Tamil nadu central and state plants

TAMIL NADU ELECTRICITY REGULATORY
COMMISSION
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Determination of Tariff for Generation
and Distribution
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Order No. 1 of 2012 dated 30-03-2012
(effective from 01-04-2012)

TAMIL NADU ELECTRICITY REGULATORY COMMISSION
(Constituted under section 82 (1) of Electricity Act 2003)

(Central Act 36 of 2003)

PRESENT : Thiru. K.Venugopal – Member
Thiru. S.Nagalsamy – Member

Order No 1 of 2012, dated 30-03-2012

In the matter of: Determination of Tariff for Generation and Distribution

In exercise of power conferred by clauses (a), (c)& (d) of sub section (1) of Section 62 and
clause (a) of subsection(1) of Section 86 (1) (a) of the Electricity Act 2003, (Central Act 36 of
2003), and after taking into account the stipulations in the National Electricity Policy and the
Tariff Policy, TNERC (Terms and conditions for determination of tariff) Regulations 2005,
TNERC (Terms and Conditions for Determination of Tariff for Intra state Transmission /
Distribution of Electricity under MYT Framework ) Regulations, 2009, and all other powers here
unto enabling in that behalf and after considering the views of the State Advisory Committee
meeting held on 27-01-2012 in accordance with section 88, after examining the comments
received from the stakeholders and after considering suggestions and objections received from
the public during the public hearings held on 30-01-2012, 02-02-2012, 06-02-2012 and 10-02-
2012 as per section 64, the Tamil Nadu Electricity Regulatory Commission, hereby, passes this
order for Generation and Distribution Tariff.

This Order shall take effect on and from the April 1, 2012.

(S. Nagalsamy) (K.Venugopal)
Member Member

Table of Contents
1 INTRODUCTION ..................................................................................................................................... 1
Background ................................................................................................................................................... 1
Preamble ....................................................................................................................................................... 1
2 Issue-wise summary of views, comments and suggestions of stakeholders on Petition and
TANGEDCO’s Replies and Commission’s Views .......................................................................................... 10
3 ENERGY SALES ..................................................................................................................................... 93
Energy Sales: ............................................................................................................................................... 93
T&D Loss: .................................................................................................................................................. 112
4 Energy Availability ............................................................................................................................. 117
Thermal Power Stations: ........................................................................................................................... 117
Gas Turbine Power Stations: ..................................................................................................................... 129
Hydel Generation: ..................................................................................................................................... 138
Wind Generation: ..................................................................................................................................... 142
Energy Available from Other Sources: ...................................................................................................... 144
5 FIXED COST ........................................................................................................................................ 164
Capital Expenditure and Capitalisation ..................................................................................................... 164
6 Expenses on account of Generation ................................................................................................. 196
Part-I: Fixed Cost: ...................................................................................................................................... 196
Return on Equity: ...................................................................................................................................... 197
Operation and Maintenance Expenses: .................................................................................................... 203
Other debts and Miscellaneous Income: .................................................................................................. 211
Part-II: Variable Cost: ................................................................................................................................ 217
Provisional Tariff for New Thermal Power Stations:................................................................................. 230
Variable cost for Gas Turbine Power Stations: ......................................................................................... 230
Hydro Generating Stations:....................................................................................................................... 237
Provisional Tariff for New Hydro Generating Stations: ............................................................................ 239
Wind Generating Stations: ........................................................................................................................ 239
Summary for Own Generation:................................................................................................................. 240
7 POWER PURCHASE COST FROM OTHER SOURCES ........................................................................... 245

Merit Order Ranking: ................................................................................................................................ 245
Power Purchase Cost: ............................................................................................................................... 248
8 Aggregate Revenue Requirement of TANGEDCO ............................................................................. 276
Regulatory Framework.............................................................................................................................. 276
Fixed Cost: ................................................................................................................................................. 277
Own Generation and Power Purchase Cost:............................................................................................. 277
Intra-State Transmission Charges: ............................................................................................................ 278
Non Tariff and Other Income .................................................................................................................... 279
Sharing of Gain and Losses ....................................................................................................................... 280
Aggregate Revenue Requirement of TANGEDCO ..................................................................................... 281
9 TARIFF PHILOSOPHY AND CATEGORY-WISE TARIFFS FOR FY 2010-11 ............................................. 283
10 TARIFF SCHEDULE ......................................................................................................................... 319
TARIFF FOR HIGH TENSION SUPPLY CONSUMERS .................................................................................... 319
TARIFF FOR LOW TENSION SUPPLY CONSUMERS..................................................................................... 325
Applicability of the Tariff Schedule ........................................................................................................... 338
11 SUMMARY OF DIRECTIVES ............................................................................................................ 340

List of Abbreviations

S. No Abbreviation Description
1 A&G Administration and General Expenses
2 ABC Aerial Bunched Cables
3 ABR Average Billing Rate
4 ARR Aggregate Revenue Requirement
5 CERC Central Electricity Regulatory Commission
6 CGS Central Generating Station
7 COS Cost of Supply
8 CPP Captive Power Plant
9 CSD Consumer Security Deposit
10 DA Dearness Allowance
11 EA Electricity Act
12 ED Electricity Duty
13 FY Financial Year
14 GFA Gross Fixed Assets
15 H1 First Half
16 H2 Second Half
17 HT High Tension
18 HVDS High Voltage Distribution System
19 kWh Kilo-watt Hour
20 LT Low Tension
21 MU Million Units
22 MW Mega-watt
23 MYT Multi-Year Tariff
24 O&M Operation & Maintenance
25 R&M Repair & Maintenance
26 O&M Operation & Maintenance
27 RoE Return on Equity
28 TO Tariff Order
29 TP Tariff Policy
30 TVS Technical Validation Session
31 Y-O-Y Year on Year

1 INTRODUCTION

Background

Preamble
1.1.1 Consequent to the enactment of the Electricity Regulatory Commissions Act 1998
(Central Act 14 of 1998), the Government of Tamil Nadu constituted the Tamil Nadu
Electricity Regulatory Commission (TNERC) vide G.O.Ms.No.58, Energy (A1)
Department, dated 17-03-1999.

1.1.2 The Commission issued its first tariff order under section 29 of the Electricity Regulatory
Commission Act, 1998, on 15-03-2003 based on the petition filed by the Tamil Nadu
Electricity Board (TNEB) on 25-09-2002.

1.1.3 In Para 7.2 of the order dated 15-03-2003, the Commission issued the following rulings:

“The Commission thus rules that the revised tariffs would be applicable from 16th March
2003 to 31st March 2004, and till such further time as the TNEB does not approach the
Commission for tariff revision. The Commission also directs that, henceforth, the TNEB
should submit a Tariff Proposal for any financial year by the end of December of the
previous financial year. In other words, the Commission expects the TNEB to submit a
tariff revision proposal for FY 2004-05 before the end of December 2003, in case the
TNEB desires to revise the tariffs for FY 2004-05.”

1.1.4 The TNEB did not come before the Commission for revision of retail tariff till January
2010. In the meantime, Electricity Regulatory Commission Act, 1998 was repealed and
the Electricity Act 2003 (Central Act 36 of 2003) (hereinafter called Act) was enacted
with effect from 10-06-2003.

1.1.5 The Commission notified the Tamil Nadu Electricity Regulatory Commission (Terms and
Conditions for Determination of Tariff) Regulations 2005 (herein after called Tariff
Regulations) on 03-08-2005 under section 61 read with section 181 of the Act.

1.1.6 The Commission issued separate order on Transmission charges, Wheeling Charges,
Cross Subsidy surcharge and Additional Surcharge on 15-05-2006, based on the petition
filed by TNEB on 26-09-2005 under section 42 of the Act.

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1.1.7 The Commission has also issued two generation Tariff Orders between 2003 and 2010
for wind, biomass based power plants and other captive and co-generation plants.

1.1.8 The Commission notified the TNERC (Terms and Conditions for Determination of Tariff
for Intra state Transmission / Distribution of Electricity under MYT Framework)
Regulations, 2009 (herein after called MYT Regulations).

1.1.9 Subsequently, TNEB filed an application for determination of tariff with Aggregate
Revenue Requirement (ARR) for all functions on 18-01-2010, which was admitted by the
Commission after initial scrutiny on 09-02-2010.

1.1.10 The Commission issued its second Retail Tariff Order on 31.07.2010.

1.1.11 Government of Tamil Nadu, in G.O (Ms) No 114 Energy Dept, dated 08-10-2008 have
accorded in principle approval for the re-organisation of TNEB by establishment of a
holding company, namely TNEB Ltd and two subsidiary companies, namely Tamil Nadu
Transmission Corporation Ltd (TANTRANSCO) and Tamil Nadu Generation and
Distribution Corporation Ltd (TANGEDCO) with the stipulation that the aforementioned
companies shall be fully owned by Government.

1.1.12 Tamil Nadu Generation and Distribution Corporation Ltd. was incorporated on 01-12-
2009 and started functioning as such w.e.f. 01-11-2010.

1.1.13 This is the third Order of the Commission on determination of Generation and Retail
Tariff.

1.1.14 TNEB was formed as a statutory body by the Government of Tamil Nadu (GOTN) on 01-
07-1957 under the Electricity (Supply) Act 1948. The Board was primarily responsible
for generation, transmission, distribution and supply of electricity in the State of Tamil
Nadu and on 1/11/2010 it was bifurcated as TANGEDCO, TANTRANSCO and and a
holding company, TNEB Limited.

1.2 Applicability of Order

1.2.1 This Order will come into effect from 01-04-2012. The Generation and retail tariff
contained in this order will be valid till 31-03-2013. TANGEDCO shall file necessary
petition in accordance with the Regulations in time to enable the Commission to pass the
next Tariff Order in time.

