Public Objections and Comments on Board's Petition

5.1 Public Hearing 

The Commission gave wide publicity to the tariff proposal submitted by Board and invited the public objections/comments. Detailed written comments, suggestions and objections from 1526 individuals and representatives of various organizations (Annexure I) were received by the Commission. The Commission is grateful to all of them for the time and effort they have put in studying the documents and offering their valuable comments and suggestions. Category wise number of objections from different regions are as follows: 

The Commission received valuable suggestions on number of issues during public hearings. Besides a large number of general observations on improvement of efficiency of the Board, realization of the outstanding dues  (consequently minimising the need for enhancement of tariff), several observations were made which will have some bearing on tariff determination. These have been dealt with in the following paragraphs.

5.2   General and Legal Issues

 5.2.1        There has been a strong opposition to the increase of tariff proposal of the Board because of irregular supply of power, poor quality of power, theft / pilferage of energy, inability to realize outstanding dues and the inefficiency in the operations of the Board.  Public also brought to notice of the Commission that the MPSEB has not complied with the directives of the Commission given by it in the last tariff order dated 26th September 2001.
Commission has taken a note of non-compliance of its directives very seriously and a separate chapter on various points (Chapter 3) has been presented in this order.

5.2.2        It was suggested by many respondents that the �General Conditions of Supply� are totally loaded in favour of MPSEB and the Commission should reframe the agreements to make it more balanced.

The Commission proposes to come out with a distribution and supply code in which a chapter on  �General Condition of Supply� and �Schedule of Miscellaneous Charges� will also be included.

5.2.3        Several references were made to loan agreement entered into by MPSEB/ Government of Madhya Pradesh with Asian Development Bank (ADB). It was felt that the revision of tariff by the commission is on the directions of ADB because of which the   interests of consumers will be affected adversely. It was suggested that in future all such loan agreements (of very high amount and the details of new projects proposed to be taken up by the Board as a consequence to taking of such loans should be presented before the Commission.

Commission would like to clarify that the tariff review is one of its normal functions. It is not based on the directions of ADB. As regards the conditional ties of the loan agreement of ADB, the same would be gone into. The Board is directed to keep the commission appraised of the details in future and any default in doing so will be viewed seriously.

5.2.4        Several consumer� voiced their opinion on linking the tariff to the paying capacity of the consumers.  It was contended that some particular group of consumers were under severe financial stress and uniform tariff even within one category (as proposed by the Board) should be re-looked into by the Commission and concessions offered going by the paying capacity of the consumers. 

Commission would like to honour the sentiments of the public as far as it is possible to do so keeping in mind the provisions of M.P. Vidyut Sudhar Adhiniyam 2000.

5.2.5        The respondents generally felt that that the publicity given to the Hearing process was inadequate and the communication left a lot to be desired. One suggestion was that the dates for Public hearings be intimated along with the Electricity Bill and a gist of the petition be also made available along with the bill itself so that the information could reach to all the consumers.

Commission has publicized about the tariff proposal of the board and the schedule of public hearing through newspapers. Publicity through electricity bills may not be an effective method as bills, which are printed at the divisional level are not being printed at the same time for all consumers.  

5.2.6        The Respondents demanded that the Petition be made available in totality (all the volumes submitted by MPSEB), and it should be translated completely in Hindi. Besides, for very poor consumers, a summary of the petition should be available at District level free of cost and the Division Level offices should keep a copy of the complete petition for public reference.

It must be clarified that the gist of the petition was published in the newspapers and the copy of the detailed petition was made available on payment basis by the Board. If the copies of the petition are made available free of cost, the Board may incur higher costs and it would have no option but to charge the associated costs from the consumers of electricity in their bills, which would not be a preferred option. MPSEB may however make sure that there is availability of petition at division levels.

5.2.7        The respondents were agitated over the derogatory remarks made by the petitioner on page 18 of the petition and demanded the Commission to record suitable comments in its Tariff Order for MPSEB.

Commission directs the Board to be careful in use of language in future so that the feelings of public are not hurt. 

5.3  Issues Related to Tariff 

Agricultural Tariff

5.3.1        Average cost of supply of agricultural consumers comes to Rs. 8/- per unit instead of Rs. 5.15 per unit as indicated by the Board and industry should not be made to cross subsidize.

