Before the
MAHARASHTRA
ELECTRICITY REGULATORY COMMISSION
World Trade
Centre, Centre No.1, 13th floor, Cuffe Parade, Mumbai 400 005.
CASE
No. 1 of 2001
In the matter of Determination of Tariff [2001-2002] Applicable to
various categories of consumers of Maharashtra State Electricity Board
And, Levying of T & D Loss charges on the basis of
differential
(Circle/Zone) T
& D Losses Evaluation
Shri P. Subrahmanyam,
Chairman
Shri Jayant Deo,
Member
Dr
Pramod Deo, Member
Interim Order
Date of Order: January 9, 2003
The Maharashtra Electricity Regulatory
Commission, in exercise of the powers vested in it under Section 29 of the
Electricity Regulatory Commissions (ERC) Act, 1998 and all other powers
enabling it in this behalf, has vide its Order dated 10th January 2002, in Case
No. 1 of 2001, determined the tariff for the supply of electricity to various
categories of consumers, after considering the proposal submitted by the
Maharashtra State Electricity Board (MSEB).
Preamble
In the above Tariff Order, the Commission
while analyzing the T & D losses and its overall effect on the revenue
requirement and the consequent tariffs, noted with concern the alarming trend
on the part of the MSEB of declaring higher T & D losses from year to year
(31.87% in FY 1999-00 to 39.49% in FY 2000-01) based on improved sampling of
agricultural pumpsets. Before the
Commission was established in August 1999, it was being maintained by the MSEB
for the last over 20 years before institutions like the State Legislature,
Parliament, State Government, the Planning Commission, other public forums, the
media, etc., that its T&D losses were only in the region of 17%. The
Commission decided to confront the menace of increasing T & D losses in a more
direct, determined and focussed manner. The cost of the excess losses was
determined as the cost of additional power purchase required on account of the
higher energy input requirement, which was computed based on the average NTPC
power purchase rate. The Commission apportioned the cost of the excess T &
D loss equally (50% each) to the MSEB and the consumers.
The Commission’s ruling in this regard
was:
“The
Commission has decided to recover this portion of the revenue requirement by showing
a new charge called ‘T & D loss Charge’, which will be a variable charge
and charged from all consumers of the MSEB, except for public utilities.
This charge will be in addition to the Energy Charge and the Demand Charge
determined by the Commission. The intention of the Commission is to stress upon
the consumers that but for this loss, the effective tariffs would have been
much lower. The Commission hopes that this will provoke the paying consumer to
rise and act against the pilferage of energy by others. It is no secret that
even earlier the consumers were paying for the higher losses, through the
energy charge and demand charge, but if the charge is shown explicitly, it is
expected to come more readily to notice and would bring about the necessary
salutary effect of combating power thefts. It is the Commission’s view that
there is an urgent need for civil society to bring its relentless social
pressure to bear upon the power thieves and bring them to heel in the shortest
possible time.
The
Commission has thus initiated the process of showing the ‘T & D loss
Charge’ for all consumers, in proportion to the average realization from that
category. It has also to be noted that, by its very nature, this is a temporary
charge, temporary in the sense that the raison d’ętre of the charge will
disappear as soon as the T & D losses of the MSEB reach the loss level
mandated by the Commission. The Commission intends to create awareness among
the consumers regarding the additional cost of the losses by showing this
charge in an explicit manner. Hence, a more or less uniform T & D loss
charge has been shown, to start with. However, in the next Tariff Order or even
sooner, the Commission intends to differentiate between the various
circles/zones, for charging T & D loss charge, based on the T & D
losses recorded by the circle/zone in question. The Commission is fully aware
that it is not fair that a consumer residing in a circle/zone, which has a
considerably lower loss level, should pay the same T & D loss charge as a
consumer residing in a high T & D loss circle/zone.
