While fixing the tariffs the Commission has taken into consideration the comments and objections raised during the public hearing, the cost of service for different classes of consumers as per the indicative cost of service model; and has sought to balance the interests of the utility as well as the consumers, keeping in view the fact that power supply cannot be sustained if the utility is not financially viable. The Commission intends to rationalise the tariffs to reflect the cost of service progressively. It cannot increase the tariff of the subsidised class to the full cost level immediately as that would mean a severe rate shock to a very large proportion of the consumers. It cannot also lower the tariff of the cross-subsidising categories to their level of cost as that would result in a sudden drop in revenue for the Licensee.
The Commission intended to introduce a two-part tariff to recover the fixed costs in addition to the variable costs imposed by each consumer category. But the Commission was constrained from developing a more scientific estimation of cost of supply based on voltage levels, time of use, consumption pattern (L.F.), load characteristics, share of peak demand by consumer classes and from allocating more precisely the costs related to the Distribution Business. The Commission can no longer accept the non-availability of the required data and hence directs the Licensee to develop a modern system of data collection, storage, retrieval and analysis through computerisation at sub-divisional level. This will generate reliable data related to consumer billing, collection of revenue, energy audit, performance standards, consumer complaint, planning, procurement, inventory management, scheduling, O&M and financial control without delay.
Even with limited information, the Commission has sought to fulfil the following objectives of retail tariff with this tariff order:
- Rationalisation of the tariff structure by moving closer towards the cost of service;
- Rationalisation of the minimum consumption charges;
- Rationalisation of other terms and conditions of supply;
- Avoidance of steep hike in tariffs;
- Simplicity, understandability, public acceptability, feasibility of application, freedom from ambiguities;
- Provide incentive to move agricultural consumers from unmetered to metered tariff;
- Curb pilferage of power;
Encourage larger consumers to connect at HT rather than LT to reduce distribution losses.