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POWER SECTOR STATUS & TARIFF

IN

ANDHRA PRADESH


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ANDHRA PRADESH

POWER SECTOR STATUS & TARIFF

IN

ANDHRA PRADESH

(2000-01)

1. The Andhra Pradesh State Electricity Board (APSEB) used to be one

of the most efficiently managed Electricity Boards in India. It had consistently

won Awards for the high Plant oad !actor (P!) achie"ed by its generating

stations. But of late# the annual re"enue deficit of APSEB had steadily

increased from $s. %&' r. in year 1*+& to $s. ,&-- r. in year 1+

,---. The increase in tariff from time to time was neither regular nor

adeuate. The deficit amount was met by /o"ernment of Andhra Pradesh

(hereinafter called /oAP) as subsidy# which had also not been 0aid in cash

most of the time. Table+1 below gi"es! the details.


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,. The reasons for the huge deficits were hea"y subsidi;ation of 0ower to

Agricultural and omestic consumers and growing transmission and

distribution losses.

4. The consum0tion 0attern of 0ower in the State showed that about 46

of 0ower sold was consumed by the !arm sector but it contributed only about

46 of the re"enues because of highly subsidi;ed tariff.

Table-2Category !"e # Sale" $ # Re%e&'e Real!"at!o&

S.

8o

etails 1'+%

(Actls) APSEB

1%+ (Actls)

APSEB

1+,--- ,---+,--1

(Pro9ected)6 ToTotalSales

6 ToTotal

$e"enue

6 ToTotalSales

6 ToTotal

$e"enue

6 ToTotalSales

6 ToTotal

$e"enue

6 ToTotalSales

6 ToTotal

$e"enue

1 omestic 1 ,- ,- ,- ,1 1 ,4 ,1

, 8on+domestic * % * 1- & 1- & 1-

4 Agricultural 4 * 4 * *- * 42 &

* Industrial ,% & ,2 &2 ,, &% ,' &&


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&. The resultant deficit amount was co"ered 0artly by cross+subsidi;ation

during tariff fi3ation and the balance# which was a substantial amount "arying

from $s. ** r. to $s. ,2', r. was 0aid by the /o"ernment annually as

e30lained earlier (Table+1).

2. The transmission and distribution losses were high at about 446.

These were wor?ed out as the difference of the gross units of 0ower

0urchased and units of 0ower sold. 7"er the last si3 years# while the 0ower

0urchases increased by 446 0ower losses increased by 1'46. =owe"er#

following the energy audit conducted by APT$A8S7 during 12+'#

APT$A8S7 conceded the e3istence of energy theft in the system and

reduced the consum0tion attributed to the Agricultural Sector. This e30lains

the sudden increase in the loss figures from 12+'.


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metered. The metered consum0tion accounted for only *16 of the total 0ower

handled.

Table-7PERCENTA


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. The consum0tion mi3 of 0ower in the State was uite ad"erse. hile

the !arm sector consum0tion was *-6 of the total consum0tion# the Industrial

consum0tion remained almost stagnant at ,,6.

Table - 5CATEPTION IN >U"

Category )9-)7 )7-)5 )5-)8 )8-)6 )6-)) ))-** # o0 totalo&"'3t!o&

omestic 4,14 4,'2 4%-1 *&4& &-- &%&* ,1

8on+domestic 2', '-* '& ,' 1-2- 14&- &

Agricultural 1-,, 114 '%4& 442 %22 1114% *-

Industry 22- 22*' 2'%4 2''- 22&4 21*1 ,,

$aiway Traction &* 24, 2%2 %&- %&, -- *

7thers %** '*, 1-,4 14,* 12,4 ,1*- %

Total ,,4& ,4*-- ,-,4 ,4'*, ,&1** ,'&,4 1--

1-. It a00eared that bul? of the increase in 0urchase of 0ower was to meet

the growing demand of !arm and omestic sectors# thereby causing more

re"enue losses through increased 0urchase of 0ower. There being no

corres0onding increase in the consum0tion of industry# the burden of


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11. The cost reco"ered from the sales was less than the a"erage cost of

su00ly due to huge losses incurred# highly subsidi;ed tariff for su00ly of 0ower

to !arm sector# substantially subsidi;ed domestic sector# limitation to further

cross+subsidi;ation and the tariff not being re"ised regularly or adeuately.

