TAMIL NADU ELECTRICITY REGULATORY             COMMISSION  ----------------------------------------------------------------...
TAMIL NADU ELECTRICITY REGULATORY COMMISSION                    (Constituted under section 82 (1) of Electricity Act 2003)...
Table of Contents1      INTRODUCTION ........................................................................................
Merit Order Ranking: ........................................................................................................
List of AbbreviationsS. No   Abbreviation   Description  1     A&G            Administration and General Expenses  2     A...
1   INTRODUCTION    Background    Preamble1.1.1   Consequent to the enactment of the Electricity Regulatory Commissions Ac...
1.1.7   The Commission has also issued two generation Tariff Orders between 2003 and 2010        for wind, biomass based p...
1.3     Tariff Filing1.3.1   The Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) has filed        Appli...
1.4.6    The list of stakeholders who have submitted objections/suggestions/views regarding the         petition in respon...
or purchase of electricity in pursuance of an agreement, entered into                     between a generating company and...
up the Balance Sheet of the successor companies and allow them to start on a clean slate        so that the successor enti...
1.7.4     The following generating stations are likely to be commissioned during the year 2012-13.              Name of th...
Section 65 of the Electricity Act 2003. In this matter, GoTN has issued a policy direction        and commitment letter Ms...
enclosed as Annexure IX. The Commission appreciates the concerns expressed by      various stake holders both in the writt...
2   Issue-wise summary of views, comments and suggestions of stakeholders    on Petition and TANGEDCO’s Replies and Commis...
2.1.10 TANGEDCO has reduced the payment period from 30 days to 20 days. It should be       continued as 30 days and it sho...
Issue-2: Regulatory Asset2.1.23 The Objectors submitted that the deficit for the current year and ensuing year FY 2012-13 ...
carrying costs has been allowed in the ARR. Thus, the respondent no.1 will suffer               with cash flow problem aff...
Issue-5: Fuel Cost / Fuel Price Adjustment Charge (FPAC)2.1.30 The fuel cost shows abnormal increase compared to power pur...
2.1.37 The valuation of coal or oil must be based on a weighted average methodology (ARC or       APRC) and not on FIFO or...
2.1.44 The Commission may establish a normative datum reference cost per million kilocalories       of all fuels on a weig...
to be without validation that true operating costs have been reflected. The petition should        negate the concept of “...
2.1.60 Issue-8: Cross SubsidyThe practice of cross-subsidies should be done away with. The       free and subsidized suppl...
ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore,        the demand charges should be lower....
2.1.78 The machineries being used by 90% of the industries are fully non linear load and       polluting the Grid.2.1.79 I...
2.1.85 TANGEDCO should not demand 15% extra energy charges from a consumer       maintaining quality power at the point of...
g.    Borewell motors and well motors to satisfy the above purposes.2.1.88 Printing industry, jewel merchants and the text...
2.1.94 Educational institutions have a very low load factor and majority of consumption is       between 9:00 am to 5:00 p...
c.   The proposed rebate should be increased to 20%.2.1.101 In Karnataka, there is no separate tariff for Government Educa...
Distribution Transformers (DTs) of TANGEDCO has increased due to the poor quality of        power.2.1.109 The slab system ...
TV           5hrs x 70W              0.35 kWh                Fan          8hrs x 70W              0.56 kWh                ...
Government is promoting subsidies/cross subsidies by providing concessional rates to its        own institutions.2.1.119 O...
2.1.127 TANGEDCO has requested to increase the energy charges for Tiny Industries in two fold        from the existing rat...
2.1.134 Objections submitted on LT CT services are:         a.    The fixed charges have been increased from Rs. 60 for tw...
2.1.141 As observed by the Commission earlier in its Tariff Order 3 of 2010 dated 31-07-2010,        the gap between the e...
Issue-22: Tariff for Commercial2.1.149 TANGEDCO has proposed to levy uniform 1% of consumption at LT Tariff V {page 129   ...
Issue-23: Tariff for LT Temporary Supply2.1.157 Presently, for any power used for construction activity by an existing con...
2.1.164 The monthly minimum charge has no relevance to LT temporary supply and hence it may        be dropped.        Issu...
2.1.173 The number of free connections to the farmers has to be restricted to only one service        while all other rema...
2.1.183 TANGEDCO should follow a strategy to meet the demand by having more power        stations than actually planned, a...
2.1.193 TANGEDCO should not purchase power above Rs. 3 per unit. Instead, it is better to shed        load instead of such...
2.1.201 Banking of wind energy may be dispensed with to avoid serious losses. Demand side        management may be enforce...
2.1.211 TANGEDCO may undertake measures to check loss in transmission/theft and install        meters in huts (BPL) so tha...
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Tamil nadu central and state plants
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  • CHENNAI GST ROAD - ON ROAD PROPERTY - WITHSTOOD THE ONSLAUGHT. FOR SALE - MAIN ROAD PROPERTY - IN CHENNAI, TAMIL NADU - ENTRY FROM NH-45. Prime Vacant Land 5.8 Grounds (13940 sq.ft.) in Singaperumal Koil, Chennai, India on Main GST Road with direct entry from GST Road. Mahindra World City is 1.2 Kms. on one side and Ford Motor Co. is 3.2 Kms. on the other side. Plot with direct entrance from Wide National Highway NH-45. Frontage Width is 46 feet, Rear Width is 56 feet and length is 286 feet. Companies like BMW, Nissan-Renault, Daimler, Enfield, Nokia, Siemens, Hyundai, Ford are in close proximity to this place. The Property has a Security Room with 3-Phase Power Supply and has a Compound Wall of about 11 feet on all sides with a 15 feet gate in the front. Since the Land is located amidst various International Companies, it will be ideally suited for Offices, IT/ITES/BPO Companies, Residential Apartments, etc. Very Ideally suited for Investment Purposes, Immediate Construction of Residential Apartments, Show Rooms, Departmental Stores, Hospitals, Logistics, etc. Appreciation Guaranteed on Investment. In case of interest, please contact:- Mr. K.Aravamudan, Mob:- 0 – 94440 12056. e.mail : hiraytech@yahoo.co.in VERY IMPORTANT NOTE:- The above Site is not affected by the heavy Rains and Thunder Storms that lashed Chennai just recently.
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Tamil nadu central and state plants

  1. 1. TAMIL NADU ELECTRICITY REGULATORY COMMISSION ----------------------------------------------------------------Determination of Tariff for Generation and Distribution --------------------------------------------- Order No. 1 of 2012 dated 30-03-2012 (effective from 01-04-2012)
  2. 2. TAMIL NADU ELECTRICITY REGULATORY COMMISSION (Constituted under section 82 (1) of Electricity Act 2003) (Central Act 36 of 2003)PRESENT : Thiru. K.Venugopal – Member Thiru. S.Nagalsamy – Member Order No 1 of 2012, dated 30-03-2012 In the matter of: Determination of Tariff for Generation and DistributionIn exercise of power conferred by clauses (a), (c)& (d) of sub section (1) of Section 62 andclause (a) of subsection(1) of Section 86 (1) (a) of the Electricity Act 2003, (Central Act 36 of2003), and after taking into account the stipulations in the National Electricity Policy and theTariff Policy, TNERC (Terms and conditions for determination of tariff) Regulations 2005,TNERC (Terms and Conditions for Determination of Tariff for Intra state Transmission /Distribution of Electricity under MYT Framework ) Regulations, 2009, and all other powers hereunto enabling in that behalf and after considering the views of the State Advisory Committeemeeting held on 27-01-2012 in accordance with section 88, after examining the commentsreceived from the stakeholders and after considering suggestions and objections received fromthe public during the public hearings held on 30-01-2012, 02-02-2012, 06-02-2012 and 10-02-2012 as per section 64, the Tamil Nadu Electricity Regulatory Commission, hereby, passes thisorder for Generation and Distribution Tariff.This Order shall take effect on and from the April 1, 2012.(S. Nagalsamy) (K.Venugopal) Member Member
  3. 3. Table of Contents1 INTRODUCTION ..................................................................................................................................... 1Background ................................................................................................................................................... 1Preamble ....................................................................................................................................................... 12 Issue-wise summary of views, comments and suggestions of stakeholders on Petition andTANGEDCO’s Replies and Commission’s Views .......................................................................................... 103 ENERGY SALES ..................................................................................................................................... 93Energy Sales: ............................................................................................................................................... 93T&D Loss: .................................................................................................................................................. 1124 Energy Availability ............................................................................................................................. 117Thermal Power Stations: ........................................................................................................................... 117Gas Turbine Power Stations: ..................................................................................................................... 129Hydel Generation: ..................................................................................................................................... 138Wind Generation: ..................................................................................................................................... 142Energy Available from Other Sources: ...................................................................................................... 1445 FIXED COST ........................................................................................................................................ 164Capital Expenditure and Capitalisation ..................................................................................................... 1646 Expenses on account of Generation ................................................................................................. 196Part-I: Fixed Cost: ...................................................................................................................................... 196Return on Equity: ...................................................................................................................................... 197Operation and Maintenance Expenses: .................................................................................................... 203Other debts and Miscellaneous Income: .................................................................................................. 211Part-II: Variable Cost: ................................................................................................................................ 217Provisional Tariff for New Thermal Power Stations:................................................................................. 230Variable cost for Gas Turbine Power Stations: ......................................................................................... 230Hydro Generating Stations:....................................................................................................................... 237Provisional Tariff for New Hydro Generating Stations: ............................................................................ 239Wind Generating Stations: ........................................................................................................................ 239Summary for Own Generation:................................................................................................................. 2407 POWER PURCHASE COST FROM OTHER SOURCES ........................................................................... 245
