Guidelines for Filing of Tariff Proposals

Filing of Proposed Tariff or Tariff Amendment

Requirements Regarding Cross-Subsidies and External Subsidies

HARYANA ELECTRICITY REGULATORY COMMISSION
SCO 180, SECTOR 5, PANCHKULA 134 109, HARYANA

Section 26(7) of the Haryana Electricity Reform Act, 1997, requires that a licensee shall provide details of the proposed tariff or amendment to a tariff to the Commission together with such further information as the Commission may require to determine whether the tariff or amended tariff would satisfy the provision of Section 26(6) of the Haryana Electricity Reform Act, 1997.

the licensee shall provide to the Commission, at least 3 months before the proposed date for implementation, a filing of the proposed tariff or amendment to a tariff (FPT) containing such details as the Commission may require. This FPT must contain the information specified below, and the licensee shall also provide such further information as the Commission may require.

(2) Where the proposed date of implementation falls within a financial year for which the Commission has previously determined a permitted aggregate revenue requirement, the FPT should be accompanied by a copy of the relevant Annual Revenue Report as submitted by the licensee, plus a copy of the order passed by the Commission in relation to that report.

Where no determination of a permitted aggregate revenue requirement has been made for the financial year in which the proposed tariff is to be implemented, the FPT should be accompanied by the Annual Revenue Report for that financial year.

a)      A statement of the current tariff rates and all applicable terms and conditions, and the   expected full-year revenue from the current tariff rates in the year in which the new tariff is to be implemented. This should be shown in Form 1.1 of Appendix 1.
b)      A statement of the proposed tariff rate prices and changes, including a full statement of all applicable terms and conditions. This statement should be shown in a form appropriate to the proposed tariff structure. Details should also be supplied of the publicity intended to be given to new tariff options when they are to be implemented.
c)      A statement of the expected full-year revenue of the proposed tariff for the year in which the tariff is to be implemented. This should be given in Form 1.2 of Appendix 1.
d)      If the proposed tariff is to be introduced after the start of the financial year, a statement of the proportion of expected revenues and quantities supplied under each proposed rate during remaining months of the financial year shall be included. This may be made on Form 1.3 of Appendix 1.
e)      A statement of the estimated change in annual expected revenues that would result from the proposed tariff changes in the year in which they are to be implemented, stated in Rupees and percentage terms. This is should be made in Form 1.4 of Appendix 1.
f)        A statement of the effect of the proposed tariff changes on a typical small, average and large consumer in each tariff class. For this purpose, a typical small consumer is defined such that within the tariff class, 90% of the consumers supplied under that tariff within a 12 month period would have greater total expenditure on tariff charges than the small consumer. Similarly, a typical large consumer is defined such that 90% of the consumers supplied under the tariff would have lesser expenditure over a 12 month period than the typical large consumer. The average consumer shall be defined as a consumer having expenditure on tariff charges equal to the average expenditure in that tariff class This statement shall be made in Form 1.5 of Appendix 1.
g)      An embedded cost study detailing functionalization, classification, and allocation of the revenue requirement into consumer classes, and determination of embedded cost-based tariffs, free of external subsidies and cross-subsidies. This should be made in Form 1.6 of Appendix 1. The study shall include all relevant details and methods used in determination of tariffs for each consumer class. If the licensee proposes cost-based tariffs for all consumer classes, the proposed tariff must be the result of the embedded cost study specified in Form 1.6.
h)      A study of marginal costs of the licensee’s business, including time-differentiated, short-term marginal costs by voltage levels and a written explanation of the methods used to calculate marginal costs. In addition, the statement shall include a comparison of the percentage of marginal costs recovered by the current and proposed tariff for each tariff class.
i)        A written explanation of the rationale for the proposed tariff changes, including justification of the return on equity being requested.
j)        A written explanation, supported by calculations of tariff rates, of any proposed new tariff.
k)      Any other information, as required by the relevant license or specified by the Commission.

Pursuant to Section 26(6)(a) of the Haryana Electricity Reform Act, 1997, it is the goal of the Commission to eliminate cross subsidies in a licensee’s tariffs. Cross subsidies take the form of tariff differentials between classes of consumers that do not reflect differences in the circumstances of supply or sale to such classes. These differences include quantity, load factors, power factor, level and timing of peak demand, conditions of interruptability, location of premises being supplied, date and duration of the agreement or any other relevant factors. The Commission may by Order allow a licensee to phase out existing cross subsidies over an appropriate period of time (the transition period) to be determined by the Commission.

The tariff filing shall include a statement that calculates the amount of cross subsidy in the existing tariffs and in the proposed tariffs, and compares the two. This may be done by using Forms 1.7 and 1.8 of Appendix 1. If the proposed tariffs include a cross subsidy, a statement is required, as applicable, to show how this complies with any planned transition period notified by the Commission.

The tariff filing shall also include a statement containing full details of the calculation of any subsidy received, due or assumed to be due from the State Government, the consumers to whom it is directed, and documentation showing how the subsidy is reflected in the current and proposed tariff applicable to those customers. This statement shall also include the tariff calculated without consideration of the subsidy for those customers. This may be done by referring to the data in Forms 1.1 and 1.2 in Appendix 1. The subsidy calculations shall also compare the situation in the year in which the tariff is to be implemented with similar data for the previous year and, where relevant, the current year.

Sections 6, 7 and 8 of the Annual Revenue Report Guidelines contain details of information that the licensee must submit with the Annual Revenue Report filing. It is not necessary to submit this information again with the FPT, but the licensee may, if he so wishes, submit any more recent updates of this information available at the time of the FPT.