Petition No. 7 of 2006
Date of Order May 5, 2006

The Punjab State Electricity Board (Board) has filed this petition for the approval of Fuel Cost Adjustment with effect from April 1, 2006. The Board calculated the Adjustment Amount at Rs. 0.39 crores and worked out the chargeable Fuel Cost Adjustment Surcharge at 0.06 paise/unit for metered category and Rs. 0.06/ BHP/Month for unmetered category.

2. The Commission has laid down the Fuel Cost Adjustment Formula as per Appendix-7 of the Conduct of Business Regulations, 2005 published in the Government of Punjab Gazette on April 22, 2005. The Fuel Cost Adjustment is, therefore, to be worked out in accordance with the formula already provided in the said Regulations.

3. As per the formula following two types of costs are to be taken into account for working out Adjustment Amount:

   1. Change in fuel cost of Board’s own thermal stations; and

   2. Change in power purchase cost due to change in fuel cost alone for Central Generating Stations

4. To arrive at the change in fuel cost from the level approved by the Commission for own thermal stations of the Board, the fuel cost for actual generation during the 3rd quarter was worked out both ways; with the parameters including prices and Gross Calorific Value of Coal and Oil approved by the Commission in the Tariff Order for the year 2005-06 as well as with actual prices and Gross Calorific Value of Coal and Oil as intimated by the Board in the Petition, but keeping performance parameters as approved by Commission in the Tariff Order.This worked out to minus Rs.10.68 crores.

5. In order to arrive at the change in power purchase cost due to change in fuel cost alone for Central Generating Stations, the power purchase data made available by the Board in its Petition at Annexure-6 was relied upon. It was noted that the Board had added power purchase from Rihand-II station also which was a new source and was not approved by the Commission while approving the Annual Revenue Requirement for the year 2005-06. However, the Board was incurring extra expenditure in making these power purchases on account of fuel cost variation. Accordingly, it was considered appropriate to take total purchase from NTPC stations into account, including the new sources for working out the Adjustment Amount required in power purchase cost on account of change in fuel cost. Power purchase from Rihand-I had been allowed by the Commission in the Tariff Order and for this, the variable cost of 70 paise/unit was approved. As such, for the purpose of workin! g out this change in respect of Rihand-II station, the approved fuel cost was taken same as that of Rihand-I station i.e 70 paise/unit. The Board had also calculated difference on this basis. Accordingly, the total difference in variable cost for NTPC stations worked out to minus Rs. 2.83 crores as per the data provided by the Board in its Petition.

6. As per Fuel Cost Adjustment Formula changes in power purchase from all Central Generating Stations are to be allowed as a pass through, through FCA. Nuclear stations under NPC are also Central Generating Stations and accordingly, changes in power purchase cost from these stations on account of variation in nuclear fuel cost also need to be taken into consideration while working out FCA amount. As per calculations made in Annexure-6, the net effect of this change was increase of Rs.0.24 crores. This amount, therefore was added while working out FCA.

7. Accordingly, the Fuel Cost Adjustment Amount on account of variation in power purchase cost worked out to minus Rs.2.59 crores (-2.83+0.24). The total Fuel Cost Adjustment was determined at Rs. (-) 13.27 crores (-2.59-10.68).

8. Since the adjustment amount as worked out by the Board was reduced, the Commission decided to give an opportunity to the Board before determining the final amount. Accordingly the Commission vide letter dated March 28, 2006 was requested to give its views on the adjustment amount worked out by the Commission.

9. In response the Board has pleaded for allowing actual parameters in respect of coal transit loss, heat rate, auxiliary consumption. The Board has further intimated that while calculating fuel cost adjustment amount in the original Petition, they have inadvertently not taken the cost impact of 20915 MT of imported coal utilized at Ropar.

10. With reference to the above, the fuel cost for actual generation during the third quarter has been worked out with actual prices and gross calorific value of Indian and imported coal as intimated by the Board, but keeping the performance parameters same as approved in the Tariff Order for 2005-06. The change in fuel cost amount now works out to Rs.(-) 8.84 crores ( Annexure I to V are attached).

11. The Commission, therefore, approves the Adjustment Amount of Rs. (-) 11.43 crores ( Rs. -8.84 crores- 2.59 crores) for the third quarter. The adjustment amount shall be allowed alongwith Tariff Order for the year 2006-07.

