Chapter-9

Tariff Related Issues
    Some Tariff related issues have been raised by various Consumers/ Consumer Organizations. The Commission has examined all these issues along with response of PSEB thereto. These issues are discussed below:
9.1 TWO PART TARIFF
    PSEB has proposed to introduce two part tariff for Large Supply Industrial Consumers (comprising of general industry and power intensive units) and Railway Traction. Demand Charges for general industry, Power Intensive Units and Railway Traction are proposed to be Rs.100, Rs.250 and Rs 65 per KVA respectively. Energy charges are proposed to be Rs.3.40 per unit for general industry and Railway Traction and Rs.3.20 per unit for Power Intensive Units. Billable demand shall be higher of the actual recorded maximum demand or 80% of Contract Demand. Presently Large Supply and Railway Traction Consumers are governed by single part tariff based upon Kwh consumption. It had been decided by the Commission in Tariff Order 2003-04 to introduce Two Part Tariff and the Board was asked to submit requisite information such as Contract Demand by August, 2003.

    Various Industrial Consumers Associations have objected to the proposed two part tariff for Large Supply industrial consumers. The following points have been raised in this context:
      i) It has been pointed out that the reasons for proposing demand charges @ Rs.100 per KVA for general industry and Rs.250 per KVA for Power Intensive Units have not been indicated. Also vast difference between the two rates proposed is said to be unjustified.

      ii) Most consumers have stated that demand charges should be charged on actual demand or percentage of contract demand , whichever is higher. The percentage proposed is 70% of contract demand instead of 80% proposed by the Board. Some consumers have stated that demand charges should be charged on actual demand and not at all linked to sanctioned contract demand.

      iii) It is stated that consumption charges for some consumers are working out to be high. The same also vary vastly with regard to actual utilization. As such there is need for incorporating provisions of maximum over all rate.

      iv) Reasons for proposing lower energy charges for Power Intensive Units have not been indicated by the Board.

      v) PHD Chamber has commented that their basic demand was to delink all charges such as ACD, Service Connection Charges & MMC from connected load. These charges should be based on contract demand instead of connected load.


    PSEB, in its reply, has stated that
      i) Demand Charges of PIUs are proposed at higher rates due to higher utilization of assets/infrastructure by them.

      ii)Demand Charges are to be computed on higher of actual demand or 80% of Contract Demand. A minimum actual demand is to be maintained to ensure recovery of basic fixed costs through demand charges. This provision is kept in two part tariffs in most of the States to ensure a minimum level of revenue against the load commitment made to the consumer by the utility and in order to arrange requisite facilities and infrastructure for provision of supply.

      iiii) The Board wishes to retain tariff structure at a simplified level and avoid unnecessary complication and as such upper ceiling for consumption charges has not been proposed by the Board.

      iv) Energy charge for PIUs have been proposed marginally lower than for general industry as a good commercial sense due to higher revenue and investment recovery for the Board. The Board has also stated that through the proposal , it has ensured competitive tariff for consumers with access to alternative sources of power through open access/captive generation.

      v) The Board has stated that ACD and Service Connection Charges are not a part of ARR but are charged under Conditions of Supply. These are however, applicable on connected load. Also except LS category, MMC has to be linked to connected load as there is no provision for metering maximum demand vis-à-vis contract demand in the meters installed for other categories.

      The Board has also supplied some information regarding contract demand as required by the Commission in its Tariff Order 2003-04.

      The Commission notes that seven months of the current year have already passed. Number of issues relating to Two Part Tariff need detailed examination. This is especially important in view of the vastly differing views of the consumers on the subject. Also the Commission needs to ascertain the financial implication of tariff proposals on the Board’s revenue in a realistic manner. Practices prevailing in other States also need to be kept in view.

      The Commission, therefore, decides to continue with the present system of Single Part Tariff for the current year. The Commission also notes that the proposal of the Board for introduction of Two Part Tariff relates only to Large Supply and Railway Traction and is not well conceived or developed after detailed analysis of its impact on various consumers as well as on the revenue of the Board. The Commission , therefore, directs the Board to prepare a detailed and well considered proposal in this regard and submit the same to the Commission alongwith its ARR and Tariff Application for the next year. Failing this the Commission may develop its own model. The proposal of the Board should cover other categories especially MS & SP as well, if not some others also.


    9.2 MONTHLY MINIMUM CHARGES
      The Board has proposed to continue recovery of MMC in case of all consumers other than Large Supply and Railway Traction consumers in which case the Board has proposed Two Part Tariff consisting of fixed charges and energy charges.

      Presently MMC is charged from all categories of consumers on the basis of sanctioned connected load. Only for Bulk Supply (H.T.) and Railway Traction consumers, MMC is charged on the basis of contract demand in KVA.

      Many Consumers Organizations have protested against the practice of charging MMC. It has been brought out that MMC leads to wasteful use of energy and is an anti- energy conservation step. It has also been pointed out that as Punjab is an energy deficit State and if any consumer is unable to consume electricity, the energy so saved is consumed by some other consumer(s) fetching additional revenue for the Board. Thus Board is not a loser and there is need for waiver/reduction in MMC. It has further been suggested that in case MMC cannot be waived off, it should be charged on annual basis.

      The Board in its reply has stated that 50% of the costs incurred by the Board are fixed in nature and comprise of capacity & wheeling charges of Central Generating Stations, employees costs, interest charges, depreciation & other administrative expenditure. It has also been stated that the Board only partly recovers these fixed costs from various consumers through MMC as fixed component of tariff. Fixed charges are kept in most of the States to ensure a minimum level of revenue to the Board/utility against the load commitment made to the consumer. In order to fulfill this commitment, the utility has to arrange requisite facilities & infrastructure.

      The Commission acknowledges that substantial portion of costs of the Board are fixed in nature and cannot undergo change with regard to fluctuations in actual energy consumption of the consumers. Ideally and as a basic commercial principle all these fixed costs should be recovered through fixed charges. In the Board, only a small fraction of these costs is recovered through MMC which is basically a fixed charge. The Commission, however, notes that MMC is one of the issues coming up again and again from consumer’s point of view. It is also pleaded by them that it encourages wasteful use of energy whereas conservation of energy is the need of the hour. The consumers feel quite bitter about MMC. The Board has also not come up with a suitable alternate proposal for ensuring recovery of fixed charges inspite of Commission’s orders to this effect. In such a scenario, the Commission feels obliged to give some relief to the consumers on this account. Some relief in MMC is in any case called for due to reduction in cost of supply.

      The Commission, therefore, decides that the MMC will continue for the time being. However, the existing rates of MMC will be reduced by 10% for all categories of consumers. The Board is being fully compensated for loss of revenue on this account.

    9.3 TREATMENT OF FRACTIONAL LOAD FOR MMC IN CASE OF DS / NRS CONSUMERS
      Many Consumer Protection Forums and Consumer Groups have brought out the hardship being faced by Domestic Supply & Non Residential Supply consumers having very small load when MMC is charged on 1 KW or part thereof basis.

      Presently all consumers are charged MMC on the basis of sanctioned connected load and the rates are fixed in Rs. per KW or part thereof.

      In the Board, MMC in case of Domestic Supply Consumers was earlier fixed as :
        i) fixed amount per consumer for those with load upto 300 Watts

        ii) higher fixed amount per consumer for those with load exceeding 300 Watts and up to 1 KW.

        iii) Fixed amount plus variable amount per KW for others.


      Only for Non Residential Supply category, the MMC was fixed on slab-wise rate.

      It was last changed in August, 2000 to rate based as per KW of sanctioned connected load.

      As a result, consumers with small loads like 300 watts are charged MMC for 1 KW. Also, consumers where load exceeds the whole number of KW even by a fraction have to pay additional MMC for full 1 KW. The present system of charging MMC is quite harsh for consumers with small loads. Number of such consumers is also quite substantial.

