approach paper 30.09

8/3/2019 Approach Paper 30.09

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Approach Paper

Determination of Various Charges for Open Access

Including Cross Subsidy Surcharge and Additional Surcharge

UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION

2nd Floor, Kisan Mandi Bhawan, Vibhuti Khand, Gomti Nagar, Lucknow


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BACKGROUND

In order to promote competition in the power sector and to provide

consumers an option of procuring power at competitive rates, the Electricity

Act 2003 (hereinafter referred to as the Act) has enabling provisions in the

form of Open Access (OA) to transmission and distribution networks. The Act

and the National Electricity Policy formulated therein by the Central

Government mandates the State Electricity Regulatory Commissions to frame

regulations specifying the terms and conditions and timeframe for

introduction of Open Access in distribution. The Commission has specified

the terms and conditions for Open Access and its phasing under the UPERC

(Terms and Conditions for Open Access) Regulations 2004, notified on 7th

June, 2005, and the methodology for the determination of TransmissionCharges, Wheeling Charges, Surcharge and Additional Surcharge, under the

Terms and Conditions for Determination of Transmission and Distribution

Tariff Regulations-2006.

In accordance with the provisions of the Act, Open Access consumers are

required to pay the Transmission Charges, Wheeling Charges (if connected to

the distribution network), Surcharge and Additional Surcharge, as may be

specified by the State Commission. The Surcharge (herein after referred as

Cross Subsidy Surcharge) and the Additional surcharge have been provided

under the Act to safeguard the interest of the incumbent distribution licensee.

The Cross Subsidy Surcharge is meant to compensate the incumbent

distribution licensee for loss of cross-subsidy on account a migration of a

cross-subsidizing consumer from his area of operation and additional

surcharge to meet the fixed cost of such a licensee as may arise out of his

obligation to supply.

Therefore, to operationalise Open Access within the State the Commission has

to determine following charges for an Open Access consumer in accordance

with the provisions of the Act, regulations made under it:


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i. Transmission Chargesii. Wheeling Charges.iii. Cross-subsidy Surchargeiv. Additional Surcharge

In addition to above charges the Commission has also specify the standby

arrangement charges in the light of clause 8.5.6 of the Tariff Policy which

states as below:

In case of outages of generator supplying to a consumer on open access, standby

arrangements should be provided by the licensee on the payment of tariff for

temporary connection to that consumer category as specified by the AppropriateCommission.

The Commission had determined the applicable transmission charges on per

unit basis in its tariff order for the FY 2004-05 stating:

UPPCL has mentioned in its filings and subsequent submissions that metering of

interface points with Special Energy Meters of the required accuracy class is in

progress. Once these meters and the associated information technology tools for

reading the meters and aggregating such readings to generate the demand and energy

readings are available, suitable tariff design based on the actual demand placed by the

distribution licensees on the transmission system can be implemented. However at

present, in the absence of historical data, there is no history available to determine the

peak and average demand of each of the licensees. Neither is any contracted demand

been determined (or allocated) by UPPCL for each of the distribution licensees.

Accordingly a demand based transmission tariff is not feasible to implement

at this juncture. In these circumstances the Commission has decided to implement

energy based transmission charges.

It was also indicated by the Commission in the above Tariff order that the

charges so determined could be utilized for the purposes of Open Access to

the transmission network.


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Regarding Surcharge and Additional Surcharge, UPERC (Terms and

Conditions for Open Access) Regulations 2004 provided that:

Surcharge

(a) In addition to transmission charges and wheeling charges, a consumer

availing open access to the transmission system/distribution system not being

a captive consumer shall pay a surcharge;

(b) Surcharge shall be determined by the Commission separately in the concerned

tariff order. In absence of such determination, the surcharge shall be

specified by the Commission on a case to case basis for a specified

period based on an application moved before it in this behalf.

Provided that the applicant shall pay surcharge as determined as per these

regulations post the expiry of the period specified above under regulation 15(2)

(b).

(c) The amount of surcharge shall be so calculated as to meet the current level of

cross subsidy from that category of consumers and shall be paid to the

distribution licensee of area of supply where the consumer is located.

(d) The surcharge shall be reduced and eliminated in the manner as determined bythe Commission in respect to reduction and elimination of cross subsidies in

terms and conditions of tariff of transmission/distribution licensees.

(e) The consumers availing exclusively interstate transmission system shall pay

such amount of surcharge as determined by the Commission by regulations in

this regard.

Additional Surcharge

(a) A consumer availing open access and receiving supply of electricity from a

person other than the distribution licensee of his area of supply shall pay to the

distribution licensee an additional surcharge, in addition to wheeling charges

and surcharge, to meet the fixed cost of such distribution licensee arising out


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of his obligation to supply as provided under sub-section (4) of section 42 of

the Act;

(b) The distribution licensee shall submit to the Commission an account

of fixed cost, which the licensee is incurring towards his obligation to

supply;

(c) The Commission shall scrutinize the statement of account submitted

by the licensee and objections, if any, and determine the amount of

additional surcharge payable by the consumer to the licensee,

(d) The additional surcharge shall be leviable for such period as the Commission

may determine.

Since, the data in the ARR/Tariff filing was not adequate for the

determination of surcharge or the additional surcharge and further since no

application, from any consumer, for grant of Open Access was filed, the

Surcharge and Additional Surcharge were not determined by the

Commission.

Transmission charges and Wheeling Charges were again determined in the

Tariff Order for the FY 2006-07. Surcharge and Additional Surcharge however

again could not be determined in absence of data required for the purpose.

However, considering the importance of Open Access in promoting

competition and private investment in the sector the Commission now feels it

necessary to determine the various applicable charges for Open Access

including the Cross-subsidy surcharge and the Additional Surcharge, based

on the data available with it and making certain assumptions. Accordingly,

under this Approach Paper some interim calculations of various applicable

charges for Open Access have been done. The idea behind this Approach

Paper is to determine the various charges for Open Access in consultation

with the utilities linked and other stakeholders. It is felt that giving consumers

as well as utilities some idea of various applicable charges for Open Access

will facilitate implementation of Open Access within the State.


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It is to clarify that the debate and discussions on the approach paper will not

be limited to the issues linked with the determination of applicable charges

for Open Access only. Utilities and other stakeholders may feel free to raise

any other issues which they feel are relevant for the immediate and effective

implementation of Open Access within the State. It is further clarify that the

views and opinions expressed in this paper are only to initiate a discussion on

the topic and do not necessarily reflect the Commissions views or opinions in

the matter.