  4. 4. Merit Order Ranking: ................................................................................................................................ 245Power Purchase Cost: ............................................................................................................................... 2488 Aggregate Revenue Requirement of TANGEDCO ............................................................................. 276Regulatory Framework.............................................................................................................................. 276Fixed Cost: ................................................................................................................................................. 277Own Generation and Power Purchase Cost:............................................................................................. 277Intra-State Transmission Charges: ............................................................................................................ 278Non Tariff and Other Income .................................................................................................................... 279Sharing of Gain and Losses ....................................................................................................................... 280Aggregate Revenue Requirement of TANGEDCO ..................................................................................... 2819 TARIFF PHILOSOPHY AND CATEGORY-WISE TARIFFS FOR FY 2010-11 ............................................. 28310 TARIFF SCHEDULE ......................................................................................................................... 319TARIFF FOR HIGH TENSION SUPPLY CONSUMERS .................................................................................... 319TARIFF FOR LOW TENSION SUPPLY CONSUMERS..................................................................................... 325Applicability of the Tariff Schedule ........................................................................................................... 33811 SUMMARY OF DIRECTIVES ............................................................................................................ 340
  5. 5. List of AbbreviationsS. No Abbreviation Description 1 A&G Administration and General Expenses 2 ABC Aerial Bunched Cables 3 ABR Average Billing Rate 4 ARR Aggregate Revenue Requirement 5 CERC Central Electricity Regulatory Commission 6 CGS Central Generating Station 7 COS Cost of Supply 8 CPP Captive Power Plant 9 CSD Consumer Security Deposit 10 DA Dearness Allowance 11 EA Electricity Act 12 ED Electricity Duty 13 FY Financial Year 14 GFA Gross Fixed Assets 15 H1 First Half 16 H2 Second Half 17 HT High Tension 18 HVDS High Voltage Distribution System 19 kWh Kilo-watt Hour 20 LT Low Tension 21 MU Million Units 22 MW Mega-watt 23 MYT Multi-Year Tariff 24 O&M Operation & Maintenance 25 R&M Repair & Maintenance 26 O&M Operation & Maintenance 27 RoE Return on Equity 28 TO Tariff Order 29 TP Tariff Policy 30 TVS Technical Validation Session 31 Y-O-Y Year on Year
  6. 6. 1 INTRODUCTION Background Preamble1.1.1 Consequent to the enactment of the Electricity Regulatory Commissions Act 1998 (Central Act 14 of 1998), the Government of Tamil Nadu constituted the Tamil Nadu Electricity Regulatory Commission (TNERC) vide G.O.Ms.No.58, Energy (A1) Department, dated 17-03-1999.1.1.2 The Commission issued its first tariff order under section 29 of the Electricity Regulatory Commission Act, 1998, on 15-03-2003 based on the petition filed by the Tamil Nadu Electricity Board (TNEB) on 25-09-2002.1.1.3 In Para 7.2 of the order dated 15-03-2003, the Commission issued the following rulings: “The Commission thus rules that the revised tariffs would be applicable from 16th March 2003 to 31st March 2004, and till such further time as the TNEB does not approach the Commission for tariff revision. The Commission also directs that, henceforth, the TNEB should submit a Tariff Proposal for any financial year by the end of December of the previous financial year. In other words, the Commission expects the TNEB to submit a tariff revision proposal for FY 2004-05 before the end of December 2003, in case the TNEB desires to revise the tariffs for FY 2004-05.”1.1.4 The TNEB did not come before the Commission for revision of retail tariff till January 2010. In the meantime, Electricity Regulatory Commission Act, 1998 was repealed and the Electricity Act 2003 (Central Act 36 of 2003) (hereinafter called Act) was enacted with effect from 10-06-2003.1.1.5 The Commission notified the Tamil Nadu Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations 2005 (herein after called Tariff Regulations) on 03-08-2005 under section 61 read with section 181 of the Act.1.1.6 The Commission issued separate order on Transmission charges, Wheeling Charges, Cross Subsidy surcharge and Additional Surcharge on 15-05-2006, based on the petition filed by TNEB on 26-09-2005 under section 42 of the Act.1|Page
  7. 7. 1.1.7 The Commission has also issued two generation Tariff Orders between 2003 and 2010 for wind, biomass based power plants and other captive and co-generation plants.1.1.8 The Commission notified the TNERC (Terms and Conditions for Determination of Tariff for Intra state Transmission / Distribution of Electricity under MYT Framework) Regulations, 2009 (herein after called MYT Regulations).1.1.9 Subsequently, TNEB filed an application for determination of tariff with Aggregate Revenue Requirement (ARR) for all functions on 18-01-2010, which was admitted by the Commission after initial scrutiny on 09-02-2010.1.1.10 The Commission issued its second Retail Tariff Order on 31.07.2010.1.1.11 Government of Tamil Nadu, in G.O (Ms) No 114 Energy Dept, dated 08-10-2008 have accorded in principle approval for the re-organisation of TNEB by establishment of a holding company, namely TNEB Ltd and two subsidiary companies, namely Tamil Nadu Transmission Corporation Ltd (TANTRANSCO) and Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO) with the stipulation that the aforementioned companies shall be fully owned by Government.1.1.12 Tamil Nadu Generation and Distribution Corporation Ltd. was incorporated on 01-12- 2009 and started functioning as such w.e.f. 01-11-2010.1.1.13 This is the third Order of the Commission on determination of Generation and Retail Tariff.1.1.14 TNEB was formed as a statutory body by the Government of Tamil Nadu (GOTN) on 01- 07-1957 under the Electricity (Supply) Act 1948. The Board was primarily responsible for generation, transmission, distribution and supply of electricity in the State of Tamil Nadu and on 1/11/2010 it was bifurcated as TANGEDCO, TANTRANSCO and and a holding company, TNEB Limited.1.2 Applicability of Order1.2.1 This Order will come into effect from 01-04-2012. The Generation and retail tariff contained in this order will be valid till 31-03-2013. TANGEDCO shall file necessary petition in accordance with the Regulations in time to enable the Commission to pass the next Tariff Order in time.2|Page
  8. 8. 1.3 Tariff Filing1.3.1 The Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) has filed Application before the Commission on 17-11-2011 for preliminary true-up and approval of Aggregate Revenue Requirement (ARR) for the year 2010-11 and approval of ARR for the year 2011-12 and 2012-13 under Multi Year Tariff and also applied for tariff revision with effect from 01-04-2012 or earlier.1.3.2 The above petition was admitted and hosted by the Commission on its website on 25-11- 2011 and registered as TP 1 of 2011.1.4 Procedure Adopted1.4.1 Regulation 7 (2) of Tariff Regulation specifies the following: “The applicant shall publish, for the information of public, the contents of the application in an abridged form in English and Tamil newspapers having wide circulation and as per the direction of the Commission in this regard. The copies of Petition and documents filed with the Commission shall also be made available at a nominal price, besides hosting them in the website.”1.4.2 The public notice containing the salient details with regard to the petition was approved and communicated to TANGEDCO on December 1, 2011, with a direction to arrange publication of the notice in news papers on December 2, 2011 and invited written objections/suggestions/views from by 31-01-2012.1.4.3 The TANGEDCO published the public notice in the following newspapers on December 2, 2011. a) The New Indian Express (English Daily); b) The Hindu (English Daily); c) Dinamalar (Tamil Daily) and d) Daily Thanthi (Tamil Daily)1.4.4 The Petition was placed before the State Advisory Committee on 27-01-2012. The list of Members who participated in the meetings is detailed as Annexure I to this Order.1.4.5 The views / comments expressed by the members are included in Chapter 2 of this Order.3|Page
  9. 9. 1.4.6 The list of stakeholders who have submitted objections/suggestions/views regarding the petition in response to the public notice are detailed in Annexure II and Objectios/suggestions/views are included in Chapter 2.1.4.7 The Commission conducted public hearing at the following places on the dates noted against each: Date Day Place Venue Tamil Isai Sangam, Raja Annamalai 30-01-2012 Monday Chennai Mandram, (Near High Court),5, Esplanade Road, Chennai- 108 Corporation Kalaiarangam, R.S. Puram, 02-02-2012 Thursday Coimbatore Coimbatore Barbier Hall (Jubilee Building), St. Josephs 06-02-2012 Monday Tiruchirappalli College, Tiruchirappalli - 2 Indian Medical Association Hall, Madurai 10-02-2012 Friday Madurai Medical College Premises, No. 1 Panagal Road, Madurai - 201.4.8 The lists of participants in each public hearing, is attached as Annexure III to this Order. The views / comments / objections raised by the participants are discussed in Chapter 2.1.5 The Electricity Act, 2003, Tariff Policy (TP) and Regulations Section-61 of the Act stipulates the guiding principles for determination of Tariff by the Commission and mandates that the Tariff should ‘progressively reflect cost of supply of electricity’, ‘reduce cross-subsidy’, ‘safeguard consumer interest’ and ‘recover the cost of electricity in a reasonable manner’. Section-62 (1) of Act states as under: “Section-62 (1): 1. The Appropriate Commission shall determine the tariff in accordance with provisions of this Act for a. supply of electricity by a generating company to a distribution licensee: Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale4|Page
