PUNJAB STATE ELECTRICITY REGULATORY COMMISSION
SCO NO. 220-221, SECTOR-34-A
CHANDIGARH

PETITION NO. 1 OF 2009

IN THE MATTER OF:

ANNUAL REVENUE REQUIREMENT

FILED BY THE PUNJAB STATE ELECTRICITY BOARD

FOR THE FINANCIAL YEAR 2009-10

PRESENT : Mr. Jai Singh Gill, Chairman

Ms. Baljit Bains, Member

Mr. Satpal Singh Pall, Member

Date of Order: Sept. 8, 2009

ORDER

The Punjab State Electricity Regulatory Commission (Commission), in exercise of powers vested in it under the Electricity Act, 2003 (Act) passes this order determining the Annual Revenue Requirement (ARR) and Tariff for supply of electricity by the Punjab State Electricity Board (Board) to consumers of the State of Punjab for the year 2009-10. The ARR filed by the Board, facts presented by the Board in its various filings, objections received by the Commission from consumer organizations and individuals, issues raised by the public in hearings held at Ludhiana, Bathinda, Jalandhar and Chandigarh, the responses of the Board to the objections and observations of the Govt. (Government) in this respect have been considered. The State Advisory Committee constituted by the Commission under Section 87 of the Act has also been consulted and all other relevant facts and material on record have been perused before passing this Order.

1.1 Background

The Commission has in its previous six Tariff Orders determined tariff in pursuance of the Tariff Applications and ARRs submitted by the Board for the years 2002-03 to 2006-07 and 2008-09. Tariff Order for the year 2007-08 has been passed by the Commission in suo motu proceedings.

1.2 ARR for the year 2009-10

The Board did not file the ARR and Tariff Application for the year 2009-10 by 30^th November, 2008 which is the due date as per PSERC (Terms and Conditions for Determination of Tariff) Regulations, 2005 (PSERC Tariff Regulations) but filed a petition (No.24 of 2008) on 2.12.2008 seeking extension of time upto 31.12.2008 in filing the ARR and Tariff Application which was allowed by the Commission. The Board filed the ARR for 2009-10 on 29.12.2008. Therein the Board had worked out a cumulative revenue gap of Rs.6980 crore for the year 2009-10 including carried over gaps of 2007-08 and 2008-09 but there was no proposal to cover up the gap depicted in the ARR.

The Government had authorized the Board under Section 172 of the Act to continue to function as a STU (State Transmission Utility) and a licensee upto 30.11.2008 and not thereafter, the Board was asked to clarify this aspect. A reference was also made to the Government in this respect. The Board in its letter dated 25.2.2009 stated that the Govt. has on 24.2.2009 authorized it to function as STU and a licensee upto 15.6.2009. Thereupon the Commission took the ARR on record on 27.2.2009. The Board in its letter dated 19.3.2009 stated that due to inadvertence, cumulative revenue gap for 2007-08, 2008-09 and 2009-10 had been shown as Rs.6980 crore instead of Rs.8546 crore and the letter was considered as a part of the ARR. The petition filed by the Board did not contain any proposal to cover this gap stating that the Commission may determine the gap and fix tariff accordingly based on the details furnished by it in its ARR. On scrutiny it was noticed that the ARR was deficient in some respects and in letter dated 27.3.2009 the Commission sought further information, a part of which was furnished by the Board in its letters dated 16.4.2009,23.4.2009 and 6.5.2009. The Board had also filed Petition No.14 of 2008 for review of Tariff Order dated 3.7.2008 passed by the Commission for the year 2008-09 which the Commission disposed of in its order dated 24.3.2009.

1.3 Invitation of objections and public hearings

A public notice was published by the Board in the Tribune, Hindustan Times, Ajit, Jagbani and Punjab Kesri on April 3, 2009 inviting objections from the general public on the ARR filed by the Board. Copies of the ARR, the submissions made by the Board in its letter No.465 dated 19.3.2009 and order dated 24.3.2009 passed by the Commission in Petition No.14 of 2008 were made available on the website of the Board and in the offices of the Chief Engineer/ARR & TR, PSEB, Patiala, Liaison Officer, PSEB Guest House, near Yadvindra Public School, Phase-8, Mohali and also in the offices of all the Chief Engineers (Operation) and all the Superintending Engineers-in-charge of Operation Circles of the Board. In the public notice, objectors were advised to file their objections with the Secretary of the Commission upto May 4, 2009, with an advance copy to the Board. The public notice also indicated that after perusing the objections received, the Commission will conduct public hearings on the dates which would be subsequently notified.

The Commission received 13 written objections by 4.5.2009 and 15 additional written objections thereafter. The Commission decided to take all these objections into consideration.

Number of objections received from individual consumers, consumer groups, organizations and others are detailed below:

Sr. No.	Category	No. of Objections
1.	Chambers of Commerce	1
2.	Industrial Associations	5
3	Industry	7
4	Railways	1
5	PSEB Engineers/Employees Associations	2
6	Individuals	8
7	Association of Affiliated Schools	1
8	Forums	3
	Total	28

The list of objectors is given in Annexure-I to this Tariff Order. The Board submitted its comments to all the objections which were made available to the respective objectors.

