Before the Karnataka Electricity Regulatory Commission, Bengaluru

BEFORE THE KARNATAKA ELECTRICITY REGULATORY COMMISSION, BENGALURU

FILE NO.

CASE NO.

IN THE MATTER OF:

Amendment to Petition filed before KERC vide application dated 30.11.2016 on Annual Revenue Requirement (“ARR”) for the Financial Year 2017-18, tariff filing and determination of tariffs to be charged by Bangalore Electricity Supply Company Limited for FY-18 and truing up for FY-16.

IN THE MATTER OF:

Bangalore Electricity Supply Company Limited, a Company incorporated under the provisions of the Companies Act, 1956 and having its main office at K.R.Circle, Bangalore.

……………………...Petitioner

AFFIDAVIT VERIFYING THE PETITION

I Doreswamy, aged about 59 years General Manager (A&RT) BESCOM, K.R. Circle, Bangalore hereby solemnly affirm and state as follows:

I am working with Bangalore Electricity Supply Company Limited, the Petitioner, as General Manager (A&RT) and am duly authorized by the said Petitioner to make this affidavit. I say that on behalf of, Bangalore Electricity Supply Company Limited, I am now filing this petition for Amendment to Petition filed before KERC vide application dated 30.11.2016 under the Electricity Act, 2003 read with Karnataka Electricity Reforms Act, 1999 for approval of truing up for FY-16, with modification of Annual Revenue Requirement (“ARR”) for the financial year FY-18, determination of tariffs to be charged by Bangalore Electricity Supply Company Limited for FY-18.

I further say that the statements made and data presented in the aforesaid Petition are to the best of my knowledge, as per records of the Company and based on estimations. Further, to my knowledge and belief, no material information has been concealed in the aforesaid Petition.

Place: Bengaluru General Manager (A&RT) Date : 16.02.2017 BESCOM, K.R. Circle,

BEFORE THE KARNATAKA ELECTRICITY REGULATORY COMMISSION, BENGALURU

IN THE MATTER OF:

Amendment to Petition filed before KERC vide application dated 30.11.2016 on Annual Revenue Requirement (“ARR”) for the Financial Year 2017-18, tariff filing and determination of tariffs to be charged by Bangalore Electricity Supply Company Limited for FY-18 and truing up for FY-16.

IN THE MATTER OF:

Bangalore Electricity Supply Company Limited, a Company incorporated under the provisions of the Companies Act, 1956 and having its main office at K.R.Circle, Bangalore.

THE PETITIONER RESPECTFULLY SHOWETH

BESCOM is a holder of the license, "Distribution & Retail Supply License"- granted by the Karnataka Electricity Regulatory Commission under Section 19 of the Karnataka Electricity Reforms Act,1999 (Act No: 25 of 1999) for carrying out the business of retail supply of electrical energy in Karnataka.

This is an application, under Section 27 of Karnataka Electricity Reforms Act,1999 under Section 61 and 62 of Electricity Act, 2003 condition 24 of the Supply License and in line with MYT Order dated 31.05.2006.

General Manager (A&RT) BESCOM Amendment to the Original Petition

BESCOM has filed petition for truing up for FY-16, with modification to Annual Revenue Requirement (“ARR”) for the financial year FY-18, determination of tariffs to be charged for FY-18 under Section 61 & 62 of the Electricity Act 2003 and under Section 27 of the Karnataka Electricity Reform Act 1999 read with relevant Regulations of KERC (Tariff) Regulations including KERC (Terms and Conditions for Determination of Tariff for Distribution and Retail Sale of Electricity) Regulations, 2006 and MY Tariff Order No. D/01/6 dated 31-05-2006 on 30.11.2016.

In addition to its above said tariff application, BESCOM is proposing amendment to its original petition on the following issues that has material impact on its tariff and functioning and also to ensure specific deliberation thereon:

i. Telescopic tariff - Domestic Sector

The electricity bill of poor and middle class consumers (consumption between 50 - 100 units) who consume less pay more rate than affluent consumers who consume an excessive quantity of electricity. This is revealed in the paras below.

The existing tariff structure fetches an average rate of Rs.5.01 per unit from the domestic consumers as against the proposed average cost of supply of Rs.7.17 per unit.

BESCOM is proposing a new tariff structure which will fatten the purse of the rich and at the same time protects the interest of the poor.

The new tariff structure is to encourage the consumers to conserve energy. The electricity tariff should be formulated in such a way that the rich should bear the increase in the electricity cost. This can be done by applying an aggressive tariff increase to the higher electricity consuming consumers. This will encourage either to conserve energy or to switch to solar power plant. The present tariff structure demands cross subsidization to domestic consumers from other categories and BESCOM sees no strategy by the Commission in making the elite among this category of consumers paying at the cost of supply. With this burden of cross subsidy the other cross subsidizing consumers are leaving the grid. BESCOM sees no gain in carrying forward the business suffering losses. BESCOM has come to the conclusion that it is unable to supply energy to this category of consumers at the approved tariff structure.

