Interview with Satish Chandra Jha

“Ensuring consumer satisfaction is a big task for the BERC”

Despite the many challenges that the Bihar power sector faces, especially issues pertaining to metering, billing and payment realisation, the Bihar Electricity Regulatory Commission (BERC) is doing a fairly good job. For the last four financial years, the commission has been determining the aggregate revenue requirement (ARR) and tariff for the retail sale of electricity for distribution companies in the state before March 31 of the following year. Excerpts from a recent interview with Satish Chandra Jha, member, BERC…

What have been the key achievements of the BERC in the past one year?

For the past four financial years, the BERC has been determining the ARR and tariff for retail sale of electricity for distribution companies in Bihar before March 31 of the following year. This has been achieved by following principles that encourage competition, efficiency, economical use of resources, good performance and optimum investment in order to ensure transparency and consumer participation in the process of tariff determination. The truing-up of expenditure has also been finalised up to 2014-15, along with tariff determination for the respective years.

In order to encourage consumers to avail of power under open access from other sources, the commission has reduced the cross-subsidy surcharge by 50 per cent till 2016-17. The target for transmission and distribution (T&D) losses has been kept at 19.5 per cent for 2016-17. Where the licensee is unable to meet the renewable purchase obligation (RPO), an amount equivalent to the RPO value is kept in a separate account and used later to promote the renewables sector in the state. Further, a rooftop solar generation regulation has been issued for projects of up to 1 MW capacity.

What role does the BERC play in the integrated planning of generation, transmission and distribution companies in the state?

By regulating the power purchase quantity for distributable power, the commission ensures that the integrated mechanism of generation, transmission and distribution available in the state is optimally utilised. In order to fulfil the future power needs, the state discoms are taking the joint venture (JV) route and constructing plants in partnership with NTPC Limited, NHPC Limited and SJVN Limited. Similarly, a JV has been formed with Power Grid Corporation of India Limited (Powergrid) for setting up additional transmission infrastructure for intra-state transmission of around 3,000 MW of power. For better efficiency in the distribution segment, the licensees have adopted the franchise route. At present, the three towns of Bhagalpur, Gaya and Muzzaffarpur are benefiting from this arrangement. Some more proposals are under consideration.

What steps are being taken by the BERC to encourage investments in renewable energy projects, including net metering for solar rooftops?

Bihar’s renewable energy policy provides tax and other benefits to promoters for project implementation in the state. The generic tariff for renewable energy sources such as cogeneration, biomass and solar is being revised every year by the commission to facilitate renewable energy development. Cogeneration projects, aggregating over 100 MW of capacity, are currently operating in the state. Project promoters have already signed power purchase agreements for solar capacity of 50 MW with state discoms and will commence generation in 2016-17. The discoms are currently finalising procurement of about 200 MW of solar capacity, including 100 MW through the competitive bidding route. Also, the commission has notified the net metering regulation for 1 MW of solar projects along with the net banking regulation for solar projects.

What is the status of RPO compliance in the state? What has been the commission’s role in ensuring compliance?

Bihar is able to meet the non-solar RPO comfortably as the cogeneration capacity in the state currently stands at over 100 MW. With regard to RPO compliance for solar energy, plants aggregating 50 MW of capacity are at various stages of construction and are likely to start generation from 2016-17. For non-compliance of RPOs, an equivalent amount has been kept in a separate fund, which is used for the promotion of renewable energy projects. This fund is utilised in providing grid connection to projects of 2 MW or less capacity, which do not fall under the purview of the Renewable Energy Policy. Both the discoms are trying hard to bring compliance to the trajectory level.

What is the level of metering in the state? What are the new metering initiatives suggested by the BERC?

The level of metering in the state is estimated at about 60 per cent. In every quarter, for the first two months, the commission has allowed for billing to be done based on the yearly average. In the third month, billing is to be done based on the actual reading, after making adjustments for the preceding two months so that 100 per cent meter reading can be ensured. Taking into consideration the vast geographic area of the state, meter reading has been outsourced. The commission is hopeful that within a year or two, better results will emerge.

Periodically, raids are being conducted to keep a check on power theft. Dilapidated conductors have been replaced in large numbers to minimise T&D losses. Overloaded substations and transformers have also been replaced under the Deendayal Upadhyaya Gram Jyoti Yojana to reduce network losses. Energy accounting at the feeder and distribution transformer levels is also under way to arrest T&D losses.

Further, the commission has allowed the implementation of new connection schemes, including schemes to award new connections through camps, besides prepaid meters in villages and government buildings. Remote metering has been implemented for high tension (HT) and low tension (LT) industrial service consumers and the implementation of smart meters is under consideration.

How many open access approvals have been granted so far? What are the hurdles in its implementation, if any?

So far, only one consumer has approached us for open access for about 12 MW of power. The commission has approved the request as per the regulations. There are a lot of hurdles in the open access scheme in the state as discoms fear losing out on cash-rich consumers, as this would result in a revenue loss. The poor state of the state load despatch centre and inadequate transmission facilities have further aggravated the problem.

What is the cross-subsidy surcharge in the state? What is the commission’s cross-subsidy reduction roadmap?

Since 2013-14, the commission has implemented voltage-wise cost analysis in the state. As per the tariff policy guidelines, the cross-subsidy level in tariff determination is strictly followed within a +/- 20 per cent limit. However, due to the lower number of HT consumers in the state, the roadmap for cross-subsidy reduction is yet to be finalised. Domestic and below poverty line (BPL) consumers constitute 85 per cent of the total consumers. This number will go up further with enhancements in rural electrification. This issue is high on the commission’s priority list and the roadmap will be charted out very soon, once 100 per cent metering, meter reading and billing are achieved.

Cross-subsidy can be reduced by fixing the tariff at its real cost level. Currently, given the high T&D loss levels and low levels of metering, meter reading, billing and collection, it is difficult to assess the actual cost of supply. This will further burden honest consumers, who make regular bill payments. The commission is waiting to take action at the appropriate time.

What has been the trend in HT and LT tariffs in the state? How are HT tariffs being rationalised to align them better with the cost of supply or cost to serve?

The average cost of supply to HT consumers in 2015-16 was Rs 6.19 per kWh, which was reduced to Rs 5.72 per kWh for 2016-17. The LT tariff too was reduced from Rs 6.78 per kWh in 2015-16 to Rs 6.21 per kWh for 2016-17. The average power purchase cost in the state, including Powergrid charges, is Rs 4.25 per kWh and the average cost of supply is Rs 5.62 per kWh. The average revenue realisation is Rs 4.03 per kWh without government subsidy and Rs 5.38 per kWh with government subsidy.

What is the status of time-of-day (ToD) tariffs in the state?

At present, ToD tariffs are applicable to HT consumers and we are planning to include more consumer categories under this scheme.

What are the immediate challenges/issues before the BERC?

The main challenges to be addressed in Bihar pertain to metering, meter reading, billing and payment realisation. Another big issue is making power available to people in areas where the grid is yet to reach. The timely completion of the Ujwal Discom Assurance Yojana (UDAY), the carriage and carrier content scheme and the open access scheme, and the management of more than 5 million BPL consumers are some of the other issues that the commission is facing.

What are the key regulations that the commission is currently working on?

The commission is currently working on mini-grid regulations and is revising the old regulations to make them compatible with current needs. Ensuring consumer satisfaction is another big task for the commission.

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