Further, to have a meaningful debate on all the issues related to effective and

early implementation of Open Access in the State, the Commission desires the

utilities and other stake holders to actively participate in the discussions to be

held and submit their comments in writing within 30 days of issuance ofnotice to this effect.

The Commission may also conduct public hearings for the purpose for which

separate notices shall be issued. Based on the objections/suggestions/

comments received form various stakeholders and public at large, the

Commission shall determine the various applicable charges for Open Access

and issue appropriate orders in the matter. The charges as may finally be

determined by Commission based on this approach paper shall remain in

force till the Commission re-determines them along-with the next tariff order.

Before detailing the method and procedure for determining the various

applicable charges for Open Access including cross subsidy surcharge and the

additional surcharge, the Commission would like to quote relevant provisions

of Open Access under the Act, the National Electricity Policy, the Tariff Policy

and the regulations framed by the Commission.


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PROVISIONS RELATED TO OPEN ACCESS UNDER THE ACT, THE

TARIFF POLICY, THE NATIONAL ELECTRICITY POLICY AND

REGULATIONS FRAMED BY THE COMMISSION

A. PROVISIONS RELATED TO OPEN ACCESS UNDER THE ACT

i) Provisions related to Open Access relevant to STU

Section 39 (2)

The functions of the State Transmission Utility (STU) shall be-

(a) .(b) .(c) .

(d) Provide non-discriminatory open access to its transmission

system for use by-

(i) any licensee or generating company on payment of thetransmission charges ; or

(ii) any consumer as and when such open access is providedby the State Commission under sub-section (2) of

section 42, on payment of the transmission chargesand a surcharge thereon, as may be specified by the

State Commission:

Provided that such surcharge shall be utilized for the purpose of

meeting the requirement of current level cross-subsidy:

Provided further that such surcharge and cross subsidies shall

be progressively reduced and eliminated in the manner as may

be specified by the State Commission:

Provided also that such surcharge may be levied till such time

the cross subsidies are not eliminated*:


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Provided also that the manner of payment and utilization of the

surcharge shall be specified by the State Commission.

Provided also that such surcharge shall not be leviable

in case open access is provided to a person who has

established a captive generating plant for carrying theelectricity to the destination of his own use.

ii) Provisions Related to Open Access for a TransmissionLicensee

Similar provisions also exist under Section 40 (c) of the Act for a

Transmission licensee.

iii) Provisions Related to Open Access for a Distribution LicenseeSection 42 (2)

The State Commission shall introduce open access in such phases and

subject to such conditions, (including the cross subsidies, and other

operational constraints) as may be specified within one year of the

appointed date by it and in specifying the extent of open access in

successive phases and in determining the charges for wheeling, it shall

have due regard to all relevant factors including such cross subsidies,

and other operational constraints:

Provided that such open access may be allowed before the cross

subsidies are eliminated*on payment of surcharge in addition to

the charges for wheeling as may be determined by the State

Commission:

Provided further that such surcharge shall be utilized to meet the

requirements of current level of cross subsidy within the area of supplyof the distribution licensee:

Provided also that such surcharge and cross subsidies shall be

progressively reduced and eliminated* in the manner as may be

specified by the State Commission:


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Provided also that such surcharge shall not be leviable in case open

access is provided to a person who has established a captive generating

plant for carrying the electricity to the destination of his own use.

*Note: It may however be noted that Government of India has

vide notification dated 28th May 2007 issued the Electricity(Amendment) Act 2007 to amend certain provisions of the

Electricity Act 2003. Under the amended provisions the word

eliminated used in connection of elimination of cross-

subsidies has been removed from Section 38 (2) (d), Section 39

(2) (d), Section 40 and Section 42 (2) and accordingly third

proviso from Section 38 (2) (d), Section 39 (2) (d) and Section

40 has been removed.

iv) Power of the Commission under the Act to frame regulations

for Open Access and determine applicable charges including

surcharge

Section 181 read with Section 86 of the Act empowers the

Commission to frame regulations and determine tariffs for

supply of electricity by a generating company to a distribution

licensee, transmission of electricity, wheeling of electricity and

retail sale of electricity as well the surcharge.

It is further provided under the Act that these tariffs are to be

determined by the concerned Electricity Regulatory

Commissions in accordance with the provisions of the Act and

the regulations for tariff determination framed by them.

Section 86 (1) (a) of the Act provides that:

The State Commission shall discharge the following functions, namely:

(a) determine the tariff for generation, supply, transmission and

wheeling of electricity, wholesale, bulk or retail, as the case

may be, within the State:


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Provided that where open access has been permitted to a

category of consumers under section 42, the State Commission

shall determine only the wheeling charges and surcharge

thereon, if any, for the said category of consumers;

B. PROVISIONS RELATED TO OPEN ACCESS UNDER THE TARIFFPOLICY

Government of India has prescribed a formula for the calculation of

cross-subsidy surcharge under Clause 8.5 of the Tariff Policy.

Clause 8.5.1

National Electricity Policy lays down that the amount of cross-subsidy

surcharge and the additional surcharge to be levied from consumers who are

permitted open access should not be so onerous that it eliminates competition

which is intended to be fostered in generation and supply of power directly to

the consumers through open access. A consumer who is permitted open access

will have to make payment to the generator, the transmission licensee whose

transmission systems are used, distribution utility for the wheeling charges

and, in addition, the cross subsidy surcharge. The computation of cross

subsidy surcharge, therefore, needs to be done in a manner that while it

compensates the distribution licensee, it does not constrain introduction of

competition through open access. A consumer would avail of open access only

if the payment of all the charges leads to a benefit to him. While the interest of

distribution licensee needs to be protected it would be essential that this

provision of the Act, which requires the open access to be introduced in a time-

bound manner, is used to bring about competition in the larger interest of

consumers. Accordingly, when open access is allowed the surcharge for the

purpose of sections 38, 39, 40 and sub-section 2 of section 42 would be

computed as the difference between (i) the tariff applicable to the relevant

category of consumers and (ii) the cost of the distribution licensee to supply

electricity to the consumers of the applicable class. In case of a consumer

opting for open access, the distribution licensee could be in a position to

discontinue purchase of power at the margin in the merit order. Accordingly,


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the cost of supply to the consumer for this purpose may be computed as the

aggregate of (a) the weighted average of power purchase costs (inclusive of

fixed and variable charges) of top 5% power at the margin, excluding liquid

fuel based generation, in the merit order approved by the SERC adjusted for

average loss compensation of the relevant voltage level and (b) the distribution

charges determined on the principles as laid down for intra-state transmission

charges.

