The document discusses the 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions organized by IIT Kanpur from March 1-3, 2021. It covers the historical background of electricity regulation in India, key principles from the Electricity Act 2003, the hybrid framework for tariff setting, components of the Aggregate Revenue Requirement, and principles for determination of power purchase costs, O&M expenses, depreciation, interest costs, and return on equity under multi-year tariff regulations.
The document discusses principles for tariff design in India, focusing on time-of-day (ToD) tariffs. It outlines key tariff principles like economic efficiency, protection of consumers, and sustainability. It also discusses the evolution of tariff regulation in India and the multi-year tariff framework. The document provides details on categorizing costs as controllable and uncontrollable in tariff setting. It explains the methodology for determining ToD tariffs, including identifying peak/off-peak hours and assessing the costs and benefits of shifting demand between time periods.
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014Stephen Labson
Under AEC liberalization, Thailand's energy sector is expected to undergo reforms including third party access to transmission and distribution networks and competition in retail segments. This will require unbundling of tariffs within the electricity supply chain.
The document analyzes tariff setting mechanisms for key parts of Thailand's electricity supply industry under AEC, including EGAT generation, EGAT transmission, MEA/PEA distribution, MEA/PEA retail supply, and EGAT single buyer. It recommends a cost of service approach for each, with a hybrid incentive-based regulation/return on assets model for generation, transmission and distribution, and a cost pass-through model for the single buyer and retail supply. The proposals aim
This document provides information about the 15th National Certification Examination for Energy Managers and Energy Auditors to be held on August 23rd and 24th, 2014. It outlines the eligibility criteria for candidates, details the examination structure and papers, and explains the roles and responsibilities of Certified Energy Managers and Certified Energy Auditors. The examination is administered by the Bureau of Energy Efficiency and National Productivity Council of India to establish national standards and qualifications for energy professionals in India. Passing involves demonstrating proficiency on papers covering general energy management, thermal and electrical utilities, and an open book assessment of energy performance.
This document discusses energy conservation in India. It outlines the Energy Conservation Act of 2001 and the roles of the Bureau of Energy Efficiency and state governments in implementing the Act. It also discusses demand side management (DSM) initiatives to improve energy efficiency and reduce peak demand. Finally, it covers energy service companies (ESCOs) and the performance contracting model where ESCOs conduct energy audits and implement energy conservation measures with guaranteed or shared savings.
The document discusses the development of renewable energy in India through various policies and regulatory frameworks. It outlines the key objectives for introducing the renewable energy certificate (REC) mechanism, including enabling inter-state sale and purchase of renewable energy to help meet renewable purchase obligations across states. The REC mechanism aims to increase flexibility, reduce transaction costs, and create competition among renewable technologies. The summary provides an overview of key aspects of the REC design in India such as eligible sources and entities, obligated entities, and the REC pricing framework.
Umpp(ultra mega power plant and international bidding )Gurparvesh kaur
slide2-background With India being a country of chronic power deficits, the Government of India has planned to provide "power for all" by the end of the Eleventh Five-Year Plan (2007–2012).
This would entail the creation of an additional capacity of at least 100,000 MW by 2012
Ultra Mega Power projects, each with a capacity of 4000 MW or above, are being developed with the aim of bridging this gap
Launched by Ministry of Power in 2005-06
slide3-Central government has taken the initiative under tariff based competitive bidding route using super critical technology on BOO basis
Central Electricity Authority is the technical partner & Power finance corporation is the nodal agency
Separate SPVs were provided for each project to undertake project development activities including bid process management
In addition to Ultra Mega thermal power Projects, Ministry of Power is also taking steps for bringing up large Hydro Projects and large size Transmission Projects on the fast track
slide4-role of ministry - Ministry of Power to be facilitator for coordination with concerned Ministries/ agencies and State Government for ensuring:
Coal block allotment for pithead projects
Environment/ forest clearances
Facilitate acquisition of land
Required support from State Govt. & its agencies
To facilitate proper payment security mechanism with State Govt./ State utilities
slide5-concept Setting up of large projects of 4000 MW at a single location: ensuring economies of scale
Award of projects to developer through tariff based competitive bidding : ensuring cheaper power
Utilization of super critical technology: ensuring higher efficiency and lower CO2 emissions
slide 7-PROVISION OF ELECTRICITY ACT, 2003
Provides that regulatory commissions shall adopt the tariff if it is determined through transparent process of bidding accordance with guidelines issued by central government
Aims at moving away from cost plus approach for tariff determination & expected to encourage private sector investment
slide8-national electricity policy-Aim of this policy is to supply reliable & quality power of specified standard in an efficient manner & at reasonable rates
Policy recognizes that competition will bring significant benefits to consumers
Policy stipulates that all efforts will need to bring the power industry as early as possible in the overall interest of consumers
slide9-Access to Electricity Available for all households in next five years.
Availability of Power Demand to be fully met by 2012.
Shortages to be overcome and spinning reserve to be available.
Per capita availability of electricity to be increased to over 1000 units by 2012.
Minimum lifeline consumption of 1 unit/ household/day as a merit good by year 2012.
Financial Turnaround and Commercial Viability of Electricity Sector
slide 10-electric tariff policy
slide11-20 international bidding comparison with national bidding
Existing supporting regulatory framework For Energy EfficiencyACX
Get up to date with existing and upcoming regulations effecting energy use in Kenya. Learn more on trends in policy making and how this will affect you as a consumer.
Stage 1 of the roadmap focuses on developing standards, protocols, and codes of conduct. Key actions include developing grid interconnection standards, cybersecurity standards, and codes of conduct for customer data and utility-owned distributed energy resources. The objectives are to ensure safe, reliable, and secure grid operations and protect customer data and access to the grid. Challenges include interfacing with national organizations and integrating standards into state regulations.
The document discusses principles for tariff design in India, focusing on time-of-day (ToD) tariffs. It outlines key tariff principles like economic efficiency, protection of consumers, and sustainability. It also discusses the evolution of tariff regulation in India and the multi-year tariff framework. The document provides details on categorizing costs as controllable and uncontrollable in tariff setting. It explains the methodology for determining ToD tariffs, including identifying peak/off-peak hours and assessing the costs and benefits of shifting demand between time periods.
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014Stephen Labson
Under AEC liberalization, Thailand's energy sector is expected to undergo reforms including third party access to transmission and distribution networks and competition in retail segments. This will require unbundling of tariffs within the electricity supply chain.
The document analyzes tariff setting mechanisms for key parts of Thailand's electricity supply industry under AEC, including EGAT generation, EGAT transmission, MEA/PEA distribution, MEA/PEA retail supply, and EGAT single buyer. It recommends a cost of service approach for each, with a hybrid incentive-based regulation/return on assets model for generation, transmission and distribution, and a cost pass-through model for the single buyer and retail supply. The proposals aim
This document provides information about the 15th National Certification Examination for Energy Managers and Energy Auditors to be held on August 23rd and 24th, 2014. It outlines the eligibility criteria for candidates, details the examination structure and papers, and explains the roles and responsibilities of Certified Energy Managers and Certified Energy Auditors. The examination is administered by the Bureau of Energy Efficiency and National Productivity Council of India to establish national standards and qualifications for energy professionals in India. Passing involves demonstrating proficiency on papers covering general energy management, thermal and electrical utilities, and an open book assessment of energy performance.
This document discusses energy conservation in India. It outlines the Energy Conservation Act of 2001 and the roles of the Bureau of Energy Efficiency and state governments in implementing the Act. It also discusses demand side management (DSM) initiatives to improve energy efficiency and reduce peak demand. Finally, it covers energy service companies (ESCOs) and the performance contracting model where ESCOs conduct energy audits and implement energy conservation measures with guaranteed or shared savings.
The document discusses the development of renewable energy in India through various policies and regulatory frameworks. It outlines the key objectives for introducing the renewable energy certificate (REC) mechanism, including enabling inter-state sale and purchase of renewable energy to help meet renewable purchase obligations across states. The REC mechanism aims to increase flexibility, reduce transaction costs, and create competition among renewable technologies. The summary provides an overview of key aspects of the REC design in India such as eligible sources and entities, obligated entities, and the REC pricing framework.
