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 30th 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

45271

43653

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

44582

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 / 107

Rs.crore

24.62

45.60

14.02

 

19

Cost of coal

S=O x Q/107

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)

Increase in Fuel Cost

(Rs. Crore)

(Rs. Crore)

2

3

4

5

6

GNDTP

3008

514.51

239

40.88

GGSTP

9806

1498.10

296

45.22

GHTP

3643

525.12

(-)34

(-)4.90

Total

16457

2537.73

501

81.2

 

The decrease in power purchase on account of higher thermal generation is 452 MU (net). The pro-rata cost of 452 MU (net) based on power purchase cost approved as per para 2.8 works out to Rs.160.32 crore (i.e. Rs.6020.37 x 452/16974). Accordingly, the net saving on account of higher thermal generation is Rs.79.12 (160.32 -81.2) crore.

 

The Commission, therefore, approves an amount of Rs.79.12 crore as incentive on account of higher thermal generation.

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

 

2.10     Employee Cost

 

2.10.1    The Commission, in the Tariff Order of 2007-08, had approved employee cost at Rs.1661.41 crore. In the review of 2007-08 in the subsequent Tariff Order, the Commission had revised the employee cost to Rs.1662.50 crore based on increase of 6.68% in the wholesale price index (WPI) based on latest estimates available for 2007-08. This was in accordance with the PSERC Tariff Regulations which specified that O&M expenses (which included employee cost) would be adjusted according to the annual variation in the rate of WPI.

 

2.10.2    The Board has submitted the audited accounts for 2007-08 according to which employee cost is Rs.2153.09 crore (gross). After deducting capitalization of Rs.117.81 crore, the cost works out to Rs.2035.28 crore. However, as per Audit comments in the audited accounts these costs are understated by Rs.6.46 crore on account of bonus payment booked to bonus payable. Thus, actual employee cost works out to Rs.2041.74 crore net of capitalization.

 

2.10.3    The Board in Petition No.14 of 2008 had pleaded that employee cost should also be allowed for the assets added during the year from the date of commissioning for the years 2006-07 and 2007-08 as per Regulation 28 (6) of the PSERC Tariff Regulations. However, the Commission while disposing of the petition, in its order dated March 24, 2009, found no justification in allowing additional employee cost to the Board on this account. It is relevant to mention here that the Appellate Tribunal in its Judgement dated May 26, 2006 had also observed that the employee cost of the Board will remain capped until performance parameters improve.

 

2.10.4    The Commission is, thus, only to adjust employee cost for 2007-08 according to the annual variations in the rate of WPI as on 1st April. The existing practice, whereby the difference in the WPI index alone is taken into account, is not fully reflective of the actual change in whole sale prices over the year.  The Commission is, therefore, of the view that it would be more realistic to take into account the average increase in WPI in a year rather than merely referring to the difference in the index as it stood on 1st April of the present and previous year. Accordingly it is noted that the increase in WPI for the year 2007-08 works out to 4.66% as against 6.68% allowed in the review. The Commission, therefore, approves employee cost of Rs.1631.02 crore by allowing an increase of 4.66% over the approved employee cost of Rs.1558.40 crore for the year 2006-07.

 

The Commission approves the employee cost of Rs.1631.02 crore for the year 2007-08.

 

 

 

 

2.11          Repairs and Maintenance (R&M) expenses

 

2.11.1    The Commission had approved R&M expenses at Rs.271.35 crore in the Tariff Order of 2007-08. In the review, these charges were revised to Rs.302.95 crore, allowing an increase of 6.68% in WPI over the R&M expenses approved for the year 2006-07 besides allowing R&M expenses for the additional assets of Rs.2843.22 crore stated to have been added during 2007-08, assuming these remained in use for six months in the year.

 

2.11.2    R&M expenses as per the audited accounts of the Board for the year are Rs.297.00 crore inclusive of Rs.19.76 crore operating expenses, of which Rs.3.10 crore have been capitalized leaving balance R&M expenses for the year as Rs.293.90 crore. However, as per Audit comments on the audited accounts of 2007-08, these expenses have been understated by Rs.1.19 crore by booking the cost of meters issued for replacement of burnt/damaged meters to capital expenditure. At the same time these charges have been reported to be overstated by Rs.0.31 crore as expenditure of capital nature has been charged to revenue. Thus, actual R&M cost for the year 2007-08 works out to Rs.294.78 (293.90+1.19-0.31) crore.

 

2.11.3 While disposing of Petition No.14 of 2008, the Commission in its order dated March 24, 2009, decided to take into account the base R&M expenses for 2007-08 at Rs.265.45 (254.53+10.92) crore instead of Rs.259.99 crore (base for 2006-07) considered to work out the R&M expenses allowable for 2007-08 in the Tariff Order of 2008-09. The PSERC Tariff Regulations provide for allowing increase in O&M expenses (which include R&M expenses) in proportion to the annual increase in WPI. After allowing WPI increase of 4.66%, as discussed in para 2.10.4 of this order over these expenses, R&M expenses allowable for the year 2007-08 work out to Rs.277.82 crore for assets valuing Rs.15413.59 crore as on April 1, 2007.

 

2.11.4 According to Regulation 28 (6) of the PSERC Tariff Regulations, O&M expenses for fixed assets added during the year are to be considered on pro-rata basis from the date of commissioning. As per audited accounts for 2007-08, fixed assets added during the year are valued at Rs.1007.14 crore. However, Audit comments to the audited accounts indicate that these assets have been understated by (i) Rs.4.27 crore on account of completed fixed assets shown as capital work in progress, (ii) Rs.0.31 crore on account of capital expenditure booked to revenue expenditure and (iii) overstated by Rs.1.19 crore on account of cost of burnt/damaged meters booked as capital expenses. Thus, actual fixed assets added during the year works out to Rs.1010.53 (1007.14 + 4.27 + 0.31 – 1.19) crore. By applying an average rate of 1.80% (277.82/15413.59*100), allowable R&M expenses for the additional fixed assets work out to Rs.9.09 crore assuming these assets remained in service for six months in the year.

 

The Commission accordingly allows the R&M expenses at Rs.286.91 (277.82+ 9.09) crore for the year 2007-08.

 

2.12          Administration and General  (A & G) expenses

2.12.1    In the Tariff Order of 2007-08, the Commission had approved A&G expenses at Rs.62.41 crore. In the review of 2007-08, these expenses had been increased to Rs.69.64 crore based on an increase of 6.68% in WPI, for the period from April 2007 to March 2008. This included A&G expenses for additional assets of Rs.2843.22 crore stated to have been added during 2007-08 assuming these remained in use for six months in the year.

 

2.12.2    As per the audited accounts of the Board, the A&G expenses for the year 2007-08 are Rs.92.04 crore (gross). Out of these, expenses of Rs.22.33 crore have been capitalized and the net expenses amount to Rs.69.71 crore. However, as per Audit comments on the accounts of 2007-08, these expenses are understated by Rs.0.21 crore due to non-adjustment of prepaid expenses of previous years. Thus, actual A&G expenses work out to Rs.69.92 crore for 2007-08.

 

2.12.3 While disposing of Petition No.14 of 2008, the Commission in its order dated March 24, 2009, decided to take into account the base A&G expenses for 2007-08 at Rs.61.08 (58.54+2.54) crore instead of Rs.59.81 crore  (2006-07) taken into account for 2007-08 in the Tariff Order of 2008-09.  As discussed in para 2.10.4 of this order, after allowing WPI increase of 4.66%, A&G expenses allowable for 2007-08 work out to Rs.63.93 crore which are allowed for assets valuing Rs.15413.59 crore as on 1st April, 2007.

 

2.12.4 The Commission adopts the same principle for allowing A&G expenses for fixed assets added during the year as has been applied to R&M expenses in para 2.11.4 of this order. Accordingly, the average rate of 0.41% (63.93 / 15413.59 * 100) is applied to the capital cost of additional assets of Rs.1010.53 crore added during 2007-08 for arriving at additional A&G expenses of Rs.2.07 crore.

 

The Commission, therefore, approves the A&G expenses of Rs.66.00 (63.93 + 2.07) crore for the year 2007-08.

 

2.13          Depreciation charges

2.13.1    The Commission had approved depreciation charges at Rs.696.82 crore for the year 2007-08 in the Tariff Order of 2007-08. In the review of 2007-08 in the following Tariff Order, these charges were revised to Rs.640.06 crore based on the revised estimates of the Board.

 

2.13.2 The Board has claimed depreciation charges of Rs.665.15 crore for the year 2007-08 in the ARR. However, by applying the average rates of depreciation to the opening balances of Assets as on April 1, 2007, the correct amount of depreciation works out to Rs.664.89 crore as detailed in Table 2.10 below.

Table 2.10: Depreciation charges

                                                                                                            (Rs. crore)

Sr.No.

Item

Assets as on April 1, 2007

% Rate

Claimed by Board

 Approved Depreciation charges for 2007-08

1

2

3

5

6

7

1

Thermal

2915.31

5.47%

159.33

159.47

2

Hydro

5,774.79

2.24%

129.57

129.36

3

Internal combustion

2.68

0.00%

-

-

4

Transmission

1,898.62

4.83%

91.79

91.70

5

Distribution

4,685.45

6.03%                                                                   

282.63

282.53

6

Others

136.74

1.34%

1.83

1.83

7

Total

15413.59

4.34%

665.15

664.89

 

In view of the above, the Commission approves depreciation charges of Rs.664.89 crore for the year 2007-08.

 

 

 

2.14          Interest and Finance charges

2.14.1    The Commission had approved net Interest and Finance charges of Rs.693.75 crore in the Tariff Order of 2007-08 after disallowing interest cost of Rs.100 crore in the case of the Board and Rs.289.92 crore of interest paid/payable on Govt. loans on account of diversion of capital funds for revenue purposes. In the review of 2007-08, the Interest & Finance charges were revised to Rs.634.04 crore mainly on account of variations of interest on working capital.

 

2.14.2  The gross amount of Interest and Finance charges as per the audited accounts for 2007-08 is Rs.1085.39 crore. The amounts not claimed by the Board and the amount of Interest and Finance charges allowed/disallowed by the Commission are tabulated in Table 2.11.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2.11: Interest and Finance charges

(Rs. crore)

Sr. No.

Description

Interest as depicted in accounts

Interest paid to the Govt. but not accounted for

Amount disallowed by Commission

Amount allowed by Commission

1.

Interest on institutional loans taken by the Board

509.47

-

7.79

501.68

2.

Interest on Govt. loans

85.99

275.89

-

361.88

3.

Interest on GPF

108.38

-

-

108.38

4.

Lease rentals

1.52

-

-

1.52

5.

Interest to consumers

4.73

-

-

4.73

6.

Sub-total

710.09

275.89

7.79

978.19

7.

Interest on WCL of Rs.4420 crs against admissible loans of Rs.878.50 crs on normative basis

365.78

-

253.77

112.01

8.

Interest on loans of Rs.265 crs. taken for Talwandi Sabo TP being developed by a Pvt. Company TSPL

1.16

-

1.16

0.00

9.

Interest paid but not due as per Audit comments

0.80

-

0.80

0.00

10.

Finance charges for loans of Rs.1384.18 crs. including loan of Rs.265 crs. taken for TSPL

7.56

-

2.32

5.24

11.

Total (6+7+8+9+10)

1085.39

275.89

265.84

1095.44

12.

Less capitalization

221.77

-

-

221.77

13.

Net Interest & Finance charges (11-12)

863.62

-

-

873.67

14.

Less interest disallowed on account of diversion

 

 

 

419.05

15.

Interest allowed (13-14)   

 

 

 

454.62

16.

Additional interest allowed for loans of Rs.1362 crs taken in lieu of Govt. loans

 

 

12.33

12.33

17.

Total Interest (15+16)

 

 

 

466.95

 

The reasons for allowing/disallowing the amount of interest as given above are discussed in the succeeding paragraphs.

 

2.14.3  In the Tariff Order of 2008-09, the Commission had approved an Investment Plan of Rs.1500 crore for the year 2007-08. However, net investment of Rs.1281 crore was approved after adjustment of Rs.219 crore consumers’ contribution considered at previous year’s level as audited accounts for 2007-08 were not available. Against this, actual capital expenditure of the Board for 2007-08 is Rs.1535.30 crore inclusive of Rs.314.40 crore for Talwandi Sabo Power Ltd. (TSPL) and Rs.8.50 crore for Rajpura Thermal Plant. The investment on these plants is not to be considered towards the investment plan of the Board since these plants are to be privately developed. Thus, actual capital expenditure of the Board works out to Rs.1212.40 crore. As per the audited accounts, consumers’ contribution for 2007-08 is at Rs.215.58 crore. In addition, the Board had also received an incentive grant of Rs.44.14 crore under APDRP during 2007-08. As these no cost funds were available with the Board for investment, actual need for capital loans works out to Rs.952.68 (1212.40-215.58-44.14) crore.  The interest on institutional loans actually availed by the Board for this purpose is Rs.509.47 crore in 2007-08. The Board’s interest liability on allowable loans of Rs.952.68 crore (against Rs.1119.18 crore actually availed) works out to Rs.501.68 crore on proportionate basis against the claim of Rs.509.47 crore. 

 

2.14.4  The Board has claimed interest of Rs.85.99 crore paid to the Govt. against actual interest due and payable of Rs.361.88 crore @ 12.22% on Govt. loans for 2007-08. Thus, the Board has not accounted for Govt. interest of Rs.275.89 (361.88-85.99) crore in its accounts. In order to arrive at the amount of gross interest payable in 2007-08, Rs.275.89 crore needs to be added to Rs.1085.39 crore.

               

2.14.5  The audited accounts include interest of Rs.108.38 crore on GPF, Rs.1.52 crore lease rentals and Rs.4.73 crore being interest paid to consumers on actual basis. Therefore, interest charges on these accounts are allowed on actual basis.

 

2.14.6 In the ARR of 2009-10, the Board has claimed interest of Rs.365.78 crore on working capital loans of Rs.4420 crore for 2007-08. However, working capital loans of Rs. 878.50 crore are admissible on normative basis on which interest charges work out to Rs.112.01 crore at an interest rate of 12.75% being the PLR of SBI as on April 2007. Accordingly, Rs.253.77 (365.78-112.01) crore is disallowed being interest on excess working capital loans availed by the Board.

         

2.14.7 In the audited accounts for 2007-08, interest of Rs.1.16 crore on loans taken for the Talwandi Sabo Thermal Plant, which is to be privately developed on Build Own Operate (BOO) basis, has been included. The claim of interest of Rs.1.16 crore on this account is not admissible and accordingly disallowed from the total Interest and Finance charges for 2007-08.

2.14.8  As per Audit comments, interest of Rs.0.80 crore which was not due but paid by the Board is included in the audited accounts. This amount is also disallowed taking into account the Audit comments.

 

2.14.9  In the Tariff Order of 2007-08, the Commission had approved Finance charges at Rs.12.08 crore which was revised to Rs.12.45 crore (inclusive of Rs.4 crore payable as interest to consumers) in the Tariff Order of 2008-09.  The net amount of Finance charges is Rs.7.56 crore as per audited accounts for 2007-08. These charges are for actual loans of Rs.1384.18 (1119.18+265) crore inclusive of loans of Rs.265 crore taken for TSPL. Thus, the percentage rate of Finance charges works out to 0.55%. However, allowable capital loans approved by the Commission are Rs.952.68 crore. By applying this rate, the allowable Finance charges comes  to Rs.5.24 crore resulting in disallowance of Rs.2.32 crore on account of excess loans. Accordingly, Finance charges of Rs.5.24 crore are approved for 2007-08.

 

2.14.10 After taking into account the above decisions, total Interest and Finance charges of the Board work out to Rs.1095.44 crore against Rs.1085.39 crore as per accounts (Table 2.11). After allowing capitalization of interest charges of Rs.221.77 crore as per accounts, the net Interest and Finance charges comes to Rs.873.67 crore against Rs.863.62 crore as per accounts.

 

2.14.11 The Commission had disallowed Rs.389.92 crore from the Interest and Finance charges on account of diversion of capital funds in the Tariff Order of 2007-08.  This amount was revised to Rs.389.15 crore in the review. The Commission has now reworked the diversion of capital funds based on the audited accounts of the Board for 2007-08 which is given in Table 2.12 below.

Table 2.12: Diversion of Capital Funds

                                                                                                                                                (Rs. crore)

Sr.

No.

Item

Year 2007-08

1

Net Fixed Block

9009.80*

2

Works in progress (WIP) during the year

3590.78**

3

Inventory at Const. Stores

155.38

4

Total (1+2+3)

12755.96

5

Less Consumers’ contribution and grants & subsidy towards cost of

capital assets

2942.84

6

Balance capital base (4-5)

9813.12

7

Requirement of Loans +equity

9813.12

8

Average Govt. Loans for the year

2961.41***

9

Average loans on account of recalled overdue Govt. loans

113.50****

10

Other loans (excluding loans taken for TSPL)

6202.23

11

Equity

2946.11

12

SBI Bonds

637.35

13

GPF utilized by Board ( Accumulations in GPF Less amount invested)

1019.08

14

Actual Loans + Equity (8+9+10+11+12+13)

13879.68

15

Less capital base

9813.12

16

Amount diverted (14-15)

4066.56

17

Less Bonds for which debt servicing under-taken by Govt.

637.35

18

Balance diverted amount (16-17)

3429.21

19

Interest effect @12.22%

419.05

 

 

Note:

 

* Net fixed assets as per audited accounts is Rs. 9006.41 crore. However, these assets have been understated by Rs.3.39 crore as per audit comments. Thus, actual net fixed block for 2007-08 is Rs.9009.80 crore.

 

** WIP during 2007-08 as per audited accounts is Rs.3784.79 crore. This amount is overstated by Rs.189.74 crore being share of assets of Irrigation Branch of the State Govt. and by Rs.4.27 crore being value of assets completed but still reflected in WIP for the year. Thus, net WIP after adjustment works out to be Rs.3590.78 crore.

 

*** Average Govt. loans= Rs.3074.91 crore for 11 months and Rs.1712.91 crore for 1 month (March, 2008) = Rs.2961.41 crore.

 

****Recalled overdue Govt. loans of Rs.1362 crore adjusted against subsidy in February 2008 considered for one month. Average loans =Rs.1362/12=Rs.113.50 crore.

 

 

The diversion of capital funds for revenue purposes for the year works out to Rs.4066.56 crore out of which debt servicing of the SBI bonds of Rs.637.35 crore will have no effect on interest charges of the Board as the same has been taken over by the Govt. Therefore, the net diverted amount carrying interest liability is Rs.3429.21 crore on which interest works out to Rs.419.05 crore at an average rate of 12.22%, which is disallowed. The Commission retains its decision regarding disallowance of interest of Rs.100 crore out of this amount on account of deficiencies in the functioning of the Board. The balance of Rs.319.05 crore is disallowed from the interest on Govt. loans for diversion of capital funds. Accordingly, interest payable by the Board on Govt. loans stands reduced to Rs.42.83 (361.88-319.05) crore.

 

2.14.12 The Board indicated that the Govt. had recalled its overdue loans of Rs.1362 crore in February, 2008 and adjusted the same against balance unpaid subsidy for 2007-08. The Board made additional claim of interest for loans of Rs.1362 crore taken in lieu of recalled Govt. loans and interest of Rs.501 crore excess paid and not refunded by the Govt. The Board has requested that borrowings on these counts may be segregated from the normal working capital borrowings and the carrying cost to service the short term borrowings on this account be allowed and the same need to be borne by the Govt. 

 

            As regards loans of 1362 crore taken to replace the loans recalled by the Govt. the Commission is convinced that the plea of the Board carries weight and interest on this account is allowable to the Board. Accordingly, interest of Rs.12.33 crore for March, 2008 on short term loans of Rs.1362 crore @ 10.86% p.a. as claimed by the Board is allowed. However, the Commission does not concur with the view that interest to this extent be borne by the Govt. It is clarified that before the recall of overdue loans by the Govt., the interest on Govt. loans of Rs.1362 crore formed part of the ARR of the Board. Since only the source of loan has changed, there is no need to shift the liability of interest to the Govt. Interest liability on account of diversion of capital funds is already being disallowed and adjusted, in part, against interest on Govt. loans. Hence, the Commission decides that the interest cost of Rs.12.33 crore will be borne by the consumers as heretofore.

 

2.14.13 As regards the Boards’ claim for allowing carrying cost of loans taken to finance the non-refund of Rs.501.07 crore, the Commission had in para 4.13 of its order dated September 13, 2007 disallowed interest of Rs.289.92 crore on Govt. loans on account of diversion of capital funds for 2006-07. For 2007-08, the Commission had disallowed interest of Rs.289.15 crore on this account based on 2006-07 accounts of the Board and interest of Rs.72.88 crore was determined as payable to the Govt. Since for 2007-08, the interest already paid to the Govt. was stated at Rs.194.10 crore, as interest to the Govt., it resulted in excess payment of interest of Rs.121.22 crore. Accordingly, in para 6.8.7 of the Tariff Order of 2008-09, the Commission had decided that total overpaid amount of interest upto 2008-09 comes to Rs.411.14 (289.92+121.22) crore. However, as decided in para 2.14.11 of this order, interest payable to the Govt. is revised to Rs.42.83 crore for 2007-08.  Against this, interest of Rs.85.99 crore was paid on Govt. loans as per the audited accounts of the Board.  Thus, excess paid interest on Govt. loans for 2007-08 comes to Rs.43.16 (85.99-42.83) crore. Accordingly, actual interest paid in excess to the Govt. by the Board is revised to Rs.333.08 (289.92+43.16) crore against Rs.411.14 crore determined earlier.  The Commission in its order dated September 13, 2007 has already ordered that the interest paid in excess by the Board will be refundable by the Govt. However, the Commission finds no justification to allow interest to the Board on this account. The amount of Rs.333.08 crore is further taken note of in para 2.16.2. 

         

            Accordingly, the Commission approves the net Interest and Finance charges of Rs. 466.95 crore for the year 2007-08 (Table 2.11).

 

2.15          Return on Equity

2.15.1    In the Tariff Order of 2007-08, the Commission had in accordance with Regulation 25 of the PSERC Tariff Regulations, approved a return of Rs.412.46 crore calculated at 14% on the equity of Rs.2946.11 crore as on April 01, 2007.

 

2.15.2    In the review for the year 2007-08 in the Tariff Order of 2008-09, the Commission retained return on equity at Rs.412.46 crore for that year. As per the audited accounts of the Board for the year 2007-08, the Govt. equity in the Board remained unchanged at Rs.2946.11 crore.

 

Accordingly, the Commission retains Return on Equity at Rs.412.46 crore for the year 2007-08 as earlier approved.

 

2.16     Subsidy and other amounts payable by the Government

2.16.1  As per the audited accounts for the year 2007-08, total subsidy of Rs.2848.04 crore has been paid by the Govt. to the Board.

