1. Regulatory Challenges in Reforming Indian Power System by Vijay L Sonavane Member, MERC Mumbai NPTI Nagpur, Date: 25 th FEB 2011

2. Reform Agenda… Indian Power System Open access in T&D Parallel Licensing Cross Subsidy Reduction

3. Edison’s Dream “We will make Electricity so cheap that only the rich will burn candles” - Thomas Alva Edison (1847 - 1931) 3

4. History of Indian Power System  18th Nov.1897 first generating station in India (Asia) commissioned at Sidrapong (Darjeeling).  Installed capacity on 15th Aug 1947: 1362 MW.  Electricity: Prime mover for economic development, Industrial & Green Revolution.  Installed capacity :1,67,077 MW (30 /11/2010) AI Energy & Peak Load Shortages: 11.1% & 11.9% Per capita: 734 U/year (FY 08) Target: 1000 U (Mar 12)

5. Indian Power Sector Total No. of consumers: Over 130 million. Revenue: Rs 350,000 CR/year T&D losses: 18 to 62% in various states. 35% of Indians do not have access to Electricity. Use: Industries: 42%, Domestic: 25%, AG: 24%, RLY: 3% As on 31/10/10: 5,08,992 villages electrified ( 85.7%) 1,68,33,575 Nos (85.2%) of AG pumps energized India is 6th Largest electricity utilizing country next to USA, China, Japan, UK & France. By 2014 we will be fourth 5

6. Indian Power System – Challenges in Transition Stage T o Reduce Distribution Losses. Reduce Shortage of power by effective Load Management. Promote and Develop Competition Promote DSM/EE activities. Promote RE Generation 6

7. Highlights of Indian Gen Sector C oal/ Gas/ Diesel: 108,362 MW : (64.9%) Nuclear: 4,560 MW : ( 2.7%) Hydro: 37367 : (22.4%) RES : 16,799 : (10.0%) Total: 1,67,077 MW (MU: 8,30,757 in FY 2010-11) AI PLF: 2009-10: 77.48% Coal: 2009-10: 341 MT Growth: 31/03/85: 42,584 31/03/97: 85,795 MW 31/03/2007: 132,329 MW 31/11/2010: 167,077 MW

8. Renewable Generation RE Source: Wind/ Solar/ Bio-Gas/ Small Hydro (Mini, Micro Run Of River Projects)/ Baggase/ Bio mass: Infirm sources Issues in RE Sources: Site Selection/ Grid Connectivity / Storage Non Schedulable resource/ Low Plant load factor Satara, Maharashtra

9. AI Transmission Network… 400 KV Lines: 102,166 Km, 220 KV Lines: 196,355 KM 400KV S/S: 124,676 MVA 220KV: 196,355 KM 765KV Lines: 3910 KM & S/S: 4500 MVA EHV: 765 KV/ 400KV/ 220 KV/ 132 KV/ 110 KV /(+/-) 500 KV HVDC In 11 th Plan JV/Private Sector Transmission projects (1200KV/765 /400/ 220KV) are being developed During 2009-10, 765KV Seoni-Bina S/s line & second circuit of Bina- Gwailor have been commissioned.

10. Evolution of National Grid State grids ( 1948+) Regional Grids (1970+) National Grid (2003+) What are the advantages of Interconnections? Higher Moment of Inertia (Stable system) Higher Power Number Mumbai (60MW/HZ) /Maharashtra (400MW/HZ)/ Western Region (800 MW/HZ)/ India (2100 MW/HZ)

11. Regional Grids of India Merging of markets along with synchronization of regions NEW Grid South Grid South West North East Northeast Five Regional Grids Five Frequencies October 1991 East and Northeast synchronized March 2003 West synchronized With East & Northeast August 2006 North synchronized With Central Grid Central Grid 11

12. 123456789101112131415161718192021222324 BASE LOAD MW Base Load – Managed through Long Term PPA’s Daily Variations – Managed through 1) Day ahead Power Exchange or 2) UI Balancing Seasonal Variations – Managed through Short Term trades, by 1) Traders, 2) Bilateral Contracts or 3) Banking Arrangements Maharashtra Load Curve and Demand Management 14 12 10 8 6 4 Hours 12

