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Expected Revenue from Charges (ERC) & Tariff Formats


             Tariff Petition before KERC              ERC for FY2002              ERC for FY2003          

 

Proposed Electric Tariff for 2002-03  |  Tariff formats   |  Table of Contents 

 
  1. Revenue From Miscellaneous Charges
  2. Income in the form of Wheeling charges, from Fuse call centres, Reconnection fees, Service connection charges and Delayed Payment Charges are shown under this head. KPTCL has estimated these income at Rs 119.13 Cr. for the year FY03, which is at the same level as in FY01 unaudited accounts as shown in Table 27.

    1. Table 27: Non-Tariff Income

      Non Tariff Income in Rs. Cr. FY01 FY02 FY03
      Wheeling charges

      8.08

      8.08

      8.08

      Fuse of calls

      0.09

      0.09

      0.09

      Reconnection Fee

      2.49

      2.49

      2.49

      Public lighting maintenance charges

      0.11

      0.11

      0.11

      Service connection charges

      13.43

      13.43

      13.43

      Delayed payment charges

      76.57

      76.57

      76.57

      Other receipts

      18.36

      18.36

      18.36

      Total

      119.13

      119.13

      119.13

  3. Other Income

Other income for the purpose of calculation of annual revenue requirement includes income on staff loans and advances, income from investments, income from trading, and miscellaneous receipts like rental from staff quarters and recoveries made. The Other income as per unaudited accounts for FY01 amounted to Rs 62.11 Cr. as shown in Table 28, which is maintained for FY03.

Table 28: Other Income

Other Income Details in Rs Cr. FY01 FY02 FY03
Interest on staff loans and advances

1.74

1.74

1.74

Income from Investments

4.37

4.37

4.37

Income from Trading

3.00

3.00

3.00

Miscellaneous Receipts

53.00

53.00

53.00

Total

62.11

62.11

62.11

  1. Annual Revenue Requirement FOR FY 03
  2. KPTCL is allowed to make a rate of return of 3% of the value of Net Fixed Assets existing at the beginning of the year FY03. The revenue shortfall after taking into consideration the allowed Rate of Return of 3% (Rs 91.22 Cr.) is estimated at Rs 3157.59 Cr (Table 29).

    Table 29: Revenue Requirement

    Annual Revenue Requirement (Rs. Cr.) FY03
    Receipts
    Revenue from tariffs

    4621.24

    Revenue from Miscellaneous Charges & Wheeling (Wheeling Charges, MR, RC, DPS)

    119.13

    Total Receipts

    4740.37

    Expenditure
    Power Purchase Expenses

    5,918.58

    R&M Expenses

    110.97

    Employee Expenses

    710.69

    A&G Expenses

    119.87

    Depreciation

    402.08

    Interest & Finance Charges

    623.62

    Less: Expenses capitalized

    (94.38)

    Other Debits (Includes Provision for Bad debts)

    65.73

    Other (Misc.)-net prior period credit

    11.68

    Total Expenses

    7,868.85

    Reasonable Return - Rate of Return at 3% of NFA

    91.22

    Less: Other Income

    62.11

    Annual Revenue Requirement

    7,897.97

    Surplus / (Deficit)

    (3,157.59)

  3. AVERAGE Cost of Supply
  4. The Expenses plus return of KPTCL for FY03 is Rs. 7960.07 Cr. after considering the allowed rate of return. The units sold as detailed in the demand projections (Table 3) is 20775.6 MU and the average cost of supply to retail consumers is Rs 3.83 per unit (

    Table 30

    ).

    Table 30: Cost of Supply for FY03

    Cost of Supply for KPTCL FY03
    1. Expenditure for the financial year (Rs Cr.)