Umpp(ultra mega power plant and international bidding )Gurparvesh kaur
slide2-background With India being a country of chronic power deficits, the Government of India has planned to provide "power for all" by the end of the Eleventh Five-Year Plan (2007–2012).
This would entail the creation of an additional capacity of at least 100,000 MW by 2012
Ultra Mega Power projects, each with a capacity of 4000 MW or above, are being developed with the aim of bridging this gap
Launched by Ministry of Power in 2005-06
slide3-Central government has taken the initiative under tariff based competitive bidding route using super critical technology on BOO basis
Central Electricity Authority is the technical partner & Power finance corporation is the nodal agency
Separate SPVs were provided for each project to undertake project development activities including bid process management
In addition to Ultra Mega thermal power Projects, Ministry of Power is also taking steps for bringing up large Hydro Projects and large size Transmission Projects on the fast track
slide4-role of ministry - Ministry of Power to be facilitator for coordination with concerned Ministries/ agencies and State Government for ensuring:
Coal block allotment for pithead projects
Environment/ forest clearances
Facilitate acquisition of land
Required support from State Govt. & its agencies
To facilitate proper payment security mechanism with State Govt./ State utilities
slide5-concept Setting up of large projects of 4000 MW at a single location: ensuring economies of scale
Award of projects to developer through tariff based competitive bidding : ensuring cheaper power
Utilization of super critical technology: ensuring higher efficiency and lower CO2 emissions
slide 7-PROVISION OF ELECTRICITY ACT, 2003
Provides that regulatory commissions shall adopt the tariff if it is determined through transparent process of bidding accordance with guidelines issued by central government
Aims at moving away from cost plus approach for tariff determination & expected to encourage private sector investment
slide8-national electricity policy-Aim of this policy is to supply reliable & quality power of specified standard in an efficient manner & at reasonable rates
Policy recognizes that competition will bring significant benefits to consumers
Policy stipulates that all efforts will need to bring the power industry as early as possible in the overall interest of consumers
slide9-Access to Electricity Available for all households in next five years.
Availability of Power Demand to be fully met by 2012.
Shortages to be overcome and spinning reserve to be available.
Per capita availability of electricity to be increased to over 1000 units by 2012.
Minimum lifeline consumption of 1 unit/ household/day as a merit good by year 2012.
Financial Turnaround and Commercial Viability of Electricity Sector
slide 10-electric tariff policy
slide11-20 international bidding comparison with national bidding
Existing supporting regulatory framework For Energy EfficiencyACX
Get up to date with existing and upcoming regulations effecting energy use in Kenya. Learn more on trends in policy making and how this will affect you as a consumer.
Stage 1 of the roadmap focuses on developing standards, protocols, and codes of conduct. Key actions include developing grid interconnection standards, cybersecurity standards, and codes of conduct for customer data and utility-owned distributed energy resources. The objectives are to ensure safe, reliable, and secure grid operations and protect customer data and access to the grid. Challenges include interfacing with national organizations and integrating standards into state regulations.
Distributed energy resources (DERs) can provide net benefits to the electric system (e.g., congestion relief) and broader society (e.g., emission reductions). However, despite these advantages, the deployment of high penetrations of DER has proved challenging. Against this backdrop, the electric utility is often singled out as a fundamental barrier to deployment of DER assets. To overcome the perceived electric utility shortcomings, many stakeholders conclude that a completely new model is needed for the electric industry.
ScottMadden disagrees with this assessment and instead believes electric utilities maintain natural advantages that can be leveraged to deploy renewables and DER assets as well or better than some models being offered. In our 51st Phase II Roadmap, ScottMadden proposes leveraging the natural advantages of the electric utility in order to accelerate the deployment and penetration of DER assets.
For more information, please visit www.scottmadden.com.
The document discusses the key principles of multi-year tariff (MYT) framework for electricity regulation in India. Some key points:
- MYT aims to incentivize efficiency, reduce regulatory uncertainty, assist utilities in planning, and introduce efficient tariff design.
- It determines the regulatory framework for a period of time including principles for regulating returns, costs, and ongoing regulation.
- The framework separates controllable and uncontrollable costs and treats them differently. Uncontrollable costs like fuel costs are passed through while utilities share gains/losses from controllable costs.
- Utilities file multi-year applications covering ARR, revenue, capital plans and performance targets for a control period of typically 5
The document discusses India's policies and frameworks for promoting renewable energy. It outlines India's renewable energy targets of installing 175 GW of renewable energy capacity by 2022, including 100 GW of solar and 60 GW of wind. It describes the key bodies involved in renewable energy development and various financial incentives available, such as feed-in tariffs, renewable purchase obligations, and renewable energy certificates. It also summarizes the Electricity Act of 2003, National Electricity Policy, and draft renewable energy policies and frameworks in India aimed at promoting renewable energy growth.
Promotion of Clean Energy, Energy Efficiency and DSM by Maharasthra Electrici...electricitygovernance
The document summarizes initiatives by the Maharashtra Electricity Regulatory Commission (MERC) to promote clean energy, energy efficiency and demand-side management in the state of Maharashtra, India. Key initiatives discussed include issuing tariff orders to promote grid-connected renewable energy, establishing renewable purchase obligations, building capacity for energy efficiency programs, implementing time-of-day tariffs and load management directives, and overcoming challenges like changing utility mindsets and developing the energy efficiency market.
Design & Development of Energy management strategies for the improvement of f...Saiifi Haider
Objectives: To develop and Optimize a control strategy model for the energy
management of 4WD hybrid electric vehicle to improve fuel efficiency using
MATLAB/Simulink and Amesim.
• Outcomes: At the end of Completion of the project, it improved the fuel
efficiency by 15 %. The Control Strategies developed run the Engine on the
optimal line in Engine performance map.
• Application: High Performance and low fuel consuming vehicle.
The ppt gives an overview on recent policy initiatives on Renwable Energy, like cerc\'s new regulation, national solar mission and renewable energy certificate
indianpowerindustry.com is a website dedicated to knowledge building and sharing for professionals of indian power sector.
At indianpowerindustry.com we cover regulatory scenario of power sector in india, tidal energy and wind energy.
The National Mission for Enhanced Energy Efficiency (NMEEE) outlines four new initiatives to promote energy efficiency in India by 2014-15:
1) Perform, Achieve and Trade (PAT) mechanism which sets energy reduction targets for 685 energy-intensive industries and allows trading of energy savings certificates.
2) Market Transformation for Energy Efficiency which promotes efficient appliances and leverages international funds for energy efficiency projects.
3) Energy Efficiency Financing Platform to ensure financing for energy efficiency projects.
4) Framework for Energy Efficient Economic Development which provides incentives and support to public sector organizations to undertake energy efficiency. The total expected investment is Rs. 74,603 crores with estimated fuel savings
Ch 2 energy conservation act and its featuresKartik Mahajan
The Energy Conservation Act of 2001 established the Bureau of Energy Efficiency (BEE) to spearhead energy efficiency initiatives in India. Key features of the act include standards and labeling for appliances, requirements for designated energy intensive industries and buildings to conduct energy audits and appoint energy managers, and the creation of the Central Energy Conservation Fund. The initial phase focuses on promotion and infrastructure, with penalties of Rs. 10,000 per offense taking effect after 5 years. Enforcement involves self-regulation through accredited energy auditors and challenge testing.
PPTTR2024 for public release presentation.pdfMukeshKr19
The document provides an overview of approaches for simplifying the tariff determination process for the electricity sector in India for the period 2024-2029.
It first reviews key indicators in the past such as steady growth in energy demand and peak capacity. It then outlines two possible approaches - Approach 1 involves shifting to a normative tariff regime where capital cost is approved on actual basis but other components are determined through norms. Approach 2 retains the existing hybrid approach but allows more components to be approved on norms.
The document elaborates on Approach 1, proposing that Annual Fixed Cost components be grouped and indexed each year according to inflation, with truing up after each period to refine the indexing factors. It provides details on implementing
1) Northern Rail obtained ISO 50001 certification for its energy management system to meet the requirements of the UK's Energy Savings Opportunity Scheme (ESOS), which mandates energy audits for large enterprises.
2) Certification provides benefits like a systematic approach to energy management, senior management buy-in, focus on energy reduction as a company objective, and continual improvement resulting in reductions in Northern Rail's energy use.
