Download Amendment to Policy Directions notified by GNCTD on 31.05.02

Multi year Tariffs Principles
by
Delhi Electricity Regulatory Commission
dated August 13, 2003
Strategy Paper on Power Sector
Reforms by GNCTD in February 1999
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T&D losses increase from 22.60% in 1991-92 to
42.70% in 1997-98
Precarious financial position –opening losses
rose from Rs 250 cr to Rs. 713 cr
Weak billing system –57% billed and collection
efficiency – 88%
Imbalance in Demand & Supply
Re-structuring of power sector recommended
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Setting up of DERC notified on 3.3.99 under
ERC Act, 1998
DERC established in Dec. 1999 as one
member commission
Delhi Electricity Reform Act 2000 Enacted
from 3.11. 2000
Concept Paper on Tariff by DERC- September
2000
Order on Rationalisation of Tariff by DERC –
January 2001
• Restructuring of DVB
• Learn lesson from Reforms in Orissa
• SBI Caps appointed as consultants to
give recommendation on restructuring of
DVB
• RFQ and RFP issued
• 32 investors showed interest
• 6 investors qualified
• 3 investors invited for RFP
• 2 investors selected
• Multi year ARR/tariff proposal for FY 2000-01
by DVB included a set of tariff determination
principle for the years 2002-06
• Tariff setting formula:
Tariff in Year ‘Y’ = Tariff in year ‘2001-02’ +
Required Revision in Tariffs in year ‘y’
Revision in year “Y” – sum of :
Change in power purchase cost, billing
revenue due to reduction in T&D losses,
salary, O&M, A&G expenses, Interest on loan,
Depreciation, RoE, Collection efficiency and
Bad Debts
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Commission’s Views on Multiyear Tariff Proposal
• Different methodology generally followed for
fixation of tariff as listed out in the Concept
Paper on Tariff
• Rate of Return Regulation
• Performance Based Regulation
• Price/Revenue Cap Regulation
• DVB proposal - Performance Based Regulation
• Pre-requisite of PBR Regulation:
- calls for sound MIS including scientific
estimation of T&D losses
- energy audit
- sound data base to set Bench mark
- Any commitment by DVB not binding on
the successor companies
• Average tariff as proposed by DVB was not
acceptable because:
1.The estimated units billed to various consumers
were likely be different from the billed units
envisaged in their tariff proposal
2.Basis of calculation would not remain same for
“tariff in year 2001-02 and required revision in the
tariff in the year “Y”
3.How the tariff for different categories will be
determined based on average tariff
• The requisite inputs for above were not available
• Proposal regarding the projection of Annual
capital expenditure in each year for the next 5
year on historical basis was not acceptable
because :
1.DVB not able to provide even the present value of
fixed assets
2.Relying on a number of assumption for the same
3.Projections could only be done based on the
present status of the assets, the need for
investment and availability of funds
•Efficiency Improvements Not Suggested
•Needs improvement in quality of service
•Parameters would differ for successor entities
•Loss reduction ought to be higher in initial
years
•Can be considered in future
•Development of efficient MIS very vital
•The Time Not Mature
There fore multi year tariff proposal by DVB
suffered.
Conclusion on Multiyear Tariff Proposal
The Commission found that
“ multiyear tariff setting principles” is an issue
that merits consideration, it is not the mature
stage for fixation of multiyear tariff principles.
“Appreciating the sprit behind the proposal for
multi year tariff the Commission shall be
willing to consider any suggestion in this
regard at an appropriate stage in future”
Transfer Scheme & Policy Directions
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Transfer Scheme by GNCTD for unbundling DVB
• Notified on 20.11.01 but not made effective
• 6 successor entities: 3 DISCOMs, GENCO,
TRANSCO, Holding Company
• Policy Directions notified by GNCTD on 22.11.02
• bidding criterion: loss reduction programme
• AT&C loss true measure of efficiency
• 16% return on equity
• 50% of additional revenues due to
overachievement
• Retail tariffs for 3 DISCOMs to be same till 200607
• Govt. to bridge gap by loan of Rs. 2600 Cr. to
TRANSCO for transition period
• DERC to determine opening loss levels and Bulk
Supply Tariff to DISCOMs
• Differential BST based on paying capacity of
DISCOMs
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Amendment to Policy Directions notified by
GNCTD on 31.05.02
• AT&C losses as per the accepted bid will be the
criterion for the purpose of tariff computation
• Method of computation and treatment of overachievement and under-achievement notified
• Opening AT&C losses with 5 years loss trajectory and
minimum level as fixed by the GNCTD for Discoms
BRPL
02- 0303
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Opening
Accepted Bid
Minimum
0506
0607
57.2
0.75 1.75 4.00 5.65 5.10
Minimum
Opening
Accepted Bid
0405
1.50 5.00 5.00 5.00 4.25
BYPL
48.1
0.55 1.55 3.30 6.00 5.60
1.25 5.00 4.50 4.50 4.00
NDPL
02- 0303
04
Opening
Accepted Bid
Minimum
0405
0506
0607
48.1
0.50 2.25 4.50 5.50 4.25
1.50 5.00 4.50 4.25 4.00
• Govt. to bridge gap by loan of Rs. 3450 Cr. to
TRANSCO
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Transfer Scheme by GNCTD for unbundling
DVB
• Notified on 26.06.02 and made effective from
01.07.2002
• 6 successor entities: 3 DISCOMs, GENCO,
TRANSCO, Holding Company
• Opening Balance Sheet as on 01.07.02 for 6
successor entities: 3 DISCOMs, GENCO,
TRANSCO, Holding Company notified
• Fixed Assets were valued on the Business
valuation basis for distribution business
• Treatment of DVB arrears(80% to Holding Co and
20% to Discom)
• Joint petition by Transco and Discoms filed on
21.12.01
• Order on opening loss levels and BST order
issued by DERC on 22.02.2002
• BST – 132p/unit, 152p/unit & 152p/unit for three
DISCOMs
• Corresponding loss levels – 57.2%, 48.10% and
48.10%
BST & RST order by DERC
• Private DISCOMs took over Distribution
Business w.e.f. 01.07.2002
• Filed first ARR for the FY 2002-03 and FY
2003-04 in December 2002
• Order on BST on 26.06.2003
• First Order on RST issued on 26.06.2003 for
Private Discoms