13. Mumbai Load curve as on 10/05/2010 13

14. 14 Functions of Distribution Utilities To Give – Good quality supply / services – Continuous Supply – At an Affordable Cost Issues – We cannot store electricity in bulk – Control switches with consumers – Payment Afterwards

15. Main issues with Distribution System Distribution Losses: Technical ( I Square R) & Non-Technical (Commercial) losses (Theft, faulty/ Slow meters) Solution to Theft: Areal Bunched Conductors (ABC)/ High Voltage Distribution Systems (HVDS) High Distribution Transformer failure rate (13.4%) Consumer Metering: Automated Meter Reading (AMR) system Time of Day (TOD)/ Time of Use (TOU) metering Challenge: Demand Side Management (DSM)/ Energy Conservation

16. Aggregate Revenue Requirement Sr. No. PaerticularsApproved ARR (Rs Cr) % of total ARR 1Power Purchase2421376.3% 2Employee Expenses25918.2% 3A&G and R&M7722.4% 4Depreciation4581.4% 5656 Interest Other Exp 640 661 2.0% 2.1% 7Transmission charges18795.91 7878 Total expenses ROE 31214 533 98.3% 1.7% 9Total ARR31747100.0% 10Non-Tariff Income1450 11ARR from Tariff30297

17. 17 Tariff Setting Consider a Utility purchasing 8000 MUs from Genco – (Rs 1.50 P.U.) & 2000 MUs from Traders (Rs 4.0 P.U.) P.P. Cost = 8000 * 1.5 + 2000 * 4 = 1200 + 800 = Rs. 2000 Cr. for 10,000 MU – i.e. P.U. input cost = Rs 2 / Unit Consider the Utility has Fixed Expenditure = Rs. 800 Cr. – i.e. Total Input Cost = Rs. 2800 Cr. for 10000 MU input – (i.e. Per unit Cost = Rs 2.80)

18. 18 If Distribution loss is 30%,One unit of Input means, 0.7 Unit Sold. i.e. Rs 2.80 have to be recovered from 0.7 Unit sale i.e. P.U. Sale Cost = 2.8 / 0.7 = Rs 4 P.U. at consumer end If the losses are 20%, i.e. 0.8 P.U. sold per unit Input i.e. P.U. Sale Cost = 2.8 / 0.8 = Rs 3.50 If Losses are 40%, i.e. 0.6 unit sold per unit Input P.U Sale Cost = 2.8 / 0.6 = Rs 4.58 Distribution loss is Integral Component of Retail Tariff Distribution loss is Integral Component of Retail Tariff Tariff Setting...

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20. Open Access, Parallel Licensee

21. Electricity Act 2003 Mandate for Reform Promoting competition/ Protecting consumers’ interest / Providing power to All Consolidation of Laws in G/T/D/ Trading Gen is decentralized but Regulatory freedom needed for accessing the market Transmission: Licensed activity. Regulatory framework necessary for competitive & transparent operation

22. Buying/Selling commodity named Electricity….. Which cannot be seen, counted in numbers, or measured in Kilos, liters or meters Which cannot be put into container with forwarding address, on a particular truck taking a particular route, but flows as per laws of Physics Which cannot be stored and whose availability and cost keep changing widely

23. Buying /Selling of Electricity…. Which intermingles with other supplies in an inevitable pool & cannot have an owner’s name tag Buyer has no control over what seller supplies &seller has no control over what buyer draws from the pool & the two may not match all time Thus, it is necessary to have mechanism for commercial handling of mismatches

24. Solution ???? Power trading has to be notional : the buyer has to pay the agreed amount to the supplier for scheduled quantum of power Payment for variations from the schedule through a common mechanism called UI (Unscheduled Interchange)