      The Commission also notes that since the bills were earlier prepared manually or with calculators, there was logic in adopting fraction of load as a whole figure for simplification in calculations.

      However, with computerization of whole process of billing, such simplification is no longer called for and this much needed and justified relief can be passed on to small consumers. Consumers in DS and NRS categories mostly have very small loads and as such, the Commission decides to consider them for this benefit.

      The Commission therefore, decides that DS and NRS consumers should be charged MMC on the basis of actual sanctioned load and no rounding off needs to be carried out for computing MMC.

    9.4 PENALTY FOR UNAUTHORIZED LOADS

      PSEB has proposed to charge compensation for unauthorized load installed by consumers and cover them under Section 126 of Electricity Act, 2003. It has been proposed to overhaul accounts of the consumer(s) for the purpose on the basis of higher tariff @ 1.5 times the applicable rate for a period of 6/3 months preceding the date of detection.

      As per present instructions consumers are charged load surcharge for the load detected in excess of sanctioned load. The load surcharge in Rs. Per KW is leviable as an additional surcharge and unauthorized load is to be disconnected. However, industrial consumers have been allowed relaxation where excess load is very small and the consumers are exempted from payment of load surcharge. Domestic supply, Non Residential Supply & Bulk Supply consumers are required to pay load surcharge and get the load regularized if the excess load is up to 10% of sanctioned load or 50 KW whichever is less. In case of Agriculture Pumping Supply consumers, the connection is not to be disconnected where unauthorized extension is upto 10% of sanctioned load but the excess load is to be got removed.

      Many Industrial Consumer Associations/Chambers have objected to the proposal of PSEB for charging the consumers in the event of detection of unauthorized load. Most of the organizations have requested that (i) connected load comprising of large number of electricity consuming gadgets should not be checked where consumer’s maximum demand is measured for tariff purposes (ii) that in the event consumers remain within sanctioned Contract Demand, there should be no penalty/surcharge for unauthorized load, if any.

      CII has also objected to the Board’s proposal to cover unauthorized load under Section 126 of Electricity Act, 2003 pertaining to unauthorized use of electricity.

      In the public hearings, it had been brought out that checking of load is causing lot of harassment to general consumers and consumers are penalized for minor violation. It was also brought out that total additional revenue on this account is not much as compared to the harassment being caused to lacs of consumers.

      The Board in its reply has stated that penalties for unauthorized load are to act as a deterrent to the consumer and need to be sufficiently high to serve the purpose. Further network planning has to be carried out by Board based upon loads required to be catered in the area. Unauthorized loads expose the network to undue stress and higher losses, increasing the costs for all consumers.

      The Commission notes that cases of detection of unauthorized load installed by a consumer may not perhaps be covered under Sector 126 of Electricity Act, 2003. However, though the issue requires further deliberations and all India consensus, there is need for discipline and the utility can strengthen the system & provide quality service only if the Consumers use load as per their sanction. The Commission therefore, notes that there is ample justification in continuing the existing provisions of Tariff for levying load surcharge for excess load over and above the sanctioned load. The Commission however, notes that number of complaints and grievances of small consumers under Domestic Supply relate to harassment on account of connected load checking to detect unauthorized load. The fact of mis-use of authority for checking of connected load is not effectively disputed by the Board itself. The impact on revenue of the Board from measures undertaken by it for unauthorized load checking especially for small consumers of DS categories is not known at present and is likely to be marginal. The Board has not intimated the concrete benefits of detection of unauthorized load where the consumer’s energy consumption is metered. The Board has also failed to come up with any genuine and practical proposal in this regard so far.

      The Commission therefore, decides to suspend checking of connected load by the Board for DS consumers for the time being. The Board is directed to come up with a suitable and practical proposal in this regard along with its ARR and Tariff Application for the year 2005-06 to be filed by November 30, this year or during its processing immediately thereafter. The Commission will reconsider the matter after receipt of the proposal from the Board.

    9.5 LATE PAYMENT SURCHARGE

      Some consumer organizations/consumers have objected to the prevailing practice of levying high surcharge on delayed payment of electricity bills. CII has suggested levy of surcharge @ 1% per month on unpaid amount.

      As per prevailing instructions, all consumers having load 100 KW and above are levied late payment surcharge @ 5% of electricity bill if delay is up to 7 days after due date and @ 10% per annum or part thereof, if delay is more than 7 days. For consumers with load less than 100 KW, late payment surcharge is leviable @ 10% on total amount of bill for delay up to one year beyond due date. After expiry of one year, interest @ 1.5% per month is charged on all consumers.

      The PSEB in its reply has stated that the late payment surcharge is levied to discourage consumers from delaying their payment as over due receivables lead to cash crunch and has working capital implications. The prevailing practice has helped the Board to keep its receivables at a low level as compared to other utilities. Any reduction in late payment surcharge would cause a fall in collections.

      The Commission has considered the issue. It appreciates that ensuring prompt recovery of dues is fundamental for the financial health of the utility. The consumer having consumed energy, has to pay the charges and there are no justifiable reasons to allow delays beyond due date. Penalties have to be deterrent enough to avoid such tendencies. The present system is considered fair.

      The Commission, therefore, decides to uphold the views of the Board and continue late payment surcharge at existing level.

    9.6 TOD TARIFF OR CONCESSION FOR NIGHT POWER SUPPLY

      Many Industrial Consumer Chambers/Associations have requested that TOD tariff be introduced for at least Large Supply category where electronic meters have been provided. Some of the associations have even suggested that in case TOD tariff cannot be introduced due to non-availability of surplus power at night then concessional night power supply tariff be introduced for two months i.e. Mid December to Mid February, when surplus power is available with PSEB at night and system parameters are maintained by backing down generation.

      One of the Employees Association of the Board has stated that due to low frequency conditions at night during paddy season, introduction of TOD tariff would not be justified. The Association have further suggested that due to large gap between availability and demand in Northern Grid, there are wide fluctuations in frequency and as such TOD tariff or concessional night tariff is not justified.

      Presently all Consumers are charged on the basis of uniform tariffs through out the day. However, Large Supply Consumers running load during evening peak hours with prior permission of the Board are required to pay extra charges namely Peak Load Exemption Charges over and above the normal energy bills.

      The Board in its reply has confirmed that introduction of TOD tariff would be beneficial in flattening the load curve if single shift consumers can shift their operation to night as a result of this incentive. In fact, the Board had introduced a concessional night load tariff scheme. But there has been no response from the industry. It has been also stated that continuous process industry who are in any case to operate at night, should not be eligible to avail benefit under the scheme. It has been further submitted that present energy deficit situation is not conducive to introduction of TOD tariff. Also, there is no surplus energy even during night hours on a consistent basis for most part of the year since tubewells are supplied electricity in three groups , out of which two groups are supplied during night hours. Further due to poor hydrology and scanty snow cover in upper reaches of Himalayas leading to lower availability of hydro power, there may not be any lean demand period in the year 2004-05.

      The Commission observes that in view of the current power deficit situation in the State for most part of the year, it would not be advisable to introduce TOD Tariff at this stage. Regarding introduction of concessional night power supply tariff, the Commission notes that such concession would be justified only if the consumer shifts his load from day time to night time. However, there does not appear to be much chance for such shifting of load. The response of industry to avail the existing scheme of concessional night load tariff has been very poor. Also continuous process three shift industry is already consuming electricity at night and providing cheaper electricity would not help in improving the power situation by flattening of load curve or improving grid parameters. Providing concession for energy consumption at night, would necessarily involve enhancement of power tariff during remaining hours. In case concessional TOD is allowed, the same will result only in lesser revenue to the Board and no improvement of system and as such will not serve any useful purpose.

      As such, the Commission upholds the view of the PSEB for not introducing TOD Tariff or Night Power Supply tariff.