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1.3 Tariff Filing

1.3.1 The Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) has filed
Application before the Commission on 17-11-2011 for preliminary true-up and approval
of Aggregate Revenue Requirement (ARR) for the year 2010-11 and approval of ARR
for the year 2011-12 and 2012-13 under Multi Year Tariff and also applied for tariff
revision with effect from 01-04-2012 or earlier.

1.3.2 The above petition was admitted and hosted by the Commission on its website on 25-11-
2011 and registered as TP 1 of 2011.

1.4 Procedure Adopted

1.4.1 Regulation 7 (2) of Tariff Regulation specifies the following: “The applicant shall
publish, for the information of public, the contents of the application in an abridged form
in English and Tamil newspapers having wide circulation and as per the direction of the
Commission in this regard. The copies of Petition and documents filed with the
Commission shall also be made available at a nominal price, besides hosting them in the
website.”

1.4.2 The public notice containing the salient details with regard to the petition was approved
and communicated to TANGEDCO on December 1, 2011, with a direction to arrange
publication of the notice in news papers on December 2, 2011 and invited written
objections/suggestions/views from by 31-01-2012.

1.4.3 The TANGEDCO published the public notice in the following newspapers on December
2, 2011.

a) The New Indian Express (English Daily);

b) The Hindu (English Daily);

c) Dinamalar (Tamil Daily) and

d) Daily Thanthi (Tamil Daily)

1.4.4 The Petition was placed before the State Advisory Committee on 27-01-2012. The list of
Members who participated in the meetings is detailed as Annexure I to this Order.

1.4.5 The views / comments expressed by the members are included in Chapter 2 of this Order.

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1.4.6 The list of stakeholders who have submitted objections/suggestions/views regarding the
petition in response to the public notice are detailed in Annexure II and
Objectios/suggestions/views are included in Chapter 2.

1.4.7 The Commission conducted public hearing at the following places on the dates noted
against each:

Date Day Place Venue
Tamil Isai Sangam, Raja Annamalai
30-01-2012 Monday Chennai Mandram, (Near High Court),5, Esplanade
Road, Chennai- 108
Corporation Kalaiarangam, R.S. Puram,
02-02-2012 Thursday Coimbatore
Coimbatore

Barbier Hall (Jubilee Building), St. Joseph's
06-02-2012 Monday Tiruchirappalli
College, Tiruchirappalli - 2

Indian Medical Association Hall, Madurai
10-02-2012 Friday Madurai Medical College Premises, No. 1 Panagal
Road, Madurai - 20

1.4.8 The lists of participants in each public hearing, is attached as Annexure III to this Order.
The views / comments / objections raised by the participants are discussed in Chapter 2.

1.5 The Electricity Act, 2003, Tariff Policy (TP) and Regulations

Section-61 of the Act stipulates the guiding principles for determination of Tariff by the
Commission and mandates that the Tariff should ‘progressively reflect cost of supply of
electricity’, ‘reduce cross-subsidy’, ‘safeguard consumer interest’ and ‘recover the cost of
electricity in a reasonable manner’.

Section-62 (1) of Act states as under:
“Section-62 (1):

1. The Appropriate Commission shall determine the tariff in accordance with
provisions of this Act for
a. supply of electricity by a generating company to a distribution licensee:
Provided that the Appropriate Commission may, in case of shortage of
supply of electricity, fix the minimum and maximum ceiling of tariff for sale

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or purchase of electricity in pursuance of an agreement, entered into
between a generating company and a licensee or between licensees, for a
period not exceeding one year to ensure reasonable prices of electricity;
b. transmission of electricity ;
c. wheeling of electricity;
d. retail sale of electricity.
Provided that in case of distribution of electricity in the same area by two or
more distribution licensees, the Appropriate Commission may, for promoting
competition among distribution licensees, fix only maximum ceiling of tariff for
retail sale of electricity.”

1.6 Similarly, the objectives stipulated in the Tariff Policy are as under:
“4.0 Objectives of the policy
The objectives of this tariff policy are to:
a. Ensure availability of electricity to consumers at reasonable and
competitive rates;
b. Ensure financial viability of the sector and attract investments;
c. Promote transparency, consistency and predictability in regulatory
approaches across jurisdictions and minimise perceptions of regulatory
risks;
d. Promote competition, efficiency in operations and improvement in quality of
supply.”

1.6.1 In the State of Tamil Nadu, Tamil Nadu Electricity Regulatory Commission in
exercise of powers vested in it under the Electricity Act, 2003 (Act) passes the Tariff
Orders.

1.7 Brief Note on Tariff Filing and Public Hearing

1.7.1 The Tariff Petition TP 1 of 2011 filed by TANGEDCO is the first Tariff Petition for
fixation of retail tariff for the year 2012-13 after the unbundling and issue of transfer
scheme by the Government of Tamil Nadu. The Transfer scheme dated 19-10-2010 is
enclosed as Annexure IV. This Transfer Scheme is a provisional Transfer Scheme,
addresses various issues like transfer of assets, revaluation of assets and partly address
the accumulated losses. This Transfer Scheme also envisages deployment of staff of the
erstwhile TNEB in the TANGEDCO and TANTRANSCO. The Commission in its earlier
Tariff Order No. 3 of 2010 dated 31-07-2010 had suggested in line with the Natioanal
Electricity Policy (para 5.4.3) and Tariff Policy that the accumulated losses should not be
passed on to the successor entities and financial restructuring has to be resorted to clean

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up the Balance Sheet of the successor companies and allow them to start on a clean slate
so that the successor entities can start performing better. The following statutory advices
have been sent to the Government of Tamil Nadu in this regard and they are appended as
Annexure V The Commission has also sent another statutory advice with regard to the
establishment of a separate Generating Company and establishment of four Distribution
Companies so that the performance of these companies can be improved which will
enable proper investments and growth of the individual company. These are also
appended as Annexure VI.

1.7.2 The Government of Tamil Nadu has issued an amended Transfer Scheme on 2-1-2012
which is appended as Annexure VII. This Transfer Scheme is also provisional and is
subject to revision. Besides various other issues, this Transfer Scheme specified that the
retirement benefits of the employees of TNEB/ successor entities will be met out of the
Revenue Account.

1.7.3 Over a period of years, the Capital Account and the Revenue Account has been mixed up
in the operation of TNEB and an attempt is being made in this order to segregate this to
bring financial discipline in the successor entities. TNEB and successor entities have
reported accumulated losses of around Rs. 50,000 crores over the years. The Commission
in its earlier Order dated 31-07-2010 through its various Statutory advices has suggested
to the Government of Tamil Nadu to take care of the accumulated losses up to the
unbundling period by way of financial restructuring so that the burden of the same is not
passed on to the consumers. This suggestion is also in line with Para 5.4.3 of the National
Electricity Policy which are extracted below.
“5.4.3 For achieving efficiency gains proper restructuring of distribution utilities is
essential. Adequate transition financing support would also be necessary for these
utilities. Such support should be arranged linked to attainment of predetermined
efficiency improvements and reduction in cash losses and putting in place appropriate
governance structure for insulating the service providers from extraneous interference
while at the same time ensuring transparency and accountability. For ensuring financial
viability and sustainability, State Governments would need to restructure the liabilities of
the State Electricity Boards to ensure that the successor companies are not burdened
with past liabilities. The Central Government would also assist the States, which develop
a clear roadmap for turnaround, in arranging transition financing from various sources
which shall be linked to predetermined improvements and efficiency gains aimed at
attaining financial viability and also putting in place appropriate governance
structures.”

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1.7.4 The following generating stations are likely to be commissioned during the year 2012-13.
Name of the Generation Commercial Operation
Sl. No. Capacity in MW
Station Date
1 North Chennai TPS Unit I 600 October, 2012
2 North Chennai TPS Unit II 600 June, 2012
Vallur TPS (JV of TNEB
3
and NTPC)
- Unit I 500 March, 2012
- Unit II 500 February, 2013
- Unit III 500
(Allocation from this station
to Tamil Nadu is 1075 MW)
300 MW by March 2012;
4 Mettur TPS Stage III 600
300 MW by June 2012
Nevyeli Lignite
250 MW by March 2012
Corporation TS Expansion
5 2 x 250 and 250 MW by
II Unit 1 &2 (Allocation to
September 2012
Tamil Nadu is 195.5 MW)
MAPS Additional PFBR
6 Kalpakkam (Allocation of 500 500 MW by May 2012
142 MW to Tamil Nadu)

1.7.5 This Order deals with major issues like accumulated losses of TANGEDCO, Regulatory
Asset, Tariff hike, power cuts. and new capacity additions by TANGEDCO etc. The
unmetered supply in the State mainly relate to agriculture and huts. TANGEDCO has
been assuming the AT&C loss level by back calculating the consumption of agriculture
and huts. This issue was also a subject matter of Appeal before the Hon’ble Appellate
Tribunal of Electricity. The Commission had estimated agricultural consumption based
on the CEA formula in its last Tariff Order. The Commission had also directed
TANGEDCO to furnish sample data of the metered connections for agricultural supply.
Based on the same data furnished by TANGEDCO the consumption per Horse Power
(HP) for agriculture was worked out and the same has been taken into account while
calculating the energy requirement for agriculture. Similarly, estimates have been made
for consumption by huts duly reflecting the number of huts with and without televisions.
It is also proposed to factor in the consumption on account of distribution of free mixers,
grinders and fans.