 

2.16.2  The subsidy payable by the Govt. is now trued up as under:

 

·         AP Consumption: The Commission has accepted AP consumption at 8902 MU on which revenue for 4372 MU (upto 31.8.07) @ 214 paise per unit works out to Rs.935.61 crore and for 4530 MU (1.9.07 to 31.3.08) @ 240 paise comes to Rs.1087.20 crore totaling Rs.2022.81 crore. Of this, consumers have been billed for Rs.18.04 crore and the balance of Rs.2004.77 crore exclusive of meter rentals and service charges of Rs.7.00 crore was payable by the Govt. as AP subsidy. 

 

·         Scheduled Castes (SC) Domestic Supply (DS) Consumers: The Commission notes that as per the decision of the Govt., Scheduled Castes DS consumers with a connected load upto1000 watts will be given free power upto 200 units per month. The Board has now reiterated its claim to subsidy of Rs.206.73 crore, inclusive of meter rentals and service charges of Rs.9.78 crore, as approved earlier in review in the Tariff Order of 2008-09, which the Commission, retains.

 

·         Non-SC Below Poverty Line (BPL) Consumers: The Govt. had also decided to give free supply of power upto 200 units per month to Non-SC BPL DS consumers with connected load upto 1000 watts. The Board has claimed subsidy on this account of Rs.1.27 crore inclusive of meter rentals and service charges of Rs.0.06 crore which is the same as approved by the Commission in review of 2007-08 in the Tariff Order of 2008-09. The Commission retains this approval.

 

·         Additional Subsidy to neutralize the effect of enhanced tariff: The Govt. had decided to neutralize the effect of enhanced tariff to all categories of consumers which was ordered by the Commission w.e.f. 1st September 2007 in the Tariff Order of 2007-08. The Commission had determined in the Tariff Order of 2008-09 that Rs.292.66 crore would be the additional subsidy payable on this account to the Board. However, the amount of Govt. subsidy actually payable is trued up to Rs.298.66 crore based on actual consumption data supplied by the Board.   

 

On the above basis, total subsidy payable by the Govt. for the year 2007-08 works out to Rs.2518.43 (2004.77+7+206.73+1.27+298.66) crore.

 

·         Interest amounting to Rs.35.56 crore for the delayed payment of subsidy of Rs.1746.05 crore was determined as payable in review of 2007-08 in para 3.15.5 of the Tariff Order of 2008-09.   

 

·         In para 2.16.2 of the Tariff Order of 2008-09 (true up of 2006-07), the Commission had determined total subsidy receivable from the Govt. upto the year 2006-07 as Rs.391.88 crore. 

 

Thus, subsidy of Rs.2945.87 (2518.43+35.56+391.88) crore is now determined as payable by the Govt. to the Board for the year 2007-08 against  paid subsidy of Rs.2848.04 crore leaving a balance of Rs.97.83 crore to be paid by the Govt. upto 2007-08. In addition, as discussed in para 2.14.13 an amount of Rs.333.08 crore is also payable by the Govt. to the Board.  Thus, total amount payable by the Govt. works out to Rs.430.91 crore at the end of 2007-08. 

 

2.17     Non-Tariff Income

2.17.1  The Commission had approved non-tariff income of Rs.369.44 crore for the year 2007-08 in the Tariff Order of 2007-08 which was increased to Rs.444.69 crore based on revised estimates.

 

2.17.2  As per the audited accounts of the Board for the year 2007-08, the other income of the Board is Rs.321.33 crore besides non-tariff income of Rs.128.58 crore which is included in the sale of power. In addition, the subsidy of Rs.7.00 crore for AP consumers and Rs.9.84 crore for SC and Non-SC BPL Domestic Supply consumers received from the Govt. on account of meter rentals and service charges also forms part of non tariff income for 2007-08. 

 

2.17.3  Prior period income is also one of the components of non-tariff income as specified in Regulation 34 of the PSERC Tariff Regulations. As per the audited accounts for the year 2007-08, net prior period credit for the year 2007-08 is Rs.111.12 crore excluding Rs.2.92 crore of prior period expenses on account of employee cost. As the Board could not supply information with regard to the period to which expenses of Rs.2.92 crore pertain, these are being disallowed. Taking this into account, the net receipts for prior period will increase to Rs.114.04 crore and total non-tariff income of the Board for the year amounts to Rs.580.79 (321.33 + 128.58+7.00+9.84+114.04) crore.

 

The Commission accordingly, approves Non-Tariff Income at Rs.580.79 crore for the year 2007-08.

 

2.18    Revenue from sale of power

2.18.1  The Commission had approved the revenue from tariff at Rs.9160.24 crore in the Tariff Order for the year 2007-08. In the review, this was revised to Rs.10501.59 crore, including Govt. subsidy.    

 

2.18.2    In the audited accounts for 2007-08, the revenue actually received from sale of power is Rs.7913.14 crore. However as per Audit comments to the audited accounts, this amount has been overstated by Rs.1.06 crore due to clearance of liability of previous year interest payable on consumers deposits without passing it to consumers. Thus, revenue works out to Rs.7912.08 crore excluding Govt. subsidy. This revenue includes non-tariff income of Rs.128.58 crore being meter rentals and service charges (Rs.79.19 crore), recoveries from theft of power (Rs.27.98 crore), wheeling charges (Rs.2.86 crore) and miscellaneous charges other than peak load exemption charges (Rs.18.55 crore). These receipts already stand accounted for in non-tariff income and as such, are to be deducted from the revenue from sale of power. The net revenue, therefore, works out to Rs.7783.50 crore. Subsidy of Rs.2518.43 crore payable for 2007-08 as determined in para 2.16 of this Tariff Order, includes an amount of Rs.16.84 crore related to meter rentals and service charges which are a part of non-tariff income for the year. Thus, after adding subsidy of Rs. 2501.59 (2518.43 – 7.00 – 9.84) crore payable by the Govt. to the Board, total revenue from sale of power amounts to Rs.10285.09 crore.

 

The Commission, therefore, approves the revenue from sale of power at         Rs.10285.09 crore for the year 2007-08.

2.19.    Other debits and extraordinary items

In the audited accounts for the year 2007-08, other debits and extraordinary items amount to Rs.4.81 crore. However, as per Audit comments on the audited accounts, other debits are understated by i) Rs.7.82 crore which is the loss on account of PCC poles shown as receivable, ii) Rs.3.95 crore due to expenditure on survey/feasibility study of unmatured/un-sanctioned projects, iii) Rs.4.53 crore because of wrong adjustment of expenses and iv) Rs.0.75 crore on account of non-write off Rs.0.18 crore of deceased employees’ liabilities and Rs.0.57 crore as cost of idle labour. Thus, total other debits and extraordinary items expenses comes to Rs.21.86 crore which represent bad and doubtful debts and miscellaneous losses that are liable to be written off.

The Commission allows this expenditure of Rs.21.86 crore for the year 2007-08.

2.20     Fringe Benefit Tax (FBT)

            The audited accounts of the Board indicate that Rs.4.98 crore was paid as Fringe Benefit Tax (FBT) which is the same as claimed by the Board in the ARR.

Being a statutory payment by the Board, this amount is allowed for year 2007-08.

2.21     True up of ARR for 2007-08

In view of the above analysis, the trued up revenue requirement for the year 2007-08 is as per details given in Table 2.13.

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2.13: Revenue Requirement

                                                                                                                       (Rs. crore)

Sr. No.

Item of Expense

Approved by Commission in T. O. for 2007-08

Approved by Commission in T. O. for 2008-09

Actuals as per Annual Accounts for 2007-08

Final approval by Commission

1

2

3

4

5

6

1

Cost of fuel

2404.28

2484.00

2625.80

2537.73

2

Cost of power purchase

3410.01

5014.34

6020.37

6020.37

3

Employee cost

1661.41

1662.50

2041.74

1631.02

4

R&M expenses

271.35

302.95

294.78

286.91

5

A&G Expenses

62.41

69.64

69.92

66.00

6

Depreciation

696.82

640.06

665.15

664.89

7

Interest charges

693.75

634.04

863.62

466.95

8

Return on Equity @ 14%

412.46

412.46

412.46

412.46

9

Other Debits and Extraodinary items

0.00

0.00

21.86

21.86

10

Fringe Benefit Tax

4.40

4.56

4.98

4.98

11

Total revenue requirement

9616.89

11224.55

13020.68

12113.17

12

i) Add incentive for higher thermal generation

              -  

                -  

                -  

79.12

ii) Less expenses disapproved due to higher T&D loss

              -  

                -  

                -  

962.61

13

Revenue requirement (11-12)

9616.89

11224.55

13020.68

11229.68

14

Less: non tariff income

369.44

444.69

444.18

580.79

15

Net revenue requirement (13-14)

9247.45

10779.86

12576.50

10648.89

16

Revenue from tariff

9160.24

10501.59

7783.50

10285.09

17

Gap (deficit)  (15-16)

87.21

278.27

4793.00

363.80

18

Gap for the year 2006-07

336.57

439.51

 

439.51

19

Total gap (deficit) (17+18)

423.78

717.78

 

803.31

20

Energy sales (MU)

28935

30870

32122

30995

 

From the true up for the year 2007-08, it is noted that there is a gap of Rs. 363.80 crore against a gap of Rs.278.27 crore determined earlier by the Commission in the review of 2007-08 in the Tariff Order dated July 3, 2008. The net deficit for the year 2007-08 after taking into account the gap of Rs.439.51 crore carried over from the year 2006-07 works out to Rs.803.31 crore against Rs.717.78 crore determined earlier. This deficit is being carried forward for adjustment in the next year. 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 3

Review for the Year 2008-09

 

 

3.1       Background

3.1.1    The Tariff Order of the Commission for 2008-09 contained its approvals of costs and revenue projections based on the Board’s estimates for different items of costs to be incurred and revenue likely to accrue during the year. The Board has, in its ARR for the year 2009-10, now furnished revised estimates for 2008-09.

 

3.1.2    There are differences in certain items of costs as well as revenues between the approvals granted by the Commission and the revised estimates now furnished by the Board. The Commission considers it appropriate and fair to re-visit and review the approvals granted by it in the Tariff Order (2008-09) with reference to the revised estimates now made available by the Board but without altering the principles and norms adopted earlier. These matters are discussed in the succeeding paragraphs.

 

3.2       Energy Demand (Sales)

3.2.1    Metered Energy Sales

The Board has re-estimated energy sales to metered categories for 2008-09 on the basis of actuals for the first 6 months (April 08 to Sept 08) and by applying category wise half yearly cumulative annual growth rate (CAGR) of the second half year for the period 2004-05 to 2007-08, to the corresponding actual category wise sales in the second half of 2007-08.

 

The Commission has estimated sales to metered categories on the basis of actual sales for first 11 months of 2008-09 (April 08 to Feb 09) supplied by the Board in its letter dated 16.04.2009 and by applying category wise monthly CAGR of March for the period 2004-05 to 2007-08, to the corresponding actual category wise sales in March 2008. On the above lines, the Commission has now worked out the estimated sales to metered categories as 19892 MU for the year 2008-09 (detailed in Table 3.1) as against 20898 MU projected by the Board.

Table 3.1: Estimated Energy Sales during 2008-09

(MU)

Sr.

No.

Category

Sales during March 2005 (actual)

Sales during March 2008 (actual)

3 year CAGR during Mar 05 to Mar 08

Sales during Apr 08-Feb 09 (actual)

Estimated sales during March 2009 by applying CAGR

Estimated sales for 2008-09

(6+7)

1

2

3

4

5

6

7

8

1

Domestic

            315

            366

5.13%

         6,071

            385

         6,456

2

Non-Residential

              93

            122

9.47%

         1,777

            134

         1,911

3

Small Power

              54

              52

-1.25%

            661

              51

            712

4

Medium Supply

            131

            130

-0.26%

         1,359

            130

         1,489

5

Large Supply

            599

            701

5.38%

         7,848

            739

         8,587

6

Public Lighting

              10

              12

6.27%

            124

              13

            137

7

Bulk Supply

              35

              40

4.55%

            435

              42

            477

8

Railway Traction

                9

              10

3.57%

            113

              10

            123

9

Metered sales (within state)

         1,246

         1,433

 

       18,388

         1,504

       19,892

 

3.2.2 The Commission has retained sales to common pool consumers at 303 MU as indicated by the Board. The Board has provided actual sales to other states during 2008-09 in additional information supplied by it on 23.04.09 as 2444 MU. This included Himachal Pradesh’s share in RSD (66 MU) and royalty in Shanan (53 MU). However, Himachal Pradesh’s share in RSD which actually works out to 68 MU and royalty in Shanan are free of cost and as such are required to be excluded from the outside State sales. Accordingly, the Outside State sales work out to 2323 (2444-68-53) MU.

 

The metered energy sales projected by the Board during determination of ARR for the year 2008-09, approved by the Commission in the Tariff Order, the revised estimates furnished by the Board and metered energy sales now approved by the Commission are given in Table 3.2.

 

 

 

 

 

 

Table 3.2: Metered Energy Sales - 2008-09

(MU)

Sr. No.

Category

Projected by PSEB during determination of  ARR 08-09

Approved by the Commission in T.O. 08-09

Revised Estimates by PSEB in ARR 09-10

Now approved by the Commission

1

2

3

4

5

7

1

Domestic

                6,476

                6,449

                6,692

         6,456

2

Non-Residential

                2,039

                2,030

                2,067

         1,911

3

Small Power

                    734

                    748

                    731

            712

4

Medium Supply

                1,571

                1,542

                1,555

         1,489

5

Large Supply

                9,394

                9,359

                9,081

         8,587

6

Public Lighting

                    153

                    149

                    147

            137

7

Bulk Supply

                    485

                 497

                 507

            477

8

Railway Traction

110

111

118

            123

9

Metered sales (within State)

              20,962

              20,885

           20,898

              19,892

10

Common pool

                    303

                  303

                303

                   303

11

Outside State sales

                2,036

                2,036

             1,541

                2,323

12

Total (9+10+11)

              23,301

              23,224

           22,742

              22,518

 

 

Metered sales of 19,892 MU within the state, common pool sales of 303 MU and Outside State sales of 2323 MU are now approved by the Commission as per details shown in Table 3.2.

 

 3.2.3   AP Consumption

The Commission in its Tariff Order of 2008-09 approved AP consumption of 9408 MU after allowing a normative growth of 5% over the consumption of 8960 MU approved for the previous year (2007-08). In its ARR for 2009-10, the Board has projected AP consumption of 9766 MU in 2008-09 but during its presentation to the Commission on 10.6.2009, the Board reported that the latest estimate of AP consumption for 2008-09 is 9325 MU.

 

Based on the Commission’s observations in the Tariff Order of 2008-09 that the methodology of computing agricultural consumption needs further refinement and the Board’s willingness to undertake such an exercise through an independent agency, the Commission had appointed M/s ABPS Infrastructure Advisory Private Limited, Mumbai (Agency) for validation of AP consumption reported by the Board during 2007-08 and in the first 3 Quarters of 2008-09. The terms of reference of the Agency, the procedure adopted by it, the initial findings, the views of the Board, revised computation of AP consumption and the views of the Commission have been discussed in detail in para 2.2.3. The pattern of non- updation of loads of AP connections with sample meters and excessive consumption shown in the recordings of sample meters was evident from the findings of the Agency for 2007-08 and the first 3 Quarters of 2008-09. In the latter year, the percentage of increased load of AP connections on which sample meters had been installed is as under: -

            Khanna                        2.4

            Bathinda                      7.5

            Sangrur                       3.7

            Gurdaspur                   1.7

            Hoshiarpur                  3.3

 

After taking into account the observations of the Board, the revised consumption of the five selected circles worked out by the Agency and the consumption earlier reported by the Board for the same period is compared in Table 3.2 (A).

Table 3.2 (A)

 

Circle

AP consumption for 2008-09 (upto Dec 2008 in MU)

 

% difference

Supplied by Board

Computed by the Agency

Khanna

376.3

332.1

11.75

Bathinda

425.455

375

11.86

Sangrur

1182.785

1067

9.79

Gurdaspur

398.34

371

6.86

Hoshiarpur

271.885

239

12.10

Total

2654.765

2384.1

10.20

 

It is again evident that the difference is primarily 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 which is inconsistent with the given supply hours and the connected load. For reasons discussed in para 2.2.3, the Commission is of the view that the findings of the study for the first 3 Quarters of 2008-09 would generally be applicable to agricultural consumption reported by the Board for the entire year. Accordingly, the Commission decides to reduce the Board’s latest estimates of agricultural consumption to the extent of 10.20% on the basis of the findings of this study.

 

The Commission thus approves AP consumption of 8374 MU for the year 2008-09.

 

3.3       Transmission and Distribution Losses (T&D Losses)

            The Board in its ARR for 2009-10 has reported T&D losses of 21% for 2008-09 which is same as submitted to the Commission at the time of determination of ARR for the year 2008-09. The Board has urged that for a variety of reasons, the loss level trajectory already fixed by the Commission could not be achieved. It has been further contended that T&D losses had been significantly reduced by the Board to 23.92% in 2006-07 (audited) whereas, the Commission had prescribed the loss level of 20.75% for 2006-07 and 19.5% for 2007-08. The Board has argued that since further reduction of losses from 23.92% in 2006-07 involves significant capital expenditure as these are primarily technical rather than commercial losses, the T&D loss trajectory should be linked to actual investment undertaken by the Board.

 

The Commission has dealt with the issue of T&D losses in its Tariff Order for the year 2008-09 wherein it was observed that the loss trajectory determined earlier ended at a normative level of 19.5% in 2007-08. Instead of going forward the Board has emphasized the need to adopt a much higher figure of 21% for the year 2008-09. The Commission observed that the reduction of losses as determined by the Commission was achievable and the inability of the Board to do so should not be a cause for penalizing the consumers. The same principle continues to hold good even though T&D losses would increase to a high of 24.07% after factoring in reduced AP consumption in accordance with para 3.2.3. 

 

Thus, the Commission retains the target T&D loss level at 19.5% for the year 2008-09 as fixed earlier.

3.4       Energy Requirement

            The total energy requirement to meet the demand of the system is the sum of estimated metered energy sales including common pool and outside State sales, estimated AP sales and T&D losses. The total energy requirement for 2008-09 projected during determination of ARR of 2008-09, approved by the Commission in its Tariff Order and revised estimates furnished by the Board in the ARR of 2009-10 and now approved by the Commission is given in Table 3.3.

 

Table 3.3: Energy Requirement for the year 2008-09

(MU)

Sr. No.

Particulars

Projected by PSEB during determination of ARR 08-09

Approved by the Commission in T.O. 08-09

Revised Estimates by PSEB in ARR of 09-10

Now approved by the Commission

1

2

3

4

5

6

1

Metered Sales within the State

            20,962

           20,885

       20,898

          19,892

2

Agriculture Consumption

            10,014

           9,408

        9,766

             8,374

3

Total sales within State (1+2)

            30,976

          30,293

 30,664*

          28,266

4

Common pool sales

                 303

             303

           303

                303

5

Outside State sales

              2,036

          2,036

        1,541

             2,323

6

Total sales

            33,315

         32,632

   32,508

          30,892

7

T&D Losses on item (3)

(a)

Percentage

21.00%

19.50%

21.00%

19.5%

(b)

MUs

              8,234

          7,338

        8,151

             6,847

8

Total energy input required

            41,549

        39,970

   40,659**

          37,739

 

Note:

*               As against 30665 MU projected by Board
**             As against 40660 MU projected by Board

 

The revised energy requirement for 2008-09 with T&D loss of 19.5% is determined as 37739 MU, which has to be met from the Board’s own generation (thermal & hydel) including share from BBMB, purchases from Central Generating Stations and other sources. 

 

3.5       PSEB’s Own Generation

3.5.1    Thermal Generation: The Board has estimated the gross generation for 2008-09 based on actual generation of the respective plants up to Sept, 2008 and taken the revised monthly generation target for the second half of 2008-09 into consideration. The Commission has, however, obtained the actual gross generation of different stations for the year 2008-09 till the end of March, 2009.

 

The station-wise generation projected by the Board during determination of ARR of 2008-09, generation approved by the Commission in its Tariff Order for that year, revised estimates now supplied by the Board and approved by the Commission on the basis of validated generation figures ending 31st March, 2009 is given in Table 3.4(A).

 

Table 3.4(A): Thermal Generation 2008-09

                                                                                                                                    (MU)

Sr. No.

Station

Projected by PSEB in ARR 2008-09

Approved by the Commission T.O. 2008-09

Revised Estimates by PSEB in ARR 2009-10

Now approved by  the Commission

Gross

Net

Gross

Net

Gross

Net

Gross

Net

1

2

3

4

5

6

7

8

9

10

1 (a)

GNDTP Unit I &II

2411

2146

1542

1402

2748

2428

1562

1402

1 (b)

GNDTP Unit III & IV

1004

894

1284

1143

2

GGSTP

9469

8655

9886

9046

9224

8434

9611

8794

3 (a)

GHTP, Stage I

3265

2971

6127

5576

3391

3078

3532

3214

3 (b)

GHTP, Stage II

2800

2534

1160

1056

2078*

1891

4

Total

17945

16306

18559

16918

16523

14996

18067

16444

 

 

* GHTP stage II generation figures include 1168 MU (gross) generated during trial runs.

 

 

The Commission approves gross thermal generation for the year 2008-09 at 18067 MU, based on actuals, against 16523 MU projected by the Board in the ARR.

 

Auxiliary Consumption & Net Generation

The plant-wise auxiliary consumption projected by the Board during determination of ARR of 2008-09, auxiliary consumption approved by Commission in the Tariff Order of 2008-09, the revised figures projected by the Board in the ARR of 2009-10 and the figures now approved by the Commission are given in Table 3.4( B).

 

Table 3.4(B):  Auxiliary Consumption 2008-09

Sr. No.

Station

Projected by PSEB in ARR 2008-09

Approved by the Commission in T.O. 2008-09

Revised Estimates by PSEB in ARR  2009-10

Now Approved by the Commission

1

2

3

4

5

6

1 (a)

GNDTP Unit I & II

11.00%

9.10%

11.66%

10.22%

1 (b)

GNDTP Unit III & IV

11.00%

11.00%

2

GGSTP

8.60%

8.50%

8.56%

8.50%

3 (a)

GHTP Stage-I

9.00%

9.00%

9.21%

9.00%

3 (b)

GHTP Stage-II

9.50%

9.00%

9.00%

 

The Commission in its Tariff Order for 2008-09 approved auxiliary consumption for GGSTP and GHTP at 8.5% and 9% respectively as per CERC norms. In case of GNDTP Units III and IV, the Commission approved auxiliary consumption at 11% as per Tanda Station norms fixed by CERC. However, for GNDTP Units-I&II, the Commission approved auxiliary consumption as 9.1% based on the contract agreement executed before initiating R&M works of GNDTP Units I and II.

