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Before
the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
13th Floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai 400
005.
Tel. 22163964 / 22163965, Fax No. 22163976
E-mail mercindia@mercindia.com
Website: www.mercindia.com
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CASE No. 5 of 2005
Dr Pramod Deo, Chairman,
Shri A. Velayutham, Member
In the matter of
Principles and Protocol to be adopted for Load Shedding by MSEB
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ORDER
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Dated: 16th June, 2005
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In
its Order dated 4th March, 2005 on an Application for compliance of Tariff
Order provisions in respect of load shedding undertaken by the Maharashtra
State Electricity Board (MSEB) and related issues, the Commission had, inter
alia, observed that there were significant variations in the implementation
of load shedding. The Order cited Chairman, MSEB's statement that such variations
are based on commercial decisions. On this, the Commission had stated (at
para 17.1.7 of the Order) that :
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"This raises the basic issue of whether a distribution licensee
is free to decide the manner in which a shortage of power is to be allocated
as between different areas and/or consumers, and the principles on which
such rationing is to be based… Such rationing has to be fair and
equitable, and the principles on which load shedding is undertaken have
to be known... Within such a framework, technical exigencies requiring
variations would be within the domain of the State Load Despatch Centre
to decide independently.
Considering the above, and in the context of Sections 42(1), 43, 61,
86 and other provisions of the Electricity Act (EA), 2003 and of the Supply
Code and Standards of Performance Regulations notified recently, MSEB
should submit to the Commission, within the next one month, the principles
and protocol proposed to be adopted for load shedding, the other alternatives
that might also meet the tests of equity, fairness and reasonableness,
and the likely impacts. Thereafter, this matter would be separately considered
and addressed by the Commission."
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| 2. In
its initial response dated April 1, 2005, MSEB set out the various considerations
underlying the load shedding undertaken by it and the distinctions made
between different areas and consumer categories. Subsequently, under a separate
Application dated April 9, 2005, MSEB sought directions under Section 23
of the Electricity Act (EA), 2003 to all Distribution Licensees in the State
to take certain measures for a limited period of time to curb electricity
demand, particularly during the evening peak hours, considering the serious
demand-supply gap necessitating load shedding on an extensive scale. By
its Orders dated April 26, 2005 and May 4, 2005 on that Application, issued
after hearing the Licensees and consumer representatives, the Commission
directed all the Licensees to take certain emergent measures. The Commission
also touched on the separate matter of load shedding principles and protocol,
and the Order dated May 4, 2005 stated that: |
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"15. At its hearing on April 26, 2005, the Commission
also considered the principles that should be adopted for undertaking load
shedding by MSEB, as a part of separate proceedings flowing from directions
given in its Order dated March 4, 2005. In addition to the various points
suggested by MSEB, the Commission directed that the T & D losses and
collection efficiency in different areas need to be taken into account while
deciding the load shedding protocol. MSEB should revert to the Commission
with its further submissions in this regard. The Commission will pass Orders
on the principles and protocol for load shedding separately later. In the
meantime, MSEB should publish their load shedding programme on their website
also." |
| It may be mentioned that, in addition to other relevant provisions,
S. 23 of EA, 2003 has a direct nexus with the present Order. |
| 3. Separately,
on various Writ Petitions concerning load shedding and related issues, the
Honorable Bombay High Court (Nagpur Bench) passed an interim Order on May
4, 2005 addressing, inter alia, the discriminatory application of load shedding,
and clarified some aspects further on May 6, 2005. On a Special Leave Petition
filed by MSEB, the Honorable Supreme Court of India stated on May 12, 2005: |
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"In terms of Order dated 6th May, 2005 the High Court, considering
the difficulties of the petitioner in rescheduling the power supply as per
interim order dated 4th May, 2005, has directed that it would do so in consultation
with the Maharashtra Electricity Regulatory Commission. The further direction
that there should be no discrimination amongst consumers irrespective of
geographical allocation is modified for the time being and the matter is
left to be determined by the petitioner in consultation with the Regulatory
Commission." |
| The High Court has extended the time for the Commission to
decide the load shedding principles upto June 30, 2005. |
| 4. MSEB
submitted its revised proposal on the principles and protocol of load shedding
on May 16, 2005. The Commission issued a Public Notice the same day making
the proposal available, inviting written comments and suggestions from the
public, and intimating dates of Public Hearings for those who wished to
be heard in person. Accordingly, Public Hearings were conducted at Thane,
Nashik, Aurangabad, Pune, Nagpur and Amravati from May 26 to June 3, 2005.
