What Determines Electricity Tariff

A Perspective A Perspective
C
What determines tariff
Contents
Bulk Power cost
Distribution cost
Tariff Comparisons Across
Commodities Commodities
Geographies
Recent Tariff Revision Trend Across the country Recent Tariff Revision Trend Across the country
Summing Up
Slide 2
Electricity: Value chain (GTD)
Generation Cost Generation Cost
Fixed Cost
Fuel Cost
G+T+D COSTS
GO INTO
GG
Transmission Cost
Charges
Losses
GOINTO
BUILDING
TARIFF
T
Distribution Cost
AS
SEENBYEND
CUSTOMER
DD
TT
O&M Cost
Financing Cost
Losses
CUSTOMER
Slide 3
What determines Tariff (80:10:10)
Three main components
Power Purchase (80% of total cost)
Generation cost
Financial
p
Transmission cost
O&M Cost includes
Repairs & Maintenance cost
O&M
cost
Financial
cost
Employees cost
Administrative cost
Financial Cost includes
D i ti
Power
Purchase
Cost
(G+T)
Depreciation
Interest
Tax D D G T G+T+D
Slide 4
Wh S li B lk P t D lhi Who Supplies Bulk Power to Delhi
100% power is sourced from Govt plants
All are under long term PPA
Rates are CERC/ DERC approved
Fuel cost increase in Generation is full
pass through to Discoms p g
Discoms have absolutely No control over Bulk Power Cost
Slide 5
y
Bulk Power Cost (G+T): Sharp Increase in recent years
4 30
5.38
5.71
Generation Component
Transmission Component
Cost in Rs / Unit
2 68
3.43
4.30
300%
1 42
1.39
1.74
1.94
2.09
2.41
2.68
1.42
Slide 6
Generation Cost: Significant Increase
Owing to coal shortage imported coal being used Owing to coal shortage, imported coal being used
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
Fixedcost of newplants is 5 times than old plants Fixed cost of new plants is 5 times than old plants
New plants fixed cost: Rs. 3 per unit
Old plants fixed cost: Rs. 0.6 per unit
Slide 7
Delhi Electricity Tariff Hikes in last 10 years
17%
21%
20%
RST 65% Increase
Rs/Unit
65% of Tariff hike has effected
in last 10 years
NoHike
Majority of the hike : 45% has
happened in last 2 years
Almost zero tariff hike
h d f 5 happened for 5 years
Mere 17% tariff hike in first
control period
Inadequate tariff led to huge un-recovered cost of Rs. 20,000 Cr
Slide 8
E i i Ever increasing revenue gap
~Rs 14,800 Cr Regulatory s ,800 C egu ato y
Assets for BSES Discoms alone
Particulars (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
9
AT&C L R d ti P th AT&C Loss Reduction Path
Benefits
Huge Savings to Government
Rs.37,500 Cr till date
Benefits
AT&C loss reduction: 57% to 17%
Commercial loss reduction: 45% to 5%
,
Rs.7,500 Cr/yr, 25% of Delhi budget
More money available for
Schools, Metro & Buses etc
Hospitals & Infrastructure etc
Reduced subsidy outgo
*Provisional,yetfortrueup
A World Record 40%AT&C Loss Reduction
y g
Slide
A World Record, 40% AT&C Loss Reduction
10
Operating Cost: Drastic Reduction
NDMC:1.13
Kerala:1.00
Bihar:0.88
PunjabSEB:0.86
NDPL 0 61
CPI increased by 120% in past 10 yrs
Despite inflation, Operating cost reduced by 45%
NDPL(TPDDL) :0.61
BSES :0.55
Despite inflation, Operating cost reduced by 45%
76 to 55 paise/unit, huge operational efficiency
O&Mcost significantly lower than SEBs O&M cost significantly lower than SEBs
Cost reduction is despite providing world class
customer services
Entire benefit of operational efficienc passed on to c stomers b lo er tariff
Slide
Entire benefit of operational efficiency passed on to customers by lower tariff
11
Recapitulating how Discoms have fared
Slide 12
Effi i i t b fiti G t & C t Efficiency improvement: benefiting Govt. & Customers
300%hike in power cost shouldhave 300% hike in power cost should have
resulted in 300% retail tariff hike
As it constitutes 80% of total cost
Huge improvements leadto 210% savings Huge improvements lead to 210% savings
World record AT&C loss reduction
Reduction in Operating expense
Savings passedto Govt & Customers Savings passed to Govt. & Customers
Kept requirement of tariff hike to 90%
Mere 65% (untimely) hike led to
U d t (R 20 000 C )
Inadequate tariff has lead to dismal financial health of Discoms
Power cost
(% hike)
Retail tariff
(% hike)
Savings
(%)
Un-recovered cost (Rs. 20,000 Cr)
Slide
Inadequate tariff has lead to dismal financial health of Discoms
13
AT&C L R d ti l di t l T iff
0.55
AT&C Loss Reduction leading to lower Tariff
Pre privatization Loss 57%
13.85
7.58
Consumer Retail tariff - Rs.6.55
5.71
Power AT&C Distr'bn Total
Required Tariff - Rs.7.40
With out privatization required tariff
Cost Loss Cost Cost
0.55
1.13
Post privatization Loss 17%
would have been - Rs.13.85
An Increase of 110% from current level
7.40
5.71
Slide
Power
Cost
AT&C
Loss
Distr'bn
Cost
Total
Cost
,
Per Unit values for FY 13
14
Tariff Comparisons Tariff Comparisons
Commodities / Services
With Neighbouring Towns / Metros
Slide 15
Power Tariff Vs Essential Commodities/Services
Slide 16
H ti l diti i h d ??? How essential commodities prices have moved ???