3) The presentation discusses how Northern Rail established energy performance baselines, monitored key energy uses, implemented responsible driving and efficiency programs, and achieved recognition for its sustainability efforts.
tew (10.10.18) - Policy guidelines for distribution network tariffsДенис Киркач
The document discusses policy guidelines for distribution network tariffs in the Energy Community. It covers 6 areas: 1) developing the policy guidelines, 2) selecting an appropriate tariff methodology, 3) recognizing costs based on principles and procedures, 4) allocating connection and network use costs, 5) allocating costs and setting tariffs, and 6) monitoring compliance. The guidelines provide principles and criteria for determining justified costs, allocating costs to tariff elements and customer classes, and incentivizing efficiency through the tariff structure.
This document provides an overview of energy use and conservation efforts in India. It discusses how total primary energy supply in India has increased from 350 Mtoe in 1990 to 580 Mtoe in 2004. The key points are:
- The Energy Conservation Act of 2001 established the Bureau of Energy Efficiency (BEE) to promote energy efficiency across sectors such as industry, transportation, municipal, and more.
- BEE implements programs like standards and labeling for appliances, PAT (Perform, Achieve and Trade) for industries, energy conservation codes for buildings.
- Under the PAT mechanism, specific energy consumption targets are set for designated energy intensive industries and trading of excess energy savings is allowed.
-
The document summarizes new challenges facing electricity distribution and regulation in India. Key challenges include high costs from past capacity additions, financial losses for distribution companies, high transmission and distribution losses, poor supply quality, grid integration of renewables, and safety issues. Suggested solutions discussed include avoiding long-term coal contracts, encouraging large consumer migration to open access, promoting efficiency, deploying agricultural solar feeders, rationalizing tariffs, and increasing professional participation in policy processes.
The document summarizes electricity regulations in India. It discusses the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs), which regulate the electricity sector. It also outlines key aspects of the Electricity Act 2003, including provisions related to power generation, transmission, and distribution. The act aims to increase competition and private sector participation in the electricity industry.
1. The document discusses strategies for setting tariffs for power plants. It explains that tariffs include fixed charges and variable charges based on electricity usage.
2. Regulatory bodies determine tariffs and ensure they efficiently allocate resources, satisfy fairness principles, and generate sufficient revenue for utilities.
3. The document provides examples of how to calculate the cost of electricity generation and the tariff rate based on total generation costs. It describes designing wholesale tariffs through determining revenue requirements and tariff structures.
Utility (Power) Distribution Franchisee Business in India - Basic Information for understanding with focus on "Input & Investment" Model
This presentation is for Education purpose only.
Refit rules guidelines license & Power Purchase AgreementJerry Sakala
The Energy Regulation Board (ERB), with the support of the USAID Trade Hub Southern Africa (SATH) has developed the draft Renewable Energy Feed in Tariffs (REFiT) Regulatory Framework. The REFiT Regulatory Framework was developed in line with REFiT Policy of 2015 developed by the Ministry of Mines Energy and Water Development. The REFiT regulatory framework was presented to stakeholders on Tuesday 22nd September 2015.
The REFiT Regulatory framework outlines the following:
REFiT Indicative Tariffs for solar projects;
Rules and Guidelines for RE projects to be implemented under the REFiT Policy of 2015; and
Guidelines for REFiT Power Purchase Agreements, and application procedures for project developers.
These rules and guidelines are only applicable to small scale renewable energy systems as defined in the REFiT Policy of 2015.
The document provides information about the distribution franchisee project in Bhiwandi, Maharashtra, India. The key points are:
- Torrent Power was selected as the franchisee to operate the distribution system for 10 years, with the goal of reducing losses and improving efficiencies.
- Under the PPP structure, MSEDCL remains the licensee while Torrent Power takes responsibility for distribution, billing, and network upgrades in the franchise area.
- Since taking over in 2007, Torrent Power has invested over 250 crore to improve the network and services. Initial losses were 58% but have reduced significantly in the past 3 years of operations.
Electricity Act 2003, Amendments and way forwardIPPAI
This document summarizes the key points from a presentation on amendments to the Electricity Act of 2003 in India. It discusses slow implementation of reforms, deteriorating finances in the power distribution sector, and recommendations from various committees to address issues like regulatory asset creation, timely tariff revisions, and increasing state subsidies. It also outlines needs like better enforcement of existing regulations, a common framework for state electricity regulators, and measures to reduce power purchase costs.
Distributed energy resources (DERs) can provide net benefits to the electric system (e.g., congestion relief) and broader society (e.g., emission reductions). However, despite these advantages, the deployment of high penetrations of DER has proved challenging. Against this backdrop, the electric utility is often singled out as a fundamental barrier to deployment of DER assets. To overcome the perceived electric utility shortcomings, many stakeholders conclude that a completely new model is needed for the electric industry.
ScottMadden disagrees with this assessment and instead believes electric utilities maintain natural advantages that can be leveraged to deploy renewables and DER assets as well or better than some models being offered. In our 51st Phase II Roadmap, ScottMadden proposes leveraging the natural advantages of the electric utility in order to accelerate the deployment and penetration of DER assets.
For more information, please visit www.scottmadden.com.
The document discusses the key principles of multi-year tariff (MYT) framework for electricity regulation in India. Some key points:
- MYT aims to incentivize efficiency, reduce regulatory uncertainty, assist utilities in planning, and introduce efficient tariff design.
- It determines the regulatory framework for a period of time including principles for regulating returns, costs, and ongoing regulation.
- The framework separates controllable and uncontrollable costs and treats them differently. Uncontrollable costs like fuel costs are passed through while utilities share gains/losses from controllable costs.
- Utilities file multi-year applications covering ARR, revenue, capital plans and performance targets for a control period of typically 5
The document discusses India's policies and frameworks for promoting renewable energy. It outlines India's renewable energy targets of installing 175 GW of renewable energy capacity by 2022, including 100 GW of solar and 60 GW of wind. It describes the key bodies involved in renewable energy development and various financial incentives available, such as feed-in tariffs, renewable purchase obligations, and renewable energy certificates. It also summarizes the Electricity Act of 2003, National Electricity Policy, and draft renewable energy policies and frameworks in India aimed at promoting renewable energy growth.
Promotion of Clean Energy, Energy Efficiency and DSM by Maharasthra Electrici...electricitygovernance
The document summarizes initiatives by the Maharashtra Electricity Regulatory Commission (MERC) to promote clean energy, energy efficiency and demand-side management in the state of Maharashtra, India. Key initiatives discussed include issuing tariff orders to promote grid-connected renewable energy, establishing renewable purchase obligations, building capacity for energy efficiency programs, implementing time-of-day tariffs and load management directives, and overcoming challenges like changing utility mindsets and developing the energy efficiency market.
Design & Development of Energy management strategies for the improvement of f...Saiifi Haider
Objectives: To develop and Optimize a control strategy model for the energy
management of 4WD hybrid electric vehicle to improve fuel efficiency using
MATLAB/Simulink and Amesim.
• Outcomes: At the end of Completion of the project, it improved the fuel
efficiency by 15 %. The Control Strategies developed run the Engine on the
optimal line in Engine performance map.
• Application: High Performance and low fuel consuming vehicle.
The ppt gives an overview on recent policy initiatives on Renwable Energy, like cerc\'s new regulation, national solar mission and renewable energy certificate
indianpowerindustry.com is a website dedicated to knowledge building and sharing for professionals of indian power sector.
At indianpowerindustry.com we cover regulatory scenario of power sector in india, tidal energy and wind energy.
The National Mission for Enhanced Energy Efficiency (NMEEE) outlines four new initiatives to promote energy efficiency in India by 2014-15:
1) Perform, Achieve and Trade (PAT) mechanism which sets energy reduction targets for 685 energy-intensive industries and allows trading of energy savings certificates.
2) Market Transformation for Energy Efficiency which promotes efficient appliances and leverages international funds for energy efficiency projects.
3) Energy Efficiency Financing Platform to ensure financing for energy efficiency projects.