  10. 10. or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity; b. transmission of electricity ; c. wheeling of electricity; d. retail sale of electricity. Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.”1.6 Similarly, the objectives stipulated in the Tariff Policy are as under: “4.0 Objectives of the policy The objectives of this tariff policy are to: a. Ensure availability of electricity to consumers at reasonable and competitive rates; b. Ensure financial viability of the sector and attract investments; c. Promote transparency, consistency and predictability in regulatory approaches across jurisdictions and minimise perceptions of regulatory risks; d. Promote competition, efficiency in operations and improvement in quality of supply.”1.6.1 In the State of Tamil Nadu, Tamil Nadu Electricity Regulatory Commission in exercise of powers vested in it under the Electricity Act, 2003 (Act) passes the Tariff Orders.1.7 Brief Note on Tariff Filing and Public Hearing1.7.1 The Tariff Petition TP 1 of 2011 filed by TANGEDCO is the first Tariff Petition for fixation of retail tariff for the year 2012-13 after the unbundling and issue of transfer scheme by the Government of Tamil Nadu. The Transfer scheme dated 19-10-2010 is enclosed as Annexure IV. This Transfer Scheme is a provisional Transfer Scheme, addresses various issues like transfer of assets, revaluation of assets and partly address the accumulated losses. This Transfer Scheme also envisages deployment of staff of the erstwhile TNEB in the TANGEDCO and TANTRANSCO. The Commission in its earlier Tariff Order No. 3 of 2010 dated 31-07-2010 had suggested in line with the Natioanal Electricity Policy (para 5.4.3) and Tariff Policy that the accumulated losses should not be passed on to the successor entities and financial restructuring has to be resorted to clean5|Page
  11. 11. up the Balance Sheet of the successor companies and allow them to start on a clean slate so that the successor entities can start performing better. The following statutory advices have been sent to the Government of Tamil Nadu in this regard and they are appended as Annexure V The Commission has also sent another statutory advice with regard to the establishment of a separate Generating Company and establishment of four Distribution Companies so that the performance of these companies can be improved which will enable proper investments and growth of the individual company. These are also appended as Annexure VI.1.7.2 The Government of Tamil Nadu has issued an amended Transfer Scheme on 2-1-2012 which is appended as Annexure VII. This Transfer Scheme is also provisional and is subject to revision. Besides various other issues, this Transfer Scheme specified that the retirement benefits of the employees of TNEB/ successor entities will be met out of the Revenue Account.1.7.3 Over a period of years, the Capital Account and the Revenue Account has been mixed up in the operation of TNEB and an attempt is being made in this order to segregate this to bring financial discipline in the successor entities. TNEB and successor entities have reported accumulated losses of around Rs. 50,000 crores over the years. The Commission in its earlier Order dated 31-07-2010 through its various Statutory advices has suggested to the Government of Tamil Nadu to take care of the accumulated losses up to the unbundling period by way of financial restructuring so that the burden of the same is not passed on to the consumers. This suggestion is also in line with Para 5.4.3 of the National Electricity Policy which are extracted below. “5.4.3 For achieving efficiency gains proper restructuring of distribution utilities is essential. Adequate transition financing support would also be necessary for these utilities. Such support should be arranged linked to attainment of predetermined efficiency improvements and reduction in cash losses and putting in place appropriate governance structure for insulating the service providers from extraneous interference while at the same time ensuring transparency and accountability. For ensuring financial viability and sustainability, State Governments would need to restructure the liabilities of the State Electricity Boards to ensure that the successor companies are not burdened with past liabilities. The Central Government would also assist the States, which develop a clear roadmap for turnaround, in arranging transition financing from various sources which shall be linked to predetermined improvements and efficiency gains aimed at attaining financial viability and also putting in place appropriate governance structures.”6|Page
  12. 12. 1.7.4 The following generating stations are likely to be commissioned during the year 2012-13. Name of the Generation Commercial OperationSl. No. Capacity in MW Station Date 1 North Chennai TPS Unit I 600 October, 2012 2 North Chennai TPS Unit II 600 June, 2012 Vallur TPS (JV of TNEB 3 and NTPC) - Unit I 500 March, 2012 - Unit II 500 February, 2013 - Unit III 500 (Allocation from this station to Tamil Nadu is 1075 MW) 300 MW by March 2012; 4 Mettur TPS Stage III 600 300 MW by June 2012 Nevyeli Lignite 250 MW by March 2012 Corporation TS Expansion 5 2 x 250 and 250 MW by II Unit 1 &2 (Allocation to September 2012 Tamil Nadu is 195.5 MW) MAPS Additional PFBR 6 Kalpakkam (Allocation of 500 500 MW by May 2012 142 MW to Tamil Nadu)1.7.5 This Order deals with major issues like accumulated losses of TANGEDCO, Regulatory Asset, Tariff hike, power cuts. and new capacity additions by TANGEDCO etc. The unmetered supply in the State mainly relate to agriculture and huts. TANGEDCO has been assuming the AT&C loss level by back calculating the consumption of agriculture and huts. This issue was also a subject matter of Appeal before the Hon’ble Appellate Tribunal of Electricity. The Commission had estimated agricultural consumption based on the CEA formula in its last Tariff Order. The Commission had also directed TANGEDCO to furnish sample data of the metered connections for agricultural supply. Based on the same data furnished by TANGEDCO the consumption per Horse Power (HP) for agriculture was worked out and the same has been taken into account while calculating the energy requirement for agriculture. Similarly, estimates have been made for consumption by huts duly reflecting the number of huts with and without televisions. It is also proposed to factor in the consumption on account of distribution of free mixers, grinders and fans.1.7.6 The cost of entire consumption on account of huts as well as on account of agricultural consumption has to be borne by the Government of Tamil Nadu by way of subsidy under7|Page
  13. 13. Section 65 of the Electricity Act 2003. In this matter, GoTN has issued a policy direction and commitment letter Ms No. 8 dated 04-02-2012 detailing provision of tariff subsidy to certain categories of electricity consumers. GoTN has also stated that they would consider any modifications of the stated subsidy rates in future also taking into consideration the needs of TANGEDCO and cannons of financial prudence. TANGEDCO would prepare an estimate of the susbsidy and reflect the same in their quarterly subsidy bills. The TANGEDCO shall furnish such details to the Commission on quarterly basis and on approval of the same, the Government of Tamil Nadu will have to provide the matching subsidy. As an improvement of the sampling process for agricultural consumption, it is necessary for TANGEDCO to install Distribution Transformer Meters in all the Distribution Transformers. These meters shall have AMR facility so that they can be read from remote. Based on the reading of the Distribution Transformer Meters, it will be possible to work out the unmetered consumption more accurately after accounting for all the metered connections and a reasonable assumption on the line loss in the last mile can be made. Nevertheless, the existing arrangement of the sample meters shall be continued. The TANGEDCO has also stated that they have awarded a study to Anna University for estimation of losses. This study shall be expeditiously completed and the report, after approval by Board of Directors of TANGEDCO, shall be submitted to the Commission latest by 30th November 2012.1.7.7 The proposal of TANGEDCO in their petition involves creation of Regulatory Asset to the tune of Rs. 24,762 Crores. Creation of a Regulatory Asset is not a good practice under most conditions. In this particular case, the tariff hike sought for by the TANGEDCO for the year 2012-13 is Rs. 9,741 Crore which amounts to 37% increase over the existing tariff. Even after this proposal, the Petition envisages creation of Regulatory Assets of Rs. 4,806 Crore for FY 2012-13. It is not possible to hike the tariff by Rs. 24762 Crore (the entire revenue gap), which will amount to an increase in tariff of 93%, further. Such a steep increase may also not be justifiable as the same (high level of) tariff may not be required to be maintained in future. While the accumulated losses before unbundling have been proposed to be addressed through financial restructuring, losses to the magnitude of Rs. 24762.31 Crore may be dealt with by a combination of Tariff hike and Regulatory Asset. The Commission, therefore, would like to get the reaction of the Government of Tamil Nadu in this regard and accordingly a reference was made to the Government of Tamil Nadu on 16-03-2012 vide Commission letter Lr. No. TNERC/Tariff/DDT-II/R.A./D.No.381/2012, which is enclosed as Annexure VIII in reply of which the Government has reverted vide letter dated 25-03-2012 which is8|Page
  14. 14. enclosed as Annexure IX. The Commission appreciates the concerns expressed by various stake holders both in the written comments submitted by them to the Commission as well as the concerns expressed during the Public Hearings held at Chennai at 30th January 2012, Coimbatore on 2nd February 2012, Tiruchirapalli on 6th February 2012 and at Madurai on 10th February 2012. The Commission directs the TANGEDCO to properly monitor the on-going projects so that they are commissioned without further delay. The TANGEDCO should also ensure that the TANTRANSCO completes all the associated transmission system for evacuation of power from the generating stations which are getting commissioned during the year 2012-13 so that power generated from the generating stations are transmitted up to the Load Centers without any bottle necks. The TANGEDCO should ensure that the power which is available at the sub-stations is taken up to the consumption points by way of appropriate distribution system. All these arrangements will have to be carried out through a well structured business plan and individual schemes matching with the business plan. All such plans and schemes shall be submitted in accordance with the Terms and Conditions of Tariff Regulations 2005, MYT Tariff Regulations as well as Licensing Conditions to the Commission. The submission for approval in this regard so far has been unsatisfactory. The Commission has been addressing the utilities by way of letters as well as by way of directions. The compliance to such letters and directions will have to be more serious.1.8 Further, correspondence with TANGEDCO in regard to data gaps and replies furnished are enclosed in Annexure X.1.9 The meetings and discussions referred to in this Order pertain to meetings between the staff of the Commission and the TANGEDCO.1.10 Various suggestions and objections that were raised on TANGEDCO’s Petition after issuance of the Public Notice both in writing as well as during the Public Hearing, along with TANGEDCO’s response and the Commissions rulings have been detailed in Section 2 of this Order.9|Page
