principles of tariff design.pdf

7/28/2019 PRINCIPLES OF TARIFF DESIGN.pdf

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Assam Electricity Regulatory Commission Tariff Order FY 2007-08

CHAPTER 8 : PRINCIPLES OF TARIFF DESIGN Page 207

CHAPTER 8

PRINCIPLES OF TARIFF DESIGN

TARIFF DESIGN :8.1 Structure of Retail Tariff and Transmission & Wheeling Charges

As discussed in TO 2006-07, for the purpose of tariff design, the Commission has

considered the following documents as basic guidelines.

a. The Tariff Policy notified by the Government of India as per Section 3 of theElectricity Act 2003.

b. The Orders of the Appellate Tribunal of Electricity in disposal of appeal againstTariff Order 2005-06 & 2004-05.

c. Tariff Order 2005-06 and 2006-07 of the Commission.In Section 11 of Tariff Order 2005-06, the Commission notes that The first task for

the Commission is to decide what method will be used to determine the level of cross subsidy.

Currently most Commissions are using an average cost to serve method because the data

does not exist to support the voltage based cost to serve method. With the data available at

present, it is not possible to calculate the cost to serve on voltage or category basis. The

Commission staff has made an attempt to formulate the cost of supply depending on nature

and time of use which has been considered for this tariff. However, the Commission will be

conducting a further study to calculate the cost to serve on voltage basis later this year. This

study will be revised once better data can be provided by the three Discoms. This is

dependent on the installation of meters to capture the required data. As indicated in Tariff

Order 2005-06, a further study on cost of supply was conducted by the Commission. The CoS

model was prepared in the form of a Staff Paper and was circulated among different

stakeholders including the ASEB and successor entities in the Advisory Committee and other

meetings of the Commission. The paper was finally accepted by the Commission after

incorporating the views and suggestions of all the stakeholders and this model forms a basis

for fixing retail tariff for FY 2006-07. It may be mentioned here that, the National Tariff

Policy notified by Government of India as per provision of Section 3 of the Electricity Act


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2003 has mandated the requirement of fixing tariff as per cost of supply to consumers.

However, the policy envisages a gradual reduction of cross subsidy with a trajectory so as to

bring the tariffs within + 20% of the average cost of supply by 2011-12. The Appellate

Tribunal of Electricity, in disposing appeal against Tariff Order of the Commission for FY

2005-06, also commented on the need of arriving at the cost of supply as mandated in the

Electricity Act. The new amendment of the Electricity Act w.e.f. 15 th June 2007 has removed

the provision for elimination of cross-subsidy and instead mandated for gradual

reduction of cross subsidy over a period of time as considered appropriate by the

Commission.

The cost allocation principle incorporated in the CoS model allow both identification

and allocation of cross subsidy within the system among consumer categories. The

Commission intends to use this model for both tariff fixation and allocation of cross subsidy

as already explained in Tariff Order 2006-07. The Commission while stressing the need to

protect consumer interests, also tried to avoid any tariff shock while calculating and

designing the retail tariffs.

The Fully Allocated Cost Tariff (FACT) for each category of consumers along with

the amount of cross subsidy and estimated resultant gap in revenue requirement has been

provisionally determined as per provision of the Electricity Act, 2003.

The cross subsidy data for different categories of consumers based on the estimated

cost of supply to different categories of consumers is applied to arrive at the cross subsidy

surcharge component of tariff of respective categories of consumers. This cost separation as

per the model will give an indication of cost causation by different categories of consumers

depending on the supply voltage, time of use, load factor etc. The cost separation will

facilitate open access to those consumers who may opt for open access benefit as per

provision of AERC Open Access Regulation notified on 13th September, 2005. Such

consumers shall have to pay open access surcharge to the respective Discoms at whose area

the consumer is located.

As discussed in TO 2006-07, the CoS model and related data required regular

updating regarding consumer load curve, consumer load factor, segment wise loss and cost

incurred in different activities. The calculations in 2006-07 were based on information on

some sample data of load curves of different categories of consumers, sample cost break up

for the purpose of separation of distribution cost. Further, loss matrix in the study was


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adopted considering a general practice of descending loss with ascending voltage; however in

practice this may not be true if there is element of unauthorized tapping at intermediate

voltage. In this Tariff Order the COS model is further updated with distribution cost

separation as a percentage of asset value at different voltage.

In TO 2006-07, the Commission directed that each Discom must set up a separate

Load Research Cell which will undertake load survey, consumer profiling and separation

of cost more precisely as per requirements of the model within two months of the coming

into effect of this tariff Order. However, sufficient data are not made available. Based on

available sample data some modifications are made in the model which have shown end

results which is comparable with actual load in the system. (Against 850 MW of actual peak

demand, the study shows peak demand of 857 MW).

Under Section 62(b) and 62(c) of the Electricity Act 2003, the Commission is also

required to fix the transmission and wheeling charges for using the transmission network.

These charges fixed on the basis of postage stamp method as per CERC Guidelines, will be

applicable for all users of the network including the Discoms. The Commission has therefore

decided to determine separately the transmission and SLDC charges to be paid by all

consumers of the transmission network (66KV and above) including loss. Similarly the

consumers using the network below 66 KV are required to pay the wheeling charges as

determined by the Commission in addition to transmission charge.

8.2 Subsidy by Government of Assam under Section 65

The Government of Assam (GoA) was approached by the Commission in respect of

provision of subsidy for any consumer or class of consumers under section 65 of the Act.