4) Framework for Energy Efficient Economic Development which provides incentives and support to public sector organizations to undertake energy efficiency. The total expected investment is Rs. 74,603 crores with estimated fuel savings
Ch 2 energy conservation act and its featuresKartik Mahajan
The Energy Conservation Act of 2001 established the Bureau of Energy Efficiency (BEE) to spearhead energy efficiency initiatives in India. Key features of the act include standards and labeling for appliances, requirements for designated energy intensive industries and buildings to conduct energy audits and appoint energy managers, and the creation of the Central Energy Conservation Fund. The initial phase focuses on promotion and infrastructure, with penalties of Rs. 10,000 per offense taking effect after 5 years. Enforcement involves self-regulation through accredited energy auditors and challenge testing.
PPTTR2024 for public release presentation.pdfMukeshKr19
The document provides an overview of approaches for simplifying the tariff determination process for the electricity sector in India for the period 2024-2029.
It first reviews key indicators in the past such as steady growth in energy demand and peak capacity. It then outlines two possible approaches - Approach 1 involves shifting to a normative tariff regime where capital cost is approved on actual basis but other components are determined through norms. Approach 2 retains the existing hybrid approach but allows more components to be approved on norms.
The document elaborates on Approach 1, proposing that Annual Fixed Cost components be grouped and indexed each year according to inflation, with truing up after each period to refine the indexing factors. It provides details on implementing
1) Northern Rail obtained ISO 50001 certification for its energy management system to meet the requirements of the UK's Energy Savings Opportunity Scheme (ESOS), which mandates energy audits for large enterprises.
2) Certification provides benefits like a systematic approach to energy management, senior management buy-in, focus on energy reduction as a company objective, and continual improvement resulting in reductions in Northern Rail's energy use.
3) The presentation discusses how Northern Rail established energy performance baselines, monitored key energy uses, implemented responsible driving and efficiency programs, and achieved recognition for its sustainability efforts.
tew (10.10.18) - Policy guidelines for distribution network tariffsДенис Киркач
The document discusses policy guidelines for distribution network tariffs in the Energy Community. It covers 6 areas: 1) developing the policy guidelines, 2) selecting an appropriate tariff methodology, 3) recognizing costs based on principles and procedures, 4) allocating connection and network use costs, 5) allocating costs and setting tariffs, and 6) monitoring compliance. The guidelines provide principles and criteria for determining justified costs, allocating costs to tariff elements and customer classes, and incentivizing efficiency through the tariff structure.
This document provides an overview of energy use and conservation efforts in India. It discusses how total primary energy supply in India has increased from 350 Mtoe in 1990 to 580 Mtoe in 2004. The key points are:
- The Energy Conservation Act of 2001 established the Bureau of Energy Efficiency (BEE) to promote energy efficiency across sectors such as industry, transportation, municipal, and more.
- BEE implements programs like standards and labeling for appliances, PAT (Perform, Achieve and Trade) for industries, energy conservation codes for buildings.
- Under the PAT mechanism, specific energy consumption targets are set for designated energy intensive industries and trading of excess energy savings is allowed.
-
The document summarizes new challenges facing electricity distribution and regulation in India. Key challenges include high costs from past capacity additions, financial losses for distribution companies, high transmission and distribution losses, poor supply quality, grid integration of renewables, and safety issues. Suggested solutions discussed include avoiding long-term coal contracts, encouraging large consumer migration to open access, promoting efficiency, deploying agricultural solar feeders, rationalizing tariffs, and increasing professional participation in policy processes.
The document summarizes electricity regulations in India. It discusses the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs), which regulate the electricity sector. It also outlines key aspects of the Electricity Act 2003, including provisions related to power generation, transmission, and distribution. The act aims to increase competition and private sector participation in the electricity industry.
1. The document discusses strategies for setting tariffs for power plants. It explains that tariffs include fixed charges and variable charges based on electricity usage.
2. Regulatory bodies determine tariffs and ensure they efficiently allocate resources, satisfy fairness principles, and generate sufficient revenue for utilities.
3. The document provides examples of how to calculate the cost of electricity generation and the tariff rate based on total generation costs. It describes designing wholesale tariffs through determining revenue requirements and tariff structures.
Utility (Power) Distribution Franchisee Business in India - Basic Information for understanding with focus on "Input & Investment" Model
This presentation is for Education purpose only.
Refit rules guidelines license & Power Purchase AgreementJerry Sakala
The Energy Regulation Board (ERB), with the support of the USAID Trade Hub Southern Africa (SATH) has developed the draft Renewable Energy Feed in Tariffs (REFiT) Regulatory Framework. The REFiT Regulatory Framework was developed in line with REFiT Policy of 2015 developed by the Ministry of Mines Energy and Water Development. The REFiT regulatory framework was presented to stakeholders on Tuesday 22nd September 2015.
The REFiT Regulatory framework outlines the following:
REFiT Indicative Tariffs for solar projects;
Rules and Guidelines for RE projects to be implemented under the REFiT Policy of 2015; and
Guidelines for REFiT Power Purchase Agreements, and application procedures for project developers.
These rules and guidelines are only applicable to small scale renewable energy systems as defined in the REFiT Policy of 2015.
The document provides information about the distribution franchisee project in Bhiwandi, Maharashtra, India. The key points are:
- Torrent Power was selected as the franchisee to operate the distribution system for 10 years, with the goal of reducing losses and improving efficiencies.
- Under the PPP structure, MSEDCL remains the licensee while Torrent Power takes responsibility for distribution, billing, and network upgrades in the franchise area.
- Since taking over in 2007, Torrent Power has invested over 250 crore to improve the network and services. Initial losses were 58% but have reduced significantly in the past 3 years of operations.
Electricity Act 2003, Amendments and way forwardIPPAI
This document summarizes the key points from a presentation on amendments to the Electricity Act of 2003 in India. It discusses slow implementation of reforms, deteriorating finances in the power distribution sector, and recommendations from various committees to address issues like regulatory asset creation, timely tariff revisions, and increasing state subsidies. It also outlines needs like better enforcement of existing regulations, a common framework for state electricity regulators, and measures to reduce power purchase costs.
Similar to CBP14_PPT_agoenka@deloitte.com.pdf (20)
Harnessing WebAssembly for Real-time Stateless Streaming PipelinesChristina Lin
Traditionally, dealing with real-time data pipelines has involved significant overhead, even for straightforward tasks like data transformation or masking. However, in this talk, we’ll venture into the dynamic realm of WebAssembly (WASM) and discover how it can revolutionize the creation of stateless streaming pipelines within a Kafka (Redpanda) broker. These pipelines are adept at managing low-latency, high-data-volume scenarios.
A review on techniques and modelling methodologies used for checking electrom...nooriasukmaningtyas
The proper function of the integrated circuit (IC) in an inhibiting electromagnetic environment has always been a serious concern throughout the decades of revolution in the world of electronics, from disjunct devices to today’s integrated circuit technology, where billions of transistors are combined on a single chip. The automotive industry and smart vehicles in particular, are confronting design issues such as being prone to electromagnetic interference (EMI). Electronic control devices calculate incorrect outputs because of EMI and sensors give misleading values which can prove fatal in case of automotives. In this paper, the authors have non exhaustively tried to review research work concerned with the investigation of EMI in ICs and prediction of this EMI using various modelling methodologies and measurement setups.
KuberTENes Birthday Bash Guadalajara - K8sGPT first impressionsVictor Morales
K8sGPT is a tool that analyzes and diagnoses Kubernetes clusters. This presentation was used to share the requirements and dependencies to deploy K8sGPT in a local environment.
Introduction- e - waste – definition - sources of e-waste– hazardous substances in e-waste - effects of e-waste on environment and human health- need for e-waste management– e-waste handling rules - waste minimization techniques for managing e-waste – recycling of e-waste - disposal treatment methods of e- waste – mechanism of extraction of precious metal from leaching solution-global Scenario of E-waste – E-waste in India- case studies.
Low power architecture of logic gates using adiabatic techniquesnooriasukmaningtyas
The growing significance of portable systems to limit power consumption in ultra-large-scale-integration chips of very high density, has recently led to rapid and inventive progresses in low-power design. The most effective technique is adiabatic logic circuit design in energy-efficient hardware. This paper presents two adiabatic approaches for the design of low power circuits, modified positive feedback adiabatic logic (modified PFAL) and the other is direct current diode based positive feedback adiabatic logic (DC-DB PFAL). Logic gates are the preliminary components in any digital circuit design. By improving the performance of basic gates, one can improvise the whole system performance. In this paper proposed circuit design of the low power architecture of OR/NOR, AND/NAND, and XOR/XNOR gates are presented using the said approaches and their results are analyzed for powerdissipation, delay, power-delay-product and rise time and compared with the other adiabatic techniques along with the conventional complementary metal oxide semiconductor (CMOS) designs reported in the literature. It has been found that the designs with DC-DB PFAL technique outperform with the percentage improvement of 65% for NOR gate and 7% for NAND gate and 34% for XNOR gate over the modified PFAL techniques at 10 MHz respectively.
