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Power pricing and Power Purchase Agreement-1-July-Dec14

Power pricing and Power Purchase Agreement-1-July-Dec14

Section A (20 Marks)

Write short notes on any four of the following

  1. Price Determination
  2. Performance-based Cost of Service
  3. Evolution of Electricity Tariff & Role of CERC
  4. Electricity Liberalization
  5. Tariff Regulation for Generation from Renewable

 

Section B (30 marks)

 

(Attempt any three)

  1. Highlight the features of the Electricity (Supply) Act, 1948. Also, discuss the tariff determination under the Electricity Act, 2003.
  2. Explain the framework for revenue requirements and costs.
  3. List and explain the Principles for Generation.
  4. “CERC Notifies Tariff Regulations for Green Power”. Elucidate.

 

Section C (50 marks)

 

(Attempt all questions. Every question carries 10 marks)

 

Read the case “Revenue Mobilization, Setting up a water civic centre- “Indradoot” and answer the following questions:

 

Case Study: Revenue Mobilization, Setting up a water civic centre- “Indradoot”

With a population of approximately 1.6 million, the Indore Municipal Corporation (IMC) is the largest city in the state of Madhya Pradesh (MP), and serves as its commercial and trade capitol. MP has only recently begun to decentralize responsibilities to the local government level, and is the first state in India to create an executive mayor position. IMC faces many challenges in managing its finances, generating adequate revenues to improve the quality of public services, and increasing opportunities for citizens to understand and participate in local government.

With continuing efforts in revenue mobilization with support from the Indo-US Fire (D) Projct, IMC has improved its revenue situation remarkably. To leverage this ongoing work, in late 2002, under the Resource Cities Program1, IMC established a partnership with the City of Garland, Texas (located in the Dallas metropolitan area) to provide IMC with technical support in addressing priority concerns. The first exchange to Indore took place in December 2002. The partners agreed to focus on two key areas: solid waste management and revenue generation, with citizen communications and outreach as a cross-cutting them of all partnership activities.

Over the course of the last 20 months, through a series of technical exchanges and ongoing communications, IMC and Garland have worked together to achieve significant progress in introducing improvements in both core partnership areas. This case study summarizes the results related to their joint efforts to improve revenue mobilization and improving citizen communications and IMC’s interface with its citizenry.

Revenue Mobilization efforts with support from Indo-US Fire(D) Project since 2000

Indore is the largest city in Madhya Pradesh and is its trade and commercial capital. The local self-government body, Indore Municipal Corporation (IMC), serves a population of around 1.6 million spread over an area of 130.17 square kilometres. IMC’s key municipal functions include construction and maintenance of road, water supply, drainage, sewage, street lighting and waste management facilities.

IMC has undertaken important measures to reduce the leakage in its revenue from important taxes and charges such as Property Tax, Water Charges, Shop Rent and License Fee. These sources contribute more than 90% of IMC’s revenue from own sources. These measures include:

  • To reform its main revenue source, i.e. Property Tax (50% of own revenues), IMC shifted to a simpler, mass-assessment method and introduced self-assessment of properties by taxpayers. A private firm computerized existing tax records, so bills could be printed out automatically. Properties whose owners had not filled out assessment forms, or who had not paid taxes and their arrears, could be identified. And the city could identify its tax recovery rates. CRISIL found that property taxes were paid on approximately 80,000 properties, of an estimated total of 300,000, in a given year.
  • IMC computerised property records and undertook a survey with the help of a private firm to identify unregistered properties. Under-assessed properties could now be identified. The number of properties registered nearly doubled in four years, from 135,000 before the survey to 236,000 in 2003. The IMC appointed 20 surveyors to identify and enroll those properties that were missed by the 2001-02 survey. In Water Charges, Shop Rent and License Fee, IMC computerised records and the billing process.
  • IMC increased tax/assessment rates for Property Tax, Water Charges, Advertisement Tax and License Fee and added new taxes and charges.
  • Internally, to strengthen its revenue collection efforts, IMC brought all billing and collection functions within a single department (Revenue Department), introduced cash-collection counters and is currently decentralizing many revenue operations to zonal offices.
  • IMC is adopting an accrual-based system of accounting and is computerizing accounting activities in order to assess its financial position more accurately. The increase in revenues has also been made sustainable by the creation of a comprehensive computer database of taxpayers.
  • The measures described above increased revenue from its own sources from Rs. 195 million in 1997-98 to Rs. 338 million in 1999-00, and then nearly doubled it to Rs. 635 million in 2002-2003. Total revenue increased correspondingly from Rs. 625 million to Rs. 1,010 million to Rs. 1,503 million. In the year 2003-04, the figure for IMC’s own revenue stood at Rs. 750 million while total revenue was Rs. 1551.0 million.