 

The revised estimates of auxiliary consumption reported by the Board are on the higher side as compared with the levels approved by the Commission except for GHTP Stage-II Units.

 

Subsequent to the issue of Tariff Order for the year 2008-09, the Board filed a review petition (14/2008) wherein it, interalia, objected to the values of Station Heat Rate and Auxiliary Consumption fixed by the Commission in the Tariff Order for calculating the fuel cost in case of GNDTP Units I&II. The Board had stated in its petition that the designed parameters are achievable only  under ideal conditions and the actual performance is always lower. Reference has also been made to the revised Station Heat Rate allowed by CERC in case of Talchar power station after renovation and modernization (R&M) which was 2850 kcal/kwh for 110 MW Units. The Board had further submitted that CERC has, in case of Tanda power station (4x110 MW), approved Station Heat Rate of 2850 kcal/kwh and auxiliary consumption of 12% after R&M works. The Commission while disposing of this petition in its order dated 24.3.2009, decided to review these parameters in the Tariff Order for 2009-10.

 

The Commission had adopted the Station Heat Rate (2460 kcal/kwh) and auxiliary consumption (9.1%) for GNDTP (Units I & II) for the year 2008-09 as per the terms and conditions of contract with the agency which undertook  R&M works of GNDTP Units I&II. However, the Commission observes that CERC has not specified operation norms for 110 MW Units, and the Commission has in the past been adopting the operational norms of similarly aged Tanda & Talchar stations for GNDTP. The Commission further observes that the CERC has revised the operational norms of Tanda thermal power station after R&M in its Order dated 24th Jan, 2007and notified the same on 27.9.2007 as under:

 

 

Target Availability

Target

PLF

Station

Heat Rate (kcal/kWh)

Auxiliary Energy Consumption Norm (%)

Specific Fuel Oil Consumption (ml/kWh)

Prior to R&M

60%

60%

3000

11.00

3.5

After R&M

80%

80%

2850

12%

2

 

The Commission notes that while fixing the norm of auxiliary consumption at 12% for the Tanda Thermal Station, CERC has in its order of 24th Jan, 2007 allowed higher auxiliary consumption as compared to GNDTP, keeping in view the following:

(a)               0.83% on account of the three staged pumping and bearing cooling water system provided at Tanda Thermal Station.

(b)               0.95% on account of losses in generator transformer, unit auxiliary transformers, station transformers and excitation power.

The Commission has been adopting CERC’s operational norms of the Tanda/Talchar thermal stations in the case of GNDTP and it is only fair that norms dertermined by CERC after R&M works in Tanda need to be similarly adopted. Accordingly, the Commission determines Station Heat Rate for Units-I&II of GNDTP at 2850 Kcal/Unit. For reasons brought out above, auxiliary consumption norms are, however, reduced to 10.22% (12.0 – 0.95 – 0.83).

 

Net thermal generation on this basis has been worked out to 16444 MU as shown in Table 3.4(A).

3.5.2        Hydel Generation: The Board has submitted the revised estimates of hydel generation for 2008-09 in the ARR of 2009-10. On enquiry by the Commission, the Board, in its letter dated 16.04.09, has furnished the actual plant-wise hydel generation figures for the year 2008-09 which have been accepted by the Commission. The station-wise generation projected by the Board during determination of ARR for 2008-09, generation approved by the Commission in its Tariff Order, the revised estimates now submitted by the Board in the ARR for 2009-10 and accepted by the Commission is given in Table 3.5.

 

Table 3.5: Hydel Generation - 2008-09

                                                                                                                        (MU)

 

 

 

 

Sr.No.

Hydel Station

Projected by PSEB in ARR of 2008-09

Approved by Commission in Tariff Order 2008-09

RE by PSEB in ARR  2009-10

Now accepted by the  Commission

1

2

3

4

5

6

1

Shanan

507

507

507

531.52

2 (a)

UBDC Phase 1

432

432

311

140.101

2 (b)

UBDC  Phase II

198.841

3

RSD

1586

1612

1539

1473.76

4

MHP

1074

1074

797

1121.861

5

ASHP

596

587

726

751.492

6

Micro Hydel

6

6

8

4.323

7 (a)

Gross Own Hydel

4201

4218

3888

4221.898

7 (b)

Net Own Hydel

4027

4056

38411

40053

 

 

 

 

 

 

8

PSEB Share from BBMB

 

 

 

 

(a)

Gross Share

4187

4187

4256

4472.74

(b)

Add Common pool share

303

303

303

303

(c)

Less External losses

165

163

168

165.49

(d)

Net Share from BBMB

4325

4327

43912

46104

 

 

 

 

 

 

9

Total Net Hydel (Own + BBMB)

8352

8383

8232

8615

 

Notes

1.       Net of Auxiliary Consumption and transformation losses (47 MU)

2.       BBMB share is net of external losses @ 3.95% on gross availability of the Board share, excluding common pool share.

3.       Own generation is net of

·          HP share (free) in RSD @ 4.6% (68 MU).

·          Royalty to HP in Shanan (53 MU).

·          Auxiliary consumption @ 0.5% for RSD generation of 1473.76 MU & UBDC Stage-1 generation of 140.1 MU (having static exciters) and for others @ 0.2% (13 MU).

·          Transformation losses @ 0.5% (21 MU).

·          Diversion to BBMB from ASHP (62.211 MU) on account of extra power generation because of diversion of water from Nangal Hydel channel.

4.       Net availability from BBMB for 2008-09 after netting off external transmission losses @ 3.7%.

 

The Commission, thus, approves revised hydel generation for the year 2008-09 at 4005 MU (net) from own hydel stations and 4610 MU (net) as share from BBMB as shown in Table 3.5.

 

3.6       Power Purchase

3.6.1    To meet the energy demand, the Board projected power purchase at 16892 MU (net) during determination of ARR for 2008-09. The Commission in its Tariff Order approved power purchase at 14669 MU (net).

 

3.6.2    The Board had furnished revised estimates of power purchase for 2008-09 at 16759 MU (net) in its ARR for 2009-10 but in its presentation on 10.6.2009 intimated the gross power purchase as 15575 MU. The approved total energy requirement during 2008-09 including common pool and outside State sales and T&D losses is determined as 37739 MU as discussed in para 3.4. The energy available from the Board’s own generating stations including its share from BBMB is 25059 (16444 MU thermal generation and 8615 MU of hydel generation including share from BBMB) as approved in para 3.5. The balance energy requirement works out to 12680 MU (net) which has to be met through purchases from Central Generating Stations and other sources. 

 

The Commission, accordingly, approves the revised power purchase at 12680 MU (net) for 2008-09.

           

3.7       Energy Balance

3.7.1    Details of energy requirement and energy availability projected during determination of ARR for 2008-09, approved by the Commission in its Tariff Order, revised estimates supplied by the Board in the ARR of 2009-10 and now approved by the Commission is given in Table 3.6.

 

 

 

 

 

Table 3.6: Energy Balance - 2008-09

(MU)

Sr. No.

Particulars

As per PSEB during determination of ARR 08-09

Approved by the Commission in T.O. 08-09

Revised Estimates by PSEB in ARR 09-10

Now approved by the Commission

1

2

3

4

5

6

A) Energy Requirement

1

Metered Sales

         20,962

        20,885

       20,898

       19,892

2

Sales to AP consumers

        10,014

           9,408

        9,766

          8,374

3

Total Sales within the State

         30,976

      30,293

 30,664

       28,266

4

Loss percentage

21.00%

19.50%

21.00%

19.5%

5

T&D losses

      8,234

       7,338

     8,151

        6,847

6

Sales to Common pool consumers

          303

             303

           303

         303

7

Outside State Sales

         2,036

          2,036

        1,541

      2,323

8

Total requirement

         41,549

        39,970

   40,659

     37,739

B) Energy Available

9

Own generation (Ex-bus)

10

Thermal

16,306

16,918

15,670

16,444

11

Hydro

4,027

4,056

3,841

4,005

12

Share from BBMB (incl.share of common pool consumers

4,325

 

4,327

 

4,391

 

4,610

 

13

Purchase net

16,891

14,669

16,757*

12,680

14

Total Available

41,549

39,970

40,659

37,739

           

 * against 16759 shown by the Board.

 

3.8       Fuel Cost

3.8.1    The Commission in its Tariff Order of 2008-09 approved fuel cost of            Rs.2742.62 crore for gross thermal generation of 18559 MU. The Board in its ARR of 2009-10 has revised estimates of fuel cost to Rs 2749 crore for gross thermal generation of 16523 MU based on calorific value and price of coal / oil for 2008-09 as given in Table 3.7. The fuel cost worked out by the Board is based on the actual parameters for the first six months and the projected values for the remaining six months for the year 2008-09.

Table 3.7:  Calorific Value and Price of Coal and Oil as submitted

by the Board for 2008-09

 

Sr.No.

Station

Gross Calorific value of coal (kCal/Kg)

Calorific Value of Oil (Kcal/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

4156

10100

28195

2341

1.04%

2

GGSTP

4043

10000

32238

2485

1.85%

3 (a)

GHTP Phase I

4047

9400

30137

2370

1.03%

3 (b)

GHTP Phase II

4050

9400

30137

2490

2.00%

 

The Board had also filed four petitions seeking approval for an additional amount of Rs. 415.78 crore on account of Fuel Cost Adjustment. Out of this, an amount of Rs. 244.76 crore is on account of variation in prices of oil and coal including freight during the year 2008-09. In its subsequent communication to the Commission, the Board has submitted revised calorific value and price of coal and oil for the year 2008-09 (upto March 2009) which are indicated in Table 3.7 (A)

 

Table 3.7 (A) – Calorific Value & Price of Coal & Oil submitted by the Board subsequently

 

Sr.No.

Station

Gross Calorific value of coal (kCal/Kg)

Calorific Value of Oil (Kcal/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

4238

10288

28293

2466

1.41%

2

GGSTP

4019

10000

30712

2575

2.20%

3 (a)

GHTP Phase I

4077

9400

28338

2540

1.69%

3 (b)

GHTP Phase II

4077

9400

28338

2540

1.69%

 

Fuel cost being a major item of expense, the Commission thought it prudent to get the same verified. The calorific value of oil and coal and the price of oil and coal accepted by the Commission are indicated in Table 3.8. These values are based on data ending March, 2009, validated by the Commission.

Table 3.8: Calorific Value and Price of Coal and Oil as accepted by the Commission for 2008-09

 

 

Sr. No.

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 trasit loss

1

 

1

2

3

4

5

6

1

GNDTP  (Unit I & II)

4239

10289

28293

2466

1.28%

2434

2

GNDTP (Unit III & IV)

4239

10289

28293

2466

1.28%

2434

3

GGSTP

4019

10000

32470*

2563

1.23%

2531

4

GHTP

4077

9400

28347

2540

0.37%

2530

 

*           Validated upto Dec, 2008.

 

3.8.2    It has also come to the notice of the Commission that a substantial quantity of coal received from the captive mine of the Board was used during 2008-09, the price of which is on F.O.R. destination basis. During validation it was found that 1090402 MT, 2452394 MT and 2681830 MT of Captive mine (PANAM) coal was used for GNDTP, GGSTP and GHTP respectively during 2008-09. The price of coal and corresponding calorific values given by the Board (Table 3.7/3.7A) and those validated by the Commission (Table 3.8) are weighted average values of coal, including PANAM coal. 

 

3.8.3        The gross generation considered in the estimation of fuel cost is 18067 MU which includes 1168 MU of infirm power generated during trial runs of GHTP Stage II Units. The fuel cost for different stations corresponding to generation now approved has been worked out, based on the parameters adopted by the Commission in its Tariff Order of 2008-09  (except for GNDTP Units I&II)  and considering price and calorific value of coal and oil as validated and accepted by the Commission and detailed in Table 3.9. In case of GNDTP Units I&II for which R&M work has been completed, the Commission has decided to allow Station Heat Rate of 2850 kcal/kwh, as per order of CERC as discussed in para 3.5.1.

 

3.8.4        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.

Table 3.9: Fuel Cost – 2008-09

Sr. No.

Item

Derivation

Unit

Approved for 2008-09

GNDTP (Unit I &II)

GNDTP (Unit III & IV)

GGSTP

GHTP

Total

1

2

3

4

5

6

7

8

9

1

Generation

A

MU

1562

1284

9611

5610

18067

2

Heat Rate

B

k.cal/kWh Generated

2850

3000

2500

2500

 

3

Specific oil consumption

C

Milli litre/kwh

2.00

3.50

2.00

2.00

4

Calorific value of oil

D

k.cal/litre

10289

10289

10000

9400

5

Calorific value of  coal

E

k.cal/kg

4239

4239

4019

4077

6

Overall heat

F = (A x B)

G.cal

4451700

3852000

24027500

14025000

7

Heat from oil

G = (A x C x D) / 1000

G.cal

32143

46239

192220

105468

8

Heat from  coal

H = (F-G)

G.cal

4419557

3805761

23835280

13919532

9

Oil Consumption

I=(Gx1000)/D

KL

3124

4494

19222

11220

10

Transit loss of coal

J

(%)

2.00

2.00

2.00

2.00

11

Total Coal Consumption excluding transit loss

K=(H*1000)/E

MT

1042594

897797

5930649

3414160

12

Quantity of PANAM coal

L

MT

598374

492028

2452394

2681830

13

Quantiy of coal other than PANAM coal

M=K-L

MT

444220

405769

3478255

732330

14

Quantity of  coal other than PANAM coal including transit loss

N=M/(1-J/100)

MT

453286

414050

3549240

747276

15

Total Quantity of coal required

O=L+N

MT

1051660

906078

6001634

3429106

16

Cost of oil

P

Rs./KL

28293

28293

32470

28347

17

Cost of  coal

Q

Rs./MT

2434

2434

2531

2530

18

Total cost of oil

R=P x I / 107

Rs.crore

8.84

12.71

62.41

31.81

 

19

Cost of coal

S=O x Q/107

Rs.crore

255.97

220.54

1519.01

867.56

 

 

20

Total Fuel cost

T=R+S

Rs.crore

264.81

233.25

1581.42

899.37

2978.85

 

The Commission, therefore, approves the revised fuel cost at Rs. 2978.85 crore for a generation of 18067 MU.

 

3.9       Power Purchase Cost

3.9.1    The Commission in its Tariff Order of 2008-09 approved a cost of Rs.4186 .33  crore for purchase of 15381 MU (gross) while the Board has in its ARR for the year 2009-10 given revised estimates of Rs. 6507.04 crore for purchase of 17747 MU (gross). Subsequently, the Board in its presentation on 10.06.09 has submitted pre-actual figures of power purchase, according to which Rs. 5167 crore has been spent for power purchase of 15575 MU (gross).

 

3.9.2        As discussed in para 3.6 the requirement of 12680 MU (net) is to be met through purchases from Central Generating Stations and other sources. The transmission loss external to the Board’s system has to be added to arrive at the quantum of gross energy to be so purchased. The Board has now stated that the external losses on power purchase during 2008-09 have been worked out on the following basis:-

 

(a)               Actual losses for the first six months of the year;

(b)               Transmission Losses for power received from Western Region & Eastern Region has been taken as 8.79% & 7.15%, respectively.

(c)               Projected transmission losses for the second half of the year received from Northern Region taken as the average of the same region’s losses during the previous year.

 

The Commission, however, decides to allow external losses @ 4.71% which were actually incurred by the Board in 2007-08. After adding 4.71% losses, the gross energy required to be purchased works out to 13307 MU (12680 MU + external losses 627 MU).

 

The prorata amount for purchase of 13307 MU works out to Rs.4414.59 (5167 x 13307/ 15575) crore.

 

The Commission, therefore, approves the revised power purchase cost of Rs. 4414.59 crore for the now determined purchase of 13307 MU gross.

 

3.9.3        Fuel Cost Adjustment (FCA) Amount

The Commission had in its Tariff Order of 2008-09 mentioned that any change in fuel cost from the level approved by the Commission would be passed on to the consumers as Fuel Cost Adjustment (FCA). PSEB filed Petitions (18/2008 & 23/2008) for approval of FCA for the 1st & 2nd quarters of 2008-09. The petitions remained pending for want of information from the Board. Subsequently, the Board filed Petition (6 of 2009) for approval of FCA for the 3rd quarter of 2008-09, which was decided to be considered along with the ARR & Tariff Petition submitted by the Board for the year 2009-10. The Board has also submitted its FCA petition (10 of 2009) for the 4th quarter of 2008-09. The Commission observes that since the variable cost of fuel has been validated upto March, 2009 and the actual power purchase cost in 2008-09 has also been taken into consideration, the pending FCA petitions may be deemed to be disposed of accordingly.

 

3.10     Employee Cost

3.10.1  In the ARR of 2008-09, the Board had claimed employee cost of Rs.2225.01 crore for 2008-09 against which the Commission approved a sum of Rs.1773.55 crore in the Tariff Order of 2008-09. The Board has now projected employee cost at Rs.2243.60 crore net of capitalization of Rs.130 crore in the revised estimates for 2008-09.

 

3.10.2 The Commission has been observing that the employee cost of the Board is one of the highest in the country and has urged the Board to take effective steps to contain this cost. This issue has already been extensively dealt with in the Tariff Orders from 2002-03 to 2008-09. The Commission, in line with its earlier observations in this respect, is unable to accept the revised projections of employee cost reported by the Board and considers it more appropriate to determine such cost as per its Regulations.

 

3.10.3 According to Regulation 28 (4) (a) of the PSERC Tariff Regulations, O&M expenses as approved for the year 2005-06 are to be considered as the base for determination of such expenses in subsequent years. The Regulation further provides that the O&M expenses will be adjusted according to the annual variation in the rate of WPI as on 1st of April every year. On the basis of methodology discussed in para 2.10.4, average WPI increase for 2008-09 works out to 8.41% which is applied to the approved cost of Rs.1631.02 crore for 2007-08 to arrive at employee expenses of Rs.1768.19 crore for the year 2008-09.

 

3.10.4 The Board, in Petition No.14 of 2008 had stated that O&M expenses which include employee cost be allowed on the cost of fixed assets added during the year on pro-rata basis from the date of commissioning in accordance with Regulation 28 (6) of the PSERC Tariff Regulations. However, for the reasons discussed in para 2.10.3 of this order, the Commission finds no justification in allowing any additional employee cost on this account.

 

The Commission, therefore, approves employee cost of Rs.1768.19 crore for 2008-09.

 

3.11     Repair and Maintenance (R&M) expenses

3.11.1  In the ARR of 2008-09, the Board had projected R&M expenses at Rs.398.30 crore against which the Commission had approved Rs.323.19 crore on this account. The Board in the ARR of 2009-10 has revised R&M expenses to Rs.354.25 crore net of capitalization of Rs.3.31 crore. Regulation 28 (4) (a) of the PSERC Tariff Regulations provides for adjusting base  O&M expenses according to annual variation in  WPI to determine O&M expenses for subsequent years. The base R&M expenses for 2008-09 are Rs.296.00 (277.82 + 18.18) crore and after allowing WPI increase of 8.41% (discussed in para 2.10.4) over these expenses, Rs.320.89 crore are determined allowable for assets worth Rs.16424.12 crore.

 

3.11.2  In the ARR of 2009-10, the Board has stated that O&M expenses are required to be allowed for the fixed assets of Rs. 4549.48 crore added during the year on pro-rata basis from the date of commissioning in accordance with Regulation 28 (6) of the PSERC Tariff Regulations. The Commission notes that the Board has expressed its inability to provide information with regard to the date of commissioning of each asset since a large number of assets of different categories are added during the year.  The Commission, therefore, is of the view that it is appropriate to consider the fixed assets added during the year as having remained in service of the Board for six months on an average during the year. The fixed assets of Rs.2484.88 crore under Thermal category stated to have been added during the year also include Units-III and IV of Stage-II of GHTP, of which Unit-III was commissioned on October 16, 2008 while Unit-IV is yet to be commissioned. As per information now supplied by the Board, the expenditure on GHTP Unit-III is Rs.1235.48 crore inclusive of generation expenditure of Rs.152.87 crore in the trial stage. As the Commission has allowed the cost of fuel consumed during trials in the fuel cost for the year, the capitalized cost of Unit-III is reduced to Rs.1082.61 (1235.48-152.87) crore. The Board has further stated that the capitalized cost of other major assets added during the year is Rs.832.06 crore.  Thus, total fixed assets added during the year work out to Rs.1914.67 crore for 2008-09. By applying the average rate of 1.95% (320.89/16424.12*100) to the fixed assets of Rs. 1914.67 crore added during the year, the allowable expenses work out to Rs.18.67 crore, assuming that these assets remained in service for six months during 2008-09. Total R&M expenses allowable for total assets of Rs.18338.79 crore during the year thus works out to Rs.339.56 crore.

                  The Commission, therefore, approves R&M expenses at Rs.339.56           (320.89 +18.67) crore for 2008-09.

3.12     Administration and General (A&G) expenses

3.12.1  In the ARR of 2008-09, the Board had projected A&G expenses at Rs.90.34 crore against which the Commission had approved the amount of Rs.79.29 crore inclusive of Rs.5 crore towards training expenses. The Board in the ARR of 2009-10 has revised A&G expenses to Rs.71.93 crore net of capitalization of Rs.23.43 crore.

 

3.12.2 The Commission notes that the claim of the Board is within the permissible norms prescribed in Regulation 28 of the PSERC Tariff Regulations, and is allowed as such.       

The Commission, accordingly, allows A&G expenses at Rs.71.93 crore for 2008-09 as claimed by the Board. 

3.13     Depreciation charges

            The Board had projected depreciation charges at Rs.783.32 crore in the ARR of 2008-09 against which the Commission approved Rs.783.34 crore in the Tariff Order. Now the Board has revised these charges to Rs.721.73 crore for assets valued at Rs.16420.73 crore as on April 01, 2008. As discussed in para 2.11.4 of this order, assets added during 2007-08 were approved at Rs.1010.53 crore against Rs.1007.14 crore stated by the Board resulting in a net increase of assets of Rs.3.39 crore. As the nature of additional assets of Rs.3.39 crore is not known, these assets are considered under category ‘Others’. Thus, depreciation charges are allowed for assets valued at Rs.16424.12 crore instead of Rs.16420.73 crore in service as on April 1, 2008. The function-wise average rates of depreciation for 2007-08 based on information supplied by the Board are applied for allowing depreciation in 2008-09. Accordingly, the depreciation charges work out to Rs.721.50 crore as detailed in Table 3.10.