    7,868.84

    2. Reasonable Return (Rs Cr.)

    91.22

    3. Expenses plus Return (Rs Cr.)(2)+(1)

    7,960.07

    4. Units sold to consumers (MU)

    20,775.62

    5. Average Cost Of Supply per Unit (Rs)

    3.83

  5. principles to tariff amendment

Uncovered Deficit

KPTCL had filed an ERC Application for FY03 on 6th December 2001.

The Revised ERC Application for FY03 with the changes in the revenue requirement has been furnished above. The revenue deficit is estimated at Rs 3157.6 Cr for FY03. The revenue subsidy committed by GoK as per the approved FRP in FY03 is Rs 1363 Crores. KPTCL is filing this Tariff Proposal for FY03 to mobilise additional revenue of Rs 1393.4 Cr.

In FY03, the revenue deficit remains at Rs 401 Cr. after taking into account the additional revenue due to revised tariffs and the committed subsidy by GoK. KPTCL had vide letter number: CC (B&R) /4404 dated 06/02/02 (Annexure – 3) requested the state government for additional subsidy to meet the revenue deficit. GoK in its letter no DE 68 PSR 2001 dated 08/02/02 (Annexure – 4) had given its consent for the same. In the same letter government had also mentioned the mechanism for dealing with the cumulative revenue gap till the end of 2001-02.

    1. Tariff Design Principles

Broadly, our approach to the tariff revision is as follows:

  • Average cost of power supply is adopted to ascertain the extent of cross subsidization existing in each consumer category
  • The average cost of power supply vis-ą-vis existing average realization rate of each category of consumer is compared to ascertain the extent of gap in the recovery of costs
  • The tariff of all consumer categories except IP sets and Bhagyajyothi /Kutirjyothi consumers, which are currently below the cost of supply is increased to meet the cost of supply taking into account the existing amount of cross subsidy available
  • Tariff categories have been rationalized - the slabs have been reduced to maximum of three slabs.
  • Since HT industrial / commercial and LT commercial consumers are already paying much above the cost of supply and subsidizing other categories, increase is proposed to cover the cost of inflation. However to encourage increased consumption by these categories tariff rates are rationalized. As such, the principle of " higher the consumption lower the price ’’ is proposed, in order to make captive cost uncompetitive and induce HT consumers to opt for KPTCL power
  •  
  • The Commission explicitly stated in its Tariff Order "Efficiency criterion requires that tariff should be cost based and without any cross-subsidization". While existing tariff structure has been rationalized in the previous tariff order, cross subsidization levels remain high
  •  
  • It is proposed to provide a 15% rebate to the LT - 1(b) Domestic Lighting, LT - 2(a) & (b) All Electric Home and LT - 5 Industrial Installations in Rural areas which are subjected to load shedding of 6 hours or more daily. The rebate will be in force till rostering of power is removed from the rural areas
  • Considering the objections filed by the Coconut and Arecanut farmers it is proposed to bring them under LT – 4(a) instead of LT – 4(d).
  • It is also proposed to introduce a tariff for IP sets installations to recover the significant portion of costs of supply in case of Income Tax assesses / Government servants including employees of corporations / universities aided educational institutions and also for professional tax payers and their families (covering husband, wife and dependent children) which will be categorized under LT – 4(b).
  • KPTCL proposes to encourage metering for LT – 4(a) category of consumers by offering a tariff scheme, which limits the maximum charges payable by the consumers to a flat rate and extends the benefit to consumers if they consume less.
  • It is proposed to increase the LT - 4(a) tariff so as to progressively move towards the cost of supply

  1. Tariff Revision Proposals

LT Category Wise Tariff Revision

The detailed tariff proposal is furnished in Format D-21.

  1. LT 1(a) Bhagyajyothi / Kutirjyothi
  2. The existing tariff for this category of consumers is Rs 10 per installation per month, based on the assumption that these consumers consume about 18 units per month. A recent study made by ISEC reveals that the consumption of these consumers is 27 units per month. At average cost of supply of Rs 3.83 p/u, the cost of supply to these consumers works out to be Rs 103.41 per installation per month in FY03.

