“26(1)     Notwithstanding anything contained in any other law, the tariff for intra-state transmission of electricity and the tariff for sub-transmission, distribution and supply of electricity, grid, wholesale, bulk or retail, as the case may be, in a State (hereinafter referred to as the “tariff”), shall be subject to the provisions of this Act and the tariff shall be determined by the Commission in accordance with the provisions of this Act:
 

Provided that the tariffs and charges set by the Board by notifications No. 05-01/GA/192/A/134, No. 05-01/GA/192/B-2, No. 5-01/GA/192/C-1, No. 5-01/GA/192/C-2, No. 5-01/GA/192/C-3, No. 5-01/GA/192/D-1, No. 5-01/GA/192/D-2, No. 5-01/GA/192/D-3, No. 5-01/GA/192/E, and No. 5-01/GA/192/F, all dated 1^st March 1999 shall be valid and enforceable notwithstanding any order or direction made by the Madhya Pradesh Electricity Regulatory Commission constituted under section 17 of the Central Act.

(2)           The Commission shall determine by regulations the terms and conditions for the fixation of tariff, and in doing so, shall be guided by the following factors, namely:

a)                   that the tariff progressively reflect the cost of supply of electricity at an adequate and improving level of efficiency;

b)                   the factors which would encourage efficiency, economical use of the resources, good performance, optimum investments, and other matters which the Commission considers appropriate for the purpose of this Act.

c)                    the electricity generation, transmission, distribution and supply are conducted on commercial principles;

d)                   the interests of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner.

e)                   the principles and their applications provided in sections 46 and 57 of the Electricity (Supply) Act, 1948 and the Sixth Schedule thereto;

f)                    in the case of the Board the principles under section 59 of the Electricity (Supply) Act, 1948 are observed;     

(3)           The holder of each license and other persons including the Board or its successor body authorized to transmit, sell, distribute or supply electricity wholesale, bulk or retail, in the State shall observe the methodologies and procedures specified by the State Commission from time to time in calculating the expected revenue from charges which the holder is permitted to recover and in determining tariffs to collect those revenues.

(4)           If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariffs which is determined by the State Commission under this section, the State Government shall pay the amount to compensate the person affected by the grant of subsidy in the manner which the Commission may direct, as a condition for the license or any other person concerned to implement the subsidy provided for by the State Government.

 

(5)           Any retail tariff determined or implemented under this Act:

a)                   shall not show undue preference to any consumer of electricity, but may differentiate according to the consumer’s load factor, and total consumption of electricity during any specified period of the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required or paying capacity of category of customers and need for cross subsidisation.

b)                   shall except in the case of financially weak consumers who are to be provided limited quantum of electricity at reduced tariff for meeting the basic needs, be in manner that the existing subsidy given to any class or classes of consumer is progressively reduced and within a period of five years from the commencement of this Act the tariff to any class of consumer shall reflect a minimum of seventy five percent of the licensee’s average cost of supply of electricity to that class;

c)                    shall be just and reasonable and be such as to promote efficiency in the supply and consumption of electricity; and

d)                   shall satisfy all other relevant provisions of the Act, regulations and conditions of license”.                                 

 

2.10     It is useful to mention that the Commission had earlier formulated its tariff philosophy setting out its approach to the tariff determination guided by the factors specified under the Act. It endeavours to address several complexities involved in tariff determination. These include:

 

(i)	Methodology for Price Regulation	The Commission has followed Rate of Return (ROR) method until such time as data become available to apply a comprehensive form of Performance Based Return (PBR).
(ii)	Determination of Revenue Requirement	Considering the desirability of being able to audit historical costs and the stability of the resulting tariffs, the Commission has adopted Ensuing Year relying mainly on the Past and Current year’s achievement.
(iii)	Valuation of Assets	Having regard to the need to ensure reliability and acceptability, the Commission has followed the methodology of original cost minus depreciation as provided in the Statement of Accounts of the Board.
(iv)	Allowed Rate of Return	The Commission is guided by the provisions of section 59 of the Electricity (Supply) Act, 1948 in the matter of allowed rate of return (surplus).

(v)	Allocation of Revenue Requirement to Consumer Classes / Tariff Schedules	Until such time, the utility submits marginal cost analysis, the Commission will adopt the tariff to be based on the accounting costs, modified by the need to phase out existing subsidies and cross subsidies.
(vi)	Performance Improvements and Reduction of Operational Costs	The Commission believes that any bench marking for reduction of operational costs need to take into account the ability of the utility to achieve the set targets.

 

 

 

 

 

3.         SALIENT FEATURES OF THE BOARD’S PROPOSAL

 

3.1       The Board has submitted petition for revision of the existing tariff in order to meet its revenue expenses on account of fixed charges, variable charges, purchase of power and the statutory requirements of surplus. 

3.2       Projection of Energy Sales and Revenue under Existing Tariff

3.2.1    The projections of energy sales, growth in load and number of consumers for 2001-02 are made in the petition on the basis of historical data of the past five years and compound annual growth rate (CAGR). The data provided for 2001-02 in the petition were subsequently revised by the Board as below: 

S.No	Item	Unit	Petition	Revised
1.	Energy Sold	MU	15,332.43	15,507.11
2.	Revenue Demand	Rs Cr	3,265.65	3,348.48

 

3.2.2        The units sold have been computed on the basis of restricted demand. 

3.3       Supply of Energy  

3.3.1    Supply of energy for 2001-02 estimated on the basis of restricted demand, from different sources by MPSEB is as follows:  

  3.3.2    Besides, the Board proposed following additional availability of energy from its hydel stations. 
 

Bansagar	325 MU
Rajghat	50 MU
Total additional	375 MU
Total Hydel generation	2464 MU