Power Pricing Framework | ESCAP Policy Documents Managment

Meta Data

Draft:

Revision of previous policy?:

Draft Year:

2003

Effective Start Year:

2004

Scope:

National

Document Type:

Other

Economic Sector:

Power

Energy Types:

Power

Issued by:

Power Division Ministry of Power, Energy and Mineral Resources Government of the People’s Republic of Bangladesh

Source:

Power Cell, Power Division, Ministry of Power, Energy & Mineral Resources

File:

Power Pricing Framework

Overall Summary:

The Power Pricing Framework was approved by the Government in January 2004. It proposes Pricing Principles to begin codifying the process and principles of tariff adjustment and to phase out prevailing distortions in tariff structure. The principles include: The average end-user electricity tariff; GOB subsidies and incentives; Tariffs revision; Differentiated Rates. The proposed power price adjustments will be implemented on September 1, 2003.

Pricing

Energy pricing:

Pricing Principles: The following principles are proposed to begin codifying the process and principles of tariff adjustment and to phase out prevailing distortions in tariff structure. The average end-user electricity tariff for each customer class will be set to fully cover reasonable costs of supplying electricity to that customer class [...] and generate a surplus to expand coverage and supply, and improve the quality of service. --- Tariffs will incorporate incentives to improve technical and commercial efficiency and generation costs will be "passed through" to end-user tariffs. --- Tariffs will be reviewed at least quarterly and adjusted annually to reflect changes in fuel prices, generation mix, exchange rates and inflation [...]. --- Differentiated rates will be maintained for peak and off-peak consumption, and a two-part tariff introduced for BPDB's generation plants, with one part covering fixed (capacity) costs and the second part covering variable (energy) costs.

Full Document Text

NOTE: Some content may not display correctly, including tables and figures. See PDF for full details.

Power Pricing Framework

(Approved by the Government in January 2004)

Pricing Principles

The following principles are proposed to begin codifying the process and principles of tariff adjustment and to phase out prevailing distortions in tariff structure:

¬The average end-user electricity tariff for each customer class will be set to fully cover reasonable costs of supplying electricity to that customer class (including cost of generation, system services, transmission, and distribution), and generate a surplus to expand coverage and supply, and improve the quality of service.

¬ Should the Government decide to subsidize the capital or operating costs to serve certain customer classes, it should do so directly from the budget.

¬ Tariffs will incorporate incentives to improve technical and commercial efficiency and generation costs will be "passed through" to end-user tariffs.

¬ Tariffs will be reviewed at least quarterly and adjusted annually to reflect changes in fuel prices, generation mix, exchange rates and inflation. Should the quarterly review indicate a variation in the recognized costs in excess of 10%, the tariffs would be adjusted at that time.

¬ Differentiated rates will be maintained for peak and off-peak consumption, and a two-part tariff introduced for BPDB's generation plants, with one part covering fixed (capacity) costs and the second part covering variable (energy) costs.

¬ The proposed power price adjustments will be implemented on September 1, 2003.