5.3.2        Shri P.L.Nene representing 4-5 Associations of HT Industries of Indore/Pithampur has mentioned that the average cost of supply of agricultural consumers is about Rs. 8/- per unit and the industries should not be made to cross-subsidize agricultural consumers. MPSEB has submitted that the cost of supply at LT end for the year 2002-03 works out to 515 per unit. In following years, it would be possible to work out the cost for various categories of LT consumers also.  As regards cross subsidization of agricultural consumes by industries, it may be mentioned that M.P. Vidyut Sudhar Adhiniyam, 2000 provides that the tariff should be determined in a manner that the existing cross subsidy is progressively reduced so that within a period of 5 years, the tariff to any class of consumer shall reflect minimum of 75% of the cost of supply to that category.  MPSEB clarified that the cross subsidization is to be reduced progressively and accordingly the existing agricultural tariff of about 83 per unit has been proposed to be increased by about 114% to 177 per unit (with Govt. subsidy of about Rs.400 crs.).  Without government subsidy, rate has been proposed as 260 per unit, which would be about 50% of the cost of supply against existing rate of 83 per unit, which is only 16% of cost of supply. Thus, effort has been made by the Board to increase cheaper agriculture tariff so that the cross subsidization by other categories is reduced.

5.3.3        Concessional tariff to agricultural consumers may only be permitted if the State Govt. is ready to subsidize this category.  The agriculture sector may not be cross subsidized from other   categories of consumers. 

5.3.4        Shri P.L.Nene on behalf of MP Electrical Consumers Society and other Associations of HT consumers has suggested that concessional tariff to agricultural consumers may only be permitted if the State Govt. is ready to subsidize this category and the agriculture sector may not be cross subsidized from other categories of consumers. The Board is of the view that the concessional tariff to agricultural consumers may be permitted by either the State Govt. subsidy to this category or by cross subsidy by other categories of consumers. The extent of cross subsidization is to be decided by the Hon�ble MPERC and the extent of subsidy to be given to the agricultural consumes is to be decided by the State Govt. 

5.3.5        The present agriculture tariff is already high and should not be increased further. 

5.3.6        Shri Ambaram Mukati, Adhyaksh, Zila  Upbhokta Jan Kalyan Parishad, Barwani has mentioned that the present agriculture tariff is already high and should not   be increased further. MPSEB has responded that the present cost at LT is 515 p/u and the existing average tariff for agricultural consumers is about 83 p/u, which is only 16% of the cost of supply.  Therefore, MPSEB clarified that it is not true that the present agricultural tariff is very high. As per M.P. Vidyut Sudhar Adhiniyam, 2000, the tariff for various categories of consumers are to be determined in a manner so that the extent of subsidy is progressively reduced within a period of 5 years and the tariff to any class of consumer reflects atleast 75% of the cost to that category. 

5.3.7        There should be option of metered or flat rate tariff to agricultural consumers. 

5.3.8        During public hearing at Indore, some of the agricultural consumers have mentioned that metered supply should not be compulsory and there should be option of metered or flat rate tariff for agricultural consumers. MPSEB has submitted that the flat rate tariff is optional which is at the option of agricultural consumers. The Govt. of M.P. has declared a policy for providing meters for all un-metered connections including agricultural consumers. However, the  Commission vide its order of 26.9.2001, has directed that un-metered agricultural connections be metered within three years from the date of order and no new connection shall be given to any consumer without meter. In view of above all new agricultural consumers are to be compulsorily given supply under metered supply option. However, the existing consumers may continue to avail supply at flat rate tariffs till meters are installed by the Board at their agricultural installations.

5.3.9        The proposed agricultural tariff on the basis of crop may not be considered due to various flaws in such a proposal.

5.3.10    During public hearing at various places some of the agricultural consumers have expressed their views that the proposed agricultural tariff on the basis of crop may not be considered due to various flaws in such a proposal. In this connection, MPSEB has responded that the crop-wise pattern of flat rate agricultural tariff was proposed only to facilitate the agricultural consumers so that the consumers who are using one or two crops are not compelled to pay flat rate tariff for the months they are not using the electricity.  If the agricultural consumers are not in favour of crop-wise pattern and the Hon�ble Commission also finds its implementation difficult then the existing pattern of flat rate agricultural tariff i.e. flat rate per HP/month for different agricultural rates could continue till the installations are meterized.