Surcharge formula:

S = T - [C *(1+ L / 100) + D]

Where

S - is the surcharge

T - is the Tariff payable by the relevant category of consumers;

C - is the Weighted average cost of power purchase of top 5% at the

margin excluding liquid fuel based generation and renewable

power

D - is the Wheeling charge

L - is the system losses for the applicable voltage level, expressed as

a percentage.

The cross-subsidy surcharge should be brought down progressively and, as far

as possible, at a linear rate to a maximum of 20% of its opening level by the

year 2010-11.

Clause 8.5.2

No surcharge would be required to be paid in terms of sub-section (2)

of Section 42 of the Act on the electricity being sold by the generating

companies with consent of the competent government under Section

43(A)(1)(c) of the Electricity Act, 1948 (now repealed) and on the

electricity being supplied by the distribution licensee on the


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authorization by the State Government under Section 27 of the Indian

Electricity Act, 1910 (now repealed), till the current validity of such

consent or authorizations.

Clause 8.5.3

The surcharge may be collected either by the distribution licensee, the

transmission licensee, the STU or the CTU, depending on whose facilities are

used by the consumer for availing electricity supplies. In all cases the amounts

collected from a particular consumer should be given to the distribution

licensee in whose area the consumer is located. In case of two licensees

supplying in the same area the licensee from whom the consumer was availing

supply shall be paid the amounts collected.

Clause 8.5.4

The additional surcharge for obligation to supply as per section 42(4) of the

Act should become applicable only if it is conclusively demonstrated that the

obligation of a licensee, in terms of existing power purchase commitments, has

been and continues to be stranded, or there is an unavoidable obligation and

incidence to bear fixed costs consequent to such a contract. The fixed costs

related to network assets would be recovered through wheeling charges.

Clause 8.5.5

Wheeling charges should be determined on the basis of same principles as laid

down for intra-state transmission charges and in addition would include

average loss compensation of the relevant voltage level.

Clause 8.5.6

In case of outages of generator supplying to a consumer on open

access, standby arrangements should be provided by the licensee on the

payment of tariff for temporary connection to that consumer category

as specified by the Appropriate Commission.


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C. PROVISIONS RELATED TO OPEN ACCESS UNDER THE

NATIONAL ELECTRICITY POLICY

National Electricity Policy under clause 5.8.3 while discussing the

surcharges to imposed on Open Access Consumers provides that:

Under sub-section (2) of Section 42 of the Act, a surcharge is to be levied by

the respective State Commissions on consumers switching to alternate

supplies under open access. This is to compensate the host distribution

licensee serving such consumers who are permitted open access under

section 42(2), for loss of the cross-subsidy element built into the tariff

of such consumers. An additional surcharge may also be levied under sub-

section (4) of Section 42 for meeting the fixed cost of the distribution licensee

arising out of his obligation to supply in cases where consumers are allowed

open access. The amount of surcharge and additional surcharge levied

on consumers who are permitted open access should not become so

onerous that it eliminates competition that is intended to be fostered

in generation and supply of power directly to consumers through the

provision of Open Access under Section 42(2) of the Act. Further it is

essential that the Surcharge be reduced progressively in steps with the

reduction of cross-subsidies as foreseen in Section 42(2) of the

Electricity Act 2003.

D. REGULATIONS OF THE COMMISSION

The Commission has specified the terms and conditions for open

access and its phasing under the UPERC (Terms and Conditions for

Open Access) Regulations -2005 and the methodology for the

determination of transmission charges and/or wheeling charges,

surcharge and additional surcharge under the UPERC (Terms and

Conditions for determination of Transmission Tariffs) Regulations and

the UPERC (Terms and Conditions for determination of Distribution

Tariffs) Regulations. The relevant provisions of the above regulations

are discussed below:-


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I) Open Access Regulations of the Commission

The Uttar Pradesh Electricity Regulatory Commission has

notified its Open Access Regulations, 2005 on 21st June 2005

which among other things details the Charges, the Surcharge

and the Additional Surcharge to be paid by Open Access

customers and the phasing of Open Access for distribution.

Under the scheme of things Open Access is to be allowed in

phases as detailed below:

S.No.

Phases Category of consumers Time from which openaccess allowed

1 Phase I Consumers with demand of 20 MWand above and connected on voltage

levels of 33 KV and above

July 1, 2005

2 Phase II Consumers with demand of 10 MWand above and connected on voltagelevels of 33 KV and above

April 1, 2006

3 Phase III Consumers with demand of 5 MWand above and connected on voltagelevels of 11 KV and above

April 1, 2007

4 Phase IV Consumers with demand of above1 MW

April 1, 2008

Regarding Transmission Charges, Wheeling Charges, Cross-subsidy

surcharge and additional surcharge, clause 15 of the above regulations

provides that:

Clause 15 - Charges for open access

(1) Transmission charges and Wheeling chargesThe Transmission charges or Wheeling charges for use of the

Transmission System of a Transmission Licensee or the distribution

system of a distribution licensee shall be regulated as under:

(a) Transmission charges and wheeling charges payable by an open accesscustomer shall be determined by the Commission in terms of the


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regulations framed by the Commission for determination of tariff for

transmission and distribution licensee respectively.

(b) Where a dedicated transmission system or a distribution system usedfor open access has been constructed for exclusive use of an open access

customer, the transmission charges or wheeling charges for suchdedicated system shall be worked out in terms of the regulations for

determination of tariff and shall be borne entirely by such open access

customer till such time the surplus capacity is used for other persons

or purposes.

(c) In case intra state transmission system or distribution system is usedby an open access customer in addition to inter-state transmission

system, transmission charges and wheeling charges shall be payable for

use of intra-state transmission and/or distribution system in addition

to payment of transmission charges for inter-state transmission.

(d) The short-term open access customer shall pay 25% of the annualtransmission or wheeling charges as determined by the

Commission for that year based on average capacities served by such

systems. The average capacity, for transmission system shall be sum of

generating capacities connected to the transmission system and

contracted capacities of other transactions handled by the system of the

Licensee while in case of distribution system, it shall be sum of import

of power at each interface point of exchange of power at electrical

boundary of distribution licensee and generation from captive power

plants, co-generation plants and plants generating electricity from

renewable sources of energy located in the area of such licensee.

Provided that above charges shall be on one-day basis which

transmission / distribution licensee shall declare in Rs. Per MW,

which shall remain fixed for a period of one year.

Provided further that when reservation of capacity has been done

consequent to bidding, the rate shall be taken as decided by bidding.


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(e) 25% of the charges collected in this manner from the short- termcustomers shall be retained by transmission or distribution licensee

and the balance 75% shall be adjusted towards reduction in

transmission/wheeling charges of the transmission/ distribution

licensee respectively chargeable to long terms customers and/or retail

tariff of the consumers of the distribution licensee.