  15. 15. 2 Issue-wise summary of views, comments and suggestions of stakeholders on Petition and TANGEDCO’s Replies and Commission’s ViewsThe following are the views/ objections/ suggestions given by stakeholders in writing as well asin public hearing.Issue-1: General2.1.1 The Commission to reduce the Tariff instead of increasing the same.2.1.2 TANGEDCO may submit the Tariff Petition every year by December and the new tariff may be made applicable with effect from 1st April of every financial year so that the burden on the consumers due to the abrupt rise in tariff maybe avoided.2.1.3 The Commission to issue guidelines for domestic consumers and commercial establishments to install single star rated installations and three star rated installations.2.1.4 TANGEDCO may be further bifurcated into Generation Company and Distribution Company for better management.2.1.5 TANGEDCO may provide the Action Taken Report on the suggestions, directions and decisions issued by TNERC in the Tariff Order No. 3/2010 dated 31-07-2010.2.1.6 The deemed demand benefit may be continued in view of the supply of demand by the generator to the grid while allotting energy to Open Access consumers.2.1.7 TANGEDCO’s petition does not adhere to the directions given by the APTEL.2.1.8 Truing-up for the previous year is based on ‘preliminary estimates’ for the year 2010-11. The numbers approved by TNERC are different from the numbers submitted in the Tariff Order dated 31-07-2010 and the numbers submitted for truing up on preliminary basis.2.1.9 TANGEDCO should provide electricity bill or demand note to its consumers which will help the consumers to understand the date of reading taken on energy meter.10 | P a g e
  16. 16. 2.1.10 TANGEDCO has reduced the payment period from 30 days to 20 days. It should be continued as 30 days and it should issue notices to all its consumers as being done by other Government departments.2.1.11 The neighboring states like Kerala, Karnataka, and Andhra Pradesh have lesser cost of electricity than Tamil Nadu.2.1.12 The Commission is processing the Tariff Petition at a fast pace in the absence of the Chairman of the Commission.2.1.13 The Government may control road side advertisements/ hoardings which consume electricity.2.1.14 The Tamil Nadu Government may constitute an Empowered Group of Eminent Energy Experts for the resolution of power crisis and submit its recommendations within a specified time frame.2.1.15 TANGEDCO should take measures for non-collection of dues from even Government departments, Panchayats, Municipalities etc.2.1.16 The Commission may publish a white paper on the case that TANGEDCO was making profit till 1998 and after 2003, TANGEDCO has reported a loss of Rs. 40,000 crores.2.1.17 The interest on Current Consumption Deposit is paid at 6% whereas the BPSC charges are levied at a higher rate.2.1.18 Electricity cess should be introduced on the same lines as Education cess.2.1.19 The Commission has not raised the tariff for 8 years and therefore tariff may be increased for all the categories. Tariff revision may be uniform for all categories of consumers. The Commission may increase the tariff but tariff shock may be avoided.2.1.20 The tariff may be increased on account of increase in power purchase cost.2.1.21 The Commission may direct TANGEDCO to create a special Reconciliation Wing in the Regulatory Cell.2.1.22 TANGEDCO has not provided backup calculations for the retail tariffs. TANGEDCO is requested to furnish the basis of deriving Rs. 300 per KVA and Rs. 5 as energy charge.11 | P a g e
  17. 17. Issue-2: Regulatory Asset2.1.23 The Objectors submitted that the deficit for the current year and ensuing year FY 2012-13 is projected as Rs. 14,496.53 Crore and Rs. 14,547 Crore respectively. TANGEDCO has proposed to recover only Rs. 9,741 Crore through partial tariff revision proposal, leaving a revenue gap of Rs. 4,806 Crore in FY 2012-13 and prayed to treat the unrecovered revenue gap as regulatory asset. Regulatory asset could be created only under exceptional circumstances as stipulated in National Tariff Policy and TNERC Regulation 2005. Tariff Policy Para 8.2.2. The facility of a regulatory asset has been adopted by some Regulatory Commissions in the past to limit the tariff impact in a particular year. This should be done only as exception, and subject to the following guidelines. a. The circumstances should be clearly defined through regulations, and should only include natural causes or force majeure conditions. Under business as usual conditions, the opening balance of unrecovered gap must be covered through transition financing arrangement or capital restructuring; b. Carrying cost of Regulatory Asset should be allowed to the utilities; c. Recovery of Regulatory Asset should be time bound and within a period not exceeding three years at the most and preferably within control period; d. The use of facility of Regulatory Asset should not be repetitive. e. In cases where Regulatory Asset is proposed to be adopted, it should be ensured that the return on equity should not become unreasonably low in any year so that the capability of licensee to borrow is not adversely affected. TNERC Tariff Regulation 2005: Regulation 13: Regulatory Asset “Wherever the licensee could not fully recover the reasonably incurred cost at the tariff allowed with his best effort and after achieving the benchmark standards for the reasons beyond his control under natural calamities and force majeure conditions and consequently there is a revenue shortfall and if the Commission is satisfied with such conditions, the Commission shall treat such revenue shortfall as Regulatory Asset.” The Hon’ble Appellate Tribunal for Electricity has also ruled at Para 8.10 of their judgment rendered in Appeal nos. 196 & 206 of 2010: “Now the question arises whether the creation of Regulatory Asset is in the interest of Distribution Company and the consumers. Respondent no. 1 will have to raise debt to meet its revenue shortfall for meeting its O&M expense, power purchase costs and system augmentation works. It is not understood how the respondent no. 1will service its debts when no recovery of regulatory asset and12 | P a g e
  18. 18. carrying costs has been allowed in the ARR. Thus, the respondent no.1 will suffer with cash flow problem affecting its operations and power procurement which will also have an adverse effect on maintaining a reliable power supply to the consumers. Thus, creation of regulatory asset will neither be in the interest of the respondent no. 1 nor the consumers.”2.1.24 The Government may come out with a proposal for undertaking TANGEDCO’s liabilities in line with a similar dispensation provided in 2002 based on The Ahluwalia Committee Recommendations in which the pending payments of all the SEBs to CPUs were undertaken by the respective state government by issue of bonds.2.1.25 Losses accumulated to the tune of Rs. 6,273.21 Crore, upto 03-10-2010, has been proposed to be absorbed in the final Transfer Scheme. Therefore it cannot be included as part of regulatory asset. The Regulatory Asset concept should not be an adjustment mechanism for accounting of losses as per International Financial Reporting System (IFRS).2.1.26 The entire Revenue Requirement must be met through the Tariff Proposal without any gap. Also, it was submitted that control period for the Tariff Order must be only for 1 year. For the year 2013-14, the tariff petition should be approved before 31-03-2013, failure of which should attract tariff reduction by 10%. This may also be incorporated in the present order.2.1.27 Initially, capital subsidy was given to TANGEDCO (erstwhile TNEB) which was later stopped in 1993-94. If continued, there will be no need to create Regulatory Asset. Issue-3: Interest on Loan2.1.28 There is abnormal increase in the interest on loan as there is no clarity on data provided by TANGEDCO as to how much loan has been availed for capital expenditure and how much for revenue expenditure. Issue-4: Pension Fund Reserve2.1.29 TANGEDCO has not addressed the issue of creating a Reserve for Pension Fund despite being repeatedly directed by the Commission.13 | P a g e
  19. 19. Issue-5: Fuel Cost / Fuel Price Adjustment Charge (FPAC)2.1.30 The fuel cost shows abnormal increase compared to power purchase cost. Fuel cost has been claimed more than twice the increase in power purchase cost, when apparently there is no corresponding increase in quantum of energy generated from own thermal generating stations2.1.31 Capacity addition with respect to new thermal generating stations or in existing generating stations may be verified in detail before approval by the Commission.2.1.32 TANGEDCO has not resorted to seek the sanction of Fuel Price Adjustment Charge (FPAC) even though Electricity Regulatory Commission’s Act 1998 or the Electricity Act 2003 provided the same. An appropriate and simple formula should be derived for calculating FPAC. Also, FPAC should be recovered from all the consumers – paying, subsidized or non paying consumers.2.1.33 The quarterly estimation of escalation charge should be worked out for which TANGEDCO should get internally audited and certified figures for all the fuel purchases. Alternatively, quarter wise FPAC comparison may be covered. Also, TANGENDCO should get the particulars from the suppliers of power, excluding the power traders which will ensure four or two charges per year. If TANGEDCO wants to add any other charge, then it should be proved that such added charges for any quarter are truly related to fuel purchases made during that adjustment period.2.1.34 Proof of payment to the supplier of power may be provided by TANGEDCO at the time of claiming FPAC. The Commission is requested to fix a time line for submitting FPAC every quarter.2.1.35 In case of blending of indigenous and imported coal for generation, the increase in value of both the coal types must be considered with the GCV and ash value, so that the blend’s weighted average GCV of coal can be assessed.2.1.36 The Commission may prescribe norms of consumption for different load factors for the units/substations.14 | P a g e
  20. 20. 2.1.37 The valuation of coal or oil must be based on a weighted average methodology (ARC or APRC) and not on FIFO or LIFO prices. TANGEDCO may be using the FIFO or LIFO for financial accounting purpose.2.1.38 TANGEDCO has proposed the average rate of power purchase as approved by the Commission for FPAC on power purchase. The Commission may provide the method to treat the excess purchases over the approved quantity of purchases while calculating FPAC.2.1.39 FPAC should include variable cost only. The fixed cost should not be considered in the FPAC formula. Interest charges on increase in stock of fuel may not be included and hence, working capital may form a part of FPAC. Any excess transportation charges or demurrages payable for delay in clearing the coal supplies for the port or non availability of berths in the ports of loading or discharge must not be included in FPAC. For the fuel supplies made during the adjustment period, no transit and handling losses must be added for calculating FPAC.2.1.40 The FPAC may be calculated in two parts: a. The FPAC for individual supplies or purchases of power must be identified, as the GCV or supplies may vary as also the specific fuel consumption. b. FPACs thus calculated, must be aggregated as a total charge per unit of consumption for all electricity consumers.2.1.41 TANGEDCO may ask for a consent letter from the State Government for FPAC incurred on the partially or totally subsidized consumers.2.1.42 The formula suggested by TANGEDCO is simple but working out the charge for individual sources of power generation or source of supply may be very cumbersome. Source of the coal and transportation cost incurred has been one of the major issues. The pricing of coal may be done recognizing the multimodal mechanism of transport. The voyages accounts of the PSC may be reconciled promptly and payments settled for the correct grade of coal as well as its transportation costs as the landed price of coal.2.1.43 TANGEDCO may submit the FPAC schedule timely and also account the entire major factors involved in the fuel cost. If there is any delay in submission of FPAC, then the FPAC may be made applicable from the date of approval by the Commission and not on quarterly basis.15 | P a g e