Commodity Unit FY03 FY13 %Increase
Dal Arhar Rs./Quintal 2,197 6,734 206%
Sugar Rs./Quintal 1,417 3,398 140%
Chillies Rs /Quintal 3 247 9 989 208% Chillies Rs./Quintal 3,247 9,989 208%
Meat Rs./Quintal 8,200 23,760 190%
Eggs '00Nos. 127 319 151%
Source: Delhi Govts statistical handbook, based on price indexof Delhi
Ghee(Desi) Rs./15Kg 1,930 4,439 130%
Note: FY 13 figures are arrived at by 8% increase in FY 12
f C %
Slide
Prices of Essential Commodities have Increased by avg. 170%
17
H S i i h d ??? How Services prices have moved ???
DTC DJB DMRC
Since inception,
Last 10 years
Last 10 years
S ce cept o ,
increased by 100%
y
gone up by 150 %
Last 10 years
gone up by 200 %
Prices of Services has Increased by avg 150%
Slide 18
Prices of Services has Increased by avg. 150%
H F l i h d ???
Petrol
Diesel LPG
How Fuel prices have moved ???
Petrol
Diesel LPG
UP by 136%
UP by 153%
UP by 278% UP by 136%
UP by 153%
UP by 278%
P i f F l h I d b 190%
Slide 19
Prices of Fuel have Increased by avg. 190%
H P ti i h d ??? How Properties prices have moved ???
CLASS A B C D
2007 43 34 27 22
2012 645 205 133 106
Growth (%) 1400 500 388 388
Rate in 000 /sqmtr
Prices of Properties increased massively by 670%
Slide 20
Power Tariff Vs Neighbours / Other Metros
Slide 21
DELHI t iff d t th N i hb i t
Delhi power tariff is substantially lower
DELHI power tariff compared to other Neighbouring towns
Delhipowertariffissubstantiallylower
thanitsneighboringtowns
Delhihasbetterpowerquality
7.7
7.9
8.2
8.1
7.1
24X7 supply
Reliability Index @ 99.98%
Stable voltage
P t i th t i 200% th Powercostinothertownsis200%than
whatisinDelhi,
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 pays substantially lower (1/3
rd
) compared to other towns
Slide
p y y ( ) p
22
DELHI t iff d t Oth M t Citi DELHI power tariff compared to Other Metro Cities
Delhi power rates are substantially cheaper than other Metros
Note:TariffcomparisonforDomesticusage@200unitspermonth
Slide 23
Delhi power rates are substantially cheaper than other Metros
Recent Tariff Revision Trend Across Country
Slide 24
H h t iff i d t id How has power tariff increased country wide
All states hiked tariff last year
Top 3 states in hike:
T il d 37% Tamilnadu 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
Slide 25
Summing up
Slide 26
S i E i f D lhi El t i it T iff Summing up: Economics of Delhi Electricity Tariff
80% of total cost is Power cost
Increased
b 300%
Uncontrollable cost
80% of total cost is Power cost
Retail tariff should have gone up
by
by 300%
300%
As 300% escalation in
power cost
Savings due to Huge efficiency
gains
210%
40% reduction in AT&C loss
& Operating cost
Reduced tariff hike required due
to huge efficiency gains
Tariff hike effected
90%
65%
Entire gains passed on to
Customers & Govt .
Untimely & Inadequate hike
Un recovered Gap in Tariff hike
65%
25%
Untimely & Inadequate hike
Leading to huge under
recovery of Rs. 20,000 Crs.
Slide 27
Over last 10 yrs period
S i P i I th b d Summing up: Price Increase across the board
Property
670%
Comparedtovery
steep hike in prices
Property
Bulk Power Cost
300%
steephikeinprices
ofotheritems
Dearness
Allowance
250%
Fuel
190%
DelhiPowerTariff
hasgoneupbymere
Fuel
190%
Essential Comm
170%
65%
Services
150%
Consumer Price
120%
Slide 28
Consumer Price
Index
120%
D it S t l T d Despite Spectacular Turnaround ,
in absence of Adequate Tariff in absence of Adequate Tariff
Discoms are facing Financial Crisis
Slide 29
Thank You
Slide 30