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Overview of tariff revision process under Regulatory Commission

Overview of tariff revision process under Regulatory Commission. Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates November 16-18, 2010, Pune, India Prayas Energy Group www.prayaspune.org/peg , energy@prayaspune.org. Tariff revision. Agenda.

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Overview of tariff revision process under Regulatory Commission

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  1. Overview of tariff revision process under Regulatory Commission Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan DelegatesNovember 16-18, 2010, Pune, IndiaPrayas Energy Groupwww.prayaspune.org/peg, energy@prayaspune.org

  2. Tariff revision Prayas EGI Workshop - Pune 2010

  3. Agenda • Tariff revision process and principles • Tariff proposal and cost components • Tariff structure Prayas EGI Workshop - Pune 2010

  4. Procedure Prayas EGI Workshop - Pune 2010

  5. Tariff principles • Company to recover all reasonable and efficient costs plus allowed profits  Revenue requirement = cost + profit • Reduction of cross-subsidy • No tariff shock to any consumer category • Development considerations • Affordability of small and agriculture consumers Prayas EGI Workshop - Pune 2010

  6. Tariff proposal and cost components • Past performance • Sales & revenue • Costs and expenses • Compliance with directives • Performance norms • Energy losses • Supply quality • Projections for next year/period • Sales • Revenue at current tariff + Non-tariff income • Costs and revenue gap/surplus • Proposed improvements in performance Prayas EGI Workshop - Pune 2010

  7. Cost components for distribution business • Power purchase cost • Transmission charges • Capital expenditure and related costs • Interest on long term loan • Depreciation • Operation and maintenance cost • Employee cost • Administration costs • Repair and maintenance Prayas EGI Workshop - Pune 2010

  8. Generation tariff components • Fixed cost • Loan repayment • Depreciation • Operations and maintenance cost • Variable costs • Fuel related expenses • Linked to performance norms such plant availability, load factor, station heat rates, etc Prayas EGI Workshop - Pune 2010

  9. Basis for cost components • Tariff regulations • Normative debt equity ratio of 70:30 • Fixed return on equity e.g. 16% for distribution and 14% for generation and transmission • Depreciation schedule for various equipments/assets • In-principle clearance mechanism for capital expenditure • Normative interest schedules • Performance norms and standards Prayas EGI Workshop - Pune 2010

  10. Tariff structure Prayas EGI Workshop - Pune 2010

  11. Industry tariffs: fixed and variable charges Prayas EGI Workshop - Pune 2010

  12. Other forms of tariff • Time of day tariff • Fuel adjustment cost Prayas EGI Workshop - Pune 2010

  13. Tariff determination • Art and science • Specific objectives to be achieved • Cost recovery • Company efficiency • Investment attractions • Social considerations: affordability of small and marginalized groups • Increased consumer confidence and increased acceptance of tariff order Prayas EGI Workshop - Pune 2010

  14. Questions and comments! Prayas EGI Workshop - Pune 2010

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