The Commission decided to hold public hearings at Ludhiana, Bathinda, Jalandhar and Chandigarh. A public notice to this effect was published on 6.5.2009, 20.5.2009 and 21.5.2009 in The Tribune, Hindustan Times, Punjabi Tribune, Punjab Kesari and Times of India informing the objectors, consumers and the general public in this respect as per details hereunder :

Venue	Date & time of public hearing	Category of consumers to be heard.
CHANDIGARH Commission Office i.e. SCO No.220-221, Sector 34-A, Chandigarh.	May 14, 2009 10.30 AM to 1.30 PM	Industry
	3 PM onwards	Agriculture consumers
CHANDIGARH Commission Office i.e. SCO No.220-221, Sector 34-A, Chandigarh.	May 15, 2009 10.30 AM to 1.30 PM	All consumers except Industry, Agricultural consumers and staff associations/unions of the Board.
	3 PM onwards	Staff associations/unions of Board and other organizations.
LUDHIANA Circuit House, Ferozepur Road, Ludhiana	May 18, 2009 11 AM to 1.30 PM	All consumers/organizations
JALANDHAR Circuit House, Skylark Chowk, Opp. Skylark Hotel, Jalandhar.	May 20, 2009 11 AM to 1.30 PM		All consumers/organizations
BATHINDA Circuit House, Civil Lines, Near D.C.Residence, Bathinda.	May 26, 2009 11 AM to 1.30 PM		All consumers/organizations

Through public notices published in different newspapers, it was intimated that the Commission will conduct a public hearing at Chandigarh on June 10, 2009 in which the Board will reply to written objections of the public and other issues raised during public hearings in addition to presenting its own case.

The public hearings were held as per schedule, and objectors, general public and the Board were heard by the Commission. A summary of the issues raised, the responses of the Board and the views of the Commission are contained in Annexure-II of this Tariff Order.

1.4 The Government was approached by the Commission through a letter dated 8.4.2009 seeking its views on the ARR to which the Government responded on 9.7.2009, which has been taken note of by the Commission.

1.5 State Advisory Committee

The State Advisory Committee set up under Section 87 of the Act, discussed the Board’s ARR in a meeting convened for the purpose on 09.06.2009. The minutes of the meeting of the State Advisory Committee are enclosed as Annexure–III to this Order.

The Commission has thus taken the necessary steps to ensure that the due process, as contemplated under the Act and Regulations framed by the Commission, is followed and adequate opportunity given to all stakeholders in presenting their views.

1.6 Compliance of Directives

In its previous Tariff Orders, the Commission had issued certain directives to the Board in the public interest. A summary of directives issued along with the comments of the Commission is given in Annexure-IV of this Tariff Order.

Chapter 2

True-up for the year 2007-08

2.1 Background

2.1.1 The Commission approved the ARR and Tariff for the year 2007-08 in its suo motu Tariff Order dated September 17, 2007 which was based on the information/data provided by the Board. The Board had furnished revised estimates for that year during the determination of ARR and Tariff for 2008-09 in which there were major differences in certain items of costs as well as projected revenues both in the revised estimates furnished by the Board and the approvals granted by the Commission. The Commission in its Tariff Order of 2008-09 reviewed its earlier approvals and re-determined the same based on the revised estimates made available. The Board has now furnished the audited accounts for the year 2007-08 which again vary in parts with the figures taken into account in the review of 2007-08 by the Commission. This chapter contains a final true up of 2007-08, based on the Audited Annual Statement of Accounts (audited accounts) but without altering the principles and the norms approved earlier.

2.2 Energy Demand (Sales)

2.2.1 The sales projected by the Board during the suo motu determination of ARR for 2007-08, sales approved by the Commission in the Tariff Order of 2007-08, revised estimates furnished during determination of ARR of 2008-09, sales approved by the Commission in review and actual sales figures now given by the Board are given in Table 2.1.

Table 2.1: Energy Sales – 2007-08

(MU)

Sr. No.	Category	Projected by PSEB during suo motu determination of ARR 07-08	Approved by the Commission in T.O. 07-08	Revised Estimates of PSEB during determination of ARR of 08-09	Approved by the Commission in review	Actuals as in the ARR of 09-10	Now approved by the Commission
1	2	3	4	5	6	7	8
1	Domestic	5897	5926	6302	6273	6491	6491
2	Non-Residential	1774	1748	1877	1876	1919	1919
3	Small Power	712	655	736	732	738	738
4	Medium Supply	1560	1649	1568	1564	1579	1579
5	Large Supply	8522	8412	8877	8825	8733	8733
6	Public Lighting	145	143	141	139	140	140
7	Bulk Supply & Railway Traction	603	630	585	583	614	614
8	Total Metered sales (within State)	19213	19163	20085	19992	20214	20214
9	Agriculture pumpsets	8939	8645	9537	8960	10030	8902
10	Total sales within the State	28152	27808	29622	28952	30244	29116
11	Common pool	300	300	303	303	302	303
12	Outside State sales	952	827	1615	1615	1576	1576
13	Total (10+11+12)	29404	28935	31540	30870	32122	30995

