Wise Supports Madhya Pradesh Electricity Regulatory Commission (MPERC)

Review, Study, Revision and Monitoring of Regulations The Centre for Regulation and Policy (CRP), WISE, was entrusted by the Madhya Pradesh Electricity Regulatory Commission (MPERC) to support various miscellaneous assignments and activities for a three-year period, starting (2021–2024). WISE deputed field staff in the MPERC office, thus enabling interaction with the officials on a daily basis for work on the ground.

The scope of work is basically divided into two groups–Group A for review, study and revision of regulations, and Group B for monitoring of various regulatory issues. Detailed scope is provided in the table (next page).

Group A

In the year under review, CRP, WISE, completed the revision of the MPERC (monitoring of performance of licensees and generating companies) Regulations, 2004, and MPERC (power purchase and procurement process) Regulations, Revision 1, 2006. A comprehensive analysis report was submitted after public consultation for the Commission’s comments, and regulations were finalised accordingly. CRP, WISE, carried out background work for the revision of the remaining two regulations as well. While working on the power purchase and procurement process regulations, the team met several important stakeholders, like the holding company that purchases power, and the state load despatch centre, to understand their issues. Consequently, guidelines for operating merit order despatch in the power procurement process were prepared and submitted.

Group B

As mandated, CRP, WISE, analysed the quarterly, half-yearly, and annual reports submitted by the utilities. WISE presented its findings before the Commission from time to time. The annual report for 2021–22 was analysed in detail and observations were presented before the Commission in the meeting held in July, 2022.

Few observations are highlighted below.

The Methodology adopted for assessed sale in case of un-metered consumers served with defective meters across the distribution licensees needs to be checked. The methodology adopted should be uniform across all DISCOMs. The minimal distribution loss/negative distribution loss reported in certain circles like the western DISCOM, underlines the need for such an exercise.

The arrears of the central and western DISCOMs have been increasing over the last decade. Total arrears due during the last five years for the central DISCOM is nearly 37%–50% of demand i.e. equivalent to 4-6 months of revenue, on average.

Domestic consumers turned out to be the major defaulters among the various categories. Such a situation may severely affect the working capital and result in more loans being available to meet day-to-day expenditures. The DISCOM needs to take immediate action to recover the arrears that are due.

The number of unmetered consumers for the last three years is stable, even though the percentage of unmetered consumers in a total number of consumers appears to be reducing for central and western DISCOMs. In contrast, the rural domestic consumers served with faulty meters were reported to be increasing in the central and western DISCOM area (56% and 84%) respectively.

Age-wise analysis of the defective meters has to be done immediately and a roadmap for replacement of defective meters as well as provision of meters for unmetered consumers has to be taken up on priority.

The agricultural consumption benchmark (kWh/HP/annum) set for assessing the agricultural consumption of un-metered AG consumers needs to be revisited on the basis of scientific study, considering the agro-climatic zone of the state/cropping pattern/rainfall/ groundwater depletion, etc.

Based on the monitoring analysis, the Commission issued several directives to the utilities for improving their performance. The directives were the base document for the review meetings conducted by the Commission, post which draft minutes of meeting was submitted before the Commission. The CRP, WISE, also submitted the utility compliance report, as per directives issued during the review meeting.

For fuel cost adjustment, CRP, WISE, submitted its analysis reports based on calculations submitted by the utilities for each quarter. Detailed analysis was carried out to find out the cost of coal and its different components, like cess, tax and transportation costs.

The utilities had submitted a Capex application (investment plan) for the period 2022–23 to 2025–26, to obtain approval of the Commission for various schemes as per Regulation 10.3 of the MPERC [The conditions of distribution license for distribution licensees (including Deemed Licensees), Regulations, 2004]. WISE analysed their proposal and observed that major investments envisaged by them were under the revamped distribution sector scheme (RDSS) launched by the Government of India. So, the detailed proposal under RDSS was evaluated and the analysis report was discussed with the Commission.

Subsequently, the final investment plan for the period 2022–23 to 2025–26 was approved by the Commission.

Tariff Determination for RE Technologies.

In January 2021, the Centre for Regulation and Policy (CRP), WISE, was appointed by the Madhya Pradesh Electricity Regulatory Commission (MPERC) to prepare of discussion paper and associated work for tariff determination of eight RE technologies – solar, wind, biomass, bagasse-based co-generation, small hydro, biogas, hybrid and waste-to-energy. The scope of work under each assignment includes:

1. Preparation of an approach paper with consideration of factors affecting the tariff for RE power projects which inter-alia includes, (i) capital cost, (ii) life, (iii) plant load factor, (iv) O&M charges, (v) fuel cost related parameters, if applicable, and (vi) financial parameters like depreciation, interest on loan and working capital, loan repayment period, etc.
2. Attending the public hearings arranged by the Commission, analysing the suggestions/objections made by the stakeholders before and after public hearings and incorporating the same in subsequent documentation.
3. Submitting the final reasoned analysis and tariff order before the Commission, and incorporating the comments on the approach paper. During the year under review, tariff for biomass-based power projects was discussed and finalised. The project is currently ongoing.