    9.7 POWER FACTOR

    9.7A Power Factor Threshold Limit

      PSEB has proposed to enhance power factor threshold limit from 0.88 lagging to 0.90 lagging for Large Supply, Medium Supply and Railway Traction consumers. Power factor limit for other categories would continue to be unchanged i.e 0.88 lagging. The higher power factor would help both the consumers and the Board. The consumers will save demand charges and the Board will gain by improvement in system conditions, improved voltage and reduction in T & D losses.

      As per prevailing practice, monthly average power factor is computed as ratio of Kwh consumption and Kvah consumption in case of Large Supply and Railway Traction consumers. In case of Medium Supply consumers, they are required to install shunt capacitors of prescribed capacity to achieve the prescribed level of power factor

      The threshold limit of 0.88 power factor and details of shunt capacitor requirement are specified in Conditions of Supply. In case power factor falls below threshold limit, the consumers have to pay power factor penalty for non compliance. Many Industrial Consumers Chambers/ Associations have objected to the Board’s proposal for enhancing power factor threshold limit from 0.88 to 0.90 for Large Supply and Medium Supply categories.

      The Commission appreciates that maintaining a higher power factor is definitely a welcome step especially in the constrained system conditions as prevalent now. Improvement in power factor is beneficial to both the utility and the consumers as well. It also helps to improve system conditions and thereby add to quality of power supply in general. A little one time additional capital cost for this purpose is therefore, more than compensated by the long term benefits reaped. It is further noted that power factor threshold limit of 0.90 has already been enforced in many other States like Gujarat, Andhra Pradesh and Karnataka. In Tamil Nadu, H.T. consumers are governed by power factor limit of 0.90 whereas for L.T. consumers limit is at 0.85.

      The Commission would therefore, definitely like to move in this direction. To this purpose, the Commission notes that power factor threshold limit was enhanced from 0.85 to 0.88 w.e.f. March, 96. At that time the Board had originally decided to raise this limit from 0.85 to 0.90 vide instructions dated April 7,1995 and revised power factor limit of 0.90 was to be enforced from January 1,1996. Thus more than six months notice was given to enable the consumers to take suitable measures and install additional capacitors. However, number of representations were received and the matter had to be reviewed. It was then decided to enhance threshold limit only up to 0.88 instead of 0.90. The revised limit was enforced from March, 1996.

      For achieving the higher power factor, consumers are required to install additional shunt capacitors. It has been estimated that about Rs.1000/- would need to be spent by a consumer for each 100 KW load for installing additional capacitors (5.6 Kvar @ Rs.160/ Kvar).

      Presently there are about 3723 Large Supply consumers out of which about 1800 consumers are paying power factor surcharge implying that their monthly power factor is below 0.88. The Commission considers it prudent to give adequate notice to the consumers to install additional shunt capacitors.

      The Commission, therefore decides that revised threshold limit of power factor be raised from 0.88 to 0.90 in respect of Large Supply, Medium Supply & Railway Traction Consumers. The revised threshold limit would be applicable w.e.f. July 1, 2005 and Board should serve adequate notice of not less than six months to the consumers to enable them to take necessary steps. The Board may also take necessary steps to ensure implementation of these orders with effect from July 1, 2005.

    9.7B Incentive and Disincentive for Power Factor

      The Board has proposed to levy power factor surcharge on Large Supply, Medium Supply and Railway Traction consumers if their monthly average power factor falls below 0.90 lagging. Rate of power factor surcharge proposed is 1% on consumption charges for each 0.01 fall in power factor below 0.90 and up to 0.80. In the event of average power factor falling below 0.80, power factor surcharge at 1% for each 0.01 fall in power factor below 0.90 and up to 0.80 and 2% surcharge for each 0.01 fall below 0.80 is proposed. Rate of incentive for higher power factor is proposed at 0.5% for each 0.01 rise in power factor above 0.95 and the total incentive is proposed to be restricted to 2%.

      As per prevailing instructions, in case of Large Supply and Railway Traction consumers power factor surcharge is levied as under:
        a) 1% for each 0. 01 fall in power factor below 0.88 and upto 0.80.

        b) 2% for each 0.01 fall in power factor below 0.80.
      In case of Medium Supply Consumers, capacitor surcharge @ 20% of bill amount is leviable for preceding 2 months if the capacitors are found to be inoperative/damaged/ missing and the consumers fail to rectify the defect within 15 days of issue of notice.

      Many Consumers/Industrial Consumer Associations have raised objections on the proposal of the Board to allow incentive @ 0.5% for each 0.01 increase in monthly average power factor above 0.95 and up to.1.0. The objectors have brought out that there is no justification for not allowing incentive in case power factor exceeds 0.90 as power factor surcharge is proposed to be levied where power factor falls below 0.90. Objections have also been raised on the ceiling on total incentive as 2%. It has further been suggested that rate of incentive should be equal to rate of power factor surcharge.

      Some Industrial Consumers Associations have suggested that power factor incentive should not be allowed to induction furnace consumers as their power factor is generally 0.98 or more due to characteristics of induction furnaces.

      The Board in its reply has stated that the incentives have been proposed considering the benefits from such incentives and the financial implications for the Board. Even though the Board agrees that the incentive should start at the threshold level for penalty, the Board proposed the incentive above 0.95 initially to balance the revenue implication. Any lowering of power factor threshold for incentive eligibility would either result in requirement of higher base tariffs or insufficient levels of incentive. The Board has also conveyed that it is open for considering alternative provision of incentive at 0.90 power factor for general industry and at 0.95 for PIU at suitable level, keeping overall revenue neutrality for the Board from the category.

      The Commission notes that there is need for providing incentive to consumers who help in improving the system conditions by maintaining higher power factor. Higher power factor would not only reduce demand on the system and improve loading conditions but would also help in reducing technical losses. The Commission notes that even in some other States, such incentive schemes are in place. Incentive @ 0.5% for each 0.01 rise in power factor above 0.95 is allowed in Tamil Nadu. In Gujarat rate of incentive is 0.15 paise/unit for each 0.01 rise in power factor above 0.90 and up to 0.95 and 0.27p/unit for each 0.01 rise in power factor above 0.95. Presently there is no incentive for higher power factor in Punjab, Andhra Pradesh and Karnataka. The Commission observes that there is adequate justification for providing incentive to consumers with power factor higher than the threshold limit. The Commission also feels that incentive should be for actual improvement in system conditions and not just for maintenance of status quo. As such, it is important to fix suitable threshold limits for different type of industries keeping in view their basic inherent characteristics. For Large Supply consumers (General Industry) and Medium Supply consumers, it may be adequate to fix threshold limit of 0.90 power factor as improvement in this will normally be achievable only after some efforts are put by the consumer. For PIUs and Railway Traction, the threshold limit should be 0.95 as their basic characteristics themselves ensure a higher power factor. The Commission therefore, decides the threshold limit for power factor incentive to be 0.90 power factor for Large Supply (General Industry) and Medium Supply and 0.95 for PIUs and Arc Furnaces and Railway Traction. The Commission observes that concept of incentive for higher power factor is being introduced for the first time and the practice of penalty for low power factor is continuing for more than 25 years. As such, the Commission will like to approach this issue cautiously and would not like the revenue stream of the Board to be adversely effected substantially. As such, initially the rate of incentive is kept only at 25% of the rate of penalty for low power factor. Regarding ceiling, the Commission feels that in view of revised lower rates of incentive no ceiling on incentive is required. In any case, incentive to be really effective and serve the purpose of continuous improvement in system should be on going and not capped.

      The Commission also feels that the consumers need to be given adequate time to take steps for improving power factor and comply with the new threshold limit in this regard. As such, the date of effect for the new threshold limit as well as of incentive thereon shall be the same as at para 9.7A above i.e. July 1, 2005.

      The Commission therefore, decides to fix threshold limit for power factor incentive to be 0.90 in respect of Large Supply (General Industry), Medium Supply and 0.95 in respect of PIUs & Arc Furnaces and Railway Traction.

