor incentive. The Commission, therefore, observes that it would be worthwhile to watch the benefits of upward revision of threshold limit of power factor and introduction of incentive for higher power factor and then to review the issue. In the meantime the Board is advised to carry out a detailed study on the proposal of introduction of KVAH based tariff. The Commission, therefore, decides to continue with the existing system of KWH based tariff and directs the Board to carry out study for practicability of introducing KVAH tariff for Large Supply, Medium Supply and Railway Traction consumers. 8.11 HIGH VOLTAGE REBATE PSEB has proposed to change the criteria of allowing high voltage rebate permissible for all categories of consumers except Railway Traction connected at 11 KV and above. It has been proposed that the consumers connected at prescribed voltage level as per PSEB norms would not be entitled for any rebate. It has been further proposed that the consumers connected at voltage higher than PSEB norms for connected load would be entitled for 3% rebate but the consumers connected at voltage lower than PSEB norms would be levied surcharge. The quantum of surcharge has not been specified. The present system is as follows: (i) Large Supply consumers and consumers of all other categories except Railway Traction catered supply at 33 KV/66 KV are allowed rebate @ 3% of energy charges. LS consumers and consumers of other categories except Railway Traction, catered supply at 132 KV/220 KV are allowed rebate @ 5% of energy charges; (ii) For Large Supply consumers except Arc Furnaces having contract demand exceeding 2500 KVA and upto 4000 KVA catered at 11 KV, the energy consumption is enhanced by 10% to cover for transformation losses, incremental line losses and service charges. 17.5% surcharge is leviable on all Arc Furnace consumers and other Large Supply consumers having contract demand above 4000 KVA and catered at 11 KV. In addition Medium Supply, Small Power, Domestic Supply and Non- Residential Supply consumers catered supply at 11 KV are allowed 7.5% rebate on their bill amount. Also Large Supply consumers catered supply at LT i.e. 400 volts are levied 20% LT surcharge. The steel rolling mills catered supply under LS category but connected at LT are levied steel rolling mill surcharge @ 5% in addition to LT surcharge @ 20%. Some industrial consumers? associations have objected to the proposal of PSEB with the plea that whenever supply is catered at 33 KV or higher voltage, there is a significant cost saving to the Board in terms of infrastructure and technical losses. It has also been submitted that substantial investment is made by the consumers in availing supply at higher voltage thus the consumers are eligible for high voltage rebate. It has been brought out by some of the industrial consumers? associations that the Board in its ARR for the year 2004-05 had recommended enhancement of quantum of rebate and there is no reason for discontinuing the rebate being allowed to 33 KV/66 KV consumers for the last more than 10 years. It has also been brought out that high voltage rebate, as decided by the Commission in its Tariff Order for 2004-05, should atleast be continued till the cost of supply is calculated consumer-wise and voltage-wise as cost of electricity would definitely be less for EHT consumers. The Commission observes that it is following the concept of average cost of supply. The Commission also observes that tariffs for Large Supply consumers had been worked out by the Board at base voltage level of 11 KV and that of Medium Supply consumers the tariffs had been worked out at base voltage level of 400 volts. The Board had also been allowing/proposing rebate for high voltage supply. These basis of tariff had been accepted by the Commission. The Commission observes that the Board in its ARR for 2004-05 had proposed higher rebate @ 6% for Large Supply consumers getting supply at 33 KV or higher voltage. The Commission also observes that in case any Large Supply consumer is connected at voltage lower than 11 KV then he is liable to pay LT surcharge as the Board/Licensee is required to invest additional amount in creating capital infrastructure and bearing additional T&D losses. The Commission further observes that where supply is availed at a voltage higher than base voltage level, the utility is benefited by way of saving of capital cost and operating costs besides reduction in losses. Basically rebate is allowed to provide incentive to consumers to take measures for improvement of grid condition and lowering of T&D losses. Thus it is considered advisable to continue the existing provisions of 3% rebate to consumers availing supply at 33 KV/66 KV. The Commission also considers it prudent to continue 5% rebate to those consumers (other than Railway Traction) catered supply at 132 KV/220 KV. The Commission directs the Board to submit a comprehensive proposal bringing out all the aspects of the matter and the proposal should also include revenue implications. The proposal should be submitted alongwith next ARR for 2006-07. Meanwhile the Commission decides to continue the existing system. 8.12 DEMAND SURCHARGE FOR EXCEEDING CONTRACT DEMAND PSEB has proposed to charge maximum demand over and above the contract demand at 200% of the proposed demand charges for Large Supply, Bulk Supply including M.E.S and Railway Traction consumers. Presently consumers of all these categories are covered under single part tariff and energy charges are based on actual energy consumption subject to monthly minimum charges. In case of Large Supply category, monthly minimum charges are based upon connected load and in case of Bulk Supply including MES and Railway Traction categories these are based upon contract demand. Any excess demand over and above the sanctioned contract demand is charged @ Rs.250/- per KVA irrespective of number of defaults for Large Supply and Railway Traction consumers. However, for Bulk Supply consumers including M.E.S. connected at 11 KV or higher voltage the excess distribution transformer capacity installed by the consumers is treated as excess demand and the consumers are charged @ Rs.750/- per KVA of excess distribution transformer capacity for each default. Some industrial consumers? associations have objected to this proposal of the Board and have suggested that the charges for excess demand over and above the sanctioned contract demand should be 1.2 ? 