    KPTCL proposes to revise the tariff for this category of consumers to Rs 30 per installation per month. The percentage increase for this category of consumers is 200%.

    KPTCL proposes to change the category for the purpose of billing from LT – 1(a) to LT – 1(b) if the consumption of consumers exceeds 18 units per month after installation of meters. Till the meters are installed an additional Rs 20 per extra point will be charged for these consumers in lieu of large-scale misuse of this facility.

  3. LT 1(b) Domestic Lighting
  4. The existing tariff for this category of consumers is below the cost of supply at Rs 2.08 per unit. KPTCL feels that these categories of consumers are economically stable and should not be cross-subsidised. KPTCL in this Application has proposed to increase the average tariff of this category of consumers to Rs 3.91 per unit. The consumers will be billed under LT – 2(a) category if the consumption exceeds 100 units per month.

    Table 31: Proposed Tariff for LT 1(b)

    Existing Tariff Proposed tariff
    Fixed Charges
    First KW

    20

    40

    Additional KW

    20

    20

    Energy Charges
    Cons.< 60 Units/ 2 months

    1.25

    2.85

    Cons.>60, <= 200 units/2 months

    2.05

    3.25

  5. LT 2(a) Domestic Combined Light (AEH)
  6. The Energy Charges for these consumers have been increased in view of bringing them closer to the cost of supply. An increase of 36% is proposed for this category of consumers in FY03. The monthly fixed charges is proposed to increased by Rs 10 per month for each additional kW above the first kW.

    Table 32: Proposed Tariff for LT 2(a)

    Existing Tariff Proposed tariff
    Fixed Charges
    First KW

    60

    60

    Additional KW

    20

    30

    Energy Charges
    Cons.< 100 Units/ month

    2.05

    3.25

    Cons.>100, <= 200 units/month

    2.55

    3.80

    Cons.>200, <= 300 units/month

    3.00

    3.80

    Cons.>300, <= 400 units/month

    3.50

    3.80

    Cons.>400

    4.25

    4.25

  7. LT 3 Commercial
  8. The existing commercial tariff is above the average cost of supply. KPTCL proposes to increase the energy charges for this category of consumers by 12%.

    KPTCL also proposes an increase in the monthly minimum charges for the first kW is from Rs 35 per month to Rs 70 per month.

  9. LT 4 (a) Agriculture
  10. The existing tariff structure for agricultural consumers in Karnataka is very low. A comparison across various states (Table 33) in the country of agricultural tariffs paid by farmers with 5 HP load and availing unmetered supply shows that Karnataka has the lowest agricultural tariffs.

    Table 33: Agricultural Tariff Comparison

    States Effective Date Monthly Bill (Rs)
    Uttar Pradesh

    16th September 2001

    275.00

    Andhra Pradesh

    24th March 2001

    145.83

    Maharashtra

    1st May 2000

    375.00

    Madhya Pradesh

    1st March 1999

    250.00

    Karnataka

    18th December 2000

    125.00

    Haryana

    1st January 2001

    500.00

    Rajasthan

    24th March 2001

    500.00

    The existing tariffs of LT – 4(a) category of consumers is Rs 540 per annum per HP which realises only 42 paisa per unit sold. KPTCL proposes to increase the tariffs of this category to a maximum of Rs 900 per annum per HP for unmetered consumers. Similarly for metered category of consumers the rates proposed is Rs 0.80 per unit subject to minimum of Rs. 540 per HP per annum. The realisation expected from this revision is Rs 0.77 per unit sold to this category.

  11. LT 4 (b) Agriculture (IT Payers & PT Payers)
  12. Currently KPTCL only recovers Rs 0.77 per unit from power sold to this category of consumers. KPTCL proposes to recover the cost of supply of power from this affluent category of consumers. Hence it is proposed by the utility to increase the tariff for this category of consumers at Rs 3.00 per unit subject to a maximum of Rs 2400 per HP per annum.