      The Commission also decides to accept the proposal of the Board to allow incentive for higher power factor and allows this incentive @ 0.25% on consumption charges for each 0.01 increase in power factor above 0.90 for Large Supply (General Industry) and M.S. and 0.95 for Power Intensive Units & Arc Furnaces and Railway Traction. There will be no cap on quantity of incentive. Date of effect for improved threshold limit and grant of incentive for power factor shall be July 1, 2005. Existing practice of levying power factor surcharge w.r.t. 0.88 power factor shall be continued till June 30, 2005.

    9.8 KVAH TARIFF

      Many Industrial Consumers Chambers/ Associations and an Employees Association of the Board have suggested for introduction of Kvah consumption based tariff in lieu of Kwh based tariff for at least Large Supply & Medium Supply consumers. It has been further brought out that the suggestion, if implemented, would motivate the Large Supply & Medium Supply industrial consumers to have higher power factor which would in turn help in improving system parameters and reduce technical losses.

      Presently all tariffs are based on Kwh Consumption. However, there is provision of penalty for low power factor in case of Large Supply category and Railway Traction and capacitor surcharge in case of Medium and Small Power Supply categories.

      PSEB in its reply has stated that need of introducing Kvah tariff for L.S. and M.S. consumers can be considered in future. For categories other than L.S. & M.S (load 70 KW and above), such tariffs would not be feasible at this juncture owing to lack of suitable metering infrastructure.

      The Board in its meeting on October 14, 2004 stated that there would be wide fluctuations in revenue if Kvah based tariff is introduced. It was further stated by the Board that proposal would be submitted after carrying out a detailed study.

      The Commission notes that there are some inherent benefits of Kvah tariff and as such the issue of introduction of Kvah tariff at least for Large Supply, Railway Traction and Medium Supply Categories needs to be considered seriously. The Board has not made serious efforts in this regard and failed to come up with proper solution to this problem.

      The Commission, therefore, directs PSEB to submit a detailed paper on the introduction of Kvah tariff in the ARR for FY 2005-06


    9.9 HIGHER TARIFF RATE FOR PEAK LOAD SUPPLY

      PSEB has proposed to continue the present practice of charging Peak Load Exemption Charges to industrial consumers.

      Presently all Large Supply Consumers except essential services such as Hospitals, Railway Stations, Railway installations, Defence & Military installations, AIR/TV, Water Supply & Sewerage installations, P&T installations & News Services installations are required to observe peak load hour restrictions. Consumers are, however, allowed to use some load during this period without payment of additional charges. Instructions also allow use of higher load than the reduced load during peak hours with the permission of Board and subject to payment of PLEC charges. Charges are calculated @ Rs.120/- per KW of permitted load beyond reduced load per month if the permitted load during peak hours is up to 100 KW. However, if the permitted load exceeds 100 KW charges are calculated on the load permitted for peak hours @ Rs.1.80 per KW per hour up to 65 % of Contract Demand and Rs.2.70 per KW per hr for exemption allowed beyond 65% of Contract Demand. The PLEC charges are calculated for a minimum of 3 hours per day. These charges are over and above the normal energy bill.

      A number of Industrial Consumers and Industrial Consumers Associations have objected to the continuation of levy of Peak Load Exemption Charges for using electricity during evening peak hours and have requested for withdrawl of the same. It has been brought out that cost of power projected in ARR includes all expenses including additional cost of peak power if any. It has further been brought out that revenue from Peak Load Exemption Charges is not being accounted in ARR. CII has further suggested that even if PLEC is to be levied to discourage drawal during peak hours, its rate should not be more than Re.1 per unit. CII has also objected to the prevailing practice of Board for charging on the basis of load in KW sanctioned for use during evening peak hours multiplied by peak load hours irrespective of the actual consumption of energy.

      The Board in its reply has stated that the power supply system in Punjab is a constrained one and there is an acute shortage during peak hours and an excessive drawal results in lowering system frequency and may result in grid failure. The excess power supply during evening peak is arranged from most expensive sources. As such, a fixed commitment by the consumer is essential. It has been further stated that revenue collected from Peak Load Exemption Charges is accounted in ARR.

      The Commission has considered the matter and notes that there is no denying the fact that there is acute shortage of power in the State especially during peak load hours. Overdrawing under ABT during this period costs much higher than the average power purchase cost and goes upto even Rs.6/- per unit. The Commission also notes that recoveries made through PLEC are duly accounted for in the tariff income of the Board. As such, both the additional cost of power purchase during peak hours and the recoveries through PLEC are duly taken care of in the Board’s expenditure and receipts. The system therefore, does not require any change in this regard. The existing rate of PLEC is also not considered unreasonably high especially in view of the exorbitant extra costs of power purchase involved. The Commission further notes that in acute shortage situation of power in peak hours, the PLEC has to be based on the extra load reserved by the consumer and not as per actual use. This is because if the Board reserves the load for the consumer, it is committed to supply that power and has to make arrangement accordingly to fulfill this commitment. In view of the commitment of the Board which in any case stands, it is not so material whether the extra power is actually drawn by the consumer or not.

      As such, version of PSEB is upheld and PLEC is continued at existing rates.


    9.10 HIGH VOLTAGE REBATE

      PSEB has proposed to increase the rebate admissible for supply at 33 KV or higher voltage under Large Supply Category to 6% on energy charges.

      Presently 3% rebate is admissible to all Large Supply Consumers catered supply at 33 KV or higher voltage.

      Some Industrial Consumers Associations have welcomed the proposal of PSEB to enhance High Voltage supply rebate from 3% to 6% on energy charges for consumers getting supply at 33 KV or higher voltage. However they have requested that rebate should be admissible on consumption charges and not on energy charges alone. It has also been suggested that while allowing High Voltage rebate, PLEC charges should also be considered as part of bill amount attracting high voltage rebate.

      A few Industrial Consumers Associations have opposed the continuation/ enhancement of high voltage rebate on the plea that high voltage supply has been provided not on the choice of the consumer but as per statutory provisions of PSEB and as such does not entitle the consumer for any incentive.

      The Board in its reply has clarified that the incentive/penalty for voltage variation would be computed on the base cost of energy including both the energy charges and demand charges and the financial implication had been calculated accordingly. The Board has not considered it prudent to include PLEC charge in the bill amount for High Voltage rebate.

      It has been further submitted that supply at higher voltage causes significant cost saving to the Board in terms of infrastructure and technical losses. In such cases, provision of power transformer, its operating and maintenance costs and transformation losses are borne by the consumer.

      The Commission observes that where supply is availed at a voltage higher than base level voltage, the utility is benefited by way of saving of capital cost and operating costs besides reduction in losses. The Members of the Advisory Committee in its meeting held on August 27, 2004 had suggested that High Voltage rebate should be graded.

      Basically rebate is allowed to provide incentive to consumers to take measures for improvement of grid conditions and lowering of T & D losses. Simply enhancing the quantum of High Voltage rebate to Large Supply Consumers availing supply at 33 KV or higher voltage would not achieve the desired benefit as consumers are already catered supply at a particular voltage. It is not considered advisable to disturb the existing provisions of 3% rebate. However, there is a need for providing higher incentive for supply at 132 KV/220 KV so that some consumers shift to higher voltage supply providing relief to the system.

      The Commission, therefore, decides to allow 3% rebate on energy charges to Large Supply consumers catered supply at 33 KV/66 KV and 5% rebate to those catered supply at 132 KV/220 KV. This would provide substantial incentive to consumers to shift to 132KV/220 KV. This incentive will also be applicable to all other categories of consumers taking supply at these voltages. This concession will, however, not apply to Railway Traction Category. This is because the base Supply voltage in case of Railway Traction itself is 132KV /220 KV and as such, no question of incentive for supply at this voltage arises.