 

Table 3.10: Depreciation charges

 

(Rs. crore)

% Rate

(Rs. crore)

% Rate

Item

Assets as on April 1, 2007

Amount of Depreciation for 2007-08

Assets as on April 1, 2008

Amount of Depreciation for 2008-09

1

2

3

4

5

6

7

Thermal

     2,915.31

159.47

5.47%

     3,020.44

165.22

5.47%

Hydro

     5,774.80

129.36

2.24%

     5,847.98

130.99

2.24%

Internal combustion

            2.68

0.00

0.00%

            2.68

0.00

 

0.00%

Transmission

     1,898.62

91.70

4.83%

     1,965.69

94.94

4.83%

Distribution

     4,685.44

282.53

6.03%

    5,447.20

328.47

6.03%

Others

        136.74

1.83

1.34%

        140.13

1.88

1.34%

Total

   15,413.59

664.89

 

   16,424.12

721.50

 

 

 

The Commission, therefore, approves depreciation charges of Rs.721.50 crore for 2008-09.

3.14     Interest and Finance charges

3.14.1    The Board had claimed Interest and Finance charges of Rs.1394.94 crore for 2008-09 against which the Commission had approved an amount of Rs.767.48 crore in the Tariff Order of 2008-09. The Board in the ARR of 2009-10 has revised the net Interest and Finance charges for 2008-09 to Rs.1207.24 crore inclusive of Finance charges of Rs.13.52 crore. Details of the claim are given in Table 3.11.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3.11: Interest & Finance Charges as claimed by the Board

 

Particulars

Rs. crore

Institutional loans

592.95

Govt. loans

0.00

Interest on Recalled Loans

140.15

Interest on loan non refund of interest

51.47

Interest on GPF

115.00

Interest paid on loans taken for private companies:

i) PFC-Talwandi Sabo Power Ltd. (TSPL)   16.73

ii) REC- Nabha Power Ltd.(NPL)                 11.26

iii) PFC/REC-Gidderbaha Power Ltd (GPL)   3.09

Total                                                             31.08

31.08

Lease rentals               

0.05

Total

930.70

Working capital loans

369.98

Grand Total

1300.68

Less Interest capitalized

67.95

Net interest

1232.73

Add Finance charges

13.52

Total Interest & Finance charges

1246.25

Less Interest recovered from:

TSPL                                                            18.73

NPL                                                              16.20

GPL                                                                4.08

Total recovery                                              39.01

39.01

Net Interest & Finance charges

1207.24

 

            The Interest & Finance charges allowable to the Board are discussed in     succeeding paragraphs.

 

3.14.2  Investment Plan

             In the Tariff Order of 2008-09, the Commission had approved Investment Plan of Rs.2000 crore. In the ARR of 2009-10, the Board has revised investment plan for 2008-09 to Rs.3682.91 crore including amounts of Rs.365 crore for Rajpura Thermal Plant and Rs.350 crore for Gidderbaha Thermal Plant. In its latest intimation, the Board has stated that actual capital expenditure for 2008-09 is Rs.1924.51 crore including investments of Rs.442.62 crore and Rs.6.61 crore in the Rajpura and Gidderbaha Thermal Plants. The outlay on these plants is not a part of the Board’s investment since these are being developed by private companies on BOO basis. Accordingly, the Commission determines the Board’s investment for the year at Rs.1475.28 (1924.51-442.62-6.61) crore on actual basis. The Commission notes that the Board had received an incentive grant of Rs.142.52 crore under APDRP from Govt. of India and the amount was released through the State Govt. during 2008-09. In addition, the Board has also received consumers’ contribution which is estimated at the previous year’s level of Rs.215.58 crore. Accordingly, actual loan requirement for this level of investment works out to Rs.1117.18 (1475.28-142.52-215.58) crore. Interest on loans other than WCL & Govt. loans works out to Rs.536.30 crore on proportionate basis as given in Table 3.12.

Table 3.12

                                                                                                                   (Rs. crore)

 

Sr. No.

Particulars

Loans as on 31.3.08

Receipt of loans

Repayment of loans

Loans as on 31.3.09

Amount of interest

1

2

3

4

5

6

7

1

As per data furnished by Board (other than WCL & Govt. loans)

5695.54

2369.30

654.57

7410.27

592.95

2

Approved by Commission (other than WCL & Govt. loans)

5695.54

1117.18

654.57

6158.15

536.30

 

3.14.3 Interest on Government loans

            In the Tariff Order of 2008-09 the Commission had approved interest of      Rs.209.32 crore on Govt. loans payable by the Board. However, this amount             was disallowed on account of diversion of capital funds for revenue purposes.      Thus, the Commission approved no interest as payable on Govt. loans for             2008-09.

 

In the Annual Statement of Accounts for 2007-08, outstanding Govt. loans are shown at Rs.1712.91 crore and interest payable on this account works out to Rs.225.48 crore for the year 2008-09 at the rates of interest given in the audited accounts of 2007-08 which on an average work out to 13.16% per annum. Keeping in view the above and for the reasons discussed in Commission’s order dated September 13, 2007, the amount of Rs. 225.48 crore is held not payable to the Govt. by the Board on account of diversion of capital funds for revenue purposes as brought out in para 3.14.11.

 

 

3.14.4  Interest on loans taken to replace re-called Government loans

            As decided earlier in para 2.14.12 of this order, interest on short-term loans of Rs.1362 crore raised to replace re-called Govt. loans adjusted against unpaid subsidy by the Govt. is allowed @ 10.29% per annum as claimed by the Board.  Thus, interest of Rs.140.15 crore is approved on this account.

 

3.14.5  Interest on G.P. Fund  

            The Board has claimed interest of Rs.115 crore on GP Fund accumulations.  The interest of Rs.115 crore on G.P. Fund being a statutory payment is allowed as claimed by the Board.

 

3.14.6  Lease Rental

            In the ARR of 2009-10, the Board has claimed an amount of Rs. 0.05 crore as lease rental for the year 2008-09 which the Commission allows.

 

3.14.7  Finance charges

 In the Tariff Order for 2008-09, Finance charges @ 0.66% on the total borrowing requirement of Rs.1781 crore amounting to Rs.11.75 crore, were approved. As per revised estimates, the Board has claimed Finance charges of Rs.13.52 crore for fresh borrowings of Rs.2989.30 (2369.30+620) crore inclusive of Rs.620 crore taken for Nabha Power Ltd. and Gidderbaha Power Ltd. The rate of Finance charges as per revised estimates of the Board work out to 0.45% of the proposed borrowings. The Commission has, however, approved net loan requirement of Rs.1117.18 crore in para 3.14.2 above. By applying this rate of 0.45% to the approved borrowings, Finance charges of Rs.5.03 crore are approved for 2008-09. Thus, Finance charges of Rs.5.03 crore are allowed for 2008-09.

 

3.14.8 Interest on Consumers’ Security Deposits

            In the Tariff Order of 2008-09, interest on consumers’ deposits amounting to Rs. 4.20 crore was approved. This amount is revised to Rs. 4.97 crore after allowing 5% increase on the actual interest of Rs. 4.73 crore paid to consumers in the previous year. Accordingly, interest on security deposits of consumers is allowed at Rs. 4.97 crore for 2008-09.

 

 

3.14.9  Capitalization of Interest and Finance charges

The Commission capitalizes the interest excluding interest on working capital in the ratio of net works in progress to total capital expenditure. Based on this principle and the expenditure as reflected in the revised estimates, the Commission approves capitalization of interest and finance charges of Rs.135.77 crore for 2008-09 against capitalization of Rs.22.29 crore approved in the Tariff Order of 2008-09.

  

3.14.10 Working Capital

The Commission had approved working capital of Rs.758.75 crore with interest cost of Rs.98.64 crore in the Tariff Order of 2008-09. In the revised estimates, the Board has projected a working capital loan of Rs.1387.07 crore on which the interest liability is Rs.169.92 crore. It is evident that these estimates have not been prepared in conformity with Regulation 30 of the PSERC Tariff Regulations, which prescribes norms for working capital applicable to an integrated utility such as the Board. Allowable costs on this basis are depicted in Table 3.13.

Table 3.13:  Working capital requirement

Sr. No.

Particulars

As submitted by the Board in the ARR

As approved by the Commission

Norm (period)

Amount (Rs.crore)

Period

Amount (Rs.crore)

1

Fuel cost

CERC (two months)

458.13

One month

248.24

2

Maintenance spares for generation (escalated @ 6%)

CERC

164.21

-

Nil

3

Power purchase cost

 One month

542.25

One month

367.88

4

Employee cost

CERC (one month)

192.96

One month

147.35

5

A&G expenses

CERC (one month)

One month

5.99

6

Average cost of stores (for R&M)

CERC (one month)

29.52

One month (R&M expenses)

28.30

7

Total

 

1387.07

 

797.76

 

Working capital on which interest is allowable to the Board on normative basis comes to Rs.797.76 crore. Accordingly, the Commission approves interest on working capital of Rs.97.73 crore @ 12.25% p.a. being the short-term PLR of the State Bank of India as on 1st April 2008.

 

 

3.14.11 Diversion of capital funds

            The Commission, in para 2.14.11 of this order has re-determined the diversion of capital funds for revenue purposes at Rs.4066.56 crore based on the Boards’ audited  accounts for 2007-08. Diversion of capital funds is estimated on this base (to be firmed up on the availability of audited accounts) for the year 2008-09. Of this amount, Rs.3429.21 crore is the net diversion carrying interest bearing liability.  Interest @ 13.16% (being average rate of interest on Govt. loans) on diverted funds of Rs.3429.21 crore works out to Rs.451.28 crore for 2008-09. This interest of Rs.451.28 crore is being disallowed from the interest cost on account of diversion of capital funds for 2008-09.

 

            In this regard, the Commission retains its decision of disallowance of interest cost of Rs.100 crore out of this amount on account of deficiencies in the working of the Board and further decides that the balance disallowance of interest of Rs.351.28 crore is to the account of the Govt. Accordingly, no interest is payable by the Board on Govt. loans while the Govt. will be liable to pay the balance of the disallowed amount of Rs.125.80 (351.28-225.48) crore to the Board. This amount is carried forward to para 3.15.4. 

 

In view of the above, Interest and Finance charges for 2008-09 are allowed as per Table 3.14.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3.14: Interest and Finance charges

                                                                                                                   (Rs. crore)

Sr. No.

Particulars

Loans as on 31.3.08

Receipt of loans

Repayment of loans

Loans as on 31.3.09

Amount of interest

1

2

3

4

5

6

7

1

Approved by Commission (other than WCL & Govt. loans)

5695.54

1117.18

654.57

6158.15

536.30

2

Govt. loans

1712.91

0.00

0.00

1712.91

225.48

3

Int. on loans taken to replace Govt. loans of Rs. 1362 crore.

 

 

 

 

140.15

4

Interest on GPF

 

 

 

 

115.00

5

Lease rental

 

 

 

 

0.05

6

Total (1+2+3++4+5)

7408.45

1117.18

654.57

7871.06

1016.98

7

Add Finance charges

 

 

 

 

5.03

8

Add Interest on Consumers’ security Deposits

 

 

 

 

4.97

9

Total Gross Interest and Finance charges

 

 

 

 

1026.98

10

Less capitalization

 

 

 

 

135.77

11

Net Interest and Finance charges

(9-10)

 

 

 

 

891.21

12

Interest on working capital

 

 

 

 

97.73

13

Total Interest (11+12)

 

 

 

 

988.94

14

Less: Disallowed on a/c of diversion:

a) Board - Rs.100 crore

b) Govt. - Rs.351.28 crore

 

 

 

 

451.28

15

Balance Interest and Finance charges

 (13-14)

 

 

 

 

537.66

 

Accordingly, the Commission approves net Interest and Finance charges of Rs. 537.66 crore for 2008-09.

 

3.15     Subsidy

3.15.1 In para 6.8.6 of the Tariff Order of 2008-09, the requirement of subsidy was determined at Rs.2479.76 crore for AP consumers, SC Domestic and Non-SC BPL DS consumers. Past subsidy recoverable from the Govt. upto 2007-08 was calculated at Rs.121.97 crore (including interest of Rs.35.56 crore). Thus, total subsidy payable by the Govt. to the Board during 2008-09 was approved at Rs.2601.73 crore.

 

3.15.2  Based on the information now supplied by the Board in the ARR for the year 2009-10, the amount of subsidy payable by Govt. to the Board for 2008-09 is revised as under:

 

·         AP Consumption: The Commission has revised AP consumption for 2008-09 from 9408 MU to 8374 MU as discussed in para 3.2.3 of this order. AP subsidy payable by the Govt. on 8374 MU @ 240 paise per kwh works out to Rs.2009.76 crore.

 

·         Meter Rentals and Service Charges: There is no change in the subsidy of Rs.7.00 crore determined earlier as payable on account of meter rentals and service charges in respect of AP consumers.

 

·         Scheduled Castes (SC) Domestic Supply (DS) consumers: The Govt. had decided to supply free power upto 200 units to Scheduled Castes DS consumers with connected load upto 1000 watts with effect from October 2, 2006. As per information submitted by the Board on April 20, 2009, it has claimed subsidy on actual consumption basis amounting to Rs.243.66 crore (inclusive of meter rentals and service charges of Rs.11.45 crore) against Rs.213.52 crore determined earlier in the Tariff Order of 2008-09.

 

·         Non-SC Below Poverty Line (BPL) DS consumers: In addition, the Govt. had also decided to give free supply of power upto 200 units per month to Non-SC BPL DS consumers with connected load upto 1000 watts with effect from December 1, 2006. The amount of subsidy claimed by the Board amounts to Rs.1.99 crore inclusive of meter rentals and service charges amounting to Rs.0.11 crore.

Accordingly, the subsidy payable for 2008-09 is now revised to Rs.2262.41 (2009.76+7.00+243.66+1.99) crore. 

 

3.15.3  Interest on delayed payment of subsidy

Govt. have paid subsidy due to the Board in 2008-09 in staggered monthly installments which is not in conformity with the manner of effecting such payment as brought out in para 6.8.8 of the Tariff Order of 2008-09. As per claim of the Board, it had to meet its revenue requirements by taking loans at the interest rate of 10.29% from the open market. The Commission is, therefore, of the view that interest on the amount of delayed payment of subsidy is payable to the Board by the Govt. This interest works out to Rs. 42.98 crore on payable subsidy of Rs. 2262.41 crore now determined in para 3.15.2. The interest amount has been arrived at after adjustment of interest of Rs. 0.30 crore calculated at the same rate of interest on Rs. 17.59 crore paid in excess by the Govt. in Feb, 2009.

 

            Thus, the amount of subsidy and interest payable by the Govt. in 2008-09 is determined at Rs. 2305.39 (2262.41+42.98) crore.

 

3.15.4  Amounts payable by the Government

             Based on the decisions as above, the subsidy as well as other amounts payable by the Govt. for 2008-09, are given below in Table 3.15.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3.15: Subsidy and other amounts payable by the Government

                                                                                                (Rs. crore)

Particulars

Consumption finally approved in ‘Review’
(in MU)

Total revenue required

Amount of  subsidy payable by the Govt.

1

2

3

4

    AP Consumption

8374

2009.76

2009.76

Meter Rentals and Service Charges

 

7.00

7.00

Sub Total (A)

8374

2016.76

2016.76

    Scheduled Castes DS consumers

 

243.66

243.66

   Non-SC BPL DS consumers

 

1.99

1.99

    Sub Total (B)

 

245.65

245.65

    Total Subsidy  (A+B)

 

2262.41

2262.41

Add Interest payable on delayed payment of subsidy during 2008-09

42.98

Total subsidy and interest payable for 2008-09

2305.39

Add subsidy and interest payable upto 2007-08 as per para 2.16.2 (true up)

97.83

Total subsidy and interest payable upto 2008-09

2403.22

Subsidy and interest paid by the Govt. during 2008-09

2601.73

Subsidy and interest paid by the Govt.  in excess upto 2008-09

198.51

 Other amounts payable by the Govt. :

i) Add excess interest paid for 2006-07 and 2007-08 determined refundable by the Govt. as per para 2.14.13 (true up)

 

 

 333.08

 

 

125.80

 

458.88

 

 

 

 

458.88

ii) Add amount payable by the Govt. for diversion of capital funds for 2008-09 as per para 3.14.11

Total other amounts  (i+ii)

Balance other amounts  payable upto 2008-09

260.37

 

            Total amount of subsidy and interest payable for 2008-09 is Rs.2305.39 crore. After adding subsidy and interest of Rs.97.83 crore payable upto 2007-08, total subsidy and interest payable upto 2008-09 comes to Rs.2403.22 crore against which the Govt. has already paid Rs.2601.73 crore during 2008-09.

 

            The balance amount of Rs.198.51 crore is adjusted against the other amounts payable of Rs.458.88 crore resulting in unpaid other amounts of Rs.260.37 crore by the Govt. to the Board. This is being carried forward to Chapter-6 (para 6.4.1).

 

           

3.16     Return on Equity

In accordance with Regulation 25 of the PSERC Tariff Regulations, the Commission in the Tariff Order of 2008-09 permitted a return on equity at the rate of 14% on an equity base of Rs.2946.11 crore, which worked out to Rs.412.46 crore.

There is no change in the equity of the Board as on April 1, 2008. The Board is, therefore, entitled to a return of Rs.412.46 crore on equity as approved by the Commission in the Tariff Order of 2008-09.

 

Accordingly, the Commission approves Return on Equity of Rs.412.46 crore for 2008-09.

 

3.17     Fringe Benefit Tax (FBT)

 

In the Tariff Order of 2008-09, the Commission had allowed FBT amounting to Rs.4.56 crore (as against the Board’s claim of Rs.5.00 crore) at the level of actual payment for 2006-07 as per the audited accounts of the Board.

           

In the ARR of 2009-10, the Board has revised the liability of FBT to Rs.5.25 crore. However, the Commission allows FBT amounting to Rs.4.98 crore at the level of actual payment for the previous year as given in the Board’s accounts for 2007-08.    

 

The Commission approves FBT expenses of Rs.4.98 crore for 2008-09.

 

 

3.18     Extraordinary items & other debits

In the ARR for the year 2009-10, the Board has claimed an expenditure of Rs.4.81 crore on account of extra ordinary items and other debits representing items which arise from transactions outside the ordinary activities of the Board which are expected not to occur frequently or regularly. The claim of the Board is not supported by any detail of expenditure but is based on actual expenditure incurred during 2007-08. The Commission is of the view that such items of expenditure can only be considered on actual basis in the true up exercise after the audited accounts for 2008-09 become available.

 

 

3.19     Non-Tariff Income

            In the Tariff Order of 2008-09, the Commission had approved non-tariff income of Rs.412 crore against the Board’s estimates of Rs.342 crore. Now, as per data supplied by the Board, the non-tariff income for the year has been revised to Rs.424.01 crore. In addition, the subsidy receivable from the Govt. on account of meter rentals and service charges for AP, SC DS and Non-SC BPL DS consumers amounting to Rs.18.56 (7.00+11.45+0.11) crore is also to be accounted for as non-tariff income. Thus, non-tariff income for the year 2008-09 comes to Rs.442.57 crore.

 

            The Commission, therefore, approves Rs.442.57 crore as the Non-Tariff Income of the Board for 2008-09.

 

3.20     Revenue from existing tariff

            The Board has revised the estimates of revenue at existing tariff to Rs.11734 crore (including subsidy of Rs.2602 crore) in place of Rs.11231.11 crore approved by the Commission in the Tariff Order of 2008-09. The Commission now revises the revenue from existing tariff to Rs.11139.38 crore as given below in Table 3.16.


Table 3.16: Revenue from Existing Tariff

 

Sr. No.

Category of consumers

As projected by Board

As approved by Commission

Energy sales (MU)

Tariff rates (paise/unit)

Revenue (Rs. in crore)

Energy sales (MU)

Tariff rates (paise/unit)

Revenue (Rs. in crore)

1

2

3

4

5

6

7

8

1

Domestic

a)

Up to 100 units

3752

240

900.00

3619

240

868.56

b)

101-300 units

1938

391

758.00

1870

391

731.17

c)

Above 300 units

1002

413

414.00

967

413

399.37

 

Total (a+b+c)

6692

 

2072.00

6456

 

1999.10

2

NRS

2067

490

1013.00

1911

449

858.04

3

Public lighting

147

440

65.00

137

440

60.28

4

Industrial Consumers

a)

SP

731

358

262.00

712

358

254.90

b)

MS

1555

396

616.00

1489

395

588.16

c)

LS

9081

395

3587.00

8587

395

3391.87

 

Total (a+b+c)

11367

 

4465.00

10788

 

4234.93

5

Bulk Supply

a)

HT

 

398

 

428

398

170.34

b)

LT

 

423

 

49

423

20.73

 

Total (a+b)

501

 

200

477

 

191.07

6

Railway Traction

118

470

55.00

123

470

57.81

7

Common pool

303

 

84.00

303

 

84.00

8

Outside state

1541

 

923.00

2323

 

1391.39

9

Total (1 to 8)

22742

 

8879.00

22518

-

8876.62

10

AP

9766

240

2602.00

8374

240

2009.76

11

Total (9+10)

32508

 

11481.00

30892

 

10886.38

12

Add: PLEC, MMC and Other charges

 

 

253.00

 

 

253.00

13

Grand Total

32508

 

11734.00

30892

-

11139.38

 

The Commission, therefore, approves revenue from existing tariff at
Rs.11139.38 crore for energy sale of 30892 MU for 2008-09.

 

3.21     Revenue Requirement

            A summary of the review for 2008-09 as discussed in the preceding           paragraphs is given in Table 3.17.

Table 3.17: Revenue Requirement

                                                                                                                                                   (Rs.crore)

Sr. No.

Item of Expense

As per Board in ARR 08-09

Approved by Commission in
T. O. for 08-09

Revised estimates by Board

Now Approved by the Commission

1

2

3

4

5

6

1

Cost of fuel

2978.00

2742.62

2749.00

2978.85

2

Cost of power purchase

5560.30

4186.33

6507.00

4414.59

3

Employee cost

2225.01

1773.55

2243.60

1768.19

4

R&M expenses

398.30

323.19

354.25

339.56

5

Admin & General Exp

90.34

79.29

71.93

71.93

6

Depreciation

783.32

783.34

721.74

721.50

7

Interest charges

1394.94

767.48

1207.24

537.66

8

Carrying cost of gap

-

102.15

-

-

9

Return on Equity

412.50

412.46

412.46

412.46

10

Fringe Benefit Tax

5.20

4.56

5.25

4.98

11

Other Debits and Extraordinary items

7.68

0.00

4.81

0.00

12

Total revenue requirement

13855.59

11174.97

14277.28

11249.72

13

Less: non tariff income

342.00

412.00

424.02

442.57

14

Net revenue requirement (12-13)

13513.59

10762.97

13853.26

10807.15

15

Revenue from existing tariff

11397.90

11231.11

11611.76

11139.38

16

Gap for 2008-09 (14-15)

(-) 2115.69

(+) 468.14

(-) 2241.50

(+) 332.23

17

Gap for the year 2007-08

3139.10

(-) 717.78

(-) 1802.00

(-)  803.31

18

Net gap (16 + 17)

5254.79

(-) 249.64

(-) 4043.50

(-) 471.08

 

Review for 2008-09 indicates that there is now a gap (surplus) of Rs. 332.23 crore. After adjustment of deficit of Rs.803.31 crore ending 2007-08 against the surplus of Rs.332.23 crore of 2008-09, the deficit upto 2007-08 get reduced to Rs.471.08 crore at the end of 2008-09. This deficit is being carried forward to the next year for adjustment. 