Around 150 individuals/organizations participated in this public process
through written or oral submissions, or both. The Commission also held several
discussions with MSEB for better understanding of operational constraints,
refinement of data, etc. |
| 5. MSEB's
proposal essentially sets out different categories of consumers and areas
for application of load shedding depending on the quantum of shortage, the
inter se Aggregate Technical and Commercial Loss (ATC) levels, and certain
exclusions and exemptions which are detailed in the proposal. Some of the
proposed area exemptions cite State Government instructions. The Commission
notes, however, that no submissions in this regard have been made by the
Govt. of Maharashtra (GoM) during these proceedings. MSEB's proposal also
states that, at present, MSEB's system demand during evening peak hours
ranges between 11,000 MW to 13,000 MW, as compared to the online capacity
during those hours of 8500 MW to 9400 MW, thus necessitating load shedding
of the order of 2500 MW to 3600 MW. The load shedding necessary during non-peak
hours is around 2200 MW. |
| 6. The
Commission notes its mandate and powers under Sections 23, 42(1), 43, 61,
86 and other provisions of the Electricity Act (EA), 2003, which are directly
or indirectly relevant to the issues involved in these proceedings. The
Commission has carefully considered the various submissions made and inputs
received by it in this matter. The Commission also notes that the supply-demand
gap is not a short-term phenomenon, and will persist to a greater or lesser
extent for a considerable further period of time. |
| 7. The
detailed Order in these proceedings will be issued shortly. In the meantime,
the Commission has decided to issue this summary, operative Order. The Commission's
substantive directions with regard to the principles and protocol to be
adopted for load shedding are briefly set out as follows: |
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(a)
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The EA, 2003 casts certain obligations on Distribution Licensees with
regard to supply of electricity to their consumers, except in certain circumstances
outside their control. However, it is inevitable that, when there is a shortage
of available power vis-à-vis the requirement of consumers, load shedding
would have to be undertaken in order to maintain the system frequency and
to ensure its security. The present Order deals with the basis on which
such shortage should be apportioned among different consumers and areas
through load shedding, rather than the actual extent of shortage that may
prevail at any point of time. Thus, it should not be construed as the Commission
having validated or accepted the figures presented by MSEB with regard to
the shortfall or its reasons. Moreover, the load shedding requirement is
dynamic, and would vary from time to time depending on the system demand-supply
gap, system frequency, season, time of day, etc.
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(b)
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The thrust of the EA, 2003 is on efficiency and economy of operations.
Moreover, the immediate issue of concern in these proceedings is the equitable
management and regulation of the load in a situation of shortage. In order
to do so in a fair and equitable manner, the Commission believes that it
is necessary to distinguish between areas with better performance, and undertake
lesser load shedding in areas with lower Distribution losses and higher
collection efficiency, all else being equal. This would be in keeping with
the principle that, at a time of scarcity, areas where energy is not being
efficiently utilized or paid for should rank lower in the rationing order. |
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(c)
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In its proposal, MSEB has considered Circles (comprising several Divisions)
as the area unit to which such principles should be applied. However, MSEB
also stated that |
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"Division-wise
categorization based on loss levels would ideally be most suitable. Although
Division-wise loss statistics are available, Division-wise load data is
not yet available and hence it would be difficult at the moment to work
out the load shedding programme on that basis. This refinement can be incorporated
subsequently."
Many participants in the public process stressed that, for obvious reasons,
the application of such principles would be more meaningful the greater
the level of disaggregation and the smaller the unit. This would also
help to focus awareness and accountability better. The Commission's interactions
with MSEB indicate that it is now possible to consider the Division as
the unit, and it has accordingly decided to adopt it for the present.
An exception has been made in the metropolitan and other major cities,
where it is more appropriate to consider the city as a compact unit, clubbing
the Divisions comprising it in case there are more than one.