5.3.11    Assessment of consumption by agriculture consumers: An agriculture scientists may be deputed to study and average energy consumption to irrigate one hectare of land for different crops and based on this, flat rate and minimum charges may be fixed by the Commission. 

5.3.12    As regards study of agriculture consumption pattern through agriculture scientists, it must be clarified that for proper assessment of energy consumed by the agricultural consumers situated at different geographical locations of Madhya Pradesh and on the basis of different crops being cultivated, an exercise / sample survey has already been conducted on about 1275 agricultural consumers. As clarified by MPSEB, efforts have been made to analyse the consumption in each geographical area based on the source of water i.e. tube well, open well, river, nalah / nahar etc. and crop produced. Further the field officers have been directed to enlarge the sample size for accurate assessment of average energy consumption pattern of agricultural consumers.

5.3.13    Tariff for nursery and horticulture: The nursery and horticulture may be retained in agriculture categories. 

5.3.14    Presently, the average tariff applicable for agricultural consumers works out to about 83 p/u as against the cost of supply of about 515 p/u at LT.  Agricultural sector is being given a highly subsidized rate, as this sector is the basic food provider to the society and GoMP is subsidizing the sector. As per MPSEB, the nurseries and horticultures work on commercial principles and at times the motive of earning a large profit is also there.

Domestic Tariff

 5.3.15    M.P. is the third largest state of the country. Per capita income is about Rs. 493/- p.m. (20% lesser than the all India average) and, therefore, the proposed tariff hike should be as per paying capacity of the average consumer.

5.3.16    The paying capacity of average consumer cannot be considered for fixing various rates for different categories of consumers. Even in one class of domestic consumer, there are affluent consumers who are using electricity more than 500 units/month and there are small consumers who are using electricity only upto 50 units/month.

5.3.17    It was argued by some of the consumers that domestic tariff should be separate for urban and rural consumers.

5.3.18    This aspect has been accepted in principle and a rebate is being given in the monthly fixed charge for domestic category of consumers in rural areas.

5.3.19    The proposal of charging minimum units on domestic connections above 10 KW may not be considered.

5.3.20    As regards the proposal of charging minimum units on domestic connections above 10 KW, the Board has proposed a minimum charge of Rs.450/- per connection per month for the domestic consumers availing supply at 3 phase and having connected load upto 10 KW. It is felt by MPSEB that the aforesaid amount of tariff minimum charge will be inappropriate for the consumers having connected load of more than 10 KW since the consumption of this class of domestic consumers would be on higher side considering their living standard and paying capacity and there is shortage of power. The consumption of only 45 units per KW appears to be reasonable to MPSEB.

Tariff for Steel Industry

5.3.21    As the Steel Industry has poor load factor, maximum concession should be given to this category. The tariff minimum to steel industry having induction furnace should be made applicable similar to that of industry with arc furnace.

5.3.22    In comparison to other HT industries, already a cheaper tariff (without demand charges) is prevalent for Mini Steel Plants with rolling mills / sponge iron plants in the same premises.  Further, a concession of 4% to 8% in energy charges has also been offered to mini steel plants for having consumption over certain load factors. As the consumption of induction furnace is comparatively higher, the provisions of tariff minimum for mini steel plants having induction furnaces equivalent to 150 units per KVA of the contract demand for a period of 7 months i.e. from April to Oct. each year has been made. However, during Rabi season when agricultural load is predominantly high, the minimum monthly consumption of only 100 units per KVA of contract demand is applicable for mini steel plants using arc furnace or induction furnace.

5.3.23    Tariff for Ferro-alloy industry is very high as compared to other Sates.

5.3.24    The representative of M/s Manganese Ore India Ltd., Balaghat has mentioned that the tariff for Ferro alloy industry is very high as compared to other States. In this connection, MPSEB mentioned that the existing tariff applicable to Ferro Alloys Industries availing supply at 33 KV is Rs.130/-per KVA of billing demand and 269 p/u plus 76.59 p/u as energy charges and FCA respectively which is cheaper in comparison to the tariff applicable for other HT consumers availing supply at 33 KV. Further, no increase has been proposed in aforesaid rates in the present tariff petition.  The objector has not indicated the names of the other State Electricity Boards. However, it may be observed from the comparative tariff study enclosed with the tariff petitions that in heavy industries the rate of MPSEB stands at No.5 from the top and as such the rates prevailing in M.P. are reasonable.