The Board has furnished the actual total sales at 32122 MU for the year 2007-08 as per audited accounts including the theft of energy of 208 MU. This theft of energy has not been apportioned to different consumer categories in the audited accounts but the Board in its ARR petition (Vol. 1) for the year 2009-10 has submitted category-wise sales for 2007-08 including theft of energy which is as per column 7 of Table 2.1.

2.2.2 Metered Sales: In metered sales, the Board has included 208 MU of energy on account of theft. The revenue on this account has been shown as Rs.27.98 crore in the annual accounts which is not commensurate with the revenue accruing from sale of energy of 208 MU to metered categories. Owing to this discrepancy in figures and in the absence of any proper justification forthcoming from the Board, the Commission had been following the approach of re-estimating energy on account of theft by matching it with the revenue shown therefrom. Now, the Board in its letter of 06.05.2009 has submitted that as per accounting procedures, the amount assessed under theft and the amount assessed under sale of power are required to be booked under different account heads. It is noticed, however, that the theft amount is sometimes credited as sale of power (SOP), whereas consumption is accounted for as theft of energy which results in lower realization on this account being reflected in the audited accounts. However, the Board has contended that as revenue and sales figures of the Board are being audited by AG (Punjab), these should be accepted by the Commission. Finding weight in the submission of the Board, the Commission accepts the same but would in future like the amount of revenue from this head to be correctly accounted. Accordingly, the Commission estimates the sales for 2007-08 on the basis of actuals given in the audited accounts for 2007-08 and adjusts the theft of energy of 208 MU to various consumer categories on a prorata basis. The Commission thus approves the metered sales within the State at 20214 MU.

The Commission accepts common pool sales at 303 MU and outside state sales as 1576 MU on the basis of actuals as given in the audited accounts for 2007-08.

Metered sales now approved by the Commission are as shown in column 8 of Table 2.1.

2.2.3 AP Consumption: The Commission in its tariff order of 2007-08 approved AP consumption of 8645 MU after allowing a normative growth of 5% over the revised approved consumption of 8233 MU for the previous year (2006-07). While doing so, the Commission observed that the methodology of computing AP consumption on the basis of sample meter readings and connected load needs further refinement. The Board in its ARR for 2008-09, reported a revised AP consumption of 10012 MU in 2007-08 against an average connected load of 5351380 KW. The increase was explained to be on account of deficient rainfall in the kharif season, increased load owing to regularization of connected load under Voluntary Disclosure Schemes (VDS) launched during 2006-07 and 2007-08 and the increasing use of submersible pumps. The Commission in its Tariff Order for the year 2008-09 observed that the assessment of AP consumption is based on the calculation of AP consumption factor which is worked out from sample meter readings and the connected load of pumps on which these meters are installed. The Commission had noted that the verified actual connected load of the pump sets on which sample meters have been installed was not available and there were several inconsistencies in reporting connected load on account of VDS and release of new connections. For the reasons discussed in that Tariff Order, the Commission was not convinced of the correctness of the revised AP consumption for 2007-08 reported as 10012 MU. In the circumstances the Commission decided to revise the estimate of AP consumption in 2007-08 by applying an increase in connected load of 8.81% to AP consumption of 8235 MU determined for the year 2006-07. Accordingly, estimate of AP consumption for the year 2007-08 was revised to 8960 MU. The Board has now submitted the AP consumption for 2007-08 as 10030 MU as per audited accounts.

During the course of hearings of the ARR and Tariff Petition for the year 2008-09, the Board offered that in case the present method of assessing AP consumption is not acceptable, the Commission may appoint an independent agency for reassessing the same, the full cost of which will be borne by the Board. The Commission thereupon decided to undertake a study on the subject.

The Commission appointed M/s ABPS Infrastructure Advisory Private Limited, Mumbai (Agency) for validation of AP consumption reported by the Board for the year 2007-08 and first three quarters of 2008-09. As per the terms of reference of the work assigned to the Agency, it was to collect the details of connected load and the recorded consumption of the sample meters for 2007-08 and the first three quarters of 2008-09 in respect of five circles i.e. Sangrur, Khanna, Hoshiarpur, Gurdaspur and Bathinda. One circle in each zone was selected with a view to make the sample of the study as representative as possible of the various regions of the State. The figures so obtained were then to be validated after comparing it with the records maintained in the field.