8.2.1 Principle for Administration of Subsidy:

In case of availability of subsidy from Government the following principle will be

adopted

(a) The subsidy given by the GoA (if any) as per Section 65 of Electricity Act 2003is for maintaining the tariffs at the levels as desired by GoA in respect of the

subsidized categories.


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(b) Each Discom gets the subsidy commensurate to the extent of energy salesprojected in each subsidized category.

(c) The subsidy allocation to each Discom as calculated in (b) above must be paidby the GoA to the respective Discoms in monthly installments, in advance.

(d) The Discoms shall file before the Commission the actual sales to subsidizedcategories of consumers for whom the GoA agreed to pay the subsidy every

month and the Commission will monitor the units actually sold by the Discoms

vis--vis the subsidy provided.

(e) At the end of the year, subsidy adjustments will be made based on the actualconsumption of units in respect of various subsidized categories.

The Government of Assam has not responded to the Commissions query on

whether subsidy will be provided this year. Therefore, the above mechanism has not been

applied in the calculations for determination of retail tariff.

8.3 Treatment of Income from trading:

Adopting the similar approach in TO 2006-07, the Commission approved the full cost

for the FY 2007-08 which includes an amount likely to be received on account of trading of

surplus energy during high hydro period and during off peak period of day. The fixed cost

payment liabilities by ASEB/Discoms associated with power purchase from the allocated

CSGS/ APGCL/ IPP generators are relatively fixed in nature which is related to peak power

requirements of the utilities. Under the ABT regime, the fixed cost liabilities are not varied

with less scheduling from generators. Similar is in the case of APGCL and IPP generators

which are embedded with ASEB/Discoms. The surplus situation during some time in a yearand some time of day does not change their liabilities towards fixed cost payment. A

marginal reduction of energy charge will only become effective in case of merit order

dispatch. Due to this reason selling of surplus energy during some hours of a day is a

compulsion rather than motive for profit. Due to deficit situation in other regions of the

country during the monsoons in Assam, ASEB/Discoms are able to sell the surplus energy

which is shown as income from trading. This income is an opportunity income for the

utilities. As per practice, the benefit of this should be passed to the ultimate consumers of the

state to arrive at the fully allocated costs. Accordingly this amount is assigned to such


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categories of consumers whose tariff is subsidized to maintain the overall cross subsidy

within a reasonable band.

The net income accrued by ASEB/Discoms on account of sale of surplus power and

purchase of power during deficit period is to be adjusted with the ARR of Discoms. This

income as opportunity income should pass to the consumers in a principle of uniformity. The

Commission decided that this income will be first utilized for funding of subsidy at a ratio of

existing level of total cross subsidy to the subsidized groups. This will reduce the burden of

cross subsidy on the subsidizing groups. By this arrangement the Commission expects that

increase in revenue from net trading sale will ultimately reduce the tariff of subsidizing

groups in future. This arrangement would give a signal to the subsidized categories to

rationalize their consumption so that ASEB can trade more energy which will be beneficial to

them in the long run in addition to reduction of energy bill for current use.

8.4 Final Retail Tariffs

Section 62(3) of the Electricity Act, 2003, stipulates that the Appropriate Commission

while determining the tariff should not show any undue preference to any consumer of

electricity, but may differentiate according to the consumers load factor, power factor,

voltage, total consumption of electricity etc. The Commission followed the principle to the

extent possible and while finalizing the tariff, considered the existing tariff and cross subsidy

and compared these with those of estimated cost of supply for each category and fixed the

retail tariff.

8.5 Principle of Cross Subsidy:

After adjustment of trading income in FACT, the final tariffs are determined byadopting the following principle.

a. The present level of cross subsidy contribution as per estimation is not altered tohigher percentage as far as practicable.

b. For consumers receiving cross subsidy and subsidizing other consumers, tariff will beadjusted nearer to their estimated cost of supply.


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c. Categories of consumers availing the benefit of Time of Day (ToD) tariff willcontinue with rationalization of the TOD rates.

8.6 Segregation of Costs:

As discussed in TO 2006-07, with an aim to introduce open access facility to

consumers and generators efforts were being made to segregate the cost of supply in a

number of functional cost elements of generation fixed charge, fuel charge, transmission

charge, distribution and consumer charge so that the cost causation only is charged from the

consumer who utilizes the portion of the facility and service. Further, the Commission

decided to notify the element of estimated cross subsidy for each category of consumer in a

transparent manner.

As per the principle of cost separation the Commission found that the utility should

recover a component of fixed expenditure arriving out of the cost separation as consumer

charge by curving it out from the fixed charge. This charge shall give a clear meaning of the

component and will be give a true picture of the principle of recovery of cost of causation.

The Discoms, in their petition has filed some segregation of cost in this regard, the

Commission considers the same but segregated as per percentage of assets value of utilities

at different voltage. The Commission expects that in future, the retail tariff shall reflect

the cost causation so that cost can be recovered in a more transparent manner.

The Commission shall endeavor to follow the guidelines envisaged in the National

Tariff Policy while formulating tariff for different users of electricity. Perhaps it will not be

out of place to mention here that the policy notified by the Government of India (GOI) has

several points requiring clarifications which were highlighted in the meetings of Forum Of

Regulators (FOR) constituted as per Section 166(2) of the Act and GOI has already issued

clarifications on some of the points.

In view of the above, Commission considered all aspects of the Policy in

determination of Tariff as far as possible within the inherent limitations and constraints.


