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KERALA STATE ELECTRICITY REGULATORY COMMISSION THIRUVANANTHAPURAM 695 003 - page 1 / 14

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KERALA STATE ELECTRICITY REGULATORY COMMISSION THIRUVANANTHAPURAM 695 003

PRESENT:

Shri M.K.G. Pillai, Chairman Shri C. Balakrishnan, Member

January 14, 2004

Petition No. DP-6

Dy.No. 00113 dt 24-06- 2003

Indian Aluminium Co. Ltd., Alupuram, Kalamassery 683 104.

Petitioner

Kerala State Electricity Board, Thiruvananthapuram.

Respondent

ORDER

1. Background:

1.1

The petitioner, Indian Aluminium Co. Ltd., Alupuram, hereinafter called Indal is

an extra high tension consumer availing power at the voltage of 110 kV from the Kerala State Electricity Board hereinafter called the KSEB or Board. The petitioner has stated that aluminium smelting, the activity in which it is engaged, is a power intensive industry and cost of power is the single most important driver in the cost of production. Cost of power at the existing tariff formed over 65% of the total cost of production while for the smelters abroad, the energy cost averages to only 20%. The selling price of aluminium is independent of the cost of individual producers, being governed by the London Metal

Exchange (LME) price and market conditions. terms over the past several years.

LME price has been reducing in real

The petitioner further stated that between 1997 and 1999, the KSEB hiked tariff five times, raising it from Rs 1.12 per kWh to Rs 2.4 per kWh. KSEB hiked EHT tariff with effect from August 1, 2001 by a further 25% and again hiked the tariff by another

Ps. 50 per kWh with effect from 1st October, 2002.

The tariff as applicable now is

Rs. 3.35 per kWh. The petitioner has stated that being critically dependent on the power cost, where a hike of Ps. 10 per kWh would increase the metal cost by about Rs. 1700/- per tonne, the smelter has become completely unviable due to the frequent hike in tariff. From a profit making unit of Indal, the smelter has now turned into a loss making unit. The hike in power tariff has resulted in an annual loss of Rs. 24 crores.

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