The
Commission directs the MSEB, under Section 22(2)(e) of the ERC Act, 1998, to
submit zonal level energy audits for all circles/zones on a monthly basis to
the Commission, along with the ‘Action Taken Report’ for each circle/zone. The
Commission intends to charge ‘circle/zone-wise T & D loss Charge’ latest by
the 1st October 2002 instead of the across-the board T & D loss
Charge. The Commission has also not applied the T & D loss charge for
public utilities like the Railways, Public Water Works, Street Lighting and
Mula Pravara Society, as, in the view of the Commission, these do not seem to
have any incentive to pilfer energy.
The Commission also
directs that the MSEB should hold the concerned employees responsible for the
excessive T & D losses in the respective zones, and the MSEB should
consider recovering the T & D loss charge from these employees after
following due disciplinary procedure. In order to provide a forum for the
consumers and to increase the awareness regarding the prevailing T & D
losses in the division/circle/zone, the MSEB should display the monthly energy
accounting data detailing the energy input, billed sales, and the T & D
losses in the division/circle/zone, on the Notice Board of the office of the
respective division/circle/zone as well as the collection centres in the area.
The amount of revenue collected through T & D loss charges from the
respective division/circle/zone and the name and contact details of the officer
responsible for the division/circle/zone should also be displayed. The above
details should also be published in the local newspaper, once every month. The
MSEB should inform all the public representatives in the area regarding the
above details.”
Differential T & D Loss Charge
From January 2002 onwards, the MSEB has
been submitting Circle-wise Energy Accounting data to the Commission, in
addition to energy accounting data on MIDC feeders, express feeders and EHV
feeders. The Commission observed that the distribution loss figures for various
circles were fluctuating widely from month to month, and in some cases, the
monthly T & D losses were being shown as negative. The Commission sought an
explanation from the MSEB on the same.
The reason given by the MSEB was that
there are different billing cycles such as monthly for HT industrial,
bi-monthly for domestic, half-yearly for agriculture, and hence, the
distribution loss computed from the billing data shows variation from month to
month. To overcome this, the Commission agreed to analyze the distribution loss
figures both on monthly and six month sliding average basis, which would take
care of the effect of different billing cycles.
On August 8, 2002, the MSEB requested
the Commission for a meeting to discuss the methodology for evaluation of T
& D losses. A meeting was held on October 7, 2002, with MSEB and Section 26
consumer representatives. The MSEB was asked to elaborate on the progress
achieved in assessing the zone/circle-wise T & D losses, and the MSEB’s
proposal for implementing the differential T & D loss charge.
Shri Kukde, Technical Member, MSEB stated that
the MSEB strongly supported the concept of T&D loss charges : however, if
any abrupt changes are to be made at this stage with a view to introducing the
concept of differential T&D loss charges on the basis of circle/zone wise
losses at this stage, efforts of improving T&D loss, might get jeopardized and, therefore,
requested the Commission not to change the present system.
Shri. Girish Sant of Prayas, suggested
that the MSEB could submit the new Tariff Proposal in two parts, viz. (i.)
keeping the present methodology, and (ii) a zone/circle wise proposal wherein
the tariff would be different based on the differential loss level of that
particular zone/circle. Shri Kukde agreed to submit two different tariff
revision proposals as suggested by the consumer representatives. He added that
instead of considering each individual circle, a group of 3 to 4 circles could
be clubbed together for the purpose.
The Commission directed the MSEB to
submit its Tariff Proposal for future tariff revision in two parts as discussed
above. The MSEB was also directed to clearly bring out the impact of
meterisation in its proposal.
Meanwhile, the Commission received 37
petitions from stakeholders on the T & D Loss Charge. The gist of these
petitions was that the Commission should implement the differential T & D
loss charge from October 1, 2002, based on the T & D loss of that circle as
stated in the Tariff Order, and also hold the respective MSEB officials
accountable for higher T & D losses in their areas.
As the MSEB did not submit its Tariff
Proposal for FY 2003-04 by the end of December 2002, the Commission held a
hearing on 30th December 2002, in the presence of Section 26
consumer representatives and the representatives of the 37 petitioners, where
the MSEB was represented by its advocate and its Technical Director, Mr.
Shetji.
