In a move to streamline the process of determining electricity tariffs, the Himachal Pradesh Electricity Regulatory Commission (HPERC) is introducing fresh regulations set to come into effect for the control period starting on April 1, 2024. These regulations, officially known as the “Himachal Pradesh Electricity Regulatory Commission (Multi-Year Wheeling Tariff & Retail Supply Tariff) Regulations, 2023,” aim to ensure a more transparent and accountable tariff structure for distribution licensees in the state.
The HPERC is taking into account various factors in shaping these new regulations. This includes an evolving regulatory landscape, the National Tariff Policy, methodologies established by the Central Commission, and rules set by the Government of India.
The regulations have been introduced under the authority granted by the Electricity Act, 2003, and the General Clauses Act, 1897. They are now open for public review, with a 30-day window for stakeholders to submit their objections or suggestions following the publication in the Rajpatra, Himachal Pradesh, in compliance with the prescribed rules.
These regulations, once officially notified in the Official Gazette, will have a significant impact on all Distribution Licensees in Himachal Pradesh, covering the entire state. They will be the governing framework for tariff determination, running from April 1, 2024, until March 31, 2029, unless extended by the Commission.
These regulations come into play when tariff determination is tied to capital costs, as determined by the Commission. However, in cases where tariffs are established through a competitive bidding process guided by Central Government guidelines, the Commission will align with these rates as per the provisions of the Electricity Act.
The heart of these regulations lies in the introduction of a Multi-Year Tariff framework for distribution businesses. Starting from April 1, 2024, this framework aims to bring more structure and transparency to the tariff determination process. Key components include the submission of a detailed Business Plan, which outlines operational norms and performance parameters for each Control Period. This is coupled with the presentation of the Aggregate Revenue Requirement and projected revenues for each year, along with mechanisms to deal with uncontrollable and controllable factors.
Distribution Licensees engaged in both distribution and generation activities will be required to maintain separate accounts for each segment. This segregation ensures that the Aggregate Revenue Requirement for generation and distribution businesses is used accurately to calculate generation tariffs, wheeling charges, and retail supply tariffs. These accounts will be separated starting from April 1, 2024, to ensure precise cost allocation.
Further, Distribution Licensees will divide their distribution business into wheeling and retail supply segments. An allocation statement detailing cost and revenue distribution will be certified by a Statutory Auditor/Cost Auditor and approved by the Board of Directors. This division becomes mandatory from April 1, 2024.
To get their Business Plans approved, Distribution Licensees will need to submit their applications by October 31st of the year preceding the Control Period. The Commission will then meticulously review and endorse these plans, considering input from the public. A Tariff Order will be issued within 120 days of receiving a comprehensive tariff determination application.
Once the tariff is approved, the Distribution Licensee will publish it in newspapers and on their website. This tariff will stay in force unless it undergoes amendments or revisions.
Additionally, Distribution Licensees will have to submit a month-wise forecast of projected electricity sales, categorized by tariff type and slab within the Control Period. This data should be provided separately for each Distribution Franchisee area.
Lastly, Distribution Licensees will also be required to devise a power procurement plan, incorporating sources for the long-term, medium-term, and short-term. This plan must be submitted for Commission approval, commencing from April 1, 2024.
In conclusion, these new regulations proposed by the HPERC aim to bring transparency, accountability, and efficiency to the tariff determination process for distribution licensees in Himachal Pradesh. These changes are designed to ensure that consumers are billed fairly and accurately for their electricity consumption and that the process is more structured and accessible for all stakeholders.
Please view the document below for more details.