1.25 times of normal demand charges. It has also been suggested that there should be tolerance of atleast 10% of sanctioned contract demand and surcharge/penalty should be leviable only if actual demand exceeds beyond the tolerance level over and above the contract demand. The Board has not specifically commented upon this issue but the proposal of the Board is a part of the proposal for introduction of two part tariff. The Commission observes that the ‘contract demand means maximum demand in KVA sanctioned to the consumers and the same shall not exceed 100% of sanctioned load in KW by using power factor of 0.88’. The Commission also observes that ‘maximum demand in any month is defined as highest average load measured in Kilovolt Amperes during 30 or 15 consecutive minutes period of the month’. The Commission further observes that presently meters with 30 minutes integration for consumers billing are installed. The Commission further observes that the Board’s system is planned and provided on the basis of commitment of consumers i.e. contract demand as such in case the consumers’ actual maximum demand in any month exceeds the sanctioned contract demand then it leads to overloading of system, adversely affecting the performance of line, sub-station and the transmission & distribution system besides increase in losses and violation of agreement. Even capacity of the metering equipment to be provided is determined on the basis of sanctioned contract demand. The Commission, therefore, observes that consumers exceeding sanctioned contract demand need to be penalized. The Commission decides that since two part tariff is not being introduced for the time being, as such demand surcharge for demand exceeding sanctioned contract demand should continue as per the prevalent rates. 8.13 PARALLEL OPERATION CHARGES Many industrial consumers? chambers/associations have objected to the parallel operation charges being charged from the Captive Power Plant owners. It has been brought out that parallel operation charges have been levied by the Board not only on such Captive Power Plant owners who are running in parallel but also on those who do not run the Captive Power Plant in parallel with the Board?s grid system. It has been brought out that consumers desirous of running Captive Power Plants in parallel have to make huge investment to strengthen their generation system, control equipment to withstand high voltage level of the Board?s grid and the large grid disturbances. It has also been brought out that the Board does not spend a single penny while paralleling is resorted to. It has been brought out that Captive Power Plant owners like to operate their plants in parallel with the Board?s grid only to optimize their generation. Such consumers can not draw power from the Board?s system as they are governed by the limitation of contract demand. It has also been pointed out that the Board is also running its grid in parallel with a number of constituents in the region and is not paying any parallel charges to any of them. As per prevailing instructions of the Board, Captive Power Plant owners who are consumers of the Board and want to have interfacing with the Board’s system with option to run the plant in synchronization with the Board’s system are required to pay monthly parallel operation charges @ Rs.200/- per KVA of 5% of the installed capacity of TG Sets in KVA. In addition those Captive Power Plant owners who are not Board’s consumers but are willing to get power from the Board’s system during breakdown, maintenance and failure of their power plant are allowed the facility to operate their DG/TG sets in synchronism with grid and run their load from the Board’s system subject to availability of power. Such Captive Power Plant owners are also required to pay monthly parallel operation charges @ Rs.200/- per KVA of 5% of the installed capacity of TG Sets in KVA. Consumers of the latter category are also required to pay higher of monthly charges @ Rs.200/- per KVA or for sale of power at double the normal relevant tariff on monthly basis. Further 10% of installed capacity of Captive Power Plant is to be kept reserved by the Board through its generation and transmission system. The Commission in its Tariff Order for 2004-05 had directed the Board to furnish full justification of parallel operation charges being recovered from the consumers. The Board has supplied the detailed position in the ARR for the year 2005-06. It has also been concluded by the Board that there is need to undertake significant studies which will take time and effort to arrive at determination of charges payable by the Captive Power Plant owners. PSEB in its reply has further stated that parallel operation charges are adequate and necessary because the consumers having captive power plant(s) running in parallel with the system of the Board are directly using supply through grid, transmission lines, generating system and other assets relating to the Board. Also the consumers enjoy uninterrupted power supply during 24 hours a day. In order to provide benefits to CPPs during parallel operation of the plants, the Board is required to maintain its system, at a cost, which is not recovered from the CPPs through the charges for the contracted demand. It has also been stated that in order to provide grid support, the Board would require to draw additional resources either from its already contracted capacities or additional capacities from others. Under the present requirements to maintain the grid quality, the intermittent supply requirements put strain on managing the operations. The imbalances resulting in financial loss to the Board need to be commercially covered. It has also been clarified by the Board that charges are leviable on those consumers/CPP owners who are running