Provided that the price determined under regulation 15(1) shall be the

floor price for the purpose of regulation 9(2) (b).

(2) Surcharge

(a) In addition to transmission charges and wheeling charges, a consumer

availing open access to the transmission system/distribution system

not being a captive consumer shall pay a surcharge;

(b) Surcharge shall be determined by the Commission separately in the

concerned tariff order. In absence of such determination, the surcharge

shall be specified by the Commission on a case to case basis for a

specified period based on an application moved before it in this behalf.

Provided that the applicant shall pay surcharge as determined as per

these regulations post the expiry of the period specified above under

regulation 15(2) (b).

(c) The amount of surcharge shall be so calculated as to meet the current

level of cross subsidy from that category of consumers and shall be paid

to the distribution licensee of area of supply where the consumer is

located.

(d) The surcharge shall be reduced and eliminated in the manner asdetermined by the Commission in respect to reduction and elimination

of cross subsidies in terms and conditions of tariff of

transmission/distribution licensees. *


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*Note: It may however be noted that Government of India has vide

notification dated 28th May 2007 issued the Electricity (Amendment)

Act 2007 to amend certain provisions of the Electricity Act 2003.

Under the amended provisions the word eliminated used in

connection of elimination of cross-subsidies has been removed from

Section 38 (2) (d), Section 39 (2) (d), Section 40 and Section 42 (2) and

accordingly third proviso from Section 38 (2) (d), Section 39 (2) (d)

and Section 40 has been removed.

(e) The consumers availing exclusively interstate transmission system

shall pay such amount of surcharge as determined by the Commission

by regulations in this regard.

(3) Additional Surcharge

(a) A consumer availing open access and receiving supply of electricity

from a person other than the distribution licensee of his area of supply

shall pay to the distribution licensee an additional surcharge, in

addition to wheeling charges and surcharge, to meet the fixed cost of

such distribution licensee arising out of his obligation to supply as

provided under sub-section (4) of section 42 of the Act;

(b) The distribution licensee shall submit to the Commission an account of

fixed cost, which the licensee is incurring towards his obligation to

supply;

(c) The Commission shall scrutinize the statement of account submitted

by the licensee and objections, if any, and determine the amount of

additional surcharge payable by the consumer to the licensee,

(d) The additional surcharge shall be leviable for such period as the

Commission may determine.

II) Terms and condition for determination of transmission tariff

and distribution tariff regulations


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The Commission has notified the Terms and Conditions for

determination of Transmission as well as Distribution Tariffs

Regulations on 6th October 2006.

(i) Terms and Conditions for determination of Transmission

Tariffs Regulations

Clause 3.11, of the above Regulation gives the methodology for

the determination of Transmission/wheeling charges as below:

Clause-3.11 Transmission/Wheeling Charges

1. In case of more than one long term of customers of the

Transmission System (distribution licensee/long term open

access customers) utilizing the transmission system, the

monthly transmission/wheeling charges leviable on such

customers shall be computed as per the following formula:

Transmission/Wheeling charges payable by the long term

customers of the Transmission Systemfor use of transmission

system for a month

= (Net ARR/12)*(CL/SCL)

Where:

Net ARR = Annual Revenue Requirement of the Transmission

Licensee for the ensuing financial year computed in accordance

with these regulations, less Non Tariff Income under

Regulation 5.1.2, which includes such percentage of revenue as

specified in the UPERC (Treatment of income of Other

Businesses of Transmission Licensees and Distribution

Licensee) Regulation 2004, as amended from time to time,

recovered from Short-term open access customers;


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CL = Allotted Transmission Capacity in MW of particular

long term of customers of the Transmission System as per

Transmission Service Agreement.

SCL = Sum of the Allotted Transmission Capacities (in MW)

to all the long-term customers of intra-State TransmissionSystem.

2. It is mandatory for all long-term transmission system

customers and the short-term transmission system customers

including the distribution licensees to enter into an agreement,

in terms of the Open Access Regulations of the Commission,

with the Transmission Licensee.

3. Wheeling charges for short-term open access customers shall be

in accordance with Open Access Regulations of the

Commission as amended from time to time.

III) Terms and Conditions for determination of Distribution

Tariffs Regulations

Clause 2.1 Filing of Annual Revenue Requirement and

Tariff Application

1. The Distribution Licensee shall file the Aggregate

Revenue Requirement (ARR)/Tariff petitions complete

in all respect along with requisite fee as prescribed in

the Commissions Fee and Fine Regulations on or before

30th November of each year. The above ARR petition

shall contain the details of the estimated expenditure

and the expected revenue that it may recover in the

ensuing financial year at the prevailing tariff.

Information as per formats specified in Annexure A to

these regulations shall form part of the ARR filings.

2. ARR/Tariff filing by the Distribution Licensee shall


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separately indicate Aggregate Revenue Requirement

(ARR) for Wheeling function and Retail Supply

function embedded in the distribution function.

3. Till such time complete segregation of accounts between

Wheeling and Retail Supply Business takes place, ARR proposals for Wheeling and Retail Supply Business

shall be prepared based on an allocation statement to the

best judgment of the distribution licensee. Methodology

for such segregation shall in any case form part of the

proposal.

4. The licensee in the ARR filing for the ensuing financial

year shall indicate the manner in which the gap, if any,

between the expenses, which it is permitted to recover

and the expected revenue at the existing tariff for the

ensuing year, shall be bridged. The ARR filing shall

include detailed tariff proposal for Wheeling and Retail

Supply in case it is proposed to bridge the gap through

tariff hike. The proposed wheeling charges shall be

voltage wise. However the distribution licensee may, in

absence of voltage wise data, compute wheeling charges

based on normative distribution losses.

Clause 5.2 Revenue Gap:

1. Tariff for wheeling of electricity shall be computed onthe basis of the costs allocated to the wheeling business

as per the allocation statement and the projected

electricity units to be wheeled through distribution

licensee's network in the ensuing tariff period. The

wheeling cost for electricity units wheeled for retail

supply shall form part of the ARR for the retail supply

business.


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2. The difference between the Expected Expenditure forretail supply business as per allocation statement and

the Revenue from projected sale of power at prevailing

tariff, non-tariff income and other revenues as per

allocation statement for the retail supply business shall

be called the Revenue Gap.

3. The revenue gap shall be bridged by measures such asimprovements in efficiency, tariff hikes and utilization

of contingency reserves etc., as may be approved by the

Commission as well as Government subsidy.

