The Maharashtra Electricity Regulatory Commission (MERC) has not allowed the Maharashtra State Electricity Board (MSEB) to hike power tariffs to meet additional employee costs as well as interest charges arising out of their investments in the Dabhol Power Company (DPC).
MERC in its tariff order for 2000-2001 has directed the state electricity board that additional expenses arising out of implementation of the Fifth Pay Commission could not be loaded on the total costs and would have to be borne through efficiency improvements.
The electricity board had asked for an approval for Rs 1,519 crore to meet the employee costs which has been pruned down to Rs 1,419 crore by the regulatory commission.
The electricity board had also asked for an approval of Rs 1,239 crore on account of interest charges which inturn has been limited to Rs 1,127 crore.
The commission points out that interest charges on account of investments made by the board in the DPC would not be allowed to passed on to the tariff.
MSEB presently has 30 per cent stake in the DPC promoted 740mw project. The balance equity is held by Enron, Bechtel and GE.
Out of total expenses on all heads, the commission had pruned down the board expenses by as much as Rs 662 crore and has only approved expenses to the tune of Rs 12,071 crore. The board on the other hand had claimed expenses to the tune of Rs 12,733 crore.
The commission has asked to electricity board to generate addition revenues to the tune of Rs 600 crore through the reduction of transmission and distribution
losses. The commission which has allowed the hike of power tariff to be limited to only six per cent as against the proposed 18.9 per cent has also asked the board to bring down the transmission and distribution (T&D) losses to 26.89 per cent.
The commission in its order points out that the T&D loss computed by the Commission, after incorporating the revised norms for LT agricultural consumption results in an estimate of 31.87 per cent. The commission directed the board to take all necessary steps to reduce the loss level to 26.89 per cent and thereby disallowed all losses in excess of this target.
In its order, the commission, has also disallowed certain expenses in respect of generation and power purchase amounting to Rs 309 crore.
The commission points out that it is not entirely satisfied by the evidence given by the representatives of MSEB from time to time on the merit order despatching and the purchase of power from different sources, including DPC and NTPC.
As a fallout of this, the commission had decided to keep the issue off merit order despatch and purchase of power from different sources under continuous review throughout 2000-01.
The commission in its order has approved only 15,657 million units for power purchase of as against the proposed 16,435 million units. It has also called for power generation of 43,583 million units as against the proposed 42,705 mu.
The commission has also proposed to introduce time of day (ToD) tariff for high tension industrial consumers to encourage demand side management. According to the order, the commission expects HT industrial consumers to avail of this facility by shifting consumption from peak period to off peak period.
This will not only benefit the industrial consumers but also help the state electricity board to flatten the load curve.
Expenses Sheet
Expenses cleared for the Maharashtra State Electricity baord for 2000-2001 (in Rs crore)
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Heads MSEB MERC Amount that
proposal approval has been pruned
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Generation of power 3540 3387 153
Purchase of powr 3798 3542 256
Repair and maintenance 675 675 0
Employee costs 1519 1419 100
Admin and general expenses 151 151 0
Depreciation 1294 1293 1
Interest charges 1239 1127 112
Provision for doubtful debts 200 200 0
Other debits 317 277 40
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Total expenses allowed 12733 12071 662
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