Annexure-I

Fuel Cost (Coal & Oil) for actual generation during 3rd quarter (Oct to Dec) of 2005-06 with actual gross calorific value and price of coal and oil as per PSEB Petition but retaining performance parameters as approved by the Commission in its Tariff Order for the year 2005-06.

S N 1.	Items 2.	Derivation3.	Unit 4.	GNDTP 5.	GGSTP 6.	GHTP 7.	Total 8.
1.	Generation	A	MU	552.97	2521.07	742.96	3817
2.	Heat Rate	B	Kcal/kwh Generation	2770	2500	2500
3.	Specific oil Consumption	C	Ml/kwh	2.0	2.0	2.0
4.	Calorific value of oil	D	Kcal/lit	9564	10000	9400
5.	Calorific value of Indian coal	E	Kcal/kg	3917.26	3865	4238
6.	Calorific value of imported coal	F	Kcal/kg	-	6800	-
7.	Overall heat	G=AB	G.cal	1531727	6302675	1857400
8.	Heat from oil	H=ACD/1000	G.cal	10577	50421	13968
9.	Heat from coal	I=(G-H)	G.cal	1521150	6252254	1843432
10.	Oil consumption	J=Hx1000/D= AC	KL	1106	5042	1486
11.	Quantity of imported coal	K	MT	-	20915	-
12.	Heat from imported coal	L=F K/1000	G.cal	-	142222	-
13.	Heat from Indian coal	M=(I-L)	G.cal	1521150	6110032	1843432
14.	Transit loss of coal	T	%	0.8	0.8	0.8
15.	Consumption of Indian coal incl. transit loss	N=M 1000/E/1-T/100	MT	391452	1593611	438485
16.	Cost of oil	O	Rs/KL	17087	15709.54	17724
17.	Cost of Indian coal	P	Rs./MT	2110	2269	2756
18.	Cost of imported coal	Q	Rs/MT	-	4898	-
19.	Total cost of oil	R=oj/107	Rs.crore	1.89	7.92	2.63
20.	Cost of Indian coal	S=N P/107	Rs.crore	82.60	361.60	120.85
21.	Cost of imported coal	U=K Q/107	Rs.crore	-	10.24	-
22	Total cost of coal	V=S+U	Rs.crore	82.60	371.84	120.85
23.	Total fuel cost	W=R+V	Rs.corre	84.49	379.76	123.48	587.73

Annexure-II

Fuel Cost (Oil + Coal) for actual generation during 3rd quarter (Oct to Dec) of 2005-06 with actual gross calorific value and price of coal and oil as per PSEB Petition but retaining performance parameters as approved by the Commission in its Tariff Order for the year 2005-06 for the 2nd unit of GNDTP.

S.No.	Item	Deviation	Unit
1.	Generation	A	MU	129.91
2.	Heat Rate	B	kcal/unit	2770
3.	Sp. Oil Consumption	C	ml/unit	2.0
4.	Calorific value of oil	D	kcal/lit.	9564
5.	Calorific value of coal	E	kcal/kg	3917.26
6.	Overall heat	F = AxB	G.cal	359851
7.	Heat from oil	G = AxCxD/1000	G.cal	2485
8.	Heat from coal	H = (F-G)	G.cal	357366
9.	Oil consumption	I = Gx1000/D = AxC	KL	260
10.	Transit loss of coal	T	%	0.8
11.	Coal consumption including Transit Loss	J=(Hx1000/E)/(1-T/100)	MT	91964
12.	Cost of oil	K	Rs/KL	15324
13.	Cost of coal ex. Transit loss	L	Rs/MT	2208
14.	Total cost of oil	M=KxI/10	Rs.crore	0.40
15.	Total cost of coal	N=JxL/10	Rs.crore	20.31
16.	Total fuel cost	O=M+N	Rs.crore	20.71

Annexure-III

Fuel Cost (Coal & Oil) for actual generation during 3rd quarter (Oct to Dec) of 2005-06 with all parameters as approved by the Commission in its Tariff Order for the year 2005-06.

Annexure-IV

Cost for actual purchase from Central Generating Stations vis-à-vis approved by the Commission in the Tariff Order 2005-06.

Annexure-V

FCA for the Third Quarter (Oct. to Dec.) of 2005-06 to be charged from April, 2006 onwards.