Clause 6.6 Surcharge

1. Till such time the cross subsidies are eliminated, theopen access consumer shall pay to the distribution

licensee a cross subsidy surcharge in addition to

wheeling charges. Surcharge to be levied on the open

access consumer shall be determined by the Commission

keeping in view the loss of cross-subsidy from the

consumers or category of consumers who have opted for

open access to take supply from a person other than the

incumbent distribution licensee.

2. When open access is allowed the surcharge for thepurpose of sections 38,39,40 and sub-section 2 of

section 42 would be computed as the difference

between (i) the tariff applicable to the relevant

category of consumers and (ii) the cost of the

distribution licensee to supply electricity to the

consumers of the applicable class. In case of a

consumer opting for open access, the distribution

licensee could be in a position to discontinue

purchase of power at the margin in the merit


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order. Accordingly, the cost of supply to the

consumer for this purpose may be computed as

the aggregate of (a) the weighted average of power

purchase costs (inclusive of fixed and variable

charges) of top 5% power at the margin, excluding

liquid fuel based generation, in the merit order

approved by the UPERC adjusted for average loss

compensation of the relevant voltage level and (b)

the transmission and distribution wheeling

charges as determined in accordance with the

UPERC Terms and Conditions for Determination

of Distribution and Transmission Tariff

Regulations as amended from time to time.

Cross Subsidy Surcharge formula:

S = T [C (1+ L / 100) + D]

Where

S is the cross subsidy surcharge

T is the Tariff payable by the relevant category of

consumers;

C is the Weighted average cost of power purchase of top

5% at the margin excluding liquid fuel based generation

and renewable power

D is the Wheeling charges for transmission and

distribution of power.

L is the system Losses for the applicable voltage

level, expressed as a percentage

The cross-subsidy surcharge shall be brought down


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22

progressively and, as far as possible, at a linear rate to a

maximum of 20% of its opening level by the year 2010-

11.

3. No such surcharge would be required to be paid interms of sub-section (2) of Section 42 of the Act on theelectricity being sold by the generating companies with

consent of the competent government under Section

43(A)(1)(c) of the Electricity Act, 1948 (now repealed)

and on the electricity being supplied by the distribution

licensee on the authorization by the State Government

under Section 27 of the Indian Electricity Act, 1910

(now repealed), till the current validity of such consent

or authorizations.

4. The cross subsidy surcharge may be collected either bythe distribution licensee, the transmission licensee or

the STU, depending on whose facilities are used by the

consumer for availing electricity supplies. In all cases

the amounts collected from a particular consumer

should be given to the distribution licensee in whose

area the consumer is located. In case of two licensees

supplying in the same area the licensee from whom the

consumer was availing supply shall be paid the

amounts.

5. However, in order to facilitate open access, theCommission may adopt a procedure different from the

procedure stated above for the calculation of cross

subsidy surcharge consistent with the provisions of the

EA 2003 and the spirit of the tariff policy after

considering the view points of licensee and the open

access customer.


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Clause 6.7 Wheeling Charge

1. The licensee shall provide non-discriminatory open

access to the consumers within the period as stipulated

by the Commission in UPERC (Terms and Conditions

for Open Access) Regulations, 2005 and amendmentsthereof if any. For the purpose of tariff for wheeling, the

person utilizing wheeling services shall be charged tariff

on both cash and kind basis.

2. The wheeling charge in cash for a consumer category for

the present shall be based on simple postage stamp

method and shall be computed as per regulation 5.2(1).

3. The normative transmission and distribution losses at

the voltage at which the open access is availed shall be

borne by the open access consumer in kind.

Clause 6.8 Additional Surcharge

1. Where a consumer avails open access, the Commissionmay determine the additional surcharge to meet the

fixed costs of distribution licensee arising out of his

obligation to supply and permit collection of such

additional surcharge for the period the fixed cost

remains stranded. For recovery of additional surcharge,

the distribution licensee shall conclusively demonstrate

that his obligation in terms of existing power purchase

commitments, has been and continues to be stranded, or

there is an unavoidable obligation and incidence to bear

fixed costs consequent to such a contract. Further, fixed

costs related to electrical network assets should be

recovered through wheeling charges.


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2. The Commission shall determine the amount of

additional surcharge to be paid by the consumer to the

licensee based on the statement of account submitted by

the licensee and objections thereof if any of the

consumer.

3. The additional surcharge shall be leviable for such

period as the Commission may determine.

DETERMINATION OF APPLICABLE CHARGES FOR OPEN ACCESS

First and foremost, before giving the details of the calculation of various

charges for Open access, the Commission would like to discuss the order

dated July 05, 2007 of the Appellate Tribunal of India in the matter of Appeal

Nos. 169,170,171,172 of 2005 & 248 and 249 of 2006, vide which Honble

Appellate Tribunal has interpreted the provisions related to Open Access in

accordance with the spirit of the Act. Commission feels that the same will put

the issues linked with the determination of Open Access in the proper

perspective.

In its above order dated 5th July 2007, highlighting the importance of

purposive interpretation of any enactment Honble Appellate Tribunal of

India has very clearly brought about the intent of the Act:

Para 14

The object and purpose of the Act lies in its preamble, which is for

unshackling the electricity industry. This it seeks to achieve by adopting,

inter alia, measures conducive to the development of the electricity industry

and promoting competition. Competition is a significant factor for

unleashing the electricity sector. Competition in the sector depends upon

various factors. One of the most important factors is the availability of open


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25

access to the consumer, generator and distributor, as the case may be. Open

access is the back bone of competition. It is the corner stone of the Act.

Further, while interpreting the provisions related to Open Access under the

Act the Appellate Tribunal lays down that -

Para 15

Under the Act, it is no longer necessary that the supplier of energy should be

the owner of delivery system. In theoretical terms, it means that a consumer

should be able to buy electricity from any one and not just the distribution

licensee located within its area of supply.

Para 18

Sub-section (47) of Section 1 of the Act defines open access. It means providing for

non discriminatory open access to any licensee or consumer or a person engaged in

generation or to the use of transmission line or distribution system in accordance with

the Regulations of the appropriate Commission. In other words, it means

providing equal opportunity to any consumer, licensee or generator, as the

case may be, to use open access. It is the duty of the Regulatory Authority to

keep the definition in view and work towards elimination of discrimination

and to promote equality of opportunity in the matter of open access.