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Category-wise Analysis of Cost of Service and Tariff

[Revenue Gap (Rs1284.97 - Rs1270.90) = Rs 14.07 Cr (1.10%)]

8.7 LT GROUP

8.7.1 Jeevan Dhara - 0.5 kW & 1 kWh/day: This group of consumers generally

uses power during the evening hours when demand for power is the highest.

At the estimated total sale of 74.82 MU, the fully allocated cost of supply

considering 60% load factor (LF) to this group is Rs 37.73Cr. At the present

tariff the total cost likely to be recovered is Rs 17.24 Cr, leaving a cost of Rs

20.49 Cr to be recovered. After apportioning a part of trading income as

subsidy, the cost of supply to this group of consumers is Rs 23.68 Cr. No

revision is proposed in this category as the supply average rate is more than

50% of average supply rate. This arrangement leaves a cross subsidy of Rs

6.44 Cr to this group. (Average cost is Rs 2.30/kwh)

The fixed and variable charges are given in tabular form below:

*CoS (AA): Cost of Supply (After Adjustment of a part of trading income as subsidy)

8.7.2 Domestic A - above 0.5 kW to 5 kW: As per study of load curve at pages 235

to 252, this group of consumers generally uses power during the evening when

demand for power is the highest. At the estimated total sale of 865 MU to allthe three slabs of consumption, the fully allocated cost of supply considering

50 % load factor (LF) to this group is Rs 483.18 Cr. At the present tariff the

total cost likely to be recovered is Rs 303.16Cr, leaving a cost of Rs 180.02 Cr

left to be recovered. After apportioning a part of trading income as subsidy,

the cost of supply to this group of consumers is Rs 363.64 Cr Revision of tariff

to balance the annual revenue requirement leads to recovery of Rs 307.48 Cr,

still leaving a cross subsidy of Rs 56.16 Cr. (Average cost increased from Rs

3.50 to Rs 3.55, an increase of 1.43% higher than average increase of 1.10%).

*CoS (AA) Existing Proposed Approved

Fixed

Rs/connection/

month

Variable

Rs/kWh

Fixed

Rs/connection/

month

Variable

Rs/kWh

Fixed

Rs/connection/

month

Variable

Rs/kWh

Fixed

Rs/connection/

month

Variable

Rs/kWh

Cross

Subsidy

SurchargeRs/kWh

162.23 2.33 15(30) 2.15 15(30) 2.25 15(30) 2.15 Nil


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Domestic A Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

0units -

120 units

92.41 2.33 30 2.75 30 3.00 30 2.8 Nil

120 units -

240 units

130.83 2.33 30 3.8 30 4.00 30 3.85 Nil

Balance 156.44 2.33 30 4.50 30 4.75 30 4.55 Nil

Average 99.45 2.33 30 3.50 30 3.55 Nil*CoS (AA): Cost of Supply (After Adjustment of a part of trading income as subsidy)

8.7.3 Domestic B - above 5 kW to 20 kW: As per study of sample load curve, this

group of consumers generally uses power during the evening when demand

for power is the highest. At the estimated total sale of 104.75 MU, the fully

allocated cost of supply considering 40 % load factor (LF) to this group is Rs

67.05 Cr. At the present tariff the total cost likely to be recovered is Rs 46.93

Cr, leaving a cost of Rs 20.12 Cr left to be recovered. After apportioning a partof trading income as subsidy, the cost of supply to this group of consumers is

Rs 53.69 Cr Revision of tariff to balance the annual revenue requirement leads

to recovery of Rs 47.45 Cr, still leaving a cross subsidy of Rs 6.24 Cr

(Average cost increased from Rs 4.48 to Rs 4.53, an increase of 1.11%, same

as overall increase of 1.1%)

The fixed and variable charges are given in tabular form.



Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

CrossSubsidy

Surcharge

Rs/kWh

220.11 2.33 30 4.10 30 4.25 30 4.15 Nil


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8.7.4 Commercial above 0.5 to 20kW: As per study of sample load curve, this

group of consumers generally uses power during the evening when demand

for power is the highest. At the estimated total sale of 262.54 MU, the fully


156.18 Cr. At the present tariff the total cost likely to be recovered is Rs

148.11 Cr, leaving a cost of Rs 8.07 Cr left to be recovered. After apportioning

a part of trading income as subsidy, the cost of supply to this group of

consumers is Rs 150.82 Cr. Revision of tariff to balance the annual revenue

requirement leads to recovery of Rs 149.42 Cr, still leaving a cross subsidy of

Rs 1.40 Cr. (Average cost increased from Rs 5.64 to Rs 5.69, an increase of

0.89 % less than overall increase of 1.1%)



8.7.5 General Load upto 20 kW: As per information from sample load curve, this

group of consumers generally uses power during off-peak hours. At the

estimated total sale of 99.9 MU, the fully allocated cost of supply considering

40 % load factor (LF) to this category of consumers is Rs 45.10 Cr. At the

present tariff, the total revenue likely to be collected from this category is Rs

45.66 Cr which is above its actual cost of supply by Rs 0.56 Cr. Therefore,

this LT group is actually contributing this excess amount towards cross

subsidizing other consumer categories. Revision of tariff to balance the annual

revenue requirement leads to revenue of Rs 46.16 Cr, and the cross subsidy

contribution to Rs 1.06 Cr. (Average cost increased from Rs 4.57 to Rs 4.62,

an increase of 1.09%, less than overall increase of 1.1%)

The CoS & approved tariff is as below;


Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variabl

e

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

331.78 2.33 110 4.5 110 4.75 110 4.55 Nil


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*COS (AA) Existing Proposed Approved