Tariff for Cement Industries

5.3.25    The tariff for cement industries in Chhattisgarh is 60% of the rate charged in Madhya Pradesh.  

5.3.26    It has been clarified by MPSEB that the rates prevailing in CSEB for cement factories are cheaper only by about 10% to 13% and not 60%. Further, CSEB is a revenue surplus SEB while MPSEB is a revenue deficit SEB and, therefore, the tariff rates are required to be higher in MPSEB in comparison to CSEB.

Tariff for Railways 

5.3.27    Tariff should be based on the cost of supply. 

5.3.28    Railways have argued that the tariff should be brought down to a reasonable level based on the cost of supply.

5.3.29    MPSEB has put forth the argument that over a period of time the tariffs have got distorted due to socio-economic considerations. The Board is now making efforts to reduce the cross-subsidy by increasing the tariff for domestic, agricultural and other subsidized categories. The process of rationalization would be possible only over a period of time.

5.3.30    The Board has also brought out several factors to highlight the fact that the cost of supply for railways is not same as that for other EHT consumers because of the nature of the railway load. These include two-phase unbalanced load resulting in negative phase sequence currents, high starting current and fluctuating nature of load. It has also been argued by MPSEB that the Railways is supplied with uninterrupted power supply while other consumers are subjected to load shedding. Thus, it is not appropriate to compare Railways to other category of consumers.

5.3.31    Leading power factor should be ignored for calculating power factor penalty.

5.3.32    The Board has presented detailed arguments to justify charging for leading power factor. These are discussed in brief below.

•          The theory of electrical engineering clearly provides the basis for charging for leading kVAh and there is no reason for ignoring them as requested by the Board

•          The availability based tariff structure effective from July 1, 2002 provides penalties for injection of leading kVAh during high voltage conditions.

•          Excessive capacitive compensation gives rise to leading currents resulting in higher losses.

•          Excessive capacitive compensation gives rise to increase in system voltage, which can damage the system and associated equipment.

•          The capacitive compensation provided by the railways is not provided at the load point where it is required.

•           Charging for leading power factor is in consonance with the recommendations of the Central Electricity Authority provided in their response to MPERC�s query.

5.3.33    The Railways traction manual provides for installation of switched capacitors wherever load variations are wide. However, fixed type capacitors have been installed and thus the power factor becomes leading during no load or light load conditions. The Board has argued that due to above technical reasons and because Railways is responsible for the leading power factor, the current provision of penalty for leading power factor should be continued. This matter has already come to the Commission and the orders of the Commission based on detailed examination are to be issued shortly

5.3.34    The integration period for recording maximum demand should be 30 minutes instead of 15 minutes.

5.3.35    The Board has argued that for widely and continuously fluctuating loads such as railways, an integration period of 30 minutes does not precisely reflect the actual quantum of demand imposed on the system. It has also presented data to justify this position. Data has also been presented to argue that in case the load is of continuous character then an integration period of 30 minutes as well as that of 15 minutes would result in the same billing demand. The Board has also argued that it has to spend a significant amount of capital to develop the infrastructure and these costs have to be adequately compensated through the tariff structure. Since in this case the 30 minutes integration period does not adequately reflect the demand imposed on the system, the resultant tariff design on the basis of 30 minute integration would lead to under recovery of costs and loss to the Board. 

5.3.36    The demand charges should be levied on Railways based on simultaneous maximum demand recorded at all the contiguous Railways Traction Sub Station fed by the same grid transformer of MPSEB.

5.3.37    MPSEB contended that as per the agreement entered with electricity consumers including Railway Traction, the power supply is given for use within the identified premises. The Railway traction supply points are normally situated at a distance of 40 to 60 kms. The connection of each Traction Substation is governed by a separate HT agreement and metered separately. As per provisions of Electricity (Supply) Act since each connection of the Traction Substation is to be metered and billed separately, the computation of Simultaneous Maximum Demand cannot be accepted as per provisions of tariff and general conditions of supply. 

5.3.38    The railways had objected that the existing provision of 30% load factor as the minimum charge resulted in an unfair burden because they were already paying the demand charges for recovery of fixed costs. The Board had clarified that since it had to make available dedicated infrastructure for Railways, provision for minimum charge was necessary. The Board also informed that the existing load factor is in the range of 28%-29% and an increasing trend is evident.

