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PRESS NOTE |
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REVISION OF ELECTRICITY TARIFF
OF
BRIHAN-MUMBAI ELECTRIC SUPPLY & TRANSPORT UNDERTAKING (BEST)
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The objective of the Electricity
Act 2003 (EA 2003) is to encourage competition, efficiency and adoption
of commercial principles as well as bring in transparency in the electricity
sector. Under the EA 2003, the tariff fixation has to be done by the
State Commission; in this case the Maharashtra Electricity Regulatory
Commission (MERC), in a transparent manner after following due public
process. |
| 2. |
This is for the first time
that BEST has submitted its Application for approval of Annual Revenue
Requirement and Tariff for FY 2004-05 and FY 2005-06 in compliance
with the Act. The Commission thereafter first conducted a technical
validation session to rectify data inconsistencies and other factual
information. Suggestions and objections were invited from the public
on the ARR and Tariff Proposal of BEST. This was followed by an open
public hearing held in Mumbai on December 21, 2005. In addition, the
Authorised Consumer Representatives have also been actively involved
in the exercise of tariff determination by the Commission. |
| 3. |
The salient features of the
Tariff Order are as follows: |
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a. |
There was a persistent demand
from consumers on removal of meter rent. In conformity with the policy
already implemented for other licencees, viz., MSEDCL, REL and TPC,
the Commission has abolished the meter rent for BEST's consumers in
the Tariff Order. |
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b. |
The Minimum monthly charge
has been abolished and the concept of Two Part Tariff, namely Fixed
Charge and Variable Charge has been introduced for all consumers,
in line with the policy already implemented for other licencees. This
will send the correct economic signal to the consumers, that all consumers
have to contribute towards the fixed cost of the licensee, and will
also simplify the bill and make it easier to understand. |
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c. |
The Commission has noted that
BEST has not yet refunded the excess Security Deposit as per the MERC
(Electricity Supply Code and Other Conditions of Supply) Regulations,
2005. The Commission has therefore directed BEST Undertaking to refund
the excess Consumer Security Deposit along with interest within a
period of 6 months. |
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d. |
Hitherto, the Transport Division
Losses were being passed on to all the electricity consumers in their
tariffs, which have been disallowed by the Commission in terms of
EA 2003 provisions. |
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e. |
The Commission has decided
to introduce the Time of the Day (ToD) Tariffs for the Commercial
and Industrial consumers with consumption above a certain level. However,
it is seen that appropriate meters are not installed for all such
consumers. The Commission has therefore directed BEST to install ToD
meters for appropriate categories of consumers in a time bound manner
so that the ToD tariffs can be introduced for these consumer categories
in the next Tariff Determination exercise for FY 2006-07. |
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f. |
The Commission has rationalized
the charges for power factor maintenance, by eliminating the Power
Factor Surcharge in the revised Tariff and retaining only the RkVAh
charges. |
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g. |
The Commissions has found the
current level of Consumer Outstandings of BEST to be unacceptable.
Therefore, it has directed BEST to make focused efforts in a time
bound manner for reducing the outstandings to a reasonable level.
It has also directed BEST to publish a list of defaulters in newspapers
and also on its website on a regular basis. |
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h. |
The Commission has noted that
the Distribution Losses of BEST for 2005-06 (P) are 12.4%, which are
on the high side for an urban underground system and has directed
BEST to reduce the losses in a progressive manner. In this respect,
the Commission has directed BEST to put in place regular substation-wise
energy accounting and audit, and to submit the break-up of technical
and commercial losses. |
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i. |
The Commission has introduced
a new category for consumers below poverty line viz. BPL, with a single
slab of 0-30 units. This is in accordance with the National Electricity
Policy, published by the Government of India; whereby "consumers
below poverty line who consume below a specified level, say 30 units
per month, may receive a special support through cross subsidy". |
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j. |
The Commission has simplified
the Tariff structure by rationalisation of present 24 number of categories
to 16 categories. |
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k. |
The Commission has approved
a Revenue of Rs.1547.61 Crores for the year 2005-06 with the revised
tariffs. |
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l. |
Gradual reduction in cross-subsidy
has been initiated, while at the same time ensuring that no consumer
category is faced with a tariff shock. |
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m. |
The revised tariff will be
applicable from 1st March 2006. |
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n. |
The State of Maharashtra is
passing through a phase of acute power shortage, and even Mumbai city,
which so far has been spared of load shedding, is likely to face power
shortages in the coming summer months. In the absence of additional
capacity in the region, there is an urgent need for energy conservation
and load management by all power intensive consumers. In order to
achieve this, the Commission has adopted the principle of economic
signals for high consumption consumers, i.e., residential (households,
which would typically have energy intensive equipment such as air
conditioners) and commercial consumers having consumption > 300
units per month and all LT/ HT industrial and HT commercial consumers.
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o. |
The Commission has therefore
directed that all the residential and commercial consumers consuming
more than 300 units per month and all industrial consumers (irrespective
of their level of consumption) in the BEST License area will have
to reduce their monthly consumption to a level of 80% of their average
corresponding monthly consumption in the past year (January 2005 to
December 2005). Penal tariff shall be applicable for the consumption
exceeding the 80% limit at the rate of additional 100% of the highest
tariff chargeable to the respective category, and will be charged
in the energy bill of the consumer in that month. |
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p. |
The money collected through
the levy of this penal tariff has to be maintained in a separate fund
to be used for energy conservation and Demand Side Management (DSM)
measures. The Commission proposes to provide overall guidance to the
licencees on DSM and assist the licensees in formulating DSM schemes,
which is the need of the hour. |
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q. |
Any reduction in the monthly
consumption below the 80% limit prescribed will be incentivised at
the rate of 50% of the normal chargeable rate to the kWh units in
the tariff slab applicable to the reduced no. of units, by refunding
the amount, sourced from the fund mentioned in paragraph 'p' above,
calculated in the energy bill of the consumer for that month. This
is applicable for residential (households, which would typically have
energy intensive equipment such as air conditioners) and commercial
consumers having consumption greater than 300 units per month and
all LT/ HT industrial and HT commercial consumers. |
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r. |
Details of the revised tariff
are enclosed. |
Sd/-
(Mrs.Malini Shankar)
Secretary, MERC |
| 25th
February 2006 |