It is proposed to charge the actual cost from affluent consumers who conserve electricity for luxury. Even if BESCOM plans to meet the energy requirement of the domestic consumers through hydel sources it is unable to do so as the consumers consuming higher energy are reaping the benefit of it than the poor. BESCOM has a noble intention of supplying the poorer consumers with hydel cost for life line consumption. At the same time the consumers with higher consumption must be allowed to charge appropriately.

Therefore an effort is being made through this new proposal to reduce the cross subsidy that is being charged to affluent consumers at the expense of the other consumers. It is further expected that with this increase in tariff the affluent customers would opt for self-generation.

The details of domestic consumers covered by 2 TRM agencies for FY16 and FY17 (upto Dec 2016 are obtained. Details are as under:

LT2a(i)

0-30 31-50 51-100 101-150 151-200 201-300 301-400 401-500 >500 Consumers FY16 (Lakhs) 11.89 6.63 13.23 7.70 3.95 2.90 0.74 0.26 0.37 Percentage 24.9% 13.9% 27.8% 16.1% 8.3% 6.1% 1.6% 0.5% 0.8% Consumption (MU) 166.73 305.17 1092.83 1084.27 822.96 900.81 353.61 158.24 564.60 Percentage 3.1% 5.6% 20.1% 19.9% 15.1% 16.5% 6.5% 2.9% 10.4%

0-30 31-50 51-100 101-150 151-200 201-300 301-400 401-500 >500 FY17(upto Consumers Dec16) (Lakhs) 10.23 7.05 13.54 7.61 3.94 2.97 0.76 0.25 0.37 Percentage 21.9% 15.1% 29.0% 16.3% 8.4% 6.4% 1.6% 0.5% 0.8% Consumption (MU) 126.89 233.92 865.45 881.76 671.13 726.06 285.49 134.39 524.73 Percentage 2.9% 5.3% 19.4% 19.8% 15.1% 16.3% 6.4% 3.0% 11.8%

LT2a(ii)

101- 201- 301- 401- 0-30 31-50 51-100 150 151-200 300 400 500 >500 Consumers FY16 (Lakhs) 6.07 2.26 2.01 0.52 0.17 0.09 0.02 0.01 0.02

Percentage 54.3% 20.2% 18.0% 4.7% 1.5% 0.8% 0.2% 0.1% 0.2% Consumption (MU) 112.51 106.74 172.10 81.83 39.70 31.33 11.94 6.37 34.53

Percentage 18.8% 17.9% 28.8% 13.7% 6.7% 5.2% 2.0% 1.1% 5.8%

101- 201- 301- 401- 0-30 31-50 51-100 150 151-200 300 400 500 >500 FY17(upto Consumers Dec16) (Lakhs) 6.77 2.16 1.84 0.49 0.17 0.10 0.03 0.01 0.02

Percentage 58.4% 18.7% 15.9% 4.2% 1.4% 0.8% 0.2% 0.1% 0.2% Consumption (MU) 82.83 82.33 140.82 71.12 34.98 28.29 10.80 5.91 32.37

Percentage 16.9% 16.8% 28.8% 14.5% 7.1% 5.8% 2.2% 1.2% 6.6%

Existing Tariff rate:

Existing rates ( Urban Tariff) Fixed charges 1st KW 30 Slabs above 1 KW 40 Energy charges <30 units 3.00 31 to 100 units 4.40 Slabs 101 to 200 units 5.90 above 200 units 6.90

BESCOM Proposal:

Tariff Category Category Description Energy Charges (Rs./unit) Amended Proposal In tariff filing As proposed for FY18 In tariff filing for FY18 Domestic / AEH - Applicable to BBMP and First 30 units 4.48 0-30 3.60 LT-2(a)(i) all urban local bodies Next 70 units 5.88 31-100 5.30 Next 100 7.38 101-200 7.10 > 200 units 8.38 201-300(i.e 1 to 300) 6.40 301-400 (i.e 1 to 400) 6.90

401-500 (i.e 1 to 500) 7.20

Above 500 (all units) 7.50 Domestic / AEH -Applicable to Village LT-2(a)(ii) Panchayats First 30 units 4.38 0-30 3.50 Next 70 units 5.58 31-100 4.90 Next 100 7.08 101-200 6.70 > 200 units 7.88 201-300(i.e 1 to 300) 6.10 301-400 (i.e 1 to 400) 6.70 401-500 (i.e 1 to 500) 7.10 Above 500 (all units) 7.40

Additional revenue earned due to tariff redesign is Rs.370.61 Crs.(D21 statement). This revenue is set off by reducing the energy charges of HT consumers (other than HT3 and HT5 categories).

