PRESS RELEASE ON ELECTRICITY TARIFF REVISION 2012-13

Kerala State Etectricity Regulatory Commission has revised the electricity retail tariff applicable for all categories of consumers of the State effective from 1st July 2012. Such a comprehensive revision comes after a decade, the last revision being in 2002.The bulk supply rates at which the small licensees buy power from KSEBare also revised. Since the retail supply tariff in the State is to
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be uniform, the revised rates will be applicable for consumers of these licensees too. The present revision is based on a tariff petition filed by KSEBwhich was given wide publicity by the Commission, discussed in the State Advisory Committee and examined at public hearings held at different cities of the State where all the stakeholders and public in general were accorded opportunity objections or make recommendations. The objections recommendations to raise and the

were analysed in depth by the Commission taking into

account the views expressed during hearings, provisions of the Electricity Act 2003, National Tariff Policy and the National Electricity Policy. This order seeks to incorporate the principles of gradual reduction of cross subsidy, promotion of affordability by different categories of consumers, demand side management and energy efficiency through financial incentives/disincentives, peak hours and rewarding the industries through incentives. The present tariff revision is expected to mop up an additional income of Rs 1676.84Crores for KSEB as against the approved revenue gap of Rs. 1889 crores for 2012-13. To avoid a tariff shock the accumulated revenue gap was not taken into account in the present revision. The overall average increase in tariff is 30.2% from the existing level. The average cost of supplying one unit of electricity this year is Rs.4.64. This includes the cost of electricity and other distribution costs. Even after the increase the average tariff is Rs 4.40/Unit as against the average cost of Rs 4.64/Unit as per approved ARR of KSEBfor the energy efficient lamps and equipments, incentives to shift consumption to offincreased power factor

year 2012-13 i.e. only 95% of the cost is met through revenue realisation. However for domestic consumers the average tariff is only Rs.2.80 post revision i.e. 60% of the average cost. The existing slab structure and the billing system are left unchanged up to consumption of 500 units per month. With the revised rates the average energy charges payable by a domestic consumer for various slabs of monthly domestic consumption and the percentage of cost recovery are as follows: Average realisation Slab(0-40) Slab(41-80) Slab(81-120) Slab(121-150) Slab(151-200) Slab(201-300) Slab(301-500) : Rs i.so/u- : Rs i.so/unu : Rs2.20/Unit : Rs2AO/Unit : Rs3.10/Unit : Rs3.50/Unit : Rs4.60/Unit. Percentage of cost recovery 32 41 47 52 67

75
100 140

Above 500 units :Rs6.50

From the above it can be seen that the tariff of domestic consumers is so designed to have minimal impact on responsible consumers who restrict their consumption within reasonable limits. However for unrestrained consumption the increase is slightly sharper. Though there are about 851akhs domestic consumers in the State, only about 9.5 lakhs consume more than 200 units per month out of which only about 24000 consume more than 500 units per month. Thus for the vast majority the increase is minimal. Commission presumes that the new price regime will provide ample signals to the high-end domestic consumers for reducing non essential consumption. Commission did not accept KSEB's proposal for Fixed Charges based on consumption patterns, but a more reasonable rate of Rs 20/-per month for single phase and Rs60/- per month for three phase consumers was approved. However consumers having an average monthly consumption of less than 40 units per month are exempted from Fixed Charges.

For the first time, concept of time-of-day (TOO)tariff is introduced to domestic sector. From 1/1/2013 all domestic consumers with an average consumption of more than 500 units per month will have to move over to TOOtariff paying higher rates for peak consumption (6 pm to 10 pm) In the case of Industrial Tariff (LT IV category) Commission has reduced the tariff proposed by KSEB for small and tiny sector. For consumers with connected load of less than or equal to 10 HPj the fixed charge is reduced to Rs.60 per month with a view to making the tiny sector viable. All industrial consumers with a connected load of more than 20KW will have to move over to TOOtariff with effect from 1/1/2013. In the case of LTVII (A) Commercial Consumers, Commission reduced the tariff proposed by KSEBfor lower levels of consumption but imposed higher rates for higher consumption as a price signal for initiating conservation and Demand Side Management (DSM). In the case of HT IV Commercial Category, Commission has increased the tariff proposed by KSEBand higher rate is prescribed for those who consume above 30,000 Units/Month. Star rated hotels, large Jewelleries, large Textile shops, large Private hospitals etc come under this group which use electricity largely for central air conditioning, display lighting etc. In the case of HT III Agriculture the increase proposed by KSEBwas reduced by the Commission. As an incentive for local Self Governments to move over to energy e-fficient lamps, the composite rates for CFl/lED lamps used for public lighting is drastically reduced. For HT/EHT consumers, power factor incentive is increased from 1.5% to 2.5%. In the case of Bulk Supply rates, applicable to Small Licensees,the tariff is fixed keeping retail tariff the same for all consumers and working backwards to provide for cost recovery and statutory return in accordance with the ARR approved for each licensee in modification of the tariff proposed by KSEB. Here again for the first time differential bulk tariff is made applicable to the different bulk users based on their consumer mix, paying capacity and performance.

Commission has also, in this order, specifically categorised certain consumers where there were doubts and disputes in the past. For "home stay" relevant domestic tariff, as opposed to commercial tariff, has been made applicable to encourage tourism. Transmission Charges, Wheeling Charges, Cross Subsidy Surcharge for Open Access for 110 kV, 66 kV, HT Commercial and HT Industrial Consumers are approved. The new rates are expected to encourage large consumers to avail open accessand procure power from outside at competitive rates. Commission has also decided to encourage use of roof top solar photovoltaic cells by providing financial incentives through tariff, details of which will be announced later.

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