 

The Commission has taken note of press reports about the improvement of the financial conditions of the Board during the year 2008-09. The impact of such improvements on the finances of the Board and the ARR of 2008-09 will be considered next year when audited accounts are available.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.            Chapter 4

Annual Revenue Requirement for 2009-10

 

4.1       Energy Demand (Sales)

4.1.1    Metered Energy Sales: The Board has projected metered energy sales for 2009-10 based on category wise Compounded Annual Growth Rate (CAGR) of three years from 2004-05 to 2007-08. The 3 year CAGR has been worked out from audited metered sales for the period 2004-05 to 2007-08 which has then been applied to the revised estimates of metered sales of respective categories for 2008-09 (except for Railway Traction) to arrive at energy sales projections for 2009-10. The Board has proposed not to apply the CAGR method in the case of Railway Traction since the Board does not foresee any increase in the demand for this category. As such, the sales to Railway Traction for 2009-10 have been kept at the same level as the revised estimate for 2008-09.  Details of the Board’s projections are in Table 4.1.

 

          Table 4.1: Energy Sales to Metered Categories as per ARR - 2009-10

                                                                                                            (MU)

Metered Energy Sales

 2007-08 (Actual)

 2008-09   (RE)

 2009-10  (Projections)

1

2

3

4

Domestic

               6,491

             6,692

                7,240*

Non-Residential

            1,919

             2,067

                2,320

Small Power

                  738

                731

                   741

Medium Supply

               1,579

             1,555

                1,590

Large Supply

               8,733

             9,081

                9,812

Public Lighting

                  140

                147

                   158

Bulk Supply

                  501

                507

                   531

Railway Traction

                  113

                118

                   118

Total Sales

             20,214

 

 20898

 

 22510**

 

*           Projected Domestic supply energy sales of 7240 MU for 09-10 also include the consumption by 148000 additional connections to be released under RGGVY scheme.

**         Against 22511 shown by the Board.

 

The Commission has estimated category wise sales within the State for 2009-10 for all categories, except Railway Traction, by applying 3 years CAGR (2004-05 to 2007-08), on sales for the year 2008-09 now approved in Chapter-3. In the case of Railway Traction, sales for the year 2009-10 have been estimated at the same level as approved in Chapter-3 for the year 2008-09, for the reason advanced by the Board. Actual sales for the years 2004-05 and 2007-08, 3 year CAGR for 2004-05 to 2007-08 as calculated by the Commission, sales now approved for 2008-09 and estimated sales in 2009-10 for different metered categories within the State are given in Table 4.2.

 

     Table 4.2: 3-Year CAGR & Estimated Metered Sales within the State – 2009-10

          (MU)

Sr. No.

Category

2004-05 (Actuals)

2007-08 (Actuals)

3 year CAGR (2004-05 to       2007-08)

Sales now approved for     2008-09

Estimated sales for 2009-10

1

2

3

4

5

6

7

1

Domestic

5182

6491

7.80%

6456

6960

2

Non-Residential

1357

1919

12.24%

1911

2145

3

Small Power

709

738

1.35%

712

722

4

Medium Supply

1478

1579

2.23%

1489

1522

5

Large Supply

6923

8733

8.05%

8587

9278

6

Public Lighting

112

140

7.72%

137

148

7

Bulk Supply

434

501

4.90%

477

500

8

Railway Traction

113

113

0.00%

123

123

9

Total Sales within State

16308

20214

 

19892

21398

 

Note:    Any increase in Domestic supply energy sales due to release of additional connections under RGGVY scheme will be accounted for at the time of the true up exercise.

 

4.1.2    Sales to common pool consumers and outside State sales

 

The Board has projected sales to common pool consumers and Outside State for the year 2009-10 as below:                                                              

Category

2008-09(RE) ( MU)

Projection for 09-10 (MU)

Sales to common pool consumers

303

302

Sales outside State

1541

1307

 

Sale to common pool consumers for 2009-10 is based on actual figures of such sales for 2007-08 with no change being foreseen in this category.

 

While computing outside State sale in 2008-09, the Board had taken the actual sale in the first half of that year while estimates for the second half were based on committed sale on account of open access and sale/banking transactions. The Board has projected Outside State sale of 1307 MU for 2009-10 on the same basis as 2008-09 which the Commission approves.

 

The Commission approves outside State sale at 1307 MU for the year 2009-10 as also the sale of 303 MU to common pool consumers.


The total estimated metered sales for the year 2009-10 depicted by the Board and approved by the Commission are given in Table 4.3.

 

Table 4.3: Metered Sales - 2009-10

                                                                                                                    (MU)

Sr. No.

Metered Category

Projected by Board

Approved by the Commission

1

2

3

4

1

Domestic

7240

6960

2

Non-Residential

2320

2145

3

Small Power

741

722

4

Medium Supply

1590

1522

5

Large Supply

9812

9278

6

Public Lighting

158

148

7

Bulk Supply

531

500

8

Railway  Traction

118

123

9

Total within State

22510

21398

10

Common pool

302

303

11

Outside State sales

1307

1307

12

Total Sales (9+10+11)

24119*

23008

 

·                     Against 24120 shown by the Board

The Commission, thus, approves metered sales at 23008 MU against 24119 MU projected by the Board.

 

4.1.3    AP Consumption: The Board has, in the ARR of 2009-10 projected AP consumption at 11699 MU for the year by applying normative growth rate of 8% twice over the consumption recorded in 2007-08. The Board also envisages release of 40000 new connections in each of the years 2008-09 and 2009-10 in addition to load added through VDS/OYT schemes which will further increase AP consumption. This projection can, in any case, not be taken into consideration as estimates of AP consumption in 2007-08 and 2008-09 have been approved by the Commission at 8902 MU (in true up) and 8374 MU (in review) respectively. The Commission observes that the Board has itself reported AP consumption during 2008-09 less than that in 2007-08 stating it owing to unusual excessive rainfall during the year 2008-09. As such, AP consumption during 2008-09 can not be taken as base for working out the consumption for the year 2009-10. With a view to estimate AP consumption in 2009-10, the Commission decides to apply the norm of 5% increase twice over the consumption worked out by the Commission for the year 2007-08. Accordingly, AP consumption for the year 2009-10 works out to 9814 MU which the Commission approves.

The Commission has over the last several years been attempting to refine the methodology of computing AP consumption. With that end in view and in the light of the findings of the recent study on AP consumption, the Commission directs the Board as under:

 

(a)   Monthly division-wise consumption recorded by sample meters be made available directly to the Commission by the agency undertaking this work.

(b)   The Board will furnish to the Commission on monthly basis (division-wise)

·         The complete data on the basis of which AP factor has been calculated i.e. load of each AP sample meter, initial and final meter readings, total connected load of AP sample meters, total consumption recorded by sample meters.

·         Details of increase/decrease in sample meter loads (including light load) along with total connected load of each division.

·         Data of the actual AP supply hours.

(c)   Sample meter readings in excess of what can possibly be consumed with the given supply hours and connected load will not be taken into account for evaluation of AP factor and division-wise details of such meters will be furnished every month.

(d)   Faulty/non-functional sample meters will be replaced in a time bound manner and in no case should the faulty meters exceed 10% of the total sample meters in a division during any month of the year.

(e)   The size of sample meters may be gradually increased to 10% of the total number of AP connections for more accurate estimation of AP consumption.

 

4.1.4    Total Energy Demand (Sales)

 

The category wise metered sales, AP consumption, common pool and outside State sales projected by the Board and as approved by the Commission are given in   Table 4.4.

Table 4.4: Total Energy Sales for 2009-10

                                                                                                                  (MU)

Sr.No.

Category

Projected by the Board

Approved by the Commission

1

Total metered sales within the state

22510

21398

2

AP consumption

11699

9814

3

Total sales within the State (1+2)

34209*

31212

4

Sales to common pool consumers

302

303

5

Outside State sales

1307

1307

6

Total sales (3+4+5)

35818**

32822

 

*           Against 34210 shown by the Board.

**         Against 35819 shown by the Board.

 

The Commission, thus, approves total energy sales to different categories of consumers at 32822 MU including common pool and outside State sales.

 

4.2       Transmission and Distribution Losses (T&D Losses)

 

The Board had projected Transmission & Distribution losses at 19.5% for 2009-10 which represents a reduction of 3.03% from losses of 22.53% in 2007-08 and 1.5% from the level of 21% for 2008-09. These losses for the years 2007-08, 2008-09 and projections for 2009-10 have been based on AP consumption of 10030 MU, 9766 MU and 11699 MU respectively.

The Commission had in Tariff Order 2004-05 fixed T&D loss of the Board as 23.25% and also fixed a trajectory of loss reduction for the next 3 years. The loss reduction level to be achieved on that basis and the achievements as reported by the Board are depicted in Table 4.4A.

 

TABLE 4.4A

Year

T&D loss fixed by the Commission

T&D loss reported by

the Board

1

2

3

2004-05

23.25%

24.27%

2005-06

22.00%

25.07%

2006-07

20.75%

23.92%

2007-08

19.50%

22.53%

2008-09

19.50%

21.00%

 

Quite evidently, the Board has not been able to achieve the T&D loss reduction targets as prescribed by the Commission. In fact, the Commission was to redetermine the reduction trajectory of T&D losses beyond 2007-08 but had to retain a normative level of 19.5% in 2008-09 as the Board had failed to reach even close to that target by the end of 2007-08.

 

The performance of the Board as depicted in Col. 3 of Table 4.4A is based on the Board’s figures of AP consumption. In the Tariff Order for the year 2008-09, the Commission had expressed doubts as to the veracity of AP consumption reported by the Board, in response to which, the Board had stated that it would be open to its re-assessment by an independent agency. Such an agency was subsequently appointed by the Commission and based upon its findings, the Commission had decided to reduce AP consumption reported by the Board by 11.25% and 10.2% for the years 2007-08 and 2008-09 respectively. On the basis of these revised estimates of AP consumption, T&D losses for the years 2007-08 and 2008-09 come to 25.12% and 24.07% respectively.

 

Several justifications have been preferred by the Board for its inability to reduce losses in line with the targets fixed by the Commission which have largely to do with unrealistic projections both of the starting point and the phased reduction required in each year. Contrary to the plea taken by the Board, however, the fact remains that the starting point of the loss reduction trajectory determined by the Commission was higher than the losses reported by the Board in 2002-03 whereas the annual reductions were even less than what had been suggested by the Board and subsequently recommended by the Abraham Committee. The Commission has repeatedly observed that the Board has not been able to draw up a comprehensive plan for the reduction of T&D losses with quantifiable annual targets and monitor its implementation. There is, however, some merit in the plea of the Board that it would be counter productive to persist with fixation of T&D losses that are entirely unrealistic and bear no relationship to the actual prevailing levels thereof. The Commission notes that the National Tariff Policy notified by the Govt. of India does indeed suggest that in such a situation it is advisable to relax the norms and refix the targets which a licensee would be required to achieve. Given the consistent inability of the Board to achieve levels of T&D loss as prescribed by the Commission, it becomes necessary to reconsider the entire issue. Taking  note of the fact that actual losses on the basis of revised AP consumption at the end of 2008-09 was 24.07%, the Commission now prescribes that loss level to be achieved during the year 2009-10 would be 22%.

 

While refixing the levels of T&D loss that the Board would be required to achieve in the year 2009-10, the Commission deems it necessary to observe that the Board which is pleading for refixation on the basis of the National Tariff Policy has been singularly amiss in conforming to other provisions of that policy and the National Electricity Policy as well. The former requires that State Electricity Regulatory Commission would by March 2007 undertake an independent assessment of base line data for different parameters in respect of each distribution circle of the licensee. The unfortunate situation on the ground, however, is that the Board has not even completed its own assessment of base line data so far despite the issue being specifically discussed and an undertaking given that this work would be attended to on a priority basis. Similarly, the National Electricity Policy requires that a time bound programme be drawn up for segregation of technical and commercial losses through conduct of comprehensive energy audits. It further enjoins that the results of energy accounting for a defined unit as determined by the Commission would be declared not later than March 2007. Again, there is no visible progress in the Board with regard to either of the segregation of technical and commercial losses or for undertaking comprehensive energy audits down to the distribution level.

 

The revised level of T&D losses to be achieved by the Board in 2009-10 would reflect in extra cost which will be incurred by effecting power purchases. Such cost is being provisionally allowed subject only to demonstrable and quantifiable improvement in the execution of specific measures to bring about reduction in T&D losses. With a view to reducing losses to 17% by 2011-12, the Board has itself indicated that some of the steps it intends to take are:

 

·                     Conversion of LT distribution system into HVDS.

·                     Installation of LT capacitors on all AP connections.

·                     100% replacement of electro-mechanical meters by more accurate electronic meters.

·                     Providing effective earthing at all the sub-stations and distribution transformers.

·                     IT implementation by introducing measures like spot billing, GIS mapping and centralized call centres for complaint registration, remote metering etc.

·                     Refurbishing/strengthening of distribution system under APDRP.

·                     Installation of capacitors at 11 KV feeders in urban and rural areas.

·                     Augmentation of overloaded feeders and deloading of distribution transformers.

·                     Installation of meters outside the premises.

·                     Theft detection by enforcement agencies.

 

While the Board proposes to undertake several measures in this direction, the Commission would for the present look only at the progress achieved in respect of:

(i)                  Conversion of LT distribution system to HVDS.

(ii)                Replacement of electro-mechanical meters by electronic meters.

(iii)               Installation of capacitors at all 11 KV feeders in urban and rural areas.

(iv)              Shifting of meters outside residential premises.

 

Specific schemes aimed at reduction of losses referred to above are capital intensive and there is obviously a limitation on the Board’s capability of executing these in full measure. These schemes have necessarily to be supplemented with steps to complete assessment of baseline data, segregation of commercial and technical losses and energy audit upto distribution level.

 

The Board will within one month of the issue of this order submit its final projections of financial and physical targets that are to be achieved for the current and next two years in respect of items (i) to (iv) above and also the targets for completion of assessment of base line data, segregation of technical and commercial losses and energy audit upto distribution level.

 

The Commission would at the time of the next Tariff Order assess the performance of the Board in respect of these specific measures and then take a view on the fixation of loss reduction trajectory for the next phase. The issue of whether the extra expenditure on power purchase provisionally allowed is to be retained will also be addressed at that stage.

 

4.3       Energy Requirement (Input)

            The total energy requirement is the sum of estimated energy sales including common pool and outside State sales and T&D losses. The estimated energy sales, T&D losses and energy requirement projected by the Board and as approved by the Commission for the year 2009-10 are given in Table 4.5.

 

Table 4.5: Energy Requirement - 2009-10

(MU)

Sr. No.

Particulars

As projected by the Board for  09-10

As approved by the Commission

1

2

3

4

1

Metered Sales within State

22510

21398

2

AP consumption

11699

9814

3

Total sales within State (1+2)

34209

31212

4

Common pool sales

302

303

5

Outside State sales

1307

1307

6

Total sales

35818

32822

7

T&D losses on item (3)

8287

8803

19.50%

22%

8

Total energy input required (6+7)

44105*

41625

 

*     Against 44106 shown by the Board.

The overall energy requirement projected by the Board is higher by 2480 MU than the requirement approved by the Commission on account of difference in Metered sales, AP consumption and T&D losses approved by the Commission. The energy requirement thus works out to 41625 MU which has to be met from the Board’s own generation (thermal & hydel) including share from BBMB and purchases from Central Generating Stations and other sources. These issues are discussed in succeeding paras.

 

4.4       PSEB’s Own Generation

4.4.1    Thermal Generation: The Board has projected generation for the year 2009-10 at 2330 MU, 9200 MU and 6724 MU for GNDTP, GGSTP and GHTP {3220 MU for GHTP Stage I (Units I & II) and 3504 MU for Stage II (Units III & IV)} respectively, stating that the gross generation in 2009-10 of GNDTP, GGSTP and GHTP Stage-I has been worked out on the basis of R&M schedule and taking into account the average forced outage in the 3 years from 2005-2006 to 2007-08. The gross generation of GHTP Stage-II (Units III & IV) has been worked out on their respective commissioning (Oct 2008 and Jan 2009) as per CERC norms.

 

Plant Availability

The Board has submitted that -

·         The Plant Availability of GNDTP for 2009-10 has been projected as 74.57% in the ARR. However, the Board has intimated the revised maintenance schedule of GNDTP Units in its letter dated 16.04.2009 which envisages major Renovation and Modernization work of Unit-IV from 01.10.09 to 01.07.2010 (182 days during 09-10) and shutdown of Units-I, II and III for 30 days each on account of annual overhauling. Accordingly, the total number of days for which a single unit will be unavailable in totality works out to 272.

 

·         The Plant Availability for GGSTP for 2009-10 has been projected at 91.20%, based on the planned maintenance schedule of its units in 2009-10 for a total of 145 days and also taking into account the last three years average of forced outages of the plant.

 

·         The Plant Availability for GHTP Stage-I for 2009-10 has been projected at 92.50% on the basis of the planned maintenance schedule of Unit-I and Unit-II for a total of 40 days and past trends in the forced outages of the plant’s units.

 

·        In the case of GHTP Stage II, Unit III started commercial operation from Oct 16, 2008 and as such plant availability has been projected as per CERC norms at 90.00% while Unit IV is expected to be commissioned by Jan 1, 2009. Plant maintenance schedule of 25 days for GHTP Stage II Unit III has also been planned.

 

The availability of GNDTP, GGSTP and GHTP – Stage I based on maintenance schedules excluding forced outages (as projected by the Board) for the year 2009-10, is calculated by the Commission as 81.37%, 93.38% and 94.52% respectively. For GHTP Stage II plant availability of 90% (as projected by the Board) has been taken for calculating gross generation.

 

The Commission has assessed availability and generation for the year 2009-10 based on the average of actual availability and generation for the three years (2005-06 to 2007-08). The actual availability and generation of the thermal plants for 2005-06, 2006-07 and 2007-08 along with average of three years generation and availability are as given in Table 4.6.

 

Table 4.6: Actual Availability and Generation – 2005-06 to 2007-08

 

Sr. No.

Station

FY 2005-06

FY 2006-07

FY 2007-08

Average of the 3 years

1

GNDTP

 

 

Generation (MU)

 

2359

 

2221

3008

 

2529

 

 

Availability (%)

 

68.00

 

64.90

87.53

 

73.48

2

GGSTP

 

 

Generation (MU)

 

9329

 

9770

9806

 

9635

 

 

Availability (%)

89.00

90.20

91.64

 

90.28

3

GHTP Stage I (Units I&II)

 

 

Generation (MU)

 

3146

 

3443

3508

 

3366

 

 

Availability (%)

 

88.00

94.30

94.81

 

92.37

 

 

 

 

 

 

 

 

 

 

 

 

Considering actual availability and generation in 2005-06, 2006-07 and 2007-08, gross generation for 2009-10 has been computed in Table 4.7.

 

Table 4.7:       Availability, Gross Generation and PLF of Existing

Thermal Plants - 2009-10

 

Sr.No.

Station

Three year average availability

Three year average generation (MU)

 

Assessed by the Commission for 09-10

 

 

Availability as per mtc. Schedules for 2009-10

Generation (MU)      (4x5) / 3

PLF (Calculated)

1

2

3

4

5

6

7

1

GNDTP

73.48%

2529

81.37%

2801

72.67%

2

GGSTP

90.28%

9635

93.38%

9966

90.29%

3

GHTP Stage I

92.37%

3366

94.52%

3444

93.61%

 

Unit III of GHTP Stage II has become operational since Oct 2008. The Board has further submitted in the ARR that Unit IV will be operational from Jan 2009. However, Unit IV has still not been put on commercial operation and the revised date of commercial operation has not been indicated. The Board has informed that Unit IV is generating at its full capacity though the commercial operation of the Unit has not been declared. For GHTP Stage II, the Board has projected plant availability as per CERC norms. The Board has projected gross generation of 3504 MU. The Commission has, therefore, decided to consider generation from Stage II (Units III & IV) as projected by the Board. Total gross generation from the thermal plants during the year 2009-10 will, therefore, be as given in Table 4.8.

 

Table 4.8: Gross Thermal Generation - 2009-10

                                                                                            (MU)

Sr.No.

Station

Approved Generation

1

GNDTP

2801

2

GGSTP

9966

3 (a)

GHTP Stage I

3444

3 (b)

GHTP Stage II

3504

 

Total

19715

 

               

            Accordingly, the Commission assesses the total gross Thermal generation as 19715 MU.

            Performance parameters  

 

The PSERC Tariff Regulations provide that for determining the cost of generation of each generating station, the Commission shall be guided, as far as feasible, by the principles and methodology of CERC, as amended from time to time. This approach has been adopted by the Commission in its previous Tariff Orders from 2005-06 onwards. CERC has in its notification No.L-7/145(160)/2008-CERC dated Jan 19, 2009 framed Regulations for Determining Terms and Conditions for Electricity Tariff for the five year period beginning April 1, 2009 wherein operation norms for thermal plants have also been prescribed. These new norms of CERC will be followed by the Commission in the estimation of fuel cost for 2009-10. CERC has, however, not specified any norms for 110 MW units and the Commission has in the case of GNDTP adopted the norms specified for the Tanda station of NTPC, which like GNDTP, has 4 units of 110 MW each. The Commission notes that Units I and II of GNDTP have been put on commercial operation on 31.5.2007 and 19.1.2006 respectively, after completion of Renovation and Modernisation (R&M).The Commission has decided to adopt SHR value and auxiliary consumption for GNDTP Units I & II as per CERC Tariff Regulations effective from April 1, 2009, in which CERC has also revised operational norms of Tanda thermal power station after its R&M. Accordingly, the SHR value of 2825 Kcal/kwh and auxiliary consumption of 10.22% (as discussed in para 3.5.1) has been taken for calculating fuel cost for GNDTP Units I & II. For Units-III and IV of GNDTP, the Commission has no reason to alter the norms adopted for the year 2008-09 since R&M in respect of these units is yet to be taken up.

 

Auxiliary Consumption & Net Generation

 

The Commission has adopted CERC norms for assessment of net generation of GGSTP and GHTP and the revised norm for Tanda Station in the case of GNDTP Units I & II while pre-revised norms for Tanda station have been taken into consideration for Units III & IV. Accordingly, auxiliary consumption for the year 2009-10 has been determined at 10.22%, 11.00%, 8.50% and 9.00% for GNDTP Units I & II, GNDTP Units III & IV, GGSTP and GHTP respectively. Auxiliary consumption and net generation from the three thermal generating stations as projected by the Board and approved by the Commission for 2009-10 is given in Table 4.9.