1.7.6 The cost of entire consumption on account of huts as well as on account of agricultural
consumption has to be borne by the Government of Tamil Nadu by way of subsidy under

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Section 65 of the Electricity Act 2003. In this matter, GoTN has issued a policy direction
and commitment letter Ms No. 8 dated 04-02-2012 detailing provision of tariff subsidy to
certain categories of electricity consumers. GoTN has also stated that they would
consider any modifications of the stated subsidy rates in future also taking into
consideration the needs of TANGEDCO and cannons of financial prudence.
TANGEDCO would prepare an estimate of the susbsidy and reflect the same in their
quarterly subsidy bills. The TANGEDCO shall furnish such details to the Commission on
quarterly basis and on approval of the same, the Government of Tamil Nadu will have to
provide the matching subsidy. As an improvement of the sampling process for
agricultural consumption, it is necessary for TANGEDCO to install Distribution
Transformer Meters in all the Distribution Transformers. These meters shall have AMR
facility so that they can be read from remote. Based on the reading of the Distribution
Transformer Meters, it will be possible to work out the unmetered consumption more
accurately after accounting for all the metered connections and a reasonable assumption
on the line loss in the last mile can be made. Nevertheless, the existing arrangement of
the sample meters shall be continued. The TANGEDCO has also stated that they have
awarded a study to Anna University for estimation of losses. This study shall be
expeditiously completed and the report, after approval by Board of Directors of
TANGEDCO, shall be submitted to the Commission latest by 30th November 2012.

1.7.7 The proposal of TANGEDCO in their petition involves creation of Regulatory Asset to
the tune of Rs. 24,762 Crores. Creation of a Regulatory Asset is not a good practice under
most conditions. In this particular case, the tariff hike sought for by the TANGEDCO for
the year 2012-13 is Rs. 9,741 Crore which amounts to 37% increase over the existing
tariff. Even after this proposal, the Petition envisages creation of Regulatory Assets of Rs.
4,806 Crore for FY 2012-13. It is not possible to hike the tariff by Rs. 24762 Crore (the
entire revenue gap), which will amount to an increase in tariff of 93%, further. Such a
steep increase may also not be justifiable as the same (high level of) tariff may not be
required to be maintained in future. While the accumulated losses before unbundling
have been proposed to be addressed through financial restructuring, losses to the
magnitude of Rs. 24762.31 Crore may be dealt with by a combination of Tariff hike and
Regulatory Asset. The Commission, therefore, would like to get the reaction of the
Government of Tamil Nadu in this regard and accordingly a reference was made to the
Government of Tamil Nadu on 16-03-2012 vide Commission letter Lr. No.
TNERC/Tariff/DDT-II/R.A./D.No.381/2012, which is enclosed as Annexure VIII in
reply of which the Government has reverted vide letter dated 25-03-2012 which is

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enclosed as Annexure IX. The Commission appreciates the concerns expressed by
various stake holders both in the written comments submitted by them to the Commission
as well as the concerns expressed during the Public Hearings held at Chennai at 30th
January 2012, Coimbatore on 2nd February 2012, Tiruchirapalli on 6th February 2012 and
at Madurai on 10th February 2012. The Commission directs the TANGEDCO to properly
monitor the on-going projects so that they are commissioned without further delay. The
TANGEDCO should also ensure that the TANTRANSCO completes all the associated
transmission system for evacuation of power from the generating stations which are
getting commissioned during the year 2012-13 so that power generated from the
generating stations are transmitted up to the Load Centers without any bottle necks. The
TANGEDCO should ensure that the power which is available at the sub-stations is taken
up to the consumption points by way of appropriate distribution system. All these
arrangements will have to be carried out through a well structured business plan and
individual schemes matching with the business plan. All such plans and schemes shall be
submitted in accordance with the Terms and Conditions of Tariff Regulations 2005,
MYT Tariff Regulations as well as Licensing Conditions to the Commission. The
submission for approval in this regard so far has been unsatisfactory. The Commission
has been addressing the utilities by way of letters as well as by way of directions. The
compliance to such letters and directions will have to be more serious.

1.8 Further, correspondence with TANGEDCO in regard to data gaps and replies furnished
are enclosed in Annexure X.

1.9 The meetings and discussions referred to in this Order pertain to meetings between the
staff of the Commission and the TANGEDCO.

1.10 Various suggestions and objections that were raised on TANGEDCO’s Petition after
issuance of the Public Notice both in writing as well as during the Public Hearing, along
with TANGEDCO’s response and the Commission's rulings have been detailed in Section
2 of this Order.

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2 Issue-wise summary of views, comments and suggestions of stakeholders
on Petition and TANGEDCO’s Replies and Commission’s Views

The following are the views/ objections/ suggestions given by stakeholders in writing as well as
in public hearing.

Issue-1: General

2.1.1 The Commission to reduce the Tariff instead of increasing the same.

2.1.2 TANGEDCO may submit the Tariff Petition every year by December and the new tariff
may be made applicable with effect from 1st April of every financial year so that the
burden on the consumers due to the abrupt rise in tariff maybe avoided.

2.1.3 The Commission to issue guidelines for domestic consumers and commercial
establishments to install single star rated installations and three star rated installations.

2.1.4 TANGEDCO may be further bifurcated into Generation Company and Distribution
Company for better management.

2.1.5 TANGEDCO may provide the Action Taken Report on the suggestions, directions and
decisions issued by TNERC in the Tariff Order No. 3/2010 dated 31-07-2010.

2.1.6 The deemed demand benefit may be continued in view of the supply of demand by the
generator to the grid while allotting energy to Open Access consumers.

2.1.7 TANGEDCO’s petition does not adhere to the directions given by the APTEL.

2.1.8 Truing-up for the previous year is based on ‘preliminary estimates’ for the year 2010-11.
The numbers approved by TNERC are different from the numbers submitted in the Tariff
Order dated 31-07-2010 and the numbers submitted for truing up on preliminary basis.

2.1.9 TANGEDCO should provide electricity bill or demand note to its consumers which will
help the consumers to understand the date of reading taken on energy meter.

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2.1.10 TANGEDCO has reduced the payment period from 30 days to 20 days. It should be
continued as 30 days and it should issue notices to all its consumers as being done by
other Government departments.

2.1.11 The neighboring states like Kerala, Karnataka, and Andhra Pradesh have lesser cost of
electricity than Tamil Nadu.

2.1.12 The Commission is processing the Tariff Petition at a fast pace in the absence of the
Chairman of the Commission.

2.1.13 The Government may control road side advertisements/ hoardings which consume
electricity.

2.1.14 The Tamil Nadu Government may constitute an Empowered Group of Eminent Energy
Experts for the resolution of power crisis and submit its recommendations within a
specified time frame.

2.1.15 TANGEDCO should take measures for non-collection of dues from even Government
departments, Panchayats, Municipalities etc.

2.1.16 The Commission may publish a white paper on the case that TANGEDCO was making
profit till 1998 and after 2003, TANGEDCO has reported a loss of Rs. 40,000 crores.

2.1.17 The interest on Current Consumption Deposit is paid at 6% whereas the BPSC charges
are levied at a higher rate.

2.1.18 Electricity cess should be introduced on the same lines as Education cess.

2.1.19 The Commission has not raised the tariff for 8 years and therefore tariff may be increased
for all the categories. Tariff revision may be uniform for all categories of consumers. The
Commission may increase the tariff but tariff shock may be avoided.

2.1.20 The tariff may be increased on account of increase in power purchase cost.

2.1.21 The Commission may direct TANGEDCO to create a special Reconciliation Wing in the
Regulatory Cell.

2.1.22 TANGEDCO has not provided backup calculations for the retail tariffs. TANGEDCO is
requested to furnish the basis of deriving Rs. 300 per KVA and Rs. 5 as energy charge.

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Issue-2: Regulatory Asset

2.1.23 The Objectors submitted that the deficit for the current year and ensuing year FY 2012-13
is projected as Rs. 14,496.53 Crore and Rs. 14,547 Crore respectively. TANGEDCO has
proposed to recover only Rs. 9,741 Crore through partial tariff revision proposal, leaving
a revenue gap of Rs. 4,806 Crore in FY 2012-13 and prayed to treat the unrecovered
revenue gap as regulatory asset. Regulatory asset could be created only under exceptional
circumstances as stipulated in National Tariff Policy and TNERC Regulation 2005.
Tariff Policy
Para 8.2.2. The facility of a regulatory asset has been adopted by some
Regulatory Commissions in the past to limit the tariff impact in a particular year.
This should be done only as exception, and subject to the following guidelines.
a. The circumstances should be clearly defined through regulations, and should
only include natural causes or force majeure conditions. Under business as
usual conditions, the opening balance of unrecovered gap must be covered
through transition financing arrangement or capital restructuring;
b. Carrying cost of Regulatory Asset should be allowed to the utilities;
c. Recovery of Regulatory Asset should be time bound and within a period not
exceeding three years at the most and preferably within control period;
d. The use of facility of Regulatory Asset should not be repetitive.
e. In cases where Regulatory Asset is proposed to be adopted, it should be
ensured that the return on equity should not become unreasonably low in any
year so that the capability of licensee to borrow is not adversely affected.

TNERC Tariff Regulation 2005: Regulation 13: Regulatory Asset

“Wherever the licensee could not fully recover the reasonably incurred cost at the
tariff allowed with his best effort and after achieving the benchmark standards for
the reasons beyond his control under natural calamities and force majeure
conditions and consequently there is a revenue shortfall and if the Commission is
satisfied with such conditions, the Commission shall treat such revenue shortfall
as Regulatory Asset.”

