Bangalore Elecrticty Supply Company New Proposals

BANGALORE ELECRTICTY SUPPLY COMPANY NEW PROPOSALS

CHAPTER – 8

New Proposals

1. Restructuring of tariff:

Introduction

It is pertinent to say that the approved revenue receipts are not being achieved with the existing tariff structure. The primary reason for the latter loss is that BESCOM is unable to meet the approved level of sales and also the approved sales mix. It is inappropriate to propose tariff hike to cover such losses. Therefore we agree that the existing electricity tariff structure should be amended.

1. Telescopic tariff - Domestic Sector

The electricity bill of poor and middle class consumers (consumption between 50 - 100 units) who consume less pay more rate than affluent consumers who consume an excessive quantity of electricity. This is revealed in the paras below.

The existing tariff structure fetches an average rate of Rs.4.71 per unit from the domestic consumers as against the actual average cost of supply of Rs.5.64 per unit.

BESCOM is proposing a new tariff structure which will fatten the purse of the rich and at the same time protects the pocket of the poor.

The new tariff structure is to encourage the consumers to conserve energy so that it is possible to reduce the generation of the power. The electricity tariff should be formulated in such a way that the rich should fill the increase in the electricity cost. This can be done by applying an aggressive tariff increase to the higher electricity consuming consumers. This will encourage either for them to conserve energy or to switch to solar power plant. The present tariff structure demands cross subsidization to domestic consumers from other categories and BESCOM sees no strategy by the Commission in making the elite among this category of consumers paying at the cost of supply. With this burden of cross subsidy the other cross subsidizing consumers are leaving the grid. BESCOM sees no gain in carrying forward the business suffering losses. BESCOM has come to this conclusion as it is unable to supply energy to this category of consumers at the approved tariff structure.

According to the new proposal, there is no need to increase the electricity charges of the consumers who consume below 50 units per month. This group constitutes 34% of the domestic sector. Further, the consumers consuming above 50 units below 150units (43%) are also not heavily burdened. All that is needed is to make a slight change in the fixed charges within this category. It is proposed to charge the actual cost from affluent consumers who waste electricity for luxury activities.

Even if BESCOM plans to meet the energy requirement of the domestic consumers through hydel sources it is unable to do so as the consumers consuming higher energy are creeping the benefit of it than the poor. BESCOM has a noble intention of supplying the poorer consumers with hydel cost at Rs1.65/unit for life line consumption. At the same time the consumers with higher consumption must be allowed to charge appropriately.

Therefore an effort is being made through this new proposal to reduce the cross subsidy that is being charged to affluent consumers at the expense of the other consumers. It is further expected that with this increase in tariff the affluent customers would opt for self-generation.

DATA:

The details of domestic consumers covered under Restructured- Accelerated Power Development Reforms Program (R-APDRP) for the month of Septemer’2015 are obtained. Details are as under:

Table No: 8.3

Sub division wise Consumer pattern
Sub-Dvn / Consu b/w
0-30 / Consu b/w
0-50 / Consu b/w
0-100 / Consu b/w
0-150 / Consu b/w
0-200 / Consu b/w
0-300 / Consu b/w
0-400 / Consu b/w
0-500 / Consu b/w
0-above 500
e1 / 14559 / 21530 / 39419 / 52588 / 60279 / 67196 / 69398 / 70259 / 71438
e2 / 5118 / 7228 / 13256 / 18807 / 22559 / 25870 / 26888 / 27316 / 27861
e3 / 2608 / 4072 / 8212 / 11950 / 14473 / 16982 / 18027 / 18499 / 19201
e4 / 3068 / 4674 / 9194 / 13224 / 15921 / 18523 / 19658 / 20142 / 20857
e5 / 11926 / 17587 / 32505 / 43939 / 50712 / 56646 / 58313 / 58850 / 59426
e6 / 3329 / 5576 / 11716 / 11869 / 20263 / 23609 / 24789 / 25300 / 26038
e8 / 20160 / 28683 / 49803 / 66335 / 76344 / 84376 / 86354 / 87097 / 88108
Anekal / 4639 / 7100 / 10876 / 12443 / 12963 / 13247 / 13319 / 13349 / 13383
Banagarapete / 3648 / 5655 / 9566 / 11389 / 12079 / 12412 / 12503 / 12531 / 12556
C1 / 14589 / 23217 / 42377 / 54396 / 60701 / 65321 / 66462 / 66795 / 67082
C2 / 9548 / 14272 / 25085 / 33522 / 39595 / 45792 / 47991 / 48819 / 49984
C3 / 14870 / 22981 / 40573 / 50757 / 55676 / 58993 / 59745 / 59962 / 60206
C4 / 21178 / 32593 / 59625 / 78649 / 89768 / 98853 / 101481 / 102402 / 103686
C5 / 16066 / 25184 / 48534 / 64078 / 71901 / 77113 / 78234 / 78581 / 78942
C6 / 12196 / 19593 / 36460 / 46918 / 52340 / 56248 / 57223 / 57560 / 57957
C7 / 20627 / 30205 / 49951 / 61238 / 66762 / 70598 / 71528 / 71826 / 72347
C8 / 22891 / 33111 / 55262 / 70138 / 78555 / 84880 / 86439 / 86935 / 87666
Challakere / 3346 / 6042 / 10599 / 12213 / 12733 / 13001 / 13056 / 13071 / 13091
Chanappattana / 6834 / 10823 / 17274 / 19799 / 20671 / 21051 / 21126 / 21156 / 21182
S1 / 10209 / 15534 / 28813 / 39754 / 47612 / 55241 / 57706 / 58650 / 59669
s2 / 9628 / 15024 / 28173 / 38021 / 44063 / 49781 / 51770 / 52603 / 53584
s3 / 12257 / 19780 / 39907 / 55360 / 63854 / 70753 / 72474 / 73030 / 73711
s4 / 15936 / 25395 / 51077 / 70479 / 81602 / 90614 / 93146 / 94075 / 95392
s5 / 24308 / 37087 / 66458 / 87519 / 100079 / 109652 / 111696 / 112292 / 113004
s6 / 24639 / 38019 / 71002 / 97876 / 115385 / 131038 / 135455 / 136871 / 138530
s7 / 7800 / 12347 / 25070 / 35194 / 40968 / 44917 / 45785 / 46030 / 46463
s8 / 10699 / 17740 / 30266 / 35972 / 38431 / 39867 / 40182 / 40289 / 40502
s9 / 21388 / 32990 / 59520 / 79037 / 90734 / 100239 / 102706 / 103465 / 104174
s10 / 26807 / 38757 / 63825 / 81435 / 92365 / 100954 / 102925 / 103511 / 104574
s11 / 7227 / 11024 / 20266 / 27532 / 31990 / 35745 / 36754 / 37092 / 37515
s12 / 18906 / 26826 / 42678 / 52782 / 58957 / 64108 / 65411 / 65820 / 66400
n1 / 7208 / 11252 / 21046 / 28007 / 32123 / 35329 / 36075 / 36304 / 36511
n2 / 14130 / 21478 / 39007 / 52395 / 60828 / 67866 / 69617 / 70221 / 70768
n3 / 16858 / 27283 / 47778 / 60049 / 66736 / 71694 / 72889 / 73262 / 73581
n4 / 35686 / 58088 / 86480 / 94949 / 97702 / 99106 / 99361 / 99554 / 99533
n6 / 19722 / 32624 / 51381 / 57186 / 58934 / 59686 / 59824 / 59864 / 59898
n7 / 22160 / 36057 / 60831 / 73035 / 78693 / 82683 / 83628 / 83893 / 84165
w1 / 15658 / 24556 / 45797 / 61484 / 70866 / 78025 / 79711 / 80184 / 80553
w2 / 6096 / 8982 / 16105 / 22325 / 26834 / 31627 / 33306 / 33988 / 34792
w3 / 20480 / 33867 / 60987 / 74895 / 80825 / 84446 / 85217 / 85457 / 85676
w4 / 3981 / 5594 / 9446 / 12525 / 14683 / 16847 / 17730 / 18139 / 18824
w5 / 3020 / 4401 / 7765 / 10318 / 12009 / 13548 / 14068 / 14253 / 14432
w6 / 14399 / 24308 / 43196 / 52445 / 56188 / 58305 / 58692 / 58804 / 58895
w7 / 7391 / 10615 / 18206 / 23971 / 27656 / 30488 / 31157 / 31340 / 31644
k1 / 26433 / 37921 / 59377 / 70662 / 75506 / 78424 / 79038 / 79233 / 79534
k3 / 6263 / 8974 / 13245 / 14767 / 15269 / 15520 / 15599 / 15625 / 15690
Anekal / 4639 / 7100 / 10876 / 12443 / 12963 / 13247 / 13319 / 13349 / 13383
Banagarapete / 3648 / 5655 / 9566 / 11389 / 12079 / 12412 / 12503 / 12531 / 12556
C1 / 14589 / 23217 / 42377 / 54396 / 60701 / 65321 / 66462 / 66795 / 67082
C2 / 9548 / 14272 / 25085 / 33522 / 39595 / 45792 / 47991 / 48819 / 49984
C3 / 14870 / 22981 / 40573 / 50757 / 55676 / 58993 / 59745 / 59962 / 60206
C4 / 21178 / 32593 / 59625 / 78649 / 89768 / 98853 / 101481 / 102402 / 103686
C5 / 16066 / 25184 / 48534 / 64078 / 71901 / 77113 / 78234 / 78581 / 78942
C6 / 12196 / 19593 / 36460 / 46918 / 52340 / 56248 / 57223 / 57560 / 57957
C7 / 20627 / 30205 / 49951 / 61238 / 66762 / 70598 / 71528 / 71826 / 72347
C8 / 22891 / 33111 / 55262 / 70138 / 78555 / 84880 / 86439 / 86935 / 87666
Challakere / 3346 / 6042 / 10599 / 12213 / 12733 / 13001 / 13056 / 13071 / 13091
Chanappattana / 6834 / 10823 / 17274 / 19799 / 20671 / 21051 / 21126 / 21156 / 21182
Chikkaballapura / 6086 / 9272 / 14494 / 16794 / 17584 / 18030 / 18168 / 18213 / 18273
Chithamani / 7172 / 11022 / 16636 / 18791 / 19564 / 19942 / 20021 / 20045 / 20074
Chithradurga / 9961 / 16948 / 28343 / 32587 / 33924 / 34620 / 34793 / 34851 / 34916
Davanagere -2 / 10940 / 21278 / 35781 / 39935 / 41207 / 41875 / 42011 / 42068 / 42121
Davanagere -1 / 18417 / 31614 / 54225 / 64942 / 69266 / 71746 / 72369 / 72573 / 72855
Doddaballapura / 10822 / 16605 / 24209 / 26634 / 27443 / 27883 / 27982 / 28014 / 28060
E9 / 24762 / 34767 / 58371 / 74051 / 82272 / 88069 / 89537 / 89974 / 90701
E10 / 14074 / 21874 / 40618 / 53870 / 61465 / 67145 / 68564 / 68984 / 69654
Gowribidnanur / 3423 / 5480 / 8726 / 10008 / 10437 / 10640 / 10691 / 10704 / 10721
Harappanahalli / 3193 / 5578 / 8840 / 9889 / 10278 / 10461 / 10491 / 10501 / 10523
Harihara / 5644 / 10150 / 17399 / 20013 / 20808 / 21188 / 21260 / 21291 / 21315
Hiriyuru / 4526 / 7462 / 12261 / 13831 / 14315 / 14502 / 14543 / 14551 / 14570
Hosakote / 5795 / 9027 / 15195 / 18057 / 19083 / 19620 / 19742 / 19765 / 19800
K2 / 32519 / 49708 / 74173 / 82556 / 85496 / 86959 / 87269 / 87342 / 87464
Kanakkapura / 4383 / 7003 / 11252 / 12937 / 13484 / 13780 / 13863 / 13888 / 13915
KGF / 12065 / 17251 / 26862 / 31490 / 33197 / 33947 / 34094 / 34136 / 34201
Kolar / 10164 / 16023 / 26179 / 30751 / 32517 / 33475 / 33672 / 33734 / 33817
Kunigal / 3601 / 5596 / 7981 / 8702 / 8904 / 9016 / 9043 / 9052 / 9081
N8 / 25634 / 39377 / 65913 / 81398 / 89025 / 93972 / 95035 / 95363 / 95709
Ramanagara / 7355 / 12080 / 20335 / 23600 / 24860 / 25494 / 25618 / 25673 / 25736
Shiddhagatta / 3989 / 6016 / 9254 / 10540 / 11020 / 11248 / 11309 / 11328 / 11353
Sira / 4455 / 7662 / 12407 / 13862 / 14298 / 14511 / 14562 / 14573 / 14586
Tiptur / 6607 / 10480 / 15702 / 17164 / 17572 / 17828 / 17889 / 17914 / 17940
Tumkur -1 / 13690 / 21268 / 32573 / 36690 / 38147 / 38834 / 38976 / 39033 / 39120
Tumkur -2 / 13387 / 21461 / 36226 / 42599 / 44804 / 45905 / 46115 / 46192 / 46300
Tumkur -3 / 4119 / 6218 / 9336 / 10328 / 10603 / 10706 / 10729 / 10738 / 10745
S7 (1-10) / 14533 / 22723 / 46877 / 67348 / 80399 / 91421 / 94186 / 95128 / 96757
S8 (1-10) / 25560 / 40906 / 71264 / 87415 / 95329 / 100464 / 101622 / 101962 / 102713
S11 (1-10) / 18149 / 27277 / 48500 / 64358 / 74551 / 83651 / 86242 / 87019 / 88548
cumulative count / 1095946 / 1699551 / 2934103 / 3680906 / 4090783 / 4401655 / 4483959 / 4511895 / 4548675
Individual count / 1095946 / 603605 / 1234552 / 746803 / 409877 / 310872 / 82304 / 27936 / 36780