    9.11 17.5% SURCHARGE FOR 11 KV ARC/INDUCTION FURNACE CONSUMERS

      Some Industrial Consumers Associations have objected to the proposal of PSEB to levy 17.5% surcharge on induction furnace consumers catered supply at 11 KV especially when tariff has been fixed at 11 KV.

      As per present policy, all Large Supply consumers except arc furnaces with contract demand exceeding 2500 Kva and up to 4000 Kva can be catered at 11 KV provided they are ready to compensate for transformation losses, incremental line losses and service charges incurred in this regard. For this purpose, energy recorded at 11 KV is enhanced by 10% for billing purposes. For all arc furnace consumers and other consumers having demand above 4000 KVA which are given supply at 11 KV, surcharge @ 17.5% is leviable.

      The Board in its reply has stated that the tariffs for various categories are worked out at a base voltage level for each category. The rebate/surcharge is offered to incentivise/penalize the consumer for shifting from the base voltage to higher/lower voltage, keeping in view the additional transformation cost, transformation losses and line losses saved/incurred by the Board by such shifting. Hence the energy recorded at 11 KV is to be enhanced by 10% for consumers with demand exceeding 2500 KVA & upto 4000 KVA (except arc furnaces) to cover for transformation losses, incremental line losses and service charges. It has been further stated by the Board that surcharge @ 17.5% shall be leviable on all arc furnace consumers above 2500 KVA and other consumers with Contract Demand exceeding 4000 KVA catered supply at 11 KV. It has also been stated that surcharge @ 17.5% is levied on arc furnace consumers catered supply at 11 KV since last 30 years.

      The Commission notes that Large Supply Consumers with bulk demand are required to be catered supply at 33 KV or higher voltage. Where they are allowed to avail supply at lower than permitted voltage, the same involves number of costs to the Board by way of setting up sub-station and its operation and maintenance. It also involves additional line losses and transformation losses for the Board. As such, these consumers are definitely liable to pay

      The Commission, therefore, decides to uphold the version of PSEB and continue levy of surcharge.


    9.12 FORCE MAJEURE CLAUSE

      Some Industrial Consumers Associations/industrial consumers have suggested amendments to Force Majeure Clause of Large Supply category. It has been suggested that the scope of Force Majeure clause should be extended to cover other events which are beyond control of consumers namely
        i) Damage to furnace transformer

        ii) Labour disputes, strikes

        iii) Explosion, casualty or accidents, epidemic, state regulations/other demand or requirement of Government.

        It has also been requested that MMC should be exempted in such events.

        The existing Force Majeure Clause is applicable to Arc/Induction Furnace consumers only and not to any other consumer category. Under this clause , concession in MMC is admissible to the consumers where normal working of the industry is afftected due to lock out due to labour problem, damage of E.H.V. Power Transformer, failure on the part of the PSEB to supply power, fires, earth-quakes, floods, tempests and lightning directly resulting in closure of industry or normal supply hours reduced through specific order of the Board, provided such closures or reduced working hours continue for at least 7 days consecutively in a billing cycle month. The relief admissible is that for the period covered under force majeure event these consumers are required to pay MMC as applicable to general industrial Large Supply consumers instead of higher amount applicable for Power Intensive Units.

        The Board in its reply has stated that the existing Force Majeure Clause covers situations of natural calamities besides lockouts and failure/damage to EHV Power transformers. It has been further submitted that there is no need to amend the clause as it covers most of Force Majeure events as per general industry practice and there is no need to add any event to the clause. The existing relief in MMC is also considered adequate. As such, the Board has not considered need for any change.

        The Commission notes that the provision of Force Majeure Clause is applicable to Arc/Induction Furnace consumers and no other consumer is entitled for any benefit in this Clause.

        The Commission upholds the version of PSEB and Force Majeure Clause is continued without any change.


      9.13 SLABS IN DS CATEGORY

        PSEB has proposed increase in slabs under D.S. Category by introducing a life line slab. The existing and proposed slabs are as under:

            

             Existing                                                         Proposed Slabs                   

             i)          up to 100 units/ month                        i)          up to 50 units / month

             ii)                     101 to 300 units / month                     ii)         51 to 100 units / month

             iii)         above 300 units/month                       iii)         101 to 300 units / month        

                                                                                     iv)        above 300 units / month

         



        Many consumer associations have objected to the proposal of PSEB to change the number of slabs from prevailing three to four. Some consumer forums have even suggested that there should be only two slabs namely upto 300 units per month and more than 300 units.

        The Board in its reply has stated that tariffs for different slabs have been framed keeping in view the interest of all classes of consumers in the category. The Board has proposed an additional ‘life line’ tariff slab of 50 units to ensure that the interests of the poorest consumers are protected adequately while the tariffs applicable for relatively richer sections are progressively rationalized.

        The Commission notes that the addition of life line slab is statedly proposed by the Board to protect interests of the poorest consumers. It is, however, important to note that there are already three slabs in the domestic category and the consumers in the highest slab also avail of the lower tariff rates in the first two slabs. Thus for a consumer consuming 400 units in a month, for first 100 units the first slab rate is applicable, for next 200 units the second slab rate is applicable and only for the balance units the third slab rate is applicable. Adding one more slab in the domestic category will further complicate the billing process. In any case, increasing slabs in a particular category is not advisable and even encourages theft. If at all effort should be to reduce the number of slabs and not increase the same. The commission, therefore, does not favour increasing number of slabs. The proposal to restrict the first slab only upto 50 units and then make the next slab from 50 to 300 units could be considered. However, the same will effect the poorest consumers, with electricity consumption up to 100 units per month, very adversely and increase their bill by almost 20% on an average. The Commission also does not favour frequent changes in category of consumers or the slabs as it results in wide variation in electricity bills.

        The Commission, therefore, decides to continue the existing slabs in domestic category.


      9.14 REVIEW OF CRITERIA FOR SP/MS/LS CATEGORIES

        An Industrial Consumers Association has pointed out that criteria for classification of load into various categories was laid down from the time of British Rulers when the rate of industrialization was very poor. It has been suggested that in view of the changed circumstances, categories of SP, MS, LS may now be kept at 100 KW, 500 KW and above 500 KW.

        As per prevailing practice, all industrial consumers with load up to 20 KW are covered under Small Power, those with load from 21 KW to 100 KW are covered under Medium Supply and consumers having load more than 100 KW are covered under Large Supply Category.

        The Board in its reply has submitted that it had noted the suggestion and had extensively deliberated on the classification of consumers in various categories while framing the proposed tariff structure. Due consideration was given to the feedback received from various industrial associations and Board had tried to accommodate the suggestions within the means of the Board.

        The Commission observes that it would not be prudent to review the existing classification as it involves drastic changes in electricity bills of individual consumers as well as revenues of the Board. The Commission also observes that, in any case, over a period of time, all consumer tariffs have to move to cost of supply resulting in diminishing of the distinctions amongst various categories.

        The Commission, therefore, decides to continue the existing categories in industrial sector.


      9.15 CLUBBING OF MS CONNECTIONS – RELEASE OF LS CONNECTIONS AT 400 VOLTS

        Some objectors suggested that numerous industrial consumers having Medium Supply loads are willing to club small connections and shift to Large Supply category. But they are unable to provide their own transformers. As such they have requested that they should be permitted to avail energy supply at 400 volts from transformers already provided by the Board without having to provide their own transformers.

        The Board in its reply has stated that all industrial consumers with load above 100 KW are to be supplied at 11 KV or above. It has been further intimated that catering supply to loads above 100 KW at L.T. is technically not advisable due to safety issues, possibility of pilferage and high system losses and such practices are to be discouraged.