The Hon’ble Appellate Tribunal for Electricity has also ruled at Para 8.10 of their
judgment rendered in Appeal nos. 196 & 206 of 2010:

“Now the question arises whether the creation of Regulatory Asset is in the
interest of Distribution Company and the consumers. Respondent no. 1 will have
to raise debt to meet its revenue shortfall for meeting its O&M expense, power
purchase costs and system augmentation works. It is not understood how the
respondent no. 1will service its debts when no recovery of regulatory asset and

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carrying costs has been allowed in the ARR. Thus, the respondent no.1 will suffer
with cash flow problem affecting its operations and power procurement which
will also have an adverse effect on maintaining a reliable power supply to the
consumers. Thus, creation of regulatory asset will neither be in the interest of the
respondent no. 1 nor the consumers.”

2.1.24 The Government may come out with a proposal for undertaking TANGEDCO’s
liabilities in line with a similar dispensation provided in 2002 based on The Ahluwalia
Committee Recommendations in which the pending payments of all the SEBs to CPUs
were undertaken by the respective state government by issue of bonds.

2.1.25 Losses accumulated to the tune of Rs. 6,273.21 Crore, upto 03-10-2010, has been
proposed to be absorbed in the final Transfer Scheme. Therefore it cannot be included as
part of regulatory asset. The Regulatory Asset concept should not be an adjustment
mechanism for accounting of losses as per International Financial Reporting System
(IFRS).

2.1.26 The entire Revenue Requirement must be met through the Tariff Proposal without any
gap. Also, it was submitted that control period for the Tariff Order must be only for 1
year. For the year 2013-14, the tariff petition should be approved before 31-03-2013,
failure of which should attract tariff reduction by 10%. This may also be incorporated in
the present order.

2.1.27 Initially, capital subsidy was given to TANGEDCO (erstwhile TNEB) which was later
stopped in 1993-94. If continued, there will be no need to create Regulatory Asset.

Issue-3: Interest on Loan

2.1.28 There is abnormal increase in the interest on loan as there is no clarity on data provided
by TANGEDCO as to how much loan has been availed for capital expenditure and how
much for revenue expenditure.

Issue-4: Pension Fund Reserve

2.1.29 TANGEDCO has not addressed the issue of creating a Reserve for Pension Fund despite
being repeatedly directed by the Commission.

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Issue-5: Fuel Cost / Fuel Price Adjustment Charge (FPAC)

2.1.30 The fuel cost shows abnormal increase compared to power purchase cost. Fuel cost has
been claimed more than twice the increase in power purchase cost, when apparently there
is no corresponding increase in quantum of energy generated from own thermal
generating stations

2.1.31 Capacity addition with respect to new thermal generating stations or in existing
generating stations may be verified in detail before approval by the Commission.

2.1.32 TANGEDCO has not resorted to seek the sanction of Fuel Price Adjustment Charge
(FPAC) even though Electricity Regulatory Commission’s Act 1998 or the Electricity
Act 2003 provided the same. An appropriate and simple formula should be derived for
calculating FPAC. Also, FPAC should be recovered from all the consumers – paying,
subsidized or non paying consumers.

2.1.33 The quarterly estimation of escalation charge should be worked out for which
TANGEDCO should get internally audited and certified figures for all the fuel purchases.
Alternatively, quarter wise FPAC comparison may be covered. Also, TANGENDCO
should get the particulars from the suppliers of power, excluding the power traders which
will ensure four or two charges per year. If TANGEDCO wants to add any other charge,
then it should be proved that such added charges for any quarter are truly related to fuel
purchases made during that adjustment period.

2.1.34 Proof of payment to the supplier of power may be provided by TANGEDCO at the time
of claiming FPAC. The Commission is requested to fix a time line for submitting FPAC
every quarter.

2.1.35 In case of blending of indigenous and imported coal for generation, the increase in value
of both the coal types must be considered with the GCV and ash value, so that the blend’s
weighted average GCV of coal can be assessed.

2.1.36 The Commission may prescribe norms of consumption for different load factors for the
units/substations.

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2.1.37 The valuation of coal or oil must be based on a weighted average methodology (ARC or
APRC) and not on FIFO or LIFO prices. TANGEDCO may be using the FIFO or LIFO
for financial accounting purpose.

2.1.38 TANGEDCO has proposed the average rate of power purchase as approved by the
Commission for FPAC on power purchase. The Commission may provide the method to
treat the excess purchases over the approved quantity of purchases while calculating
FPAC.

2.1.39 FPAC should include variable cost only. The fixed cost should not be considered in the
FPAC formula. Interest charges on increase in stock of fuel may not be included and
hence, working capital may form a part of FPAC. Any excess transportation charges or
demurrages payable for delay in clearing the coal supplies for the port or non availability
of berths in the ports of loading or discharge must not be included in FPAC. For the fuel
supplies made during the adjustment period, no transit and handling losses must be added
for calculating FPAC.

2.1.40 The FPAC may be calculated in two parts:
a. The FPAC for individual supplies or purchases of power must be identified, as the
GCV or supplies may vary as also the specific fuel consumption.
b. FPACs thus calculated, must be aggregated as a total charge per unit of consumption
for all electricity consumers.

2.1.41 TANGEDCO may ask for a consent letter from the State Government for FPAC incurred
on the partially or totally subsidized consumers.

2.1.42 The formula suggested by TANGEDCO is simple but working out the charge for
individual sources of power generation or source of supply may be very cumbersome.
Source of the coal and transportation cost incurred has been one of the major issues. The
pricing of coal may be done recognizing the multimodal mechanism of transport. The
voyages accounts of the PSC may be reconciled promptly and payments settled for the
correct grade of coal as well as its transportation costs as the landed price of coal.

2.1.43 TANGEDCO may submit the FPAC schedule timely and also account the entire major
factors involved in the fuel cost. If there is any delay in submission of FPAC, then the
FPAC may be made applicable from the date of approval by the Commission and not on
quarterly basis.

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2.1.44 The Commission may establish a normative datum reference cost per million kilocalories
of all fuels on a weighted basis and direct TANGEDCO to work out the difference in
consumption of fuels compared to normative consumption levels and allow the excess to
merge with the tariff or extend the deficit as a tariff adjustment for all the consumers.

2.1.45 TANGEDCO has filed its proposal for the FPAC formula for avoiding the uncontrollable
cost on account of hydro thermal mix in power generation and purchase. This would
enable TANGEDCO to recover the actual cost of the fuel incurred and the actual cost of
power purchase.

Issue-6: Cost of Supply

2.1.46 The Tariff may be fixed as per the consumer’s load factor, power factor, voltage, total
consumption of electricity and should reflect the Cost of Supply to the concerned
consumer category.

2.1.47 TANGEDCO should furnish a statement showing the Cost to Serve for each category of
consumers at different voltage level with allocation of Transmission & Distribution loss
and consumer wise cross subsidy at the existing tariff while submitting ARR.

2.1.48 TANGEDCO has assumed that all the energy imported into and handled in the grid is at a
single voltage level of 230 KV and priced accordingly. The ARR must reflect that
TANGEDCO is receiving power from various internal and external sources and at
different voltage levels.

2.1.49 The transmission loss for each of 110 KV and 33 KV levels have been stated to be 1409
MU, while the estimated annual consumption at these voltage levels are 2342 MU and
2805 MU respectively. The loss figures seem to be incorrect as the loss should be
approximately proportional to load factor and its squared value.

2.1.50 TANGEDCO has consumers in EHT-230 KV, 110 KV, 66 KV, 33 KV, and HT-22/11
KV voltage levels besides in LT 415/230 voltage segments. The rates mentioned do not
reflect the correct cost or loss levels. Also, the T & D loss figures may be recalculated.

2.1.51 The loss assigned to the specific consumer should be as per the voltage category.

2.1.52 The format figures did not reflect a rational approach in its calculations, to arrive at the
different voltage levels cost or average costs. The approach that has been adopted seems

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to be without validation that true operating costs have been reflected. The petition should
negate the concept of “Cost of Service” process of tariff determination.

2.1.53 The cost of supply for all categories of consumers has been furnished in Form- 25 of the
ARR formats as Rs. 5.98 per kWh. As per the orders of Appellate Tribunal for Electricity
in Appeal Nos. 192 & 206 of 2010, the Tribunal has directed the State Commission to
determine the voltage wise cost of supply within six months from the date of judgment,
i.e., July 28, 2011, but TANGEDCO has not furnished the data. Therefore, the
Commission may issue orders to TANGEDCO to furnish the voltage wise cost of supply
before finalizing the Order.

Issue-7: Subsidy

2.1.54 The amount of Rs. 2,234.32 Crore as subsidy payable by the State Government appears
to be very small. TANGEDCO has used a very low level pricing of power for a set of
consumers. Therefore, appropriate methodology should be used by TANGEDCO instead
of ‘Cost to Serve’ model.

2.1.55 The subsidy should be offered for the domestic consumers having a monthly
consumption of more than 500 units also.

2.1.56 TANGEDCO should be provided with the subsidy amount before the start of the
financial year by the Government of Tamil Nadu. The Government should pay the
subsidy towards domestic consumer to TANGEDCO on a quarterly basis.

2.1.57 The subsidy has been given as 150 paisa and 100 paisa per unit for the bi-monthly
consumption up to 100 and 200 units respectively, but there has been no provision for
subsidy for the first 200 units in the bi-monthly consumption exceeding 200 units and the
subsidy is minimal of 50 paise per unit above 200 to 500 units. Therefore, the subsidy
should be increased by at least Re. 1 per unit for the first 200 units for the consumers who
consume between 200 and 500 units bi-monthly.

2.1.58 Fixed charges and minimum charges (Rs. 110/-) should be reduced.

2.1.59 The subsidy should be provided for residents in huts using one bulb. Rs. 50 per month
should be collected from other consumers in huts.