Below table depicts the consumption pattern for the month of Sep’2015

Table No: 8.4

Sub division wise Consumption pattern
Sub-Dvn / Consu b/w
0-30 / Consu b/w
0-50 / Consu b/w
0-100 / Consu b/w
0-150 / Consu b/w
0-200 / Consu b/w
0-300 / Consu b/w
0-400 / Consu b/w
0-500 / Consu b/w
0-above 500
e1 / 154402 / 437108 / 1783248 / 3409465 / 4738700 / 6406124 / 7156583 / 7538583 / 8564647
e2 / 48233.3 / 134420.3 / 592556 / 1281605.3 / 1932081.3 / 2729900.3 / 3077295.3 / 3267638.3 / 480748.8
e3 / 33998 / 93510 / 406911 / 871012 / 1308348 / 1915302 / 2274358 / 2484923 / 3100066
e4 / 37382 / 102638.56 / 445106.06 / 945702.06 / 1412920.06 / 2053778.06 / 2427058.06 / 2642382.06 / 3275950.1
e5 / 136063 / 366536 / 1485384 / 2901098 / 4073330 / 5499414 / 6064906 / 6301634 / 6783595
e6 / 46841 / 138357 / 601066 / 1238849 / 1828261 / 2638200 / 3042512.9 / 3269162.9 / 3986818.4
e8 / 212530 / 557852 / 2143711 / 4186877 / 4399407 / 6318467 / 6990934 / 7322371 / 8346414
Anekal / 54606 / 153571 / 425683 / 615018 / 704313 / 770897 / 795501 / 808692 / 849559.9
Banagarapete / 39276 / 120973 / 409456 / 631412 / 745462 / 828874 / 860587 / 873085 / 891319.7
C1 / 186437 / 536585 / 1957390 / 3432981 / 4521135 / 5624026 / 6010726 / 6157477 / 6493308
C2 / 108720.39 / 300310.69 / 1111820.67 / 2161283.67 / 3216306.67 / 4714419.27 / 5465634.27 / 5833253.27 / 6909857.1
C3 / 174647 / 503945 / 1807284 / 3056284 / 3904744 / 4695665 / 4951433 / 5048203 / 5382625
C4 / 252166 / 715090 / 2729342 / 5081521 / 7005980 / 9181823 / 10078235 / 10486866 / 11858712
C5 / 189788 / 562237 / 2308937 / 4222065 / 5570683 / 6810847 / 7190266 / 7343767 / 7637716.5
C6 / 156706 / 457766 / 1709154 / 2993418 / 3928441 / 4862760 / 5195573 / 5345372 / 5675345.4
C7 / 215860 / 602533 / 2059202 / 3443282 / 4397498 / 5312559.5 / 5628877.5 / 5761233.5 / 6701629.3
C8 / 243854 / 658017 / 2306814 / 4141018 / 5595300 / 7104155 / 7633426 / 7853731 / 8684341
Challakere / 43909 / 152734 / 480842 / 675693 / 764434 / 827989 / 846280 / 852943 / 868603
Chanappattana / 91110.5 / 252336.5 / 720059.5 / 1027026.5 / 1176790.5 / 1265757.5 / 1290955.5 / 1304548.5 / 1334883.5
S1 / 118703 / 335426 / 1332647 / 2691441 / 4055991 / 5902867 / 6744756 / 7162624 / 8066782.2
s2 / 109413.5 / 328343.5 / 1311393.5 / 2530042.5 / 3577798.5 / 4960106.5 / 5640026.5 / 6008862.5 / 6897753.5
s3 / 144547 / 450876 / 1968220 / 3878315 / 5347386 / 6996159 / 7581338.18 / 7826237.18 / 8552243.2
s4 / 192742 / 577304 / 2517279 / 4911986 / 6836739 / 9000212 / 9861743 / 10272235 / 11640259
s5 / 283856 / 802900.8 / 2994399.2 / 5605241 / 7778454.8 / 10062267.3 / 10754551.2 / 11018116.1 / 11953637
s6 / 295476 / 837691 / 3319476 / 6650768 / 9686685 / 13449081 / 14949671 / 15576633 / 17421670
s7 / 82808 / 268233 / 1227136 / 2477587 / 3477097 / 4413352 / 4708857 / 4818151 / 5326574
s8 / 137343 / 422446 / 1334023 / 2028583 / 2451356 / 2790262 / 2896518 / 2944462 / 3173844
s9 / 269904 / 739344 / 2720617 / 5135459 / 7158722 / 9435967 / 10275316 / 10611445 / 11249862
s10 / 269428.9 / 754155.3 / 2613713.5 / 4790472.1 / 6683555.9 / 8737417.8 / 9405200.9 / 9663880.1 / 11580264
s11 / 77923 / 232427 / 927193.6 / 1827550.6 / 2600120.6 / 3501914.6 / 3846515.6 / 3997130.6 / 4400922.6
s12 / 182023 / 501697 / 1674523 / 2921009 / 3989624 / 5223774 / 5666782 / 5847131 / 6848420
n1 / 91840 / 255708 / 989305 / 1849140 / 2559435 / 3326052 / 3578790 / 3680128 / 3851851
n2 / 176024 / 473858 / 1786126 / 3445400 / 4906159 / 6595879 / 7192084 / 7460467 / 7886413
n3 / 236008 / 656762 / 2169837 / 3679243 / 4835101 / 6019614 / 6422563 / 6586501 / 6834385
n4 / 529239 / 1426255 / 3434482 / 4456313 / 4927223 / 5258320 / 5344386 / 5380358 / 5567897
n6 / 294686 / 812932 / 2144781 / 2845047 / 3143379 / 3320016 / 3366986 / 3384756 / 3412138
n7 / 312133 / 872636 / 2680713 / 4177653 / 5153458 / 6106439 / 6427487 / 6543403 / 6795537
w1 / 202556 / 562831 / 2147391 / 4090291 / 5714805 / 7428240 / 8001047 / 8209716 / 8493658.8
w2 / 64933 / 182233 / 716896 / 1490328 / 2273289 / 3434418 / 4009605 / 4313398 / 4970424
w3 / 275379.3 / 818256.2 / 2810986.7 / 4511424.9 / 5530812.3 / 6391543.4 / 6654210.5 / 6760050.4 / 7120693.8
w4 / 37714.4 / 102848.8 / 392081.2 / 775213.6 / 1150291.9 / 1673485.3 / 1974603.7 / 2156543.5 / 2945322.1
w5 / 31647 / 87605 / 339674 / 656846 / 950105 / 1322265.56 / 1499601.56 / 1582229.56 / 1766916.6
w6 / 204664.1 / 605211.1 / 1985204.1 / 3110992.1 / 3752905.1 / 4253904.1 / 4385553.1 / 4435316.1 / 4534891.1
w7 / 78354 / 209059 / 778880 / 1493127 / 2131102 / 2808649 / 3036182 / 3117724 / 3417088