Table - 6

COST RECOVERY FRO> SA:ES ($s5Dwh)

escri0tion 1*+& 1&+2 12+' 1'+% 1%+ 1+--

,Pro%!"!o&al/

A"erage ost of nit 1.4* 1.&1 ,.-4 ,., ,.'% ,.1

ost reco"ered from sales -.% 1.-4 1.2% 1.%, 1.%4 1.'

Percentage ',6 2%6 %46 '6 226 226

1,. The /oAP had been 0ro"iding subsidy to the e3tent of about 4- to 4&6

of the total e30enditure to meet the re"enue deficit as well as the statutory 46

return on the net fi3ed assets to the Board.


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Table-1*EXPENDITURE - REVENUE - SUBSIDY

($s. in rores)

escri0tion 1*+& 1&+2 12+' 1'+% 1%+ 1+,---(Pro".)

Total Subsidy ** 1,& %&1 1,&2 ,&1 ,2',

SubsidyPaid5ad9usted by

/oAP

Euitywritten off

Ad9ustedagainst

oan

Ad9ustedagainst

oan

$s. *%4r.

Ad9ustedagainstoans

ash oan of$s. &*& r.#

Bonds$s.11-- r.

Total $s.12*&r.

ash grant of$s.1-& r. :

Bonds for$s.4-14.,*r. raised

1*. This had in turn forced the Board to borrow money to settle the bills

for 0urchase of coal and 0ower. The Board also raised funds by

way of Bonds guaranteed by the /o"ernment. The /o"ernment

was reuested to ser"ice the debt arising out of these Bonds as the

Bond issue was resorted to on account of the non+recei0t of subsidy

f th / t Th / t h d d t i th


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Table-12INTEREST C.AR


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distribution could not be maintained unless the charges for the electricity

su00lied were adeuately le"ied and duly collected.

,-. ith the enactment of the $eform Act# the APSEB was unbundled into

K/enerationF and KTransmission C istributionF entities by constituting

/eneration or0oration of Andhra Pradesh (AP/E87) C Transmission

or0oration of Andhra Pradesh imited (APT$A8S7) on -1.-,.. The

Andhra Pradesh Electricity $egulatory ommission was constituted on

41.-4.1. APT$A8S7 was further unbundled w.e.f. -1.-*.,--- into

LTransmission or0orationM and four Listribution om0aniesM (IST7S)#

which would function as subsidiaries of the Transmission com0any till the

0ri"ati;ation of the IST7S too? 0lace. APT$A8S7 was both the Bul?

and $etail Su00ly icensee. icensing of the IST7S had been under

0rocess in the ommission.


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while subsidi;ing su00ly of 0ower to !arm and omestic sectors and for this

reason reduce the de0endence on e3ternal subsidy# mo"e towards

om0ensatory tariffs# im0ro"e the financial "iability and credibility of the utility

to attract 0ower de"elo0ers and finally reduce the cost of su00ly.

I33e?!ate Ta"@" be0ore te Co33!""!o&

Im0ro"e o0erational efficiency.

inimise cross+subsidy.

etering of Agriculture onsum0tion

$educe TC osses.

$educe e3ternal subsidy.

o"e towards com0ensatory tariffs.

a?e the icensee financially "iable.