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

328.03 2.89 125 3.95 125 4.10 125 4.00 0.06


8.7.6 Public Lighting: This group of consumers uses power both during peak &

off-peak (night) hours. At the estimated total sale of 7.8 MU, the fully

allocated cost of supply considering 50 % load factor (LF) to this group of

consumers is Rs 4.36 Cr. At the present tariff, the total cost likely to be

recovered is Rs 3.83 Cr, leaving a cost of Rs 0.53 Cr to be recovered. After

apportioning a part of trading income as subsidy, the cost of supply to this

group of consumers is Rs 4.01 Cr. Revision of tariff to balance the annual

revenue requirement leads to recovery of Rs 3.87 Cr, still leaving a cross

subsidy of Rs 0.14 Cr. (Average cost increased from Rs 4.91 to Rs 4.96, an

increase of 1.02 %, less than overall increase of 1.1%)

The CoS & approved Tariff in tabular form follows:


8.7.7 Agriculture upto 7.5 hp: This group of consumers generally uses power

during off-peak hours. At the estimated total sale of 7.11 MU, the fully

allocated cost of supply considering 30 % load factor (LF) to this group of

consumers is Rs 3.43 Cr. At the present tariff, the total cost likely to be

recovered is Rs 1.83 Cr, leaving a cost of Rs 1.80 Cr left to be recovered.

After apportioning a part of trading income as subsidy, the cost of supply to

this group of consumers is Rs 2.37 Cr. Revision of tariff to balance the annual


Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

479.69 2.33 120 4.2 120 4.40 120 4.25 Nil


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subsidy of Rs 0.05 Cr. (Average cost increase from Rs 2.58 to Rs 2.63, an

increase of 1.94%, higher than overall increase of 1.1%).

The CoS & approved Tariff is given in tabular form:


8.7.8 Small Industries - Rural upto 20 kW: As per sample load curve, this group

of consumers generally uses power during off-peak hours. At the estimated

total sale of 37.04 MU, the fully allocated cost of supply considering 40 %

load factor (LF) to this group of consumers is Rs 16.72 Cr. At the present

tariff, the total cost likely to be recovered is Rs 11 Cr, leaving a cost of Rs

5.72 Cr to be recovered. After apportioning a part of trading income as

subsidy, the cost of supply to this group of consumers is Rs 12.92 Cr. Revision

of tariff to balance the annual revenue requirement leads to recovery of Rs

11.19 Cr, still leaving a cross subsidy of Rs 1.73 Cr. (Average cost increase

from Rs 2.97 to Rs 3.02, an increase of 1.68 %, higher than overall increase of

1.1%)

The CoS & approved Tariff is given below:



Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

11.22 3.20 30 2.25 30 2.50 30 2.30 Nil


Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

27.02 2.89 30 2.30 30 2.75 30 2.35 Nil


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8.7.9 Small Industries - Urban: As per sample load curve, this group of consumers

generally uses maximum power during off-peak hours. At the estimated total

sale of 26.61 MU, the fully allocated cost of supply considering 40 % load

factor (LF) to this group of consumers is Rs 12.01 Cr. At the present tariff, the

total cost likely to be recovered is Rs 9.61 Cr, leaving a cost of Rs 2.40 Cr left

to be recovered. After apportioning a part of trading income as subsidy, the

cost of supply to this group of consumers is Rs 10.42 Cr. Revision of tariff to

balance the annual revenue requirement leads to recovery of Rs 9.74 Cr, still

leaving a cross subsidy of Rs 0.68 Cr. (Average cost increased from Rs 3.61 to

Rs 3.66, an increase of 1.39%, higher than overall increase of 1.1%)

The CoS & approved Tariffs are as follows:


8.8 HT GROUPS:

8.8.1 HT Domestic 20 kW and above: As per sample load curves, this group of

consumers generally uses power during the evening when demand for power

is the highest. At the estimated total sale of 34.76 MU, the fully allocated cost

of supply considering 40 % load factor (LF) to this group is Rs 19.16 Cr. At

the present tariff the total cost likely to be recovered is Rs 14.69 Cr, leaving a

cost of Rs 4.47 Cr left to be recovered. After apportioning a part of trading

income as subsidy, the cost of supply to this group of consumers is Rs 16.19

Cr. Revision of tariff to balance the annual revenue requirement leads to

recovery of Rs 14.87 Cr, still leaving a cross subsidy of Rs 1.32 Cr. (Average

cost increased from Rs 3.95 to Rs 4.00, an increase of 1.27%, higher than

overall increase of 1.1%).


Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Fixed

Rs/kW/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

39.32 2.89 40 2.55 40 3.00 40 2.60 Nil


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8.8.2 HT Commercial 20 kW and above: As per study of sample load curves, this

group of consumers generally uses power during the evening when demandfor power is the highest. At the estimated total sale of 162.99 MU, the fully


89.86 Cr. At the present tariff the total cost likely to be recovered is Rs 83.07

Cr, leaving a cost of Rs 6.79 Cr left to be recovered. After apportioning a part

of trading income as subsidy, the cost of supply to this group of consumers is

Rs 85.35 Cr. Revision of tariff to balance the annual revenue requirement

leads to recovery of Rs 83.89 Cr, still leaving a cross subsidy of Rs 1.46 Cr.

(Average cost increased from Rs 5.10 to Rs 5.15, an increase of 0.98 %, less

than the average increase of 1.1%).