  13. LT 4 (c) and 4 (d) Agriculture and Private Horticulture
  14. KPTCL proposes to increase the energy charges to Rs 2.25 per unit subject to minimum of Rs 1500 per HP per annum for LT – 4 (c).

    KPTCL proposes to increase the energy charges to Rs 2.50 per unit subject to minimum of Rs 1500 per HP per annum for LT – 4(d).

  15. LT 5 Industrial, Non-Industrial Heating and Motive Power
  16. There has been a request to reduce the Fixed Charges for installed capacity of 67 HP to 100 HP. KPTCL in this Application has proposed to reduce the fixed charges from Rs 100 per HP per month to Rs 80 per HP per month to give relief to small industrialists of the state.

    The overall increase in tariff for these consumers is 9%.

  17. LT 6 Water Supplies, Sewage, Pumping, etc

      KPTCL has proposed to revise the existing rates to meet the significant portion of the cost of supply for these categories of consumers in FY03.

    1. HT Category Wise Tariff Revision
    2. The details of the tariff proposal are furnished in Tariff Format D-21.

    3. HT 1 Public Water Supply and Sewage Pumping Installations
    4. KPTCL has proposed to increase the Energy charges from Rs 2.30 per kWh to Rs 3.25 per kWh to meet the cost of supply in FY03. The demand charges have also been increased from Rs 150/KVA to Rs 180/KVA. The realisation rate is expected to increase from Rs 2.82/unit to Rs 3.83/unit.

    5. HT 2(a) Industrial, Non Industrial and Non Commercial
    6. KPTCL has proposed to introduce a new slab for consumption of more than 2 lakh units per month. This is done to encourage increased consumption by this category of consumers. As such, the principle of " higher the consumption lower the price ’’ is proposed, in order to make captive cost uncompetitive and induce HT consumers to opt for KPTCL power

    7. Table 34: Proposed Tariff for HT 2(a)
    8. Existing Tariff Proposed tariff
      Demand Charges Rs 150/KVA Rs 180/KVA
      Energy Charges
      Cons.< 1 lakh units/ month

      3.25

      3.60

      Cons.>1 lakh units/month, <= 2 lakh units/month

      3.75

      4.00

      Cons.>2 lakh/month

      3.75

      3.80

Similarly for Railways, the increase in energy charges proposed from Rs 3.25 per unit to Rs 3.60 per unit.

An overall increase of 8% is proposed for this category of consumers.

HT 2 (b) Commercial

There exists two consumption slabs for billing this category of consumers - <=2 lakh and > 2 lakh units per month. KPTCL has proposed to introduce a new slab of tariff for consumers whose consumption is greater than 3 lakh units per month.

Table 35: Proposed Tariff for HT 2(b)

    1. Existing Tariff Proposed tariff
      Demand Charges

      Rs 180/KVA

      Rs 180/KVA

      Energy Charges
      Cons.< 2 lakh units/ month

      4.00

      4.10

      Cons.>2 lakh units/month, <= 3 lakh units/month

      4.30

      4.40

      Cons.>3 lakh/month

      4.30

      4.30

The proposed tariff for the consumers consuming power in the third slab is lower than the tariff in the second slab. KPTCL feels these measures incentivises high consumption consumers and would help attract captive consumers back to the grid.

HT 3(a) & 3(b) Agriculture

The consumers in this category are economically stable and have the paying capacity to be billed at the average cost of supply. KPTCL proposes to increase the tariff for this category of consumers to move them towards the cost of supply.

KPTCL proposes to increase the energy charges to Rs 2.25 per unit subject to minimum of Rs 1500 per HP per annum for HT – 3(a)

KPTCL proposes to increase the energy charges to Rs 2.50 per unit subject to minimum of Rs 1500 per HP per annum for HT – 3(b)

HT 4 Rural Electric Cooperative Society

In FY03, the pooled power purchase costs for KPTCL is Rs 1.95 per kWh. KPTCL proposes a tariff of Rs 2.40 per kWh keeping in view the transmission loss and other transmission costs.