Generative AI leverages algorithms to create various forms of content
CBP14_PPT_agoenka@deloitte.com.pdf
1. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur 1
14th Capacity Building Programme for Officers of Electricity
Regulatory Commissions
RegulatoryApproach to Tariff Setting in the Power Sector –
Power Procurement and Renewable Energy
March 1 – 3, 2021 | IIT Kanpur
Organised by
Centre for Energy Regulation
Department of Industrial and Management Engineering
Indian Institute of Technology Kanpur
2. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur 2
Distribution Tariff Process –
Multi-Year Tariff and Truing-up
Name:Amit Goenka
Designation:Associate Director
Organization: Deloitte Touche Tohmatsu India LLP
3. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Historical Background
Electricity (Supply) Act, 1948
• SEB were created under the statute
• State-owned organization with
responsibilities for generation,
transmission and distribution
• SEBs were broadly expected to operate
on commercial principles
• “Cost plus” approach for tariff fixation
with annual adjustments and limiting
profits to “reasonable return”
1948
1998
2003
Electricity Act, 2003
• To encourage investment,
competition and efficiency in
power sector
• Provided for roles and
responsibilities of Regulatory
Commissions
• Guidance for tariff
determination, rationalisation
of electricity tariff, reduction
of cross-subsidy and
promotion of efficiency, etc.
• Recommendation for MYT
• Progressively reflect costs at
adequate & improving
efficiency levels
• Adoption of commercial
principles and consideration of
average cost of supply
Electricity Regulatory
Commissions Act
2006
• Principles for Determination
of Tariff
• Reduction of cross subsidy
+/-20% of average tariff in
next five years
• Time bound introduction of
MYT framework
Tariff Policy
Limited revisions, High cross-subsidies,
revenue gaps, financial sustainability
4. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Electricity Act 2003 – Guiding Principles
Section 61. (Tariff regulations):
The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the
determination of tariff, and in doing so, shall be guided by the following, namely:-
(a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to
generating companies and transmission licensees;
(b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles;
(c) the factors which would encourage competition, efficiency, economical use of the resources, good
performance and optimum investments;
(d) safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in a reasonable
manner;
(e) the principles rewarding efficiency in performance;
(f) multi year tariff principles;
(g) that the tariff progressively reflects the cost of supply of electricity and also, reduces cross-subsidies in
the manner specified by the Appropriate Commission;]
(h) the promotion of co-generation and generation of electricity from renewable sources of energy;
(i) the National Electricity Policy and Tariff Policy:
5. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Electricity Act 2003 – Guiding Principles
Section 62. (Determination of tariff):
………
(3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any
consumer of electricity but may differentiate according to the consumer's load factor, power factor, voltage,
total consumption of electricity during any specified period or the time at which the supply is required or the
geographical position of any area, the nature of supply and the purpose for which the supply is required.
(4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year,
except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be
specified.
(5) The Commission may require a licensee or a generating company to comply with such procedures as may be
specified for calculating the expected revenues from the tariff and charges which he or it is permitted to
recover.
(6) If any licensee or a generating company recovers a price or charge exceeding the tariff determined under
this section, the excess amount shall be recoverable by the person who has paid such price or charge along
with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee.
6. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Hybrid framework for Tariff setting
• Key objective of performance
based regulations is to
appropriately reflect the
performance of power
utilities in consumer tariffs
and push utilities towards
targeted performance levels.
• Tariffs are determined by
regulators in India using a mix
of controllable and
uncontrollable factors
• Cost plus basis for
uncontrollable parameters
like fuel costs, sales etc. and
using targets/ norms for
controllable parameters like
AT&C losses, O&M costs, capex
benchmarking, ROE etc.
Description
Sector
Reform
Stage
Countries
following
this regime
Tariff set based
on historical &
socio-political
trends
Utilities allowed
to recover their
costs plus
returns
Uncontrollable
costs allowed on
Cost Plus basis
while Controllable
costs on Target/
Norm basis
Multiple utilities
exist in market,
competing among
themselves to
supply electricity
Government
Owned/
monopoly
Nepal, Sri Lanka,
Cambodia,
Thailand etc.
Lao PDR,
Myanmar
United Kingdom,
Australia for power
supply business
India
Cost/ tariff for a ideal
utility determined
with recovery linked
to inflation and
performance of utility
Malaysia, Brazil,
Philippines, UK
for networks
business
Historical/
Negotiation
Cost Plus
Hybrid/
MYT
Performance
Based
Regulation
Market
Competition
Tariff
Setting
Agency
Government Government/
Regulator
Regulator -
Regulator
Independent Regulator with single utility,
publically or privately owned
Multiple
competing
utilities
7. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Benefits of Multi-Year Framework
• Provides regulatory Certainty and Accountability (for both Consumers as
well as Licensee)
• Encourages Planning
• Targets are assigned for controllable parameters
• Incentivize efficiency improvement
• Principles for sharing of gain / loss on account of over-achievement / under-
achievement
8. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Key highlights of MYT Regulations
• Prescribes the Control Period – 3 to 5 years
• Provides principles to be applied for parameters and their treatment
• Controllable and Uncontrollable Parameters
• Business Plan/ Capital Investment Plan
• Principles for sharing of Gain/ loss
• Yearly reset of Tariff – Based on variations in uncontrollable parameters and
truing-up for past period
• Mid-term Review of controllable parameters
9. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Basic Framework of MYT Regulations
Beginning of the Control Period
Approval for Business Plan (Power purchase planning, Capital Investment Plan, Financing, O&M targets, etc.)
Identify performance parameters, set efficiency targets, and indicate manner of treatment of various parameters
End of the Control Period
Review performance across key aspects, make proposals for next Control Period
During the Control Period
Apply exogenous variables
and correction factors
Year 1
Review of ARR/ Tariff
Proposals for control
period
Determination of CoS
Tariff deign
methodology &
determination of retail
tariffs
Year 2
APR for Ensuing Year
Determination of CoS
Allowance of
uncontrollable factors
as per regulations/
determination of tariffs
Year X
APR for Ensuing Year
Determination of CoS
Allowance of
uncontrollable factors
as per regulations/
determination of tariffs
Mid-term review could
also be undertaken in
case of 5 year Control
Period for reviewing any
significant changes in
controllable parameters
and account for any
revision in capex
requirements
10. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Controllable and Uncontrollable Parameters
Uncontrollable Factors Controllable Factors
• Variations in capital expenditure on account of time
and/or cost overruns/efficiencies
• Variation in technical and commercial losses
• O&M expenses
• Return on Equity (RoE)
• Depreciation
• Working capital requirements
• Failure to meet SOP
• Interest and finance charges
• Wires Availability and Supply Availability
• Variation in Sales
• Variation in cost of power purchase
• Force Majeure
• Change in Law
• Taxes and Duties
▪ “Uncontrollable factors” comprise of the factors which were beyond the control of, and could not be mitigated by the
Distribution Utility
▪ “Controllable factors” comprise of the factors which are within the control of the Distribution Utility
▪ Aggregate gain or loss to the Distribution Utility on account of uncontrollable factors shall be passed through,
as an adjustment in the tariff of the Distribution Utility
▪ The approved aggregate gain or loss to the Distribution Licensee on account of controllable factors is being
shared between both consumers and distribution utilities as per percentage share specified in state specific
regulations.
11. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Gain/ Loss Sharing Mechanism
▪ Differs across state regulations – broadly the variables are Distribution loss and O&M expenses
▪ Few states provide for sharing of gain between utility and consumer in certain ratio (50:50, 60:40, etc.) as per
regulations
▪ Provision for sharing of losses on account of controllable parameters may or may not be allowed in regulations
DELHI TARIFF REGULATIONS
• Incentive on account of over-achievement of Distribution Loss
Over-achievement < 50%(Previous target – Current Target): 2/3rd to the Consumers and 1/3rd to the DL
Over-achievement > 50%(Previous target – Current Target): 1/3rd to the Consumers and 2/3rd to the DL
• Incentive sharing for sale of surplus power (Actual Sale Rate- Variable Cost)
upto 100% of Avg FC: 2/3rd to the Consumers and 1/3rd to the DL
above 100% of Avg FC: 1/3rd to the Consumers and 2/3rd to the DL
12. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Components of Aggregate Revenue Requirement (ARR)
Power Purchase Cost
O&M Expenses (Employee, R&M and A&G)
Depreciation
Interest & Finance Charges
Interest on Working Capital
Return on Equity
Non-Tariff Income Other Income
AGGREGATE REVENUE REQUIREMENT (ARR)
13. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Power Purchase Cost
• One of the most important aspect (comprising of ~70-80% of overall ARR)
• Obligation of licensee to plan its power procurement from long-term, medium-term and
short-term sources in most efficient manner
• Assessment of availability of power from various sources:
◦ State Generating Stations
◦ Central Generating Stations
◦ Long-term PPAs with IPPs and other sources
◦ RPO Obligation
• Determination of quantum of power to be purchased from various sources in accordance
with the principles of merit order schedule and despatch
• Actual generation and power available (allocation) in the past few years
• Projection for Fixed and Variable charge as per the CERC/SERC determined tariff in case of
central /State generating stations and PPA/competitive rate for IPPs and renewable power
• Based on sales projections and power available from various sources, utility is required to
plan for procurement / disposal of deficit / surplus power
14. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
O&M Expenses
• Comprises of Employee, R&M and A&G expenses
• Each component is projected separately based on historical costs – typically last three years
• Annual increase Provision for inflation based on CPI /WPI
• Additional provisions for one time expenses i.e. arrears on account of pay commission
• Model Tariff Regulations issued by FOR provide for development of norms for O&M expenses for
distribution licensee considering:
• Combination of number of personnel per 1000 consumers and number of personnel per substation along with annual
expenses per personnel for Employee expenses;
• Combination of A&G expense per personnel and A&G expense per 1000 consumers for A&G expenses
• R&M expense as percentage of gross fixed assets for estimation of R&M expenses:
• Norms in the trajectory shall have consideration for productivity/ efficiency improvements
Employee Cost
EMPn = (EMPn-1)* (1+Gn) * (1+
CPIinflation)
R&M Expenses
R&Mn = K*GFA n-1*(1 WPIinflation)
A&G Expense
A&Gn = (A&Gn-1)*(1+WPIinflation) +
Provision
15. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Depreciation
• Depreciation shall be charged from the first year of operation of the asset.
• Depreciation shall be calculated annually on the basis of rate and schedule to be specified by
Commission.
◦ Earlier the depreciation was equally divided over the useful life of asset
◦ Based on CERC Tariff Regulations, higher rate of depreciation over the initial 12 yrs to cover the requirement for
repayment of loan. Balance depreciation is equally divided over balance useful life of the asset
• The residual value of assets shall be considered as 10% and depreciation shall be allowed to a
maximum of 90% of the original cost of the asset.
◦ No depreciation on land (GFA for purpose of depreciation to exclude land)
◦ Few SERCs have also provided for 100% depreciation of IT related assets/ software
• No depreciation to be allowed on assets funded by capital subsidies, consumer contributions or
grants
16. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Interest on Capital Loans
• Actual loan or normative loan, if any, shall be referred as gross normative loan
◦ Equity (deployed in capital projects) in excess of 30% shall be treated as normative loan
• Normative loan outstanding as on 1st April of Control Period shall be computed by reducing the
cumulative repayment approved by the Commission
• Notwithstanding any moratorium period availed by the Distribution Licensee, the repayment of the
loan shall be considered from the first year of the control period as per annual depreciation
allowed
• Repayment for each year of Control period shall be deemed to be equal to the depreciation
allowed for the year
• Rate of interest shall be the weighted average rate of interest (as per the loans outstanding in the
accounts of licensee) calculated on the basis of actual loan portfolio at the beginning of each year
of the control period
• In case of no actual outstanding loans, last available weighted average interest rate to be
considered
17. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Interest on Working Capital
• Interest on working capital is allowed on normative basis irrespective of the
actual loan undertaken by the licensee
• For computing the normative working capital requirement, the following
methodology is prescribed:
◦ Two months equivalent of expected revenue
◦ O&M expenses for one month
◦ Maintenance spares @ 40% of R&M expenses for one month
◦ Less: Security Deposit from consumers
◦ Less: One month power purchase cost
• Interest is allowed considering one year SBI MCLR as on 1st April of the
Control Period plus 300-350 basis points
18. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Reasonable Return
• Return on equity is allowed on actual equity or 30% whichever is lower
• Assets funded by consumer contribution, capital subsidies/grants and corresponding depreciation
shall not form part of the capital base.
• Rate of return allowed by SERCs differs (typically 14-16% post tax)
◦ SERCs have followed the return on equity allowed by CERC on generation and transmission projects with some
additional increase to account for the higher risk
• Additional RoE for quality of service (Supply availability, Wheeling availability – SAIDI/SAIFI)
• Few States, Return on Capital Employed concept is also used where the total Weighted Average
Cost of Capital (WACC) is allowed on the total capital deployed after adjusting for depreciation i.e.
Delhi, Andhra Pradesh
• In case of distribution licensees, income tax is approved as per actual
19. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Reasonable Return
• Return on equity is allowed on actual equity or 30% whichever is lower
• Assets funded by consumer contribution, capital subsidies/grants and corresponding depreciation
shall not form part of the capital base.
• Rate of return allowed by SERCs differs (typically 14-16% post tax)
◦ SERCs have followed the return on equity allowed by CERC on generation and transmission projects with some
additional increase to account for the higher risk
• Additional RoE for quality of service (Supply availability, Wheeling availability – SAIDI/SAIFI)
• Few States, Return on Capital Employed concept is also used where the total Weighted Average
Cost of Capital (WACC) is allowed on the total capital deployed after adjusting for depreciation i.e.
Delhi, Andhra Pradesh
• In case of distribution licensees, income tax is approved as per actual
20. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Revenue Surplus /Gap
• Refers to the difference of ARR (expenses of the
distribution utility for a year) and the total revenue
expected to be recovered during the year from the
consumers
• Total revenue includes
◦ Revenue from sale of power to consumers within the licensee
area (projected sales and existing tariff)
◦ Sale of surplus power
◦ Subsidy available from State Government select categories i.e.
agriculture, BPL, etc.
• Any revenue gap is required to be met through tariff
increase across various categories
• In case of high revenue gap, provision for Regulatory
Asset exists
Aggregate Revenue Requirement
Total Revenue
Revenue Gap /(Surplus)
21. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Tariff Design – Principles in Tariff Policy
8.3 Tariff design: Linkage of tariffs to cost of service
Consumers below poverty line who consume below a specified level, as prescribed in the National Electricity
Policy may receive a special support through cross subsidy. Tariffs for such designated group of consumers
will be at least 50% of the average cost of supply.
For achieving the objective that the tariff progressively reflects the cost of supply of electricity, the Appropriate
Commission would notify a roadmap such that tariffs are brought within ±20% of the average cost of
supply. The road map would also have intermediate milestones, based on the approach of a gradual reduction in
cross subsidy.
Extent of subsidy for different categories of consumers can be decided by the State Government keeping
in view various relevant aspects. But provision of free electricity is not desirable as it encourages wasteful
consumption of electricity. ……………………………The subsidized rates of electricity should be permitted only up to
a pre-identified level of consumption beyond which tariffs reflecting efficient cost of service should be
charged from consumers. If the State Government wants to reimburse even part of this cost of electricity to poor
category of consumers the amount can be paid in cash or any other suitable way. Use of prepaid meters can also
facilitate this transfer of subsidy to such consumers.
Metering of supply to agricultural/rural consumers can be achieved in a consumer friendly way and in
effective manner by management of local distribution in rural areas through commercial arrangement with
franchisees with involvement of panchayat institutions, user associations, cooperative societies etc.
22. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Tariff Design – Principles in Tariff Policy
Two-part tariffs featuring separate fixed and variable charges and time differentiated tariff shall
be introduced on priority for large consumers (say, consumers with demand exceeding 1 MW) within
one year and subsequently for all consumers within a period of five years or such period as may be
specified.
The Appropriate Commission may provide incentives to encourage metering and billing based
on metered tariffs, particularly for consumer categories that are presently unmetered to a large
extent.
23. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Key aspects for consideration in Tariff
• Two-part Tariff for recovery of fixed cost and variable cost
• Tariff to remain within +/-20% of average cost of supply
o Reduction of cross-subsidy
o State Govt to decide on the quantum of subsidy to be provided to specific category/ type of consumers
• Reflection of average cost of supply / voltage level cost of supply
• Socio-economic considerations (50% tariff for BPL)
• Time differential tariff (Peak hour surcharge / night-time concessions)
24. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
CASE STUDY: DETERMINATION OF ARR AND
TARIFF DESIGN
24
25. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Consumer Load, Number and Sales
▪ CAGR for each consumer category based on actual sales for the past 6 years from FY 2012-13 to FY 2017-18 is considered
▪ The Commission has normalized the growth rate, wherever, considered appropriate based on the ground reality, to realistically
estimate the sales figures for a particular category of consumers for each year of the Control Period.
Estimation of Sales
Consumer Category FY 2019-20 FY 2020-21 FY 2021-22 CAGR Considered
Domestic 3137.38 3385.63 3653.51 7.91% (5 year)
Non-Domestic 1325.79 1378.24 1432.77 3.96% (5 year)
Govt. Public Utilities 639.13 675.56 714.08 5.70% (3 year)
Private Tube-wells/ Pumping sets 282.91 294.23 306.00 4.00% (nominal growth rate)
Industrial – LT 315.03 326.05 337.47 5.00% (nominal growth rate) + any
applications from large industries
Industrial – HT 6445.84 6768.14 7106.54
Mixed Load 185.46 189.17 192.95 2.00% (nominal growth rate)
Railway Traction 30.08 31.28 32.53 4.00% (nominal growth rate)
Total 12,361.61 13,048.30 13,775.85
26. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Distribution Loss targets & Energy Balance
▪ Marginal loss reduction to the extent of 0.25% for each year of the Control Period
Approved Distribution Loss target
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Distribution Losses 14.25% 14.00% 13.75%
Energy Balance
Source FY 2019-20 FY 2020-21 FY 2021-22
Total sales with efficiency improvement (MU) 12397.76 13086.34 13815.89
Overall Distribution Loss (%) 14.25% 14.00% 13.75%
Transmission Loss (%) 1.40% 1.40% 1.40%
Energy Input at State periphery (MU) 14,663.31 15,432.73 16,245.87
Total Energy available from firm sources 12,768.47 13,874.84 14,987.90
Power Procurement to meet RPO 291.46 - -
Deficit/(Surplus) 1,603.38 1,557.89 1,257.97
27. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Power Purchase Projection Basis
▪ Monthly MoD is prepared and surplus/deficit with respect to monthly sales is evaluated
▪ Procurement plan for meeting the deficit quantum
▪ Few utilities undertake Banking arrangement for meeting shortfall capacity during specific months i.e. HP
Basis for Projection of Power Procurement
Source Units Projection Cost Projection
UJVN Ltd. Average of actual month-wise gross generation in last 3
years
Approved Tariff of UJVN plants
NHPC, THDC, SJVN Plants Average of actual month-wise gross generation in last 3
years
FC and VC projected separately based on AFC approved for
respective plants
In absence of TO, previous year FC/ VC with reasonable escalation
NTPC Plants Based on average PLF for last three years and allocation
of licensee
Fixed cost projected separately based on AFC approved for
respective plants
Variable cost as per last year with reasonable escalation
IPPs As per PPA capacity and actual/ normative PLF As per PPA/ actual for past year/(s)
RE sources As per PPA with existing plants
Expected commissioning of capacity with appropriate
CUF
As per weighted average rate of procurement for past year
For new stations, as per discovered price/ Commission approved
rate
28. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Power Purchase Projection
Projection of Power Procurement for Control Period
Source FY 2019-20 FY 2020-21 FY 2021-22
Units Total Cost Per Unit Units Total Cost Per Unit Units Total Cost Per Unit
UJVN Ltd. 4259.54 770.19 1.81 4134.45 785.59 1.90 4023.3 801.31 1.99
NHPC, THDC, SJVN Plants 1777.64 556.87 3.13 1777.64 573.57 3.23 1777.64 590.78 3.32
NTPC Plants 2562.77 894.92 3.49 2562.77 930.71 3.63 2562.77 967.95 3.78
IPPs 3192.08 1851.46 5.80 4405.87 2423.22 5.50 5630.08 2871.34 5.10
RE Sources 976.44 510.31 5.23 994.11 482.35 4.85 994.11 501.65 5.05
Total Power Purchase cost 12768.47 4583.75 3.59 13874.84 5195.44 3.74 14987.9 5733.03 3.83
Source FY 2019-20 FY 2020-21 FY 2021-22
Inter-State Transmission Charges (Rs. Cr) 509.73 519.41 529.80
Intra-State Transmission Charges (Rs. Cr) 255.01 259.86 265.05
SLDC Charges (Rs. Cr) 11.35 11.52 11.75
Non-Solar 10.25% 10.25% 10.50%
Solar 7.25% 8.75% 10.50%
Total 17.50% 19.00% 21.00%
Transmission & SLDC Charges
RPO Targets (Solar/Non-Solar)
29. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
O&M Expenses – Employee Cost
▪ Normative employee expenses for each year has been projected based on growth in employees and CPI Inflation
▪ Gn factor considered based on addition of y-o-y manpower as per approved HR Plan
▪ Actual capitalization rate for past year/(s) applied for projecting net employee cost
Projection for Employee Costs
Particulars FY 2019-20 FY 2020-21 FY 2021-22
EMPn-1 422.08 450.10 546.69
Gn 2.20% 16.41% 12.73%
CPI inflation 4.34% 4.34% 4.34%
EMPn = (EMPn-1) x (1+Gn) x (1+CPIinflation) 450.10 546.69 643.02
Capitalisation rate 16.90% 16.90% 16.90%
Less: Employee expenses capitalised 76.08 92.41 108.69
Net Employee expenses 374.02 454.29 534.33
30. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
O&M Expenses – R&M Expense
▪ K factor: Based on actual R&M expenses over average GFA in the last three years
▪ GFA projection based on opening GFA and additional capitalization projected for each year
▪ WPI inflation – average increase of last three years WPI index
Projection for R&M Expense
Particulars FY 2019-20 FY 2020-21 FY 2021-22
K 3.06% 3.06% 3.06%
GFAn-1 4682.71 5259.80 5851.76
WPI inflation 0.33% 0.33% 0.33%
R&Mn = K x (GFAn-1) x (1+WPIinflation) 143.95 161.69 179.88
31. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
O&M Expenses – A&G Expense
▪ Base year A&G expenses considered review of last three years actual A&G expenses vis-à-vis the approved
▪ Projections undertaken considering WPI inflation and capitalization
▪ Additional provision for Data Centre related expense and License fees
Projection for A&G Expense
Particulars FY 2019-20 FY 2020-21 FY 2021-22
A&Gn-1 28.61 28.71 28.81
WPI inflation 0.33% 0.33% 0.33%
A&Gn = A&Gn-1 x (1+WPIinflation) + Provision 28.71 28.81 28.90
Capitalisation rate 59.50% 59.50% 59.50%
Less: A&G expenses Capitalised 17.08 17.14 17.20
Net A&G expenses 11.63 11.67 11.70
Provisioning towards additional Data Centre
expenses
19.36 21.69 24.34
License Fee 3.00 3.25 3.50
Total A&G expenses 33.99 36.61 39.54
32. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Review of Capital Expenditure and Capitalization
Projection for Capital Expenditure & Capitalization (1/2)
Particulars FY 2019-20 FY 2020-21 FY 2021-22
A. Central Schemes
DDUGJY 345.30 - -
IPDS 48.29 299.02 175.17
SAUBHAGYA 64.63 - -
B. Load Growth
New Substation projects 100 80 70
