…Message Box ( Arial, Font size 18 Bold) Presentation Title ( Arial, Font size 28 ) Date, Venue, etc..( Arial, Font size 18 ) Suggestion/Objections to

…Message Box ( Arial, Font size 18 Bold)

Presentation Title ( Arial, Font size 28 )

Date, Venue, etc..( Arial, Font size 18 )

Suggestion/Objections to R Infra-D

MYT Petition (FY 2012-13 to FY 2015-16)

Case 09 of 2013

06.04.2013


Tariff presented in Public Notice


Tariff presented in Public Notice & MYT Petition

R Infra-D has presented the Energy Charge in Table 11 of the Public Notice

R Infra-D has presented that it would separately recover a Regulatory Asset Charge from

consumers in Table 9 of the Public Notice

The tariff increase presented in Table 12 does not include this Regulatory Asset Charge

and gives a wrong impression to the consumer that the tariff is maintained at the existing

level for almost all the categories

By not indicating the category wise Reg. Asset Charge, the public notice does note correctly represent the tariff increase and the entire purpose of issuing a public notice is defeated

It is submitted that the Hon’ble Commission may direct R Infra-D to reissue the public notice to show the accurate proposed tariff


Suggestions/Objections on R Infra-D’s

MYT Petition


Wheeling Charges

Wheeling Charges are the cost payable to a licensee towards the usage of its wires

network

The changeover consumers of Tata Power have to pay these charges for using the R Infra

network

Wheeling Charge (Rs/kWh) = Wheeling ARR (Rs. Crs.)

Units Wheeled (kWh)

Hence, any increase in the numerator (Wheeling ARR) or decrease in the denominator

(Units wheeled) will lead to higher wheeling charges (Rs./kWh)

R Infra has proposed an 80% increase in wheeling charges by proposing an increased

wheeling ARR and at the same time considering lower units wheeled


Wheeling Charges

The Wheeling ARR is directly impacted by the capitalisation for wires business

Considering the decreasing consumer base and the existing established network of R

Infra, the proposed capex of about Rs. 400 crores every year, is totally unjustified

The Hon’ble Commission may carry out a detailed examination of the same

Wheeling ARR

Unit Wheeled

R Infra has reduced the units wheeled (denominator) in FY 2013-14 by considering

higher switchover sales of about 1,500 MUs, whereas, switchover sales approved by the

Hon’ble Commission in Tata Power’s Business Plan is about 336 MUs

Considering the non-cooperation by R Infra for switchover, the switchover sales

projected are unrealisticMERC may consider reasonable Wheeling ARR and Units Wheeled while computing the Wheeling Charge


Cross Subsidy Surcharge (CSS)

R Infra has proposed an increase in

CSS such that it recovers about

Rs. 468 crores from CSS in FY 2013-

14

National Tariff Policy states that

the CSS should be brought down to

20% of its opening value at a linear

rate

Hon’ble Commission has also held

a similar view in its Order in Case

No. 9 of 2006

MERC may not allow any increase in CSS and propose a road map for reducing existing CSS

Without prejudice to our Appeal in the Supreme Court, the National Tariff Policy states

that CSS should not be so high that it would make competition unviable


Ratio of Sales and no of consumers to Total no of sales & consumers

Residential (0-300) Other Consumers

A look at the no of consumers of Tata Power shows that Tata Power has been making best efforts to welcome both High and Low end consumers alike.In terms of sales also Tata Power has managed to increase the low end consumer sales contribution from 1% (for direct consumers) to 12% (for changeover consumers) within a short span of three years


Regulatory Asset Charge

Changeover consumers, who have terminated relationship with RInfra-D in accordance

with this Hon'ble Commission’s order dated 15th October 2009 cannot be made liable to

bear the burden of R Infra-D’s past revenue gaps and Regulatory Asset Charge cannot be

imposed on these consumers

Without prejudice to the above, it is necessary to identify the benefits derived by the

consumers changed over in a year and accordingly charge the consumer such regulatory

assets for the benefits availed by the consumer

Regulatory asset is not a source of revenue for the distribution licensee and, therefore, it

cannot be recovered from a consumer unless such reasonable nexus is established.


Impact of increase in charges


Increase in Charges for Changeover - Residential

R Infra has proposed a

humungous increase in charges

to be levied to changeover

consumers


Comparison of Tariff - Residential

Tariff Proposed

Tata Power’s Energy Charge is substantially lower for residential consumers


Tariff Comparison for Changeover - Residential

The differential of about 55% is proposed to be reduced to merely about 16% - 19% for

residential consumers consuming less than 300 units.

Further, tariff differential of about 70% for other residential categories translates into a

loss of changeover consumers of about 4% - 10%

Such exorbitant charges shall deter the consumers from exercising their option for supply


Summary


Summary

Issue Suggestion/Objection

Wheeling Charges • Wheeling ARR to be reviewed from the perspective of

high capitalisation

• Consider realistic switchover sales for reduction of units

wheeled

Cross Subsidy Surcharge • No increase in CSS as it anti-competitive

• Roadmap for reduction of existing CSS

Regulatory Asset Charge • Should not be charged

•If at all, it has to be charged a nexus should be established

with the benefits availed by the consumer


Documents

…Message Box ( Arial, Font size 18 Bold) Presentation Title ( Arial, Font size 28 ) Date, Venue, etc..( Arial, Font size 18 ) Suggestion/Objections to