Directions: Read the passage given below and answer the questions that follow by choosing the correct/most appropriate options:

For the first time in years, the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) has submitted a petition which proposes an annual increase of tariff by 6%. Reeling under the weight of mounting debts and long-pending payments to generators, this was a long-anticipated step.

One of the reasons for TANGEDCO’s poor financial health is that tariffs have not been revised on an annual basis, thereby resulting in a gap between the average revenue requirement and the average cost of supply. Continuous under-recovery over the years and the cancellation and or delay of projects have adversely impacted TANGEDCO’s capability to upgrade and modernise its distribution network and hindered the transition towards a smart grid future. Hence, the proposal of an annual adjustment of tariffs by the rate of inflation is a positive step — this will not only provide more predictability to its consumers but also avoid the one-time steep tariff increase every few years.

It is a welcome step to protect its smaller consumers from the tariff impact in this petition. However, some of the additional tariff categories in this petition may be open to interpretation under non-verifiable conditions. Hence, a simplification of the tariff structures which is easier to comprehend could be considered.

Green tariffs have been emerging ______ an alternative renewable energy procurement model for commercial and industrial consumers. However, TANGEDCO’s proposed premium green tariff, at 150% of the applicable tariff rate, may dissuade consumers from availing of this. Green tariffs, if properly designed, could help TANGEDCO reduce sales migration of commercial and industrial consumers to open access while at the same time providing export-oriented industries with an opportunity to meet their sustainability commitments.

There is a steep increase in demand (fixed) charges for high tension consumers in this petition — more than 100% as compared to the last tariff order. Wheeling charges for open access have been increased from the existing ₹0.21/unit to ₹1.52/unit for High Tension consumers (an increase of 624%). This may make Tamil Nadu one of the most expensive open access markets in the country, potentially impacting the industrial attractiveness of the State.

The inclusion of all high tension consumers (except lift irrigation) under the time-of-day tariff is a positive step, but this could have also included low tension consumers. The domestic consumer category is a main contributor to the evening peak load. In Tamil Nadu, the domestic consumer category (LT I-A) accounted for 41.28% (30,390 MU) of the total energy sales in the financial year 2020-21. Therefore, including the domestic consumer category under the time-of-day tariff and a detailed loss reduction plan could potentially result in cost savings for TANGEDCO.

TANGEDCO is planned to meet 87% of the expected increase in power demand from thermal power plants and only 13% from renewables. Commissioning of the announced coal power plants will lock in TANGEDCO with a high fixed cost and could result in more expensive power for consumers in the years to come — 1,890 MW of TANGEDCO’s coal plants are 30 years and older, and are up for retirement. Also, 4,320 MW of TANGEDCO’s own-coal power plants need to be retrofitted with flue gas desulphurisation systems, which will further increase the per unit cost.