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Overview of tariff revision process under Regulatory Commission

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Overview of tariff revision process under Regulatory Commission Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates November 16-18, 2010, Pune ... – PowerPoint PPT presentation

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Title: Overview of tariff revision process under Regulatory Commission


1
Overview of tariff revision process under
Regulatory Commission
  • Prayas - EGI Skill-share workshop for Tajikistan
    and Kyrgyzstan DelegatesNovember 16-18, 2010,
    Pune, IndiaPrayas Energy Groupwww.prayaspune.or
    g/peg, energy_at_prayaspune.org

2
Tariff revision
3
Agenda
  • Tariff revision process and principles
  • Tariff proposal and cost components
  • Tariff structure

4
Procedure
5
Tariff principles
  • Company to recover all reasonable and efficient
    costs plus allowed profits
  • ? Revenue requirement cost profit
  • Reduction of cross-subsidy
  • No tariff shock to any consumer category
  • Development considerations
  • Affordability of small and agriculture consumers

6
Tariff proposal and cost components
  • Past performance
  • Sales revenue
  • Costs and expenses
  • Compliance with directives
  • Performance norms
  • Energy losses
  • Supply quality
  • Projections for next year/period
  • Sales
  • Revenue at current tariff Non-tariff income
  • Costs and revenue gap/surplus
  • Proposed improvements in performance

7
Cost components for distribution business
  • Power purchase cost
  • Transmission charges
  • Capital expenditure and related costs
  • Interest on long term loan
  • Depreciation
  • Operation and maintenance cost
  • Employee cost
  • Administration costs
  • Repair and maintenance

8
Generation tariff components
  • Fixed cost
  • Loan repayment
  • Depreciation
  • Operations and maintenance cost
  • Variable costs
  • Fuel related expenses
  • Linked to performance norms such plant
    availability, load factor, station heat rates, etc

9
Basis for cost components
  • Tariff regulations
  • Normative debt equity ratio of 7030
  • Fixed return on equity e.g. 16 for distribution
    and 14 for generation and transmission
  • Depreciation schedule for various
    equipments/assets
  • In-principle clearance mechanism for capital
    expenditure
  • Normative interest schedules
  • Performance norms and standards

10
Tariff structure
11
Industry tariffs fixed and variable charges
12
Other forms of tariff
  • Time of day tariff
  • Fuel adjustment cost

13
Tariff determination
  • Art and science
  • Specific objectives to be achieved
  • Cost recovery
  • Company efficiency
  • Investment attractions
  • Social considerations affordability of small and
    marginalized groups
  • Increased consumer confidence and increased
    acceptance of tariff order

14
Questions and comments!
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