k1 / 275074 / 739843 / 2311673 / 3690069 / 4524353 / 5212311 / 5420624 / 5506478 / 5867276
k3 / 63518 / 172928 / 480519 / 663946 / 749622 / 808683.6 / 835427.6 / 847128.6 / 950611.6
Anekal / 54606 / 153571 / 425683 / 615018 / 704313 / 770897 / 795501 / 808692 / 849559.9
Banagarapete / 39276 / 120973 / 409456 / 631412 / 745462 / 828874 / 860587 / 873085 / 891319.7
C1 / 186437 / 536585 / 1957390 / 3432981 / 4521135 / 5624026 / 6010726 / 6157477 / 6493308
C2 / 108720.39 / 300310.69 / 1111820.67 / 2161283.67 / 3216306.67 / 4714419.27 / 5465634.27 / 5833253.27 / 6909857.1
C3 / 174647 / 503945 / 1807284 / 3056284 / 3904744 / 4695665 / 4951433 / 5048203 / 5382625
C4 / 252166 / 715090 / 2729342 / 5081521 / 7005980 / 9181823 / 10078235 / 10486866 / 11858712
C5 / 189788 / 562237 / 2308937 / 4222065 / 5570683 / 6810847 / 7190266 / 7343767 / 7637716.5
C6 / 156706 / 457766 / 1709154 / 2993418 / 3928441 / 4862760 / 5195573 / 5345372 / 5675345.4
C7 / 215860 / 602533 / 2059202 / 3443282 / 4397498 / 5312559.5 / 5628877.5 / 5761233.5 / 6701629.3
C8 / 243854 / 658017 / 2306814 / 4141018 / 5595300 / 7104155 / 7633426 / 7853731 / 8684341
Challakere / 43909 / 152734 / 480842 / 675693 / 764434 / 827989 / 846280 / 852943 / 868603
Chanappattana / 91110.5 / 252336.5 / 720059.5 / 1027026.5 / 1176790.5 / 1265757.5 / 1290955.5 / 1304548.5 / 1334883.5
Chikkaballapura / 73214 / 201804 / 579832 / 859162 / 994859 / 1101465 / 1148057 / 1168076 / 1218158
Chithamani / 85562.5 / 240339.5 / 643710.5 / 903936.3 / 1035626.4 / 1125588.4 / 1152600.4 / 1163197.4 / 1189194.9
Chithradurga / 134604 / 417073 / 1238474 / 1751264 / 1979854 / 2143704 / 2202494 / 2228171 / 2285739
Davanagere -2 / 155764.6 / 575052.6 / 1597474.6 / 2097211.6 / 2314120.6 / 2472909.6 / 2518903.6 / 2544270 / 2586996
Davanagere -1 / 262994.5 / 795859.6 / 2445396.6 / 3754919.9 / 4498432.5 / 5085500.5 / 5297447.5 / 5387046.5 / 5716273.5
Doddaballapura / 140136 / 371427 / 915436 / 1208382 / 1347196 / 1451744 / 1485815 / 1499910 / 1532404
E9 / 221497 / 628401 / 2391049 / 4320539 / 5738965 / 7125037 / 7624603 / 7818813 / 8904769
E10 / 164116.4 / 480990.2 / 1880914.4 / 3517678.7 / 4830869.5 / 6189338.1 / 6671366.5 / 6857320.1 / 7675613.4
Gowribidnanur / 39905 / 123006 / 358137 / 513620 / 586890 / 635677 / 652754 / 658392 / 673279
Harappanahalli / 46201 / 141666 / 373099 / 500565 / 566483 / 610163 / 620433 / 624813 / 650386
Harihara / 77602.8 / 260557.2 / 780508.89 / 1096214.79 / 1232131.69 / 1321151.79 / 1345347.49 / 1358887.49 / 1376185.5
Hiriyuru / 57562 / 176169 / 520054 / 708132 / 790612 / 835041 / 848654 / 852283 / 873354
Hosakote / 71609 / 202359 / 654337 / 1004083 / 1180299 / 1306886 / 1348511 / 1358710 / 1388516
K2 / 418805 / 1108496 / 2854066 / 3867733 / 4371533 / 4720086 / 4825271 / 4857567 / 4973091
Kanakkapura / 57875 / 162878 / 468787 / 672060 / 765752.6 / 836317.6 / 864732.6 / 875763.6 / 904571.1
KGF / 111944.99 / 322774.99 / 1032924.99 / 1595433.99 / 1888848.39 / 2065915.49 / 2115776.49 / 2134202.49 / 2191210.5
Kolar / 120615 / 357524 / 1094578 / 1651133 / 1952758 / 2180048 / 2246676 / 2274011 / 2345909
Kunigal / 47501 / 127436 / 297099 / 383408 / 417830.2 / 444603.2 / 453692.2 / 457723.2 / 488115.2
N8 / 334569 / 889445 / 2845020 / 4748893 / 6061654 / 7239678 / 7600386 / 7745289 / 8037516
Ramanagara / 96007 / 287629 / 886685 / 1284327 / 1500225 / 1648713 / 1691293 / 1715433 / 1768654
Shiddhagatta / 45024 / 126691 / 361211 / 517015 / 599363 / 653354 / 673810 / 681988 / 702209
Sira / 64631.9 / 194237.9 / 532352.8 / 707450.8 / 782297.8 / 833033.8 / 850148.8 / 854898.8 / 866806.8
Tiptur / 89539 / 244588 / 617210 / 793217 / 863360 / 923355 / 944029 / 955198.42 / 974278.42
Tumkur -1 / 181544 / 487175.5 / 1304270 / 1802318 / 2052373 / 2215833 / 2264450 / 2289093 / 2394443
Tumkur -2 / 175810 / 501443 / 1580702 / 2353398 / 2729807 / 2989134 / 3060754 / 3094676 / 3199343.5
Tumkur -3 / 53891 / 138736 / 362971 / 482165 / 528789 / 552682 / 560415 / 564458 / 571542
S7 (1-10) / 160382 / 495227 / 2330927 / 4869316 / 7133507 / 9776064 / 10717352 / 11135521 / 13870326
S8 (1-10) / 315569 / 938249 / 3161147 / 5142284 / 6506712 / 7727690 / 8121105 / 8271728 / 9686154
S11 (1-10) / 193632 / 564052 / 2148911 / 4116756 / 5884202 / 8076004 / 8957084 / 9301369 / 12048042
Cumulative sum / 13219655 / 37653715 / 128876405 / 221402716 / 289836142 / 364280647 / 392273023 / 404604951 / 443734455
Individual sum / 13219655 / 24434060 / 91222690 / 92526311 / 68433425 / 74444504 / 27992376 / 12331927 / 39129505