Regarding determination of cross-subsidy surcharge and its quantum the

order interprets Sub-Section (2) of Section 42 of the Act as below:

Para 24

Sub-Section (2) of Section 42 of the Act authorizes the State Regulatory

Commissions to introduce open access in the area of distribution of

electricity. It requires the State Commission to introduce open access in such

phases and subject to such conditions including the cross subsidies and other

operational constraints that may be specified within one year of the

appointed date by it. While determining the charges for wheeling, the

Commission is required to have due regard to all relevant factors including

surcharge and other operational constraints. According to the first proviso to


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26

Section 42(2), open access can be allowed by the Commission on payment of

surcharge in addition to wheeling charges. The State Commission under first

proviso is also required to determine the surcharge. In terms of second

proviso to Section 42(2), the surcharge determined by the Commission is

required to be utilized to meet the requirements of current level of cross-

subsidies within the area of supply of distribution licensee. It needs to be

noted that neither the first proviso nor the second proviso provides that the

cross subsidy must be so computed that it is equal to or more than the current

level of cross subsidy. All that the second proviso requires is that after the

surcharge is determined by the Commission under the first proviso, the

surcharge collected for providing open access must be utilized towards

meeting the current level of cross subsidy. The dictionary meaning of the

word utilised is to put to use. The appearance of the word utilised in thesecond proviso to Sub-Section (2) of Section 42 before the words to meet the

requirements of current level of cross subsidy is not without significance. It

is a pointer as to how the surcharge will be used. In case the surcharge was

always required to be equal to or more than the current level of cross subsidy,

the second proviso would have stated as follows:-

Provided further that such surcharge shall be equal to or may be more than

the requirements of current level of cross subsidy within the area of supply of

the distribution licensee.

Para 25

In fact the second proviso only deals with mode of utilization of surcharge.

It does not lay down that surcharge should measure up to or be equal to the

current level of cross subsidy.

In this context it is also relevant to quote clause 5.8.3 of the National

Electricity Policy which also holds that:

The amount of surcharge and additional surcharge levied on consumers who

are permitted open access should not become so onerous that it eliminates


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27

competition that is intended to be fostered in generation and supply of power

directly to consumers through the provision of Open Access under Section

42(2) of the Act. Further it is essential that the Surcharge be reduced

progressively in steps with the reduction of cross-subsidies as foreseen in

Section 42(2) of the Electricity Act 2003.

The Honble Appellate Tribunal further builds up the argument citing acute

shortage of electricity and absence of commensurate build up of generation

capacities to meet the growing demand:

Para 27

It should have adopted such level of cross subsidy surcharge as would have

maintained the right equilibrium between promotion of competition andfinancial security of the utility (distributor). Unless the consumers can avail

of the open access at a reasonable cost not exceeding the rate at which

electricity is available within the area of supply of the distribution licensee,

it will be difficult for the private entrepreneurs to set up generating stations.

The Regulatory Authorities must face the reality. There is no denying the fact

that there are crippling shortages of electricity in the country. The economic

growth which is about 9% of the GDP, cannot be sustained and further

accelerated unless substantial capacity addition takes place. The Regulatory

Commissions need to encourage the entrepreneurs to set up generating

stations by their visionary orders.

In the last para of the order Honble Appellant Tribunal of India directs all the

Electricity Regulatory Commission that:

In future all the Regulatory Commissions while fixing wheeling charges,

cross subsidy surcharge and additional surcharge, if any, shall have regard to

the spirit of the Act as manifested by its Preamble. The charges shall be

reasonable as would result in promoting competition. They shall be worked

out in the light of the above observations made by us.


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From discussions above it becomes quite clear that in no case quantum of

cross-subsidy surcharge and the additional surcharge be such that it

eliminates competitions and renders the provision related to Open Access

under the Act otiose.


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A. Transmission Charges

Section 61of Electricity Act provides that the Appropriate Commission shall,

subject to the provisions of this Act, specify the terms and conditions for the

determination of tariff, and in doing so, shall be guided by the principles and

methodologies specified by the Central Commission for determination of

the tariff applicable to generating companies and transmission licensees;

The Commission has accordingly adopted the same principles for the

determination of Transmission Tariffs as has been specified by the Central

Electricity Regulatory Commission. In accordance with the UPERC (Terms

and Conditions for determination of Transmission Tariff) Regulations 2006

the annual per MW charges for use of Transmission network can be

calculated by dividing the Net ARR of the Transmission licensee by the Sum

of the Allotted Transmission Capacities (in MW) to all the long-term

customers of intra-State Transmission System.:

Annual per MW Transmission Charges = Net ARR / SCL

Where:

Net ARR = Annual Revenue Requirement of the Transmission Licensee for the

ensuing financial year computed in accordance with these regulations,

less Non Tariff Income under Regulation 5.1.2, which includes such

percentage of revenue as specified in the UPERC (Treatment of income

of Other Businesses of Transmission Licensees and Distribution

Licensee) Regulation 2004, as amended from time to time, recovered

from Short-term open access customers;

SCL = Sum of the Allotted Transmission Capacities (in MW) to all the long-

term customers of intra-State Transmission System.

The Net ARR, as approved by the Commission, of UPPCL (Transco) for the

FY 2006-07 is as given below:


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Approved Net ARR of UPPCL (Transco) for the FY 2006-07

ARR Items ARR as approved by the Commissionin Tariff Order FY 2006-07

Employees Expenses 181.64

A & G Expenses 22.80

R & M Expenses 59.31

Depreciation 208.36Interest Charges 316.61

Other Interest and Finance 8.99

Less: Other Income /Non Tariff (16.30)

Special Appropriations 0

Reasonable Return 20.64

ARR (Rs. Crs.) 802.05

Gross Capacity Available to UPPCL

Description/Name of

Agency

UPRVUNL

(Thermal)

UPJVNL

(Hydro)

UPs Share of

Capacity fromCentral Sector Plants

UPs Share of

Capacity fromJV/IPP Plants

Thermal Hydro

Installed Capacity (MW) 4480 522 3387 501 1258

Capacity of plants shutdown (MW)

183 -- -- -- --

Sum of total AvailableCapacity (MW)

4297 522 3387 501 1258

Total System AvailableCapacity (MW)

9965

Station Name InstalledCapacity (MW)

Derated (Shutdown)Capacity (MW)

AvailableCapacity (MW)

