Preface

This report on the working of the Commission has been prepared as required under Section 105 of the Act. The Electricity Act 2003 came into force with effect from 9^th of June 2003, consolidating the laws relating to Generation, Transmission, Distribution, Trading and use of electricity and for taking measures conducive to the development of Electricity Industry, promoting competition, providing protection to consumers’ interest, supply of electricity to all, rationalization of electricity tariff, ensuring transparent policy and procedure. It also ended the monopoly of Government sector over the electricity industry. This Act aims to promote investment through private participation and also to provide the consumers with quality power and service. On one side it opens up the door for the private investment by protecting the investment by grant of return on investment, on the other hand it protects the interest of the consumers by ensuring quality power at affordable price with better service and choice of source of power through open access. It is expected that the competition will bring better technology, improved service and above all reduced cost making the electricity cheaper.

Jharkhand State Electricity Regulatory Commission was constituted in line with the provisions of E.R.C. Act 1998 and now the Electricity Act 2003.  In a short time the Commission has tried to bring about the change in the Electricity Industry in Jharkhand. In the State of Jharkhand the potential for generating power is enormous, all the sources of generating power are available in Jharkhand, for the thermal power Jharkhand has (30% of the nation’s coal deposit) mines, the sunshine available for the generation of solar power, and it has pockets of very strong wind force to develop the wind energy.   Jharkhand being a forest covered area it has plants available for the generation of electricity through biomass, and above all it is full of rivers and streams in hilly terrain which can provide run of river hydel projects, obviating the need for expensive dams and displacement of people. Jharkhand has Uranium mines which are the only source for nuclear power in the country. Coal beds in the coal mines have indicated the availability of methane gas, which requires its proper utilization for power generators. The coal belt area has number of coal washeries, where the coal rejects are thrown as a waste.  The technology is already available for generating electricity from coal washery/reject. It only requires more encouragement and this coal waste can be converted from waste to useful input for electricity generation.

The Commission is working to bring about the reforms in the power sector in the State of Jharkhand and in the short time it has received enormous support not only from the Government of Jharkhand and the licensees but also from the people of Jharkhand who are waiting for change in the power sector in Jharkhand to bring about the change for development and betterment in the region.

This is the first report of the Commission on it is working from day of its operation to date, from now on this report will be issued annually. I would like to place on record appreciation for TERI, Commission’s consultant for doing a good work and for Samadhan, Ranchi for designing and maintaining Commission’s website and the computer Kiosk.

                                                                                                                Sd/-
Ranchi                                                                                                    (S.K.F Kujur)
Dated   :  15 AUG 2005                                                                              Chairman

Jharkhand State Electricity Regulatory Commission

            JSERC was constituted by the Government of Jharkhand in August 2002 and was operationalised on 24^th of April 2003 with the Chairman being administered the oath of the office. It functioned as a single man Commission at initial stage..

                The second member of the Commission, Member (Technical) was appointed and joined on 1^st of October ’04 and the third member; Member (Administration and Legal) was appointed and joined on 9^th of February ’05.

                The Commission started functioning in a rented accommodation from June 2003 and its premises was got readied by December 2003.

The Commission:

                The Commission consists of:

Chairman:                Shri S.K.F.Kujur

Member(T):             Shri P.C.Verma.

Member (Legal)        Smt. Shakuntala Sinha

Secretary:                Shri A.K.Mehta.

 Apart from the above the Commission is being assisted by two consultants Shri G.D.Sinha (IT & Energy Audit) and Shri B.N.P.Singh(EE) and other office support staff.

The Government of Jharkhand vide its notification dated 22.08.2002 laid down the function of JSERC as per Section 22 of The Electricity Regulatory Commission Act 1998 :

(a)        to determine the tariff for electricity, wholesale, bulk, grid or retail, as the case may be, in the manner provided in section 29;

(b)        to determine the tariff payable for the use of the transmission facilities in the manner provided in Section 29;

(c)        to regulate power purchase and procurement process of the transmission utilities and distribution utilities including the price at which the power shall be procured from the generating companies, generating stations or from other sources for transmission, sale, distribution and supply in the State;

(d)        to promote competition, efficiency and economy in the activities of the electricity industry to achieve the objects and purposes of this Act.