The Commission is of the opinion that there is merit in the argument of the Railways and hence decided to reduce the load factor for minimum charges to 28%. It is evident that this amendment would provide some relief to the Railways while simultaneously minimizing the financial impact on the Board. 

Tariff for Cold Storages 

5.3.39        The Cold Storage is directly connected with agricultural sector and therefore, the tariff should be equal to agricultural consumers. 

5.3.40        During the public hearing at Indore, M.P. Cold Storage Association has urged that the Cold Storage is directly connected with agricultural sector and therefore, the tariff should be equal to agricultural consumers. MPSEB has responded that the agricultural tariff is generally kept lower looking to paying capacity of the consumers and subsidy being provided by the GoMP.  Paying capacity of cold storage consumers cannot be compared with an individual agricultural consumer and therefore application of seasonal tariff for LT industrial consumer for cold storage availing supply at LT and HT slab tariffs for cold storage at HT is in order.

Tariff for Public institutions/ charitable organizations 

5.3.41        One of the arguments during the hearings was that social organizations, trusts, trust hospitals, charitable organizations, charitable hospitals, may be charged at domestic tariff. Plants helping environment be given special rate as in Maharashtra.

5.3.42       The hospitals run by the Charitable trusts, general hospitals, mosques, temples, churches, religious institutions are supplied electricity at domestic tariff. The nurseries growing forest plants and without commercial motives are supplied electricity at cheaper agriculture tariff. However, the nurseries having commercial motives are supplied electricity at non-domestic tariff. 

5.3.43        The public service organizations may be billed on domestic tariff instead of non-domestic tariff. 

5.3.44      The LT domestic tariff is a subsidized tariff, which is applicable for the domestic appliances and household affairs. The average existing rate for domestic consumers comes to 212.66 P/U whereas the cost of supply at LT has been worked out as 515 P/U. The domestic tariff is being fixed at subsidized rates, as the electricity forms a basic need. The activities of public service organizations cannot be equated with that of the domestic activities and hence the applicability of subsidized domestic tariff to these consumers does not appear to be reasonable.

Tariff for Water works 

5.3.45        Water works tariff may not be increased, as the burden would get transferred to public. 

5.3.46        MPSEB pleaded that LT agricultural water works tariff; at present is 225.59 p/u (149 + 76.59) while the rate of HT water tariff is 250.59 p/u (174+76.59) against the cost of supply of power of 515 p/u at LT and 244 p/u at HT. An increase of about 20% has been proposed both in HT and LT water works tariff so that atleast cost of supply is recovered. Further, HT Water Works cross subsidizes the LT water works to some extent. The average cost of supply is 413 p/u.

Tariff for Powerlooms 

5.3.47        Power loom tariff should be similar to the tariff in   Maharashtra.   Concessional tariff should be fixed for power looms upto 10 HP load.

 5.3.48    In Maharashtra State Electricity Board, flat rate of Rs. 450 per loom per month (based on 8 hour working) for power loom consumers is applicable till the meters are installed. Thereafter, they will be billed at the rate applicable for general motive power which is equal to fixed charge of Rs. 60/- per HP/month for 50% sanctioned load plus energy charges of 265 p/u upto 1000 units, 325 p/u for units in excess of 1000 units and upto 3000 units and 365 p/u for balance units inclusive of T&D loss charge of 25 p/u. It may thus be seen that metered power loom tariff is quite high in Maharashtra compared to existing rate of 200 p/u in M.P. Further, the proposed power loom tariff of 300 p/u in M.P. is quite comparable to existing metered power loom tariff in Maharashtra. At present power loom tariff is made applicable upto 25 HP connected load and most of the small power loom consumers are lying within the category of connected load upto 10 HP. The proposed rate has therefore been considered by MPSEB. 

5.3.49    Tariff for Hotel, Tourism and Travel : Hotel, tourism, and travel have been recognized as industries and therefore separate subsidized tariff may be considered.  

5.3.50    MPSEB replied on the request for a separate subsidized tariff for hotel, tourism and travel that in case of availing their supply at LT, LT non-domestic tariff is applicable and for the hotels availing supply at HT, General Purpose tariff is billed because this class of consumers are operating on the commercial principles and earning profits out of their activities.