The CoS and tariff charges are given in tabular form below:


8.8.3 Public Water Works: As per sample load curves, this group of consumers

generally uses power during off-peak hours. At the estimated total sale of

49.05 MU, the fully allocated cost of supply considering 40 % load factor (LF)

to this category of consumers is Rs 19.64 Cr. At the present tariff, the total


Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

221.31 2.26 30 3.90 30 4.10 30 3.95 Nil


Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

385.54 2.26 115 4.20 115 4.50 115 4.25 Nil


14/46



revenue likely to be collected from this category is Rs 23.17 Cr which is above

its actual cost of supply by Rs 3.53 Cr. Therefore, this HV group is actually

contributing this excess amount towards cross subsidizing other consumer

categories. Revision of tariff to balance the annual revenue requirement leads

to an increased revenue of Rs 23.42 Cr, and the cross subsidy contribution to

Rs 3.78 Cr.

(Average cost increased from Rs 4.72 to Rs 4.77, an increase of 1.06%, less

than the average increase of 1.1%)

The CoS & approved tariffs are as follows:


Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

241.52 2.70 125 4.05 125 4.30 125 4.10 0.77


8.8.4 Bulk Supply 20 kW and above

8.8.4 (1) Government Educational Institutes: This group of consumers

generally uses power both during peak and off-peak hours. At the estimated

total sale of 33.41 MU, the fully allocated cost of supply considering 40 %

load factor (LF) to this category of consumers is Rs 12.88 Cr. At the present

tariff, the total revenue likely to be collected from this category is Rs 14.24 Cr

which is above its actual cost of supply by Rs 1.36 Cr. Therefore, this HV

group is actually contributing this excess amount towards cross subsidizing

other consumer categories. Revision of tariff to balance the annual revenue

requirement leads to an increased revenue of Rs 14.41 Cr, and the cross

subsidy contribution of Rs 1.53 Cr. (Average cost increased from Rs 4.26 to

Rs 4.31, an increase of 1.17%)

The CoS & approved tariff is given below;


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*CoS (AA)

Rs

Existing

Rs

Proposed

Rs

Approved

Rs

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

279.47 2.55 110 3.75 110 4.00 110 3.80 0.46


8.8.4 (2) Others: As This group of consumers generally uses power both

during peak and off-peak hours. At the estimated total sale of 267.93 MU, the

fully allocated cost of supply considering 60 % load factor (LF) to this

category of consumers is Rs 118.62 Cr. At the present tariff, the total revenue

likely to be collected from this category is Rs 128.71 Cr which is above its

actual cost of supply by Rs 10.09 Cr. Therefore, this HV group is actually



to an increased revenue of Rs 130.05 Cr, and the cross subsidy contribution of

Rs 11.43 Cr. (Average cost increased from Rs 4.80 to Rs 4.85, an increase of

1.04%).

The CoS & approved tariff is given in table:


Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

417.73 2.26 145 4.05 145 4.50 145 4.10 0.38


8.8.5 HT Small Industries upto 50 kW: This group of consumers generally uses

power during off-peak hours. At the estimated total sale of 54.85 MU, the

fully allocated cost of supply considering 40 % load factor (LF) to this group

of consumers is Rs 21.96 Cr. At the present tariff, the total cost likely to be

recovered is Rs 16.26 Cr, leaving a cost of Rs 5.70 Cr to be recovered. After

apportioning a part of trading income as subsidy, the cost of supply to this


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group of consumers is Rs 18.17 Cr. Revision of tariff to balance the annual


subsidy of Rs 1.64 Cr. (Average cost increased from Rs 2.96 to Rs 3.01, an

increase of 1.69%, higher than the average increase of 1.1%).

The CoS & approved tariff follows:


Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

116.77 2.70 40 2.75 50 3.20 40 2.80 Nil


8.8.6 HT Industries I 50 kW to 150 kW: This group of consumers generally uses



category of consumers is Rs 16.31 Cr. At the present tariff, the total revenue

likely to be collected from this category is Rs 18.04 Cr which is above its

actual cost of supply by Rs 1.73 Cr. Therefore, this HV group is actually



to an increased revenue of Rs 18.24 Cr and cross subsidy contribution of Rs

1.93 Cr.

(Average cost increased from Rs 4.43 to Rs 4.48, an increase of 1.13 %)

The CoS & approved tariff is given in table below.


Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

140.36 2.70 100 3.50 120 4.00 100 3.55 0.47



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8.8.7 HT Industries II above 150 kW: This group of consumers generally uses

power during both peak and off-peak hours. At the estimated total sale of

330.61 MU, the fully allocated cost of supply considering 60 % load factor

(LF) to this category of consumers is Rs 139.94 Cr. At the present tariff, the

total revenue likely to be collected from this category is Rs 149.89 Cr which is

above its actual cost of supply by Rs 9.95 Cr . Therefore, this HV group is

actually contributing this excess amount towards cross subsidizing other

consumer categories. Revision of tariff to balance the annual revenue

requirement leads to an increased revenue of Rs 151.54 Cr, and the cross

subsidy contribution to Rs 11.60 Cr. (Average cost increased from Rs 4.53 to

Rs 4.58, an increase of 1.10%)

The CoS & approved tariff is given in table below:


Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs/kWh

312.34 2.15 140 3.60 150 4.00 140 3.65 0.35


8.8.8 Tea, Coffee & Rubber: This group of consumers generally uses power during

off-peak hours. However, from many sample load curves examined, it is found

that with higher availability of power during peak hours, this category tends to

draw power during peak hours causing coincidental peak during evening

hours. However, the consideration for FY 2006-07 has been continued for this

year also. At the estimated total sale of 303.174 MU, the fully allocated cost of

supply considering 30 % load factor (LF) to this category of consumers is Rs

128.89 Cr. At the present tariff, the total revenue likely to be collected from

this category is Rs 172.32 Cr which is above its actual cost of supply by Rs

43.43 Cr. Therefore, this HV group is actually contributing this excess amount

towards cross subsidizing other consumer categories. Revision of tariff to

balance the annual revenue requirement leads to an increased revenue of Rs

173.83 Cr, and the cross subsidy contribution of Rs 44.94 Cr. (Average cost


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increased from Rs 5.68 to Rs 5.73, an increase of 0.88 %)

The CoS & approved tariff is given in the following table:


Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

CrossSubsidy

Surcharge

Rs

128.41 2.95 230 3.95 240 4.30 230 4.00 1.48


8.8.9 Oil & Coal: This group of consumers generally uses power during peak &

off-peak hours. At the estimated total sale of 74.3 MU, the fully allocated cost

of supply considering 50 % load factor (LF) to this category of consumers is

Rs 36.12 Cr. At the present tariff, the total revenue likely to be collected from

this category is Rs 38.80 Cr which is above its actual cost of supply by Rs 2.68

Cr. Therefore, this HV group is actually contributing this excess amount

towards cross subsidizing other consumer categories. Revision of tariff to

balance the annual revenue requirement leads to an increased revenue of Rs

39.17 Cr, and the cross subsidy contribution of Rs 3.05 Cr. (Average cost

increased from Rs 5.22 to Rs 5.27, an increase of 0.96%)



Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA/

month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs

575.95 2.26 270 4.00 280 4.30 270 4.05 0.41


8.8.10 HT Irrigation load above 7.5 hp: This group of consumers generally uses



category of consumers is Rs 28.69 Cr. At the present tariff the total cost likely


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to be recovered from this category is Rs 24.35 Cr, leaving a cost of Rs 4.34 Cr

to be recovered. After apportioning a part of trading income as subsidy, the

cost of supply to this group of consumers is Rs 25.81 Cr. Revision of tariff to

balance the annual revenue requirement leads to recovery of Rs 24.68 Cr, still

leaving a cross subsidy of Rs 1.13 Cr. (Average cost increased from Rs 3.61 to

Rs 3.66, an increase of 1.39% higher than average increase of 1.10%).



Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Fixed

Rs/kVA

/month

Variable

Rs/kWh

Cross

Subsidy

Surcharge

Rs

87.98 2.95 40 3.20 40 3.50 40 3.25 NIL


******


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TARIFF FOR OPEN ACCESS

[TRANSMISSION CHARGE, SLDC CHARGE, WHEELING CHARGE, CROSS SUBSIDY &

ADDITIONAL CROSS SUBSIDY]

The Commission has already notified AERC (Terms & Conditions for Open Access)

Regulations, 2006, indicating a roadmap for open access facilities to be provided by Discoms.

In the open access scenario, it is necessary to notify different tariff charges as per provisions

of the regulations. Accordingly, as per provision of Clause 15.1 and 15.2, of AERC (Terms &

Condition for Open Access) Regulations, 2006, the Commission notifies the following

charges applicable for open access consumers who are likely to avail the open access

facilities including captive generators.

8.9 TRANSMISSION CHARGES

The transmission charges as given in Part VI (AEGCL) are applicable for the use of

transmission lines (system) of a transmission licensee by Generating companies, distribution

licensees, other Licensees, and also consumers who are permitted open access u/s 42 (2) of

the Electricity Act 2003.

Rates:

Transmission charges --------- Rs. 6912/MW/Day or Rs 0.54/unit

Plus

Energy losses in kind at 6.1%

8.10 STATE LOAD DESPATCH CENTRE (SLDC) CHARGES

Rate: Rs 181.66/MW/Day or Paise 1.74/unit

Notes:

i) The Transmission licensee shall deliver the quantum of energy given to it by a generatingcompany or a captive plant or a licensee for transmission after taking into account the

transmission loss of 6.1 %.


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ii) The Distribution Companies availing bulk supply from AEGCL (STU) need to payTransmission charges and SLDC charges separately as the Transmission charges and

SLDC charges has not been considered in the Bulk Supply Tariff (BST).

8.11 WHEELING CHARGES

In the Cost of supply (CoS) calculation, cost for different activities of power supply is

separated. In addition, segment wise loss is also derived at by taking into consideration the

overall loss approved by the Commission and also with information from sample survey of

different segments. Based on this, the wheeling charges (as given below) are applicable for

use of the distribution system of a licensee by other licensees or generating companies or

captive power plants, or consumers permitted open access u/s 42 (2) of the Electricity Act

2003. In the COS model, distribution cost are separated as demand related and consumer

related cost. Accordingly, wheeling charge should have two separate elements. However, the

total wheeling charge is notified as a single item.

Wheeling Charge

LAEDCL CAEDCL UAEDCL

MU 1265.38 778.58 860.97Cost (Cr) 153.93 125.86 108.76

Wheeling Charge Rs/ kwh 1.22 1.62 1.26

Plus

Losses in kind up to the respective voltage level at which the wheeled energy is delivered

are as follows:

Delivered

Voltage

LAEDCL

% loss

CAEDCL

% loss

UAEDCL

% loss

33 KV 12.27 13.81 13.68

11 KV 20.04 22.66 22.55

LT 34.07 39.99 39.14

Notes:

i) The Distribution licensee shall deliver the quantum of energy given to it for wheelingreduced by the distribution loss level at the voltage at which the energy is delivered to


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consumer in the area of the distribution licensee.

ii) If the wheeling involves transmission of energy through transmission system of aTransmission Licensee, the consumer or the supplier as the case may be, has to pay the

applicable transmission charges also as notified along with loss in kind.

iii)If the wheeling of electricity is through the distribution system of more than onedistribution licensee, the wheeling charges shall be payable to the distribution licensee of

the area where the electricity is delivered.

iv)Loss figures are at a highest (ceiling) limit considering overall approved distribution lossof Discoms for FY 2007-08. Discoms have the liberty to deliver power at improved actual

loss.