their load through grid in parallel to the Board’s system and not those who are having Captive Power Plants but not in parallel to the Board’s system. The Commission notes that the consumers or persons having Captive Power Plant running in parallel with the Board’s system enjoy following benefits over and above the others: · Availability of uninterrupted and reliable power supply with better voltage regulation. · Stability of power supply to such an industry is far far better. · All variations in load of the owner or variation in output of the Captive Power Plant are absorbed by the grid thereby minimizing chances of tripping of Captive Power Plant. · Electrical performance of Captive Power Plant is better with the grid support. The Commission notes that all these benefits do cost the Board. The Commission also notes that presently monthly minimum charges are leviable on the basis of sanctioned load in case of Large Supply consumers. Such consumers having Captive Power Plants are levied monthly minimum charges for the load minus the TG set capacity of Captive Power Plants; thus the consumers are not liable to pay even the monthly minimum charges for this load and quantum of parallel operation charges is a small fraction of monthly minimum charges. The Commission also observes that there is need for commissioning a study by the Board for assessing the quantum of charges. The Commission therefore decides that till the study is complete the parallel operation charges being levied on Captive Power Plant owners shall continue to be levied at the prevalent rates. These parallel operation charges shall be leviable on all Captive Power Plants which run in parallel/synchronism with grid of the Board, irrespective of the fact whether Captive Power Plant owners are consumers of the Board or not. The Commission further decides that adequate measures be taken by the Board to ensure that no Captive Power Plant owner is allowed to run the plant in parallel with the Board’s system without prior permission and getting the adequacy of the protection system checked from the Board. 8.14 GENERAL CONDITIONS OF TARIFF AND SCHEDULE OF GENERAL CHARGES The industrial consumers? associations/forums have been objecting to the other charges being levied by the Board to the consumers without approval of the Commission. These charges are being levied under General Conditions of Tariff and Schedule of General Charges of the Board. The Board has not submitted the justification for the specified quantum of various charges. The Board has, however, recently submitted General Conditions of Tariff for approval of the Commission. The Commission observes that the Board has been allowed to recover these charges on year to year basis and these need to be reviewed by the Commission. The Commission will invite public objections in the matter to know the views of the public and take a decision in the matter before issue of the next tariff order. The Commission decides to continue the present charges including rentals and deposits which are being collected by the Board as per the “Sales Regulations for Supply of Energy to Consumers”, at the existing rates. 8.15 MONTHLY MINIMUM CHARGES TO PUBLIC LIGHTING CONSUMERS Some Municipal Committees/Councils have brought out that under the proposed two part tariff system the Board has proposed to abolish monthly minimum charges for all categories except Public Lighting category. It has also been brought out that as per the Board’s proposal monthly minimum charges would be applicable to Public Lighting consumers even under the two part tariff comprising of fixed charges and energy charges. It has further been brought out that presently monthly minimum charges are calculated by assuming 8 hours running of lamps/lighting points round the year and some street light points remain defective for different periods, as such monthly minimum charges on the basis of average running of 8 hours period are on higher side. It has been submitted that it should be reduced to 6 hours per day. It has further been submitted that if monthly minimum charges are to be retained then there is no need for fixed charges in the street light tariff. Presently all Public Lighting consumers are governed by single part tariff leviable on energy consumption of the consumers. However, monthly minimum charges clause provides that annual revenue is to be calculated by assuming 8 hours per day running of sanctioned load or actual load whichever is higher and the shortfall in revenue, if any, is chargeable to the consumers. The Board has proposed two part tariff for this category alongwith other categories but has also proposed to continue the levy of monthly minimum charges besides fixed charges to Public Lighting category consumers. In response the Board has stated that under the two part tariff, monthly minimum charges clause would not be operative. It has also been informed that the Board has proposed to discontinue monthly minimum charges for all categories. The Board has not given any comments on the suggestion for reducing monthly minimum charges on the basis of average running of 8 hours per day to 6 hours per day. The Commission notes that as two part tariff is not being adopted for any category for the time being, the Public Lighting category shall also continue to be governed by single part tariff. This would imply that fixed charges would not be applicable but monthly minimum charges would be applicable. The Commission observes that street lights are switched on during evening hours till next morning and their operating hours vary from 9 ½ hours in summer to 13 ½ hours in winter. The Commission also observes that replacement of defective street light points is the basic responsibility of the local bodies. The Commission further observes that monthly minimum charges are being levied on the Public Lighting consumers on the basis of 8 hours running of load on annual basis for the last more than 30 years. The Commission further notes that monthly minimum charges are applicable for all categories of consumers on monthly basis and Public Lighting consumers have already been given concession for calculating the same on annual basis. The Commission, therefore, decides to continue with the existing system. 