The Agency following the methodology adopted by the Board did not take into account the sample meters falling under the following categories:

· Defective Meters

· Locked Meters

· Meters with initial readings and Meters with zero readings

· Meters with abnormal readings/inconsistent readings

The Agency collected the details of connected load, supply hours and the consumption of sample meter connections from the Board’s System Losses Study Cell (SLSC) in respect of all the five circles. It also observed that consumption shown by some of the sample meters was more than it possibly could have been with the supply hours intimated by SLSC. This sample meter load was thereafter validated by the Agency from the AP ledgers/VDS registers maintained at the Sub Divisional offices of the Board. The Agency observed that the load of some of the sample meters was not updated inspite of actual enhancement under VDS or otherwise. The circle wise percentage increase in the actual load was observed as under: -

Khanna 4.9

Bathinda 4.7

Sangrur 3.8

Gurdaspur 1.5

Hoshiarpur 2.5

After updating the loads of sample meters and recalculating the consumption of those meters which showed consumption inconsistent with the reported loads and given supply hours, the Agency calculated the month wise AP factor of each division for all the five circles and thereafter computed the monthly consumption of each division by multiplying the AP factor thus arrived at with the total connected load of the division.

The Agency submitted its report in May 2009. The AP consumption worked out by the Agency in the five circles with the AP factor of the Board, the AP consumption determined with AP factor calculated with updated loads and the difference in percentage terms is given in Table 2.1(A).

Table 2.1(A)

Circles	Consumption as per PSEB AP factor (MU)	Consumption as per AP factor computed by the Agency (MU)	% difference
Khanna	509.94	399.39	21.68
Bathinda	479.52	356.13	25.73
Sangrur	1543.80	1188.31	23.03
Gurdaspur	486.20	366.62	24.59
Hoshiarpur	386.87	307.83	20.43

A copy of the preliminary report submitted by the Agency to the Commission was sent to the Board for its comments. The Board made the following observations:

· Average AP connected load is not as per PSEB records.

· Light load has not been considered at a number of places.

· The supply hours considered in the study are not as per actuals.

· The efficiency of the motors has not been taken into account.

· Possibility of unauthorized loads not being accounted for.

In view of these observations, the Agency was asked to recalculate the AP consumption for all the five circles. The Agency has, by and large, accepted the Board’s contentions as mentioned above and considered supply hours data provided by the office of the Chief Engineer/SO&C, factored in the efficiency of motors and also had taken into account the lighting load while computing the total load of the division. The possibility of unauthorized loads could not be taken into account because of difficulties in its quantification. The Agency then recalculated the AP factor with updated load on sample meters and consumption earlier supplied by the Board excluding the excessive consumption recorded by sample meters to the extent it was incompatible with the revised figures of connected load and supply hours. The connected load of each Division as furnished by the Board and AP factor arrived at as above was considered to calculate the total consumption in each Division of the five circles. The Agency submitted its report giving circle-wise consumption for 2007-08 which is compared with the AP consumption earlier supplied by the Board as in Table 2.1(B).

Table 2.1(B)

Circle	AP consumption for 2007-08 (MU)		% difference
	Supplied by Board	Computed by the Agency
Khanna	513.05	452.2	11.86
Bathinda	497.463	416.0	16.38
Sangrur	1592.764	1452.0	8.84
Gurdaspur	489.608	435.0	11.15
Hoshiarpur	381.022	328.0	13.92
Total	3473.907	3083.2	11.25

Based on the validation of data for the five circles, a variation of 11.25% is observed between AP consumption reported by the Board to the Commission and that computed by the Agency. It is evident that the difference is mainly on account of non-updation of loads of AP connections on which sample meters have been installed and excessive consumption shown in the recordings of sample meters that is inconsistent with the given supply hours and the connected load. The report of the Agency is based primarily on the data furnished by the Board which has also been validated from the Board’s records. Moreover, the observations of the Board to the preliminary report made available to them have also, by and large, been taken into account. For these reasons, the Commission has no hesitation in accepting the findings of the Agency.

As the sample in the study represents 25% of the circles and about 33% of the total estimated AP consumption, its findings can with some measure of assurance be applied to the rest of the State. The Commission, accordingly, finds sufficient reason to presume that a similar pattern of over reporting agricultural consumption prevails in other circles of the Board as well. Accordingly, the Commission decides to reduce agriculture consumption reported by the Board (10030 MU) by 11.25% by applying the findings of this study to the State as a whole.

The Commission thus approves AP consumption of 8902 MU based on the validated data and report of the Agency for the year 2007-08.

2.3 Transmission and Distribution Losses (T&D Losses)

2.3.1 The Commission in its Tariff Order of 2007-08 fixed the target of T&D losses at 19.50%. During the determination of ARR of 2008-09, the Board stated that T&D losses in 2007-08 would be 22.70% but the Commission retained the T&D losses at 19.50% in the review. The Board has now intimated that the actual losses of 2007-08 are 22.53%. The Commission, however, sees no reason to accept T&D losses in excess of the target fixed by the Commission.

The Commission, therefore, retains the T&D losses at 19.50% as approved in the Tariff Order for the year 2007-08.