(2)           Subject to the provisions of Chapter III and without prejudice to the provisions of Sub-section (1), the State Government may, by notification in the Official Gazette, confer any of the following functions upon the State Commission, namely:-

(a)       to regulate the investment approval for generation, transmission, distribution and supply of electricity to the entities operating within the State;

(b)        to aid and advise the State Government, in matters concerning electricity generation, transmission, distribution and supply in the State;

(c)        to regulate the operation of the power system within the State

(d)        to issue licenses for transmission, bulk supply, distribution or supply of electricity and determine the conditions to be included in the licenses;

(e)        to regulate the working of the licensees and other persons authorized or permitted to engage in the electricity industry in the State and to promote their working in an efficient, economical and equitable manner;

(f)         to require licensees to formulate perspective plans and schemes in coordination with others for the promotion of generation, transmission, distribution, supply and utilization of electricity, quality of service and to devise proper power purchase and procurement process.

(g)        to set standards for the electricity industry in the State including standards relating to quality, continuity and reliability of service;

(h)        to promote competitiveness and make avenues for participation of private sector in the electricity industry in the State, and also to ensure a fair deal to the customers;

(i)         to lay down and enforce safety standards;

(j)         to aid and advise the State Government in the formulation of the State power policy;

(k)        to collect and record information concerning the generation, transmission, distribution and utilization of electricity;

 (l)        to collect and publish data and forecasts on the demand for, and use of, electricity in the State and to require the licenses to collect and publish such data;

(m)       to regulate the assets, properties and interest in properties concerning or related to the electricity industry in the State including the conditions governing entry into, and exit from, the electricity industry in the such manner as to safeguard the public interest;

(n)        to adjudicate upon the disputes and differences between the licensees and utilities and to refer the matter for arbitration;

(o)        to co-ordinate with environmental regulatory agencies and to evolve policies and procedures and appropriate environmental regulation of the electricity sector and utilities in the State, and

(p)        to aid and advise the State Government on any other matter referred to the State Commission by such Government;

The advent of Electricity Act saw the Electricity Regulatory Commission Act 1998 being repealed but the functions of the SERCs  were detailed in Section 86 of the Electricity Act 2003 which are as under:

a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State:

Provided that where open access has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers;

(b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State;

(c) facilitate intra-state transmission and wheeling of electricity;

(d) issue licenses to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State;

(e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;

(f) adjudicate upon the disputes between the licensees, and generating companies and to refer any dispute for arbitration;

(g) levy fee for the purposes of this Act;

(h) specify State Grid Code consistent with the Grid Code specified under clause (h) of sub-section (1) of section 79;

(i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees;

(j) fix the trading margin in the intra-State trading of electricity, if considered, necessary; and

(k) discharge such other functions as may be assigned to it under this Act.

 (2) The State Commission shall advise the State Government on all or any of the following matters, namely :-

(i) promotion of competition, efficiency and economy in activities of the electricity industry;

(ii) promotion of investment in electricity industry;

(iii) reorganization and restructuring of electricity industry in the State;

(iv) matters concerning generation, transmission , distribution and trading of electricity or any other matter referred to the State Commission by that Government.

Objectives for the Commission:.

Apart from the functions notified above the Commission is required to notify the regulations as required under Section 181 of Electricity Act, 2003

Finalise Commission’s order on the petitions filed before the Commission within the time frame as laid down in the Act and Regulations..            

(a) Preparation of Regulations:

                The Commission started preparing its Regulations by preparing and notifying the draft regulations through its web-site and press notifications. After getting the comments and suggestions, public hearings were organized and then the regulations were finalized. So far, the following Regulations have been notified by the Commission:

JSERC (Conduct of Business) Regulation 2003,

JSERC (Delegation of Financial Powers) Regulations, 2003.

JSERC (State Advisory Committee) Regulation, 2003.

JSERC (Tariff) Regulation, 2003, replaced by JSERC (Terms and Conditions of Thermal Generation Tariff) Regulations,. 2004,

JSERC (Terms and Conditions for Determination Tariff) Regulations, 2004,

JSERC (Guidelines for setting up of Consumers Grievance Redressal Forum and Electricity Ombudsman) Regulations, 2005. 

JSERC (Open Access in Intra State Transmission & Distribution) Regulations 2005

JSERC (Terms and Condition for Distribution License) Regulation, 2005.

JSERC Electricity Supply Code, 2005.

JSERC (Distribution Licensees’ Standard of Performance) Regulation, 2005.

(b) Transparency in the working of the Commission:

Public Hearings:

                Electricity Act 2003 directs that working of the Commissions should be transparent. Public Hearing has been considered as one of the most appropriate method of transparency. Before any decision is taken by the Commissions, public hearings are organized to get opinions/ suggestions/ objections on the matter. All stake-holders are invited to these hearings. Thus public hearings have a special place in the working of Commissions to maintain transparency, exchange of thought and ideas, involvement of stakeholder including the consumers and openness. In line with this philosophy JSERC had been organizing public hearings at places spread over in the state.

