DIGITAL ASSIGNMENT-3

A CASE STUDY ON STATE ELECTRICITY

BOARD
PRESENTED BY: BHAVANI.V(21MBA0001)
KAASHIKAA.V(21MBA0072)
MANIMOZHI.M(21MBA0104)
MOHAMMED MANSOOR(21MBA0088)
MOHAMMED UNAIS(21MBA0146)
INTRODUCTION:

• Electricity is a form of energy and almost all of our modern conveniences are electrically
powered.

• The State Electricity Board (SEBs) in India are responsible for the generation and
transmission of electricity to every state in the country.

• CONSUMERS- over 20 million in Tamil Nadu

• INDUSTRIAL SLOWDOWN- Started in 1996

• REASONS- Credit crunch and Infrastructural bottleneck.

• NEED TO GROWTH- At a rate of 9 to 10%

THE STATE ELECTRICITY BOARD COMES UNDER MONOPOLY

Consumers have no other alternatives but the option of purchasing electrical

power from SEB’s as they are licensed suppliers of electricity operated by the
state government.
MARKET CONDITION UNDER
WHICH THE SEB WORKS?

As it is a discriminating monopoly,
Demand curve slopes downwards.
Supply curve move upwards.
Working strategy:
❖ Peak demand
❖ Off-Peak
❖ Shoulder
POWER SUPPLY IN INDIA
 Electricity consumption in various sectors
45.00%

40.00%

MARKET CONDITION 35.00%

Percentage consumption
30.00%

• 60,000 MW of new capacity 25.00%

needed to raise the finance of 20.00%
Rs.3,00,000 crore.
15.00%
• Monetary constrictions
10.00%
• Occurring a loss of Rs.10,000 to
Rs.12000 crore annually 5.00%

• Weak revenue generation 0.00%

2016 2017 2018 2019 2020
• Tariff on electricity in India with Domestic 23.86% 24.32% 24.20% 24.76% 24.01%
other countries Commercial 8.59% 9.22% 8.51% 8.24% 8.04%
Industrial 42.30% 40.01% 41.48% 41.16% 42.69%
• Correlation between electricity Traction 1.66% 1.61% 1.27% 1.52% 1.52%
and the revenue Agriculture 17.30% 18.33% 18.08% 17.69% 17.67%
Misc 6.29% 6.50% 6.47% 6.63% 6.07%
Domestic Commercial Industrial Traction Agriculture Misc
Electricity usage in every sector in the year of 2020:

Total Supply: 12,70,663 MU

• Domestic – 24.01%
• Commercial – 8.04%
• Industrial – 42.69%
• Traction – 1.52%
• Agriculture – 17.67%
• Miscellaneous – 6.07%
CURRENT CRISIS ON UPCOMING DEVELOPMENT
ELECTRICITY IN INDIA
• Covid impact on electricity
• Decline in demand by 9.1
percent in 2020-2021
• Drop in Plant Load
Factor(PLF) to 54 percent
• Occurs a loss of Rs.200 billion
in 2020-2021
• disruption in supply chain in
India and labour availability
issues
 SEBS ARE DISCRIMINATION MONOPOLISTS.’ DO YOU
AGREE WITH THE STATEMENT. DISCUSS CRITICALLY.

What is a discriminating monopolist?

• It can be defined as the practice of the seller, specifically of the monopolist, by which
different price can be charged for the same commodity from different group of buyers
depending on the market condition.

• For example; the Calcutta Electric Supply Corporation supplies electricity to different
categories of consumers (domestic, commercial, industrial etc.) at the different rates.

• Here the concerned monopolist is termed as the discriminating monopolist.

SEBs tariff structure given on the case study

• Industrial users - Rs 100 per 100 kilo-watt hour

• Domestic households - Rs 50 per 100 kilo-watt hour

The SEBs hopes to increase its revenue by targeting another group, the ‘self -
employed’ who operates on commercial basis, but from their homes.
• Self-employed – Rs 75 per 100 kilo-watt hour
Yes, I agree with the statement.

• SEBs are discrimination monopolist because it charges the industry way

more than the domestic households .

• The industry is unable to go in for alternative arrangements, because more

industries are power intensive.

• And also, Industry consumes only 35% of the power but contributes more
than 50% of the total sales revenue to the SEBs.
Do you think discriminating SEB is more
beneficial than non – discriminating SEB

• Yes !
• By targeting each type of customer, the monopoly is
able to earn a greater profit.
• Price discrimination charges customers different
prices for the same products based on a bias
toward groups of people with certain
characteristics.
• State Electricity Board charges differently from
domestic consumers and commercial consumers.
SIMPLE MONOPOLIST:
A monopoly market is a situation when a service or a product may be brought only
from a single supplier. This situation is the defining characteristic of a specific
market. This absence of competitors to manufacture the product or service needed
by the consumers is a simple.

Advantages:
• Single producer with a remote
substitute
• Equal pricing
• Highest monopoly revenue.
• Stability of prices.
• Large economies of scale.
Disadvantages
• No close substitute.
• Impact on Poor
• Inefficient-lack of competition.
• Does not develop new products
• Restrict the quantity of goods
 DISCRIMINATING MONOPOLIST
Advantages
• Increase in revenue earning
• Reduction in wastage
• Decrease in cost of production
• Increase in sale wider market.
Disadvantages
• Any consumer surplus that existed
before the price discriminating will be
lost.
• pay more than the price of single, non
discriminating market.
• No other alternatives
 CONCLUSION

• The State Electricity Board comes under Monopoly Market as

discriminating monopolist .
• They sell the same quantity of electricity for different sector of buyers.
• Discriminating Monopoly is more beneficial than non discriminating
monopoly.