Anpara A 630 0 630

Anpara B 1000 0 1000

Harduaganj 440 65 375

Obra A Ext-I 550 108 442

Obra B 1000 0 1000

Panki 220 10 210

Paricha 220 0 220

Paricha Ext. 420 0 420

Total 4480 183 4297

Gross Available Hydro Generating Capacity from UPJVNL Plants

Station Name Capacity (MW

Khara 72

Matatila 30


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Obra (Hydel) 99

Rihand 300

U.G.C. Power Stations (Including Belka & Babail). 21.5

Total 522.5

Gross Available Generating Capacity from CGS and JV Plants

Name of the Central SectorGenerating Station

MW allocations toUP

Anta 104.8

Auriya 231.1

Dadri Thermal 84.0

Dadri Gas 259.4

Rihand-I 361.1

Rihand-II 331.5

Singrauli 824.6

Tanda 440.0

Unchahar I 254.7

Unchahar II 143.8

Unchahar-III 69.6

Chamera 109.5

Chamera-II 74.8

Dhauliganga 65.9

Salal I&II 48.0

Tanakpur 21.3

Uri 96.3

Dulhasti 85.0

NAPP 152.90

RAPP 78.32

Nathpa Jhakri 256 17.1Farakka 23.7

Kahalgaon 12.3

Talchar 14.8

VishnuPrayag 352

Tala Power 300

Tehri Hydro 350

Total Allocation from CGS 5146

Transmission Charges Rs./MW/Year = ARR Transco/ Total MW Allocations

= 802.05 x 10^7/ (4297+ 522.5+ 5146)

=802.05 x 10000000/9965.5

= Rs. 804826.6519 /MW/Year


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Transmission Charges Rs./MW/Month = Rs. 67068.8877 /MW/Month

The above transmission charges are taking into account the costs of entire

transmission network. In absence of voltage wise segregated data it is

assumed that cost of wheeling of power through transmission network

related to 400 kV, (400+220) kV and (400+220+132) kV is 40%, 70% and 100%

respectively of the total costs for the entire transmission network respectively.

Accordingly, the voltage wise transmission charges shall be as below:

Sl. No. Voltage of Supply Transmission charges

1 400 kV Rs. 321930.6608/MW/Year or

Rs. 26827.5551/MW/month

2 220 kV Rs. 563378.6563/MW/Year orRs. 46948.2214/MW/month

3 132 kV Rs. 804826.6519 /MW/Year or

Rs. 67068.8877 /MW/Month

Transmission chargesfor Short Term Open Access can be calculated from the

above charges in accordance with the provision of UPERC (Terms andConditions for Open Access) Regulations 2004.

B. Determination of Wheeling Charges

Clause 2.1 (2) & (3) of the Terms and Conditions for determination of

Distribution Tariff Regulations provide that ARR/Tariff filing by the

Distribution Licensee shall separately indicate Aggregate Revenue

Requirement (ARR) for Wheeling function and Retail Supply function

embedded in the distribution function and that till such time complete

segregation of accounts between Wheeling and Retail Supply Business takes

place, ARR proposals for Wheeling and Retail Supply Business shall be

prepared based on an allocation statement to the best judgment of the

distribution licensee.


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Since, the above regulation was not in force at the time of filing of ARR/Tariff

petitions for the FY 2006-07 segregated data was not made available by the

licensees. Wheeling charges for open access therefore could not be determined

alongwith the Tariff Order in accordance with the provisions of the above

reguation. However, to initiate a dialogue on the methodology specified in

the regulation, the Commission has, based on the data and information

available in the ARR for the FY 2006-07 and certain assumptions, done the

calculation for wheeling charges for the purposes of Open Access to the

distribution network.

As per the provisions of the Distribution Tariff Regulation:

Wheeling Charges = ARR W / Energy handled by the distribution system

Where:

ARR W - is ARR for Wheeling function

Further,

ARR W = {ARR D PPC TC Annual} * (% of total costs allocated to wheeling

Function)

Where

ARR W - is the ARR for Wheeling function

PPC - Power Purchase Cost

TC Annual - Annual Transmission Charges

The consolidated Net ARR for all the Discoms as approved by the

Commission for FY 2006-07 is as below:

S.No. ARR Heads Approved Costs

1 Power Purchase Costs (PPC) 10779.61

2 Annual Transmission Charges (TC)Annual 802.05

3 Employees Costs 818.51

4 A & G Costs 91.66


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S.No. ARR Heads Approved Costs

5 Repair & Maintenance Expenses 222.87

6 Interest Charges 296.37

7 Other Interest & Finance Charges 57.22

8 Provision for Bad & Doubtful Debts 0.00

9 Depreciation 691.09

10 Special Provisions 0.00

11 Reasonable Return 0.0012 Total Approved Expenses 13759.39

13 Less: Expenses Capitalized (204.99)

14 Employees Costs (122.78)

15 A & G Costs (13.75)

16 Interest & Finance Charges (68.46)

17 Net Approved Expenses 13554.40

18 Less: Other Income (126.00)

19 Less: Committed GoUP Subsidy (1012.00)

20 Net ARR 12416.40

In absence of actual segregation of costs it has been assumed that 80% of the

total costs shall be towards the wheeling function, accordingly:

ARR W = Rs. (13554 10779 802) * 0.8 Crores

= Rs. (1578.4) Crores

Further, in accordance with the Tariff Order for the FY 2006-07, taking energy

handled by the distribution system of 48073 MU, the per unit cost of wheeling

had been worked out as Rs. 0.33 /unit.

The above wheeling charges have been determined taking into account the

costs of entire distribution network. However, cost of wheeling for the

purposes of Open Access (i.e. at 33 and 11 KV), will be much less. It is

accordingly assumed that 50% of the charges so determined shall apply to

Open Access consumers at 33 KV and 60% to Open Access consumers at 11

KV. Accordingly the charges for wheeling of power through distribution

network at different voltages shall be as below:


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Sl.No. Voltage of Supply Wheeling Charges

1. Open Access Consumers drawing power from

the distribution network at 33 KV.

Rs. 0.17/unit

2. Open Access Consumers drawing power from

the distribution network at 11 KV.

Rs. 0.20/unit

However, Open Access Consumer directly connected to the transmission

network need to pay only the transmission charges and no wheeling

charges.

C. Determination of Cross-Subsidy Surcharge

The Formula for the calculation of the Cross Subsidy Surcharge as prescribed

in the Tariff Policy and adopted by the Commission in its regulations is as

below:

Surcharge formula:

S = T - [C *(1+ L / 100) + D]

Where

S - is the cross-subsidy surcharge to be determined.

T - is mentioned as the Tariff payable by the relevant category of

consumers but in view of two part tariffs taken as the average

revenue realized or the through rate of particular category of

consumers as worked out during determination of tariffs.

C - is the Weighted average cost (both fixed and variable) of power

purchase of top 5% at the margin excluding liquid fuel based

generation and renewable power in the merit order approved by

the Commission during determination of tariffs.


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D - has been mentioned as the Wheeling charge but shall include

both the Transmission Charges as well as wheeling charges (if

connected to distribution network).

L - the normative system losses for the applicable voltage level,

expressed as a percentage and shall mean normative

Transmission as well as Distribution losses depending upon

the network (Transmission or Distribution) to which

connected.