The consumer representatives and other
petitioners were firm in their view that as the MSEB had not submitted its
Tariff Petition as per the schedule by December 2002, the Commission should
implement its Order by imposing differential T & D loss charge for
different zones/circles depending on the T & D loss in that zone/circle.
The general view of the petitioners was that no T & D loss charge should be
levied in zones/circles with T & D loss lower than 26.87%. Some petitioners
suggested that zones/circles with T & D loss lower than 26.87% should be
given a rebate, i.e. negative T & D loss charge. They added that a signal
has to be given to the zones/circles having high T & D losses by levying
higher T& D loss charges, as indicated in the Commission's Tariff Order
dated January 10, 2002.
Most petitioners were critical of the
MSEB for its non-compliance with the Commission's Orders regarding the
publishing of the Energy Audit results and the Action Taken Report in
newspapers every month, publicity for incentive schemes to reduce the T & D
loss, and providing name badges for the field staff.
The petitioners also queried the MSEB
regarding the action taken by the MSEB against the errant employees, number of
employees suspended, and the money recovered from these employees. They were
critical of the MSEB for not doing enough to discipline its employees and bring
about accountability in its functioning. The petitioners apprehended that if
the MSEB was unable to recover the 50% share of the cost of the T & D
losses from its employees, the revenue shortfall would be passed on to the
consumers in the next financial year, through tariff. Several petitioners were
critical of the MSEB for showing high losses, even in areas where 100% metering
has been achieved.
Mr. Treasurer representing the
Maharashtra Chamber of Commerce suggested that the T & D loss charge should
be linked to the T & D loss of that billing unit or the respective feeder.
Mr. Treasurer suggested that the Commission could opt for a slab system for T
& D loss charge, based on the carrot and stick approach.
Mr. Pendse of Mumbai Grahak Panchayat,
a Section 26 consumer representative, stated that only four zones, viz. Konkan,
Pune, Nagpur (Urban) and Kalyan had shown acceptable improvement over the
period January 2002 to September 2002. He added that if these four zones could
reduce the losses to within acceptable limits, then there was no reason to
accept sub-standard performance from other zones. Further, the MSEB should
concentrate its efforts mainly on the larger zones, such as Kolhapur and Nasik,
which consume around 37% of the total consumption. He said that selected
circles of the MSEB had shown that it was possible to reduce T & D losses
by making committed efforts, and the best way to ensure that the improvement in
performance is mirrored in all zones/circles is to start charging differential
T & D loss charge, based on the T & D losses of that zone/circle.
Mr. Girish Sant of Prayas stated that
the T & D loss charge had introduced transparency in T & D losses and
should be refined further to reflect the zone/circle wise T & D losses as
stated in the Tariff Order. He enquired whether the MSEB had introduced any
incentive/disincentive in the wage agreement with its employees to reflect the
T & D losses in the respective zones. Mr. Sant suggested that as the T
& D losses in any zone had historical differences, the differential T &
D loss charge should also give due weightage to the reduction in T & D
losses of that zone/circle, apart from the historical loss levels of that
zone/circle.
In this hearing, the MSEB was asked
about the status of its Tariff Proposal and the proposed methodology for
charging differential T & D loss charge based on the T & D loss
exhibited by that zone/circle/division. MSEB responded that it was not in
favour of implementing the differential T & D loss charge. The MSEB added
that it would be able to submit its Tariff Proposal only after another two
months, and stood by its commitment to submit the Tariff Petition in two parts,
one based on the present methodology and another based on differential T &
D loss charge for each zone/circle, based on the T & D loss of that
zone/circle.
Rationale
for the interim Order
The Commission has considered the
issues raised by the petitioners and the views of the MSEB and the consumer representatives
in this regard. The Commission is of the opinion that the request for a
differential T& D loss charge has merit, and needs to be implemented
immediately. However, there are several issues that need to be sorted out, as
well as impact analysis to be carried out based on analysis of data, before a
scheme for levying differential T & D loss charge can be formulated. The
Commission is of the opinion that the periodical Energy Accounting data
submitted by the MSEB is not enough to develop a scheme for levying a
differential T & D loss charge. However, in the absence of the detailed
Tariff Revision Application, the Commission will explore the possibility of
arriving at an empirical formula for levy of differential T & D loss
charges.