        Commission has noted that basic voltage level for Large Supply Category consumers is 11 KV. It is also noted that supply of electricity at 11 KV means lesser losses, lesser capital costs and maintenance expenditure, better and reliable supply of power and lesser chances of theft of energy. It has also been noted that there are a few Large Supply Consumers in the State who are catered supply at 400 Volts. Such Large Supply Consumers are levied a surcharge @ 20% on bill amount. Steel Rolling Mill consumers under Large Supply Category and catered supply at L.T. are levied additional surcharge @ 5 %.

        The Commission has considered the issue and agrees with the views of the Board regarding technical advisability of supply at 11 KV only.

        The Commission, therefore, upholds the views of the Board and decides not to make any relaxation.


      9.16 TARIFF APPLICABLE TO DEFENCE ESTABLISHMENTS

        Chief Engineer, Jalandhar Zone, MES Jalandhar has requested:
          i) To fix the Tariff for MES as Central Government agency by introducing a new tariff schedule compatible with their licensee status since Defence is not a profit making consumer and has predominantly domestic load. Also entire take over single point supply, stepping down arrangement & distribution system is created & maintained by them from their own funds.

          ii) To approve 10.12.02 as date of applicability of tariff whenever fixed for MES as licensee, for financial adjustment between the PSEB & MES for excessive tariff paid as MES had made its first application to Commission on that date.

          iii) To grant an immediate interim relief for excessive tariff charged by PSEB with the proviso of financial adjustment on approval of separate schedule & tariff.

          iv) Energy should be charged on the basis of actual meter consumption and MMC should not be applicable to them.
        It has also been reiterated that MES is not a commercial establishment.

        Presently loads of mixed nature where further distribution is carried by consumer like Defence Establishments, Railway Colonies etc. are charged under Bulk Supply category.

        The Board in its reply had submitted that MES is charged under Bulk Supply Tariff as the load of military establishments is a mixed load, comprising of residential colonies, offices and some commercial establishments. It has also been stated that the tariff rates of Bulk Supply are higher than Domestic Supply and lower than Non Residential Supply category. Also 50% of the cost incurred by the Board is fixed in nature comprising of capacity and wheeling charges of Central Generating Stations, employees cost, interest and depreciation charges and other administrative expenses. These charges are recovered through MMC and as such MMC cannot be avoided. It was also submitted that grant of separate licensee status may be decided by the Commission only after issue of order by GOI.

        Consequent to receipt of clarification from Ministry of Power, Government of India, the Commission has separately decided that all defence establishments where further electricity distribution to the colonies is the responsibility of MES, are deemed licensees under Section 14 of Electricity Act 2003. The tariff for this consumer as deemed licensee shall be decided in the petition of the consumer already pending with the Commission through a separate order and after following due procedure and public hearing, if necessary. Till then the Defence Establishments shall continue to be billed under Bulk Supply Tariff as already ordered by the Commission.

        The Commission observes that change of category shall be applicable from the date of order and not with retrospective effect.


      9.17 B.S.N.L. TELEPHONE EXCHANGES – CHANGE OF CATEGORY FROM NRS TO INDUSTRIAL CATEGORY
        BSNL has represented that the category of about 1400 telephone exchanges located throughout the State be changed from N.R.S. to Industrial Category. It has been brought out that after corporatization, they have been accorded the status of industrial undertaking and as such, their request for change of category to Industrial tariff needs to be considered.

        Presently all the telephone exchanges are covered under Schedule Non Residential Supply

        The Board in its reply has stated that since no manufacturing process is involved in the operations of BSNL, the Board does not agree for the proposed change of category.

        The Commission had requested BSNL to apprise it of the tariff policy being followed in other States for its telephone exchanges. No feed back has been made available by the consumer in this regard. The Commission notes that load of a telephone exchange mainly comprises of lighting load, fan load and air conditioning load besides load of exchange itself and there is no manufacturing process involved. Also, lighting load, fan load and air conditioning load in offices, hospitals and other non residential premises are charged under Non Residential Supply category.

        The Commission would like to have feedback from the consumer first and meanwhile it is decided not to change the category at present.


      9.18 RAILWAY TRACTION TARIFF

        PSEB has proposed to introduce Two Part Tariff for Railway Traction Category. It has also been proposed to reduce the tariff by about 15.5% against about 4.6% increase in tariff for Large Supply Category. Average rate is expected to be 378 paise per Kwh.

        Presently Railway Traction category is covered under Single Part Tariff based upon Kwh consumption. Energy rate is 447 paise per Kwh.

        Chief Electrical Distribution Engineer Northern Railway has raised following objections to the PSEB proposal regarding Railway Traction Tariff ( R.T. Tariff).
          i) Railway Traction Tariff should be brought down to a reasonable level as the Board is purchasing power from Central Generating Stations @ 207 paise per unit.

          ii) Billing demand should be 65% of Contract Demand or actual demand recorded whichever is higher.

          iii) High Voltage rebate @ 6% should be allowed as proposed in case of Large Supply Category since supply voltage in case of Railway Traction is 220 KV or 132 KV.

          iv) Railways should be exempted from levy of penalty for over-drawl of demand beyond Contract Demand as demand may exceed due to bunching of trains, due to accident, problems in PSEB system at one Sub station etc.

          v) Revision of Contract Demand should be made effective from 30 days after receipt of application without linking it with others.

          vi) Octroi should not be levied at Kurali and Anandpur Sahib supply points as the same is not being levied at other points, in compliance of provisions of Constitution of India.

          vii) Maximum demand charges as well as load violation charges should be considered by taking simultaneous maximum demand at all metering points.


        PSEB in its reply has stated that:
          i) besides paying for electricity to Central Generating Stations, the Board is bearing transmission losses @ about 4% for Northern Region, transmission charges for the Northern Region, transmission & distribution charges for Board’s system and system losses of about 24% to work out the landed cost of such power to an average consumer.

          ii) The provision of computing billable demand as higher of actual recorded maximum demand or 80% of Contract Demand, has been proposed to ensure a minimum level of revenue against the load commitment made to the consumer by the utility and in order to arrange requisite facilities and infrastructure for provision of supply.

          iii) Tariffs have been computed for Railway Traction category without considering the voltage rebate.

          iv) Drawl of demand in excess of Contract Demand leads to overloading in the system feeding the point of supply & increases losses in the network. It could also cause stressful conditions on the regional network compromising on the continuity of supply to other consumers of the region as such penalty for violation of Contract Demand is leviable.

          v) In case system strengthening is not required for revising Contract Demand as per request of the consumer, the suggested schedule can be implemented. However where system strengthening is required the request of the consumer for increase in Contract Demand could be accepted only after completion of works and the time frame can not be committed in advance.

          vi) Octroi @ 4 paise per unit is levied on electricity consumption/ use and sale of electricity in various cities/towns under the jurisdiction of Municipal Corporations/Committees/Councils/Nagar Panchayats/ N.A.C.’s in Punjab as per Notification of Government of Punjab.

          vii) Metering & billing of Railways is carried out for each supply point separately and provision at each individual supply point is made to serve Contract Demand at that supply point. Board’s network is not robust enough to supply entire load of the consumer from any supply point


        The Commission has noted that presently Railway Traction Category is under single part tariff and supply voltage is 132 KV/220 KV. Regarding the issues raised, views of the Commission are as under:

          i) The Commission has noted that neither peak load restrictions nor

          & iii) weekly off(s) nor normal power cuts are applicable to Railway Traction. Therefore, they get much better and continuous power supply as compared to other Consumers. It is also observed that the load of Railway Traction is highly fluctuating. Also, it generates harmonics in the system which is quite damaging. As such, there is a merit in charging higher tariff from these consumers with reference to Large Supply and Non Residential Supply categories. The Commission has however, already given some discount. The detail are discussed in Chapter 10.

          ii) The Commission decides to continue Single Part Tariff as in case of Large Supply Consumers for the current year. The merits of the issue are discussed in detail in Para No. 9.1 above.

          iv) The Commission has observed that penalty for a consumer exceeding contract demand is applicable when the consumer actually exceeds sanctioned Contract Demand. as such, the consumer must discipline himself & remain within sanctioned Contract Demand failing which penalty shall be leviable. Also the penalties are applicable to all Large Supply consumers as well and there is no reason for Railways to be made an exception in this regard.

          v) The issue is being addressed by the Commission through Regulations being framed in this regard.

          vi) The Commission notes that Octroi is levied as per Government of Punjab notification. As such, Northern Railway is advised to take up the matter with Government of Punjab if any exemption in this regard is required.

          vii) The Commission accepts the views of the Board.
        As such, the Commission decides to continue the existing practice of Single Part Tariff for Railway Traction for the current year.