L - is system losses at applicable voltage level. However, for Open

Access consumers drawing power directly from the

transmission network the same shall be the normative

transmission losses as approved by the Commission.

For the sample calculation of Cross Subsidy Surcharge for the HV-2 category

of consumers T has been taken as the through rate for the HV-2 category i.e

Rs 4.4/kWh , as approved by the Commission in the Tariff Order for FY 2006-

07.

C the weighted average cost of top 5% power, purchased at the margin

excluding liquid fuel based generation and renewable power has been takenfrom the merit order as approved by the Commission in the Tariff Order for

the FY 2006-07. The information submitted by the licensees in the ARR/Tariff

Filings for the FY 2006-07 indicated that they have purchased 2120 MU of

Power @ Rs. 5.5 /unit through other sources. The Commission was made to

understand that this is the average rate of power procured through the

trading route. Accordingly, the cost of top 5% power (around 2530.15 MU) at

the margin can be fairly assumed as not more than Rs. 5.0/unit.

Further, for wheeling of electricity through transmission network the

commission has determined the average transmission charges irrespective of

voltage level as Rs.0.167/unit in the Tariff Order for the FY 2006-07.


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Substituting these values in the surcharge formula yields negative results

indicating no requirement for any cross-subsidy surcharge:

S = Rs. 4.44 (5.0*(1+5/100) + (0.167))

= Rs. -0.977 /unit

In this context it is also relevant to quote from the order of the Honble

Appellate Tribunal dated 5th July 2005 in which it has been held that:

It is well-known that there is a shortage of electricity and in case a consumer finds

another source of power for its needs, it reduces the burden of the distribution licensee

due to the avoided additional purchase of power at marginal cost. In case the

distribution licensee can meet the demand of electricity and provide quality service at

a reasonable price, there can be no dearth of consumers and in that event there is

hardly any question of loss to the distribution licensee when a consumer moves away

from it.

Meaning thereby that if the consumer mix of a particular licensee is not

changing with the migration of a cross-subsidizing consumer there should not

be any requirement for the cross-subsidy surcharge. The cross-subsidy

surcharge accordingly is determined to be as zero for the present.

D. Determination of Additional Surcharge

Clause 8.5.4 of the Tariff Policy provides that:

The additional surcharge for obligation to supply as per section 42(4) of the Act

should become applicable only if it is conclusively demonstrated that the obligation of

a licensee, in terms of existing power purchase commitments, has been and continues

to be stranded, or there is an unavoidable obligation and incidence to bear fixed costsconsequent to such a contract. The fixed costs related to network assets would be

recovered through wheeling charges.

Accordingly, Additional Surcharge shall be payable by the Open Access

consumers only if licensee demonstrates to the satisfaction of the


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Commission that his obligation in terms of existing power purchase

commitments, has been and continues to be stranded, or there is an

unavoidable obligation and incidence to bear fixed costs consequent to such a

contract.

This view has also been upheld by the Appellate Tribunal of India in its order

dated 5th July 2007 in APPEAL Nos. 169,170,171,172 of 2005 & 248 and 249 of

2006.

In view of ever growing demand for power and gap between its demand and

supply, it is felt that there is hardly any reason for any of the obligations of

the licensee, in terms of existing power purchase commitments, to remain

stranded for which licensee has to bear the fixed costs.

Accordingly, for the present, additional surcharge is determined to be zero.

E. Standby Arrangement Charges

In this context, the Tariff Policy notified by the Central Government under

clause 8.5.6 provides that:

In case of outages of generator supplying to a consumer on open access, standby

arrangements should be provided by the licensee on the payment of tariff for

temporary connection to that consumer category as specified by the Appropriate

Commission.

The State Electricity Regulatory Commissions (SERCs) are further required to

be guided by the tariff policy in discharge of their functions as well as framing

of regulations under Section 61 of the Act.

It is however to clarify that though, the tariff order issued by the Commissionprovides for charges to be paid by the consumers requiring temporary

connection, but the supply under the category is to be provided at 230/440

Volts only. Therefore some temporary rates need to be prescribed for such

standby arrangement requiring supply at 11 kV and above voltages in the

Tariff Order.


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It is felt that temporary charges of Open Access consumers can be linked to UI

charges. Accordingly, it is proposed that the temporary charges for Open

Access consumers for drawl over and above his schedule may be UI + 25%.

The detailed scheme is as below:

(i) User of captive generating plant, if not a consumer of distribution

licensee of his area, while receiving supply of electricity from such

plant as well as Open Access Consumers, connected directly or

indirectly with the grid/distribution system, shall ensure to draw

power as per schedule during each 15 minute time block. The drawl

more than the schedule by them shall be considered as temporary

supply from the distribution licensee in whose area they are located.

The temporary supply shall be charged at rate schedule specified bythe Commission for them. No charge has so far been specified for

temporary supply at 11 kV and above. The temporary charges for such

user or consumer shall be frequency linked rate 255 higher than UI rate

specified by CERC from time to time. Such frequency linked rates

based on CERC notification dated 26.4.07 are as follows:

Average frequency of time block (Hz)

Below Not Below

UI Rate (Paise per kWh)

---- 50.50 0.0

50.50 50.48 8.0

50.48 50.46 15.0

---- ---- ----

---- ---- ----

49.84 49.82 255.0

49.82 49.80 263.00

49.80 49.78 274.00

49.78 49.76 285

---- ---- ----

---- ---- ----49.54 49.52 420.00

49.52 49.50 431.00

49.50 49.48 451.00

49.48 49.46 471.00

---- ---- ----

---- ---- ----

49.04 49.02 911.00


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49.02 ---- 931.00

(Each 0.02 Hz step is equivalent to 7.5 Paise/kWh in 50.5 49.8 Hz

frequency range, to 11.2 Paise/kWh in 49.8 49.5 Hz frequency range

and to 20 Paise/KWh in 49.5 49.02 Hz)

(ii) Above charges shall be without prejudice to penalty which may be

imposed by the Commission, for non-compliance of the provision of

the Act, Regulation or Code or order made there under, on

recommendation of State Load Despatch Centre.

(iii) the billing of the standby arrangement charges, under sub-para (i)

above, shall be carried out with the billing of UI charges and paid

accordingly similar to UI payments.

The premium of 25% is required to ensure the grid discipline and protect the

interest of incumbent distribution licensee as well as the consumers in its area

of operation. Higher premium will further force the open access consumer to

think in terms of alternatives sources which can provide power at economical

rates and at shorter notice thereby also promoting competition.

approach paper 30.09

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