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2.1.60 Issue-8: Cross SubsidyThe practice of cross-subsidies should be done away with. The
free and subsidized supplies to agriculture or economically weaker sections of society
should continue, but TANGEDCO should not divert electricity (in the event of a
shortage) to other consumers to cover its own deficit. The Supreme Court of India ruled
in the case of West Bengal Electricity Regulatory Commission Vs West Bengal High
Court and CESC Ltd., Kolkata that there cannot be cross subsidy from one consumer to
another.

2.1.61 The consumers below poverty line who consume below a specified level, say 30 units per
month, may receive a special support by way of cross subsidy. Tariff for such designated
group of consumers may be at least 50% of the average Cost of Supply. This provision
should be re-examined after five years.

Issue-9: Tariff for HT Industry

2.1.62 The industrial output in the state is already adversely affected due to power cuts. The
tariff increase should ensure un-interrupted power supply to HT industrial consumers.

2.1.63 Measures should be taken by TANGEDCO to increase the power supply to meet the
demand of Industry, either through spare capacity available within the State or through
procurement of power from other states.

2.1.64 The morning peak hour cut for industries should be withdrawn.

2.1.65 Demand charges may be uniform at Rs. 200 per KVA per month for HT consumers
instead of applying varying levels with high increases.

2.1.66 All HT consumers should be allowed to procure power under provisions of Open Access.

2.1.67 HT Consumers, availing power supply at high voltage are virtually consumers of
TANTRANSCO. TANGEDCO comes into picture only for metering and billing
purposes. Hence, a HT consumer has to bear the entire cost of the transmission line from
the Grid substation of TANTRANSCO to the consumption point, switching, protection
and the metering equipment and the utility incurs no capital cost. Maintenance of these
equipments is done by TANTRANSCO and the cost of which has been covered in the

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ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore,
the demand charges should be lower.

2.1.68 The transmission loss at HT voltage is less compared to when supplied at 11 KV, thus,
the energy charges should also be reduced.

2.1.69 The energy charges should not be increased from Rs. 3.00 per unit to Rs. 5.00 per unit for
HT Tariff IA.

2.1.70 The industrial output in the state is already adversely affected due to power cuts. The
tariff increase should ensure un-interrupted power supply to HT industrial consumers.

2.1.71 Measures should be taken by TANGEDCO to increase the power supply to meet the
demand of Industry, either through spare capacity available within the State or through
procurement of power from other states.

2.1.72 The morning peak hour cut for industries should be withdrawn.

2.1.73 Demand charges may be uniform at Rs. 200 per KVA per month for HT consumers
instead of applying varying levels with high increases.

2.1.74 All HT consumers should be allowed to procure power under provisions of Open Access.

2.1.75 HT Consumers, availing power supply at high voltage are virtually consumers of
TANTRANSCO. TANGEDCO comes into picture only for metering and billing
purposes. Hence, a HT consumer has to bear the entire cost of the transmission line from
the Grid substation of TANTRANSCO to the consumption point, switching, protection
and the metering equipment and the utility incurs no capital cost. Maintenance of these
equipments is done by TANTRANSCO and the cost of which has been covered in the
ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore,
the demand charges should be lower.

2.1.76 The transmission loss at HT voltage is less compared to when supplied at 11 KV, thus,
the energy charges should also be reduced.

2.1.77 The energy charges should not be increased from Rs. 3.00 per unit to Rs. 5.00 per unit for
HT Tariff IA.

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2.1.78 The machineries being used by 90% of the industries are fully non linear load and
polluting the Grid.

2.1.79 In accordance with section 62 (3) of Electricity Act 2003, TNERC may differentiate the
tariff on the basis of operating voltage.

2.1.80 The stipulation of minimum demand of 90% of the sanctioned demand should be
exempted for educational institutions.

2.1.81 TANGEDCO is levying demand charges at Rs. 300/KVA for the whole of the month,
when they only supply for 14 hours per day. The Commission may penalize
TANGEDCO when consumers do not get power supply as envisaged under Electricity
Act 2003, by fixing unreliability charge or non-performance charge which may be paid to
the consumers. This could be adjusted against the Regulatory Asset, if it is created and
so long as it unamortised.

2.1.82 TANGEDCO has requested to continue to keep the present billing demand in its petition.
Accordingly, in the case of two part tariff, the maximum demand charges for any month
will be levied on the KVA demand actually recorded in that month or 90% of the
sanctioned demand whichever is higher. However, in case of R&C measures, it is the
actual recorded maximum demand or 90% of the demand quota as fixed from time to
time whichever is higher. The present billing of 90% may be reduced to 80% as
prevailing in Andhra Pradesh.

2.1.83 Electricity consumption by labor welfare establishments like canteen, hostel, dispensary,
crèche etc in HT premises are being treated as commercial use. TANGEDCO should
provide separate electricity meters for measuring the consumption at labor welfare
establishment so that it need not be charged as theft and the HT consumers should not be
penalized. Therefore, the consumption of such establishments (when not metered
separately) should be billed along with the HT consumption.

2.1.84 HT industrial consumers should be allowed to use at least 15% of their sanctioned
demand for the purpose of labor welfare measures. Separate meters should be installed to
meter the load when it exceeds 15% of the sanctioned demand and the LT tariff may be
charged for the excess demand.

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2.1.85 TANGEDCO should not demand 15% extra energy charges from a consumer
maintaining quality power at the point of common coupling with proper harmonic
equipment. Central Electricity Authority (CEA) have given power quality parameters for
the bulk consumers in their Notification No. 12/X/STD (CONN) GM/CEA (21-Feb-07)
(the Central Electricity Authority (technical) Standards for Connectivity to the Grid)
Regulations, 2007 in Part IV under the heading “Grid Connectivity Standards” applicable
to the distribution system and bulk consumers, CEA have sought compliance of the
following:
a. Total voltage harmonic distortion should not exceed 5%
b. Total current distortion should not exceed 8%

Hence, such extra charges should be levied only on those consumers who do not meet the
requirements of CEA.

TANGEDCO should notify in the Tariff Order, the reason for this 15% extra charges, as
notified in the old tariff order w.e.f. 16-03-2003 and an opportunity should be given to
the consumers to limit the harmonics within the values prescribed by CEA and get
exempted from this 15% extra energy charges.

2.1.86 Textile industry submitted that the Commission has unequally revised the tariff in the
Tariff Order dated 31-07-2010, and requested not to repeat it this time as it overloads a
few consumer categories.

2.1.87 TANGEDCO has made an allocation of 1% of the total units consumed towards
maintenance of canteen, rest shed, garden, RO plant, effluent treatment plant, residential
quarters and hostels etc., to be billed under HT Tariff IA and in case of excess, to be
billed under LT Tariff V (1) in Para 11.1.1. (viii). This move of TANGEDCO was
welcomed and there was a request that this be extended to 1.5% of the total units
consumed, when R&C measures are in force. Further, the following are the activities
integrated with the Industrial activity according to the various provisions under the
Factories Act, 1948 and Tamil Nadu Factories Rules 1950 and therefore, any industrial
consumer is required to be in compliance with the Statutory provisions:
a. Canteen (Section 46)
b. Shelters, Rest Rooms and Lunch Rooms (Section 47)
c. Creches (Section 48)
d. Garden and Greenery (Rules 52-A)
e. RO Plant for drinking water (Section 18)
f. CETP (TNPCB Norms)

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g. Borewell motors and well motors to satisfy the above purposes.

2.1.88 Printing industry, jewel merchants and the textile industry have requested that the tariff
should not be hiked and that the existing tariff should be continued.

2.1.89 The Commission may permit HT industries to draw upto 25% of the Maximum Demand
during evening peak hours instead of 10%.

2.1.90 The Commission may hike the tariff for big industries and foreign industries and Multi
National Companies (MNCs) instead of domestic consumers.

2.1.91 TANGEDCO’s proposal of charging extra 10 paisa / unit from HT consumers whose
sanctioned demand exceeds 5000 KVA and not availing the supply at i.e. 33 KV, may be
made applicable only for future supply to new HT consumers.

2.1.92 Sufficient time of at least 5 years to be provided for change from existing level to new
voltage level supply. In the meanwhile, TNERC in its Draft Notification dated 01-12-
2011 in respect of Tamil Nadu Electricity Supply (6th Amendment) Code, 2011 wherein
Section 3 “Categories of Supply” Clause d & e, it was defined as follows:
d. Three-phase three wire supply at 11 KV or 22 KV depending on the voltage
level existing in the area of supply shall be provided for a demand limit up to 3
MVA or 5 MVA as the case may be. However, the minimum demand shall be 63
KVA.

e. The Consumer shall be provided supply at 33 KV for a demand exceeding 3
MVA and up to 10 MVA if the area of supply is fed through 11 KV system and if
the area of supply is fed through 22 KV system, supply at 33 KV shall be provided
for a demand exceeding 5 MVA and up to 10 MVA.

These provisions differed from the present proposal suggested by TANGEDCO.

Issue-10: Tariff for HT - II Category

2.1.93 TANGEDCO has proposed an increase of 100 paise per unit of energy supplied to HT
IIB (i) category for the private educational institutions and 50% hike in demand charges
from Rs. 200/KVA/month to Rs. 300/KVA/month, thus raising the present average
charge from Rs. 5.50 to Rs. 7.41 (for 650 KVA demand & 1,25,000 units monthly
consumption).

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2.1.94 Educational institutions have a very low load factor and majority of consumption is
between 9:00 am to 5:00 pm. For FY 2012-13, the increase in tariff is not in proportion
with the consumption as the Consumption by LT II category has been projected as almost
double of HT II category whereas expected revenue has been projected as equal.