From the existing tariff the different consumption patterns are computed considering 1 KW as sanctioned load for consumption below 50 units and 3 KW for consumption above 50 units as shown in the table below:

Table No: 8.5

Consumption / Fixed charge / Energy charge at existing rate / Total bill / Avg, variable charge / Avg Fixed charge / Avg rate of realization
30 / 25 / 81 / 111 / 2.7 / 0.83 / 3.53
50 / 25 / 161 / 211 / 3.2 / 0.50 / 3.72
100 / 70 / 361 / 461 / 3.6 / 0.70 / 4.31
150 / 95 / 628.5 / 778.5 / 4.2 / 0.63 / 4.82
200 / 95 / 896 / 1096 / 4.5 / 0.48 / 4.96
300 / 95 / 1521 / 1821 / 5.1 / 0.32 / 5.39
400 / 95 / 2146 / 2546 / 5.4 / 0.24 / 5.60
500 / 95 / 2771 / 3271 / 5.5 / 0.19 / 5.73

Existing Tariff rate:

Table No: 8.6

Existing rates ( Urban Tariff)
Fixed charges
Slabs / 1st KW / 25
above 1 KW / 35
Energy charges
Slabs / <30 units / 2.70
31 to 100 units / 4.00
101 to 200 units / 5.35
above 200 units / 6.25

DATA Analysis.

Table No: 8.7

Particulars / 0-30 / 31-50 / 51-100 / 101-150 / 101-200 / 201-300 / 301-400 / 401-500 / >500 / Total
Consumers / 1095946 / 603605 / 1234552 / 746803 / 409877 / 310872 / 82304 / 27936 / 36780 / 4548675
% of consumers / 24% / 13% / 27% / 16% / 9% / 7% / 2% / 1% / 1% / 100%
Consumption in Mu / 13.22 / 24.43 / 91.22 / 92.53 / 68.43 / 74.44 / 27.99 / 12.33 / 39.13 / 443.73
% of Consumption / 3% / 6% / 21% / 21% / 15% / 17% / 6% / 3% / 9% / 100%

From the above tables the following assumption can be drawn:

a)37% (24%+13%) consumers consumes 9% (3%+6%) of energy- ie. below 50 units.

b)43% (27%+16%) consumers consumes 42% (21%+21%) of energy ie., between 51 to 150 units.

c)16% (9%+7%) consumers consumes 32% ( 15%+17%) of energy ie., between 151 to 300 units.

d)4% (2%+1%+1%) consumers consumes 18% (6%+3%+9%) of energy ie., above 300 units.

e)For consumption above 200 units the Energy charges (EC) applicable is Rs.6.25 per unit. Though prima facie it appears that the EC for this consumption is above the average cost of supply (Rs.5.59per unit as per Tariff order 2.3.2015) in reality the average realization is below the average cost of supply.

f)Increase in consumption results in reduction in fixed charge component. Hence, the average realization for consumption above 200 units is below the average cost of supply.

BESCOM Proposal:

It is proposed to increase Fixed charges at the rate of Rs.10/- for all the consumers

For Energy charges, the following are considered.

1. No change is proposed for the consumption below 30 units.

1. Telescopic tariff is proposed for all the units consumed in each slab.

Proposal are as under:

1. Rs.2.70 per unit upto 30 units consumption.

1. Rs.3.5 per unit for all the monthly units if the consumption exceeds 30 units and upto 50 units.

1. Rs.4.8 per unit for all the monthly units if the consumption exceeds 50 units and upto 200 units.
2. Rs.5.4 per unit for all the monthly units if the consumption exceeds 200 units and upto 300 units.

1. Rs.5.75 per unit for all the monthly units if the consumption exceeds 300 units and upto 400 units.
2. Rs.5.95 per unit for all the monthly units if the consumption exceeds 400 units and upto 500 units.

1. Rs.6.1 per units for monthly units if the consumption exceeds 500 units.

Revenue impact from the existing and proposed tariff for different slabs is compared.

