The Tamil Nadu Electricity Regulatory Commission (TNERC) has initiated a suo-moto process for tariff determination for the year 2014-15 and true ups for the years 2011-12, 2012-13 and to conduct the annual performance review process for the year 2013-14. Given the financial predicament of the Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) and the need for post facto evaluation to understand the actual extent of costs incurred and losses accumulated, this process is extremely crucial. Moreover, with power procurement costs reaching spiraling heights and with base load low-cost capacity addition being a need, it is also important to evaluate the performance of the distribution company in this regard. For 2014-15, the current demand estimation process and the tariff design (based on high cross subsidisation) does not take into account the migration of high paying consumers to open access, group captive schemes and/or roof top solar installations. Without accounting and planning for these eventualities, the TANGEDCO is bound to follow an unsustainable trajectory with deteriorating finances, continuing load shedding and higher tariffs for consumers.
As a part of the suo-moto process the TNERC published a 28 page ‘Summary of ARR determination of TANGEDCO for 2014-15’ which did not provide vital information about TANGEDCO’s performance (based on audited accounts till 2013-14) as well as TNERC’s assumptions in their estimations. In order to facilitate informed public particiation, Prayas made a submission in the matter requesting the commission to make some vital information available to the public. Consequently, on 22nd october 2014 we made another submission on more substantive aspects of the matter. This submission mainly deals with the need to evaluate performance of the TANGEDCO, ways to mitigate high cost power purchase, developing a framework for rational power purchase planning and monitoring actual status of capacity being added and so on. Based on our study of various documents pertaining to TANGEDCO and our experiences with other states, we have also included suggestions towards ensuring equitable load shedding, scientific and periodic energy accounting and restructuring the tariff design to protect the interest of small consumers.Find this submission below. On the 24th of October, we presented our submission before the TNERC during the public hearing conducted in Chennai. The said presentation and the above mentioned submissions can be downloaded using the links below.
TNERC issued at tariff order for the year 2014-15 which is available below:
The tariff determination process and the provisional true-ups for 2 years and the performance review of 1 year was completed without obtaining crucial information necessary for cost determination from TANGEDCO. Moreover,there were serious procedural lapses by the commission which limited public participation and impeded transparency.This was highlighted by several consumers in the public hearings as well as by the Member of the Commission in his dissent order (Page 297 onwards of the tariff order).
Given the financial predicament of TANGEDCO , such procedural lapses, if repeated in the coming years would adversely impact the power sector in Tamil Nadu. Therefore,with the tariff process for 2015-16 around the corner,there is a need for immediate action.
Prayas (Energy Group)'s submission in the matter to the Commission is attached below .In this submission,Prayas has suggested that:
1. TNERC must undertake an investigation of the affairs of TANGEDCO using its powers under Section 128 of the Electricity Act. The appointed agency (say, CAG) should obtain crucial data and the terms of reference for this agency must be decided via a consultative process.
2. Based on the investigation findings, TNERC must initiate suo-motu tariff determination process for 2015-16 and final true-up process for 2014-15 as well as for the years 2010-11 to 2013-14.
3.Such a tariff process must be meaningful and consultative with public hearings in all regions of the state,technical validation session involving consumer representatives and the presence of TANGEDCO at all public hearings .