25. Drawl from CS 2500 MW Gen 10000 MW State Load 12500 MW CS Schedule 2000 MW CS UI 500 MW If System frequency is 49.5 Hz, the State has to pay ar Rs 8.73 PU is Rs.10,18,250 in 15 minutes! (500 MW: Rs. 1.018M) Cost of 12000 MW scheduled generation for 15Min at Rs 3 PU is Rs. 12000/4 X 3 i.e. 90,00,000 in 15 minutes! (12000 MW: Rs.9.0 M) (For only 4% Energy: Price is over 10% : Avoid overdrawing) Concept of Unscheduled Interchange 25

26. UI rate in Paisa 26

27. Electricity Markets More private sector participation needed Need to unbundle supply system & start multi-seller, multi-buyer model Basic need: consensus building in various stake holders Competition: Open access (using existing DL’s wires & paying wheeling charges) Parallel Licensing (New DL to lay the network & give supply) We should see competition as an opportunity & not as a threat

28. Open Access O A means that customer can pick & choose their supplier & any supplier can use existing lines to reach any customer. On payment of wheeling charges, CS surcharge & additional surcharge wherever applicable. (S 42(2), 42 (4)) Open access means enabling Sale/ purchase of energy between two parties utilizing the system of an (in-between) third party & not blocking it on any unreasonable grounds. Implications: Competitors may cherry pick high revenue customers but Cross Subsidy & Stand by issues

29. More clear definition Open access means enabling non-discriminatory Sale/ purchase of electrical energy between two parties utilizing the system of an (in-between) third party & not blocking it on any unreasonable grounds

30. Example of OA Tata Power wants to sell 100 MW to Discom A in Andhra TPC & Discom A agree on terms & conditions of sale TPC to get consent from MSETCL /STU & no objection from SLDC Kalwa Discom A to get consent from APTRANSCO and APSTU and no objection from AP SLDC

31. Example (contd) Both SLDCs after ascertaining transmission adequacy agree to arrange for necessary metering, scheduling, EA, UI settlement All concerned to have a common understanding about treatment/ sharing of transmission losses, levy of transmission/ wheeling charges for use of intra-state & inter-state system

32. OA REGULATIONS OF MERC MERC has formulated two Regulations: Transmission OA 2005 & Distribution OA, 2005 Distribution OA Regulations permit consumers with contract demand >= 1 MVA are eligible to avail OA from by 1st April 2007 Draft for OA Regulations were finalized & uploaded on MERC website for comments by stakeholders & consumers up to 11 th Feb.2011.Final Version is getting ready

33. Categorization of OA Customers Long term Open Access customers OA for a period >= 12 years but not exceeding 25 years Medium term Open Access customers  OA for a period 3 months Short­-term Open Access customer OA for a period up to one month, at a time. “Limited Short term OA customer” means consumer, who has a supply agreement with the DL & avails OA only during pre- scheduled LS period”

34. Open Access: issues Cross subsidy: To compensate full/partial revenue loss of existing DL Apportionment of losses Shortage scenario: load shedding State of Art Energy metering & EA system Despite none of these issues, most countries took over ten years to implement full OA

35. Charges for Open Access Customer Charges payable by OA customers: Transmission charges & Wheeling charges Cross Subsidy Surcharge (CSS) Additional Surcharge (ASC) Standby Support charges (SBSC) Scheduling & System Operation Charges payable to SLDC

36. Why Cross Subsidy Surcharge(CSS)? In current tariff orders, CSS & ASC are identified as NIL from 1 st April 2007 (due to negative values) Study Committee re-examined approach towards CSS & ASC. By identifying a value for CSS & ASC, prospective OA applicant would share burden of Cross Subsidy.

37. Cross Subsidy Surcharge NTP formula S = T – [ C (1+ L / 100) + D ] S: Surcharge T: Tariff payable by relevant category of consumers; C: Weighted average cost of PP of top 5% at the margin excluding liquid fuel based Gen. & renewable power D: Wheeling charge L: % System Losses for applicable voltage level ( In case the formula gives negative value of surcharge, ‘C’ in the formula needs to be redefined (????))