The Commission has, therefore, decided
to issue an interim Order, for implementation with effect from January 1st,
2003, (i.e. billing month of January) based on the T & D loss data made
available by the MSEB till the month of September 2002. The Commission has
observed that it takes between 60 days to 90 days for the MSEB to submit the
energy accounting data for the month. The Commission has decided to recognize
the efforts of such zones/circles who have shown improved performance and have
reported lower T & D loss levels. At the same time, it is also necessary
that the zones/circles who have shown no improvement or whose performance has
deteriorated, should be put on notice, so that more concentrated efforts are
made in these zones/circles for reduction in T & D losses, as envisaged in
the Tariff Order issued on January 10, 2002.
Computation
of Zone/Circle-wise T & D Losses
The Commission has analyzed the
month-wise Energy Accounting data submitted by the MSEB for the period of
January 2002 to September 2002. The Commission has also analyzed the Merit
Order Despatch data submitted by the MSEB to compute the energy input into the
transmission and distribution network. The transmission loss in the system has
been assessed as the difference between the total energy input as recorded in
the Merit Order Despatch data and the summation of the total energy input
recorded by the different zones. This aggregate transmission loss has been
apportioned to the different zones/circles in proportion to their share of the
energy input.
The distribution losses in each
zone/circle has been computed as the difference between the energy input and
the energy billed for that zone/circle. For comparison of the T & D loss of
the zone/circle with the benchmarks set by the Commission, the Commission has
computed the T & D loss as the difference between the total energy input
into the circle after apportioning the Transmission loss, and the energy
billed, as a percentage of the total energy input in that zone/circle.
The Commission has decided to implement
the differential T & D loss charge at the circle level and zone level in
cases where no separate circle exists [Pune (Urban) and Nagpur (Urban)], as
stated in the Tariff Order dated January 10, 2002. The Commission will consider
extending the concept of differential T& D loss charge upto division level
in future.
The Commission’s analysis shows that 11
circles have T & D loss levels below the Commission’s performance benchmark
of 26.87%, as shown in the Table below:
Table I:
Circles with T & D loss below 26.87%
| Sr.
No. |
Circles |
6
month Moving Avg. T&D loss (%) |
Jan
02 to
Jun 02 |
Feb
02 to
Jul 02 |
Mar
02 to
Aug 02 |
Apr
02 to
Sep 02 |
| 1 |
Sangli
Circle |
25.4% |
23.1% |
22.4% |
18.6% |
| 2 |
Chandrapur
Circle |
29.3% |
26.5% |
23.4% |
21.2% |
| 3 |
Vashi
Circle |
21.0% |
22.8% |
23.1% |
21.3% |
| 4 |
Pen
Circle |
23.2% |
22.5% |
22.7% |
21.9% |
| 5 |
Ratnagiri
Circle |
24.0% |
24.3% |
24.5% |
22.6% |
| 6 |
Nagpur
Circle |
27.3% |
26.5% |
26.4% |
23.3% |
| 7 |
Kolhapur
Circle |
26.2% |
25.3% |
25.7% |
24.5% |
| 8 |
Wardha
Circle |
24.7% |
26.5% |
25.2% |
24.5% |
| 9 |
Pune
[U] Circle |
23.9% |
25.1% |
26.7% |
24.8% |
| 10 |
Vasai
Circle |
27.1% |
26.8% |
26.1% |
25.9% |
| 11 |
Bhandup
Circle |
27.4% |
26.9% |
27.3% |
26.0% |
|
The above analysis shows that most of
the above circles have been showing steady improvement, except for Pune (Urban)
and Vashi circles, where the six monthly average is showing an erratic trend. The
Commission has also noted that the T & D loss of Sangli circle in the month
of June 2002 has been shown to be negative, due to which the moving average T
& D losses works out to less than 26.87%.