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,&. 7n A0ril '# the !iling for Pro0osed tariff was made. A correction to

su00lementary A$$ 5 E$ was filed on ay %# ,---. The filing of A$$5 E$

was as followsBEDDED COST >ODE: - A::OCATION FACTORS

ategory escri0tion

ENERAND CUSTO>ER

Energyincludingall losses

in

Energyallocation

factor

oincidentdemandincludingall losses

in

oincidentdemand

allocationfactor

8o. ofustomers

ustomersallocation

factor

:T omestic at+I 1-#1,- ,*.%26 4#412 *.,6 %#&%#-- '4.*46

:T Indl. Su00ly at+III ,#1 '.4&6 *21 2.%26 141#1& 1.146

:T Irrn. C Agrl. at+> 1''4 4%.'&6 1#-&1 1&.2,6 1#%'#1-- 12.,,6

.T Indl. Seg. at+I 4#*4, %.*46 *%' '.,*6 ,#&' -.-,6

:T$.T Total ,All at4/= 9*;81* 1**4**# 5;828 1**4**# 11;5)8;*19 1**4**#

24. sing classification factors and allocation factors# the cost to ser"e for

each category was estimated. The 0er unit cost was determined on the basis

of consum0tion net of losses. Table ae!ed e30lains the wor?ing of Host to

Ser"eH in res0ect of omestic ategory of onsumers.


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2&. It would be obser"ed from the abo"e that T 8on+domestic# T

Industry# =T industry C =T $ailway Traction ategories of onsumers were

0aying higher than their Lost to Ser"eM and thus subsidi;ing Agricultural and

omestic ategories of onsumers. $e"enue reali;ation from domestic

category was only 4*6 of the cost to ser"e while that for agriculture was

e"en lower at %6. This ty0e of cross subsidi;ation had resulted in the

following outcome ,

T Irrigation5Agrl. at > '-4

T Public ighting (ocal Bodies) at.>I ,'

=T Irrigation at.I> G

=T $ural Elec.o+o0.Societies -

Additional Subsidy to T Agrl.at.> on account of annualisation ,,

TOTA:= 1(97

GIncluded in T ategory >

'2. 7n account of the /o"ernment sanctioning subsidy# the e3isting tariffs

were reuired to be increased to generate only $s.1-', r.

Table - (1


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Table - (2Tar!00 Not!0!e? by te Co33!""!o& !t a S'b"!?y o0 R"41(97 Cr4

ategory !A inPs5nit

A"g.reali;ation at

full cost

A"erage $ealisationin Ps5unit after

subsidy of $s. 14*&r.

T omestic *2 4&- ,&%

T 8on+domestic 42% *'& *'&

T Industrial 4,* *1% *1%

T Agriculture ,42 &- 4-

=T Industry ,-% *2, *2,

=T $ailway Traction 14 *&* *&*

'%. The ommission rewor?ed the reuired metered tariff on the basis of

the re"ised flat rates and fi3ed 4& 0aise 0er unit for metered Agricultural

consum0tion. This resulted in four out of eight categories finding the metered

tariff attracti"e.


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%-. If the use of 0um0sets was limited only for four hours and for 1*- to

12- days in a year# the metered tariff would benefit all categories of farmers

as shown belowariable ost Ad9ustment ,12 ,12 ,12

Efficiency gains &-- &-- &--

A$$+after deductions %&1% '%2& '%2&

$e"enue at urrent Tariffs &*4' &**% &**%

/AP to be co"ered 4-%1 ,*1' ,*1'

Tariff Increase %-% (1&6) 1-', ',

Subsidy E30ected ,,', 14*& 12,2

1. The re"enue reali;ation from the different consumer categories had

gone down with the increase in subsidy committed by the /oAP. The final

0icture on a"erage reali;ation basis was as below Agricultural '& to *-- 5=P5@ear &- 5=P5 @ear 1&- to *--5=P5 @ PAP $ailwayTraction

,1, ,2& (,&6) 4*- (,%6) *,- : % (,26) *&* (26)

T C =T 7"erall

A"erage

1-, 1,, (,-6) 12, (446) 1% (,-6) ,,' (1*.&6)