Public Lighting -LT-6 (b):

As a Demand Side Measure LED lamps are to be replaced with mercury vapour lamps, sodium vapour, fluorescent lamps etc. The illumination (Lumens) in a 70 watts LED lamps is equivalent to 200 watts vapour lamp. If Mercury vapour lamps are replaced with LED lamps the illumination will be 3 times more. The efficacy of a Mercury vapour lamp is 30-60 Lm/W whereas the efficacy of LEDs is 60-140 Lm/W. Hence, BESCOM has amended its earlier tariff proposal

Particulars Existing Proposed

Fixed Charges. Rs. 60 / KW / month Rs. 60 / KW / month

Energy Charges. 6.98 Rs. / unit 11.00 Rs. / unit (other than LED)

Energy Charges for LED / Induction Lighting. 5.98 Rs./unit 5.98 Rs./unit

HT – Reduction in Energy Charges and Increase in Demand Charges

Revenue expenditure incurred by BESCOM in procurement of energy is divided into two parts: a) Fixed expenditure and b) Variable expenditure; likewise the charges levied on the consumers by BESCOM under Average Realization Rate (ARR) are divided into fixed/demand charges and variable/energy charges.

The cost of procurement of energy from the private generators for BESCOM stands divided in the ratio of 33:67 towards fixed charges and the energy charges respectively. However BESCOM is obligated to divide its receipts (ARR) into Fixed Charges and Energy Charges in the ratio of 11:89 respectively. All other state Distribution licensees are recovering the costs in the same ratio of fixed charges and variables charges in which they procure energy from generators.

BESCOM by virtue of existing framework of distribution of charges as brought out in the forgoing paragraphs is forced to collect 22% of the fixed charges through variable/energy charges. Thus the variable charges component invariably carries fixed charges in it. Having regard to the existing framework, if BESCOM is deprived of variable charges on account of customers opting for Open Access Power, it stands to lose out on 22% of the Fixed Charges. In view of HT consumers opting for purchase of electricity though open access system, the fixed charges, to the extent they are inbuilt in the variable charges, will not be recovered by BESCOM.

Since the contribution of fixed charges is only 11% of the ARR, the balance i.e 22% (33%-11%) is camouflaged in the energy charges. Hence, the energy charges appear to be on a higher side. This is also the foremost reason for HT consumers to gradually shift to the Open Access System as they believe the energy charges being levied under ARR to be too high, without realizing that the Fixed Charges are being compensated to that extent. If the Fixed charges, which are masked in the energy charges, are separated, then the variable cost will stand proportionally reduced. Wherefore, it is in the best interest of the BESCOM, Consumers and even the Generators to increase the fixed charges and reduce variable charges for HT consumers in the same proportion they are inbuilt in cost of supply. Hence, it is hereby proposed to increase the demand charges and reduce the proposed energy charges.

Reduction As proposed Amended Proposal in EC Tariff Category (Rs./unit) Category Description Demand Energy Charges Demand Energy Charges Charges (Rs./unit) Charges (Rs./unit)

Water Supply, HT-1 sewerage water 190 all units 5.98 250 all units 5.47 0.51 treatment

190 250 Industrial - 1 <=100,000 7.73 <=100,000 7.08 0.65 BMAZ >100,000 8.23 >100,000 7.58 0.65

HT-2(a)(i) Railway Traction 190 all units 7.38 250 all units 6.68 0.70

BMRCL 180 all units 7.18 250 all units 6.48 0.70 . 180 250 Industrial - other HT-2(a)(ii) 1 <=100,000 7.68 0 <=100,000 6.73 0.95 than BMAZ 1 >100,000 8.08 0 >100,000 7.13 0.95

210 250 Commercial - HT-2(b)(i) 1 <=200,000 9.53 0 <=200,000 8.88 0.65 BMA 1 >200,000 9.83 0 >200,000 9.18 0.65

200 250 Commercial - HT-2(b)(ii) other than 1 <=200,000 9.33 0 <=200,000 8.72 0.61 BMAZ 1 >200,000 9.63 0 >200,000 9.02 0.61

180 250 Government HT-2(c)(i) Hospital and 1 <=100,000 7.48 0 <=100,000 7.03 0.45 Edu. 1 >100,000 7.98 0 >100,000 7.53 0.45

180 250 Private Hospitals HT-2(c)(ii) 1 <=100,000 8.48 0 <=100,000 7.53 0.95 and Edu. 1 >100,000 8.98 0 >100,000 8.03 0.95

HT-4 Res. Apartments 110 250 - Colonies 7.33 6.48 0.85

Additional revenue earned due to tariff redesign in Domestic tariff of Rs.370.61 Crs.(D21 statement). This revenue is set off by reducing the energy charges of HT consumers (other than HT3 and HT5 categories).

Revised D21 statements are attached.

The other contents of the original petition remain unaltered.

For Bangalore Electricity Supply Company Limited

General Manager (A&RT)