Failure to Adjust Contracted Demand Results in Excess Power Charges
The Comptroller and Auditor General of India has reported that the government’s failure to adjust contracted demand based on actual electricity consumption has resulted in an excess expenditure of 4.88 crore on power charges in 10 government buildings in Chennai. Additionally, inaction on the part of the government to correct power factor in another government building has led to an avoidable expenditure of 1.68 crore.
The 10 departments affected include the Commissioner of Treasuries and Accounts, Saidapet; Tamil Nadu State Information Commission, Saidapet; Commercial Taxes and Registration Department; Tamil Nadu Public Service Commission; Directorate of Vigilance and Anti-corruption; Commissionerate of Municipal Administration; Institute of Obstetrics and Gynaecology (IOG) and Government Hospital for Women and Children, Egmore; Directorate of School Education; Employees State Insurance Hospital, Ayanavaram, and the Government Polytechnic College.
The Comptroller and Auditor General has recommended that all government departments review their contracted demand and revise agreements with Tangedco based on actual consumption observed in these offices.
The Contracted Demand for a High-Traffic (HT) connection is specified in the agreement between the consumer and Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) and is based on the consumer’s request. Regulation 17(6) of TNESC allows HT consumers to reduce their contracted demand by up to 50% once in a year, after the initial agreement period of one year. Tangedco must implement such changes within seven days of receiving the consumer’s application.
The Demand Charges component in the electricity bill is calculated based on the actual recorded demand or 90% of the Contracted Demand, whichever is higher. An audit of records for vouchers of electricity bills paid by 10 HT consumers in government departments from 2017-23 revealed that the recorded demand was much lower than the contracted demand throughout the period.
Four HT consumers did not utilize even 50% of their contracted demand in any of the months for which the electricity bills were audited. Despite the contracted demand ranging from 120 KVA to 2,614 KVA, the corresponding maximum demand ranged only from 39.36 KVA to 1,283.70 KVA. The actual consumption ranged from 3% to 84.80% of the contracted demand.
The average recorded demand was as low as 19% (163 KVA compared to a contracted demand of 850 KVA) in the Registration and Commercial Taxes department building. The Institute of Obstetrics and Gynaecology and Government Hospital for Women and Children, Egmore recorded the maximum average recorded demand at 56% (449.20 KVA compared to a contracted demand of 800 KVA).
None of the offices revised the contracted demand, even though a provision was available. The proposal of the departments seeking the Public Works Department (PWD) for assessment of HT demand and the assessment of the PWD arriving at the contracted demand was not made available to the audit to understand the basis of seeking such high demand which remained unutilized. The audit calculated the avoidable expenditure on Demand Charges by calculating the difference between the actual contracted demand and a reasonable contracted demand of each HT consumer. The reasonable contracted demand was arrived at by adding 10% to the highest recorded demand of each HT consumer.
The analysis revealed that, despite adopting the above methodology, the excess payment towards electricity charges calculated at the prevailing rates was 4.88 crore, indicating that a more realistic revision would have resulted in savings in expenditure.
Reference : https://www.thehindu.com/news/national/tamil-nadu/failure-to-revise-contracted-demand-leads-to-488-crore-excess-power-charges-in-10-tamil-nadu-government-buildings-says-cag-report/article69505899.ece