Release of New PTW Connections 33.00 36.30 36.60
Installation of meters for giving new connections 16.50 21.78 29.95
Laying of LT lines 40.25 44.27 48.70
Other Works 9.03 9.38 15.21
C. Loss Reduction
Laying of LT ABC Cable in theft prone areas 156.75 172.43 189.67
Replacement of defective single phase and three
phase meters
17.99 15.16 16.67
Installation of 11kV & 33kV underground cables 32.97 36.27 39.90
Other Works 14.80 10.92 12.01
33. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Review of Capital Expenditure and Capitalization
Projection for Capital Expenditure & Capitalization (2/2)
Particulars FY 2019-20 FY 2020-21 FY 2021-22
D. System Reliability and Safety Improvement
Additional Transformers 109.30 88.77 73.33
LT Protection System on Transformer 30.92 34.01 37.41
Safety measures 8.70 9.57 10.53
Smart Grid projects for industrial areas 5.00 5.00 5.00
E. Creation of infrastructure facilities & miscellaneous works
Procurement of S/S and high value consumer meter
testing and diagnostics equipment
11.85 11.85 11.85
Consumer care centres, Epayment of bills and Cash
collection centres
1.19 1.19 1.19
IT related expenditure 9.17 16.25 11.58
Grand Total 1,055.63 892.16 784.76
34. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Review of Capital Expenditure and Capitalization
Projection for Capital Expenditure & Capitalization
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Capital expenditure 1055.63 892.16 784.76
Capitalisation 577.09 591.96 601.32
▪ For capitalization, average capitalization achieved by utility over past three years have been considered
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Capitalisation 577.09 591.96 601.32
Funding Plan
Debt 269.90 276.85 281.23
Equity 115.67 118.65 120.52
Grant 191.53 196.46 199.57
Financing Plan
▪ Funding has been considered based on actual of past three year funding of various schemes and shall be considered at the time of
truing-up
35. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Depreciation
▪ Weighted average rate of 5.20% applied each year for computation of depreciation
▪ Depreciation during initial 12 years is high in view of loan repayment as per the regulations and remaining depreication is divided
in balance life of the assets
Projection for Depreciation
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Opening GFA 4682.72 5259.80 5851.76
Grants 1924.84 2116.36 2312.82
Depreciable opening GFA 2757.88 3143.44 3538.94
Net addition during the year 385.56 395.50 401.75
Closing GFA 3143.44 3538.94 3940.69
Depreciation rate 5.20% 5.20% 5.20%
Depreciation 143.38 163.43 183.99
36. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Interest on Capital Loans
▪ Repayment considered as equivalent to the approved depreciation for each year
▪ Opening loan as per truing-up of past year and approved financing plan for the Control Period
▪ Interest rate is considered as weighted average rate of interest for existing loans of licensee
Projection for Loans and Interest
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Opening Loan balance 589.77 716.29 829.71
Drawal during the year 269.90 276.85 281.23
Repayment during the year 143.38 163.43 183.99
Closing Loan balance 716.29 829.71 926.95
Interest Rate 11.04% 11.04% 11.04%
Interest on Capital Loans 57.20 70.06 81.44
37. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Return on Equity
▪ Closing equity of previous year and additional equity based on approved capitalization of schemes / works
▪ Return on equity considered as 16.5% post tax
▪ Income Tax is approved as per actual
Projection for Equity and Return on Equity
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Opening Equity 546.12 661.78 780.43
Addition during the year 115.67 118.65 120.52
Closing Equity 661.78 780.43 900.95
Rate of Return 16.50% 16.50% 16.50%
Return on Equity 90.11 109.19 128.77
38. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Interest on Working Capital
▪ Rate of Interest is considered on normative basis and is equal to the SBI MCLR as on 1st April for the respective year + 300 basis
points
Projection for Working Capital Requirement & Interest
Particulars FY 2019-20 FY 2020-21 FY 2021-22
O&M expenses for 1 month 178.37 189.93 202.07
Annual revenues from tariffs and charges 4798.80 4922.77 5050.89
Receivables for two months of revenue from sale of
electricity;
799.80 820.46 841.82
Maintenance spares @ 15% of O&M Expenses for one
month
26.76 28.49 30.31
Less: one-month power purchase 217.12 234.95 256.61
Less: Consumer Security Deposit 315.79 324.00 332.43
Total Working Capital 472.02 479.93 485.15
Rate of Interest on Working Capital 11.45% 11.45% 11.45%
Interest on Working Capital 54.05 54.95 55.55
39. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Non-Tariff Income
▪ Non-tariff income has been projected based on actual non-tariff income in the past three years
▪ Appropriate escalation has been considered as per increase in non-tariff income
▪ Exclusions/inclusion of any one time income has been considered
Projection for Non-tariff Income
Particulars FY 2015-16 FY 2016-17 FY 2017-18
Interest on deposits 65.59 57.09 61.70
Income from staff welfare activities 0.15 0.16 0.14
Rebate/Incentive 45.69 44.07 22.47
Misc receipts 37.14 22.37 15.59
Material Cost Variance 36.78 26.86 20.27
Delayed payment surcharge - 183.92 173.11
Revenue from sale of surplus power outside State - 17.20 -
Wheeling charges recovery - 1.64 16.13
Prior Period Income - 28.06 -0.88
Total 185.35 381.38 308.52
Particulars FY 2019-20 FY 2020-21 FY 2021-22
Projected non-tariff income 250 250 250
40. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Overall ARR and Revenue Surplus /Gap
▪ For FY 2019-20, as increase of ~3% is required for meeting the revenue deficit
Revenue Surplus/Gap
Particulars FY 2019-20 FY 2020-21 FY 2021-22
ARR 6,549.4 6,811.4 7,083.8
Less:
Revenue from sale of power 6218.81 6,467.6 6,726.3
Revenue from sale of surplus power 152.75 136.92 108.68
Total Revenue Gap/ (Surplus) to be
recovered through Tariff
177.83 206.88 248.88
Revenue Gap / (Surplus) as % of Revenue
2.9% 3.2% 3.7%
41. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Allocation of Wheeling and Supply ARR
Particulars Wheeling Supply
Power Purchase Expenses 0% 100%
Inter-state transmission Charges 0% 100%
Intra-state transmission Charges 0% 100%
SLDC Charges 0% 100%
Employee Expenses 70% 30%
R&M Expense 90% 10%
A&G Expense 60% 40%
Interest and Financing Charges 95% 5%
Depreciation 95% 5%
Return on Equity 100% 0%
Non-Tariff Income 0% 100%
▪ Wheeling charge is applicable on generator/ consumers availing open access for sale/ procurement of power
42. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Tariff Revision
▪ Category-wise increase in fixed and variable charge is analyzed in accordance with the provisions of Tariff Policy and Regulations
▪ ABR to be in range of +/-20% of cost of supply
Projection of Revenue based on Approved Tariff
Particulars
Existing Tariff Approved Tariff
Sales
(MU)
Revenue
(Rs. Crore)
ABR
(Rs. /kWh)
Sales (MU) Revenue
(Rs. Crore)
ABR
(Rs. /kWh)
ABR as % of
ACOS
Average
Increase
Domestic 3137 1279.62 4.08 3137.38 1328.67 4.23 80.21% 3.7%
Non-Domestic 1326 772.28 5.83 1325.79 808.34 6.10 115.47% 4.6%
Govt Public
Utilities
639 339.59 5.31 639.13 348.52 5.45 103.28% 2.6%
Private Tube
Wells
283 52.06 1.84 282.91 55.17 1.95 36.93% 6.0%
LT Industry 315 178.13 5.65 315.03 181.50 5.76 109.11% 1.9%
HT Industry 6446 3620.17 5.62 6445.84 3734.76 5.79 109.74% 3.0%
Mixed Load 185 94.32 5.09 185.46 99.30 5.35 101.41% 5.1%
Railway Traction 30 16.78 5.58 30.08 17.01 5.65 107.07% 1.3%
Incremental
Sales
36 18.61 5.14 36.21 19.25 5.32 - 3.5%
Total 12398 6371.56 5.14 12397.83 6592.52 5.32 - 3.5%
43. 14th Capacity Building Programme for Officers of Electricity Regulatory Commissions - March 1 – 3, 2021 | IIT Kanpur
Thank You