TARIFF PHILOSOPHY PAPER OF M.P.E.R.C.

PERFORMANCE IMPROVEMENTS AND REDUCTION OF OPERATIONAL LOSSES

1. The most pressing need for reform in the electricity industry in the State is in the areas of quality of power, reduction of losses and metering of customers’ consumption, apart from economy in operation / maintenance, establishment and other expenses. There is much scope for improving quality of power supply and reducing transmission and distribution losses. Moreover, price increases should be subject to improvement in performance, including the quality of power. Losses threaten the utility’s financial health and keep prices unnecessarily high for the paying consumers. Unmetered supply not only does not enable utility to recover the charges on realistic consumption, but also encourages wastage of power.
2. The Commission intends to develop suitable standards of performance and ask the utility for strict adherence. It is incumbent upon the utility to develop appropriate plans and present those to the Commission for consideration. Such an approach sharpens the utility’s expertise and experience in these areas and brings it to the Commission's scrutiny and also assures the consumers about the steps taken or contemplated to be taken in the matter. Efficiency criterion requires that there should be minimum T&D loss and effective metering as the base.
3. The fixation of tariff, according to the regulations laid down by the Commission, shall be based on factors, among others, different operational norms and performance levels such as plant load factor, transmission and distribution losses, reduction in the unaccounted energy due to theft / pilferage, recovery of outstanding arrears, etc.
4. Any bench marking for reduction of transmission and distribution losses and improvements in performance need to take into account the ability of the utility to achieve the set targets which will mainly depend upon how the utility proposes to develop appropriate plans and present those to the Commission.