8.16 POWER CUTS/OTHER POWER REGULATORY MEASURES PSEB has filed Petition No.5 of 2005 under Section 23 of Electricity Act, 2003 for authorizing the Board to impose power cuts, peak load hour restrictions and taking other power regulatory measures during the year 2005-06. It has been submitted that during the year 2005-06 there shall be shortage in the availability of power vis-à-vis unrestricted demand (in MW) and energy (in MU) during most months of the year. It has further been intimated that while working out the availability of power, the estimated power/energy from all sources i.e. own power houses including share from BBMB, share from central sector power projects, purchase from various agencies, banking from neighbouring states and unscheduled over drawal(s) have been taken into account. It has been estimated by the PSEB that there shall be shortage of energy and power during the year as such the Board would be constrained to impose power cuts and take other regulatory measures as under: (i) to impose evening peak load hour restrictions on industrial consumers (normally Large Supply consumers); (ii) to impose power cuts on industrial sector by way of weekly off days, restrictions on use of quantum of energy etc.; (iii) to impose power cuts on Agriculture sector, Non-Residential Supply and Domestic Supply consumers (rural and urban sectors); (iv) to impose power cuts on other categories of consumers such as Bulk Supply etc. or to take other regulatory measures as required. Vide order dated March 09, 2005, the Commission ordered that public notice inviting objections from the public be published in this regard. It was also decided that public hearings in this respect would be held alongwith hearings fixed in respect of ARR and Tariff Application for the year 2005-06. The Commission further ordered that in the meantime authorization already issued by the Commission may continue for another three months i.e. upto June 30, 2005. In compliance with the above order public notice was published in various news papers on March 10, 2005 and March 13, 2005. The objections from the following were received within due date:
All these objectors have objected to the proposal of the Board for imposing power cuts and suggested that PSEB should develop new power projects, improve its maintenance quality and farmers be asked to use only ISI marked pumps so that wastage of energy is avoided. It has also been suggested that power cuts on subsidizing categories should be applied judiciously so that Board’s revenue from the highest revenue paying consumers is least effected. It has further been suggested that the additional power requirements of the subsidized categories should be met by arranging power from other sources and unscheduled and unapproved cuts should not be imposed on industry as these impair economy of the Board and the industry very badly. Bharti Kisan Union has also filed a Petition wherein interalia it has been brought out that quality of power being supplied to rural sector is very bad as against quality of power being supplied to urban areas. The Union has pleaded that there should be minimum discrimination between urban consumers and rural consumers as far as quality of power is concerned. This petition is pending with the Commission. The Commission notes that due to mis-match between availability of power from all sources and ever rising demand for electricity in the State, the Board is deficit in power and is unable to supply uninterrupted power to its consumers. To meet the demand of the consumers/general public, the Board has to impose peak load hour restrictions on industry, put heavy restrictions on supply of power to AP sector and impose power cuts/regulate the energy consumption of other categories of consumers. The Commission also notes that Bharti Kisan Union have been pleading for better quality of supply. The Commission had decided to allow 10% rebate in tariff rates to rural domestic consumers in its Tariff Order for the year 2004-05 due to poor quality of power supply to rural consumers. The Commission observes that representatives of rural sector have requested for better quality of supply to the rural consumers and not focused on lower tariff. The Commission also observes that members of the Advisory Committee in their meeting held on April 01, 2005 had also expressed the view point that the Board should not discriminate with rural consumers. The Commission appreciates the difficulties of the Board in supplying power to consumers of all categories in urban and rural areas equitably. However, such vast disparities in quality of power supply to different classes of consumers or between urban and rural consumers are against the principles of justice and equality and therefore difficult to accept. The Commission, therefore, decides to authorize the Board to impose restrictions/power cuts and other regulatory measures to bridge the gap between demand and supply of power. Such measures will, however, be taken only to the minimum extent to ensure least disturbance, dislocation and inconvenience to the consumers and general public while keeping in view the requirement of the power system. The Board will also ensure that purchase of power for this purpose is only for the minimum quantum and at minimum cost. The Board should also ensure to make arrangements to inform the consumers well in advance of the scheduled power cuts. If the contingency so arises, the Board may impose unscheduled power cuts also. The Commission further decides that the Board should take adequate steps to minimise discrimination amongst consumers of different categories especially rural and urban domestic consumers as far as possible while imposing power cuts. The Commission also directs the Board to submit action plan for gradual reduction and ultimate elimination of disparity in quality of power supply alongwith its next ARR for the year 2006-07. Petition No.5 of 2005 is disposed of accordingly.
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