Tariff for temporary connections: 

5.3.51    Tariff of temporary connections may be reduced. 

5.3.52    MPSEB replied that prior to 5th Oct. 2001, temporary tariff was twice that of normal tariff. However, the Hon�ble MPERC vide its order dt. 26.9.2001, has reduced the temporary supply tariff to 1.5 times of normal tariff, therefore, tariff for temporary supply may not be reduced further.

5.4          Issues Related to Tariff Structure and Design

TOD Tariff 

5.4.1        TOD tariff may not be considered for abolition.

5.4.2        Several HT consumers and their Associations have represented against Board�s proposal for abolition of TOD tariff. In this connection, MPSEB has submitted that it is presently passing through acute power shortage and for most of the period of the year the system load curve is generally flat.  Due to flat load curve, net impact of TOD tariff is that without any additional consumption, the consumers are getting the benefit of concessional tariff at night hours without any relief to the system. Here, it may also be mentioned that whatever relief the Board may get during peak hour restriction through TOD tariff, the energy saved is mostly being drawn by the agricultural consumers by operating their three phase pumps in single phasing condition by using phase splitters. Unless the supply is interrupted from 132 KV Sub-station, this situation cannot be corrected and the energy saved through TOD process is being used by agriculture consumers for whom the tariff determined is too low as compared to cost of supply.

         The Commission through this tariff order would take suitable steps to deter power consumption during peak load hours.

Minimum Charge

5.4.3        A large number of HT/LT consumers have represented that Minimum charge may be fixed on the basis of reduced supply hours in case the power is not made available for all the 24 hours. 

5.4.4        MPSEB has submitted that the tariff minimum charges have been prescribed to recover the expenditure required to be incurred regularly and constantly by the Board towards payment of interest on capital borrowed for creating infrastructure, depreciation of the equipment and operation & maintenance of the infrastructure irrespective of the fact whether the electricity generated and transmitted upto the premises of the consumer is used by him or not. The prescribed monthly minimum charges have been kept so low that even if Board�s HT and LT consumers are consuming electricity for a period varying from a few hours to 10 - 12 hours, they shall be able to consume electricity equivalent to prescribed minimum charge. Here it may also be mentioned that the proportion of fixed cost and variable cost for MPSEB is 56:44 whereas the existing tariff enables recovery of only about 15 to 20% revenue through tariff minimum charges.

5.4.5        The proposed minimum charge of Rs. 75 on single light point connection is very high.

5.4.6        With regard to the minimum charge of Rs.75/- on SLP connections, it may be mentioned that at present, SC/ST consumers living below poverty line are eligible for free supply upto 20 units per month subject to tariff minimum charges of Rs.50/- per month per connection. The bills of eligible SC/ST SLP consumers are being paid by the State Government @ Rs.50/- per month per connection. A limited sample study has indicated that a large section of SLP consumers are consuming more than 100 units/month., Till the SLP consumers are meterized, it is not possible to correctly assess their consumption.  Therefore, the minimum charge of Rs.75/- appears to be reasonable to MPSEB.

Peak Load Hour Surcharge 

5.4.7        The Peak Load Hour surcharge may not be considered:

5.4.8        Several HT consumers and their Associations have represented against the proposal of additional peak load hour tariff. In this connection, the MPSEB has submitted that their system is severely stressed on account of high demand in the peak load hours. Due to constant demand in the system in peak load hours, the Board is required to overdraw power from Central Sector Generating Stations and is required to pay peak rate for power purchase (around Rs. 4.20 per unit) at frequency below 49 Hz. It is, therefore necessary that the HT consumers who have been permitted to avail power during peak load hours should share at least partial burden of the utility on account of costly power purchase in peak load hours. Accordingly, the peak load additional tariff of only 15% of the energy charges has been proposed to be recovered from such industrial consumers.

Merger of FCA

5.4.9        The FCA may not be merged with the tariff otherwise it will result in huge financial burden on the consumers in the form of duty. 

5.4.10    Most of the objectors have represented against the proposed merger of FCA with the energy charges, as it will increase the rate of electricity duty payable by them. The MPSEB has submitted that it is customary to merge FCA charges with energy charges at the time of tariff revision. Earlier also, the Board during tariff revisions w.e.f. Dec. 80 and Oct. 92 had merged the FCA rates of 5.37 p/u and 60 p/u respectively with the energy charges. This practice has been followed by other SEBs also. For example, at the time of tariff revision in Andhra Pradesh (APTRANSCO) w.e.f. 5.6.2000, in Uttar Pradesh (UPPCL) w.e.f. 9.8.2000 and in Gujarat w.e.f. 10.10.2000, FCA rates were merged with energy charges and necessary formula of FCA was required to be submitted to their respective Commissions for determination of a transparent formula.

