Section 10 in Jammu and Kashmir State Electricity Regulatory Commission (Mini Grid Renewable Energy Generation and Supply) Regulations, 2016
10. Types of Tariff and Revenues.
- The Jammu and Kashmir Electricity Act, 2010 exempts MGO from mandatory licensing requirement for generation and distribution of electricity in a rural area to be notified by the Government.10.1Costs, Revenues and Pricing Mechanism.-The cost structure of Mini -Grid Project and tariff has to be market driven and is to be mutually agreed by the Consumer and Mini Grid Operator. It will have the following elements :-(a)Fixed costs include cost of project development, generation plant, storage systems (batteries), inverters, distribution network, cost of availing debt including interest charges, fixed taxes and fees. Further fixed cost may also include management cost, overhead and transaction costs.(b)Variable costs is the running charges for operation, maintenance and management as under-(i)Operating cost include charges for operating the plant, billing and collecting money from consumers, maintenance and cleaning, guarding the plant, fixed technical losses like self consumption of inverters, storage devices, and losses in transformers etc ;(ii)Customer relationship costs are allocated to resolve customer grievances etc.10.2Revenue Sources.-Long term sustainable operation will require that the Mini-Grid Projects recover fixed and variable costs and the Mini-Grid Operators are able to earn a reasonable return on investment. The possible revenue resources for mini grids are fee for connections, sale of electricity, and through grants/subsidies if applicable. As most communities in rural areas are very sensitive to price strategies for ensuring affordability of the service, certain possible strategies are given below :-(a)Aligning Demand with Supply : Accurately assess demand of varied type of consumers and match it with supply efficiently. This will help lower the tariffs, stabilize the revenue flow and ensure project viability.(b)Setting Tariff for Sale of Electricity : Tariff should maintain a balance between financial viability and rural household's ability and willingness to pay. Two categories are-(i)Energy tariffs or pay-as-you-go model depends on actual energy consumed and works with a pre-payment or post payment mechanism provides an accurate record of energy consumption with flexibility on use depending on their income, usage with time of consumption but main concern is additional cost of meters and operational costs of meter reading, billing etc. which would need to be considered ;(ii)Power or fixed tariff depends on the anticipated power use on watt basis by offering certain fixed number of lights, a mobile charging point, a fan, TV etc. consumption being regulated through timer, load limiter etc. with fixed tariff package to be collected at regular intervals.(c)Charges for Connection : To recover cost of providing the connection and induce commitment from consumers but should be made affordable by reducing the upfront and allowing balance through installments.(d)Grants and Subsidies : Grants and subsidy support as may be approved by Central/State Government have bearings on affordability and scalability of the projects. The benefits of such subsidies shall be passed on to the consumers through affordable tariff.10.3Determination of Feed in Tariff for MGOs.-The tariff determined by the Commission for renewable energy generating plants through the JKSERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2013 and amendments thereof, shall be the upper limit for procurement of green power by the Distribution Licensee from the MGOs.10.4Power Purchase Agreement.-The Distribution Licensee shall enter into the Power Purchase Agreement (PPA) with the Mini Grid Operator one month from receipt of notice, for purchase of electricity from the Mini Grid Renewable Energy System (MRES).
