I don’t normally talk about my inflation numbers in this blog, because I don’t have a lot of data. I am the kind of guy who needs data to talk about things. To make sense of inflation we need at least 7 years worth of data. Ten years data will be more useful though. Thankfully I have some of my electricity bills since 2012. So there is long enough history to see the inflation in electricity bills in Bangalore.
From 2012 to 2014 I have some bills but not all. From 2015 onwards I have the bills for each and every month. BESCOM (Bangalore Electricity Supply Company) which provides electricity where I live does not upload all the bills online. Some bills were missing. So my stash of printed bills came to rescue.
As usual, I made a spreadsheet and filled it with every bit of detail from the printed bill. These include the likes of
- number of units consumed
- fixed costs
- variable costs
- fuel cost adjustment charges (FAC)
- tax rate
I fall under the LT-2(a)(i) category. For the uninitiated, it means Low Tension (LT) Domestic (2) under Bangalore city (a(i)). For areas under village panchayats it is a(ii). I entered all that data into a spreadsheet which now looks like this.
I color coded them to mean something. The red cells indicate when the costs have changed. The yellow cells on the left is the data I need to enter every month. The bill comes out on the rightmost column. If the calculated bill is different from my actual bill then something in the fixed cost, variable cost or FAC must have changed. So I need to fix those cells in that row and color them. It took a long time to enter all the old data, but now I just add a row every month. So it is not a lot of work anymore.
Before studying inflation, it will help to understand how the electric company charges us. The following costs affect your bill.
The fixed costs depend on the sanctioned load. Our sanctioned load is 4 KW. Not sure what our real load is because BESCOM does not report it. In our case the cost of first KW is Rs. 70 and the next 3 KW are charged at Rs. 80 per KW. So fixed cost currently is 70 + 240 = 310 as per the latest bill. These numbers are revised every year. Normally this seems to be happening between April to June every year for us, but it was delayed last year due to COVID.
These costs depend on how many units you use in a month. The first 30 units are charged at one rate. The next 70 are charged at higher rate and so on. BESCOM’s 2021 rates can be found on their website. From their latest proposal it seems like they want to move from slabs to single rate that increases based on how many units you consume. So if we use less than 50 units, it is will charged at Rs. 3.75/unit for all units. If it is less than 100 units the cost will be Rs. 5.20/unit of all units. And so on. It was not yet approved, but at some point it seems like the bills will go up quite a bit for us. Like fixed costs, these numbers are also revised every year around the same time.
Fuel cost adjustment charges (FAC)
FAC is the amount applied on electricity bills based on the varying prices of fuel. So your electricity bill might increase even if your units or costs have not gone up. The electric companies are allowed to make changes every quarter. And we see this change quite often. The rate is applied to all units of your bill. So if it is Rs. 0.15/unit and you consumed 100 units then your bill will increase by Rs. 15. But of course it could be revised downwards too in which case your bill will come down.
Who can forget taxes? On top of all the above charges, you have to pay tax on the total amount. Not sure how often the taxes are revised, but it does change.
Putting all these things together, we can figure out the inflation. I first wanted to figure out the inflation if we were using the same amount of units every month. Of course in reality the units consumed changes every month. So I used the average units we consumed in 2014 which is 267. If we were to consume 267 units every month over the last 9 years, our electric bill would follow this trend.
You will note that the cost has been trending up in general. There are also some dips thanks to FAC. In 2012 the cost of 267 units was Rs. 1209 which increased to Rs. 2207 by 2021. So the inflation is about 7% during the 9 year period which is not too bad if you ask me.
In another post I will explain our actual inflation. The reason it will be different from the cost inflation is because we might be consuming more units or less units than what we consumed in 2012.