8.12 Back up power rate:

In an open access operation the transmission and distribution licensees are liable to

transmit/ wheel energy from generators/ source to open access consumers. In an ideal

situation any deviation in scheduled generation should be adjusted by generator and open

access consumer. However, in practice there is likelihood of deviation. The Commission after

considering the related issues decided that such unscheduled drawal by open accessconsumers from Discom/Transco network shall be calculated considering highest notified UI

rate by CERC regulation at the 220 KV level after apportioning the same with the loss level

at which the open access consumer is connected. Any excess energy with the network due to

less drawal by consumer than schedule will attract tariff at UI rate as decided by the CERC

until AERC notifies interstate ABT rates. However, the generator/ supplier may agree upon

some tariff in a mutually agreed term and procedure but in no case should be higher than the

average cost of power purchase from existing sources. The utility may offer a temporary

supply rate notified in the Schedule of Tariff to such consumer opting for Open Access and

needs back-up power.

8.13 Cross Subsidy Surcharge and Additional Surcharge

The cross subsidy surcharge payable for availing open access to the transmission

system and the distribution system as envisaged under sections 38, 39(2)(d), 40(c) and 42(2)

of the Electricity Act, including in the case of use of wheeling facility by generators to supply


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electricity to consumers under existing wheeling agreements, shall be as per the terms and

conditions of open access specified u/s 42(2) of the Electricity Act 2003. The cross subsidy

charges are calculated considering the Cost of Supply model and the additional surcharge

under section 42(4) of the Electricity Act, 2003 shall be payable wherever applicable, in a

case to case basis.

Cross Subsidy Surcharge

Category Amount of

Cross Subsidy

Rs Cr

Cross subsidy

Surcharge Rs /

kWh

LT General Supply 1.06 0.06

Public Water Works 3.78 0.77Bulk Government

Educational Institution

1.53 0.46

Other Bulk supply 11.43 0.38

HT Industries-1 1.93 0.47

HT Industries-II 11.60 0.35

Tea Coffee & Rubber 44.94 1.48

Oil & Coal 3.05 0.41

N.B: No cross subsidy surcharge is applicable for open access from captive generator for

captive use.

******


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Discussion on Other Parameters of Tariff

In Ch 8.7 to of the Tariff Order 2006-07, the Commission discussed about otherparameters of tariff namely Connected Load, Contracted Demand, Tariff for seasonal

Consumers, Availability Based fixed charge, Incentive for higher Power Factor, TOD Tariff,

Two Part Tariff Structure, Optional Tariff for HT-11 industrial Category, and incentive to

renewable energy.

8.14 Connected Load: Same as observations made in Tariff Order 2006-07. The

connected load is defined in the AERC (Supply Code and Related Matters)

Regulations, 2004 (First Amendment) 2007 as amended and the same is consideredfor calculation of fixed charge of different categories. However, in case of Domestic

categories of consumers, the higher rating of only one equipment shall be considered

for determination of connected load for tariff purpose if both Geyser and Air-

conditioner (without Heater) are installed and used for domestic purpose only.

8.15 Contract Demand : Same as observations made in Tariff Order 2006-07.

8.16 Tariff for Seasonal Consumers: At present Tea Coffee & Rubber category

consumers are considered as seasonal consumers. This category consumer also has

demand for lowering/ as per their requirements unrelated with the connected load.

Since T.O. 2004-05, the minimum demand level was 70% of connected load in KVA

during season time and 30% of seasonal demand during off season period. The

season time is normally considered for 8 months and off season time for 4 months. As

per present arrangements from TO 2006-07 the consumer should declare their

requirement of power demand for season months on or before 31st Aug, within the

stipulated range of 65% to 105% of their connected load and off season demand at a

minimum of 40 % of seasonal demand. From the records made available it is found

that while most of the consumers barring few contracted their seasonal demand within

the range of connected load, at the minimum level, the same consumers however

opted for higher than minimum stipulated 40% of seasonal demand.. In the Tariff

Order 2006-07, it was stated that, the Commission is open to further review of the

matter based of data of actual demand created by this category during different season

in future.


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In the Tariff Order it was decided that the off season tariff rate should be for any

continuous four months from September to March. Further the off season contracted demand

was fixed at 40% of contracted demand of season period. As such if any consumer is in

requirement of demand in excess of 40% of seasonal contracted demand and draw from the

system the consumer is liable to pay penalty in form of higher fixed charge for the excess

demand above 40% of seasonal contracted demand. Penalty under compulsive situation is not

the intention of the utilities and the Commission. As such after reviewing the matter, the

commission decided to modify the off season contract period from any continuous four

months from September to March to maximum continuous four months from September to

March. This modification will benefit the utility by recovering higher fixed charge at

seasonal rate for more than eight months from some consumers who opts for less number of

off -seasonal months and the consumer will be benefited by avoiding from paying penalty

charge.

8.17 Availability Based Fixed Charge: As discussed in TO 2006-07, the availability

based fixed charge will be determined as per clause 7.5 of AERC (Supply Code and

Related Matters) Regulations, 2004 (First Amendment) 2007.