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(d)
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MSEB had proposed the ranking of Circles or other units on the basis
of their Aggregate Technical & Commercial (AT&C) losses. However,
the Commission believes that it is necessary to separate the two components,
being essentially different in nature, and also to give greater weightage
to Distribution losses (after excluding transmission losses as described
below). It is worth recalling that, in an earlier Tariff Order dated January
10, 2002, the Commission had decided that the burden of Transmission &
Distribution losses above a benchmark level of 26.87% should be shared equally
by consumers and MSEB, and the resultant charge to consumers shown separately
in their bills. This dispensation was challenged in various Writ Petitions,
but the Bombay High Court upheld it. In its judgement dated February 11,
2004, the High Court observed, inter alia, that |
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"the
Commission has adopted an unorthodox and innovative method in dealing with
T & D losses…The Board and the consumers are pari delecto in preventing
T&D losses on account of theft…The Commission has also noted that
it will be improper to require the consumers in areas which show better
compliance to pay for the thefts by consumers in other areas which show
less compliances and higher thefts… We are inclined to ignore the criticism
that the Commission has proposed to do something which has not been done
before."
(Subsequent to that Tariff Order, the Commission exempted Circles with
T&D losses below the benchmark level from the charge. Separate T&D
loss charges were discontinued altogether from December 1, 2003.) Although
there may be correlation between some of the factors responsible for losses
as well as low recovery (such as organizational inefficiency and malpractices,
local social ethos and paying culture, etc.), the emphasis for the present
purpose has to be on the losses criterion considering the primary objective
of managing the load, and this is reflected in weightage in the ratio of
70:30 for the Distribution loss and collection inefficiency, respectively,
adopted now by the Commission.
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(e)
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Only Distribution losses have been taken, considering that Transmission
losses are at the higher levels of voltages and outside the control of the
Divisions. For the time being, for want of a better alternative, the loss
figures considered for this purpose are as assessed by MSEB. Validation
of the data has not been undertaken by the Commission, and is not in a form
comparable to the data submitted earlier on energy accounting and merit
order despatch in compliance of various Tariff Order directions. Further
exercises required of MSEB will be outlined in the detailed Order.
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(f)
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Distribution loss has been computed from EHV Sub-station output levels,
after excluding the segregatable industrial load in order to give a more
representative picture, since it tends to skew the loss levels. Moreover,
since HT industry is largely excluded from the load shedding mechanism based
on the criteria and rankings adopted (but not altogether from load shedding
per se), it is appropriate to exclude the HT industrial load from the Distribution
loss computations. The broadly representative MIDC feeder loss levels assessed
by the Commission in its Tariff Order for FY 2003-04 have been considered
to estimate the corresponding HT input from the HT sales, so as to derive
the balance LT input (including unavoidably, some HT input on mixed feeders)
from the total energy input to the Division. Collection efficiency has also
been computed excluding HT recovery for the application of the 70:30 criterion,
since the Commission finds that such recovery is generally very high, requires
little effort to maintain, and is likely to give a misleading picture of
such efforts even in Divisions where there may be a few large consumers
of this type, and skew the overall collection efficiency figures. For the
time being, both Distribution loss and collection efficiency have been considered
taking into account the period from April, 2004 to March, 2005, so that
seasonal and other variations are captured.
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(g)
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Weightage has also been given to the fact that the technical Distribution
losses in rural areas will generally be higher than in urban areas, given
the wider spread of the LT network in the former and other factors. The
Commission has for the moment considered a difference of 3% for the purpose
of this Order, based on discussions with MSEB. However, this difference
will be reassessed after further data and analysis is submitted by MSEB.
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(h)
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The Divisions have been ranked on the basis of the weighted average loss
levels, computed as described earlier. The contribution of the Divisions
in each of three types of areas, viz. major urban areas, other urban areas,
and rural areas (as categorized by MSEB) to the daily total load has been
segregated. Analysis of the sheddable load (after excluding the HT industrial
load and public water works connected to separate/express feeders) shows
that the contribution of the major urban, other urban and rural Divisions
to the sheddable load is 1063 MW, 2227 MW, and 5100 MW, i.e. approximately
in the ratio of 1:2:5. In effect, 1 hour of load shedding in rural areas
will give load relief equal to that achieved by 5 hours of load shedding
in major cities and 2 hours of load shedding in other urban areas. Hence,
the desired load relief can be achieved by shedding load in proportion to
the contribution to the total load of these different types of areas.