The circles with T & D losses
ranging between 26.87% and 39.49%, the average T & D loss considered by the
Commission for determining the tariff of MSEB in FY02, have been listed below:
Table II: Circles
with T & D loss above 26.87% and below 39.49%
| Sr.
No. |
Circles |
6 month Moving Avg. T&D loss (%) |
Jan
02 to
Jun 02 |
Feb
02 to
Jul 02 |
Mar
02 to
Aug 02 |
Apr
02 to
Sep 02 |
| 1 |
Ahmednagar
Circle |
30.4% |
30.2% |
29.2% |
28.4% |
| 2 |
Aurangabad
[R] Circle |
38.5% |
34.9% |
35.5% |
29.7% |
| 3 |
Nashik
Circle |
28.7% |
28.9% |
30.3% |
31.4% |
| 4 |
Pune
[R] Circle |
31.7% |
31.6% |
30.8% |
32.0% |
| 5 |
Satara
Circle |
25.1% |
27.2% |
29.3% |
32.1% |
| 6 |
Buldhana
Circle |
22.8% |
23.9% |
25.7% |
34.5% |
| 7 |
Gadchiroli
Circle |
29.3% |
30.1% |
32.2% |
34.7% |
| 8 |
Solapur
Circle |
36.3% |
37.7% |
36.4% |
36.6% |
| 9 |
Jalna
Circle |
38.7% |
38.7% |
39.8% |
37.3% |
| 10 |
Sindhudurg
Circle |
37.7% |
37.5% |
37.0% |
37.8% |
| 11 |
Kalyan
Circle |
40.7% |
39.6% |
39.4% |
38.8% |
| 12 |
Jalgaon
Circle |
34.7% |
35.4% |
37.2% |
38.9% |
| 13 |
Nagpur
[U] Circle |
43.1% |
43.2% |
42.5% |
39.2% |
|
It is interesting to note that within
these 13 circles, six circles are showing a deterioration in the T & D loss
levels, while the other circles are showing negligible or marginal improvement
in the T & D loss levels. Further, Ahmednagar circle is showing negative
losses in June 2002, while Buldhana circle is showing negative losses in March
2002, though in a majority of the remaining months, the T & D losses are
being reported above 30%.
There are 12 circles with T & D
losses ranging above 39.49% as shown in the Table below:
Table III:
Circles with T & D loss above 39.49%
| Sr.
No. |
Circles |
6 month Moving Avg. T&D loss (%) |
Jan
02 to
Jun 02 |
Feb
02 to
Jul 02 |
Mar
02 to
Aug 02 |
Apr
02 to
Sep 02 |
| 1 |
Nanded
Circle |
46.0% |
41.5% |
40.9% |
40.5% |
| 2 |
Bhandara
Circle |
37.7% |
39.2% |
39.9% |
40.9% |
| 3 |
Yeotmal
Circle |
42.3% |
41.6% |
41.9% |
41.4% |
| 4 |
Aurangabad
[U] Circle |
42.3% |
43.5% |
43.6% |
41.9% |
| 5 |
Amravati
Circle |
42.0% |
41.4% |
41.3% |
43.8% |
| 6 |
Latur
Circle |
48.4% |
48.3% |
47.9% |
45.1% |
| 7 |
Parbhani
Circle |
50.4% |
51.5% |
50.0% |
47.6% |
| 8 |
Dhule
Circle |
47.3% |
45.7% |
47.2% |
47.8% |
| 9 |
Akola
Circle |
47.2% |
45.7% |
47.9% |
50.6% |
| 10 |
Osmanabad
Circle |
46.9% |
48.4% |
50.2% |
51.0% |
| 11 |
Beed
Circle |
51.3% |
52.7% |
52.4% |
53.3% |
| 12 |
Bhiwandi
Circle |
58.1% |
57.3% |
58.7% |
58.5% |
|
It is interesting to note that within these 12 circles, four
circles are showing a deterioration in the T & D loss levels, while the
other circles are not showing any significant reduction in the T & D loss
levels. Further, the Commission notes with great concern that four circles,
viz. Akola, Osmanabad, Beed and Bhiwandi are showing T & D losses in excess
of 50%.