2.4 PSEB’S Own Generation

2.4.1 Thermal Generation: The station-wise generation projected by the Board during the suo motu determination of ARR by the Commission for the year 2007-08, generation approved by the Commission in the Tariff Order, revised estimates furnished by the Board during determination of ARR of 2008-09, generation approved by the Commission in the review, actuals now supplied by the Board with the ARR for 2009-10 and generation finally approved by the Commission is given in Table 2.2.

Table 2.2: Thermal Generation – 2007-08

(MU)

Sr. No.	Station	Projected by PSEB during suo motu determination of ARR 07-08		Approved by the Commission T.O. 07-08		Revised Estimates by PSEB in ARR 08-09		Approved by the Commission T.O. 08-09		Actuals by PSEB submitted in ARR 09-10		Now approved by the Commission
		Gross	Net	Gross	Net	Gross	Net	Gross	Net	Gross	Net	Gross	Net
1	2	3	4	5	6	7	8	9	10	11	12	13	14
1	GNDTP	2540	2248	2769	2464	2885	2549	3008	2677	3008*	2663	3008	2677
2	GGSTP	9200	8418	9510	8702	9356	8553	9806	8972	9806	8979	9806	8972
3	GHTP Stage-1	4500	4095	3542	3223	3418	3110	3509	3193	3508	3197	3508	3192
4	GHTP Stage-2**									135	120	135	123
5	Total	16240	14761	15821	14389	15659	14212	16323	14842	16457	14959	16457	14964

* Includes 44 MU generated during trial run of GNDTP Unit-1 during April 2007 after the R&M works were completed, as intimated by the Board in its letter no. 601 dated 16.4.2009.

** Energy generated during trial run.

Plant-wise generation is not available in the annual statement of accounts and as such the data supplied along with the ARR of 2009-10 and the generation figures validated by the Commission have been taken into account.

Accordingly, the Commission approves gross thermal generation for the year 2007-08 at 16457 MU.

Auxiliary Consumption

The auxiliary consumption projected by the Board during suo motu determination of ARR by the Commission for the year 2007-08, auxiliary consumption approved by the Commission in the Tariff Order, revised estimates furnished during determination of ARR of 2008-09, auxiliary consumption approved by the Commission in the review, actuals now supplied by the Board with the ARR for 2009-10 and auxiliary consumption finally approved by the Commission is given in Table 2.3 below.

Table 2.3: Auxiliary Consumption – 2007-08

Sr. No.	Station	Projected by PSEB during suo motu determination of ARR 07-08	Approved by the Commission in T.O. 07-08	Revised Estimates by PSEB in ARR 08-09	Approved by the Commission in T.O. 08-09	Actuals by PSEB submitted in ARR 09-10	Now approved by the Commission
1	2	3	4	5	6	7	8
1	GNDTP	11.50%	11%	11.63%	11%	11.41%	11.00%
2	GGSTP	8.50%	8.50%	8.58%	8.50%	8.44%	8.50%
3	GHTP	9%	9%	9.01%	9%	8.87%	9.00%

It is observed that actual auxiliary consumption now reported by the Board is marginally higher for GNDTP and lower for GGSTP and GHTP than the approved levels. As auxiliary consumption has been approved on normative basis, the Commission is inclined to retain the levels as approved in the Tariff Order for 2007-08.

The net thermal generation on this basis works out to 14964 MU as shown in column 14 of Table 2.2.

The Commission further observes that the Board has over-achieved in thermal generation by 501 MU (16322* - 15821) gross and 452 MU (14841**-14389) net as compared to generation originally approved, as shown in Table 2.2.

* 16322 = 16457 - 135

** 14841 = 14964 - 123

The Commission takes note of higher thermal generation and consequential less power purchase to that extent. This is further discussed in para 2.9.

2.4.2 Hydel Generation: The station-wise generation submitted by the Board to the Commission during suo motu determination of ARR and Tariff for the year 2007-08, generation approved by the Commission in its Tariff Order, revised estimates furnished by the Board during determination of ARR of 2008-09, generation approved by the Commission in review and actuals now furnished by the Board and those accepted by the Commission are given in Table 2.4.

Table 2.4: Hydel Generation – 2007-08

(MU)

Sr. No.	Hydel Station	Projected by PSEB during suo motu determination of ARR 07-08	Approved by Commission in TO 07-08	RE by PSEB in ARR 08-09	RE accepted by Commission in TO 08-09	Actuals by PSEB in ARR 09-10	Now approved by Commission
1	2	3	4	5	6	7	8
1	Shanan	529	529	517	540	540	540
2	UBDC	446	446	380	428	428	428
3	RSD	1568	1568	1484	1539	1538	1538
4	MHP	1026	1026	1399	1362	1362	1362
5	ASHP	657	642	790	710	710	710
6	Micro Hydel	7	7	8	7	7	7
7	Total own hydel
a	Gross	4233	4218	4578	4586	4585	4585
b	Net	4203	4059	4404	4425	4527^1	4365^3
8	PSEB Share from BBMB
a	Gross Share	4204	4204	4653	4325	4327	4327
b	Add Common pool share	300	300	303	303	302	303
c	Less External losses	161	146	183	168	171	171
d	Net Share from BBMB	4343	4358	4773	4460	4458^2	4459
9	Total Net Hydel (Own + BBMB)	8546	8417	9177	8885	8985	8824

1. Net of auxiliary consumption (8 MU) and transformation loss (50 MU).

2. BBMB share including common pool is net of transmission loss of 171 MU (3.95%) of gross share not including common pool.

