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Comments and Suggestions regarding MSEDCL tariff petition for FY 2016-17 to FY 2019-20

Author(s): Prayas (Energy Group) Publication Date: July, 2016

The Maharashtra State Electricity Distribution Company Ltd (MSEDCL) has submitted petition seeking revision of its tariffs. The proposal is regarding final True Up of FY 14-15, Provisional True Up of FY 15-16 & Multi Year Tariff for FY 16-17 to FY 19-20. The petition is availabe on the company's website.

MSEDCL's total revenue requirement for FY 2015-16 is around Rs. 59,000 Cr and it is seeking a total increase of more than Rs. 56,000 Cr over the next four years. This is largely due to revenue gaps arising from previous years, cost increase (both in generation as well as distribution and transmission). MSEDCL is also proposing backing down of 4000 MW-6000 MW of capacity on an annual basis for the next four years, though it will have to pay for the fixed costs of this capacity. MSEDCL has not projected any new open access sales, i.e. the open access quantum in FY 15-16 is assumed to remain constant over the next control period. It has also not considered the impact on account of the clean energy cess and increase in coal prices as declared by Coal India Ltd recently. Further, it has not included the carrying cost impact of more than Rs. 5,000 Cr that would accrue if the claimed revenue gap is allowed.

Even with all this, MSEDCL is forced to increase tariff by around 5%-8% across all categories for the next four years and has proposed to levy an additional surcharge on open access on account of the generation that it has to backdown.

Further, MSEDCL is projecting agriculture sales of around 27,000 MUs and distribution losses of 13-14%. This is in spite of the fact that at the time of the technical validation session itself it was demonstrated that agriculture sales estimate of MSEDCL is incorrect and impractical and the losses are likely to be much higher than what is being claimed.

The present proposal as well as the current business model of MSEDCL is not sustainable. The submissions made by Prayas at the Pune and Aurangabad public hearings highlight this based on data and analysis. The submissions also provide ideas that can be considered to reduce the tariff impact.

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