 

Table 4.9: Generation and Auxiliary Consumption for Thermal Plants – 2009-10

                                                                                                                                                                (MU)

Sr. No.

Station

 

Projected by the Board

 

 

 

Approved by the Commission

 

 

Gross Generation

Auxiliary Consumption

Net Generation

Gross Generation

Auxiliary Consumption

Net Generation

1

2

3

4

5

6

7

8

1

GNDTP*

 

2330

268

2062

1580

161

1419

Units-I&II

10.22%

GNDTP*

11.50%

1221

134

1087

Units-III&IV

11.00%

2

GGSTP

9200

791

8409

9966

847

9119

8.60%

8.50%

3

GHTP Stage-I

3220

290

2930

6948

625

6323

9.00%

GHTP Stage-II

3504

315

3189

9.00%

9.00%

 4

Total

18254

1664

16590

19715

1767

17948

 

*           The gross generation of 2801 MU in case of GNDTP in Table 4.8 has been apportioned as 1580 MU by Units-I&II and 1221 MU in respect of Units III&IV based on plant availability of 91.78% and 70.96% respectively (calculated on the basis of maintenance schedule of Units I & II and Units III & IV respectively as projected by the Board in its ARR for 2009-10).

 

 

Net thermal generation approved by the Commission is 17948 MU against 16590 MU projected by the Board.

 

4.4.2        Hydel Generation: In the ARR for 2009-10, the Board has estimated hydel generation from its own stations for the year 2009-10 based on the three years’ average of gross generation for 2005-06, 2006-07 and 2007-08. The Commission has also considered the average gross generation for three years in line with the approach adopted in its earlier Tariff Orders. The generation projected by the Board and the generation approved by the Commission is given below in      Table 4.10.

 

 

 

 

Table 4.10: Own Hydel Generation – 2009-10

                                                                                                                          (MU)

Sr. No.

Station

Generation projected by the Board for 09-10

Actual Generation

 

 

Generation estimated by the Commission (Based on 3 year average)

05-06

06-07

07-08

1

2

3

4

5

6

7

1

Shanan

515

509

496

540

515

2

UBDC

448

531

385

428

448

3

RSD

1744

2013

1679

1538

1743

4

MHP

1257

1238

1171

1362

1257

5

ASHP

695

708

666

710

695

6

Micro Hydel

7

6

8

7

7

 7

Total own generation (Gross)

 

4665

 

5005

4405

 

4585

4665

 

The Commission approves estimated gross generation of 4665 MU from the Board’s own hydel stations. The Commission also approves the Board’s share and common pool share from BBMB as projected by the Board and depicted in Table 4.11.

 

Table 4.11: Total Hydel Generation - 2009-10

                                                                                               (MU)

Sr. No.

Station

Projected by the Board for 09-10

Approved by the Commission

1

2

3

4

1

Shanan

515

515

2

UBDC

448

448

3

RSD

1744

1743

4

MHP

1257

1257

5

ASHP

695

695

6

Micro Hydel

7

7

7

Total own generation (Gross)

4665

4665

8

Total own generation (Net)

4604

4494

9

BBMB

 

 

i)

PSEB share (Gross)

4323

4323

ii)

Common Pool share

302

303

iii)

External Losses on PSEB share in BBMB

171

171

iv)

Availability (Net)

4454

4455

10

Total Availability (Net)

9058

8949

 

 

 

 

 

Notes

 

1.       Board’s Projection for own generation is net of auxiliary consumption and transformation losses (61 MU).

 

2.       Commission’s Assessment of own generation is net of:

 

·          HP share (free) in RSD @ 4.6% (80 MU).

·          Royalty to HP in Shanan (53 MU).

·          Auxiliary consumption @ 0.5% for RSD generation of 1743 MU and UBDC stage-1 generation of 140 MU (on previous year’s pattern) and 0.2% for others (15 MU).

·          Transformation losses @ 0.5 %( 23 MU).

 

3.       BBMB share is net of external losses based on the actual level of losses @ 3.95% in 2007-08.

 

 

The Commission, thus, assesses net hydel generation of 8949 MU for the year 2009-10.

 

4.4.3        Total Availability of energy from the Board’s own stations and BBMB: The approved net generation from own thermal and hydel stations of the Board and share from BBMB is given in Table 4.12.

Table 4.12: Net Own Generation - 2009-10

Sr. No.

Station

Energy available
(ex-bus)  (MU)

1

2

3

1

Thermal Stations

17948

2

Hydel Stations (Own)

4494

3

Share from BBMB (including 303 MU share of common pool consumers)

4455

4

Total own Availability

26897

 

The Commission approves the total energy available from the Board’s own generating stations including share from BBMB as 26897 MU.

 

4.5       Purchase of Power

4.5.1    The total energy required to meet the demand during 2009-10 including common pool and outside State sales is 41625 MU as discussed in para 4.3. The energy available from own generating stations of the Board including its share from BBMB is 26897 MU as approved in para 4.4.

 

4.5.2    The balance requirement of 14728 MU (net) has to be met through purchases from Central generating stations and other sources. This is against a requirement of 18458 MU (net) projected by the Board for the year 2009-10.

 

4.6       Energy Balance

4.6.1    The energy balance which takes into account the approved energy sales to different categories of consumers, T&D losses and energy availability is given in Table 4.13.

 

Table 4.13: Energy Balance – 2009-10

                                                                                                                         (MU)   

Sr. No.

Particulars

Projected by the Board

Approved by the Commission

1

2

3

4

A

Energy Requirement

 

 

1

Metered Sales within state.

22510

21398

2

Sales to AP consumers

11699

9814

3

Total sales within state (1+2)

34209

31212

4

T&D Losses

8287

8803

5

Common pool

302

303

6

Outside State sales

1307

1307

7

Total Requirement (3+4+5+6)

44105

41625

 

 

 

 

B

Energy Availability

 

 

1

Own generation (ex-bus)

 

 

a)

Thermal

16590

17948

b)

Hydel

4604

4494

2

Share from BBMB (including share of common pool consumers=303)

4454

4455

3

Purchase (Net)

18457*

14728

4

Total Availability

44105

41625

           

                * Power purchase of 18457 MU is against 18458 MU shown by the Board in ARR.

 

4.7       Fuel Cost

4.7.1    Fuel Cost Projected by the Board: The Board has projected fuel cost of Rs.3047 crore for a total generation of 18254 MU during the year 2009-10 based on operational parameters and fuel prices as detailed in Table 4.14.

 

 

 

 

 

 

 

 

Table 4.14: Fuel Parameters projected by the Board - 2009-10

 

Sr.No.

Station

PLF

Station Heat Rate (kcal/kwh)

Transit loss of coal

Coal Price including transit loss (Rs/MT)

Calorific value of coal (kcal/kg)

Price of Oil (Rs/KL)

Specific oil consumption (ml/kwh)

Calorific Value of oil (kcal/litre)

1

2

3

4

5

6

7

8

9

10

1

GNDTP

60.45%

   3,000

2.00%

  2,341

   4,100

   28,195

               3.50

10100

2

GGSTP

83.35%

   2,702

2.00%

  2,485

   4,015

   32,238

               2.00

10000

3

GHTP

(i)

Stage-I (Units-I&II)

87.52%

   2,500

2.00%

  2,370

   4,050

   30,137

               2.00

9400

(ii)

Stage-II (Units- III&IV)

80.00%

   2,500

2.00%

  2,490

   4,050

   30,137

               2.00

9400

 

 

4.7.2    The Board has submitted that the performance parameters and coal transit loss of all the three stations as submitted by the Board may be approved without any change in the light of the following:

 

·         The Station Heat Rate (SHR) for GHTP – Stage I and GNDTP has been taken as 2500 Kcal/kWh and 3000 Kcal/kWh respectively as per CERC norms. For GGSTP, the SHR has been taken at 2702 Kcal/kWh on the basis of previous year’s data. For the previous year, the Board had taken SHR of 2692 kcal/kwh after considering the fact that two of the six units at GGSTP are more than 22 years old.

·         SHR for GHTP Stage-II has been considered as 2500 Kcal/kwh in accordance with CERC norms.

·         The price of coal for 2009-10 has been estimated on the basis of the actual average coal prices for the respective stations till September, 2008.

·         The calorific values of coal for 2009-10 have been worked out as per the actual average calorific value figures for different stations till September, 2008.

 

4.7.3    Fuel Cost approved by the Commission

Gross Generation

 

The gross generation of thermal plants for the year 2009-10 has been discussed in para 4.4.1 and summarized in Table 4.8.

 

Station Heat Rate

The CERC has laid down norms of gross SHR for coal based thermal power generating stations as given in Table 4.15.

    Table 4.15: CERC Norms for Gross Station Heat Rate

Sr. No.

Unit size / Plant

SHR norm (kcal/kwh)

1

2

3

1

200/210/250 MW sets

2500

2

500 MW and above sets

2425

3

Talcher Thermal Power Station

2950

4

Tanda Thermal Power Station

2825

 

 

 

 

 

 

 

On the above basis, the Commission approves SHR at 2500 kcal/kWh for GGSTP and GHTP. As CERC has not specified any norm for units installed at GNDTP, the Commission has decided to allow SHR of 2825 kcal/kwh for GNDTP Unit I & II based on the CERC norms for Tanda TPS. In case of GNDTP Units III and IV, the Commission has decided to continue with SHR of 3000 kcal/kwh as allowed for these two units in its previous orders.

 

Coal Transit Loss

The Commission has permitted Transit Loss of 2% for all power plants in its earlier orders. The Board has not intimated the quantity of captive mine (PANAM) coal to be used at each of the power plant during the year 2009-10. While calculating the fuel cost for 2009-10, the Commission has assumed the coal mix in respect of PANAM coal and other coal in the same ratio as actually consumed in 2008-09 at each of the power plants. PANAM coal is priced on F.O.R. destination basis and no transit loss is involved. In case of other coal, the Commission decides to continue with the norm of 2% transit loss for all thermal stations.

 

Price and Calorific Value of Coal

As per past practice, Fuel cost being a major item of expense, the actual calorific value, price and transit loss of coal for the year 2008-09 were verified and the results are given in Table 4.16.

 

 

Table 4.16: Validated Calorific Value, Price and Transit Loss of Coal – 2008-09

 

Sr. No.

Station

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

1

 

1

2

3

4

5

6

1(a)

GNDTP  (Unit I & II)

4239

10289

28293

2466

1.28%

2434

1(b)

GNDTP (Unit III & IV)

4239

10289

28293

2466

1.28%

2434

2

GGSTP

4019

10000

32470

2563

1.23%

2531

3

GHTP

4077

9400

28347

2540

0.37%

2530

 

In working out the cost of coal for the year 2009-10, the Commission has considered the price and calorific value of coal as validated for the year 2008-09. The price and calorific value of coal indicated above are the weighted average values of coal, including PANAM coal.

 

The Commission notes that data supplied by the Board in respect of coal cost for the years 2007-08 and 2008-09 indicates that certain amounts have been booked under the sub –head ‘other costs’ at all thermal generating stations. This cost is reported to be incurred on account of items such as transit loss, demurrage, mill rejects, stones, commission to agents, payment to railway staff etc. The Commission has provisionally allowed this cost but will subsequently go into the justification thereof and determine whether such costs can be passed on to the consumers.

 

Specific Oil Consumption, Calorific Value and Price of Oil

 

The Board has projected the Specific Oil Consumption of GHTP and GGSTP at 2 ml/kwh while it is estimated at 3.5 ml/kwh in the case of GNDTP.

 

The Commission has adopted CERC norms for oil consumption as in the case of other performance parameters of thermal plants. As per the new Regulations of CERC effective from 1.4.2009, the specific oil consumption to be allowed for thermal plants is 1 ml/kwh. The Commission thus approves 1 ml/kwh specific oil consumption for GNDTP Unit I & II, GHTP and GGSTP.  In case of GNDTP Units III & IV, the Commission has decided to continue with specific oil consumption of 3.5 ml/kwh as allowed in the earlier years since their R&M works are still to be undertaken by the Board. 

 

Based on the above, the fuel cost assessed for the year 2009-10 is as given in Table 4.17.

 

Table 4.17: Fuel cost (Coal and Oil) – 2009-10

Sr. No.

Item

Derivation

Unit

Approved for 2009-10

GNDTP Unit I & II

GNDTP Unit III &IV

GGSTP

GHTP

Total

1

2

3

4

5

6

7

8

9

1

Generation

A

MU

1580

1221

9966

6948

19715

2

Heat Rate

B

k.cal/kWh Generated

2825

3000

2500

2500

 

3

Specific oil consumption

C

Milli litre/kwh

1.00

3.50

1.00

1.00

4

Calorific value of oil

D

k.cal/litre

10289

10289

10000

9400

5

Calorific value of coal

E

k.cal/kg

4239

4239

4019

4077

6

Overall heat

F = (AxB)

G.cal

4463500

3663000

24915000

17370000

7

Heat from oil

G = (A x C x D) / 1000

G.cal

16257

43970

99660

65311

8

Heat from coal

H = (F - G)

G.cal

4447243

3619030

24815340

17304689

9

Oil Consumption

I = (G x 1000) / D

KL

1580

4274

9966

6948

10

Total Coal Consumption excluding transit loss

J=(Hx1000)/E

MT

1049126

853746

6174506

4244466

11

Transit loss of coal

K

(%)

2.00

2.00

2.00

2.00

12

Quantity of PANAM coal

L

MT

602198

467853

2556245

3334037

13

Quantity of coal other than PANAM coal

M=J-L

MT

446928

385893

3618261

910429

14

Quantity of  coal  other than PANAM coal including transit loss

N=M/(1-K/100)

MT

456049

393768

3692103

929009

15

Total Quantity of coal required

O=L+N

MT

1058247

861621

6248348

4263046

 

16

Cost of oil per KL

P

Rs./KL

28293

28293

32470

28347

 

17

Cost of  coal per MT (excluding transit loss)

Q

Rs./MT

2434

2434

2531

2530

 

18

Total cost of oil

R=P x I / 107

Rs.crore

4.47

12.09

32.36

19.70

 

19

Cost of coal

S=QxO/107

Rs.crore

257.58

209.72

1581.46

1078.55

 

20

Total Fuel cost

R+S

Rs.crore

262.05

221.81

1613.82

1098.25

3195.93

 

Based on the generation and operational parameters, approved by the Commission above, cost of fuel for the year 2009-10 works out to Rs. 3195.93 crore for thermal generation of 19715 MU (gross) as detailed in Table 4.17.

 

 

Fuel Cost Adjustment (FCA)

 

Any change in the fuel cost from the level approved by the Commission is to be passed on to the consumers as FCA. Punjab State Electricity Regulatory Commission (Conduct of Business) Regulations, 2005 contain the FCA formula according to which any change in fuel cost would be passed on to the consumers with the prior approval of the Commission.       

 

4.8       Power Purchase

4.8.1    Projection by the Board: The Board has projected a cost of Rs. 7264.61 crore for purchase of 19558.33 MU (gross) in 2009-10. In doing so, the Board has taken the following into account: -

 

·         Availability projections from old stations (stations in existence for last 3 years) are based upon the average of energy received in the years 2005-06 to 2007-08.

·         For Unchahar-III and Dulhasti stations, energy has been projected based on average energy figures for 2007-08 and 2008-09.

·         For Dhauliganga and Rihand II, average energy figures for 2006-07 and 2007-08 have been considered

·         For Tala and Tehri, average energy figures for 2007-08 and 2008-09 (where available) or energy figures for 2006-07 have been considered (where figures for 2007-08 are not available).

·         Unit 2 of Kahalgaon Stage-II has been considered as commercially operational from December, 2008 and Unit 3 has been taken as commercially operational from April 2009.

·         Energy received from Mejia TPS has been considered from November 2008.

·         Projection of power to be received from RAPP-5 and RAPP-6 has been calculated based on the assumption that RAPP-5 and RAPP-6 will be commercially operational from January and May 2009 respectively.

·         The following new power stations have been considered commercially operational:

§         Unit 1 of Malana –II from July 2009 and Unit 2 from August 2009.

§         Unit 1 of Sewa-II from May 2009, Unit 2 from June 2009 and Unit - 3 from July 2009.

§         Unit 1 of Koldam from December 2009, Unit 2 from February 2010 and Unit-3 from March 2010.

4.8.2    Requirement of Energy through Purchase: As discussed in para 4.5.2, the requirement of 14728 MU (net) has to be met through purchases from Central Generating Stations and other sources. The transmission loss external to the Board’s system has to be added to arrive at the total quantum of energy to be purchased. 

 

4.8.3    Transmission Loss External to PSEB System: For net power purchase of 18458 MU, the Board has shown gross power purchase of 19558 MU after adding average transmission loss of 5.62% as external to its system.

 

The Commission has, however, considered external loss at a weighted average of 4.71% based on the actual such loss in the year 2007-08. The gross energy to be purchased, thus, works out to 15456 MU (14728 MU + external transmission losses 728 MU) instead of 19558 MU projected by the Board.

 

4.8.4        Entitlement from Central Generating Stations: In order to estimate the energy entitlement of the Board from different Central Generating Stations (CGSs), the Commission has considered the average of the actual energy purchased by the Board for three years (2005-06, 2006-07 and 2007-08). Based on the above, the plant wise energy available from NTPC, NHPC and NPC stations is depicted in Table 4.18, Table 4.19 and Table 4.20.

 

Table 4.18: PSEB’s Entitlement from NTPC stations – 2009-10

Sr. No

Station

Capacity

Firm Allocation

 

Energy entitlement based on 3 year average

Actual Share allocation based on 3 year average (%)

 

 

MW

%

MW

MU

%

1

2

3

4

5

6

7

1

Anta(G/F)*

419

11.69%

49

290

12.82

2

Anta(R/F)*

 

 

 

31

NA

3

Anta (L/F)*

 

 

 

35

NA

4

Auraiya(G/F)*

663

12.52%

83

442

13.25

5

Auraiya(R/F)*

 

 

 

50

NA

6

Auraiya(L/F)*

 

 

 

58

NA

7

Dadri(G/F)*

830

15.90%

132

654

16.45

8

Dadri (R/F)*

 

 

 

57

NA

9

Dadri(L/F)*

 

 

 

132

NA

10

Singrauli

2000

10.00%

200

1565

10.91

11

Rihand-I

1000

11.00%

110

862

11.90

12

Rihand-II

1000

10.20%

102

694

11.10

13

Unchahar-I

420

8.57%

36

286

8.84

14

Unchahar-II

420

14.28%

60

486

15.17

15

Unchahar-III*

210

8.10%

17

158

10.21

16

Kahalgaon-I* (ER)

840

12.27%

103

350

18.98

17

Kahalgaon –II* (ER)

500

3.53%

18

886

14.62

18

Farakka(ER)*

1600

4.18%

67

201

17.92

19

Kawas (WR)*

 

 

 

31

NA

20

Jhanor Gandhar * (WR)

 

 

 

1

NA

21

Koldam*

 

 

 

22

NA

            * For these plants data is not available for all three years (from 2005-06 to 2007-08) to estimate three year average and hence energy entitlement and share allocation are based on the Board’s projections for the year 2009-10.

 

 

Table 4.19: PSEB’s Entitlement from NHPC stations – 2009-10

 

Sr. No.

Station

Capacity

Firm Allocation

Energy entitlement based on 3 year average

Share allocation based on 3 year average

 

 

MW 

%

MW

(MU)

(%) 

1

2

3

4

5

6

7

1

Bairasul

180

46.50%

84

317

47.34

2

Salal

690

26.60%

184

893

26.51

3

Tanakpur

94

17.93%

17

69

17.04

4

Chamera-I

540

10.20%

55

228

11.04

5

Chamera-II

300

10.00%

30

169

12.00

6

Uri

480

13.75%

66

366

12.95

7

Dulhasti *

390

8.28%

32

242

10.56

8

Dhauli Ganga*

280

10.00%

28

132

12.31

9

Sewa –II*

 

 

 

60

 

 

           *   Note: For these stations, data for earlier years is not available for estimation of three year average and hence their energy entitlement and share allocation are based on the Board’s projections for the year 2009-10.

 

Table 4.20: PSEB’s Entitlement from NPC stations – 2009-10

 

 

Sr. No

Station

Capacity

 

Firm Allocation

 

Energy entitlement based on 3 year average

Share allocation based on 3 year average 

MW

%

MW

MU

%

 

2

3

4

5

6

7

1

NAPP

440

11.59%

51

140

12.28

2

RAPP-3

220

22.73%

50

260

23.54

3

RAPP-4*

220

22.73%

50

263

21.12

4

RAPP-5 & 6*

 

 

 

227

21.62

      

  *         Note: For RAPP-4, RAPP-5 and RAPP-6, where past data is not available to estimate the 3 year average, energy entitlement and share allocation are based on the Board’s projections for the year 2009-10.

 

 

4.8.5    Cost of Power Purchase

(a)     Central Generating Stations (CGS)

Terms and Conditions of Tariff Regulations issued by CERC in January 2009 are applicable for all central generating stations from April 1, 2009 onwards. However, CERC is yet to issue Tariff orders for individual Central Generating Stations. In this order, therefore, the Commission has decided to take fixed charges as per bills for Dec 2008. These fixed charges will be reviewed in the subsequent orders of the Commission once CERC issues tariff orders for the Central Generating Stations based on the new tariff Regulations.

 

NTPC Stations

Fixed Cost

As per CERC Regulations, fixed cost is payable in proportion to the share allocation of the Board in each of the Central Generating Stations and the Commission has accepted this principle. The annual fixed charges (AFC) in the case of NTPC stations have been considered as per bills for Dec, 2008.

 

Variable Cost

 

The Commission has assessed variable cost for 2009-10 as per NTPC bills for Dec, 2008 for different stations. In cases where the bills are not available (Kawas and Gandhar), the Commission has decided to approve the charges projected by the Board for 2008-09. In the case of Koldam, the Commission has taken the charges projected by the Board for 2009-10 into consideration while charges adopted for Anta (R/F), Aauraiya (R/F) and Dadri (R/F) are as approved in the Tariff Order for 2008-09, since these stations do not feature in the bills for Dec, 2008.

 

Incentive and Other Charges

 

The incentive and other charges are provisionally approved as projected by the Board for the year 2009-10.


NHPC Stations

 

Fixed Cost

CERC Regulations provide that fixed cost is payable in proportion to the share allocation of the Board in each of the Central Generating Stations and the Commission has accepted this principle. AFC in the case of NHPC stations have been considered as per bills for Dec, 2008. 

 

Variable Cost

 

The Commission has assessed variable cost for 2009-10 as per NHPC bills for Dec, 2008 for different Central Generating Stations.  In case of Sewa-II, where the bills are not available, variable cost has been taken as projected by the Board in the ARR for 2009-10.

 

Incentive and Other Charges

The incentive and other charges are provisionally approved as projected by the Board for the year 2009-10.


