delhi electricity tariff economics

8/12/2019 Delhi Electricity Tariff Economics

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What Determines Electricity Tariff


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What determines tariff

Contents

Bulk Power cost

Distribution cost

Tariff Comparisons Across

Geographies

Summing Up

Slide 2


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Electricity: Value chain (G T D)

Fixed Cost Fuel Cost G+T+D COSTS GO INTO

G

Transmission Cost

Charges Losses

BUILDING

TARIFF

Distribution Cost

AS SEEN BY END D

O&M Cost Financing Cost Losses

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What determines Tariff (80:10:10)

Three main com onents

Power Purchase (80% of total cost) Generation cost Transmission cost

O&M Cost includes Repairs & Maintenance cost

O&Mcost

cost

Employees cost Administrative cost

Financial Cost includes

PowerPurchase

Cost(G+T)

eprec a on Interest TaxDDG T G+T+D

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o upp es u ower o e

100% power is sourced from Govt plants

All are under long term PPA

Rates are CERC/ DERC approved

Fuel cost increase in Generation is fullass throu h to Discoms

Discoms have absolutel No control over Bulk Power Cost

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Bulk Power Cost (G+T): Sharp Increase in recent years

5.38

5.71

Generation ComponentTransmission Component

Cost in Rs / Unit

3.43

.

300%

1.39

1.74 1.942.09

2.41.

.

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Generation Cost: Significant Increase

,

Imported coal is 4 times more costly Blending up to 30-40% by NTPC plants

Higher transport cost

Coal sourced from longer distance

Consistent Increase in transportation cost

Higher fixed cost from new plants

More than 60% power from new plants

New plants fixed cost: Rs. 3 per unit

Old plants fixed cost: Rs. 0.6 per unit

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Delhi Electricity Tariff Hikes in last 10 years

17%21%

20%RST 65% Increase

Rs / Unit

65% of Tariff hike has effectedin last 10 yearsNo Hike

Majority of the hike : 45% hashappened in last 2 years

Almost zero tariff hikeappene or years

Mere 17% tariff hike in firstcontrol period

Inadequate tariff led to huge un-recovered cost of Rs. 20,000 Cr

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ver ncreas ng revenue gap

~Rs 14 800 Cr Re ulator Assets for BSES Discoms alone

Partic ulars (Rs crs) BYPL BRPL BSES NDPL Total

Upto FY 09 -26 612 586 351 937

FY 10 533 1,068 1,601 751 2,352

FY 11 1,121 1,546 2,667 964 3,631

FY 12 2,216 4,233 6,449 1,783 8,232

FY 13 *E 1,690 1,779 3,469 885 4,354

Total Gap 5,534 9,238 14,772 4,734 19,506

Slide

Absence of cost reflective tariff led to huge unrecovered cost, Rs.~ 20,000 Crs

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oss e uc on a

Huge Savings to Government

Rs.37 500 Cr till date

AT&C loss reduction : 57% to 17%

Commercial loss r eduction : 45% to 5%

Rs.7,500 Cr/yr, 25% of Delhi budget

More money available for Schools, Metro & Buses etc

Hospitals & Infrastructure etc

Reduced subsid out o* Provisional, yet for true up

Slide

,

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Operating Cost: Drastic Reduction

NDMC : 1.13

Kerala : 1.00 Bihar : 0.88 Punjab SEB : 0.86

CPI increased by 120% in past 10 yrs

Des ite inflation O eratin cost reduced b 45% (TPDDL) : . BSES : 0.55

76 to 55 paise/unit , huge operational efficiency

Cost reduction is despite providing world class

customer services

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n re ene o opera ona e c ency passe on o cus omers y ower ar

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Recapitulating how Discoms have fared

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c ency mprovement: ene t ng ovt. ustomers

300% hike in ower cost should have

resulted in 300% retail tariff h ike

As it constitutes 80% of total cost

World record AT&C loss r eduction

Reduction in Operating expense

.