  21. 21. 2.1.44 The Commission may establish a normative datum reference cost per million kilocalories of all fuels on a weighted basis and direct TANGEDCO to work out the difference in consumption of fuels compared to normative consumption levels and allow the excess to merge with the tariff or extend the deficit as a tariff adjustment for all the consumers.2.1.45 TANGEDCO has filed its proposal for the FPAC formula for avoiding the uncontrollable cost on account of hydro thermal mix in power generation and purchase. This would enable TANGEDCO to recover the actual cost of the fuel incurred and the actual cost of power purchase. Issue-6: Cost of Supply2.1.46 The Tariff may be fixed as per the consumer’s load factor, power factor, voltage, total consumption of electricity and should reflect the Cost of Supply to the concerned consumer category.2.1.47 TANGEDCO should furnish a statement showing the Cost to Serve for each category of consumers at different voltage level with allocation of Transmission & Distribution loss and consumer wise cross subsidy at the existing tariff while submitting ARR.2.1.48 TANGEDCO has assumed that all the energy imported into and handled in the grid is at a single voltage level of 230 KV and priced accordingly. The ARR must reflect that TANGEDCO is receiving power from various internal and external sources and at different voltage levels.2.1.49 The transmission loss for each of 110 KV and 33 KV levels have been stated to be 1409 MU, while the estimated annual consumption at these voltage levels are 2342 MU and 2805 MU respectively. The loss figures seem to be incorrect as the loss should be approximately proportional to load factor and its squared value.2.1.50 TANGEDCO has consumers in EHT-230 KV, 110 KV, 66 KV, 33 KV, and HT-22/11 KV voltage levels besides in LT 415/230 voltage segments. The rates mentioned do not reflect the correct cost or loss levels. Also, the T & D loss figures may be recalculated.2.1.51 The loss assigned to the specific consumer should be as per the voltage category.2.1.52 The format figures did not reflect a rational approach in its calculations, to arrive at the different voltage levels cost or average costs. The approach that has been adopted seems16 | P a g e
  22. 22. to be without validation that true operating costs have been reflected. The petition should negate the concept of “Cost of Service” process of tariff determination.2.1.53 The cost of supply for all categories of consumers has been furnished in Form- 25 of the ARR formats as Rs. 5.98 per kWh. As per the orders of Appellate Tribunal for Electricity in Appeal Nos. 192 & 206 of 2010, the Tribunal has directed the State Commission to determine the voltage wise cost of supply within six months from the date of judgment, i.e., July 28, 2011, but TANGEDCO has not furnished the data. Therefore, the Commission may issue orders to TANGEDCO to furnish the voltage wise cost of supply before finalizing the Order. Issue-7: Subsidy2.1.54 The amount of Rs. 2,234.32 Crore as subsidy payable by the State Government appears to be very small. TANGEDCO has used a very low level pricing of power for a set of consumers. Therefore, appropriate methodology should be used by TANGEDCO instead of ‘Cost to Serve’ model.2.1.55 The subsidy should be offered for the domestic consumers having a monthly consumption of more than 500 units also.2.1.56 TANGEDCO should be provided with the subsidy amount before the start of the financial year by the Government of Tamil Nadu. The Government should pay the subsidy towards domestic consumer to TANGEDCO on a quarterly basis.2.1.57 The subsidy has been given as 150 paisa and 100 paisa per unit for the bi-monthly consumption up to 100 and 200 units respectively, but there has been no provision for subsidy for the first 200 units in the bi-monthly consumption exceeding 200 units and the subsidy is minimal of 50 paise per unit above 200 to 500 units. Therefore, the subsidy should be increased by at least Re. 1 per unit for the first 200 units for the consumers who consume between 200 and 500 units bi-monthly.2.1.58 Fixed charges and minimum charges (Rs. 110/-) should be reduced.2.1.59 The subsidy should be provided for residents in huts using one bulb. Rs. 50 per month should be collected from other consumers in huts.17 | P a g e
  23. 23. 2.1.60 Issue-8: Cross SubsidyThe practice of cross-subsidies should be done away with. The free and subsidized supplies to agriculture or economically weaker sections of society should continue, but TANGEDCO should not divert electricity (in the event of a shortage) to other consumers to cover its own deficit. The Supreme Court of India ruled in the case of West Bengal Electricity Regulatory Commission Vs West Bengal High Court and CESC Ltd., Kolkata that there cannot be cross subsidy from one consumer to another.2.1.61 The consumers below poverty line who consume below a specified level, say 30 units per month, may receive a special support by way of cross subsidy. Tariff for such designated group of consumers may be at least 50% of the average Cost of Supply. This provision should be re-examined after five years. Issue-9: Tariff for HT Industry2.1.62 The industrial output in the state is already adversely affected due to power cuts. The tariff increase should ensure un-interrupted power supply to HT industrial consumers.2.1.63 Measures should be taken by TANGEDCO to increase the power supply to meet the demand of Industry, either through spare capacity available within the State or through procurement of power from other states.2.1.64 The morning peak hour cut for industries should be withdrawn.2.1.65 Demand charges may be uniform at Rs. 200 per KVA per month for HT consumers instead of applying varying levels with high increases.2.1.66 All HT consumers should be allowed to procure power under provisions of Open Access.2.1.67 HT Consumers, availing power supply at high voltage are virtually consumers of TANTRANSCO. TANGEDCO comes into picture only for metering and billing purposes. Hence, a HT consumer has to bear the entire cost of the transmission line from the Grid substation of TANTRANSCO to the consumption point, switching, protection and the metering equipment and the utility incurs no capital cost. Maintenance of these equipments is done by TANTRANSCO and the cost of which has been covered in the18 | P a g e
  24. 24. ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore, the demand charges should be lower.2.1.68 The transmission loss at HT voltage is less compared to when supplied at 11 KV, thus, the energy charges should also be reduced.2.1.69 The energy charges should not be increased from Rs. 3.00 per unit to Rs. 5.00 per unit for HT Tariff IA.2.1.70 The industrial output in the state is already adversely affected due to power cuts. The tariff increase should ensure un-interrupted power supply to HT industrial consumers.2.1.71 Measures should be taken by TANGEDCO to increase the power supply to meet the demand of Industry, either through spare capacity available within the State or through procurement of power from other states.2.1.72 The morning peak hour cut for industries should be withdrawn.2.1.73 Demand charges may be uniform at Rs. 200 per KVA per month for HT consumers instead of applying varying levels with high increases.2.1.74 All HT consumers should be allowed to procure power under provisions of Open Access.2.1.75 HT Consumers, availing power supply at high voltage are virtually consumers of TANTRANSCO. TANGEDCO comes into picture only for metering and billing purposes. Hence, a HT consumer has to bear the entire cost of the transmission line from the Grid substation of TANTRANSCO to the consumption point, switching, protection and the metering equipment and the utility incurs no capital cost. Maintenance of these equipments is done by TANTRANSCO and the cost of which has been covered in the ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore, the demand charges should be lower.2.1.76 The transmission loss at HT voltage is less compared to when supplied at 11 KV, thus, the energy charges should also be reduced.2.1.77 The energy charges should not be increased from Rs. 3.00 per unit to Rs. 5.00 per unit for HT Tariff IA.19 | P a g e
  25. 25. 2.1.78 The machineries being used by 90% of the industries are fully non linear load and polluting the Grid.2.1.79 In accordance with section 62 (3) of Electricity Act 2003, TNERC may differentiate the tariff on the basis of operating voltage.2.1.80 The stipulation of minimum demand of 90% of the sanctioned demand should be exempted for educational institutions.2.1.81 TANGEDCO is levying demand charges at Rs. 300/KVA for the whole of the month, when they only supply for 14 hours per day. The Commission may penalize TANGEDCO when consumers do not get power supply as envisaged under Electricity Act 2003, by fixing unreliability charge or non-performance charge which may be paid to the consumers. This could be adjusted against the Regulatory Asset, if it is created and so long as it unamortised.2.1.82 TANGEDCO has requested to continue to keep the present billing demand in its petition. Accordingly, in the case of two part tariff, the maximum demand charges for any month will be levied on the KVA demand actually recorded in that month or 90% of the sanctioned demand whichever is higher. However, in case of R&C measures, it is the actual recorded maximum demand or 90% of the demand quota as fixed from time to time whichever is higher. The present billing of 90% may be reduced to 80% as prevailing in Andhra Pradesh.2.1.83 Electricity consumption by labor welfare establishments like canteen, hostel, dispensary, crèche etc in HT premises are being treated as commercial use. TANGEDCO should provide separate electricity meters for measuring the consumption at labor welfare establishment so that it need not be charged as theft and the HT consumers should not be penalized. Therefore, the consumption of such establishments (when not metered separately) should be billed along with the HT consumption.2.1.84 HT industrial consumers should be allowed to use at least 15% of their sanctioned demand for the purpose of labor welfare measures. Separate meters should be installed to meter the load when it exceeds 15% of the sanctioned demand and the LT tariff may be charged for the excess demand.20 | P a g e