3. Own generation is net of

· HP share (free) in RSD @ 4.6% (71 MU),

· Royalty to HP in Shanan (53 MU),

· Diversion to BBMB from ASHP (59 MU) on account of extra power generated because of diversion of water from Nangal Hydel Channel to Anandpur Sahib Hydel Channel during repair at Ganguwal/Kotla power houses,

· Transformation loss @ 0.5% (23 MU)

· Auxiliary consumption @ 0.5% for RSD generation of 1538 MU and UBDC Stage-1 generation of 184 MU (having static exciters) and @ 0.2% for others (14 MU).

The actual gross hydel generation from the Board’s own hydel stations for the year 2007-08 is 4585 MU and the Commission accepts the same. While calculating the net generation, the Board has not deducted the free HP share in RSD and royalty in Shanan. In line with the principle being followed in such sales, the Commission has worked out net hydel generation by deducting HP share in RSD, royalty in Shanan and diversion to BBMB from ASHP from gross generation along with the auxiliary consumption and transformation losses. Net hydel generation for the year 2007-08 thus works out to 4365 MU. The actual net availability from BBMB is 4459 MU which the Commission accepts.

The Commission, therefore, approves net hydel generation for the year 2007-08 at 4365 MU from the Board’s own generation and 4459 MU as net share from BBMB as shown in table 2.4.

2.5 Power Purchase

2.5.1 The Commission in its Tariff Order of 2007-08 approved net power purchase of 12865 MU. During determination of ARR of 2008-09, the Board furnished revised estimates for net power purchase of 16850 MU but in review, the Commission approved 14156 MU only. The Board has now submitted net purchases during 2007-08 of 16974 MU as per audited accounts. This matter is further discussed in para 2.8.

2.6 Energy Balance

2.6.1 The details of energy requirement and availability approved by the Commission in review in the Tariff Order of 2008-09 and the actuals now furnished by the Board are given in Table 2.5. The energy balance, including T&D losses along with sales and availability now approved by the Commission is depicted in column 6 of Table 2.5.

Table 2.5: Energy Balance – 2007-08

(MU)

Sr. No.	Particulars	Approved by the Commission in T.O. 08-09	Actual by PSEB in ARR 09-10	Now approved by the Commission	Sales & actual T&D losses as per approved availability
1	2	3	4	5	6
A) Energy Requirement
1	Metered Sales	19,992	20,214	20,214	20,214
2	Sales to Agriculture Pumpsets	8,960	10,030	8,902	8,902
3	Total Sales within the State	28,952	30,244	29,116	29,116
4	Loss percentage	19.50%	22.53%	19.50%	25.12%
5	T&D losses	7,013	8,796	7,053	9,767
6	Sales to Common pool consumers	303	302	303	303
7	Outside State Sales	1,615	1,576	1,576	1,576
8	Total requirement	37,883	40,918	38,048	40,762
B) Energy Available
9	Own generation (Ex-bus)
10	Thermal	14,842	14,959	14,964	14,964
11	Hydro	4,425	4,527	4,365	4,365
12	Share from BBMB (incl.share of common pool consumers	4,460	4,458	4,459	4,459
		(common pool = 303)	(common pool = 302)	(common pool = 303)	(common pool = 303)
13	Purchase net	14,156	16,974	16,974	16,974
14	Total Available	37,883	40,918	40,762	40,762

2.6.2 The total energy requirement now approved by the Commission considering T&D losses at 19.50% is 38048 MU (net) as against 40918 MU projected by the Board, whereas total energy availability now approved is 40762 MU (net). The difference of 2714 MU (net) between energy requirement and energy availability is owing to the underachievement of T&D loss target as discussed in para 2.3 and depicted in columns 5 & 6 of Table 2.5. Higher T&D loss over and above the level approved by the Commission has resulted in increased net power purchase to the extent of 2714 MU (9767 - 7053) MU. The matter is further discussed in para 2.9.

The Commission approves the total energy requirement for the year 2007-08 at 38048 MU (net) after retaining T&D losses at 19.50%.

2.7 Fuel Cost

2.7.1 In its Tariff Order of 2007-08, the Commission approved the fuel cost as Rs.2404.28 crore for a gross thermal generation of 15821 MU. In review, this cost was revised to Rs.2484.00 crore for the then approved generation of 16323 MU. Details of approved fuel cost in the Tariff Order of 2007-08 and review are given in Table 2.6.