Dissemination of information:

                The Commission makes available information to the public and stakeholders through press, website, and computer kiosk at Commission’s office (through touch screen).  

Licensees

                In the state of Jharkhand, following are the licensees (including deemed licensees):

Distribution: Jharkhand State Electricity Board (with generation), TISCO (with generation), SAIL and DVC in the Damodar Command Area (for supply at 30 kv and above)

Second Licensee: Tata Power (Applied)

Major generators in Jharkhand

Jharkhand State Electricity Board, TVNL, Tata Powers, DVC, Bokaro Ele. Supply Co.

Apart from the above there are number of small generators generally captive in nature.

State Advisory Committee

                The Commission constituted the State Advisory Committee as required under Section 87 of Electricity Act 2003, to advice it. There are twenty one members in the Committee. By end of 15^th of August 2005, four meetings of the Committee were held. State Advisory Committee in its deliberations gave valuable suggestion and advice to the Commission.

Coordination Forum

                 The Government of Jharkhand constituted the Coordination Forum as required under Section 166(4) on Electricity Act 2003. The Chairman of the Commission is the Chairman of the Coordination Forum. Coordination Committee met twice in 2004.

Tariff Setting

(1)           Jharkhand State Electricity Board:

                Jharkhand State Electricity Board filed its ARR and petition for tariff determination for the year 2003-’04 in August 2003. The Board filed revised petition after Commission issued its observations and submitted on 4^th November 2003. Different stakeholders raised several objections. The Board had petitioned for increase in rates for all categories of consumers. Objections were received from 104 persons/ consumers/ stakeholders/ parties. The objections were passed on to the Board for reply but it did not give any reply to any one. The major objections were as grouped under:

(a)                 Inadequate information and inconsistency in tariff filing.

(b)                 Submission of unaudited accounts.

(c)                 Fixed charges proposed as miscellaneous charges.

(d)                 Proposed increase in the tariff:

(e)                 Proposed increase in cost specially employees cost increase by 23.5%.

(f)                  Board’s own generation at a very low PLF.

(g)                 Very low collection efficiency.

(h)                 Minimum Monthly Consumption charge.

(i)                  High T&D Loss.

(j)                  Violation of the provisions of Industrial policy.

(k)                 Proposed tariff with retrospective effect.

(l)                  Subsidy and cross subsidy.

(m)                Un-metered consumption

The Commission held public hearing at Ranchi and Deoghar. There after the Commission issued the tariff order 2003-’04 on 27^th of December 2003 making it effective from 1^st of January 2004.

 
The major changes introduced by the Commission in the approved tariff structure:

(i)         Gradual movement towards the cost of supply based tariff regime.

(ii)        Introduction of optional metered tariff for un-metered for rural consumers in the domestic, agriculture and commercial categories.

(iii)        Merger of CS-II and CS-III consumer categories

(iv)        Merger of LTIS-I and LTIS-II consumer categories

(v)         Change in applicability of LTIS tariff by extending it to 107 HP. Correspondingly, HTS-I tariff made applicable for 107 HP and above.

(vi)        Introduction of load factor rebate and voltage rebate for HT Consumers

(vii)       Introduction of TOD tariff for HTS-I, HTS-II and EHTS consumers.

(viii)      Special tariff for Military Engineer (Defence) Services

(2)               Tenughat Viydut Nigam Ltd (TVNL)

TVNL is a Government of Jharkhand’s undertaking generating electricity. TVNL filed its petition on 31.03.2004 for setting generation tariff for the year 2004-05.  The Commission visited the plant along with its consultants and advisers. Commission asked for some clarification and details in June ’04 which was replied by TVNL in June itself. After getting the comments on the public notice, public hearing was held on 26^th June 2004.

        The Commission issued the Tariff order on 23^rd August 2004. The Commission approved a tariff of Rs. 1.83/unit consisting of Rs.1.05/ unit as fixed charges and Rs.0.78/unit  as variable charges.

Grant of License

        Section 14 of Electricity Act 2003 has laid down that the State Electricity Regulatory Commission may grant license to transmit electricity as transmission licensee or to distribute electricity as distribution licensee and or to undertake trading in electricity as an electricity trader. The companies submitted their application under Section 15 of Electricity Act 2003 for the grant of distribution license:

TISCO

        M\s TISCO was granted permission in 1923 by the then Government of Bihar for distribution of electricity in Jamshedpur township. M\s TISCO applied for the grant of license under Electricity Act 2003. Commission allowed M\s TISCO to continue distributing electricity in the same area pending finalisation of the Regulation and notification of Rule by Government of Jharkhand. 