38. Cross subsidy surcharge Surcharge formula (NTP) S = T – [C (1+L/100) + D] C  Costliest long term contracted PP cost excluding liquid fuel generation may be considered Example: If C  Rs.4.26 PU (for costliest LTPP) then S = 67 PS/Unit for IND consumer @ 33KV & above

39. OA CSS IN Various States State Punjab Haryana Uttrakhand Himachal Pradesh Madhya Pradesh Rajasthan Cross Subsidiary in Paise/Unit 0 72 38 20 84 at 66/33 KV and 62 at 132 KV 13

40. Additional Surcharge: Stranded costs OA customer, receiving supply from a person other than DL of his area of supply, shall pay to the DL, an additional surcharge, in addition to wheeling charges & CSS, to meet out the fixed cost of such DL, arising out of his obligation to supply as provided under Section 42(4) of EA 2003. Additional surcharge shall become applicable only if, the obligation of DL in terms of LTPP commitments has been stranded. Fixed costs related to network assets are recovered through wheeling charges.

41. Additional Surcharge (ASC) DL should be required to demonstrate stranded cost, if any, every six months to SERC. On being satisfied, SERC would determine additional surcharge (Ps/KWH) Such ASC should be levied only on new open access applicants. No ASC for captive GEN plant for carrying electricity to destination of his own use.

42. Treatment of S/B Supply (Our Views) In case consumer meets part of his demand through OA & if the supplier defaults to supply power or In case of failure by OA supplier & the consumer meeting all his requirement from DL, Energy settlement would be at highest of the following : UI charge At SMP levied under Intra State ABT mechanism Temporary tariff as permitted in NTP

43. Unscheduled Interchange If an OA consumer is unable to draw scheduled energy due to failure of InSTS &/or network of DL, power injected may be treated as Banked Power & OA consumer may be allowed to draw the same within a period of 3 months with an advance notice of 24 hours to DL. Beyond 3 months, energy would be treated as lapsed.

44. Metering  For OA consumer having load of >= 10 MW & all Gen Stations irrespective of capacity, Special Energy Meters shall be installed by STU or DL as the case may be, for & at the cost of the customer.  SEM can be inspected by any person authorized by STU/ SLDC.  As regards OA consumers having load < 10 MW, the TOD meter shall be installed by DL concerned.  All OA customers shall follow Metering Standards of CEA.

45. States Allowing OA Power Procurement through Power Exchanges Punjab Haryana Uttarakhand Himachal Pradesh Madhya Pradesh Rajasthan Tamil Nadu

46. Volume on Power Exchanges

47. Price on Power Exchange

48. BENEFITS OF OPEN ACCESS Maharashtra is facing peak & energy deficits, even after subsequent reforms programs, the utilities are not unable to bridge the gap and provide quality & reliable power supply to consumers. With OA, consumers are will get alternative sources of power from Market, may be, at a lower cost, & can have assured availability of power on demand Purchase of costly power to meet demand can be avoided, which will actually result in lower PP cost for DL, leading to lower tariffs for remaining utility consumers. However, Revenue of DL will get affected (CSS/ASC/SBC)

49. “ If it is to be It is up to me!!” Thanks!! (Contact me vlsonavane@gmail.com) 49

50. Parallel Distribution Licensee MERC can grant distribution license to more than one persons for distribution through their own networks in same area (6 th proviso of S14) Implications: DL will face Competition in its HT & High Revenue Customers.

51. Determination of tariff Section 62 (1) proviso 1 (d) The appropriate Commission may determine tariff in accordance with provisions of this Act for (a) Generation (b) Transmission (c) Wheeling (d) retail sale of electricity PROVIDED that, in case of distribution of electricity in the same area by two or more DL, the Commission may, for the purpose of promoting competition, among DLs, fix only maximum ceiling of tariff for retail sale of electricity.

52. Competition through parallel licensee SERC to grant License if investment meets GoI stipulated norms (S 14/Proviso 6) Tariff ceiling may be set by Regulator(S 62(1d)) No time frame issue unlike OA: Commencement of operation by time & cost of roll out plan Competition in retail through parallel network is an immediate possibility.

