Consumer Education & Research Centre

Ref. : Er/press/2006/tariff9_p65

All four distribution companies of Gujarat Urja Vikas Nigam Ltd. (GUVNL) have petitioned the Gujarat Electricity Regulatory Commission (GERC) for a revision in tariff which includes increase in fixed charges to Rs. 14 per kW of sanctioned/ contracted load, increase in energy charges due to reduction in the slab system and introduction of special surcharge to meet unpredictable and uncontrollable expenses.

Consumer Education and Research Society (CERS), Ahmedabad, in its submission filed before the GERC, has objected to the basic concept of revision in tariff at uniform rates for all the distribution companies. The main purpose of the Electricity Act, 2003 is to introduce competition in the electricity sector to provide choice to consumers to select their own distribution licensee who provides quality power at cheaper and competitive rates. CERS has, therefore, requested the Commission to reject the petitions filed by all distribution companies.

The Electricity Act, 2003 where Section 61 states on tariff regulations :

Sub Section (C)

“the factors which would encourage competition, efficiency, economical use of resources, good perfor mance and optimum investments.”

The petitioners have demanded revised tariff to be applicable from 1 April 2006 and, therefore, petitioners should file application for revision in tariff for 2006-2007 and 2007-2008, and not for 2005-2006 and 2006-2007.

CERS, in its submission, has stated that the presently applicable fixed charges shall become variable if these charges are calculated on the basis of sanctioned load of consumers. CERS has made a comparison of the existing and proposed fixed charges which is as follows:

Residential Consumers:

____________________________________________________________________________

Type of Supply Fixed Charges Increase Increase
Existing Proposed (in Rs.) No oftimes
Rs/Month Rs/kw/month

____________________________________________________________________________

Single-phase 5.25 14 x 6 = 84 78.75 15
(up to 6 kw)

Three-phase 15.75 20 x 10 = 200 184.25 11.7
(10 kw load)

____________________________________________________________________________

The petitioners claim that the energy charges have been reduced; therefore, the claim that the burden on consumers is minimum can be challenged by the following comparison:

Residential Consumers:

ExistingCharges Proposed Charges Rs.

____________________________________________________________________________

(Five Slab System) (Three Slab System)
50 x 2.70 = 135 100 x 2.70 = 270
50 x 3.00 = 150 200 x 4.00 = 800
100 x 3.60 = 360 100x 4.70 = 470
100x 4.10 = 410
100 x 4.70 = 470

For 400 units Rs. = 1525 For 400 units Rs. =1540

From the above it is clear that energy charges are not reduced as stated by the petitioners but are increased marginally.

CERS has also pointed to the GERC the poor performance of all distribution companies compared to the standards of performance notified by GERC Regulations. CERS has stated that if they achieve the standards notified by the GERC then there is no need for revision in tariff.

So far these distribution companies have not bothered to send quarterly reports on reliability indices, e.g. the system average interruption frequency index (SAIFI), the system average interruption duration index (SAIDI) and the momentary average interruption frequency index (MAIFI). The plant load factor of the GUVNL is less than 70 per cent for the past five years compared to 81.45 per cent of the Central sector and 85.12 per cent of the private sector in 2004-2005.

CERS has also brought to the notice of the Commission the high power purchase cost which is as high as 80 per cent of the total expenditure. The petitioners have a capacity of 8683 MW in the State against the demand for 9500 MW during summer months. The GUVNL’s own contribution is hardly 70 per cent of its plant capacity of 5000 MW, i.e. 3500 MW. The GUVNL has to purchase power from independent power producers at exorbitant rates to maintain power supply or to opt for load shedding.

CERS, therefore, has requested the Commission to reject the petitions filed by all the distribution companies and improve their performance before approaching the GERC.

Date : 08/03/2006

Editor : Pritee Shah
INSIGHT — The Consumer Magazine
Place : Ahmedabad