  26. 26. 2.1.85 TANGEDCO should not demand 15% extra energy charges from a consumer maintaining quality power at the point of common coupling with proper harmonic equipment. Central Electricity Authority (CEA) have given power quality parameters for the bulk consumers in their Notification No. 12/X/STD (CONN) GM/CEA (21-Feb-07) (the Central Electricity Authority (technical) Standards for Connectivity to the Grid) Regulations, 2007 in Part IV under the heading “Grid Connectivity Standards” applicable to the distribution system and bulk consumers, CEA have sought compliance of the following: a. Total voltage harmonic distortion should not exceed 5% b. Total current distortion should not exceed 8% Hence, such extra charges should be levied only on those consumers who do not meet the requirements of CEA. TANGEDCO should notify in the Tariff Order, the reason for this 15% extra charges, as notified in the old tariff order w.e.f. 16-03-2003 and an opportunity should be given to the consumers to limit the harmonics within the values prescribed by CEA and get exempted from this 15% extra energy charges.2.1.86 Textile industry submitted that the Commission has unequally revised the tariff in the Tariff Order dated 31-07-2010, and requested not to repeat it this time as it overloads a few consumer categories.2.1.87 TANGEDCO has made an allocation of 1% of the total units consumed towards maintenance of canteen, rest shed, garden, RO plant, effluent treatment plant, residential quarters and hostels etc., to be billed under HT Tariff IA and in case of excess, to be billed under LT Tariff V (1) in Para 11.1.1. (viii). This move of TANGEDCO was welcomed and there was a request that this be extended to 1.5% of the total units consumed, when R&C measures are in force. Further, the following are the activities integrated with the Industrial activity according to the various provisions under the Factories Act, 1948 and Tamil Nadu Factories Rules 1950 and therefore, any industrial consumer is required to be in compliance with the Statutory provisions: a. Canteen (Section 46) b. Shelters, Rest Rooms and Lunch Rooms (Section 47) c. Creches (Section 48) d. Garden and Greenery (Rules 52-A) e. RO Plant for drinking water (Section 18) f. CETP (TNPCB Norms)21 | P a g e
  27. 27. g. Borewell motors and well motors to satisfy the above purposes.2.1.88 Printing industry, jewel merchants and the textile industry have requested that the tariff should not be hiked and that the existing tariff should be continued.2.1.89 The Commission may permit HT industries to draw upto 25% of the Maximum Demand during evening peak hours instead of 10%.2.1.90 The Commission may hike the tariff for big industries and foreign industries and Multi National Companies (MNCs) instead of domestic consumers.2.1.91 TANGEDCO’s proposal of charging extra 10 paisa / unit from HT consumers whose sanctioned demand exceeds 5000 KVA and not availing the supply at i.e. 33 KV, may be made applicable only for future supply to new HT consumers.2.1.92 Sufficient time of at least 5 years to be provided for change from existing level to new voltage level supply. In the meanwhile, TNERC in its Draft Notification dated 01-12- 2011 in respect of Tamil Nadu Electricity Supply (6th Amendment) Code, 2011 wherein Section 3 “Categories of Supply” Clause d & e, it was defined as follows: d. Three-phase three wire supply at 11 KV or 22 KV depending on the voltage level existing in the area of supply shall be provided for a demand limit up to 3 MVA or 5 MVA as the case may be. However, the minimum demand shall be 63 KVA. e. The Consumer shall be provided supply at 33 KV for a demand exceeding 3 MVA and up to 10 MVA if the area of supply is fed through 11 KV system and if the area of supply is fed through 22 KV system, supply at 33 KV shall be provided for a demand exceeding 5 MVA and up to 10 MVA. These provisions differed from the present proposal suggested by TANGEDCO. Issue-10: Tariff for HT - II Category2.1.93 TANGEDCO has proposed an increase of 100 paise per unit of energy supplied to HT IIB (i) category for the private educational institutions and 50% hike in demand charges from Rs. 200/KVA/month to Rs. 300/KVA/month, thus raising the present average charge from Rs. 5.50 to Rs. 7.41 (for 650 KVA demand & 1,25,000 units monthly consumption).22 | P a g e
  28. 28. 2.1.94 Educational institutions have a very low load factor and majority of consumption is between 9:00 am to 5:00 pm. For FY 2012-13, the increase in tariff is not in proportion with the consumption as the Consumption by LT II category has been projected as almost double of HT II category whereas expected revenue has been projected as equal.2.1.95 The rate for supply of energy for film exhibitors has been proposed to increase from Rs. 4.50 to Rs. 6.80 per unit for cinema theatres under High Tension Category. As the lowest rates of admission are fixed by the state government and due to poor state of film exhibitors (because of competition from Cable TV and Satellite TV), the requested tariff hike may not be accepted.2.1.96 Continue the existing demand charge of Rs. 200/KVA per month and increase the energy charges by 5% for HT Tariff IIA.2.1.97 Private educational institution may be included in HT IIA category as the ultimate objective of the educational institution is to impart knowledge to students, which is a socially desirable service. The Hon’ble Supreme Court of India in Case number Writ Petition, (Civil) 317 of 1993 (TMA Pai Foundation Vs State of Karnataka) has ruled that “Reasonable Surplus (Funds collected by Education Institutions) to meet cost of expansion and augmentation of facilities in educational institutions does not amount to profiteering.” Therefore it was suggested that private education institutions should come under HT Tariff IIA.2.1.98 Proposed extra levy of 20% on energy consumed during peak hours is strongly objected by HT consumers. The proposed incentive of 5% rebate may be increased up to 20% on energy consumption during night hours.2.1.99 Private educational institution should not be differentiated from government institutions with respect to tariff categorisation.2.1.100 The proposed tariff structure for HT II (B) has been identical to HT Tariff III and it is requested to be grouped under HT Tariff III. a. Tariff applicability must encompass all allied utilities connected with the educational institutions such as hostels, guest houses, canteen, laboratories, conference hall, auditorium, indoor and outdoor stadium, water works, and other supplementary services. b. Extra levy for peak hour consumption have been objected on the account of being study hours for the students for exams.23 | P a g e
  29. 29. c. The proposed rebate should be increased to 20%.2.1.101 In Karnataka, there is no separate tariff for Government Educational Institutions. The discrimination will lead to violation of Section 62 (3) of the Electricity Act 2003 regarding discrimination between the consumers and hence, there should not be a separate tariff category for government and private educational institutions. Issue-11: Tariff for HT Tariff III2.1.102 The Commission is requested to have differential tariff for aviation and other commercial activities such as shops, restaurants etc. If no separate metering is possible, than a separate category other than HT Commercial can be proposed for Airports and composite tariff can be determined for aviation and commercial activities. The ATE in its judgment dated 22-07-2011 in Hyderabad International Airport Vs APERC has also given the same findings. Issue-12: Tariff for HT Tariff IV2.1.103 Many service industries like automobile service centers, etc are brought under Tariff IV. These industries should be brought under Tariff III B. Issue-13: Tariff for Domestic2.1.104 The hike in electricity tariff will greatly affect the consumers as the proposed tariff is exorbitant and that the revision results in increase by about 100%.2.1.105 Air conditioner users and UPS users should pay Additional Security Deposit.2.1.106 The domestic consumers belonging to category I(A)- (a), (b), (c), (d) and (e) will end up in paying extra 75%, 90%, 83%, 65% and 85% respectively over and above the existing rates, after the proposed hike in domestic tariff.2.1.107 Various combinations of energy charges for various types of slabs were suggested2.1.108 Due to the power cuts, the domestic consumers are using inefficient Invertors, which further consume a lot of power. As the efficiency of domestic UPS is 50% which is a loss that results in increased subsidized domestic consumption. The increase in the failure of24 | P a g e
  30. 30. Distribution Transformers (DTs) of TANGEDCO has increased due to the poor quality of power.2.1.109 The slab system should be common for all consumers irrespective of total consumption of electricity. TANGEDCO has proposed revision of Tariff for consumption of electricity more than 500 units bi-monthly. It was submitted that the common slab system may be implemented, without changing slab rates, based on total units consumed bi-monthly.2.1.110 As per Electricity Act 2003, the Security Deposit amount is refundable to the consumers if it is paid in excess of contract demand or it should be adjusted in two billing cycles. If the contract demand exceeds the metered demand, the excess amount may be refunded by the Board with interest before the due date of payment of third billing cycle. The Commission may direct TANGEDCO for: a. Levy of Additional Consumption Caution Deposit which can be adjusted in case of disconnection of service in the event of any default in payment by the consumer. b. Initiate stringent recovery steps to recover long over dues. c. Introduce a suitable Tax Saving Investment Scheme like Floating of Short term or Long term Infrastructure Power Bonds or Certificates. d. Resort to Differential Tariff Mechanism for end-user (like IT Corporate Majors) of power back up gadgets like inverters and generators which also indirectly contribute to the drain of power from the grid who can be differentiated from the non users by adopting a suitably administered price mechanism.2.1.111 Separate tariff may be given for the State Government and Central Government employees.2.1.112 Prepaid card should be introduced for the domestic consumers for the payment of electricity in advance for the bi-monthly consumption. Issue-14: Tariff for Hut2.1.113 The existing sanction load for the BPL families is 110 watts (Bulb - 40 watts, Color TV 70 watts). The proposed additional load as per Government of Tamil Nadu’s announcement for the BPL families, would be additional 970 Watts (Mixi 750 Watts, Wet grinder 150 Watts, and Table Fan 70 Watts). For a total load of 1080 watts, the per day consumption by the connected load is as follows:25 | P a g e
  31. 31. TV 5hrs x 70W 0.35 kWh Fan 8hrs x 70W 0.56 kWh Mixi 0.5hrs x 750W 0.375 kWh Wet grinder 1hr x 150W 0.15 kWh Bulb 6hrs x 40W 0.24 kWh Approximately 1.7 kWh Annual consumption per Hut SC would be 1.7 x 365 i.e. 621 units. The minimum average generation cost of electricity with TANGEDCO’s own generation is 350 paise. Therefore, the compensation by Government of Tamil Nadu to TANGEDCO per annum will amount to Rs. 2173.5 per SC.2.1.114 TANGEDCO has projected the rise in consumption of huts (BPL) as 424 MU whereas the actual consumption is expected to be much more because of color TV, fan, Mixi, grinder and laptop. The Commission has already stated in its Tariff Order of 2003 that for Huts and Agricultural services a separate policy has to be evolved and followed for all services to be metered. Hence, the Commission may direct TANGEDCO for undertaking implementation of 100% metering, collection and disconnection mechanism.2.1.115 The load limit to BPL category may be increased to 110 watts. Meters may be fixed and consumption of electricity by BPL category consumers up to the limit of 100 units bi- monthly may be free. Consumption beyond 100 units may be charged at regular tariff. Issue-15: Tariff for Street Lighting and Water Supply2.1.116 TANGEDCO may equip street lights with Dusk to Dawn switches so as to save electricity.2.1.117 Electronic chokes may be introduced by TANGEDCO instead of conventional ones. Issue-16: Tariff for LT Educational Institutions & Recognized Hospitals2.1.118 Under LT Tariff IIB, the pricing parity between the government educational institutions and private educational institutions is objected by the private educational institutes. The26 | P a g e
