The Central Commission has invited comments and suggestions from the public on the Approach Paper for laying down the terms and conditions of tariff for the control period from 1.4.2014 to 31.3.2019. Attached below, is the submission by Prayas in this respect.
It is welcome initiative on part of the commission to facilitate fresh thinking on this critical issue of tariff determination, bearing in mind the learning from previous MYT implementation, protection of consumer interests and the current challenges faced by the sector. The list of issues articulated in the approach paper are of significance and must be discussed before arriving at any consensus with respect to the tariff regulations for the next control period. However, the paper limits itself to only raising questions without quantifying impacts of each possible alternative on tariff or providing any quanitative analysis of past MYT implementation.
The main purpose behind initiating MYT framework was to encourage good planning practices and ensure efficiency improvements so as to have better control on costs. Hence, before getting to any debate or discussions regarding what needs to be modified it is important to first understand what the past MYT implementation has achieved and what it could not, in the context of this broader objective. Hence, we feel that there is need for a more detailed background analysis and information in order to take this process forward. Among various other issues, the submission highlights need for a subsequent discussion paper which presents more detailed analysis regarding:
- Review of past MYT implementation, detailing how the regulations impacted financial and operational performance as well as tariffs in that period.
- Analysis of Best Practices across different countries
- Assessment of possible options and their impact on tariff and efficiency
Apart from raising these larger issues, the submission also shares a few suggestions regarding better reporting of fuel availability and performance parameters, using benchmarking technique for deciding certain costs, enabling provisions to facilitate third Party Verification and audit of capex schemes after their implementation, involving institutions such as the CAG for more detailed financial analysis of regulated businesses etc.
Given the critical nature of these regulations and their impact on DISCOM tariff and finances, it is very important to invest time and effort in terms of enabling a complete and transparent understanding about the impacts of any amendments to these regulations as well as to facilitate better understanding of issues, if any with the present MYT implementation and areas of improvement. The entire submission can be downloaded by clicking on the link below.