Maharashtra State Electricity Distribution Company Limited (MSEDCL) has filed the Petition for approval of its Multi-Year Tariff (MYT) Business Plan for the period from FY 2013-14 to FY 2015-16 before the Maharashtra Electricity Regulatory Commission (MERC) under Sections 61 and 62 of the Electricity Act, 2003 (Act) and Regulation 7 of the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011. A public hearing in this matter was conducted on 10th May 2013 at MERC in Mumbai. Submission made by Prayas in this regard is attached below.

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. For any MYT exercise to be successful, there is a need for following:

  1. Reliable baseline data for making future projections
  2. Rigorous and scientific demand forecast
  3. Long term power purchase and capital expenditure plans which should be followed with necessary coordination between different utilities and generators
  4. Continuous monitoring and evaluation of trajectories for various performance parameters. And last but the most important
  5. Co-relating MYT exercise with supply and service quality and financial performance of the utility, benefits of which should accrue to consumers in the form of predictable costs and reliable service.

However, as the submission points out there is lot of ambiguity in underlying projections for some of the key parameters and inspite of going through one cycle of MYT process there is no reliable baseline data, details of which are explained in the submission. The presentation also shows how the commission is largely responsible of the failure of MYT regime on account of the following reasons:

  • Failure in power purchase planning
    • In spite of numerous submissions, no action taken which has resulted into ad-hoc planning
    • Consumers bear the burden of high cost power purchase or load shedding
  • Failure in protecting consumer interests
    • SoP regulation amendment process started in August 2010, still not concluded.
    • Road-map for cross-subsidy reduction still not finalised
    • No benchmark data for reliability indices
    • LT general category tariff not being implemented
  • Failure in holding the utilities accountable
    • Load shedding protocol, Un-metered agriculture sales, non adherence of performance norms, etc

In light of grave lapses on part of the commission in failing to achieve any of the stated MYT objectives, there is need to undertake a serious review as to what MYT regime can actually achieve and how it should be implemented. Also given the absence of independent analysis on part of commission and utility’s reluctance to any kind of accountability for its costs and operations, it will be highly unfair to impose MYT regime based on a plan which is not even owned by the utility In fact, MSEDCL has categorically objected to MYT based planning and has considered all tariff components uncontrollable Commission has approved such petition to form basis for public debate which itself is a travesty of the MYT process. Similar issues have been raised by Prayas regarding MYT petition filed by R-Infra D. Therefore, under such circumstances Prayas has demanded to defer the MYT process for this year and tariff for FY 2013-14 should be determined on annual basis. The Commission should first do an exercise of MYT review and undertakes independent analysis of at least most crucial parameters such as power purchase planning, unmetered agricultural consumption, Genco’s operating norms, etc. Only after such exercise MYT regime implementation can be considered.