  32. 32. Government is promoting subsidies/cross subsidies by providing concessional rates to its own institutions.2.1.119 Objection was raised on the increase in the fixed charges by the HT II category consumers. Instead, it was suggested that the slabs may be defined keeping 10 KW of contracted load instead of connected load as one slab and the rate should be fixed at Rs. 10 per slab per month. There should be separate rate for fixed charges for LTCT services.2.1.120 Private Educational institutions have objected to the tariff hike.2.1.121 There should not be fixed charges for LTCT services as it has no relevance. Therefore, it may be dropped. Issue-17: Tariff for Places of Public Worship2.1.122 Meditation centers may be considered in the category of Actual Place of Public Worship. Issue-18: Tariff for Tiny Industries2.1.123 LT Tariff IIIA (i) and IIIA (ii) may be rationalized into a single category.2.1.124 TANGEDCO has provided the minimum load under IIIA categories as 10 HP in its petition. Most of the Micro industries with minimum work force have been operating on a load range of 15 HP to 20 HP. It was suggested that LT Tariff IIIA may be applied to loads up to 20 HP.2.1.125 The charges may be computed on actual power consumed. The current rate of fixed charges for Tariff IIIA & IIIB is Rs. 30 per connection per month. TANGEDCO could have asked for a hike to Rs. 100 per connection per month, however, it has proposed a change to per KW basis for a charge of Rs. 100 per KW per month. The proposal to change the very basis of the charge from Rs. /connection to Rs. /KW may be denied.2.1.126 TANGEDCO has requested to levy demand charges (fixed charges) at the rate of Rs. 50/KW for Tiny Industries (LT IIIA), Rs. 100/KW for LT Industries and Rs. 120/KW for LT CT services per month. The Commission may reject the proposal of tariff hike.27 | P a g e
  33. 33. 2.1.127 TANGEDCO has requested to increase the energy charges for Tiny Industries in two fold from the existing rate. The Commission may not increase the energy charges and if needed, the increase may limit to Rs. 0.50 per unit.2.1.128 The proposed increase of 10% in energy charges for LT III (B) category (i.e. from Rs. 5.00/unit to Rs. 5.50/unit) may be uniformly charged to all categories of consumers including LTCT services.2.1.129 Flour mills submitted that due to the presence of HT consumer units near their site, they need to pay TANGEDCO Rs. 2000 for the damage due to natural accidents in the HT line. It is requested to exempt the damage charges for the damages due to natural accidents.2.1.130 Silver chain makers which were earlier categorized under LT Tariff IIIA (1) have requested for the same tariff to continue.2.1.131 A separate dedicated power station may be setup in Tirupur for the benefit of knitwear sector. Issue-19: Tariff for Power Loom2.1.132 The concessional tariff is allowed to cottage, micro and power loom consumers with the intention of helping poor self-employed consumers. However, these concessions are being misused. Further, it submitted that Auto Loom consumers that have been categorized under the Power Loom category have been enjoying concessional tariff rates and subsidies from Tamil Nadu Government. Issue-20: Tariff for LT Industries2.1.133 For the LT consumers, TANGEDCO has proposed an average increase of 59% energy charges while the range for individual consumer category is 0% for bulk supply and 589% for agriculture. In terms of absolute values of energy rates, against a existing rate of 25 paise per unit for agriculture and 666 paise per unit for LT commercial category, the proposed rates are 175 paise for agriculture and 872 paise per unit for LT Industries. In monetary terms, TANGEDCO has proposed to collect Rs. 7,260.76 Crore through proposed revision, out of Rs. 9,741.01 Crore.28 | P a g e
  34. 34. 2.1.134 Objections submitted on LT CT services are: a. The fixed charges have been increased from Rs. 60 for two months to Rs. 240/KW/month which is a 400% increase. b. The energy charges have been increased from 500 paise per unit to 600 paise per unit. This is 20% increase in the rates. Hence, the slab charges are requested to be retained at the existing levels. c. The monthly minimum charge is escalated by 250%. Therefore, the LT CT based industries will have to bear 82.30% of the entire increase in charges, under category III of the LT tariffs.2.1.135 The fixed charges should not be related to MD or connected load and should be retained at the existing energy charges.2.1.136 The export units may be exempted from tariff hike so that they can sustain themselves in the global market. Issue-21: Tariff for LT Agriculture2.1.137 For calculation of revenue from sale of power by Agriculture category, the connected load may be considered as submitted by consumers for the replacement of energy efficient motors.2.1.138 The unauthorized additional load may be regularized by collecting Rs. 10,000 per HP. This amount may be utilized for improving the TANGEDCO’s infrastructure.2.1.139 TANGEDCO has admitted that the agricultural consumption has been 100% free. There has been no road map submitted on fixing meters in the agricultural services. The Commission in its Tariff Order 3 of 2010 dated 31-07-2010 directed TANGEDCO that a time bound program for 100% metering needs to be worked out and submitted to the Commission. It was requested that necessary directions should be given to provide meters for all services.2.1.140 The farmers who are having above 10 acres of land have to be supported for constructing a storage tank to avoid lift irrigation.29 | P a g e
  35. 35. 2.1.141 As observed by the Commission earlier in its Tariff Order 3 of 2010 dated 31-07-2010, the gap between the expenditure incurred by TANGEDCO and the subsidy paid by the government is the main reasons for the poor financial health of TANGEDCO.2.1.142 As provided in the Electricity Act 2003, the Commission should safeguard consumer’s interest and recover the cost of electricity in a reasonable manner. The Commission should pass appropriate orders directing the utility to recover the cost of electricity, if not from consumers, then from the Government since the Government itself is responsible for the free supply of electricity as per Section 65 of the Electricity Act which states: “Provided that no such direction of the state Government shall be operative if the payment is not made in accordance with the provision contained in this section and the tariff fixed by the state Commission shall be applicable from the date of issue of orders by the Commission in this regard.”2.1.143 For fixing meters to free services in Agriculture sector, a sum of Rs. 2,000 Crores will be required which may be born by Government of Tamil Nadu.2.1.144 The Free Electricity Pump Set scheme should be stopped.2.1.145 The water from agriculture connection should be permitted to be used for poultry and feeding animals. There should not be any penalty for using the agricultural water for animal husbandry, sericulture etc.2.1.146 Enforcement squads are misusing the provisions relating to theft of energy and are charging commercial tariff for agriculturists. There may be a ceiling of 25,000 to 35,000 numbers of cattle to bring an agricultural service connection within the meaning of commercial category.2.1.147 The ex-service men squad employed by TANGEDCO has booked farmers maintaining cows and goats in their agricultural field under the theft of energy which should not to be done as Government also gives free cows and goats to the farmers.2.1.148 The electricity used for Integrated Farming may not be considered as Electricity Theft.30 | P a g e
  36. 36. Issue-22: Tariff for Commercial2.1.149 TANGEDCO has proposed to levy uniform 1% of consumption at LT Tariff V {page 129 clause 11.1.1 (viii)}, for usage of the energy for other purposes, irrespective of actual usage. This proposal may badly affect the major consumers like Foundries. Applying 1% of the energy to the LT Tariff V would be irrational for the industries whose consumption of the energy for other purposes is nil or very minimal.2.1.150 The marriage/community halls should have 2 service connections for indoor and outdoor consumption and the lavish illumination should be charged at appropriate tariff.2.1.151 The Commission may re-categorize telecom towers under separate sub-category within the existing commercial category.2.1.152 The tariffs currently charged to consumers falling under the Commercial category in Tamil Nadu are on the higher side when compared to various states in India.2.1.153 The Commission has been requested to consider the proposal of compulsory installation of AMR meters and roll out of consolidated billing for large consumers with multiple connections.2.1.154 The Commission may consider reducing the tariff proposed for the commercial consumers.2.1.155 There is no definition of commercial tariff in the Tariff Order of 31-7-2010. Therefore, those consumers who do not fall in the tariff slabs of LT I to IV may not be brought under the Commercial category.2.1.156 The proposed fixed charge under LT Tariff V should be charged at a rate of Rs. 50 per month plus Rs. 5 per slab of 10KW of motive power (connected load) per month taking grinder, A/C and water heater under motive power. Separate rate for LTCT services may be denied.31 | P a g e
  37. 37. Issue-23: Tariff for LT Temporary Supply2.1.157 Presently, for any power used for construction activity by an existing consumer, it is classified as power theft/misuse. It is suggested that the procedure may be modified and TANGEDCO should accept the application for permission for the extra power requirement for the construction activities. The extra charges, if any, may be collected in the existing meters. There should be no requirement for applying fresh temporary connections.2.1.158 The compounding fees should not be collected for the misuse of the energy and instead, the consumer should pay the difference in tariff for misuse of energy.2.1.159 Proposal for applying LT Tariff VI category for the construction activities which are carried out by HT Category consumers with the purpose of expansion or improvement or replacement for the infrastructure connected with the main utility for which HT supply has been availed, contradicts with the applicability of HT Tariff III submitted by TANGEDCO the new proposal which also dealt with construction activity.2.1.160 The lavish illumination has to be discouraged during R&C period. The tariff for lavish illumination should be more than excess demand and energy charges payable for violation of quota.2.1.161 The temporary power usage for construction activity for temple functions, public meetings, exhibitions, conferences of political parties and religious discourses, etc., are different from the construction activity which would become a part of main building after completion. Hence, a separate category within Temporary Supply may be required.2.1.162 The power theft by political parties in public meetings and functions should be discouraged by TANGEDCO through a minimum charge of Rs. 5000 towards Madras Electricity Supply (MES) charges.2.1.163 The existing rate of Rs. 10.50 per unit should be reduced to Rs. 9.00 per unit which would be 50% more than the LT commercial tariff of Rs. 6.00 per unit as suggested. TANGEDCO has not mentioned the unit of the connected load or contracted demand in its submission. The per day basis approach may be replaced by the fixed charge per month adopting a charge of Rs. 10 per KW since the consumer is also paying the cost of extension to the supply agency.32 | P a g e