53. Main Difference O A: On incumbent licensee’s Network CSS/SB-Charges/ASC to be decided as the network of incumbent Licensee is used Parallel Licensee: DL will have to lay the network. Ceiling Tariff concept.

54. Case study: TPC-D and R Infra-D M/s Tata Cos had four licenses: 1907/1919/ 1921/ 1953 for sell, supply & distribute power to Bulk as well as retail consumers. GOM on 12/07/2001 transferred these to Tata Power. M/s BSES Ltd had license from 29/05/1926 & 13/05/1926 as DL in suburban Mumbai. R-Infra has taken over BSES. In Mumbai City: Four DLs : TPC-D (bulk Consumers & few Retail) /R-Infra-D (North Mumbai up to Vikhroli /BEST (South Mumbai )/MSEDCL (Mulund/Bhandup)

55. Case study: TPC-D and R Infra-D Hon. Supreme Court Order dated 8 th July 2008 allowing supply of electrical energy in retail by TPC-D utilizing distribution network of the other licensee present in the area. “and allow these three appeals upon holding that under the Terms & Conditions of the licenses held by it ‘Tata Power Co. Ltd. Is entitled to effect supply of electrical energy in retail directly to consumers, whose MD is less than 1000 KVA, apart from its entitlement to supply energy to other licensees for their own purpose, and in bulk, within its area of supply as stipulated in its licenses.”

56. TPC Petition dated 30 th August 2009 R-Infra’s area of supply forms the part of TPC’s area of supply. Both have common areas to the extent of R-Infra’s area of supply. TPC proposes to use R-Infra’s existing Dist network system to ensure smooth Change over. Public Hearing on TPC’s petition 30 th Sept 2009 & 8 th Oct 2009 (136 persons present)

57. Noting the consumer interest & their keenness to exercise the choice of supplier on immediate basis, MERC decided to issue interim order. Order issued on 15 th Oct 2009 as per powers vested under Section 94(2) of EA 2003: “The appropriate Commission shall have powers to pass such interim order in any proceeding, hearing or matter before the Commission, as that Commission may consider appropriate.” No reference has been drawn to Section 42 of EA 2003 & Regulations issued there under, to avoid the applicability of Section 86(1)(a). MERC Order..

58. Some issues about change over Period for change over: shall not exceed 30 days from the date of receipt of complete change over application form by TPC. Past Dues/liabilities & disconnection: As per Section 56 of EA. (Disconnection of supply in default of payment). Migration is not allowed to consumer who is in arrears, without clearing his dues or for a disconnected consumer (in arrears)

59. Shifting : Energy Meter Issues Ownership of Energy Meters: Consumers have a choice to continue with the existing meter of R- Infra/ Opt for meter from TPC / Purchase his own meter from third party Joint testing of meter at the time of migration Meter for changeover consumers to have downloadable capability Common meter specifications for third party meter purchase

60. Meter reading for consumers to be done by TPC. As TPC will be responsible for Billing/ Collection & meter reading is an integral part of bill preparation. TPC will provide meter reading info to R-infra on daily basis along with the date& time TPC shall pay R-Infra wheeling charges within 21 days from date of bills raised on changeover consumers,irrespective of payment of WC by consumers. Shifting of consumers from RIL To TPC

61. Security Deposit: Last month bill will be issued by RIL In case of non-payment of dues, RIL after deducting the SD available with them can disconnect the consumer, if the consumer does not pay the balance amount in time Theft & inspection: Any theft by meter tampering or bypassing meter leads to increased distribution losses for R- Infra and requires R-Infra to pay for this energy, in intra State pool at System Marginal price. To ensure that wheeling DL is able to manage distribution losses, it should have the RIGHT TO INSPECT and READ Consumer METER from time to time for detection & investigation of theft by way of meter tampering or bypassing the meter Security Deposit & Theft detection