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(i)
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Applying the above principles, the Divisions have been ranked in four
Groups as follows, such that all Divisions within a Group would be subject
to the same level of load shedding (except for Divisions comprising a major
city, which would be clubbed): |
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Group
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Weighted average loss and collection efficiency
level
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Urban
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Rural
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Group A |
0% to 25%
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0% to 28%
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Group B |
> 25% to 35%
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> 28% to 38%
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Group C |
> 35% to 50%
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> 38% to 53%
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Group D |
Above 50%
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Above 53%
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(The first bracket is upto 25%/28%, for which a parallel can be drawn with
the benchmark T&D Loss level of 28.67% considered in the Commission's
first Tariff Order, although the components of these percentages are of
course somewhat different.)
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(j)
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All Divisions in the MSEB area of supply will be subject to load shedding
as and when it is required, but the number of hours of load shedding in
one Division as compared to another would differ on the basis of the above
principles and the total load required to be shed. |
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(k)
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The maximum hours of planned load shedding during any day in any Division
should not be more than 8 hours. In circumstances in which the application
of the principles in this Order would result in this ceiling being exceeded
in any Division category (e.g. rural), the load shedding in the same category
in the next higher Group will be increased upto the ceiling of 8 hours.
For example, if rural Divisions in Group D require 10 hours of load shedding
as per these principles, they would be subject only to 8 hours. The load
equivalent to the excess 2 hours will be shed by adding to the load shedding
in rural Divisions of Group C to the extent necessary (subject also to the
ceiling of 8 hours), and so on till the load can be met. This will ensure
that, in such circumstances, the load ratio between categories is still
followed, but not Group-wise.
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(l)
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When it is found that the quantum of load relief actually required is
less than planned, it should be distributed by pro-rata reduction in the
hours of load shedding in Group A Divisions. |
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(m)
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MSEB should not shed load for more than 4 hours at a stretch in any Division.
If the total load shedding to be carried out is more than 4 hours, it should
be undertaken in two or more blocks. |
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(n)
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MSEB will have to ensure that, taking its supply area as a whole, the
load shedding programme is drawn up in such a way that the load withdrawal
or addition related to load shedding should not result in frequency jerk
endangering grid security. |
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(o)
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The above principles will not apply to Railway traction loads, and those
public water works (including MIDC, CIDCO, and Maharashtra Jivan Pradhikaran,
etc. as may be relevant) and continuous process industries which are on
separate feeders, nor will these be subject to load shedding. They will
also not apply to those industries and industrial areas which are supplied
through dedicated/express feeders. However, such industries and industrial
areas (excluding continuous process industries) will be subject to load
shedding for 16 hours on the day of the area-wise staggered weekly-off set
out in GoM's Maharashtra Electrical Energy (Regulation of Distribution,
Supply, Consumption or Use) Order, 1995 dated 1st December, 1995. In this
context, it will be recalled that, in its Order dated May 4, 2005, the Commission
had stated that
"In
order to remove any doubt or uncertainty, the Commission directs that
the contents of that Order, as amended to date, will remain protected
and shall continue to be in force until further orders".
With the Commission's present Order, the rest of the GoM dispensation
will not survive.
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(p)
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Based on the above Grouping and principles, and in consultation with
MSEB, the Commission has simulated the different levels of load shedding
across these Groups, with further differentiation between major urban, other
urban, and rural areas according to the rationale discussed earlier, to
achieve the load relief desired. An illustrative simulation using a shortfall
level of around 2500 MW during the evening peak, given purely as an example
for providing greater clarity on the application of the principles adopted
by the Commission, is at Annexure 1. Annexure 2 lists the
MSEB Divisions Group-wise considering the criteria set out above. The Annexures
also set out the meanings of the relevant terms used, as defined by MSEB.
As noted elsewhere in this Order, the figures are as presented by MSEB and
have not been validated by the Commission, for which further data and analysis
may be necessary subsequently. |
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(q)
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The Commission would like to make it clear that this dispensation is
intended for planned load shedding. Even in this case, some rounding off
(particularly to the advantage of Divisions in Group A) may have to be resorted
to in micro-planning while adhering broadly to the load ratio differentiation
in the number of hours of load shedding in different Divisions and types
of areas. There may also be exigent situations such as forced outages, etc.,
in which the State Load Despatch Centre would require deviations from these
principles in actual operation. However, while the detailed load shedding
programme itself may change from time to time depending on changes in estimates
of expected load or the shape of the daily load curve due to seasonal or
other factors, planned load shedding should be undertaken in accordance
with these principles. The concerned Division officials must be held accountable
for deviations, and action taken against them. At the same time, it is necessary
to recognize consistent and sustained improvements in loss and collection
efficiency parameters beyond a benchmark level through an incentive scheme
for the concerned Division personnel. Similarly, consistently poor performance
should be penalised through the instrument of the Annual Confidential Reports
and other means. MSEB should report the mechanism adopted for the purpose
by it within 2 months.