T&D Loss 

5.5.1        T&D Loss Surcharge may not be considered because loss reduction and efficient performance is the responsibility of the Board. 

5.5.2        Number of HT/LT consumers have represented against the proposed levy of T&D loss surcharge. In this connection, MPSEB has submitted that the T&D loss surcharge has been proposed on the basis that MPSEB alone should not be blamed for high T&D losses. The cost of commercial losses is the cost of additional power purchase required on account of higher energy input. Accordingly, in line with the T&D loss charge as introduced in Maharashtra as per direction of Maharashtra State Electricity Regulatory Commission, the T&D loss surcharge has been proposed by the Board so that there is greater awareness and social pressure against theft of electricity.

Commission has not agreed with the proposal of the Board in this regard but at the same time expects the honest consumers to cooperate by way of exchange of information about abstraction of energy by anyone if it is to their knowledge.

Power Factor Incentive 

5.6.1        The power factor penalty / incentive may also be considered to be extended to LT industries (at present it is applicable to only HT industries).

5.6.2        Once the static Meters capable of measurement of power factor are installed at the premises of all the LT industries, the power factor penalty as well as incentive scheme could be given due consideration by the Board. 

5.6.3        The power Factor incentive should be given from 0.90 instead of 0.95. The incentive be doubled from 0.95 to 1.0.

5.6.4        Shri R.P. Agrawal of Association of Industries, Dewas and some other Associations of Industries have requested during the public hearings that the power factor incentive should be given from 0.90 instead of 0.95 and the incentive rate be doubled from 0.95 to 1.0. MPSEB has submitted that the power factor incentive is not given by all State Electricity Boards and the same has been made applicable in the neighbouring States of Maharashtra, Gujarat, Orissa etc. including MPSEB. Wherever power factor incentive is given, it is for achievement above 0.95 except in Orissa. In Orissa, incentive is given when power factor is above 0.97.

Load factor Incentive

5.7.1        The load factor incentive may not be reduced and may be extended to all other industries.  

5.7.2        Shri P.L. Nene on behalf of M.P.Cement Manufacturers Association, Satna, mentioned that the load factor incentive being given for certain industries may not be reduced. Further, Shri Alok Saboo of M.P. Chambers of Commerce and Industry, Gwalior requested that load factor incentive should be made applicable to all industries. 

5.7.3        MPSEB has submitted that the aforesaid load factor based concession was offered to certain core industries to save Electro-Chemical / Electro-Thermal, Ferro Alloys units and Mini Steel Plants from general recession and to introduce a comparable tariff for Cement Industries which is nearly at par with cost of captive generation. Hence the aforesaid concession should not be extended to all industries. 

5.7.4        The bulk consumer may be given cheaper power.  

5.7.5        During the public hearing, it was pleaded before the Hon�ble MPERC that the bulk consumers may be given cheaper power. In this connection, it is to submit that according to the commercial principles, it is true that the bulk purchaser of any commodity should be offered cheaper rates as compared to retail consumers. MPSEB, in line with the provisions of the MP Vidyut Sudhar Adhiniyam 2000, has not proposed any hike for HT consumers and thereby has tried to reduce cross subsidization and encourage bulk consumption.

Two-part tariff

5.8.1        Two-part tariff may be introduced for non-domestic connections also. 

5.8.2        Several non-domestic consumers and their associations particularly Association of Private Medical Practitioners have resisted against the concept of connected load in non-domestic installation and have requested for introduction of a demand based two part tariff for non-domestic connections also.  MPSEB has submitted that the demand based two-part tariff for non-domestic consumes could be prescribed for the consumers having contract demand above 20 KW. 

5.8.3        MD based tariff may be designed for ice factories. 

5.8.4        Shri B.B.Bhargava, Ice Factory, Gwalior suggested that MD based tariff may be designed for ice factories. MPSEB has submitted that Alternative-II of the existing LT industrial tariff is a Two Part MD based tariff, which is applicable to the industries, and ice factories can avail it as well. The Tariff Minimum is on monthly basis.