2.1.95 The rate for supply of energy for film exhibitors has been proposed to increase from Rs.
4.50 to Rs. 6.80 per unit for cinema theatres under High Tension Category. As the lowest
rates of admission are fixed by the state government and due to poor state of film
exhibitors (because of competition from Cable TV and Satellite TV), the requested tariff
hike may not be accepted.

2.1.96 Continue the existing demand charge of Rs. 200/KVA per month and increase the energy
charges by 5% for HT Tariff IIA.

2.1.97 Private educational institution may be included in HT IIA category as the ultimate
objective of the educational institution is to impart knowledge to students, which is a
socially desirable service. The Hon’ble Supreme Court of India in Case number Writ
Petition, (Civil) 317 of 1993 (TMA Pai Foundation Vs State of Karnataka) has ruled that
“Reasonable Surplus (Funds collected by Education Institutions) to meet cost of
expansion and augmentation of facilities in educational institutions does not amount to
profiteering.” Therefore it was suggested that private education institutions should come
under HT Tariff IIA.

2.1.98 Proposed extra levy of 20% on energy consumed during peak hours is strongly objected
by HT consumers. The proposed incentive of 5% rebate may be increased up to 20% on
energy consumption during night hours.

2.1.99 Private educational institution should not be differentiated from government institutions
with respect to tariff categorisation.

2.1.100 The proposed tariff structure for HT II (B) has been identical to HT Tariff III and it is
requested to be grouped under HT Tariff III.
a. Tariff applicability must encompass all allied utilities connected with the
educational institutions such as hostels, guest houses, canteen, laboratories,
conference hall, auditorium, indoor and outdoor stadium, water works, and other
supplementary services.
b. Extra levy for peak hour consumption have been objected on the account of being
study hours for the students for exams.

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c. The proposed rebate should be increased to 20%.

2.1.101 In Karnataka, there is no separate tariff for Government Educational Institutions. The
discrimination will lead to violation of Section 62 (3) of the Electricity Act 2003
regarding discrimination between the consumers and hence, there should not be a
separate tariff category for government and private educational institutions.

Issue-11: Tariff for HT Tariff III

2.1.102 The Commission is requested to have differential tariff for aviation and other commercial
activities such as shops, restaurants etc. If no separate metering is possible, than a
separate category other than HT Commercial can be proposed for Airports and composite
tariff can be determined for aviation and commercial activities. The ATE in its judgment
dated 22-07-2011 in Hyderabad International Airport Vs APERC has also given the same
findings.

Issue-12: Tariff for HT Tariff IV

2.1.103 Many service industries like automobile service centers, etc are brought under Tariff IV.
These industries should be brought under Tariff III B.

Issue-13: Tariff for Domestic

2.1.104 The hike in electricity tariff will greatly affect the consumers as the proposed tariff is
exorbitant and that the revision results in increase by about 100%.

2.1.105 Air conditioner users and UPS users should pay Additional Security Deposit.

2.1.106 The domestic consumers belonging to category I(A)- (a), (b), (c), (d) and (e) will end up
in paying extra 75%, 90%, 83%, 65% and 85% respectively over and above the existing
rates, after the proposed hike in domestic tariff.

2.1.107 Various combinations of energy charges for various types of slabs were suggested

2.1.108 Due to the power cuts, the domestic consumers are using inefficient Invertors, which
further consume a lot of power. As the efficiency of domestic UPS is 50% which is a loss
that results in increased subsidized domestic consumption. The increase in the failure of

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Distribution Transformers (DTs) of TANGEDCO has increased due to the poor quality of
power.

2.1.109 The slab system should be common for all consumers irrespective of total consumption
of electricity. TANGEDCO has proposed revision of Tariff for consumption of electricity
more than 500 units bi-monthly. It was submitted that the common slab system may be
implemented, without changing slab rates, based on total units consumed bi-monthly.

2.1.110 As per Electricity Act 2003, the Security Deposit amount is refundable to the consumers
if it is paid in excess of contract demand or it should be adjusted in two billing cycles. If
the contract demand exceeds the metered demand, the excess amount may be refunded by
the Board with interest before the due date of payment of third billing cycle. The
Commission may direct TANGEDCO for:
a. Levy of Additional Consumption Caution Deposit which can be adjusted in case
of disconnection of service in the event of any default in payment by the
consumer.
b. Initiate stringent recovery steps to recover long over dues.
c. Introduce a suitable Tax Saving Investment Scheme like Floating of Short term or
Long term Infrastructure Power Bonds or Certificates.
d. Resort to Differential Tariff Mechanism for end-user (like IT Corporate Majors)
of power back up gadgets like inverters and generators which also indirectly
contribute to the drain of power from the grid who can be differentiated from the
non users by adopting a suitably administered price mechanism.

2.1.111 Separate tariff may be given for the State Government and Central Government
employees.

2.1.112 Prepaid card should be introduced for the domestic consumers for the payment of
electricity in advance for the bi-monthly consumption.

Issue-14: Tariff for Hut

2.1.113 The existing sanction load for the BPL families is 110 watts (Bulb - 40 watts, Color TV
70 watts). The proposed additional load as per Government of Tamil Nadu’s
announcement for the BPL families, would be additional 970 Watts (Mixi 750 Watts,
Wet grinder 150 Watts, and Table Fan 70 Watts). For a total load of 1080 watts, the per
day consumption by the connected load is as follows:

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TV 5hrs x 70W 0.35 kWh
Fan 8hrs x 70W 0.56 kWh
Mixi 0.5hrs x 750W 0.375 kWh
Wet grinder 1hr x 150W 0.15 kWh
Bulb 6hrs x 40W 0.24 kWh
Approximately 1.7 kWh

Annual consumption per Hut SC would be 1.7 x 365 i.e. 621 units. The minimum
average generation cost of electricity with TANGEDCO’s own generation is 350 paise.
Therefore, the compensation by Government of Tamil Nadu to TANGEDCO per annum
will amount to Rs. 2173.5 per SC.

2.1.114 TANGEDCO has projected the rise in consumption of huts (BPL) as 424 MU whereas
the actual consumption is expected to be much more because of color TV, fan, Mixi,
grinder and laptop. The Commission has already stated in its Tariff Order of 2003 that for
Huts and Agricultural services a separate policy has to be evolved and followed for all
services to be metered. Hence, the Commission may direct TANGEDCO for undertaking
implementation of 100% metering, collection and disconnection mechanism.

2.1.115 The load limit to BPL category may be increased to 110 watts. Meters may be fixed and
consumption of electricity by BPL category consumers up to the limit of 100 units bi-
monthly may be free. Consumption beyond 100 units may be charged at regular tariff.

Issue-15: Tariff for Street Lighting and Water Supply

2.1.116 TANGEDCO may equip street lights with Dusk to Dawn switches so as to save
electricity.

2.1.117 Electronic chokes may be introduced by TANGEDCO instead of conventional ones.

Issue-16: Tariff for LT Educational Institutions & Recognized Hospitals

2.1.118 Under LT Tariff IIB, the pricing parity between the government educational institutions
and private educational institutions is objected by the private educational institutes. The

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Government is promoting subsidies/cross subsidies by providing concessional rates to its
own institutions.

2.1.119 Objection was raised on the increase in the fixed charges by the HT II category
consumers. Instead, it was suggested that the slabs may be defined keeping 10 KW of
contracted load instead of connected load as one slab and the rate should be fixed at Rs.
10 per slab per month. There should be separate rate for fixed charges for LTCT services.

2.1.120 Private Educational institutions have objected to the tariff hike.

2.1.121 There should not be fixed charges for LTCT services as it has no relevance. Therefore, it
may be dropped.

Issue-17: Tariff for Places of Public Worship

2.1.122 Meditation centers may be considered in the category of Actual Place of Public Worship.

Issue-18: Tariff for Tiny Industries

2.1.123 LT Tariff IIIA (i) and IIIA (ii) may be rationalized into a single category.

2.1.124 TANGEDCO has provided the minimum load under IIIA categories as 10 HP in its
petition. Most of the Micro industries with minimum work force have been operating on
a load range of 15 HP to 20 HP. It was suggested that LT Tariff IIIA may be applied to
loads up to 20 HP.

2.1.125 The charges may be computed on actual power consumed. The current rate of fixed
charges for Tariff IIIA & IIIB is Rs. 30 per connection per month. TANGEDCO could
have asked for a hike to Rs. 100 per connection per month, however, it has proposed a
change to per KW basis for a charge of Rs. 100 per KW per month. The proposal to
change the very basis of the charge from Rs. /connection to Rs. /KW may be denied.

2.1.126 TANGEDCO has requested to levy demand charges (fixed charges) at the rate of Rs.
50/KW for Tiny Industries (LT IIIA), Rs. 100/KW for LT Industries and Rs. 120/KW for
LT CT services per month. The Commission may reject the proposal of tariff hike.

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2.1.127 TANGEDCO has requested to increase the energy charges for Tiny Industries in two fold
from the existing rate. The Commission may not increase the energy charges and if
needed, the increase may limit to Rs. 0.50 per unit.

2.1.128 The proposed increase of 10% in energy charges for LT III (B) category (i.e. from Rs.
5.00/unit to Rs. 5.50/unit) may be uniformly charged to all categories of consumers
including LTCT services.

2.1.129 Flour mills submitted that due to the presence of HT consumer units near their site, they
need to pay TANGEDCO Rs. 2000 for the damage due to natural accidents in the HT
line. It is requested to exempt the damage charges for the damages due to natural
accidents.

2.1.130 Silver chain makers which were earlier categorized under LT Tariff IIIA (1) have
requested for the same tariff to continue.