  38. 38. 2.1.164 The monthly minimum charge has no relevance to LT temporary supply and hence it may be dropped. Issue-24: Free/Concessional Tariff2.1.165 As per National Tariff Policy, the minimum and maximum of tariff should be +/- 20% of the average cost of energy. The free energy to huts and agriculture is against the Tariff policy. Power supply to huts should be metered and ceiling for consumption of electricity should be specified for these categories of consumers. Agricultural supply should also be metered and should be rationalized with respect to the area of agricultural land with consumption ceiling.2.1.166 The Government may pay the cost of energy incurred by TANGEDCO for free electricity, wherever provided, for agriculture and huts, on a quarterly basis.2.1.167 The concession given to consumers whose bi-monthly consumption is up to 100 units is proposed to be withdrawn i.e. on fixed rates and the rate of Rs. 1.50 per unit has been proposed to be charged throughout, resulting is the consumer paying a bi-monthly minimum of Rs. 110 instead of Rs. 40 charged earlier. The tariff may be hiked for the consumers who consume 1000 or 2000 units per two months.2.1.168 Ice Producers have sought for concessional tariff.2.1.169 The Steel plants should be exempted from the 15% extra energy charges and limit the harmonics within the limits prescribed by Central Electricity Authority (CEA).2.1.170 Salt manufacturing industries, Non Government Organizations, Rice Mills, CMC Vellore and hospitals attached to educational institutions have requested for concessional tariff.2.1.171 Electricity generation tax should be waived as long as R&C measures are in force. Issue-25: Free Power2.1.172 TANGEDCO should provide free power to the farmers who are having more than 10 acres of land and should be encouraged to install solar power panels. The free power for farmers having 5 to 10 acres of land should be charged at a rate of 50 paise per unit.33 | P a g e
  39. 39. 2.1.173 The number of free connections to the farmers has to be restricted to only one service while all other remaining services should be charged.2.1.174 The concept of free power should be dropped and there should be no exemption in electricity tariffs to any category of consumers.2.1.175 Free power to horticulture service connection for farmers may be provided. Issue-26: Generation2.1.176 TANGEDCO may limit its activities in respect of its own generation. Power purchase by TANGEDCO may be monitored and controlled by the Commission.2.1.177 The seven generators which were classified as captive generators were exempted from the payment of cross subsidy charges. Their status may be verified again and cross subsidy charges may be recovered from these consumers.2.1.178 TANGEDCO has lost Rs. 1500 Crore in the dispute between GMR and PPN. TANGEDCO may try to lodge a claim for this loss from both the parties.2.1.179 The Kudankulam Nuclear power project may begin power generation to meet the shortage of 1500 MW in the State.2.1.180 The energy generation by TANGEDCO’s thermal power stations has dropped by 2000 MUs for the year 2010-11 compared to 2009-10 which amounts to Rs. 600 crores of loss. The Commission may ask TANGEDCO to find out the reasons so that the further generation loss could be avoided.2.1.181 There has been heavy loss incurred in the Fixed Cost and Variable Cost in respect of power purchased from Independent power Producers except Pillaiperumalnallur. TANGEDCO may take necessary steps to reduce the cost.2.1.182 The tariff for GMR, PPN, Samalpatti, Madurai and ST CMS has not been regulated. The fixed cost of IPPs should come down from 24% of capital cost to approximately 9% after a period of 10 years. The O&M cost in fixed cost component of IPP tariff should be checked.34 | P a g e
  40. 40. 2.1.183 TANGEDCO should follow a strategy to meet the demand by having more power stations than actually planned, and may exploit the full potential of non conventional and renewable sources of energy as also mobilize private investment.2.1.184 TANGEDCO may promote jatropha/bio-diesel cultivation to be used as fuel for generation of power.2.1.185 TANGEDCO may add sufficient capacities to cater to the future demand.2.1.186 The Basin Bridge plant may be converted to Combined Cycle plant.2.1.187 TANGEDCO may prioritize local small scale industries (SSI) which are not having sufficient supply of electricity over the multinational companies for giving new electricity connections. The new connections to the multinationals sectors should be continued but the generation capacity should be increased proportionately.2.1.188 The electricity tax at the rate of 10 paisa per unit on self generation of electricity from generators may be withdrawn.2.1.189 Big shopping malls and Business houses should install their own non-conventional electricity production units. Issue-27: Power Purchase2.1.190 TANGEDCO may purchase power from affordable generating stations except the power from Kayangulam.2.1.191 The power purchase from non conventional energy sources may be restricted to statutory limits, if it is not affordable.2.1.192 TANGEDCO is firming up the infirm power from wind generations with a very high reactive component, causing serious losses to them. TANGEDCO may account for the quantum of losses under a separate head. TANGEDCO might have made losses by way of banking of 6000 MW of infirm power in 10000 MW grids with high technical losses by way of accommodating very high reactive component.35 | P a g e
  41. 41. 2.1.193 TANGEDCO should not purchase power above Rs. 3 per unit. Instead, it is better to shed load instead of such high purchase.2.1.194 HT consumers are allowed to enter into power purchase agreements with potential suppliers of power. Medium and small industries have requested for permission to source power from other states. Power generators may be given permission to sell power to other states under open access (Inter-state Open Access).2.1.195 In 2009-10, 14500 MUs was purchased from open market. Private generators which constitute 19% of the total power purchases by TANGEDCO have swindled 50% of the total revenue earned by TANGEDCO. TANGEDCO has bought power at Rs.15 per unit from the open market, which the Commission may regulate.2.1.196 TANGEDCO started incurring losses from the year 2002-03 amounting to Rs.1,000 Crore and gradually increased up to the present level of Rs.53,000 Crore. This is because of high power purchase cost from IPPs, traders and open market. The Commission may regulate the private power purchase as per the provisions of the Electricity Act, 2003.2.1.197 The procedure of involving FPAC is unnecessary as the tariff determination process is an annual exercise which may take care of fuel price adjustment during the year.2.1.198 The hydro power generation from Pycara and Kundah projects costs 20 paise per unit as all its fixed cost has been recovered. Therefore, this source should be earmarked for agricultural sector. Issue-28: Renewable Energy2.1.199 The barrier to wind power development may be removed (including infrastructure for evacuation) and an enabling regulatory and policy environment for investments in this sector should be created.2.1.200 The consumers having contract demand more than 10 MVA may generate electricity up to 5% to 10% of the contract demand which should gradually increase to 25% from renewable sources.36 | P a g e
  42. 42. 2.1.201 Banking of wind energy may be dispensed with to avoid serious losses. Demand side management may be enforced for the wind mills by levying common power factor compensation.2.1.202 A separate company may be formed for cheap power sources like hydro power station which should sell power to TANGEDCO at non conventional energy cost and utilize the fund to compensate weaker section like hut and agriculture.2.1.203 Solar power generation should be promoted. Government of Tamil Nadu may take initiatives and offer subsidized rates to boost solar energy use. The usage of solar energy to power the domestic consumers and schools may be promoted as is done in Karnataka.2.1.204 The power generation from wind mills may be enhanced. The power generation potential from Courtrallan falls may be examined for hydro electric power scheme.2.1.205 The Commission may direct TANGEDCO to procure additional power from wind energy generators or alternatively allow to bank the same for a longer duration as third party sale is technically restrictive.2.1.206 Manufacturing & selling of storage electric water heaters may be banned. Instead, solar water heater should be promoted. Similarly, usage of solar water heating system for colleges, big canteens for the hot water usage for cooking purpose may be promoted.2.1.207 There should be no sales tax for LED lighting systems, solar PV panels, and solar water heaters. The concession of tax percentage for domestic appliances should be according to star rating approval.2.1.208 Green houses may be promoted by lowering the power tariffs for such type of houses. Issue-29: Energy Audit/ Demand Side Management / Energy Efficiency2.1.209 TANGEDCO has not been checking the correctness of Current Transformers/Power Transformers and meters provided for the feeders.2.1.210 Under the Energy Conservation Act 2001, power generation, transmission and distribution are designated consumers for energy audit, whereas, TANGEDCO has not undertaken any such audit.37 | P a g e
  43. 43. 2.1.211 TANGEDCO may undertake measures to check loss in transmission/theft and install meters in huts (BPL) so that excess energy consumed over the allotted free units could be checked and properly accounted.2.1.212 TANGEDCO may have a full time Member in charge of DSM and this activity may be given same importance as Generation and Distribution.2.1.213 The Bachat Lamp Yojna may be implemented throughout the State. It is also requested to constitute a high level local experts committee in all the districts for assessing the potential of energy savings and implementing the recommendations in a phased manner.2.1.214 In street lighting and Government offices, incandescent lighting may be replaced with efficient fluorescent lamps (CFLs).2.1.215 Energy efficient pump sets should be distributed to farmers replacing their old pump sets. Issue-30: Time of Day Tariff and Extending evening peak hours2.1.216 It was appealed to the APTEL that the morning peak hours have been set between 6 am and 9 am without any study or statistics. The Regulations in this regard provide for 6:00 am to 9:00 am as the morning peak and 18:00 hours to 21:00 hours as the evening peak. APTEL has accepted this Regulation because the Commission’s Regulations provide for specific timings. However, in TANGEDCO’s petition, the evening peak is sought to be revised to 18:00 hours to 23:00 hours. TANGEDCO has not provided any justification for the change sought for. Therefore, the Commission may maintain the Peak hour from morning 6 am to 9 am and evening 6 pm to 9 pm.2.1.217 Peak hour charges are collected at 20% whereas the incentive for consumption during 10:00 pm to 5:00 am is provided at 5%. The night shift allowance (incentive for night shift consumption) may be increased to 20%.2.1.218 Extending of evening peak hours has been objected by the consumers on the account of: a. There have already been R&C measures in place whereby TANGEDCO has allowed industries to draw only 10% of the eligible quota during the evening peak hours. b. By extending peak hours, TANGEDCO has proposed to levy additional 20% of the tariff for the two additional hours. There has been no proper justification for extending the evening peak hours. c. The rebate for consumption during night hours will be reduced by one hour.38 | P a g e

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