SAIL

        M\s SAIL was granted permission by the then Government of Bihar to distribute electricity in the area acquired for Bokaro Steel Plant. M\s SAIL applied for the grant of distribution license under Electricity Act 2003. Public hearing was held in Bokaro in which the Commission heard the beneficiaries, consumers and other members of the public. Commission allowed M\s SAIL to continue distributing electricity in the same area pending notification of Rule by Government of Jharkhand. 

Hearing of SAIL’s petition at Bokaro
 

TATA POWER:

     TATA POWERs applied for distribution license for Mango and Adityapur area under proviso 6 of Section 14 of Electricity Act 2003 ( as a second licensee). Hearing was held at Jamshedpur

Licensees

The most important entity in the state is the Jharkhand State Electricity Board. The Board has been granted permission by Central Government to function as State Transmission Utility and a Licensee. The Board had filed ARR for the year 2003-04 in August 2003 (revised in November 2003), ARR and the tariff was revised with effect from 1.1.2004 with a direction to file ARR for the year 2004-05. Despite repeated letters, directions the Board failed to file ARR for subsequent period.

M/s TISCO had finalised and notified its tariff just before the Commission became operational. M/s TISCO filed its petition for ARR and tariff revision in  June 2005 and revised its petition in August 2005.

M/s SAIL has yet to file its ARR for Commission’s approval.

M/s DVC had been fixing the tariff on its own as per the provisions of DVC Act 1948. The tariff setting by DVC was challenged by the Board to which the Commission directed DVC to get their generation tariff fixed by CERC and thereafter its distribution tariff by JSERC for its area in Jharkhand. This decision, having been upheld by CERC and Government of India, DVC has filed its petition for ARR approval and tariff fixation before CERC.

M/s TATA Powers in Jamshedpur is generating and supplying electricity to TISCO (Distribution Licensee), the Commission has asked M/s TATA Powers to file its petition for getting the generation tariff determined by the Commission as per Section 62 (1) (a).

 Activities of the Commission in brief

Framing of Regulations: 11 Regulations were notified by the Commission.  

ARR filed:                        Two.

Tariff notified:                  Two

Public Hearing organised: Thirteen

Hearing on petitions:          Thirty one

            Study under taken by the Commission:

In the city of Jamshedpur in Jharkhand, TISCO is a Distribution Licensee since 1923. The Commission noticed that in the area of the distribution of TISCO there were five pockets, where the electricity was being supplied by the Electricity Board. The collection of revenue on account of electricity   was very poor and the consumers were complaining about the poor quality of supply and services. In the year 2002 the State Government decided to hand over these areas to TISCO and after this area was taken over by the TISCO, the supply position and the revenue collection improved appreciably. The Commission ask M/s TERI to under taken study as to how did the change take place and what lesson can be drawn from this. The Commission published the report in November 2004.

Important decisions of the Commission

Damodar Valley Corporation operating under DVC Act 1948 BUT JSERC has the jurisdiction to determine the distribution tariff under the provisions of Electricity Act 2003 and its generation tariff has to be got determined by CERC.

Orders/Regulations of the Commission challenged in Court

Accounts

( As certified by CA)

The Commission prepares its budget and forward the same to the Government of Jharkhand. The State Government approve the fund for the Commission and same is received by the Commission by bank draft. The accounts of the Commission were first audited by internal auditors and there after the same were offered for accounts audit by C&AG as required under the Act. The accounts of the Commission for two years are as under:

RECEIPT & PAYMENT ACCOUNT FOR THE YEAR ENDING 31.03.2004.

RECEIPT & PAYMENT ACCOUNT FOR THE YEAR ENDED 31.03.2005

MEETING OF FORUM OF INDIAN REGULATORS at RANCHI
 

            The Forum of Indian Regulators known as FOIR consisting of all the regulators in India in power sector met for its the 16th General Body at Ranchi as General Body meeting-cum-work-shop. The meeting was hosted by the Jharkhand State Electricity Regulatory Commission and the co-host was Indian Institute of Coal Management, Ranchi. The meeting was held on 2nd and 3rd of December 2004.