2.1.131 A separate dedicated power station may be setup in Tirupur for the benefit of knitwear
sector.

Issue-19: Tariff for Power Loom

2.1.132 The concessional tariff is allowed to cottage, micro and power loom consumers with the
intention of helping poor self-employed consumers. However, these concessions are
being misused. Further, it submitted that Auto Loom consumers that have been
categorized under the Power Loom category have been enjoying concessional tariff rates
and subsidies from Tamil Nadu Government.

Issue-20: Tariff for LT Industries

2.1.133 For the LT consumers, TANGEDCO has proposed an average increase of 59% energy
charges while the range for individual consumer category is 0% for bulk supply and
589% for agriculture. In terms of absolute values of energy rates, against a existing rate
of 25 paise per unit for agriculture and 666 paise per unit for LT commercial category,
the proposed rates are 175 paise for agriculture and 872 paise per unit for LT Industries.
In monetary terms, TANGEDCO has proposed to collect Rs. 7,260.76 Crore through
proposed revision, out of Rs. 9,741.01 Crore.

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2.1.134 Objections submitted on LT CT services are:
a. The fixed charges have been increased from Rs. 60 for two months to Rs.
240/KW/month which is a 400% increase.
b. The energy charges have been increased from 500 paise per unit to 600 paise per
unit. This is 20% increase in the rates. Hence, the slab charges are requested to be
retained at the existing levels.
c. The monthly minimum charge is escalated by 250%.

Therefore, the LT CT based industries will have to bear 82.30% of the entire increase in
charges, under category III of the LT tariffs.

2.1.135 The fixed charges should not be related to MD or connected load and should be retained
at the existing energy charges.

2.1.136 The export units may be exempted from tariff hike so that they can sustain themselves in
the global market.

Issue-21: Tariff for LT Agriculture

2.1.137 For calculation of revenue from sale of power by Agriculture category, the connected
load may be considered as submitted by consumers for the replacement of energy
efficient motors.

2.1.138 The unauthorized additional load may be regularized by collecting Rs. 10,000 per HP.
This amount may be utilized for improving the TANGEDCO’s infrastructure.

2.1.139 TANGEDCO has admitted that the agricultural consumption has been 100% free. There
has been no road map submitted on fixing meters in the agricultural services. The
Commission in its Tariff Order 3 of 2010 dated 31-07-2010 directed TANGEDCO that a
time bound program for 100% metering needs to be worked out and submitted to the
Commission. It was requested that necessary directions should be given to provide meters
for all services.

2.1.140 The farmers who are having above 10 acres of land have to be supported for constructing
a storage tank to avoid lift irrigation.

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2.1.141 As observed by the Commission earlier in its Tariff Order 3 of 2010 dated 31-07-2010,
the gap between the expenditure incurred by TANGEDCO and the subsidy paid by the
government is the main reasons for the poor financial health of TANGEDCO.

2.1.142 As provided in the Electricity Act 2003, the Commission should safeguard consumer’s
interest and recover the cost of electricity in a reasonable manner. The Commission
should pass appropriate orders directing the utility to recover the cost of electricity, if not
from consumers, then from the Government since the Government itself is responsible
for the free supply of electricity as per Section 65 of the Electricity Act which states:
“Provided that no such direction of the state Government shall be operative if the
payment is not made in accordance with the provision contained in this section
and the tariff fixed by the state Commission shall be applicable from the date of
issue of orders by the Commission in this regard.”

2.1.143 For fixing meters to free services in Agriculture sector, a sum of Rs. 2,000 Crores will be
required which may be born by Government of Tamil Nadu.

2.1.144 The Free Electricity Pump Set scheme should be stopped.

2.1.145 The water from agriculture connection should be permitted to be used for poultry and
feeding animals. There should not be any penalty for using the agricultural water for
animal husbandry, sericulture etc.

2.1.146 Enforcement squads are misusing the provisions relating to theft of energy and are
charging commercial tariff for agriculturists. There may be a ceiling of 25,000 to 35,000
numbers of cattle to bring an agricultural service connection within the meaning of
commercial category.

2.1.147 The ex-service men squad employed by TANGEDCO has booked farmers maintaining
cows and goats in their agricultural field under the theft of energy which should not to be
done as Government also gives free cows and goats to the farmers.

2.1.148 The electricity used for Integrated Farming may not be considered as Electricity Theft.

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Issue-22: Tariff for Commercial

2.1.149 TANGEDCO has proposed to levy uniform 1% of consumption at LT Tariff V {page 129
clause 11.1.1 (viii)}, for usage of the energy for other purposes, irrespective of actual
usage. This proposal may badly affect the major consumers like Foundries. Applying 1%
of the energy to the LT Tariff V would be irrational for the industries whose consumption
of the energy for other purposes is nil or very minimal.

2.1.150 The marriage/community halls should have 2 service connections for indoor and outdoor
consumption and the lavish illumination should be charged at appropriate tariff.

2.1.151 The Commission may re-categorize telecom towers under separate sub-category within
the existing commercial category.

2.1.152 The tariffs currently charged to consumers falling under the Commercial category in
Tamil Nadu are on the higher side when compared to various states in India.

2.1.153 The Commission has been requested to consider the proposal of compulsory installation
of AMR meters and roll out of consolidated billing for large consumers with multiple
connections.

2.1.154 The Commission may consider reducing the tariff proposed for the commercial
consumers.

2.1.155 There is no definition of commercial tariff in the Tariff Order of 31-7-2010. Therefore,
those consumers who do not fall in the tariff slabs of LT I to IV may not be brought
under the Commercial category.

2.1.156 The proposed fixed charge under LT Tariff V should be charged at a rate of Rs. 50 per
month plus Rs. 5 per slab of 10KW of motive power (connected load) per month taking
grinder, A/C and water heater under motive power. Separate rate for LTCT services may
be denied.

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Issue-23: Tariff for LT Temporary Supply

2.1.157 Presently, for any power used for construction activity by an existing consumer, it is
classified as power theft/misuse. It is suggested that the procedure may be modified and
TANGEDCO should accept the application for permission for the extra power
requirement for the construction activities. The extra charges, if any, may be collected in
the existing meters. There should be no requirement for applying fresh temporary
connections.

2.1.158 The compounding fees should not be collected for the misuse of the energy and instead,
the consumer should pay the difference in tariff for misuse of energy.

2.1.159 Proposal for applying LT Tariff VI category for the construction activities which are
carried out by HT Category consumers with the purpose of expansion or improvement or
replacement for the infrastructure connected with the main utility for which HT supply
has been availed, contradicts with the applicability of HT Tariff III submitted by
TANGEDCO the new proposal which also dealt with construction activity.

2.1.160 The lavish illumination has to be discouraged during R&C period. The tariff for lavish
illumination should be more than excess demand and energy charges payable for
violation of quota.

2.1.161 The temporary power usage for construction activity for temple functions, public
meetings, exhibitions, conferences of political parties and religious discourses, etc., are
different from the construction activity which would become a part of main building after
completion. Hence, a separate category within Temporary Supply may be required.

2.1.162 The power theft by political parties in public meetings and functions should be
discouraged by TANGEDCO through a minimum charge of Rs. 5000 towards Madras
Electricity Supply (MES) charges.

2.1.163 The existing rate of Rs. 10.50 per unit should be reduced to Rs. 9.00 per unit which
would be 50% more than the LT commercial tariff of Rs. 6.00 per unit as suggested.
TANGEDCO has not mentioned the unit of the connected load or contracted demand in
its submission. The per day basis approach may be replaced by the fixed charge per
month adopting a charge of Rs. 10 per KW since the consumer is also paying the cost of
extension to the supply agency.

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2.1.164 The monthly minimum charge has no relevance to LT temporary supply and hence it may
be dropped.

Issue-24: Free/Concessional Tariff

2.1.165 As per National Tariff Policy, the minimum and maximum of tariff should be +/- 20% of
the average cost of energy. The free energy to huts and agriculture is against the Tariff
policy. Power supply to huts should be metered and ceiling for consumption of electricity
should be specified for these categories of consumers. Agricultural supply should also be
metered and should be rationalized with respect to the area of agricultural land with
consumption ceiling.

2.1.166 The Government may pay the cost of energy incurred by TANGEDCO for free
electricity, wherever provided, for agriculture and huts, on a quarterly basis.

2.1.167 The concession given to consumers whose bi-monthly consumption is up to 100 units is
proposed to be withdrawn i.e. on fixed rates and the rate of Rs. 1.50 per unit has been
proposed to be charged throughout, resulting is the consumer paying a bi-monthly
minimum of Rs. 110 instead of Rs. 40 charged earlier. The tariff may be hiked for the
consumers who consume 1000 or 2000 units per two months.

2.1.168 Ice Producers have sought for concessional tariff.

2.1.169 The Steel plants should be exempted from the 15% extra energy charges and limit the
harmonics within the limits prescribed by Central Electricity Authority (CEA).

2.1.170 Salt manufacturing industries, Non Government Organizations, Rice Mills, CMC Vellore
and hospitals attached to educational institutions have requested for concessional tariff.

2.1.171 Electricity generation tax should be waived as long as R&C measures are in force.

Issue-25: Free Power

2.1.172 TANGEDCO should provide free power to the farmers who are having more than 10
acres of land and should be encouraged to install solar power panels. The free power for
farmers having 5 to 10 acres of land should be charged at a rate of 50 paise per unit.

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2.1.173 The number of free connections to the farmers has to be restricted to only one service
while all other remaining services should be charged.

2.1.174 The concept of free power should be dropped and there should be no exemption in
electricity tariffs to any category of consumers.

2.1.175 Free power to horticulture service connection for farmers may be provided.

Issue-26: Generation

2.1.176 TANGEDCO may limit its activities in respect of its own generation. Power purchase by
TANGEDCO may be monitored and controlled by the Commission.