      9.19 POWER SUPPLY TO RAILWAYS (OTHER THAN RAILWAY TRACTION)

      Chief Electrical Distribution Engineer, Northern Railways has suggested following amendments in the prevailing practices in respect of power supply to their colonies, railway stations, offices, pumping installations, railway hospitals and railway workshops etc.
        i) Railways should be charged under schedule Domestic Supply by allowing benefit of slab tariff for each house instead of charging colonies under Bulk Supply Tariff.

        ii) It has been brought out that railways are allowed single point supply and cost of total internal infrastructure like distribution substation & lines, their maintenance cost & distribution losses, billing & financial recovery is borne by railways as such suitable rebate should be allowed.

        iii) Octroi should not be levied on electricity as no State is authorized to impose tax on consumption of electricity under Constitution of India.

        iv) Standby transformer being provided for continuity of electricity should not be included while computing contract demand of railways at various supply points under Bulk Supply.

        v) Late payment surcharge should not be levied for late payment on account of non/late receipt of electricity bills.

        vi) A single consolidated bill may be issued for all connections or a system of payment at a flat rate based on last year consumption be introduced.

        vii) Monthly minimum charges should not be levied on supply points connected to rural feeders.
      As per existing instructions mixed loads of MES, Defence Establishments, Railways, CPWD Institutions and other similar Establishments where further distribution is to be done by the consumer, are catered under Bulk Supply Category. Other loads of Railways/supply points like loco sheds, DCW etc. are charged under Industrial Category.

      PSEB in its reply has stated that
        i) Non Traction load of Railways is a mixed load with consumption falling under Domestic and Commercial categories etc., as such these loads are covered under Bulk Supply category. The tariff rates for Bulk Supply category are between Domestic and Non Residential Supply categories. The proposed Domestic Supply tariff would be comparable with Bulk Supply tariff.

        ii) Since Bulk Supply tariff is proposed to be comparable with Domestic category and much less than Commercial category tariffs as such it is not possible for the Board to agree any rebate.

        iii) Octroi is levied @ 4 paise per unit on consumption/use and sale of electricity in various Cities/Towns under the jurisdiction of Municipal Corporations/Committees/ Councils/ Nagar Panchayats and Notified Area Committees in the State. The octroi is levied as per notification issued by the State Government and the Board has no say in the matter.

        iv) No comments have been conveyed.

        v) Late payment surcharge is levied with a view to discourage the consumers from making delayed payments. Any reduction in surcharge would cause fall in collections and collection efficiency presently being maintained nearly at 100%.

        vi) Presently operations of the Board are largely manual and a single consolidated bill would require consolidation of consumption for all meter readings across the State. The proposal, if accepted, would lead to delay and errors and unnecessary disputes.

        vii) Monthly Minimum Charges are based upon consumption which is only a small fraction of expected energy consumption. It is also practically difficult to separate small number of consumers fed from rural feeders and propose a separate tariff.
      The Commission notes that problems referred to by Chief Electrical Distribution Engineer, Northern Railway pertain to supply points covered under Bulk Supply category only.


      The Commission feels that mixed loads of Northern Railway are justifiably covered under Bulk Supply Tariff. The terms of this category are applicable to all Bulk Supply consumers and there is no reason for Railways to be made an exception in this regard.
    9.20 MMC FOR ICE FACTORIES/COLD STORAGES
      A few Ice factories/Cold storage consumers have objected to the high level of MMC rates applicable for ice factories/cold stores as compared to general industry which is discriminatory. It has been stated that MMC is charged from ice factories during off season whether factory is running at full capacity or not. It has been brought out that prohibitive rates of MMC are forcing the units to close down. It has also been suggested that LS & MS ice factory consumers be treated at par.

      Presently Ice factories/ Ice candies & Cold storages are charged MMC at about 3.5 times the MMC for general industry for the period from April to July. During remaining period, MMC rates for these and general industry are equal.

      The Board in its reply has stated that the tariffs for all categories are required to progressively reflect cost of supply and reduce/eliminate cross subsidies within the period to be specified by Commission. PSEB has made efforts to rationalize tariff structure and to move the tariff towards economic cost of supply. As such Board is not in a position to equalize rates for Large Supply & Medium Supply categories.

      The Commission observes that there is no denying the fact that the consumption pattern of Ice factories and Cold storages is not uniform through out the year. The consumption is mainly concentrated during the summer months and substantially reduced during the remaining months. The variations are so vast that logically MMC cannot be uniform. Also the consumption is heavy during the period when demand is already very heavy in the State and the Board is required to purchase costly power to meet its commitment to the consumers. As such, there is merit in charging higher rate of MMC from these Ice factories/Cold storages during this period. The increased MMC rate for summer months is with reference to assessed consumption of electricity by these units during that period and does not require revision. Also MMC is applicable as long as consumer continues to be attached to the Board’s system. This is to ensure recovery of fixed cost to the Board for ensuring fulfillment of its commitment to supply power to the consumer. Also under the present tariff order, rates of electricity consumption for LS and MS consumers have been equated though other conditions like voltage level at which supply is to be catered differ due to system demands. The Commission, however, decides to allow 10% discount in MMC rates for all categories of consumers.

      The Commission, therefore, decides to continue the present system of charging of MMC from Ice factories, Ice Candies and Cold Storages. The Commission, however, decides to equalize MMC rates in respect of these units for off season period.

    9.21 PRIVATE/CHARITABLE EDUCATIONAL INSTITUTIONS

    9.21A Tariff
      Some Private Educational Institutions have requested that electricity consumption of private unrecognized or private unaided but recognized schools or other charitable educational Institutions should be charged under Domestic Supply tariff in place of Commercial tariff.

      As per prevailing instructions supply to Government/Government Aided Educational Institutions, viz Schools, Colleges, Universities, I.T.I.s, Hostels and residential quarters attached to these institutions is classified under Domestic Supply Tariff. However supply to Private -un-recognised/ unaided but Government recognized educational institutions is billed under Non Residential Supply category.

      PSEB in its reply has stated that they are making conscious efforts to rationalize the tariff structure to move the tariffs towards the economic cost of supply to meet with the provisions of Electricity Act, 2003. It has been further stated that the Board is constrained to add any other class of consumers in the subsidized categories until the State Government compensates the Board for supplying power at subsidized rates.

      Besides above, the Commission also notes that the unaided /private educational Institutions are generally charging the fee(s) as per commercial principles and are mostly not governed by the Government rules for payment of salary to teaching staff. As such, these Institutions cannot be equated with Government/Government aided educational institutions. It is also practically not feasible to verify the genuineness of the charitable characteristic of private institutions and hence there is scope for mis-utilization. There is therefore, not adequate justification for changing the category of these educational institutions.

      The Commission, therefore, decides to uphold the views of the Board and to continue charging of Private un-recognised and Private unaided but recognised educational institutions and other Charitable educational institutions under NRS category at existing terms.

    9.21B MMC for Educational Institutions
      A small number of educational Institutions have brought out that the Private Schools use electricity mainly for 5-6 hours every day during summer only for 3-4 months. The MMC is however, charged for the whole year.