NPC Stations

The power purchase rate for NAPP and RAPP-3 & 4 stations has been considered by the Commission as per bills for Dec, 2008. For RAPP-5&6 stations, the power purchase rate as of RAPP-3&4, has been considered by the Commission.

 

(b)    Power Purchase Tariff for NRSE Plants (including Jalkheri) and Short Term Power Purchase within the State

The cost of power purchase from New & Renewable Sources of Energy Plants (including Jalkheri) and short term power purchases within the state are provisionally approved as per the Board’s projections.

 

(c)     Power Purchase Rates for Banking

Power purchase and the cost of banked power obtained from HPSEB, J&K, UPCL and Rajasthan has been provisionally approved as per Board’s projections. Further, the Commission approves power purchase (622 MU) and cost of banked power through traders in view of the Board’s clarification in letter dated 28.7.2009 stating that power purchase requirement of 622 MU for 2009-10 under the banking arrangement through traders is obligatory. Although the purchase of banked power is reportedly revenue neutral, the Commission would like the Board to submit a complete account of its power banking arrangements in its ARR from the next year onward.

(d)    Power Purchase Rates from Tehri, NJPC, Mejia, Baghlihar and Malana-II

The energy entitlement and the share allocation for Tehri and NJPC have been taken as given by the Board for 2009-10 as data for earlier years is not available. The annual fixed charges for NJPC and variable charges for Tehri and NJPC are as per bills of Dec, 2008 submitted by the Board. The annual fixed charges of Tehri are as projected by the Board in the ARR. For Mejia and Baghlihar, variable charges have been provisionally approved as projected by the Board in the ARR. For Malana II, variable charges have been approved as provided in the Commission’s order dated 24.01.07 Petition No. 11 of 2006.

 

(e)       Power Purchase from Traders and through UI

The power available from all the Central Generating Stations and other sources including banking is 14383 MU. Taking into account a gross power purchase requirement of 15456 MU, only 1073 MU needs to be purchased through traders as against 4992 MU proposed by the Board. The Commission therefore allows 1073 MU of power purchase from traders for 2009-10. The per unit cost of purchase of power from traders is taken as per actual average purchase rate of traded power in 2008-09 which comes to 621.24 paise per unit.

 

The Commission notes that the average rate of power purchased through traders as also the UI power purchase rate is increasing every year. The average rate of power purchased through traders during the years 2006-07, 2007-08 and 2008-09 was 485.94, 574.19 and 621.24 paise per unit respectively. Additional power purchased through traders or UI at high cost and supplied in increasing quantities to any category of consumers is not commercially viable. In these circumstances, the Board has but little option to undertake demand side management practices and effect power purchases in a judicious manner. Keeping in mind the escalating cost of power purchase in each successive year, the Commission deems it necessary that such purchases be kept within the costs approved. Accordingly, the Commission decides to limit the cost of power purchase from the traders at an average rate of 621.24 paise being actual average purchase rate of traded power in 2008-09. The Commission further decides that the cost of power purchase from traders in excess of the approved quantum will be admissible only at an average rate of realization per unit of 402.46 paise of 2009-10 (Table 6.5 Col.9). The Board may, in case of purchases effected owing to unavoidable exigencies, approach the Commission for any relaxation when the costs of 2009-10 come up for review.

 

The Commission notes with concern the high cost of power purchase under UI specially during 2008-09 and observes that due care and caution needs to  be exercised to ensure that minimum UI purchases are effected specially at high rates. In line with the recommendations of the Standing Committee on Energy, imposition of additional UI surcharge under CERC’s UI Regulations for over drawal at times when frequency is below 49.2 Hz will not be allowed.

 

The Commission reiterates that the Board needs to purchase power in a judicious and economic manner and also resort to demand management practices, if necessary, to maintain its commercial viability. The Board is also directed to furnish along with the ARR, details of any additional UI charge paid on account of drawal of power when frequency was below 49.2 Hz.

 

(f)        Transmission Charges

The Board has projected transmission charges payable in 2009-10 to PGCIL and NRLDC as Rs.236 crore and Rs 0.07 crore respectively which the Commission approves. In addition, the Commission also approves open access charges (banked energy) of Rs 9.29 crore for 2009-10.

 

Based on the above, the cost of power purchase for the year 2009-10 is worked out as detailed in Table 4.21.

 

 

 

 

 

 

 

 

 

 

Table 4.21: Power Purchase Cost - 2009-10

 

Sr. No.

Source

Purchase (MU)

AFC (Rs. Crore)

PSEB share

VC (Ps/ Unit)

FC (Rs. Crore)

VC (Rs.crore)

Others (Rs.crore)

Total (Rs.crore)

1

2

3

4

5

6

7

8

9

10

I

NTPC

 

 

 

 

 

 

 

 

1

Anta (G/F) (Gas)

290

78.08

12.82

100.88

10.01

29.26

4.88

44.15

2

Anta (R/F) (LNG)

31

387.00

 

12

 

12.00

3

Anta (L/F) (Liquid)

35

460.26

 

16.11

 

16.11

4

Auraiya(G/F)

442

116.18

13.25

124.37

15.39

54.97

7.62

77.98

5

Auraiya (R/F)

50

402.00

 

20.10

 

20.10

6

Auraiya(L/F)

58

506.67

 

29.39

 

29.39

7

Dadri (G/F)

654

159.51

16.45

123.13

26.24

80.53

16.15

122.92

8

Dadri (R/F)

57

398.00

 

22.69

 

22.69

9

Dadri (L/F)

132

724.87

 

95.68

 

95.68

10

Singrauli

1565

352.49

10.91

97.79

38.46

153.04

13.54

205.04

11

Rihand - I

862

344.02

11.90

118.34

40.94

102.01

18.74

161.69

12

Rihand - II

694

526.68

11.10

121.43

58.46

84.27

4.29

147.02

13

Unchahar-I

286

142.46

8.84

200.73

12.59

57.41

6.68

76.68

14

Unchahar-II

486

177.87

15.17

199.36

26.98

96.89

1.78

125.65

15

Unchahar-III

158

148.10

10.21

199.10

15.12

31.46

0.75

47.33

16

Kahelgaon-I

350

316.79

18.98

209.55

60.13

73.34

3.73

137.20

17

Kahelgaon-II

886

768.36

14.62

203.31

112.33

180.13

0.00

292.46

18

Farakka

201

518.33

17.92

203.74

92.88

40.95

1.29

135.12

19

Kawas

31

 

 

703.13

 

21.8

0.98

22.78

20

Gandhar

1

 

 

651.16

 

0.65

 

0.65

21

Koldam

22

 

 

333.07

 

7.33

 

7.33

 

Sub Total

7291

 

 

 

509.53

1210.01

80.43

1799.97

II

NHPC

 

 

 

 

 

 

 

 

22

Bairasuil

317

52.87

47.34

78.96

0.00

25.03

2.26

27.29

23

Salal

893

176.74

26.51

52.46

0.00

46.85

5.58

52.43

24

Tanakpur

69

46.82

17.04

88.08

1.90

6.08

0.30

8.28

25

Chamera-I

228

199.53

11.04

88.08

1.95

20.08

3.38

25.41

26

Chamera-II

169

327.37

12.00

88.08

24.39

14.89

11.30

50.58

27

Uri

366

274.17

12.95

88.08

3.27

32.24

3.07

38.58

28

Dulhasti

242

497.40

10.56

88.08

31.21

21.32

7.38

59.91

29

Dhauli Ganga

132

177.02

12.31

88.08

10.16

11.63

1.63

23.42

30

Sewa-II

60

 

 

333.07

 

19.98

 

19.98

 

Sub Total

2476

 

 

 

72.88

198.10

34.90

305.88

III

NPC

 

 

 

 

 

 

 

 

31

NAPP

140

 

 

190.38

 

26.65

 

26.65

32

RAPP-3

260

 

 

276.21

 

71.81

 

71.81

33

RAPP-4

263

 

 

276.21

 

72.64

 

72.64

34

RAPP 5-6

227

 

 

276.21

 

62.70

 

62.70

 

Sub Total

890

 

 

 

 

233.80

 

233.80

IV

Other Sources

 

 

 

 

 

 

 

 

35

Co-Gen. incl. Jalkheri

231

 

 

397.48

 

91.82

 

91.82

36

Short term power purchase within Punjab

88

 

 

387.49

 

34.10

 

34.10

V

Banking

 

 

 

 

 

 

 

 

37

HPSEB

277

 

 

315.14

 

87.29

 

87.29

38

Rajasthan

106

 

 

738.22

 

78.25

 

78.25

39

UPCL

162

 

 

346.05

 

56.06

 

56.06

40

J&K

227

 

 

525.00

 

119.18

 

119.18

 

Sub Total

772

 

 

 

 

340.78

 

340.78

41

NJPC

697

1278.12

10.10

88.08

67.70

61.39

14.10

143.19

42

Tehri

244

 

7.70

250.00

33.14

61.00

2.96

97.10

43

Meiia (DVC)

223

 

 

247.56

 

55.21

 

55.21

44

Baghlihar

598

 

 

333.07

 

199.18

 

199.18

45

Malana-II

251

 

 

269.00

 

67.52

 

67.52

46

Traders

1073

 

 

621.24

 

666.59

8.86

675.45

47

Banking Through Traders

622

 

 

735.09

 

457.23

 

457.23

VI

Other Charges

 

 

 

 

 

 

 

 

48

PGCIL

 

 

 

 

 

236.00

 

236.00

49

NRLDC

 

 

 

 

 

0.07

 

0.07

50

Open Access Charges (Banking)

 

 

 

 

 

9.29

 

9.29

 51

Total

15456

 

 

 

683.25

3922.09

141.25

4746.59

 

* The ‘other’ cost has been estimated on pro-rata basis given the power purchase of 1073 MU now being approved from this source as against 4992 MU projected by the Board.

 

 

The Commission approves power purchase cost at Rs.4746.59 crore for power purchase of 15456 MU (gross).

 

4.9       Employee Cost

4.9.1    The Board has, after capitalization of Rs.140 crore, projected net employee cost at Rs.3454.68 crore for 2009-10, details of which are given in Table 4.22.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4.22: Employee cost projected by the Board

                                                                                                          (Rs. crore)

Employee Cost

FY 07-08              (Actual)

FY 08-09

(RE)             

FY 09-10               (Projected)             

1

2

3

4

 Gratuity

91.34

96.00

100.80

 Pension + Commuted pension

366.70

419.00

471.00

 Leave encashment

58.71

62.00

65.10

LTC to pensioners

2.03

2.61

2.79

 Medical reimbursement

4.05

6.16

6.59

Fixed medical of pensioners

12.14

15.10

16.15

BBMB

53.18

65.00

75.00

 Terminal benefits –Total (1)

588.15

665.87

737.43

 Salaries & other expenses

 

 

 

 Basic salaries

904.72

913.00

918.00

 Overtime

7.76

8.15

8.60

 DA

368.94

491.00

606.00

 Bonus/generation incentive

50.35

53.00

55.50

Payment under Workmen’s Compensation Act

0.32

0.35

0.37

 Other allowances incl. PF work charged benefit

232.98

242.23

260.78

 Sub-Total (2)

1565.07

1707.73

1849.25

 Gross Employee cost  (1+2)     

2153.22

2373.60

2586.68

 Less: Capitalization

117.81

130.00

140.00

Net Employee cost

2035.41

2243.60

2446.68

Pay Commission arrears

-

-

1008.00

 Net Employee cost

2035.41

2243.60

3454.68

 

            Clarifying the basis on which these costs have been worked out, the Board            has stated that:

           

·         Basic salary has increased by 3% over the revised estimates of the previous year while DA has been estimated considering six monthly increases of 6%. DA and other allowances are at par with those paid by the Govt. and are in line with the Board’s assurances to its employees at the time of their transfer from the PWD Electricity Branch in 1962-63.

·         No control is exercisable on payment of BBMB’s share of employee cost as this is reimbursed as per the actual claims of that organization.

·         Terminal benefits include payment of gratuity, pension, commuted pension, LTC to retirees, medical reimbursement, fixed medical allowance of retirees and payment towards encashment of earned leave at the time of retirement.

 

4.9.2    The Board has also referred to a host of measures being undertaken to control employee cost including freezing fresh recruitment, complete ban on creation of new posts, outsourcing of security works, reduction in generation incentive by 10%, withdrawal of compassionate appointments to dependents of deceased employees, introducing special schemes for employees to avail long leave for self employment, computerization of cash collection centers etc. In addition, the Board has commissioned M/s Price Waterhouse Coopers to undertake a study of its manpower requirements whose report is awaited.

 

4.9.3    While disposing of Petition No.15 of 2008 of the Board, the Commission has amended its Tariff Regulations in 2009. As per Regulation 28 (8) of the amended Tariff Regulations, employee cost is to be considered in two parts of which the first comprises of terminal benefits such as payment of Death-cum-Retirement Gratuity, Pension, Commuted Pension, Leave encashment, LTC, Medical reimbursement including fixed medical allowance in respect of pensioners and share of BBMB employee expenses. All other expenses accounted for under different sub-heads of employee cost taken together will be the second part. The cost component of terminal benefits and BBMB expenses will be allowed on actual basis and increase in all other expenses under different sub-heads will be limited to the average increase in WPI during the year. 

 

4.9.4    In compliance with the amended provisions of the Tariff Regulations, the Commission allows Rs.737.43 crore on account of terminal benefits in 2009-10 as claimed by the Board. In respect of other employee cost, the Commission has taken into account the consolidated average of such cost under different sub heads for the previous three years and on that basis has reduced the approved employee cost in 2008-09 from Rs.1768.19 crore to Rs.1310.41 crore i.e. 74.11%. 

 

The average annual WPI increase for the year 2009-10 would only be available next year and  it is the normal practice of the Commission to apply the WPI increase of the previous year while allowing enhancement in employee cost. Such a practice is relevant in a situation where there is a gradual increase in WPI each year. This year, however, there has so far been a reported downward trend in inflation which will have its impact on the WPI as well. In this situation,          the Commission does not deem it prudent to continue the earlier practice and allows instead a 5% increase of WPI on ad-hoc basis for working out enhancement in the employee cost. On that basis, allowable other employee cost works out to Rs.1375.93 crore in 2009-10.

 

            Accordingly, total employee cost of Rs.2113.36 (737.43+1375.93) crore is allowable for 2009-10 under the amended Tariff Regulations. However, the Commission is obliged to take note of the fact that the employee cost of the Board is one of the highest in the country, seen either in normative terms or in comparison to costs incurred by similarly placed licensees in other states. The Commission is further constrained to note that the Board has conspicuously failed to initiate steps to right-size its manpower. The Board has since the previous year been referring to the commissioning of a study to determine its manpower norms which will then enable it to bring its staff strength to the desired level. However, there is nothing to indicate that this study has concluded or that the Board has taken any policy decision in this respect.  The Commission is of the considered view that it is imperative for the Board to immediately ensure that the findings of the study on manpower norms and related issues are forthcoming and that it takes the requisite decisions regarding norms of manpower that will in future be applicable to achieve reduced manpower levels. It is only when the roadmap for revising staff strength of the       Board becomes available would the Commission consider allowing extra employee cost due to the Board on the basis of the amended regulations. For the time being, the Commission approves employee cost of Rs.1856.60 crore for 2009-10 after allowing an increase of 5% over the approved cost of Rs.1768.19 crore in 2008-09.

 

4.9.5    In its claim, the Board has also included Rs.1008 crore payable as arrears for increased pay and allowances based on the recommendations of the 5th Pay Commission. This claim is not being allowed at this stage as the Board is yet to take a decision on adopting the new recommended pay scales and disbursement of arrears. The claim of the Board in this respect would, therefore, be considered at the time of review in the next Tariff Order.

 

            The Commission, therefore, for the time being approves Rs.1856.60 crore as employee cost for 2009-10. 

4.10     Repair and Maintenance (R&M) expenses

 

4.10.1 The Board has projected net R&M expenses at Rs.406.80 crore for the year 2009-10 which translates into an increase of 14.84% over the R&M expenses of Rs.354.25 crore estimated by the Board in the revised estimates for 2008-09. The Board justified its claim on the ground that vintage power plants and T&D networks requires more repairs and maintenance. Besides, it also has to achieve loss reduction targets apart from maintaining standards of supply. Moreover, the demand for power has increased significantly creating pressure on the existing system. The Board has clarified that additional R&M expenses have been calculated taking into account the additional assets likely to be added during the year as envisaged in Regulation 28 (6) of the PSERC Tariff Regulations.

 

4.10.2 The PSERC Tariff Regulations provide for allowing an annual enhancement based on increase in WPI over and above R&M expenses approved for the previous year. As discussed in para 4.9.4, the WPI increase for the year 2009-10 is not available and therefore, the Commission allows adhoc increase of 5% over and above the base R&M expenses considered at Rs.358.23 (339.56+18.67) crore for 2008-09. Accordingly, Rs.376.14 crore are allowed on this account for assets worth Rs.18338.79 crore in service as on April 1, 2009.

 

4.10.3 As regards claim of the Board towards allowing R&M expenses for additional assets of Rs.3823.24 crore likely to be added during 2009-10 in terms of the PSERC Tariff Regulations, the Commission is of the view that the increase in R&M expenses demanded on this account cannot be allowed at this stage and will be considered at the time of review next year.     

 

The Commission, therefore, approves Rs.376.14 crore as R&M expenses for 2009-10.

 

4.11     Administration and General (A&G) expenses

4.11.1 The Board has projected administration and general expenses at Rs.76.00 crore net of capitalization of Rs.24.13 crore for the year 2009-10. The Commission notes that the claim of the Board is within the permissible norms prescribed in Regulation 28 of the PSERC Tariff Regulations and therefore, deserves to be allowed.

 

 4.11.2 As regards claim of the Board towards allowing A&G expenses for additional assets of Rs.3823.24 crore likely to be added during 2009-10 in terms of the PSERC Tariff Regulations, the Commission is of the view that the increase in A&G expenses demanded cannot be allowed at this stage and will be considered at the time of review next year.

 

            The Commission accordingly, approves the A&G expenses at Rs.76.00 crore for 2009-10 as claimed by the Board.

 

4.12     Depreciation charges

4.12.1 The Board has estimated depreciation charges of Rs.969.99 crore for the year 2009-10 based on the assets of Rs.20970.21 crore as on March 31, 2009. However, as discussed in para 3.11.2 of this order, the value of total assets as on April 1, 2009 is reduced to Rs. 18338.79 crore. As per information now supplied by the Board, fixed assets capitalized during 2008-09 valued at Rs.1082.61 crore related to GHTP Unit-III under Thermal category while Rs.832.06 crore pertain to other fixed assets categories. As the Board has not given information about the categories to which other assets of Rs.832.06 crore belong, these assets are apportioned to different categories in the same ratio as the Board had claimed for assets of different categories given in the ARR. Accordingly, the value of assets for calculating the amount of depreciation to be allowed for 2009-10 as on April 1, 2009 has been worked out as given in Table 4.23. 

 

4.12.2    The Commission applies the average percentage rates of depreciation for 2009-10 which are derived from such charges given in the audited accounts for 2007-08. By applying these rates, the depreciation for 2009-10 works out to Rs. 826.02 crore. Details of function-wise depreciation charges are given in Table 4.23.

 

 

 

 

 

 

 

 

 

Table-4.23: Depreciation charges

 

Sr. No.

Item

Assets as on April 1, 2008
 (Rs crore)

Rate (%)

Depreciation charges for 2008-09
( Rs crore)

Assets as on April 1, 2009
 (Rs crore)

Rate (%)

Depreciation charges for 2009-10
 (Rs crore)

1

2

3

4

5

6

7

8

1

Thermal

3020.44

5.47%

165.22

4103.05

5.47%

224.44

2

Hydro

5847.98

2.24%

130.99

5853.11

2.24%

131.11

3

Internal Combustion

2.68

0.00%

0.00

2.68

0.00%

0.00

4

Transmission

1965.69

4.83%

94.94

2205.54

4.83%

106.53

5

Distribution

5447.20

6.03%

328.47

5995.83

6.03%

361.55

6

Others

140.13

1.34%

1.88

178.58

1.34%

2.39

 

Total

16424.12

 

721.50

18338.79

 

826.02

 

The Commission accordingly approves depreciation charges of Rs.826.02 crore for 2009-10.

 

4.13          Interest and Finance charges

 

4.13.1      The Board has claimed interest and finance charges at Rs.1585.61 crore (net) as per details given in Table 4.24 below. 

 

Table- 4.24: Interest & Finance Charges

 

Particulars

Rs. crore

Institutional loans

786.21

Govt. loans

0.00

Interest on Recalled Loans

163.44

Interest on loans for non-refund of interest

60.12

Interest on GPF

125.00

Interest paid on loans taken for private company

 PFC/REC-Gidderbaha Power Ltd (GPL)  

23.19

Lease rentals               

0.03

Total

1157.99

Working capital loans

556.44

Grand Total

1714.43

Less Interest capitalized

119.19

Net interest

1595.24

Add Finance charges

14.87

Total Interest & Finance charges

1610.11

Less Interest recovered from GPL

24.50

Net Interest & Finance charges

1585.61

 

The Interest and Finance charges allowed to the Board are discussed in the succeeding paragraphs.

 

4.13.2  Investment Plan

            The Board has proposed an investment plan of Rs. 5016.40 crore in the ARR for 2009-10. In order to improve generation, the Board has proposed an investment of Rs.53.74 (10+43.74) crore in Hydro Electric Plant at Shahpur Kandi and Bhakra Power House.  With a view to reduce T&D losses (including APDRP Schemes) and improve its power system performance, the Board has proposed to spend Rs.3453.41 crore, inclusive of Rs.2000 crore for HVDS Project, for conversion of LT lines of AP feeders to 11 KV feeders. The Board has also proposed an investment of Rs.189.91 crore under RGGVY scheme and Rs.618 crore for release of 40,000 A.P. connections during the year. 

 

            It is noted that for 2008-09, an investment plan of Rs.2000 crore was approved against which actual expenditure reported by the Board is Rs.1924.51 crore. After excluding Rs.365 crore for Rajpura Thermal Plant which is being privately developed on BOO basis, the Commission approved an investment plan of Rs.1559.51 crore on actual basis. The Commission observes that the Board invariably proposes an ambitious investment plan every year but actual capital expenditure is no where near the proposed plan. However, considering the Board’s need to make substantial investments in transmission and distribution network for providing uninterrupted and reliable power supply to the consumers and considering the level of actual capital expenditure in previous years, the Commission now allows an investment plan of Rs.2000 crore for 2009-10. After adjustment of consumers’ contribution of Rs.215.58 crore, assumed at the level of   2007-08, the actual investment requirement comes to Rs.1784.42 (2000-215.58) crore. Interest on loans other than WCL & Govt. loans works out to Rs.660.96 crore on proportionate basis as given in Table 4.25.

 

 

 

 

 

 

 

Table 4.25 Interest and Finance charges

                                                                                                                   (Rs. crore)

 

Sr. No.