Table No: 8.8

Particulars / Proposed tariff / Consumers / Sales / Fixed charges in Crs. / Energy Charges in Crores / Total Revenue in Crs. / ARR / Revenue with existing tariff / Diff. in revenue demand
0-30(all units) / Rs.35 for 1st kW and Rs.45 for subsequent kW / 1241917 / 181.87 / 49.10 / 49.10 / 2.70 / 2857.41 / 538
31-50 (all units) / 672705 / 363.74 / 0.00 / 127.31 / 127.31 / 3.50
51-200 (all units) / 2690821 / 3455.53 / 0.00 / 1658.65 / 1658.65 / 4.80
201-300 (all units) / 362226 / 1030.60 / 0.00 / 556.52 / 556.52 / 5.40
301-400 (all units) / 103493 / 363.74 / 0.00 / 209.15 / 209.15 / 5.75
401-500 (all units) / 51747 / 181.87 / 0.00 / 108.21 / 108.21 / 5.95
> 500 (all units) / 51747 / 484.99 / 0.00 / 295.84 / 295.84 / 6.10
Total / 5174655 / 6062 / 391 / 3005 / 3395 / 2857.41 / 538.00

1. Voltage class wise tariff for HT- consumers

Introduction:

Government owned distribution companies have lost the opportunity of competition in the market consequent to open access. Existing Acts, Regulations favors competition. These relaxed laws have allowed the generators to cherry pick consumers from distribution companies. This has resulted in losing the competence of competition. On these grounds reductionin variable charges for the HT consumers and increase in demand charges by introducing voltage class wise tariffare proposed.

DATA.

Details of expenditure incurred towards fixed and variable cost for the last 3 years and receipts for the last 3 years are tabulated below:

1. Expenditure

Table No: 8.9

Particulars / FY-13 / FY-14 / FY-15 / FY-13 / FY-14 / FY-15
Details / Cost in Crs. / % wise contribution
Capacity charges to the Generators / 1326.22 / 1374.36 / 1405.6 / 11.1% / 11.4% / 10.2%
Transmission charge(KPTCL+PGCL) to Transmission utilities / 1174.44 / 1301.92 / 1284.82 / 9.8% / 10.8% / 9.3%
Distribution-wire business / 731.09 / 767.34 / 996.39 / 6.1% / 6.4% / 7.2%
Distribution-Supply business / 500.29 / 585.55 / 852.55 / 4.2% / 4.9% / 6.2%
Total Fixed charge / 3732.04 / 4029.17 / 4539.36 / 31.3% / 33.4% / 33.0%
Variable charge ( Power purchase) / 8203.23 / 8026.47 / 9233.47 / 68.7% / 66.6% / 67.0%
Total ARR / 11935.27 / 12055.64 / 13772.83 / 100.0% / 100.0% / 100.0%

1. Receipts:

Table No: 8.10

Details / FY-13 / FY-14 / FY-15 / FY-13 / FY-14 / FY-15
Receipts in Crs. / % wise contribution
Fixed charge / 1124.97 / 1312.34 / 1551.02 / 10% / 11% / 12%
Energy Charge / 9662.27 / 10237.34 / 11574.22 / 90% / 89% / 88%
Total / 10787.24 / 11549.68 / 13125.24 / 100% / 100% / 100%

1. Voltage wise consumers and consumption for the period from April’15 to Sept’15 pertaining to R-APDRP area are obtained and tabulated below. Ie. 6 months consumption of FY-16.

Table No: 8.11

Category / Voltage Class in KV / Active Installations / Connected load in KVA / Net Consumption in Mu / Wheel Energy Units in Mu / Net Demand Revenue in Crs. / ARR in Rs. / FC in Rs. / EC in Rs. / EC on 1st slab as determined by Commission in Rs.
HT1 / 220 / 1 / 42,800 / 135.18 / 0 / 55.47 / 4.1 / 0.26 / 3.85 / 4.1
HT1 / 11 / 91 / 35,298 / 35.62 / 0 / 21.13 / 5.93 / 0.8 / 5.13 / 4.1
HT2A1-N / 220 / 1 / 14000 / 16.36 / 0 / 10.04 / 6.13 / 0.69 / 5.44 / 5.55
HT2A1-N / 110 / 5 / 1,100 / 0.84 / 0 / 0.59 / 7.04 / 1.07 / 5.97 / 5.9
HT2A1-N / 66 / 16 / 161,465 / 174.64 / 38.37 / 99.12 / 5.68 / 0.75 / 4.93 / 5.9
HT2A1-N / 11 / 2331 / 1,000,718 / 1262.23 / 188.67 / 756.85 / 6 / 0.64 / 5.35 / 5.9
HT2A2-N / 66 / 1 / 350 / 0.3 / 0 / 0.21 / 6.87 / 0.88 / 5.98 / 5.85
HT2A2-N / 11 / 145 / 26,202 / 32.42 / 0 / 21.89 / 6.75 / 0.62 / 6.13 / 5.85
HT2B1 / 110 / 4 / 1,070 / 0.84 / 0 / 0.73 / 8.7 / 1.15 / 7.56 / 7.55
HT2B1 / 11 / 4,611 / 1,403,947 / 1532.48 / 235.95 / 1161.22 / 7.58 / 0.82 / 6.75 / 7.55
HT2B2 / 66 / 1 / 118 / 0.01 / 0 / 0.02 / 15.95 / 8.97 / 6.97 / 7.35
HT2B2 / 11 / 69 / 9,257 / 6.58 / 0 / 5.9 / 8.97 / 1.2 / 7.76 / 7.75
HT2C1 / 11 / 87 / 34,256 / 51.58 / 0 / 34.92 / 6.77 / 0.51 / 6.26 / 5.6
HT2C2 / 11 / 248 / 59,451 / 72.76 / 12.99 / 46.59 / 6.4 / 0.63 / 5.78 / 6.6
HT4A Sub meter / 110 / 1 / 1 / 0.43 / 0 / 0.28 / 6.36 / 6.36 / 5.5
HT4A sub meter / 11 / 29 / 1,489 / 13.64 / 9.3 / 6.8 / 6.8 / 5.5
HT4A / 11 / 137 / 29,843.53 / 34.32 / 20.27 / 5.91 / 0.39 / 5.51 / 5.5
Total / 7,778 / 2,821,365 / 3370.23 / 475.98 / 2244.49 / 6.66