5.8.5        The meter rent is very high and should be reduced. 

5.8.6        As regards meter rent, MPSEB pleaded that the meter rent is charged from the consumers in lieu of the provisions contained under section 26 of Indian Electricity Act 1910 which provides that if the meter is provided by the licensee in the premises of the consumer, the licensee can recover an amount towards the rent of metering equipment. The meter rent being charged by the Board is based on the cost of meter and metering equipments.

Regulatory Asset 

5.9.1        The liability in the form of regulatory assets may not be passed on to the consumers and therefore, this proposal of the Board may not be considered. 

5.9.2        The tariff for various categories of consumers is determined by the Hon�ble Commission considering each and every aspect of the Board�s expenditure and different bench mark parameters viz. efficiency, performance. Therefore, it is reasonable that the shortfall / deficit, as decided by the Hon�ble Commission (to avoid tariff shock to the consumers and impact on revenue due to change in consumer mix), be considered as regulatory asset to be carried forward and included in the capital base as a part of the annual revenue requirement of the subsequent years.

         In the absence of necessary details, the Commission has not allowed this proposal of the Board.

 Recovery of dues

5.10.1    The recovery of arrears from HT as well as LT consumers may be made without any discrimination. 

5.10.2    All attempts are being made to recover dues from HT & LT consumers by way of DRA action, attachment of property etc. The legal hurdles are the main impediments in the process.

Late payment surcharge

5.11.1    The surcharge on HT consumers should be same as proposed for LT consumers.

5.11.2    MPSEB clarified that the surcharge at present for HT consumers is at 2% per month on the outstanding amount of the bill upto 30 days and 2.5% per month thereafter if the bills are not paid by the consumers within the period prescribed. In case of LT consumers if the bills are not paid by the consumers within the due date prescribed, surcharge of 2% of the total amount of current bills (excluding arrears) and surcharge of 2.5% per month of outstanding arrears is payable in addition. For HT consumers, the surcharge is calculated for number of days after the due date However, in case of LT consumers, if consumer pays the bill amount just after due date, surcharge for whole month @ 2% is levied on the current bill amount. Accordingly, rate of surcharge of only 1.5% per month on the amount of monthly bill (including outstanding arrears) is proposed to be levied on the LT consumers in case of non-payment of bill within the period prescribed.

 Free supply to Board�s employees

5.12.1    It was argued that the burden of free supply to MPSEB employees should be borne by the Board out of its profit. 

5.12.2    MPSEB stated that the benefit of free electricity is given to the officers / employees in other SEBs also. In other departments such type of facilities are applicable to the officers / employees i.e. in Railways and in Road Transport departments, free railway / bus pass and PTO are provided and in telephone department facility of free telephone calls and in Coal India Ltd. facility of free coal is provided to the officers /employees of the department. Lower interest rate on loan to employees of Banks is another example of extension of such concessions.

5.12.3    With such facilities officers/employees are tried to be given encouragement to perform their duties in efficient manner. At present, in general, regular officers and employees in general are given 50% concession in the tariff applicable to them and retired employees are given only 25% concession in the tariff. No concession is given in electricity duty, cess and meter rent etc.

Bills served by MPSEB 

5.12.1    The common consumer is not able to understand the bill and   therefore instead of various charges like meter rent, electricity duty, cess, tariff etc, only one fixed rate should be charged. 

5.12.2    The bills being issued to the consumers for availing electricity are already under scrutiny of the Hon�ble Commission and the same shall be revised as per the directives of Hon�ble Commission. The levy of electricity duty and cess are statutory levies being charged as per the State Govt. notifications.  The duty component is chargeable as the percentage of the energy charges and hence it depends both on the units consumed and the rate of energy charges and therefore no fixed charge can be derived for the same. 

Interest on Security Deposit

5.13.1    No interest is paid by MPSEB on the security deposit held.

5.13.2    The concept of recovering security deposit from consumer is that electricity is supplied to the consumers in advance and then after one month the bill is sent to them and in case of non-payment of bill by the consumers, about two and half months passes till the time action to disconnect the consumers installation is taken by the Board. In view of above to safeguard the Board�s interest, provision for security deposit amount equivalent to one and half months average energy consumption only has been provided.  The amount of security deposit held by the Board is treated as a part of working capital and hence no interest is being paid to the consumers. The Board�s decision of non-payment of interest on security deposit has also been upheld by the Hon�ble High Court of Madhya Pradesh, Jabalpur.