Commission’s
Ruling
The Commission has decided that the T
& D loss charge will be levied as per the T & D loss level exhibited by
that circle, through a scheme to be formulated subsequently. In the interim
period, the circles where the T & D loss levels are lower than the
benchmark of 26.87% will be exempted from the levy of T & D loss charge.
The circles which have T & D losses above 26.87% will continue to pay the
existing T & D loss charges.
The Commission would like the circles
with T & D losses above 26.87% to become more aware of the T & D losses
in their circle, and ensure through active participation that the T & D
losses in these circles are brought down to below 26.87% levels. The Commission
would also like to alert these circles that after detailed analysis, the
Commission will incorporate differential T & D loss charges, wherein the
circles with higher T & D losses will have to pay higher T & D loss
charges.
As regards the circles with T & D
losses above 39.49%, they will have to put in greater efforts to ensure that
the T & D losses are brought down substantially, or else face a steep
increase in the T & D loss charges, on account of the graded T & D loss
charge to be implemented subsequently. The Commission is also of the opinion
that T & D losses of above 50% are absolutely unacceptable, and the MSEB
should put in concentrated efforts to bring down the loss levels to benchmark
levels, within the shortest possible time, else, the Commission may be
compelled to take drastic punitive action.
The Commission has noted that even
within the circles where the T &D loss is below 26.87%, there are divisions
where the T& D losses are high. The MSEB should apply the principles of
‘ABC Analysis’ for such divisions within the circle, to ensure that the efforts
towards reducing T & D losses are gainfully directed.
The Commission also clarifies that once
the six monthly moving average T & D loss in any circle moves below 26.87%,
then the T & D loss charge will cease to be applicable from the next month
onwards. Further, once the six monthly moving average T & D loss moves
below 26.87%, even if the six monthly moving average T & D loss for any
subsequent period is higher than 26.87%, then no T & D loss charge will be
applicable. It is the MSEB’s responsibility to ensure that there is no slippage
in the T & D loss levels in that circle/zone.
The Commission has noted that the
assessed energy consumption as reported by the MSEB has several
inconsistencies. The Commission has assessed the un-metered agricultural
consumption based on its analysis of the circle-wise agricultural consumption
sample data submitted by the MSEB alongwith the Tariff Application for FY
2001-02. Prima-facie, it appears that the T & D losses of several circles
may be higher than that being reported by the MSEB. This necessitates a
detailed investigation. The Commission has also noted that the circles showing
T & D loss levels below 26.87%, continue to remain within the benchmark
loss level, even if adjusted based on the analysis of the previous sample data.
Keeping in view the above observations,
analysis and various submissions made by the stakeholders, the Commission
hereby directs that:
1.
The MSEB
should not levy T & D loss charge in the circles where the T & D loss
levels are lower than the benchmark of 26.87%, referred in Table I above, with
effect from January 1st, 2003.
2.
The circles
which have T & D losses above 26.87% will continue to pay the existing T
& D loss charges, referred in Tables II and III above.
3.
Once the
six monthly moving average T & D loss moves below 26.87%, even if the six
monthly moving average T & D loss for any subsequent period is higher than
26.87%, then no T & D loss charge will be applicable
4.
MSEB
should put concentrated efforts to ensure that the T & D losses are brought
down substantially in circles where the T & D losses are higher than
26.87%, especially in the circles with T & D losses above 50%, based on the
principles of ‘ABC Analysis’.
5.
MSEB
should ensure the compliance of the Commission’s directives in this regard as
given in order dated 10th January 2002 and also put the information
on their website.
| Sd/- |
Sd/- |
Sd/- |
|
| (Jayant Deo) |
(Dr Pramod Deo) |
(P. Subrahmanyam) |
|
| Member |
Member |
Chairman, MERC |
|
|
|
|
Sd/- |
|
|
|
(Sanjay Kumar) |
|
|
|
Secretary, MERC |
| |