1. Approved v/s Actuals HT sales for FY-15

Table No: 8.12

Sl No / Particulars / Approved / Actuals / Consumption Mix
Consumption / Consumption / Approved / Actual / Variation in Mix
1 / HT-1 / 629.29 / 664.24 / 2.48% / 2.72% / 0.24%
2 / HT2(a)(I) / 2634.33 / 2441.34 / 10.37% / 9.99% / -0.38%
3 / HT2(a)(ii) / 2930.38 / 2308.81 / 11.54% / 9.45% / -2.09%
4 / HT2 b(i) / 3124.02 / 2594.57 / 12.30% / 10.62% / -1.68%
5 / HT2 b(ii) / 213.61 / 201.32 / 0.84% / 0.82% / -0.02%
6 / HT2 C(i) / 1.48 / 75.4 / 0.01% / 0.31% / 0.30%
7 / HT2 C(ii) / 8 / 113.91 / 0.03% / 0.47% / 0.43%
8 / HT3(a)(i) / 6.93 / 17.43 / 0.03% / 0.07% / 0.04%
9 / HT-3(a)(ii) / 1.04 / 0.52 / 0.00% / 0.00% / 0.00%
11 / HT3(a)(iii) / 11.99 / 0.31 / 0.05% / 0.00% / -0.05%
12 / HT-4 / 128.65 / 127.25 / 0.51% / 0.52% / 0.01%
13 / HT-5 / 59.06 / 285.59 / 0.23% / 1.17% / 0.94%
HT - TOTAL / Total / 9748.78 / 8830.68 / 38.39% / 36.14% / -2.25%

Data analysis: From the above tables the following points can be drawn:

• Revenue expenditure can be divided into two parts 1. Fixed expenditure contributing 33% of the total cost and 2. Variable expenditure contributing 67% of the total cost.
• On the contrary under Revenue earned from tariff 1. Fixed cost collected are at the rate of 11% and 2. Variable costs collected are at the rate of 89% of the total receipt.
• In majority of categories recovery of variable charges are not even at the Commission determined first slab rate. This may be due to inbuilt rebate such as voltage class rebate and incentive for Time of the Day tariff.
• Since the contribution of fixed charges is only 10% of the average realization rate the balance i.e 23% (33%-10%) is camouflaged in the energy charges. Hence, the energy charge seems to be on a higher side. This is foremost reason for tapping HT consumers by generators. If the Demand/Fixed charges which is masked in the energy charges are separated then the variable cost can be reduced. Hence, it is proposed for increasing the fixed charges and reducing variable charges for HT consumers. This proposal does not affect the existing average realization rate of HT consumers.
• Change in the approved sales mix also affects the cross subsidy level.
• If there is any reduction in sales under HT tariff, loss on account of fixed charges is at the larger extent ie. -23%, and this will further worsen the cross subsidy level.

• Commission while determining the tariff does not consider the inbuilt rebate. Hence the existing D-21 format needs to be corrected suitably to arrive at the exact impact of the tariff revision.

Hence, it is proposed to increase the demand charges and reduce energy charges. Further, BESCOM is also proposing voltage class wise (EHT and HT) tariff. Tough it is estimated that BESCOM will lose Rs.68 Crs with this proposal, it is hoped that by reducing the energy charges the sales will increase and result in increased revenue. By doing this, BESCOM will attain competence in the open access market. Proposal is as under

Table No: 8.13

Category / Voltage Class in KV / No. of consumers / Load / Consumption / FC /unit / Voltage class wise rate with 10% margin / X subsidy comp. / subsidy % / EC/unit
HT1 / 220 / 1 / 42,800 / 572.99 / 0.17 / 4.74 / 1.089 / 82.46% / 3.50
HT1 / 11 / 237 / 142,456 / 150.99 / 2.12 / 5.63 / 1.089 / 82.46% / 2.40
HT2A1-N / 220 / 1 / 14000 / 27.37 / 1.15 / 4.74 / -1.366 / 122% / 5.00
HT2A1-N / 110 / 5 / 1100 / 1.40 / 1.77 / 4.74 / -2.236 / 136% / 5.20
HT2A1-N / 66 / 16 / 161465 / 292.10 / 1.24 / 4.74 / -1.739 / 128% / 5.20
HT2A1-N / 11 / 4460 / 1460113 / 2111.17 / 1.56 / 5.63 / -1.739 / 128% / 5.80
HT2A2-N / 66 / 1 / 350 / 21.27 / 0.04 / 4.74 / 0.000 / 100% / 4.70
HT2A2-N / 11 / 1813 / 769,633 / 2278.73 / 0.76 / 5.63 / -0.497 / 108% / 5.40
HT2B1 / 110 / 4 / 1,070 / 1.44 / 1.67 / 4.74 / -3.726 / 160% / 6.80
HT2B1 / 11 / 5107 / 1,424,348 / 2628.51 / 1.22 / 5.63 / -3.726 / 160% / 8.10
HT2B2 / 66 / 1 / 118 / 0.35 / 0.76 / 4.74 / -2.484 / 140% / 6.50
HT2B2 / 11 / 334 / 76,627 / 203.72 / 0.85 / 5.63 / -2.484 / 140% / 7.30
HT2C1 / 11 / 306 / 59333 / 95.70 / 1.39 / 5.63 / -4.161 / 167% / 8.40
HT2C2 / 11 / 204 / 31811 / 144.58 / 0.50 / 5.63 / -2.236 / 136% / 7.40
HT3ai / 11 / 14 / 13226 / 51.63 / 0.00 / 5.63 / 4.472 / 28% / 1.20
HT3aii / 11 / 8 / 7774 / 1.54 / 0.00 / 5.63 / 4.472 / 28% / 1.20
HT3b / 11 / 10 / 450 / 0.21 / 0.00 / 5.63 / 4.081 / 34% / 1.50
HT4A / 11
HT4ASM / 11 / 254 / 28348 / 103.56 / 0.62 / 5.63 / -0.559 / 109% / 5.60
HT4ASM / 110 / 1 / 132 / 0.94 / 0.32 / 4.74 / -0.559 / 109% / 5.00
HT5 / 11 / 734 / 5763 / 78.53 / 0.17 / 5.63 / -5.352 / 186% / 10.80

In the above paras, BESCOM has enumerated the reasons for increase in fixed charges. For LT categories the fixed charges are increased by Rs.10/- per KW/HP across all LT categories and for HT categories the fixed charges is proposed at Rs. 250/kVA for all categories. By the proposed increase in fixed charges, BESCOM would gain by Rs.505 Crs.as shown in the table below:

Table No: 8.14

Tariff / Existing / Revised
FC / FC
LT2ai / 290.01 / 390.62
LT2aii / 37.79 / 61.08
LT2bi / 0.66 / 0.92
LT2bii / 0.13 / 0.18
LT3i / 111.71 / 139.64
LT3ii / 9.12 / 12.16
LT5a / 92.38 / 120.07
LT5b / 41.12 / 54.37
LT6 WS / 108.08 / 138.96
LT6 SL / 31.62 / 37.94
HT1 / 12.28 / 17.06
HT2ai / 219.92 / 305.4
HT2aii / 216.03 / 317.69
HT2bi / 227.33 / 284.16
HT2bii / 19.48 / 25.63
HT2ci / 11.23 / 16.52
HT2cii / 4.32 / 6.35
HT4 / 5.79 / 14.48
HT5 / 7.70 / 9.17
Total / 1,446.70 / 1,952.40

1. Billing on kVAh basis to EHT/HT consumers:

BESCOM’s distribution loss trajectory is around 13%. Further, reduction of technical loss is very crucial. Consumer’s contribution towards reduction in loss is a prime factor. Some of the State Electricity Regulatory Commissions, such as Punjab, Andhrapradesh, Haryana, Delhi, West Bengal, and Chhathisgarh States adopted KVAh billing in their jurisdictions.

