What is the process of ARR filing by discoms?Discuss in light of IEA 2003 provisions.

The process of Annual Revenue Requirement (ARR) filing by distribution companies (discoms) in India is governed by the Electricity Act, 2003 (IEA 2003). The ARR filing is a critical component in the tariff determination process, ensuring that discoms can recover costs and achieve financial sustainability. The process can be outlined as follows:

Key Provisions of IEA 2003

The IEA 2003 lays down the legal framework for tariff regulation, promoting transparency and efficiency in the power sector. Key provisions include:

• Section 61: Mandates the regulatory commission to specify terms and conditions for tariff determination, considering factors like cost of supply, cross-subsidies, and consumer interests.
• Section 62: Empowers the regulatory commission to determine tariffs for the supply of electricity by discoms.
• Section 64: Details the procedure for filing tariff petitions, including ARR filings, by discoms.

ARR Filing Process

1. Preparation of ARR Proposal:

   • Data Collection: Discoms gather data on operational costs, capital expenditures, power purchase costs, and expected revenues.
   • Forecasting: Estimates are made for future costs and revenue requirements, including projections for demand, supply, and losses.

2. Submission to Regulatory Commission:

   • Filing the Petition: Discoms submit the ARR proposal, typically on an annual basis, to the respective State Electricity Regulatory Commission (SERC).
   • Documentation: The submission includes detailed financial statements, cost breakdowns, and justifications for proposed tariffs.

3. Public Consultation and Scrutiny:

   • Public Notice: The regulatory commission issues a public notice inviting comments and objections from stakeholders, including consumers and industry experts.
   • Public Hearings: Hearings are conducted to discuss the ARR proposal, allowing stakeholders to present their views and concerns.

4. Review and Analysis:

   • Regulatory Review: The SERC reviews the proposal, considering stakeholder inputs, and conducts a detailed analysis of the costs and revenue projections.
   • Queries and Clarifications: The commission may seek additional information or clarification from the discom during the review process.

5. Tariff Determination:

   • Draft Order: The SERC issues a draft tariff order, reflecting its analysis and proposed tariff changes.
   • Final Order: After considering final objections and suggestions, the SERC issues the final tariff order, specifying the approved tariffs and conditions for the upcoming year.

Conclusion

The ARR filing process, as mandated by the IEA 2003, ensures a transparent and participatory approach to tariff determination. It balances the financial viability of discoms with consumer interests, promoting an efficient and fair electricity distribution system.