Power Shortage Mitigation Strategy – Pune Model

1. Power Shortage Mitigation Strategy – Pune Model Forum of Indian Regulation (FOIR) Khajuraho Pradeep Bhargava 25th September,2008

2. Power Shortage Mitigation Strategy – Pune Model 1. Motivation / Compulsion For The CII Initiative • Maharashtra Had been Promising Its Citizens Power Shortage “For Next 3 – 5 Years”. • Neither Centre Nor Neighboring States Had Surplus Energy to Share on a Sustained Basis • Load Shedding AReality – We only Speculate “How Much” ? • Legal Framework / Political Compulsions Rightly demanded UniformTreatment for Pune also. • So CII, Pune Evolved A Solution with our Enlightened Regulator (MERC) which ensured Relief with …. • Zero Help From the Governments • Financial Pass Thru for State Utility (MSEDC) • No Extra Demand Or Diversion from the Grid • No “Out of Pocket” for Industry. • Reasonable charge recovery from the Beneficiaries (Citizens of Pune) No Load Shedding In Urban Pune After Years Of Hardships – Almost AMiracle

3. Power Shortage Mitigation Strategy – Pune Model • 2. How The Pune Model Worked Before After MSEB Grid MSEB Grid Shortfall – 100 MW Load Shedding Shortfall – Nil Zero Load Shedding 650 MW 650 MW 200 MW Pune Load 750 MW 100 MW 550 MW 550 MW Self Generation Consumption 100 MW Extra Cost (CPP) @ Rs. 6 Per Unit Rs. 10 Crore / Month Recovery (Citizens) 230 Mn Unit / Month Rs. 0.42 / Unit Financials Self Contained, Participative Model – Win Win

4. Power Shortage Mitigation Strategy – Pune Model 3. Pune Model Revisited – Birth of DGBDF – Model 2 • Pune operated with Zero Load Shedding from June’06 to March’08 • With Pune Load increasing and Maharashtra Energy Gap Widening, the expectation of “Marginal Power” to mitigate Load Shedding went up • From 540 MW hr/day – (90MW x 6 hrs) • To 1800 MW hr/day – (150MW x 12 hrs) • This was not workable with DG – and MSEDC further increased the expectation to 300MW x 12 hrs – 3600 MW hr/day (being challenged) • Once again, through MERC, concept ofDistributed Generation Based Distribution Franchisee (DGBDF) came into being • Tata Power Company (TPC) became the Interim Franchisee for Pune (as well as Thane/Navi Mumbai) with Tata Power Trading mobilizing Power. • In Operation since April,08 – with “dedicated” power being brought into Maharashtra grid for Pune/Thane and recovery of Reliability charge. Landmark Decision by MERC– Can be theFrameworkfor All State, For Specific Communities

5. Power Shortage Mitigation Strategy – Pune Model 4. Challenges (Conceptual / Practical) Faced During Implementation • Why Indulge – Sovereign Responsibility of Stateto provide Services. • “Pseudo” Socialism – What about “Have Nots” !!! • What is the “Hidden Agenda” of Industry ?? • Give me a “Long Term Solution” – Choose to Ignore Short Term • “Public Posturing” is at Premium over “Private Conviction”. • Where Does Final Responsibility rest in this “Multi Star” Show. • Continuity/ Consistency of a Voluntary Gesture. Do We“Give Up”Because of Potholes / Speed Breakers– Or “Give To”SocietyComfort / Dignity

6. Power Shortage Mitigation Strategy – Pune Model 5. What Has Been Unleashed / Learnt In This Experience • Raising / Analysing Problems Is Easy – Become part of the Solution. • Enhance Mental Bandwidth – Most Barriers Are Self Imposed. • No Free Lunches – Pay For A Facility – And then Demand its Availability • Truly A Public Private Partnership – Regulator / Citizens / Industry / Service Provider • What Better CSR – Industry Using Its Assets to Bring “Light” to 4 Mn Citizens. • There are few things Governments Cant / Wont Do…..Citizen Power Can. • “Fringe Benefit” – Lower T & D Losses / Cleaner Environment / Encourages Conservation. Having A Good Idea Is Not Good Enough – Success DemandsTenacity & Team Work

7. Power Shortage Mitigation Strategy – Pune Model 6. Road Ahead • Regulator’s Blessings, Citizen’s Engagement, Utility Participation vital for such a Model • This is perhaps the Only Short Term Option (1 -3 years) available for Communities in India. “Power for ALL” is at best a 2012 Agenda. • We need to continue our efforts on all Other Fronts – Generation, Conservation, Non-Conventional Energy, Reducing T & D etc. etc… • Need to Identify Areas which have :- • Reasonable ATC Losses • Have Citizens who are willing to pay for Facility • Industrial Base (if CPP Basis to be used) • SERCs to take a Proactive Role – CII/ Citizen Bodies will Initiate Load Shedding is Not the Answer to Demand Management – Offer Choice to Those Who Can Afford

8. Thank You

9. Power Shortage Mitigation Strategy – Pune Model BACK UP A) Basis :Average Load Shedding for Pune Urban 600 MW Hr / Day (as per Protocol agreed by MERC) 216 Mn Units / year B) CPP Cost : Variable Cost of CPP Generation HSD Rs. 11.04 / unit (Fuel, consumables) LDO Rs. 8.24 / unit Variable Energy Tariff of MSEDC to Industry Rs. 4.61 / unit (including FCA, Peak Hour Tariff etc.) Amount to be Reimbursed to stay Cost Neutral HSD Rs. 6.43 / unit LDO Rs.3.63 / unit C) Total Cost to be Reimbursed to CPPs Rs. 129 crore / year (85% HSD, 15% LDO) D) Total Energy Units sold by MSEDC in Pune (Urban) 3066 Mn Units (excluding domestic consumers upto 300 units/month) E) Reliability Charge for Consumers of Pune Urban Rs. 0.42 / unit (to recover cost payouts to CPPs)