A team of officers of BESCOM were deputed to Andhra Pradesh Eastern Power Distribution Company Limited (APEPDCL), Vishakhapatnam to study the background, hurdles in implementation and the impact of KVAH billing in Andhra Pradesh. The study team visited Corporate office of APEDPDEL, Vishakhapatnam on 11.08.2015. The team, after considering the existing situation in Eastern Power Distribution Company Limited (APEPDCL), Vishakhapatnam, recommended for KVAH billing in Bangalore Electricity Supply Company (BESCOM).

As per the team report, situation existing in Karnataka and AndhraPradesh are compared and remarks are tabulated below.

Situation prevailing in (APEPDCL), Vishakhapatnam before implementation of KVAH billing. / Situation prevailing in Karnataka / Remarks
Power factor bench mark set at 0.95 lag for both HT and LT / Power factor bench mark set at 0.85 lag in case of LT and 0.90lag in case of HT / This difference itself save about 10% of energy in Karnataka
Power factor penalty at 0.5% to 3% of energy charges for all categories / Penalty at 3paise per unit for every fall of .01 lag in case of HT and 2 paise in case of LT subject to a maximum of 30 paise per unit / Penalty rate in AP Is high compared to Karnataka
25% of energy charges was being levied as surcharge / There is no surcharge for not fixing capacitors / This is the prime factor which mooted for KVAH billing
For Ferro industries, 50 unit per KVA is the deemed energy charges / There is no deemed Energy charges / This is one of the reason for opting alternative billing method by Ferro consumers of AP
One suitable capacity transformer for one installation and metering done at the HT side of the transformer / Multiple consumers are connected to single transformer and metering is being done on LT side of Transformer / This has resulted in Virtual HT for LT installations.
Transformation loss is loaded to the consumer.
Interference in metering equipment, theft of energy by these consumers are eliminated in AP
80% of the Contract Demand is the minimum billing demand / 75% of Contract Demand is the minimum billing demand / This is also reason for mooting the kVAh billing method. This also increases the realization rate in AP

With the above situation prevailing in the State of Karnataka, BESCOM placed following facts before the Hon’ble Commission for proposing KVAh billing.

1. Out of the total consumption, 36% of energy is sold to HT/EHT consumers, 24% of energy is sold to IP category and 23% of energy is consumed by LT-domestic consumers.
2. The existing meters support immediate conversion from KWh billing to KVAh billing.

In this background, BESCOM propose KVAh billing for all HT installations in 1st phase and for LT-Industries and Commercial installations having connected load of 20HP and above in the subsequent phase. BESCOM does not intend to take benefit from shifting of KWH billing to KVAh billing but proposes for tariff neutralization.

KVAh billing requires some recapitalization:

• Since from the invention of electricity, kW and kWh are fixed as measurement of electricity demand and electricity consumption respectively.
• Drastic technology developments have taken place in electricity metering but kWh& kW remained as valid units for electricity energy &demand measuring.
• By comparing the electricity billing and metering, it is noticed that the electricity tariffs and billing hasn’t developed in proportion to metering devices technology.

The electricity charges must contain quantitative as well as qualitative components motivating the customers to improve their quality standard. The electricity meters are manufactured according to standards. But there is no identified standards for electricity billing. So it is necessary that the electricity based tariffs and metering be redefined.

The electricity billing commonly consist of three components in which at least one component (Demand charge) is constant.

The components are as follows:

1-Active energy charge - measured in kWh

2- Reactive energy charge (power factor penalty) – measured in kVARh

3- Demand charge – measured in kW/kVA/HP (for consecutive periods of time).

The electricity charges are of two kinds ie., tariffs & penalties.

Tariffs are those charges that are applied to quantitative components ie., like active energy (KWh) and demand (KW/HP/KVA)

The electricity power in normal condition is consisted of two components; active and reactive. The active or real power is actually consumed and converted into useful work for creating heat, light and motion and is measured in (kW) and is totalized by the electric meter in (kWh).

The reactive power that is measured by (kVAR) and is totalized by the meter in (kVARh) unit is the power used to provide the electromagnetic field in inductive and capacitive equipment. It isn’t actually consumed but it is conserved as a potential energy in electromagnetic field and has a periodic movement (oscillation) between power supplier and power consumer. Therefore the reactive power cannot be converted to work but its existence is necessary for converting the electric energy to work and vice versa. Hence the reactive power occupy the capacity of electricity network and reduce the useful capacity of system for generation and distribution of the active power& energy and so increase the power& energy losses in electricity network.

In any case the customer compensates the losses on account of this either by power factor penalty or by providing individual capacitive compensator.

For reactive compensation the customer has two options:

• Pay monthly minimum charges for penalty or
• Pay a high charge once forever by installing capacitive compensator.

Traditionally we have electromagnetic meters which recorded demand in kW and energy in kWh. Due to the advent of meters like trivector electronic, the following are recorded

• apparent energy ie., kilo volt amps,(kva) kilo volt ampere hour ( kvah),
• real energy ie., kilo watt , kilo watt hour (kwh) and
• reactive power ie.,kvarh

But the effects of conventional meters still persists in electricity billing.

Electrical energy is a vector quantity, it is the product of current and voltage. In a non-harmonic environment ie., for lighting, heating loads etc., where the loads are linear in nature, both current and voltage are in same phase so the apparent power is equal to real power.

In harmonic environment, where the energy flows through an induction motor. The voltage drops hence voltage will not be in phase with current (lag condition). If energy flows in capacitor, voltage boost and in this case also voltage will not be in phase with current (lead condition). On both these counts current is not in phase with the voltage. But by using the second ie. Lead condition can mitigate the lag condition thus minimizing the optimum usage of apparent power into real power.