8.18 Incentive for Higher Power Factor: The present arrangement of rebate for

maintaining higher power factor is considered adequate. In the KVA based fixed

charge tariff, the consumer is availing twin benefit of lowering demand by improving

power factor and benefit of power factor rebate. The present arrangement is almost

comparable with other utilities of the country.

8.19 TOD Tariff: As discussed in the Section 1- Tariff Design, the Commission intended

to extend the benefit of TOD tariff to other HT category of consumers. This Demand

Side Management (DSM) practice has been considered as one of the most effective

method for demand management. The configuration of system availability in Assam

in terms of generating capacity as well as system constraints necessitated containment

of peak demand for entire period of the year. The three tier TOD tariff introduced in

Tariff Order 2005-06 for some categories have already achieved the purpose upto

some extent. The categories of consumers where this tariff is applicable often adjusts

its power consumption timing from evening peak hours to day or night hours when

tariff is relatively low. However, further extension of TOD tariff to other main HT

group like commercial & domestic categories


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will create a different effect on the consumers, due to the reason that these categories

are essentially in need of energy during peak hours. As such, imposing a TOD higher

rate during peak hours shall force such consumers to save power during peak hours

and also reduction of tariff rates for rest of the hours during day and night might

generate a plan to rethink their consumption plan by shifting a portion of nonessential

load to non-peak hours. The price signal might create a lower demand during peak

hours. At present under HT group, domestic, commercial, public water works, HT

Small industries and HT Irrigation are not covered under TOD rate. The utilities have

build up some data base and made available to the Commission the pattern of

consumption during different periods of day by different categories under TOD tariff.

However, the volumes of data in sample form are not sufficient. The Commission

expects that the Load Research Cell under Discoms will collect more data from

such consumers and submit to the Commission for a Data Base on TOD

consumption. The data submitted by the utilities should be in both paper and

soft copy forms. Since the data regarding TOD Consumption is not made available at

present, the Commission decided not to go for extension of TOD tariff to other

categories in this Tariff Order.

8.20 Two Part Tariff Structure: Like tariffs of other public utility services, Electricity

Tariff structure which was in single part mode in earlier days gradually moved

towards two part mode. As discussed in Chapter 8, in the Tariff Order 2006-07, the

Commission decided to continue with the two part tariff structure for recovery of

electricity cost.

The Cost of Supply calculations shows the need of higher recovery of tariff from

some categories of consumers as per the principle of cost causation. The quality and

availability of power are still deterrent factors for adoption of cost of supply principle in

totality while structuring the retail tariff. Therefore, the Commission has decided not to

enhance the fixed charge component of tariff and decided to fill up the revenue gap by

adjustment of energy charge component by 5 paise per unit across the board barring the

lifeline category Jeevan Dhara. No increase in tariff in this category is made as the average

tariff for this category of Rs 2.30 per unit is already higher than 50% of the total average cost

of supply to all categories. It may be mentioned here that the Tariff Policy of the Government

of India states that the tariff for no category should be less than 50% of the average cost of

supply. However, the Commission considers it appropriate to notify the estimated cost


27/46



causation by different category of consumers in terms of fixed charges and energy charges

which is explained in details in Section xx: Category wise Analysis of CoS and Tariff.

8.21 Optional Tariff for HTII Industrial Category: The optional tariff was introducedfor the first time in Tariff Order 2006-07 for consumers who mostly comprise of

power intensive industries and continuous process industries in addition to single

shift/two shift processes. According to information received, Rs 145 Cr has been

earned as revenue from this category against a sale of 336 MU leading to average

realization of Rs 4.33 per unit sold. It was anticipated that about a 291 MU of power

would be sold under this category recovering Rs 127 Cr as revenue with average

realization per unit being Rs 4.35 per unit. In FY 2005-06, total sale was 260 MU and

revenue earned Rs 121 Cr with an average realisation of Rs 4.66 per unit of energy

sold. This may imply that, introduction of this optional tariff may have been

beneficial to the consumers as the average realisation has been reduced from this

category and there has been an increase of sale and higher revenue for the Discoms.

8.22 Renewable Energy: The Commission in tariff order 2005-06 notes that In Assam,

during winter months very high consumption of electricity is observed during the

morning hours resulting in peaking of demand in morning in addition to normal peak

hours. One of the reason for this peaking of demand in the morning during winter

months is use of water heating appliances like geysers, immersion rods etc. These

heating appliances consume high amounts of electricity In order to encourage

consumers to switch over to solar water heating system, the Commission proposes to

introduce a monthly rebate of Rs.30 for all consumers who have installed such solar

water heating systems for meeting their hot water requirements and these are actually

used.

The Commission does not have detailed information as to the number of consumers

actually using solar water heating appliances and getting benefit from this arrangement. Even

then, the Commission has decided it appropriate to continue with the arrangement of granting

rebate for use of solar water heating system at Rs 40/- per month. (Please refer to Part X:

Schedule of Tariff for details). In Tariff Order 2006-07, the Commission directs the Load

Research Cell of Discoms to collect information regarding use of solar water heating systems in

their respective areas and total amount of rebate allowed and submit reports of the same along

with the next tariff petitions. However no data is made available to the Commission by the


28/46



DISCOMs. The Consumer Advocacy Cell of the Commission may also take an initiative to

popularise the solar water heaters and create a database with information received from the

Discoms for use in future decision making by the Commission. The information submitted by

the utilities should be in both paper and soft copy forms.

***********


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SAMPLE LOAD CURVES


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