      All Domestic Supply and Non Residential Supply consumers are charged MMC based upon sanctioned load bimonthly and for the entire year.

      PSEB in its reply has stated that more than 50% of the cost incurred by the Board is fixed in nature and comprises of capacity and wheeling charges of central generating stations, employees cost, interest charges, depreciation and other administrative expenses. The Board recovers these fixed charges only partly from various consumers through MMC. The MMC is based on minimum level of consumption for various categories assessed with reference to their sanctioned connected load. Board has therefore, conveyed its inability to accept the request of the objectors.

      The Commission notes that it may not be correct to say that the private schools use electricity only for 5-6 hours every day during summer months only. In any case, MMC levels are covered by electricity consumption of even less than 4-5 hours every day. Further all Domestic Supply & Non Residential Supply Consumers are liable to be charged MMC for the entire year and the loads of these categories cannot be equated to seasonal industries.

      The Commission, therefore, upholds the charging of MMC from educational Institutions as per present provisions.


    9.22 BILLING OF ACCREDITED NEWSPAPERS

      A Consumer Organization has objected to the prevailing practice of charging bonafide factory lighting consumption of accredited newspapers under Non Residential Supply category. It has been brought out that this action is discriminatory as bonafide factory lighting of Large Supply consumers is charged as a part of industrial consumption. It has been suggested that as newspapers are printed during night hours, there is need for providing some rebate like other States.

      According to present policy, lighting load of the accredited newspapers is charged under NRS Category whereas other load of these newspapers is charged under Industrial Category. However, all loads of other news papers/ printing presses are charged under NRS Category.

      PSEB in its reply has stated that all accredited newspapers are eligible for supply under relevant Industrial category. It has been further stated that since their lighting load is much higher as compared to other industrial consumers, lighting load is not considered as a part of industrial supply and is charged under Non Residential Supply category.

      The Commission notes that the reply of the Board is not very convincing. The benefits allowed to accredited newspapers have been restricted to factory load only and not lighting load. However, the newspapers cannot really claim parity with Large Supply consumers due to different nature of loads. The supply may also not be catered to at the voltage level obligatory for LS consumer. If this is done, it may require additional capital investment or payment of surcharge by the consumer which may not really be worthwhile even from consumer’s point of view. Also the lighting load in this case is substantially more than incase of general industry where the lighting load happens to be only a very small fraction of total load.

      In view of all above, the Commission decides that the existing system of categorization of loads for newspapers may continue.

    9.23 SOS CHILDREN’S VILLAGE RAJPURA, PUNJAB

      A Consumer has submitted that SOS Children’s Village is a charitable organization working for orphaned , destitute, abandoned and needy children of Punjab to provide environment and facility for their growth to become contributing members of the society. It has been intimated that it is a bulk domestic user receiving power from 11 KV line and having its own transformer and its bi-monthly bill is about Rs.90,000/- . It has requested for 50% concession on the electricity rates so that money saved could be utilized for the benefit of the needy.

      Under the present system, this Organisation is charged under Domestic Supply category.

      The Board in its reply has stated that according to Electricity Act, 2003, the tariffs of all categories are required to reflect the cost of supply of electricity and cross subsidies are progressively to be eliminated. It has been further stated that Board is constrained to add any other class of consumers in subsidized category until the State Govt. expressly compensates the Board for providing such supply at subsidized rates.

      The Commission observes that the organization in question is already charged at Domestic Supply rates which is itself a subsidized category. Also, as per mandate of the Electricity Act, 2003, the Commission is obliged to reduce and finally eliminate cross subsidies. As such, it would not be prudent to make new additions in this subsidized category. Also it would not be advisable to show any preference to individual organizations.

      The Commission, therefore, decides to continue the present system of charging of SOS Children’s Village.

    9.24 OTHER ISSUES
    9.24.A General Conditions of Tariff
      General Conditions of Tariff are prefixed to the Schedules of Tariff of the Board. These contain important operating conditions including definitions of various terms, operating conditions of agricultural tubewell consumers, billing procedures and practices, tariffs for special categories, applicability of Electricity Duty, taxes and fuel cost adjustment clause.

      The Commission notes that the Board has submitted Electricity Supply Regulations, as updated up to June 9, 2004 and amended in line with Electricity Act, 2003 which has a separate Chapter on this issue. The Commission observes that the Supply Regulations supplied by the Board are mainly updated version of the Supply Regulations till now in vogue. No serious efforts seems to have been made to make them update and in line with the present system as well as the Electricity Act, 2003.

      The Commission, therefore, directs the Board to review the General Conditions of Tariff in view of above observations and submit revised proposal in this regard. Meanwhile the Commission decides to continue the present General Conditions of Tariff subject only to changes necessitated by this order.

    9.24.B Advance Consumption Deposit

      Some Consumers Associations have been raising the issue regarding rate of Advance Consumption Deposit & need for payment of interest thereon.

      Advance Consumption Deposit is recovered under the provisions of Conditions of Supply. This Advance Consumption Deposit is payable by most of the consumers and no interest is paid by the Board.

      The Commission notes that under Section 47 of the Act, it is obliged to frame Regulations for issues relating to requirement of security from the consumers and allowing of interest thereon as per the provisions of the Act. Draft Regulations have already been put on the website of the Commission inviting comments from the public/consumers. The issue of amount of security to be deposited and rate of payment of interest thereon shall, therefore, be considered by the Commission at the time of finalization of these Regulations.

      Till such time the Commission decides to continue the system prevailing in the Board in this regard.

    9.24.C MMC for AP Metered Consumers

      In the existing tariff structure, MMC is not applicable for AP consumers. In the tariff proposal for the year 2004-05, the Board has not proposed any MMC for this category. Unmetered AP consumers are paying flat rate tariff and as such there is no need for introduction of MMC for them. In case MMC is introduced for AP metered consumers, they will be paying much higher bill on the metered units during high consumption paddy months and paying MMC during the remaining low consumption period. Thus, overall during the year, they may even end up paying more than the unmetered consumers. This will be against the spirit of encouraging the AP consumers for shifting to metered supply.

      The Commission, therefore, decides to continue existing system of not charging MMC from metered AP consumers.

    9.24.D AP Consumers in Municipal Limits

      Presently, Agriculture Pumping Supply Consumers have the option to be governed under flat rate or metered supply tariff. However, AP consumers getting supply from urban / city feeders are allowed metered supply only. The Commission in its Tariff Order for the year 2002-03 had directed the Board to prepare a plan for gradual shift from the flat rate system to metered supply and submit the same to the Commission at the earliest. It was further directed that in the mean while, the Board must extend facility of metered supply to any Agricultural Pumping Set Consumer who applies for the same out of the existing consumers.

      The Commission further notes that under Section 55 of the Electricity Act, 2003, all licensees are obliged to supply electricity to all consumes through installation of a correct meter only, after expiry of 2 years from the appointed date. The appointed date being June 10, 2003, this limit expires on June 9, 2005.

      The Commission notes that Agricultural Pumping Supply Consumers located within Municipal limits of all cities and towns are getting supply on urban pattern and are thus in a much better position with regard to quality and quantity of power supply. These consumers are presently getting their supply on metered basis only.

      The Commission, therefore, decides to continue supply electricity to AP consumers located in the Municipal limits under the metered supply tariff only.

    9.24.E Parallel Operation Charges

      Some consumers have objected to the recovery of parallel operation charges by the Board on the capacity of T.G.(s) on monthly basis. It has been brought out that there is no justification for recovering these charges especially when the cost of connecting infrastructure has been paid by the consumer.

      These charges are being levied on all consumers who install T.G. sets and operate the same.

      The Commission would be framing Regulations in this regard and till these are framed, the recovery of Parallel Operation Charges is allowed to be continued as per present practice.

      Also the Commission directs the Board to furnish full details of recovery of Parallel Operation Charges along with the next ARR and Tariff Application for the year 2005-06.

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