(G) The increase u0to 4-- units5 month is 8il

(G) The increase for - to *-- units5 month is ,16

(G) The increase for - to *-- units5 month is ,%6


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Annexure

,R"4 !& ror"/

E8E$/@ $EATE 7STS EA8 $EATE 7STS ST7E$ $EATE 7STS

8ame of

the

E30enditure

onsum0tionEnergy

in sAmount

lassifi

cation

factor

Allocati

on

factor

Energy

related

cost

Amount

lassifi

cation

factor

Allocation

factor

emand

related

cost

Amount

lassifi

cation

factor

Allocation

factor

usto

mer

related

in $s.

a?hs

Total

E30end

iture

Energy

charges

in

Ps.5unit

emand

harge

s in

Ps.5

unit

ustomer

harge

s in

Ps.5

unit

Total

A"g.

ost 5

nit in

Ps.

/ross e"el 1-1,- '4%1* &%.%-6 ,*.%26 1-'1* '4%1* *1.,-6 *.,6 1*%4 '4%1* -.--6 '4.*46 - ,&'%-' 1-' 1*% - ,&&

8et e"el 2,&1 1-'1* 1*%4 - 1'4 ,*- - *1,

/ross e"el 1-1,- 141&1 -.--6 ,*.%26 - 141&1 -.--6 *.,6 &%4* 141&1 1-.--6 '4.*46 22 2%-- - 2 1 '

8et e"el 2,&1 - &%4* 22 - , 11

/ross e"el 1-1,- &*,&* -.--6 ,*.%26 - &*,&* &-.--6 *.,6 144'1 &*,&* &-.--6 '4.*46 11 44,- - 14 ,- 44

8et e"el 2,&1 - 144'1 11 - ,1 4, &4

/ross e"el 1-1,- -4* -.--6 ,*.%26 - -4* 1.%,6 *.,6 ,,,2 -4* %.1%6 '4.*46 441' &&*4 - , 4 &

8et e"el 2,&1 - ,,,2 441' - * &

/ross e"el 1-1,- ,*&&, -.--6 ,*.%26 - ,*&&, 1.%,6 *.,6 1111 ,*&&, %.1%6 '4.*46 1*'& 1,&%' - 11 1 1,

8et e"el 2,&1 - 1111 1*'& - 1% , ,-

/ross e"el 1-1,- 4,%&1 -.--6 ,*.%26 - 4,%&1 1.%,6 *.,6 1*%2' 4,%&1 %.1%6 '4.*46 1'* 12%*1 - 1& , 1'

8et e"el 2,&1 - 1*%2' 1'* - ,* 4 ,'

/ross e"el 1-1,- 1,* -.--6 ,*.%26 - 1,* 1.%,6 *.,6 &%2 1,* %.1%6 '4.*46 '% 224 - 1 - 1

8et e"el 2,&1 - &%2 '% - 1 - 1

/ross e"el 1-1,- +*&'*' -.--6 ,*.%26 - +*&'*' &-.--6 *.,6 +11,'& +*&'*' &-.--6 '4.*46 +12'2 +,%-'1 - +11 +1' +,%

8et e"el 2,&1 - +11,'& +12'2 - +1% +,' +*&

/ross e"el 1-1,- %'1 -.--6 ,*.%26 - %'1 1.%,6 *.,6 *-2- %'1 %.1%6 '4.*46 &4 *& - * 1 &8et e"el 2,&1 - *-2- &4 - 2 1 '

/ross e"el 1-1,- %42&&* ,*.%26 1-'1* %42&&* *.,6 1-2'* %42&&* '4.*46 11*'1 41--& 1-' 1%% 11 4-2

8et e"el 2,&1 1'4 4-& 1% *2

Table o0 Co"t alloat!o& o0 eaA ategory o0 e2e&?!t're to :T Do3e"t! - 1

Purchase

of Energy

aintanenc

eEm0loyees

ost

7ther $e".

(8on+Tariff

Income)e urn on

a0italBase

Total ost

./eneral

E3 .e0reciatio

nn e res an

other !in.

h.Pro"ision

for Ta3es

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