Retail tariffs for electricity consumers in Maharashtra: a forward looking assessment

The four components of an electricity bill and the factors that influence them are as follows: Power procurement costs: The cost to generate power is driven by the overall mix of generation, the cost of fuel for each generation source, the efficiency of these generators, and the capital and operational costs of each generator. The cost of integration of renewable energy has been considered as part of the power purchase costs in this analysis. These costs are taken from CEEW’s long-term (mid-century) projections for India based on the results of energy modelling (CEEW, 2017). In addition, this component also accounts for (technical) losses incurred in transmission and distribution. Transmission charges: The cost to transport high-voltage power from the generators over inter-state and intra-state lines to the DISCOM infrastructure. This is driven by the cost of building and maintaining these lines as India’s need for electricity grows. Distribution charges: The cost to distribute and transform, from higher to lower voltages, the power from transmission lines to individual customers. This is driven by the cost to build and maintain the infrastructure to deliver power and to comply with the Renewable Power Purchase Obligations for each state. Cross-subsidy charges: The cost for commercial and industrial customers to offset the total delivered cost of electricity to domestic customers. This is driven by political considerations and dynamics in each state. This report examines each of these factors in detail.