2.1.177 The seven generators which were classified as captive generators were exempted from
the payment of cross subsidy charges. Their status may be verified again and cross
subsidy charges may be recovered from these consumers.

2.1.178 TANGEDCO has lost Rs. 1500 Crore in the dispute between GMR and PPN.
TANGEDCO may try to lodge a claim for this loss from both the parties.

2.1.179 The Kudankulam Nuclear power project may begin power generation to meet the
shortage of 1500 MW in the State.

2.1.180 The energy generation by TANGEDCO’s thermal power stations has dropped by 2000
MUs for the year 2010-11 compared to 2009-10 which amounts to Rs. 600 crores of loss.
The Commission may ask TANGEDCO to find out the reasons so that the further
generation loss could be avoided.

2.1.181 There has been heavy loss incurred in the Fixed Cost and Variable Cost in respect of
power purchased from Independent power Producers except Pillaiperumalnallur.
TANGEDCO may take necessary steps to reduce the cost.

2.1.182 The tariff for GMR, PPN, Samalpatti, Madurai and ST CMS has not been regulated. The
fixed cost of IPPs should come down from 24% of capital cost to approximately 9% after
a period of 10 years. The O&M cost in fixed cost component of IPP tariff should be
checked.

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2.1.183 TANGEDCO should follow a strategy to meet the demand by having more power
stations than actually planned, and may exploit the full potential of non conventional and
renewable sources of energy as also mobilize private investment.

2.1.184 TANGEDCO may promote jatropha/bio-diesel cultivation to be used as fuel for
generation of power.

2.1.185 TANGEDCO may add sufficient capacities to cater to the future demand.

2.1.186 The Basin Bridge plant may be converted to Combined Cycle plant.

2.1.187 TANGEDCO may prioritize local small scale industries (SSI) which are not having
sufficient supply of electricity over the multinational companies for giving new
electricity connections. The new connections to the multinationals sectors should be
continued but the generation capacity should be increased proportionately.

2.1.188 The electricity tax at the rate of 10 paisa per unit on self generation of electricity from
generators may be withdrawn.

2.1.189 Big shopping malls and Business houses should install their own non-conventional
electricity production units.

Issue-27: Power Purchase

2.1.190 TANGEDCO may purchase power from affordable generating stations except the power
from Kayangulam.

2.1.191 The power purchase from non conventional energy sources may be restricted to statutory
limits, if it is not affordable.

2.1.192 TANGEDCO is firming up the infirm power from wind generations with a very high
reactive component, causing serious losses to them. TANGEDCO may account for the
quantum of losses under a separate head. TANGEDCO might have made losses by way
of banking of 6000 MW of infirm power in 10000 MW grids with high technical losses
by way of accommodating very high reactive component.

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2.1.193 TANGEDCO should not purchase power above Rs. 3 per unit. Instead, it is better to shed
load instead of such high purchase.

2.1.194 HT consumers are allowed to enter into power purchase agreements with potential
suppliers of power. Medium and small industries have requested for permission to source
power from other states. Power generators may be given permission to sell power to other
states under open access (Inter-state Open Access).

2.1.195 In 2009-10, 14500 MUs was purchased from open market. Private generators which
constitute 19% of the total power purchases by TANGEDCO have swindled 50% of the
total revenue earned by TANGEDCO. TANGEDCO has bought power at Rs.15 per unit
from the open market, which the Commission may regulate.

2.1.196 TANGEDCO started incurring losses from the year 2002-03 amounting to Rs.1,000
Crore and gradually increased up to the present level of Rs.53,000 Crore. This is because
of high power purchase cost from IPPs, traders and open market. The Commission may
regulate the private power purchase as per the provisions of the Electricity Act, 2003.

2.1.197 The procedure of involving FPAC is unnecessary as the tariff determination process is an
annual exercise which may take care of fuel price adjustment during the year.

2.1.198 The hydro power generation from Pycara and Kundah projects costs 20 paise per unit as
all its fixed cost has been recovered. Therefore, this source should be earmarked for
agricultural sector.

Issue-28: Renewable Energy

2.1.199 The barrier to wind power development may be removed (including infrastructure for
evacuation) and an enabling regulatory and policy environment for investments in this
sector should be created.

2.1.200 The consumers having contract demand more than 10 MVA may generate electricity up
to 5% to 10% of the contract demand which should gradually increase to 25% from
renewable sources.

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2.1.201 Banking of wind energy may be dispensed with to avoid serious losses. Demand side
management may be enforced for the wind mills by levying common power factor
compensation.

2.1.202 A separate company may be formed for cheap power sources like hydro power station
which should sell power to TANGEDCO at non conventional energy cost and utilize the
fund to compensate weaker section like hut and agriculture.

2.1.203 Solar power generation should be promoted. Government of Tamil Nadu may take
initiatives and offer subsidized rates to boost solar energy use. The usage of solar energy
to power the domestic consumers and schools may be promoted as is done in Karnataka.

2.1.204 The power generation from wind mills may be enhanced. The power generation potential
from Courtrallan falls may be examined for hydro electric power scheme.

2.1.205 The Commission may direct TANGEDCO to procure additional power from wind energy
generators or alternatively allow to bank the same for a longer duration as third party sale
is technically restrictive.

2.1.206 Manufacturing & selling of storage electric water heaters may be banned. Instead, solar
water heater should be promoted. Similarly, usage of solar water heating system for
colleges, big canteens for the hot water usage for cooking purpose may be promoted.

2.1.207 There should be no sales tax for LED lighting systems, solar PV panels, and solar water
heaters. The concession of tax percentage for domestic appliances should be according to
star rating approval.

2.1.208 Green houses may be promoted by lowering the power tariffs for such type of houses.

Issue-29: Energy Audit/ Demand Side Management / Energy Efficiency

2.1.209 TANGEDCO has not been checking the correctness of Current Transformers/Power
Transformers and meters provided for the feeders.

2.1.210 Under the Energy Conservation Act 2001, power generation, transmission and
distribution are designated consumers for energy audit, whereas, TANGEDCO has not
undertaken any such audit.

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2.1.211 TANGEDCO may undertake measures to check loss in transmission/theft and install
meters in huts (BPL) so that excess energy consumed over the allotted free units could be
checked and properly accounted.

2.1.212 TANGEDCO may have a full time Member in charge of DSM and this activity may be
given same importance as Generation and Distribution.

2.1.213 The Bachat Lamp Yojna may be implemented throughout the State. It is also requested to
constitute a high level local experts committee in all the districts for assessing the
potential of energy savings and implementing the recommendations in a phased manner.

2.1.214 In street lighting and Government offices, incandescent lighting may be replaced with
efficient fluorescent lamps (CFLs).

2.1.215 Energy efficient pump sets should be distributed to farmers replacing their old pump sets.

Issue-30: Time of Day Tariff and Extending evening peak hours

2.1.216 It was appealed to the APTEL that the morning peak hours have been set between 6 am
and 9 am without any study or statistics. The Regulations in this regard provide for 6:00
am to 9:00 am as the morning peak and 18:00 hours to 21:00 hours as the evening peak.
APTEL has accepted this Regulation because the Commission’s Regulations provide for
specific timings. However, in TANGEDCO’s petition, the evening peak is sought to be
revised to 18:00 hours to 23:00 hours. TANGEDCO has not provided any justification for
the change sought for. Therefore, the Commission may maintain the Peak hour from
morning 6 am to 9 am and evening 6 pm to 9 pm.

2.1.217 Peak hour charges are collected at 20% whereas the incentive for consumption during
10:00 pm to 5:00 am is provided at 5%. The night shift allowance (incentive for night
shift consumption) may be increased to 20%.

2.1.218 Extending of evening peak hours has been objected by the consumers on the account of:
a. There have already been R&C measures in place whereby TANGEDCO has allowed
industries to draw only 10% of the eligible quota during the evening peak hours.
b. By extending peak hours, TANGEDCO has proposed to levy additional 20% of the
tariff for the two additional hours. There has been no proper justification for
extending the evening peak hours.
c. The rebate for consumption during night hours will be reduced by one hour.

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d. The proposed change will increase the overall power cost for the industries.

2.1.219 The night hour concession may be increased by 10% for the months of June to October to
encourage consumption at night hours.

2.1.220 TANGEDCO has provided an incentive of 5% on the energy charges being used between
22:00 hrs to 05:00 hrs. The industrial consumer may loose its shift production this way,
thereby incurring huge loss and increasing the cost. Maharashtra State Electrcity Board in
1984 has announced such a scheme with 23 paisa per unit as concession which was a
failure.

2.1.221 Peak hour tariff and night hour rebate may be treated on equal footing.

Issue-31: Retail Tariffs

2.1.222 Varieties of consumers avail access to power and each consumer has different affordable
concerns for the price to be paid for energy consumed. TANGEDCO being a commercial
organization is eligible to earn 14% return on their equity. TANGEDCO is not concerned
about the ‘ability to pay’ of consumer. TANGEDCO has proposed an extraordinary
increase in tariff of nearly 100% for HT consumer and 63% for LT consumer.

2.1.223 If the Government is directing such supplies (under Section 65 and or Section 108 of the
Electricity Act 2003) the Commission may instruct the Government to provide for the
grant of the deficit too.

2.1.224 The retail tariff for such consumers who fall under the category of free or subsidized
supplies must be determined by the Commission truly and meticulously, so that the
consumers do not suffer any part of the burden of such supplies. About 22% of the total
consumption in Tamil Nadu is falling under this category.

2.1.225 Industrial and Commercial classes of consumers are under burden because of cross-
subsidy.

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