Table 2.6: Fuel Cost – 2007-08

Sr. No.	Station	As per T.O. 07-08		As per Review in T.O. 08-09
		Gross Generation (MU)	Fuel Cost (Rs.crore)	Gross Generation (MU)	Fuel Cost (Rs.crore)
1	2	3	4	5	6
1	GNDTP	2769	474.16	3008	513.90
2	GGSTP	9510	1416.83	9806	1,467.20
3	GHTP	3542	513.28	3509	502.90
4	Total	15821	2404.28	16323	2,484.00

2.7.2 The Board in its ARR of 2009-10 has indicated actual fuel cost for 2007-08 for a gross generation of 16322 MU as Rs.2626 crore whereas in the audited accounts of 2007-08, the total generation expenses are Rs.2645.56 crore. These comprise of Rs. 2535.22 crore for coal and oil consumption, Rs.15.61 crore for other fuel related costs including octroi, contract handling charges, siding charges etc., Rs.74.97 crore for fuel related losses including transit losses and Rs.19.76 crore for other operating expenses such as cost of water, lubricants, consumable stores and station supplies. Out of these, Rs.19.76 crore booked towards other operating expenses do not form part of the fuel cost and are being considered under repair and maintenance expenses in para 2.11. Thus, the net fuel cost as per audited accounts is taken as Rs.2625.80 (2645.56 – 19.76) crore.

2.7.3 The actual fuel cost intimated by the Board for 2007-08 in its ARR of 2009-10 for a gross thermal generation of 16322 MU is based on calorific value and price of coal / oil as given in Table 2.7A. In gross thermal generation, the Board has not taken into account the generation of GHTP Stage II during its trial run. The Board has also intimated that the fuel cost of GHTP Stage II (Units III & IV) has been booked under Capital Cost of the plants and hence the cost of generation of Units III & IV of GHTP Stage II has not been considered as operational (fuel) cost in accordance with CERC Regulations.

The Commission observes that the Board is still an integrated utility and the power generated during trial run of GHTP Stage II Units had been injected into the grid of the Board without consideration of frequency at that time. As such, the Commission is not inclined to treat the power generated during trial run as power purchased at UI rate and consequently reduce that amount from the capital cost of the plant. However, fuel cost of the generation during trial runs will be considered and allowed as revenue expense.

Table 2.7A: Calorific Value and Price of Coal and Oil as submitted

by the Board for 2007-08

Sr. No.	Station	As submitted by PSEB
		Calorific value of coal (kCal/Kg)	Calorific Value of Oil (K.cal/Ltr)	Price of Oil (Rs/KL)	Price of coal including transit loss (Rs./MT)	Transit loss (%)
1	2	3	4	5	6	7
1	GNDTP	4181	10056	23383	2313	2.04%
2	GGSTP	3972	10000	23254	2397	2.50%
3	GHTP	4153	9400	19250	2354	1.49%

2.7.4 Fuel cost being a major item of expense, the Commission thought it prudent to get the same validated. The finally accepted values are indicated in Table 2.7B.

Table 2.7B: Calorific Value and Price of Coal and Oil as approved
by the Commission for 2007-08

	As accepted by the Commission
Station	Gross Calorific value of coal (kCal/Kg)	Calorific Value of Oil (K.cal/Ltr)	Price of Oil (Rs/KL)	Price of coal including transit loss (Rs./MT)	Transit loss (%)	Price of coal excluding transit loss (Rs./MT)
	1	2	3	4	5	6
GNDTP	4181	10066	23383	2313	1.87%	2270
GGSTP	3972	10000	23251	2397	2.40%	2339
GHTP	4153	9400	19246	2354	1.49%	2319

2.7.5 In the ARR for the year 2009-10, the Board has not reported any consumption of imported coal for the year 2007-08. This was also verified at the power stations at the time of validation when it was noted that a substantial quantity of coal from the Board’s captive coal mine (PANAM) was used during 2007-08 which is priced F.O.R. destination. The Commission verified that 901533 MT, 1842539 MT and 830668 MT PANAM coal was used at GNDTP, GGSTP and GHTP, respectively, during 2007-08. The price of coal and corresponding calorific values given in the ARR of the Board (as given in Table 2.7A) and those validated by the Commission (as given in Table 2.7B) are weighted average values of coal, including PANAM coal.

2.7.6 The Commission has now approved revised gross thermal generation of 16457 MU (3008 MU for GNDTP, 9806 MU for GGSTP, 3508 MU for GHTP Stage I and 135 MU for GHTP Stage II) as discussed in para 2.4.1. The fuel cost for different thermal stations corresponding to generation now approved has been worked out, based on the parameters adopted by the Commission in its Tariff Order of 2007-08. Price and calorific value of coal and oil has been adopted as validated and accepted by the Commission.

2.7.7 No transit loss has been allowed for PANAM coal while arriving at fuel cost as prices according to the contract are on F.O.R. destination basis. In case of coal other than PANAM coal, transit loss of 2% has been allowed by the Commission.