Kept requirement of tariff hike to 90%

Mere 65% (untimely) hike led to

Power cos t(% hik e) Retail tarif f (% hike) Savings(%) n-recovere cos s. , r

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0.55

oss e uc on ea ng o ower ar

Pre privatization Loss 57%

13.857.58 Consumer Retail tariff - Rs.6.55

5.71

Power AT&C Distr'bn Total

Required Tariff - Rs.7.40

With out privatization required tariffCost Loss Cost Cost

0.55

1.13

Post privatization Loss 17% would have been - Rs.13.85

An Increase of 110% from current level

7.405.71

Slide

Power Cost

AT&C Loss

Distr'bnCost

TotalCost

,Per Unit values for FY 13

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Commodities / Services

With Neighbouring Towns / Metros

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Power Tariff Vs Essential Commodities/Services

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ow essent a commo t es pr ces ave move

Commodity Unit FY 03 FY 13 % Increase

Dal Arhar Rs./Quintal 2,197 6,734 206%

Sugar Rs./Quintal 1,417 3,398 140%

. , ,

Meat Rs./Quintal 8,200 23,760 190%

Eggs '00 Nos. 127 319 151%

Source: Delhi Govts statistical handbook, based on price index of Delhi

Ghee (Desi) Rs./15 Kg 1,930 4,439 130%Note: FY 13 figures are arrived at by 8% increase in FY 12

Slide

Prices of Essential Commodities have Increased by avg. 170%

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ow erv ces pr ces ave move

DTC DJB DMRC

Since ince tionLast 10 earsincreased by 100%gone up by 150 %

gone up by 200 %

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ow ue pr ces ave move

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r ces o ue ave ncrease y avg.


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ow ropert es pr ces ave move

CLASS A B C D

2007 43 34 27 22

2012 645 205 133 106

Growth (%) 1400 500 388 388Rate in 000 /sqmtr

Prices of Properties increased massively by 670%

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Power Tariff Vs Neighbours / Other Metros

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power ar compare o o er e g our ng owns

than its neighboring towns Delhi has better power quality

7.7 7.9 8.2 8.17.1

24X7 supply Reliability Index @ 99.98% Stable voltage

ower cos n o er owns s an what is in Delhi,

To compare same quality of 24x7 power

Note: *08 hrs Load shedding/day impact is taken for NCR towns Alternate power during shed hours taken at Rs 16/unit All calculations are for 200 units of monthly residential consumption

DELHI customer a s substantiall lower 1/3 rd com ared to other towns

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power ar compare o er e ro es

Note: Tariff comparison for Domestic usage @ 200 units per month

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Recent Tariff Revision Trend Across Country

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ow as power ar ncrease coun ry w e

All states hiked tariff last year

Top 3 states in hike:

Tam na u 37%

Kerala 30%

WB (CESC) 24%

Average hike of 16%

A welcome change which has to

continue

Tariff hike has contributed towards restoration of Health of Discoms

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Summing up

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umm ng up: conom cs o e ec r c y ar

80% of total cos t is Power cos tIncreased Uncontrollable cost

Retail tariff should have gone upby

y

300% As 300% escalation in

power cost

Savings due to Huge efficiencygains

210%40% reduction in AT&C loss

& Operating cost

Reduced tariff hike required dueto huge efficiency gains

Tariff hike effected

90%

65%

Entire gains passed on toCustomers & Govt .

Untimel & Inade uate hike

Un recovered Gap in Tariff hike 25%

Leading to huge underrecovery of Rs. 20,000 Crs.

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Over last 10 yrs period


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umm ng up: r ce ncrease across e oar

670%

Compared to very Bulk Power Cost 300%

of other itemsDearness

Allowance250%

Delhi Power Tariff

has gone up by mere Essential Comm 170%

65%Services 150%

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Index


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esp e pec acu ar urnaroun ,

in absence of Ade uate Tariff

Discoms are facing Financial Crisis

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Thank You

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delhi electricity tariff economics

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