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

ESTABLISHMENT AND FUNCTIONS OF MPERC

1. The Madhya Pradesh Electricity Regulatory Commission (the Commission) was established by the Government of Madhya Pradesh vide notification in MP Gazette dated 20^th August 1998, under the Electricity Regulatory Commissions Act, 1998 (for short the ‘Act’).
2. The Commission has been mandated to discharge the responsibilities assigned under Section 22(1) of the Act.

1. "Powers and Functions of State Commission, 22(1) - Subject to the provisions of Chapter III, the State Commission shall dischthe following functions, namely:
   1. to determine the tariff for electricity, wholesale, bulk, grid or retail,   as the case may be, in the manner provided in section 29;
   2. to determine the tariff payable for the use of transmission facilities in the manner provided in section 29;
   3. to regulate power purchase and procurement of the transmission utilities and distribution utilities including the price, at which the power shall be procured from the generating companies, generating stations or from other sources for transmission, sale, distribution and supply in the State:
   4. to promote competition, efficiency and economy in the activities of the electricity industry to achieve the objects and purposes of this Act."
2. Further, some more functions have been conferred by the State Government through notification dated 20-8-98 under section 22(2) of the Act. The reforms are required, as in spite of all efforts for change of organizational culture, and sustained attempts for diagnosis and cure of maladies affecting the work culture, the MPSEB in its present form is not able to make itself a progressive and competitive organization. The delegation of authority on the above lines opens a wide variety of options for calculations of cost of generation, transmission and distribution. For fixation of tariffs, the provisions further elaborate the principles in section 29 of the aforesaid Act.
3. It is provided in section 30 of the Act that where the Commissions depart from factors specified in clauses (a) to (f) of sub-section (2) of section 29, they shall record the reasons for such departure in writing.
4. The Commission has issued regulations regarding the conduct of its business, which include tariff regulations, issue of licenses and establishment of the State Advisory Committee. The Commission has laid down the procedure for estimating revenue requirement and tariff filings specifying the range of information that the utility is required to submit to the Commission when filing its Annual Revenue Requirement and Tariff Proposals.
5. The Commission believes that it is now appropriate to articulate the tariff regulatory framework in order to meet its responsibilities under Sections 22(1) and 29 of the Act and to fulfill its role in the achievement of important purposes of Act. The Commission hereby, sets principles for the tariff and aims to achieve price regulation that will be applicable to the Electricity Industry of the State.