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(r)
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MSEB should publicize (including hosting it on its website) and implement
its load shedding programme on the basis of this Order within a week.
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8. The Commission
reiterates that it has not accepted MSEB's submissions regarding the extent
of load shedding required and other figures except for the time being, and
that further data and analysis is required. The Commission's requirements
in this regard, as well as the manner in which load shedding according to
the principles is to be monitored will be set out in the detailed Order. |
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9. During the public
process, the Confederation of Indian Industry (CII), Western Region pointed
out that large captive generation capacity is available with industries
around Pune. Considering the significantly higher running costs of such
plants, some dispensation is required to compensate such industries for
operating them throughout the day and thereby reducing the load on MSEB
and enable it to better supply other consumers. Alternatively, a link can
be established with industrial and other consumers who are willing to pay
more for reliable, uninterrupted power. This would also relieve MSEB to
that extent. The Commission's Order dated September, 8, 2004 on fossil-fuel
based Captive Power Plants does not fully address such variants. In this
context, it will be recalled that, in an earlier Tariff Order, the Commission
had mooted the concept of a 'Reliability Charge' to be proposed by MSEB,
and reiterated it in its last Tariff Order. Considering the cluster of surplus
captive power capacity at Pune, MSEB should revert within 3 weeks to the
Commission with detailed, workable alternatives for harnessing it on a pilot
basis, which might provide a model for other such clusters. For this purpose,
MSEB should consult CII, as well as others such as the Mahratta Chamber
of Commerce, Industries & Agriculture, etc. |
| 10. It
is evident that significant levels of shortages will continue to prevail
in the MSEB area for a considerable period. The Commission has been stressing
the urgent need for MSEB to undertake Demand-Side Management measures and
to intervene pro-actively through energy conservation and efficiency promotion
schemes so as to build a critical mass of consumer awareness and adoption.
The Commission has taken up these issues separately. Another aspect of such
measures is joint load management with the participation of consumers rather
than load regulation. In its Order dated March 4, 2005 the Commission had
emphasized the need for separation of feeders, which would also give greater
flexibility in agricultural and other load management. Thereafter, MSEB
has submitted a very limited 1st-phase programme for capital expenditure
approval, which is being examined separately. In the meantime, MSEB should
identify clusters of consumers in each Division with whom to work out an
arrangement for a ceiling on load at different times of the day. MIDC areas
may be suitable to begin with, but there would be several other such types
of consumers or clusters which can be approached on priority. MSEB's Akshay
Prakash scheme of joint, voluntary self-regulation by villages is one variant
of this approach, but it is difficult to take up villages in isolation considering
the nature of feeders at present. |
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11. Although load
shedding is being resorted to in most States in one form or the other, this
Order constitutes perhaps the first exercise of its kind to settle certain
transparent and equitable principles through a public regulatory process
after the coming into force of the EA, 2003. Considering the persistence
of power shortages, by its very nature this dispensation will have to be
seen as 'work in progress', to be reviewed and refined periodically by the
Commission considering actual working and the ground realities obtaining
from time to time, further data and analysis, other measures that are undertaken,
the performance of different Divisions, and other factors. |
12. Recently, MSEB
has given way to three functional successor entities and a holding company
(the distribution function having been vested in the Maharashtra State Distribution
Company). However, the term 'MSEB' has been used throughout this Order for
convenience.
The
detailed Order will follow shortly. |
Sd/-
(A. Velayutham)
Member
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Sd/-
(Dr Pramod Deo)
Chairman, MERC |
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Sd/-
(A.M. Khan)
Secretary, MERC |
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Download
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View pdf
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Annexure 1
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Annexure 2 (Summary Sheet)
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Annexure 2 (Continued 1 of 4)
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Annexure 2 (Continued 2 of 4)
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Annexure 2 (Continued 3 of 4)
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Annexure 2 (Continued 4 of 4)
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