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The Kerala State Electricity Regulatory Commission has arrived at a provisional revenue gap of Rs 887.81 crore, against the revenue gap of Rs 2,208.31 crore projected by the State Electricity Board (KSEB) for 2011-12.
It approved an aggregate revenue requirement (ARR) of Rs 6,512.73 crore and total expected revenue from charges (ERC) of Rs 5,624.92 crore, against the Rs 7,815.77 crore and Rs 5,607.46 crore, respectively, projected by the KSEB.
BRIDGING GAP
Accordingly, the Commission has directed that the Board shall submit suitable proposals for bridging the approved revenue gap for the year 2011-12 without delay. Till such time, the existing tariff will continue.
While proposing a revenue gap of Rs 2208.31 crore, no proposal was made for bridging such a large revenue gap, the Commission said.
It assessed that the revenue gap proposed for the year would entail increase in existing tariff by about 42 per cent. The petition stated that proposals to meet the revenue gap involve policy directions at the Government level.
Hence, after approving the revenue gap by the Commission, the Board in consultation with Government will file proposals to bridge the revenue gap.
COSTS UP
The analysis of the petition shows that there has been considerable increase in cost over the previous years, which resulted in this huge revenue gap.
The cost-plus regulation, however, is not meant to transfer all costs to the consumers which are projected or incurred by the licensee (KSEB).
The Commission is duty bound to examine that the costs passed on are reasonable and reflect the principles of efficiency, prudency and economy.
KSEB anticipates energy sales of 15,600 MU for 2011-12, which is about 6.34 per cent over projected sales of 2010-11. According to KSEB, there is a trend towards moderation of energy demand in 2010-11 and 2011-12.
The moderation of energy demand in the year 2011-12 is significant, mainly on account of energy saving campaigns and demand-side management measures.
There are also reasons to believe that energy demand may slow down, the Commission said.
According to the estimates of KSEB, backlog of connections has been almost cleared. Accordingly the projection of four lakh connections may not materialise.
Even while taking efforts to clear the backlog of connections, KSEB added only 3.3 lakh consumers in 2008-09 and 3.83 lakh in 2009-10. The number of connections given up to February 2011 is still lower (3.63 lakh).
Many assembly constituencies have been declared as fully electrified areas. Hence, the addition of 4 lakh consumers may not be a reasonable estimation regarding number of consumers, the Commission said.
The Commission has directed the Board to effectively utilise the emerging energy market in the country to insulate consumers from rising cost of liquid fuel-based electricity.
It should also closely monitor the commercial exploitation of the coal block allotted for the State at Baitharani and the proposed Cheemeni project where KSEB is the primary stakeholder.
The Commission would resort to a comprehensive review of power position in the month of December 2011, by which time the rainfall position and the shortage or surpluses, if any, would be reasonably established.
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