STUDY AND ANALYSIS OF TARIFF RATIONALIZATION IN DELHI DISTRIBUTION SECTOR

Abstract

An electrical utility, whether public or private, functions in dynamic environment of the society. In social, financial, technical and governmental forces can’t be meticulous by the discom. The discom has control only its internal atmosphere as system and process only. To maintain the equilibrium condition b/t the internal and external environment through regular improvement in process and reforms. For a utilityi in electricity tariff finalization is complicated process and its remain the survival strategy of utility to maintain the actual requirement of tariff hike with the help of regulator approval. The identification of actual cost of supply for electricity services, is a complicatedi and not easily possible in current scenario, which also create a serious impact on Power industry. The electricity service sector is intangible in nature, it can’t be easily measure characteristic or satisfaction of customer demands. Fori a utility identification of output is critical in terms of cost parameters. The electricity is service industry, ipricing is a main part of decision making in power sector. The mostly customers avail the services but as per mind set of customers it is free of cost. So that the AT & C losses in power industry increased day by day. The ieconomic theories undertake that commercial organization main objective of imaximizing their profitsi. The organization management also bother about which quality of services be served to consumer in whatever amount. A municipal and private segment organization is predicted to pursue for profits with enhancement of consumer growth, reliability, customer satisfaction, advance technology implementation and social resourcesi growth. As per the multiple objective of discomsi is to be harmonizedi with one another with also improvement of commercial and financial viability of the discoms. The availability of resources are limited and customer and technical problems both are compiled in strict regal regime which are also create a i problem for discoms. In Indian states mostly discoms are not provide reliable supply because loss component is huge and it is not fulfill the customer demand as per EA’2003. v Apart from this, the planet is facing severe challenges in energy sector. The worldwide economy is about to develop fourfold within the next 40 years, which potentials economic benefits and big enlargements in people’s standard of living. But it also indicates a far greater consumption of electricity. A worldwide revolution is critical within the ways in which electricity is generate, distribute and used. This report is a shot to know the Business Model of an influence Distribution Company (DISCOM) by studying the “Annual Revenue Requirement (ARR)” of Tata Power-DDL and analyze the financial constraints of the Poweri Sector in terms of privatizationi model and studying the Delhi distribution sector to look at the method of tariff finalization and gaps. In Delhi various steps are re taken by the GoNCTD and was to ibring out a reforms strategyi on Power Sector in Feb. 1999. They had published a unique reforms and model which help the Delhi customer base and improved the reliability of power. The new reforms act that iultimately resulted within the iunbundling of DVB and privatization of electricity distribution segment, generation segments and transmission with effect from 1st July 2002. As a results of CERCi reforms act, all SEBs are idirected to unbundle in three segments viz. Generation, Transmission & Distribution. Due to high AT&C Losses in Distribution Sectors, reforms activities are being focused for Distribution Sector by adopting privatization and franchising model of Distribution Sector. The wattage sector is consists of three main segment named as, 1.Generation, 2.Transmission 3.Distribution For Generation of electricity in many Public Utilities are exist as i.e. NTPC, NHPC, SJVN, SECI, Torrent, and DVC, NPCIL. The generating sector are contain partnership of public sector or private sector. The fuel allocation are depend the generating station governed by private or public. In India transmission segment is governed by Central govt. utilities i.e. PGCIL. To Govt. utility vi transmit the electricity supply from the generators to iDistribution Company’s entire India is divide India into five zones/regions i.e. 1.Northern 2.Southern 3.Eastern 4.Western 5.Northeastern Further additionally within every state, there's SLDC (State Load Dispatch Center) to manage the transmission of electricity in states. The distribution network is principally disbursed by DISCOMS and SEBs. With Delhi privatization model, many nations have followed et al. are within the process of privatization with the most aim to serve the consumers in an exceedingly better way and reduction of AT&C losses. State Regulator targets are set to decrease AT&C losses for a specific period of your time while maintaining the performance standards regarding Power Quality and consumer related services. In abovementioned scenario and constraints, it's of major importance to create efficient, effective and optimum forecast or an estimate of the particular revenue requirement by the DISCOMs which is employed by the SERCs to spot the tariff to be paid by the retail consumers of Power. once a year DISCOMs need to submit ARR to SERC within which total cost, capital Therefore, the components of the ARR should be precisely calculated and logically formulated and therefore the plans identified should be implemented with ultimate control so on achieve the inducement as visualized in ARR & avoid the dis-incentives and gaps related to the identical as laid out in the orders of SERC regarding tariff or others. Scope of study contains the Tariff component of Tata Power-DDL & its financial components & the Delhi Power Sector Reforms & related Financial Model. All the references are drawn from the Delhi Power Sector Model & TPDDL because the data for the identical is accessible. Delhi Model is taken into account to be a successful implemented Power Sector Privatization Model in India & across the planet which happened through the vii route of venture (JV) between the govt. of city Territory of Delhi (GoNCTD) & the private players under the aegis of Delhi Electricity Regulatory Commission (DERC). The supportive Financial structure just after privatization that helped in sustaining the arrangements by the private parties & taking it further to cut back losses & setting the instance of efficient management of Power Distribution has been studied. Studies have flagged several issues - Recovery less than the actual cost of supply through fixed charges in tariffs and the fact that the tariff does not reflect the costs of supply - Cross-subsidy charges levels for mostly discoms still not within the boundaries as per the EA and therefore the NPT. - While iun-electrified area idomestic consumers are ibeing ielectrified, iUSO and iDBT are main strategically concern area and improve the reliability of system