Currently only about 35% of water bills are paid by residents/businesses. The cost of providing water amounts to approximately 540 million Rs. per year, and the amount collected equals about 90 million Rs. If the Municipality were able to collect 100% of the money owed it (an unlikely event) they would still only capture 50% of the cost of providing water—requiring a subsidy from property tax revenue of over $6 million. The current level of subsiding water by 450 million Rs. annually from the property tax and other revenue sources will increase as the population continues to grow, and cannot be sustained. The problem is also that the current water tax does not reflect costs of service.

The partnership aimed to leverage the work done by the FIRE project and giving exposure to the IMC city managers to urban management practices and systems of US cities. During, Indore delegation’s first visit to the City of Garland, they saw the functioning and benefits of the civic centre there. This encouraged the delegation to come back and set up a civic centre especially for the purpose of streamlining water related processes viz. water grievances redressal, issuing new water connections, detection and legalizing illegal water connections, water tax collection drive etc.

“Indradoot”, water civic centre

IMC has established a water civic centre called “indradoot” at its Yeshwant Club water overhead tank premises on the 8th September 2003. This centre aims to redress complaints pertaining to water supply arrangement, water quality or water tax within a stipulated time frame.

The cell registers and solves complaints of water supply, analyses complaints received for future actions, launches special water tax collection drives, track and legalese illegal water connections.

Prior to setting up such a centre, citizens had to go to the Municipal Corporation building or the zonal office of Narmada. Citizens now can call on numbers- 2540744 or 2538800 or even send an e-mail on IMC’s website, www.indorenagarnigam.com. Apart from this, citizens can also lodge complaints at any of IMC’s 11 zonal offices or 31 water tank offices.

The complaint cell receives the following types of complaints:

  • Leakage in pipeline
  • Bad quality of water
  • Non-receipt of bill for water usage
  • Illegal water connections
  • Any other problem related to water supply.

Consumers can also request for quality test of his/her private water source and seek information for obtaining a new water connection here.

At the time of registering a complaint, a unique complaint number is allotted for future reference. Immediately, after registration, the complaint is directed to the concerned unit and a feedback is collected. The centre is open from 10:30 am to 5:30 pm on all working days.

The IMC publicized the establishment of “indradoot” widely on local television, in popular local newspapers and by distributing handbills. The approximate onetime cost of establishing this cell is Rs. 7,50,000.

Benefits

  • The centre has received and redressed 5700 complaints within the period 1st November to 28th July 2004.
  • As a result of an intensive drive of cracking down of illegal water connections, the centre was able to legalise almost 2350 connections till 10th July 2004. Detailed survey and investigations are done by the departmental staff regularization of identified illegal connections based on actual use of category of water use is done on the site.
  • Also, due to intensive water tax collection campaigns of the IMC, the centre alone could collect about Rs. 31.2 million till May 2004.

Indore officials, by visiting Garland, were also able to see a successful functioning local government which deals with conditions similar to the ones they are facing. Exposure to systems that are run professionally and which function to maximise consumer satisfaction allowed the Indore Municipal Corporation to better understand the processes involved to reach this end, to foresee the benefits of a community with such systems in place, and to better realize their role in creating these transitions and their role once these new systems are in place.

Garland officials also benefit by forcing themselves to break down systems that have been in place, unquestioned for years. They were able to better understand and appreciate the benefits of their own processes and by examining them in a new light, potentially come across ways to improve them. They have been able to recognize the universal application of their skills and knowledge and use them in a very different setting. Indian cities have far fewer resources available to them for service delivery than American cities do and by seeing how much Indore has done with such limited resources, Garland representatives were able to gain a greater appreciation for the amount of resources and revenues that they do have at their disposal and be more creative in their usage. Most importantly, they are able to assist a partner city, struggling with problems that they once struggled with and helping that city to attain a successful solution in the best way they can.

 

 

Questions:

1.      Describe the collaboration of IMC and Garland.

2.      What is Indradoot mentioned in the above case?

3.      Throw light on the type of complaints received by complaint cell.

4.      Discuss the process of registering complaints.

5.      Write a brief summary of the above mentioned case.

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