62. Retail tariffs (Energy Charges in PS/ per Unit) CategoryConsumptionTPC-DR-Infra-DBEST LT Res0-100105296155 101-300250556330 301-500440916530 >5005301061680 LT Com0-20 KW425795400-760 20-50 KW4801026730 >50 KW5051091755 LT IND0-20KW450776370-595 > 20 KW4601077640-700 HT IND500756505 HT Com485841715

63. Calculation of tariff for Change-over consumers Tariff for Change-Over consumers = Charges based on tariff of supply DL (-) Wheeling Charges of Supply DL [a] (+) Wheeling Charges of wheeling DL [b] (a) HT = 18 Ps/KWH & LT = 37 Ps/KWH (b) HT = 46 Ps/KWH & LT = 88 Ps/KWH  Two DL: Supply (Tata), Wheeling: R-infra About 90,000 Consumers shifted from R-Infra to TPC. Applications received 50,000 (+) MIAL Case: Daily savings Rs 10.5 Lakh Residential (monthly bill in Rs) : Savings :13.5% to 31.2% 

64. Conclusions EA 2003 : Engineers/Economists/Lawyers Engineers: like to operate sophisticated PS Economists: like to work on optimal incentives Lawyers: like to write rules & agreement Power sector reform brings all of them into close contact. But None of them can succeed at their chosen tasks, unless they work together in designing sustainable solutions for the Customers”

65. Important issues in Cross Subsidy Reduction Analysis of various MERC tariff orders: No definite pattern for CS is being followed. CSR plan for each utility, to be prepared, separately. We are in the process of finalizing the Roadmap & simultaneously preparing the draft Regulations.

66. ACOS for various utilities MSEDCL:455 P/U BEST:575 P/U TPC-D:520 P/U R-Infra-D:635 P/U

67. Categories having >1% of total Sale AND /OR >1% of total consumers AND > 1% Revenue UtilityACOS (Ps/Unit) Min ABR (Ps/U) Categories Max ABR (Ps/U) Category MSEDCL455210(46%) LT V- AG 845 (186%) HT-Com BEST575368 (64%) LT- Res 755 (131%) HT- Com R-Infra (*)706524 (74%) LT- I- Res 952 (135%) LT-II- Com TPC-D520395 (76%) LT- I- Res 551 (106%) HT- Com

68. Three step in Cross subsidy Reduction Step I: Inter category Cross subsidy Reduction based on Average cost of supply for utility Step II: Inter category Cross subsidy Reduction based on cost to serve for each category Step III: Intra category (sub-category wise) cross subsidy reduction

69. Tariff Subsidy by GOM (C onsumers to pay at a lesser tariff than approved by MERC) Financial YearAG Consumers (Rs CR) P/L Consumers (Rs CR) Total Subsidy (Rs CR) FY 2005-0613093331642 FY 2006-0712294841713 FY 2008-0913054711776 FY 2009-1013974851882 FY 2010-1118656582523

70. Important issues Categories having Sale <1% of total Sale AND/OR Consumers <1% of total consumers AND Revenue <1% of total Revenue are not considered in study at the initial stage Utilities need to carry out Cost to Serve (Cost of Service) studies for various category of consumers. (Within 24 months) Initially, roadmap based on ACOS (five year road map) After the results of Cost to Serve studies for each category, roadmap modification will be taken up. Finally, intra-category CSR can be taken up

71. CS IN MSEDCL (FY 2010-11) SUBSIDIZING CATEGORIES ACOS= RS.4.55/KWH Total CS = Rs. 5020 Cr in total ARR of Rs 32056 Cr (15.7%) [64% from IND & 31% from COM] CATEGORYSALE MU ABR% of ACOS CS= (ABR- ACOS) CS IN RS. CR % of Total CS LT-COM3814686151% (*)23188118% LT IND4549537118%823737% HT IND25024570125% (*)115287857% HT-COM1620845186% (*)39063213% RLYS1427604133% (*)1492124%

72. CS IN MSEDCL (FY 2010-11) Subsidized Categories [71%to AG & 19% Domestic] CATEGORYSALE MUABR% of ACOS CS= (ABR- ACOS) CS IN RS. CR % CS of TTL CS LT-Res1247837983%7694819% LT PWW59122650% (*)2291353% LT Ag1405721046% (*)245344469% HT Ag49624854% (*)2071022% HT PWW119041792%38451% MPECS74329665% (*)1591182%