2.7.8 On the above basis, fuel cost for the year 2007-08 for different thermal stations corresponding to actual generation is given in Table 2.8. As discussed in para 2.7.3, the fuel cost in respect of 135 MU generated by GHTP Stage II (Units III & IV) during their trial run is also included in this cost.

Table 2.8: Fuel Cost- 2007-08

Sr. No.	Item	Derivation	Unit	Approved for 2007-08
				GNDTP	GGSTP	GHTP	Total
1	2	3	4	5	6	7	8
1	Generation	A	MU	3008	9806	3643	16457
2	Heat Rate	B	k.cal/kWh Generated	3000	2500	2500
3	Specific oil consumption	C	Milli litre/kwh	3.50	2.00	2.00
4	Calorific value of oil	D	k.cal/litre	10066	10000	9400
5	Calorific value of coal	E	k.cal/kg	4181	3972	4153
6	Overall heat	F = (A x B)	G.cal	9024000	24515000	9107500
7	Heat from oil	G = (A x C x D) / 1000	G.cal	105975	196120	68488
8	Heat from coal	H = (F-G)	G.cal	8918025	24318880	9039012
9	Oil Consumption	I=(Gx1000)/D	KL	10528	19612	7286
10	Transit loss of coal	J	(%)	2	2	2
11	Total Coal Consumption excluding transit loss	K=(H*1000)/E	MT	2132989	6122578	2176502
12	Quantity of PANAM coal	L	MT	901533	1842539	830668
13	Quantity of coal other than PANAM coal excluding transit loss.	M=K-L	MT	1231456	4280039	1345834
14	Quantity of coal other than PANAM coal including transit loss	N=M/(1-J/100)	MT	1256588	4367387	1373300
15	Total Quantity of coal required	O=L+N	MT	2158121	6209926	2203968
16	Cost of oil	P	Rs./KL	23383	23251	19246
17	Cost of coal (excluding transit loss)	Q	Rs./MT	2270	2339	2319
18	Total cost of oil	R=P x I / 10^7	Rs.crore	24.62	45.60	14.02
19	Cost of coal	S=O x Q/10^7	Rs.crore	489.89	1452.50	511.10
20	Total Fuel cost	T= R+S	Rs.crore	514.51	1498.10	525.12	2537.73

The Commission, thus, approves the fuel cost at Rs.2537.73 crore for gross thermal generation of 16457 MU for the year 2007-08.

2.8 Power Purchase Cost

2.8.1 The Commission, in its Tariff Order for the year 2007-08, approved a cost of Rs.3410.01 crore for purchase of 13401 MU (gross). In review, the Commission revised it to Rs.5014.34 crore for the purchase of 14843 MU (gross), inclusive of 4.63% external losses (based on actual external losses for 2006-07).

2.8.2 The actual gross power purchase for the year 2007-08 now reported by the Board is 17813 MU including unscheduled interchange (UI) of 1952 MU. The net power purchase after accounting for external losses of 4.71% is 16974 MU. The actual cost of power purchase for 2007-08 as per ARR 2009-10 is Rs.6020.42 crore. However, the power purchase cost as per audited accounts for 2007-08 is Rs.6020.37 Crore.

The Commission thus approves a cost of Rs.6020.37 crore for power purchase of 16974 MU net.

2.9 Expenses Disapproved/Incentive approved by the Commission

2.9.1 Expenses disapproved on account of higher T&D losses: As discussed in para 2.3, the Board has under achieved the T&D loss target approved by the Commission. As per Tariff Regulations, the entire loss on account of failure of the licensee to achieve the targets set by the Commission is to be borne by the licensee. As brought out in para 2.6, T&D loss level higher than that approved by the Commission has resulted in increased power purchase to the extent of 2714 MU (net), the pro-rata cost of which based on power purchase cost approved in para 2.8 works out to Rs.962.61 (6020.37 x 2714 / 16974) crore.

The Commission, therefore, disapproves expenses to the extent of Rs. 962.61 crore on account of higher T&D losses.

The effect of this is reflected at Sr. No. 12 (ii) of Table 2.13.

2.9.2 Incentive for higher Thermal Generation: The Commission has noted higher thermal generation to the extent of 501 MU gross (452 MU net) and consequent less power purchase on this account in para 2.4.1. The station-wise increase in gross generation is 239 (3008-2769) MU for GNDTP and 296 MU for GGSTP (9806-9510). However, the actual gross generation of GHTP is less by 34 MU (3508-3542) than approved by the Commission in the Tariff Order of 2007-08. The net increase in fuel cost for different stations corresponding to this variation in generation based on cost now approved works out to Rs.81.2 crore as given in Table 2.9.

Table 2.9: Increase in Fuel Cost due to higher Thermal Generation: 2007-08

Stations	Now approved by the Commission		Increase due to higher generation
	Generation (MU)	Fuel Cost	Increase in generation (MU)