HT 5 Residential Apartments and Colonies

  1. KPTCL proposes to increase the Energy charge for this category of consumers from Rs 2.85 per kWh to Rs 3.30 per kWh. This is an increase from the existing tariff level to bring these consumers to the average cost of supply.

  2. Summary of Tariff Revision

The revenue at proposed tariff works out to be Rs 6026.38 cr. The category wise tariff revision proposal is detailed in Table 36.

Table 36: Summary of Tariff Revision across categories

      Tariff Categories Existing Revenue (Rs Cr.) Proposed Revenue (Rs Cr.) Increase %
      Bhagyajyothi- LT - 1(a)

      24.77

      74.30

      200

      Domestic Lighting – LT – 1(b)

      396.26

      745.28

      88

      All Electric Home – LT - 2(a) & (b)

      743.37

      1009.85

      36

      Commercial Lighting – LT – 3

      421.13

      471.33

      12

      IP Sets- LT – 4(a)

      316.58

      527.64

      67

      IP Sets LT – 4(b)

      51.24

      136.65

      167

      IP Sets- LT - 4(c)

      3.12

      5.85

      88

      IP Sets- LT – 4(d)

      9.94

      24.85

      150

      LT Industries- LT – 5

      629.21

      686.46

      9

      LT Water Supply- LT - 6(a)

      69.98

      155.44

      122

      LT Water Supply- LT - 6(b)

      30.38

      46.56

      53

      Public Lighting- LT – 6(a)

      42.46

      118.89

      180

      Public Lighting- LT – 6(b)

      33.46

      58.56

      75

      Temporary Supply – LT - 7

      21.29

      21.29

      0

      HT Water Supply – HT - 1

      185.13

      251.00

      36

      HT Industries- HT - 2(a)

      1,299.48

      1400.31

      8

      Railway Traction- HT – 2(a)

      13.96

      15.14

      8

      HT Commercial- HT - 2b

      255.30

      259.69

      2

      HT Irrigation- HT - 3(a)

      6.41

      12.03

      88

      HT Irrigation- HT - 3(b)

      0.01

      0.02

      78

      HT Bulk Supply- HT – 4

      9.30

      38.27

      312

      Residential Apartments - HT - 5

      20.40

      23.07

      13

      Other states

      0.00

      0.00

      0

      MUSS

      38.05

      38.05

      0

      Less Rural Rebate

      0.00

      105.91

      Total

      4621.24

      6014.60

      30.15%

  1. Additional Revenue from Tariff Hike

The revenue in FY03 from existing tariffs is Rs 4621.24 Cr. with LT – 4(a) tariff at Rs 540 per HP per annum. The tariff proposal applicable for full year of FY03 is estimated to mobilise Rs 6014.60 Cr as revenue from sale of power.

The net additional revenue generated after considering the rural rebate for FY03 of Rs 105.91 Cr is estimated at Rs 1393.4 Cr. The percentage hike proposed by KPTCL is 30.15% in this Tariff Application as shown in Table 36.

  1. Fixed Cost Coverage

The fixed cost burden (5.11) for KPTCL is 32.8 % of the total expenditure of Rs 7960.07 at Rs 2614.78 Cr. The fixed cost recovered from the existing tariff by means of Fixed Charges from consumers amount to Rs 1149.3 Cr. out total revenue receipts of Rs 4621.24 Cr. The fixed cost charged to consumers in the existing tariffs recover only 24.87 % of the fixed cost burden of KPTCL in FY03

With the proposed tariffs, KPTCL proposes to recover Rs 1819.59 Cr. out of Rs 6014.60 Cr. through fixed charges.

The fixed cost burden envisaged to be recovered from consumers is 69.58% through the proposed fixed charges from this Tariff Application.

 

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