CMIA CONFERENCE ON 14 TH SEP, 2013 AT AURANGABAD ASHOK PENDSE, TBIA

CHALLENGES BEFORE INDUSTRY IN RESPECT OF ELECTRICITY TARIFF

TARIFF When the electricity tariff is substantial with respect to cost of production it makes large impact. Eg:- Metal processing, Plastic, Ice, The Case of Ice factory The Case of Dubai

TARIFF COMPARISON NOV ’12

INDUSTRIAL CONSUMPTION OF MSEDCL(MU) FOR 13-14

INDUSTRIAL CONSUMPTION OF MSEDCL(MU) FOR 14-15

INDUSTRIAL CONSUMPTION OF MSEDCL(MU) FOR 15-16

TARIFF As it can be seen almost 40% of consumption comes from industry, which contributes to largest chunk of Rs. 9000/- crores cross subsidy and hence, MSEDCL and GOM should be concerned about health of industry.

WHY THE TARIFF IS HIGH? YEAR POWER PURCHASE COST (Rs. Crores) Average Revenue requirement (Rs. Crores) Power purchase cost (%) 71%82%85% Average cost of supply (Rs/Unit)

POWER PURCHASE SCENE MURs/UnitMURs/UnitMURs/Unit MSPGCL NTPC NPCIL RGPPL JSW MUNDRA ADANI INDIA BULLS CAPTIVE TRADERS

POWER PURCHASE SCENE YEAR MSPGCL42%41%43% NTPC + NPCIL25%22%21% JSW + MUNDRA + ADANI + INDIA BULLS + CPP + TRADERS 20%26%23% OTHERS13%11%13%

POWER PURCHASE SCENE Hence, the power purchase from MAHAGENCO is quite high than the market scene. Also, it constitutes almost more than 40% power purchase. So the question comes, what is happening in MAHAGENCO? There are three sets of stations :- 1) Older Stations 2) Stations synchronized in & ) Stations which are likely to come in & 14-15

OLDER STATIONS YEAR13-14 Net Gen. (MU’s) ARR (Rs.Crores) Bhusawal Chandrapur Nasik Koradi Parli Khaperkheda Total Rs. 3.33

RECENT STATIONS Net Gen. (MU’s) ARR (Rs. Crore) Paras 3& Parli 6& Khaperkheda Total Rs.4.44/ Unit

UPCOMING STATIONS & 14-15Rs/Unit Bhusawal 4500MW4.26/- Bhusawal 5500MW4.28/- Chandrapur 8500MW5.09/- Parli 8250MW4.71/- Koradi 8660MW5.22/-

POWER PURCHASE SCENE Hence it can be seen that all the recent and upcoming stations of MAHAGENCO is the major issue as far as unit rate is concerned. It is worth going to market and buying power rather than buying it from MAHAGENCO.

CAPITAL EXPENDITURE OF MSEDCL For feeder separation Rs.2000 Crores already spent. Hence the demand has been controlled. It virtually means load shedding being done through agricultural pumps. So far about Rs.3500 Crores have been spent. Whereas the total outlet is about Rs Crores. The main objectives of Capex are :- 1) Improvement in the quality of supply. 2) Reduction in loss. 3) Catering to increased demands to existing customers. 4) Meeting the demand of newer customers.

PASSIVE ROLE Stay with MSEDCL, and pursue reduction and minimum increase in the tariff for present and future years. To do this :- A) Participate in public hearing and specific hearing of not only MSEDCL but also generation. B) With the help of media, newspapers, forums, etc. bring to the notice of common man regarding high electricity tariff. C) Bring to the notice of the govt. the unviable tariff of industry as compared to other states. D) Make efforts with MERC to bring down the open access limit from 1MW to 100 KVA.

ACTIVE ROLE Go away from MSEDCL, The two choices : A) Captive power plant. B) Open Access. There are four components which need to be addressed in both the cases: 1) Power purchase cost 2) Wheeling charges 3) System Loss 4) Cross subsidy surcharge In case of captive CSS is not applicable.

CAPTIVE POWER PLANT “Captive generating plant” means a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any co- operative society or association of persons for generating electricity primarily for use of members of such cooperative society or association of person 13 “company“ means a company formed and registered under the Companies Act, 1956 and includes anybody corporate under a Central, State or Provincial Act; (49) “person” shall include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person

CAPTIVE POWER PLANT i) not less than twenty six percent of the ownership is held by the captive user(s), and (ii) not less than fifty one percent of the aggregate electricity generated in such plant, determined on an annual basis, is consumed for the captive use: Provided that in case of power plant set up by registered cooperative society, the conditions mentioned under paragraphs at (i) and (ii) above shall be satisfied collectively by the members of the cooperative society: Provided further that in case of association of persons, the captive user(s) shall hold not less than twenty six percent of the ownership of the plant in aggregate and such captive user(s) shall consume not less than fifty one percent of the electricity generated, determined on an annual basis, in proportion to their shares in ownership of the power plant within a variation not exceeding ten percent

CAPTIVE POWER PLANT Three points emerge: 1) All put together 26% equity minimum 2) They must consume minimum 51% generation 3) The consumption should be proportional to equity, in a financial year, with (+/-10%) variation allowed.

CAPTIVE POWER PLANT Eg:1 Consumer 1 6% Equity6 / 26 = 23% Equity 51 x 0.23 = 11.73% generation – Consumer 2 5% Equity5 / 26 = 19.2% Equity 51 x = 9.79% generation – 8.81 Consumer 3 6% Equity5 / 26 = 19.2% Equity 51 x = 9.79% generation – 8.81 Consumer 4 6% Equity5 / 26 = 19.2% Equity 51 x = 9.79% generation – 8.81 Consumer 5 6% Equity5 / 26 = 19.2% Equity 51 x = 9.79% generation – % Equity%Equity distribution Generation distribution Variation allowed

CAPTIVE POWER PLANT Eg:2 Consumer 151% Equity6 / 26 = 51% Equity 51% generation 45.9 – 56.1 Consumer 25% EquityNo relevance Consumer 36% EquityNo relevance Consumer 47% EquityNo relevance Consumer 58% EquityNo relevance

TO CONCLUDE If you stay with MSEDCL then go to passive role to control the cost. If you go away from MSEDCL do active role, one of them is captive power plant.