The inaugural function was chaired by His Excellency Shri Ved Prakash Marwah, the Governor of Jharkhand. Shri A.K. Basu, the Honorary Acting Chairman of Forum (The Chairman of CERC) welcomed the Hon’ble Governor of Jharkahnd Shri Ved Prakash Marwah, all the participants of FOIR and invited guests. In his welcome address, Shri Basu stressed the need for expediting development activities in the newly created State of Jharkhand to fulfill the hopes and aspirations of the people of the State. Shri Basu stated that institution of Regulatory Commissions in the Power Sector is only a few years old. During these few years, Regulatory Commissions have played a key role in reforming the power sector. Central Commission and many State Commissions have issued landmark orders during the last few years. With the enactment of the Electricity Act 2003, the roles and responsibilities of Regulatory Commissions have been expanded. He stated that transparency, openness and impartiality in the functioning of Regulatory Commissions were its strengths and it must achieve objectives set by the Electricity Act, 2003.

After the address by the Chief Guest there was a presentation on behalf of JSERC on “National Power Scenario, Jharkhand - the Rising Sun”. In the presentation the development that was taking place in Jharkhand in the Power Sector was presented, the present scenario and the programs for the reforms were also depicted. After the presentation Shri S.K.F.Kujur, Chairman JSERC, gave the vote of thanks to the Hon’ble Governor of Jharkhand and all the Members of FOIR.

After the inaugural function the Members of the FOIR started to discuss item listed out in the agenda. The Members of the FOIR elected Shri A.K.Basu, as Honorary Chairman, Shri S.S Gupta, as Honorary Senior Vice Chairman ,Shri D.C.Shaoo, as Honorary Vice Chairman in place retiring officials.

Shri K. Sreerama Murthy, Member, APERC made a presentation on manner of computing surcharge and additional surcharge. Shri A. K. Basu pointed out that there was a need to have some uniformity in computation of surcharge across the States so that coordinated development of the sector can be ensured. After threadbare discussions, a group of seven members was constituted for the purpose of recommending methodology for computation of Surcharge and Additional Surcharge.

            The issue of fixation of tariff for traded power came up for discussion. Most of the SERC’s informed the house that while approving ARR for the SEBs/Licencees, a provision of ceiling rate at which power could be purchased for short term is made by SERC’s. All long term purchases either from generator or trader are anyway under the regulatory jurisdiction.

Forum discussed the guidelines circulated by Comptroller & Auditor General of India entitled “Guidelines on performance audit of regulatory bodies”. Members were of the opinion that these guidelines were inconsistent with the provisions of the Electricity Act 2003, and encroached upon quasi-judicial nature of regulatory jurisdiction. A Committee was constituted to discuss the CAG guidelines on performance audit of regulatory bodies.

The issue of the report of the TERI on compilation and analysis of electricity tariff came up for discussion. Mr. Vivek Sharma of TERI informed that he had sent a copy of the report to all Regulatory Commission for their comments. No comments have been received by him. It was decided that all Commissions may send their comments, if any, in three weeks time.

There after Shri S. D. Ukkali, Member, KERC made a comprehensive presentation on Prepaid Metering. Presentation covered various technical issues related to metering and benefit of prepaid meters to consumers and utilities. Presentation was appreciated by all Members.

Dr. Pramod Deo, Member, MERC made a presentation on Cross Subsidies & Agricultural Tariffs. The presentation highlighted the issues pertaining to agricultural supply and their possible solutions.

Proposal for sponsoring research and training by FOIR came up for discussion. Shri K. N. Sinha urged the house to constitute a group to go in to the details and suggest the areas/subjects. Accordingly, a group was constituted to go into the details and suggest the areas/subjects for research.

The Indian Institute of Coal Management made a presentation on the role of coal industry in power. The presentation stressed the exploitation of coal bed methane for power production. It further said that 2300 MWE power could be generated if methane was used. It also suggested use of coal waste in power production.

It was decided that the next meeting of the FOIR would be held at Lucknow, which would be hosted by the UPSERC, as agreed by the Chairman, UPSERC. The meeting ended with a vote of thanks to the Chair.

During the stay at Ranchi, the members of FOIR visited Dasham Falls and the Sun Temple on Tata Road. A few members visited Open Cast coal mine, a coal washery and a power plant using the rejects  from the washery at Rajrappa.

Training/ Participation in Workshop/conferences/meetings 

The Chairman, Members and other officers of the Commission had been attending Seminars/ workshops/conferences/ Training programs organized by Forum of India Regulators, Confederation of India Industries, Independent Power Producers Association of India, The Energy and Resources Institute, National Thermal Power Corp., Power Grid Corp. of India Ltd, Administrative Staff College of India, SARI-USAID, South Asia Forum for Infrastructure Regulation etc. Shri P.C.Verma, Member (T) attended the core training program organized by SAFIR in Pakistan in October 2004.