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  • Bulk Supply Tariff

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    shroffhardik
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    Differential Bulk Supply tariff (DBST) refers to a model of electricity supply known as Single Buyer Model. Bulk supplier differentiates between the buyers or distribution utilities and levies differential Bulk Supply tariff on them. The differentiation is mainly on account of varied sales and consumer mix, i.e., the buyer / distribution utility with less revenue generating consumer mix would be charged the lower Bulk Supply tariff.

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    Differential Bulk Supply tariff (DBST) refers to a model of electricity supply known as Single Buyer Model. Bulk supplier differentiates between the buyers or distribution utilities and levies differential Bulk Supply tariff on them. The differentiation is mainly on account of varied sales and consumer mix, i.e., the buyer / distribution utility with less revenue generating consumer mix would be charged the lower Bulk Supply tariff.

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    339 views2 pages

    Bulk Supply Tariff

    Uploaded by

    shroffhardik
    Differential Bulk Supply tariff (DBST) refers to a model of electricity supply known as Single Buyer Model. Bulk supplier differentiates between the buyers or distribution utilities and levies differential Bulk Supply tariff on them. The differentiation is mainly on account of varied sales and consumer mix, i.e., the buyer / distribution utility with less revenue generating consumer mix would be charged the lower Bulk Supply tariff.

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    Differential Bulk Supply Tariff

    Differential Bulk Supply tariff (DBST) refers to a model of electricity supply known as Single Buyer Model where in there exists one buyer or company which buys electricity from different generators as per the power purchase agreement. The buyer then allocates the electricity among different distribution utilities. The bulk supplier can charge Uniform Bulk Supply Tariffs or Differential Bulk Tariff (DBST) from the utilities but the reason for its existence is mainly because the bulk supplier differentiates between the buyers or distribution utilities and levies differential bulk supply tariff on them. The differentiation is mainly on account of varied sales and consumer mix, i.e., the buyer/ distribution utility with less revenue generating consumer mix would be charged the lower bulk supply tariff as compared to the DBST charged to the buyer having favorable consumer mix. The Commission agreed with the prayer of the DISCOMs for adoption ofDifferential Bulk Supply (BST) Mechanism for a uniform structure ofretail supply tariffs in the four DISCOMs. BST ensures that consumers insimilar categories in the State of Gujarat have similar tariff and there maynot be any discrimination among the consumers. While deciding BST rates for various DISCOMs the Commission took care that the BulkSupply Tariff reflects efficiency of the DISCOMs Historically, the Revenues and cost of supply are different in each of the DISCOMs areas. The revenue is depending upon the consumer profile of the DISCOM apart from variance in consumption pattern, quality of supply etc. The Cost of supply is different because of differences in network pattern, asset profile, employees strength, O & M practices, varying loss levels etc., apart from differences in the power purchase rate which has now arisen.

    Power purchase agreements have been assigned to distribution companies. In that State, a differential retail tariff is being considered across various distribution companies on account of factors such as the percentage of agricultural and rural consumers requiring subsidies, transmission losses, age of power stations and type of fuel used. On the flip side, some electricity supply companies might have to steeply raise their tariffs and that is likely to invite protests from consumers. There may also be a sense of discrimination among power consumers in different regions within the State. If the tariff is to be reduced, the Government will have to provide more subsidies.

    If the differential bulk supply tariff is not charged, then in the event of profit being earned by any of the DISCOMs in future, it would not be possible to withdraw/ transfer such profits to loss making companies and therefore, differential higher bulk supply tariff could be charged to such companies.

    Merits DBST takes care, via power purchase allocation, of different load profiles of the distribution companies so that retail tariffs are uniform in the state for different categories of consumers. National tariff policy section 8.4 specifies the same. DBST enables implementation of Uniform Retail Tariff without any subsidy or government intervention in the sector. Demerits DBST impacts allocative efficiency, i.e., it distorts investment decisions. If the licensee realizes that its efficiency would not be rewarded and indeed it would be penalized by way of costly power purchase rate, the licensee would not have any incentive to undertake efficiency enhancing investment. Creating and maintaining differential power purchase costs for licensees would not create a level playing field between the different licensees, which may be essential in an environment where there is consumer choice and therefore competition. Level playing field is essential when the licensees may have to compete in the open access market with each other.

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