73. Other SERCs…. K arnataka: No CSR Road map. ACOS approach in tariff Order. No intra class CSR. Punjab: CSR Regulations in place. ACOS approach followed. Discoms directed to carry out category wise Cost of supply. No mention of intra class CS. Gujrat: CSR road map not issued. Study is being taken up

74. Other SERCs… AP: No specific road map & just trying CSR. COS approach to be used. CS to be brought into +/-20 % level Delhi: Does have specific CSR Road map. But decided to use ACOS approach (No specific mention of intra-class CSR) Orissa: Tariff Policy being followed for deciding allowable level of CS. There is an intra- Discom CS. No specific mention about the method/Road map for CSR. (No mention about Intra-Class CSR)

75. MPERC Notification: 06/10/2010: LT (ABR as % of ACOS of that FY) CategoryFY 08-09FY 09-10FY 10-11FY 11-12 Dom93 9495 Non-Dom152140130120 PWW86909295 IND121 120 AG Met67 7380 St Light100

76. MPERC Notification: 06/10/2010: HT (ABR as % of ACOS of that FY) CategoryFY 08-09FY 09-10FY 10-11FY 11-12 RLY128123 120 Coal mines149140130120 PWW88909295 IND125124122120 Non-IND136131126120 Seasonal179160140120 Bulk-Res97 Bulk supply80859095

77. CS Reduction: Rs 341 CR to be reduced per year ( considering ACOS remains constant for 5 years ) CategoryPresent ABR % Year 1Year 2Year 3Year 4Year 5 LT –COM ABR CSR in Rs Cr 151% 685 145% 660 -107 139% 632 -107 -132% 610 -107 126% 573 -107 120% 546 -107 HT-IND ABR CSR 125% 570 124% 565 -120 123% 560 -120 122% 555 -12 121% 550 -120 120% 546 -120 HT-COM ABR CSR 186% 845 173% 786 -97 160% 727 -97 147% 668 -97 134% 609 -97 120% 545 -97 RLYS ABR CSR 133% 604 130% 590 -16 127% 576 -16 125% 568 -16 122% 554 -16 120% 545 -16

78. CS : Rs 252 CR to be increased per year ( considering ACOS remains constant for 5 years ) CategoryPresent ABR % Year 1Year 2Year 3Year 4Year 5 LT –PWW ABR CSR in Rs Cr 50% 226 56% 253 16 62% 280 16 68% 307 16 74% 334 16 80% 363 17 LT-Ag ABR CSR 46% 210 49% 221 217 53% 239 217 57% 257 217 61% 275 217 65% 293 217 HT-Ag ABR CSR 54% 247 58% 265 9 62% 284 9 66% 302 9 70% 321 9 74% 339 9 MPECSL ABR CSR 65% 295 68% 309 10 71% 322 10 74% 336 10 77% 349 10 80% 363 10

79. Some imp issues…. LT AG tariff: 46% to 65% in 5 years (CSR in 10 years) HT AG tariff: 54% to 74% in 5 years (CSR in 7 years) CSR/ Year: Rs. 340 Cr/year Rise: 252 Cr/year Balance amount to be increased in categories with ABR>80 & <100%, e.g. LT-I Main issues: Fuel prices rising, sales is also rising ACOS = Total ARR/Sale will accordingly change. Category wise sale is also changing, ABR will accordingly go up or down CSR Model needs to take care of these issues & based on the trajectory, the revised tariff needs to be fixed.

80. Conclusions… CS reduction roadmap being prepared & CSR regulations being prepared Final draft under preparation CS Surcharge for each utility will be computed & computations will be sent to stakeholders for comments.

81. Reforming the Existing system “ Many of the important things in the world have been accomplished by the people, who kept on trying, even when there seem to be no hope at all” Dale Carnegie

82. Thank You (vlsonavane@gmail.com) 82