Particulars

Loans as on 31.3.09

Receipt of loans

Repayment of loans

Loans as on 31.3.10

Amount of interest

1

2

3

4

5

6

7

1

As per data furnished by Board (other than WCL & Govt. loans)

7410.27

4768.17

858.56

11319.88

786.21

2

Approved by Commission (other than WCL & Govt. loans)

7410.27

1784.42

858.56

8336.13

660.96

 

 

4.13.3  Interest on Government loans

            The Board has shown the Govt. loans at Rs.1712.91 crore as on April 01, 2009 and has neither proposed any drawal of fresh loan nor repayment of the existing ones. As the Commission had in the Tariff Order of 2008-09, disallowed interest on Govt. loans on account of diversion of capital funds for revenue purposes, the Board has not claimed any interest on Govt. loans for 2009-10. 

 

However, interest payable on outstanding Govt. loans of Rs.1712.91 crore at an average rate of 13.16% works out to Rs.225.48 crore for 2009-10 as discussed in para 3.14.3. For the reasons discussed in the Commission’s Order dated September 13, 2007, this amount is disallowed and adjusted against interest disallowed on account of diversion of capital funds for revenue purposes with a further direction that this amount of interest is not payable to the Govt. by the Board.

 

4.13.4  Interest on loans taken to replace the Govt. loans                    

            As decided earlier in para 2.14.12 of this order, interest on short-term loans of Rs.1362 crore raised to replace the recalled Govt. loans adjusted against unpaid subsidy, is also allowable @ 12% per annum as claimed by the Board.  Thus, interest of Rs.163.44 crore is approved for 2009-10. 

 

4.13.5 Interest on G.P. Fund

            The Board has claimed interest of Rs.125 crore on GP Fund accumulations. The interest on GP Fund being statutory payment is allowed.

 

4.13.6  Lease Rental

The Board has claimed lease rental of Rs.0.03 crore which is also allowed for 2009-10. 

 

4.13.7  Interest on Consumers’ Security Deposits

The consumers of the Board are to be paid interest on their security deposits with the Board w.e.f. January 1, 2008,  at the rate of long term PLR of the SBI as on April 1, 2007, in terms of Regulation 17 of the PSERC (Electricity Supply Code & Related Matters), Regulations, 2007. The Board has intimated that it had consumers’ security deposits of Rs.1112.84 crore as on January 1, 2008 which accumulated to Rs.1153.58 crore as on March 31, 2008. This amount includes Rs.8.38 crore related to interest payable to consumers on their security deposits. Thus, the actual consumers’ security deposits on which interest is payable upto March 31, 2008 are Rs.1145.20 (1153.58-8.38) crore which tallies with the audited accounts of the Board for 2007-08. The Board has claimed interest of Rs.35.47 crore at the rate of 12.75% being Long Term PLR of the SBI as on April 1, 2007 for a period of three months from January 1, 2008 to March 31, 2008 on these accumulations which is allowed. 

 

Further, the Board has also claimed interest of Rs.147.08 crore on an amount of Rs.1153.58 crore as on April 1, 2008. However, interest due for the year 2008-09 is to be calculated on estimated security deposits of Rs.1271.09 crore as on April 1, 2009 at the rate of 12.75% being Long Term PLR of the SBI as on April 1, 2008 which works out to Rs.162.06 crore. Accordingly, the Commission allows interest of Rs.162.06 crore to be paid during 2009-10.

 

As regards the Board’s claim for interest due for the year 2009-10, the same will be payable during the year 2010-11 and will be considered by the Commission in the Tariff Order for the subsequent year.

 

Accordingly, the Commission approves interest of Rs.197.53 (35.47+162.06) crore on security deposits payable during 2009-10.

 

 

 

4.13.8  Finance charges

            The Board has claimed finance charges at Rs.14.87 crore which work out to 0.31% of the proposed fresh borrowings of Rs.4768.17 crore. The Commission has, however, approved actual loan requirement of Rs.1784.42 crore for investment purposes. The finance charges on this loan requirement at a rate of 0.31% work out to Rs.5.53 crore which are approved for 2009-10.             

 

4.13.9  Capitalization of interest and finance charges

            In its previous Tariff Orders, the Commission had allowed capitalization of interest, excluding interest charges on working capital, in the ratio of net works in progress to total capital expenditure. Based on the same principle, the Commission approves capitalization of interest and finance charges of Rs.57.82 crore for the year 2009-10.

 

4.13.10 Working Capital

            The Board has projected a working capital requirement of Rs.1531.33 crore and estimated the interest charges at Rs.187.59 crore @ 12.25% based on the short term PLR of the State Bank of India. The Board has arrived at the working capital requirement of Rs.1531.33 crore adopting two months fuel cost and maintenance spares for generating plants as per CERC norms. However, Working Capital requirements as per amended Regulation 30 of the Tariff Regulations is determined as detailed in Table 4.26.

 

Table 4.26: Working capital requirement

                                                                                                                           (Rs. crore)

 Particulars

Approved by Commission for    2009-10

Two month Fuel Cost

532.66

One month Power Purchase Cost

395.55

One month Employee Cost

154.72

One month Administration and General Expenses

6.33

One month Repair and Maintenance Expenses

31.35

Maintenance spares @ 15% of O&M expenses

346.31

Total requirement for working capital

1466.92

Interest Rate

12.25%

Interest

179.70

            Accordingly, total working capital requirement as per the Regulations works out to Rs.1466.92 crore against Rs.1531.33 crore claimed by the Board. Interest on the approved normative working capital requirement of Rs. 1466.92 crore by applying the short term PLR of 12.25% of the State Bank of India as on April 2009 comes to Rs.179.70 crore.

 

4.13.11 Diversion of Capital funds

            The Commission, in para 2.14.11 of this order, has re-determined the net diversion of capital funds for revenue purposes at Rs.3429.21 crore based on the Board’s audited accounts for 2007-08.  As discussed in para 3.14.11 of this order interest of Rs.451.28 crore is disallowed on this account for 2009-10 also. 

 

            In this regard, the Commission retains its decision of disallowance of interest cost of Rs.100 crore of the Board on this account, on account of deficiencies in its working and further decides that the balance disallowance of interest of Rs.351.28 crore will be to the account of the Govt.  Keeping this in view, interest of Rs.225.48 crore due on Govt. loans from the Board is adjusted against the amount of Rs.351.28 crore and the balance disallowed amount of Rs.125.80 crore is payable by the Govt.  This is being carried forward to Chapter-6 (para 6.4.1).

 

4.13.12 Interest on loans taken for non-refund of interest

            The Board has claimed interest on loans taken due to non-refund of excess interest on Govt. loans paid in the years 2006-07 and 2007-08. As discussed in para 2.14.13 of this order, the issue of non-refund of the amount of interest by the Govt. is a matter mutual to the Govt. and the Board and therefore, the Commission finds no justification to pass on such cost to the consumers and the claim on this account is disallowed.

 

4.13.13 Interest on loans taken for Gidderbaha Power Ltd.

            As regards the Board’s claim for interest on loans taken from PFC/REC for Gidderbaha Power Ltd. (GPL), the Commission is of the view that the interest paid on loans taken for GPL, a private company is to be recovered by the Board from the company itself.  Hence, it is not appropriate to pass on such cost to the consumers.  Accordingly, the claim of the Board is disallowed.  

              On the basis of the above decisions, the Commission approves interest and     finance charges as given in Table 4.27.

 

Table 4.27: Interest and Finance charges

                                                                                                                   (Rs. crore)

 

Sr. No.

Particulars

Loans as on 31.3.09

Receipt of loans

Repayment of loans

Loans as on 31.3.10

Amount of interest

1

2

3

4

5

6

7

1

Approved by Commission (other than WCL & Govt. loans)

7410.27

1784.42

858.56

8336.13

660.96

2

Govt. loans

1712.91

0.00

0.00

1712.91

225.48

3

Int. on loans taken to replace Govt. loans of Rs.1362 crore

 

 

 

 

163.44

4

Interest on GPF

 

 

 

 

125.00

5

Lease rental

 

 

 

 

0.03

6

Interest to consumers

 

 

 

 

197.53

7

Total (1+2+3+4+5+6)

9123.18

1784.42

858.56

10049.04

1372.44

8

Add Finance charges

 

 

 

 

5.53

9

Total gross Interest & Finance charges

 

 

 

 

1377.97

10

Less capitalization

 

 

 

 

57.82

11

Net Interest and Finance charges

 (9-10)

 

 

 

 

1320.15

12

Interest on working capital

 

 

 

 

179.70

13

Total Interest (11+12)

 

 

 

 

1499.85

14

Less: Disallowed on a/c of diversion:

a) Board - Rs.100 crore

b) Govt. - Rs.351.28 crore

 

 

 

 

451.28

15

Balance Interest and Finance charges

 (13-14)

 

 

 

 

1048.57

 

 

                                                                           

Accordingly, the Commission approves net Interest and Finance charges of Rs.1048.57 crore for 2009-10.

 

 

 

 

4.14          Interest cost of the approved Gaps for 2006-07, 2007-08 and 2008-09

 

4.14.1    In the ARR, the Board has submitted that it has to raise short term loans from the market for meeting the gap on account of revenue deficits which are subsequently approved by the Commission in review and true up and that the interest cost of these approved revenue gaps need be allowed.  

4.14.2    The Commission notes that on the basis of true up for 2007-08 and review of 2008-09 forming a part of this order, there are approved gaps which would be available to the Board as revenue only after the tariffs of 2009-10 are revised and hence there is justification for allowing carrying costs of these gaps. The Commission has determined a gap of Rs.439.51 crore upto the year 2006-07. The Commission allows interest of Rs.53.84 crore @ 12.25%, being the short term PLR of State Bank of India as on April, 2008 for 2006-07.

4.14.3    The Commission notes that on the basis of review for 2008-09, the Commission has determined a gap of Rs.803.31 crore (including gap of 2006-07) for the year 2007-08. Interest on the gap of Rs.803.31 crore is allowed at Rs.98.41 crore @12.25%, being the short term PLR of State Bank of India as on April, 2008 for 2007-08.

4.14.4    The Commission further notes that on the basis of review for 2008-09 forming a part of this order, the Commission has determined a consolidated gap of Rs.471.08 crore upto 2008-09 after adjusting the gap of Rs.803.31 crore against the surplus of Rs.332.23 crore of 2008-09. Interest on the gap of Rs.471.08 crore is allowed at Rs.57.71 crore @12.25%, being the short term PLR of State Bank of India as on April, 2009 for 2008-09.

            The Commission accordingly approves total carrying cost of Rs.209.96 (53.84+98.41+57.71) crore for 2009-10 for the approved gaps.

 

4.15          Return on Equity

 

The Board has claimed Rs.412.46 crore towards return on equity on a capital base of Rs.2946.11 crore as on April 1, 2009 which is allowed.

 

The Commission, therefore, approves Return on Equity of Rs.412.46 crore for 2009-10.

 

4.16          Fringe Benefit Tax (FBT)

The Board has estimated FBT at Rs.5.51 crore for the year 2009-10. However, as FBT stands withdrawn by the Central Govt., this cost is disallowed.

 

4.17     Extraordinary items and other debits

The Board has projected extraordinary and other debits at Rs.4.81 crore for 2009-10, keeping it at the level of 2007-08 actuals. Extraordinary items are defined as those which arise from events or transactions out side the ordinary activities of the Board but are material and not expected to occur frequently. Other debits primarily include material cost variance, bad and doubtful debts written off/ provided for and miscellaneous losses.

 

Such items of expenditure can be considered only on actual basis. The Commission, therefore, decides that such expenditure, if any, would be considered in the true up exercise after audited accounts for 2009-10 become available.

 

4.18     Non–Tariff Income

                The Board has projected non-tariff income of Rs.444.03 crore for 2009-10 and the Commission allows the same.

The Commission, therefore, approves the Non-Tariff Income of Rs.444.03 crore for 2009-10.

 

4.19     Revenue from existing tariff

 

The Revenue from existing tariff earlier projected by the Board for the year 2009-10 was Rs.9633 crore which was later revised to Rs.9340 crore excluding revenue from AP consumption.  However, the expected revenue from existing tariff on the basis of sales approved by the Commission works out to Rs.11475.24 crore as given in Table 4.28.

 

 

 

 

 

 

Table 4.28: Revenue from Existing Tariff

Sr. No.    

Category of Consumers

Energy Sales    (MU)

Tariff Rates (P/unit)

Revenue   

(Rs. crore)

1

2

3

4

5

1

Domestic

 

 

 

a)

Up to 100 units

3902

240

936.48

b)

101-300 units

2016

391

788.26

c)

Above 300 units

1042

413

430.35

 

Total

6960

 

2155.09

2

NRS

2145

449

963.11

3

Public Lighting

148

440

65.12

4

Industrial Consumers

 

 

 

a)

SP

722

358

258.48

b)

MS

1522

395

601.19

c)

LS

9278

395

3664.81

 

Total

11522

 

4524.48

5

Bulk Supply

 

 

 

a)

HT

449

398

178.70

b)

LT

51

423

21.57

6

Railway Traction

123

470

57.81

7

Common pool

303

 

84.00

8

Outside State

1307

 

798

9

Total

23008

 

8847.88

10

A P Consumption

9814

240

2355.36

11

Total

32822

 

11203.24

12

Add: PLEC, MMC, Rebates & Other Charges

 

 

272.00

13

Grand Total

32822

 

11475.24

Note : (i) The slab-wise energy sales for domestic supply are taken in the same ratio as for 2008-09.              .

          (ii) Revenue from outside State sales is from sale of Banked Power to other States and to 

               Traders.

 

 

The Commission, as such, approves revenue from existing tariff at Rs.11475.24 crore for 2009-10.

 

4.20          Revenue requirement

 

The summary of the revenue requirement of the Board for the year 2009-10 as analyzed in the preceding paragraphs is given in Table 4.29.

 

Table 4.29: Revenue Requirement 

                                                                                                                            (Rs. crore)

Sr. No.

Item of expense

Proposed by the Board

Approved by The Commission

1

2

3

4

1

Cost of fuel

3047.00              

3195.93

2

Cost of power purchase

7264.61              

4746.59

3

Employee cost

               3454.68

1856.60

4

R&M expenses

                  406.80

376.14

5

A&G expenses

                     76.00

76.00

6

Depreciation

                  969.99

826.02

7

Interest charges

               1585.61

1048.57

8

Return on Equity

                  412.46

412.46

9

Fringe Benefit Tax

                       5.51

-

10

Extraordinary items and debits

4.81

-

11

Total revenue requirement

             17227.47

12538.31

12

Add consolidated gap for 2008-09

4205.00 

471.08

13

Gross revenue requirement (11+12)

21432.47

13009.39

14

Less Non-Tariff income

                  444.03

444.03

15

Less Revenue from existing tariff

             12442.00

11475.24

16

Net Gap for 2009-10 (13-14-15)

8546.44

1090.12

17

Add carrying cost of Gaps

--

209.96

18

Total gap for 2009-10 (16+17)

8546.44

1300.08

19

Energy sales (MU)

 

32822

 

 

The Annual Revenue Requirement for 2009-10 is assessed at Rs.12538.31 crore with energy sales of 32822 MU. The average cost of supply with this revenue requirement comes to 382.01 paise/unit. The combined average cost of supply works out to 402.76 paise/unit (13219.35/32822 MU) after taking into account the ARR of Rs.12538.31 crore for 2009-10, approved gap of Rs.471.08 crore for 2008-09 and carrying cost of Rs.209.96 crore for the approved gaps.   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter-5

Tariff Related Issues

___________________________________________

           

Certain Tariff related issues were raised by several Consumers/Consumer Organizations during the course of public hearings held by the Commission in pursuance of the ARR and tariff determination for the year 2009-10. Some other matters came up for consideration either in the earlier Tariff Orders of the Commission or were taken up on the basis of proposals made by the Board. The Commission has examined all these issues taking into account the public objections and responses of the Board. All these issues are discussed below:

 

5.1       Availability clauses for Schedule DS, Schedule NRS and Schedule BS consumers.

5.1.1. The General Conditions of Tariff and Schedules of Tariff appended thereto were approved by the Commission and enforced with effect from April 1, 2006. Schedules of Tariff stipulate the terms & conditions for charging tariff in the case of different categories of consumers. Availability clause provided in each Schedule lays down the eligibility of consumers who are chargeable under the relevant Schedule. After considering representations received from consumers/consumer associations, the Commission had in the Tariff Order for the year 2008-09 observed that the eligibility of consumers who ought to be covered under Bulk Supply category required to be clearly identified and defined. The Commission while reviewing the availability clause in the case of Bulk Supply  (Schedule BS) considered it necessary to  review the  availability clauses of the Schedules of Tariff for Domestic Supply (Schedule DS)  and  Non Residential Supply   (Schedule  NRS)as well. After examining the matter, the Commission invited the comments of the public to its proposal for affecting amendments to the availability clauses of Schedule DS, Schedule NRS and Schedule BS. The objections/comments of the Board and the State Govt. were also invited.

 

5.1.2    The proposal for which Public Notice was issued brought out the revised eligibility conditions for supply of electricity under different schedules. These are detailed as under:

a)         Schedule DS:

i)                    Use of electricity for lights, fans, domestic pumping sets, single phase Toka Machines not exceeding 2 bhp and house hold appliances in all residential premises.

ii)                   Govt. Educational Institutions viz Schools, Colleges, Universities, ITI’s, Hostels and residential quarters attached to these Institutions.

iii)                 Hostels to be considered as one unit without compounding.

iv)        Govt. Sports Institutions/Gymnasium Halls

v)         All Religious Institutions viz Temples, Gurudwaras, Mosques and   Churches being used for worship by the general public.

vi)        Govt. Hospitals, Dispensaries, Primary Health Centers, Hospitals run by Charitable Institutions approved under Section 80 (G) of the Income Tax Act.  

b)         Schedule NRS

i)          All appliances like lights, fans, pump sets, central air conditioning plants, lifts, welding sets, battery  chargers, printing presses, dry cleaning machines etc. etc. in non residential premises such as business houses, Cinemas, Clubs, public offices.

ii)         Private Educational Institutions viz Schools, Colleges and Universities, Hostel and Residential Quarters attached to the Educational Institutions.

iii)                 All Hotels, Motels, Guest Houses, Departmental Stores, Restaurants, offices & Oil Depots of Oil Companies.  

iv)        Doctors running regular full time out patient Clinics, Advocates using a part of their houses as full time offices , TV Cable Operators, PCO’s and dairy farms in a part of the residential premises  

c)         Schedule BS:

General or mixed loads exceeding 10 KW of MES, Defence Establishments, Railways, Irrigation Head Works, Jails, Police lines/colonies, BSF/CRPF/PAP/other Para Military Forces  complexes or other Institutions/Installations of CPWD/ Central/State Govt. where further distribution is to be undertaken by the consumers.

5.1.3    In response to the public notice, educational institutions/ associations of affiliated schools, private hospitals and the Board raised objections and also sought a hearing. The Commission invited the objectors to present their views when public objections to the ARR of 2009-10 were being heard. The objectors raised the following issues.

i)                    Educational institutions/association of affiliated schools pleaded that the proposal discriminates between Govt. and private educational institutions as the former are covered under Schedule DS and all other institutions are under Schedule NRS. They submitted that all educational institutions   are serving the society equally even though most of the private institutions are not getting any financial assistance from the Govt. It was prayed that private institutions should also be charged tariff under Schedule DS.

ii)                   All private sports Institutions/Gymnasiums should be classified under Schedule DS as in the case of Govt. sports institutions.

iii)                 It was pleaded on behalf of oil companies that oil Terminals/Depots are not simply pumping stations but they manufacture products like ethanol blended motor spirit, and premium brands of diesel and petrol. Moreover as these oil terminals/depots are registered under the Factories Act as well as Central Excise Department, these should be charged under the Schedule of Industrial Tariff and not NRS Tariff.

iv)                 A private hospital covered under the Bulk Supply category requested that Regulations for Cooperative Group Housing Societies and Employer’s Colonies notified by the Commission on 13th May, 2008 should cover charitable hospitals.

5.1.4        The Board in its response to the public notice  stated that :

 i)         Oil terminals and LPG bottling plants should be covered under Industrial Tariff and Oil Depots under NRS category.

ii)                   Auto repair work shops and service centres, marble shops including those having cutting machines should be covered under NRS Tariff.

iii)                 Representations received from Pingalwara, Orphanages. gaushalas, ashrams for the physically challenged and old age homes for being charged under DS Tariff instead of NRS.   

5.1.5    The Commission notes that presently all Govt./Govt. aided educational institutions and Govt. Hospitals are covered under Schedule DS whereas all unaided educational institutes and private hospitals/nursing homes/clinics are covered under Schedule NRS. Hospitals getting supply at a single point for further distribution are, however, covered under Schedule BS. All oil terminals & gas bottling plants & a few of oil depots are covered under the Schedule for Industrial tariff. However, some oil depots are covered under Schedule NRS as well.

5.1.6        The Commission observes that Govt. Educational and Sports institutions and Govt. Hospitals/Primary Health Centres & dispensaries provide services to the society at as low a cost as possible. Govt. aided schools are, perhaps, also similarly placed as they are expected to charge fees at the same rates as applicable to Govt. institutions. To that extent, there is some justification to supply cheaper power to these institutions. However, the social objective of providing low cost educational and health services ought not to be achieved even partly by supply of relatively cheaper power and it is the Govt. that must take a call and provide resources to achieve those objectives. In the present circumstances, however, the Commission would not like to effect any changes in the cost of supply to these institutions as that would put an immediate and substantial burden on the Govt. but such a course of action may have to be considered in the future.

5.1.7  The Commission, therefore, decides that

i)        all Govt./Govt. aided Educational Institutions, Hospitals, Primary Health Centres, Civil Dispensaries &  Hospitals run by charitable institutions approved under Section 80 G of the Income Tax Act  will be covered under Schedule DS.

ii)       All unaided educational institutions and private hospitals (other than charitable) will be covered under Schedule NRS.

iii)      Educational Institutions and Hospitals having mixed loads where further distribution is undertaken by these institutions will be covered under Schedule BS.

iv)      The Commission further decides that oil/gas terminals, gas bottling plants and depots of oil/gas companies will be charged under the relevant Schedule of Industrial Tariff.

Accordingly the Commission decides to amend availability clauses of Schedules DS, NRS &BS as under:-

 

 

Schedule DS –Availability

1.       (a)          Supply to a residential premises for lights, fans, domestic pumping set, Single Phase toka machine not exceeding 2 BHP and other house hold appliances.

(b)         Where a portion of a residential premises is used regularly for the conduct of business, the supply in that portion will be separately metered under a separate connection and billed under Schedule NRS. If a separate meter is not obtained, the entire supply will be classified under Schedule NRS.

            2.       (a)          Supply to Govt./Govt. aided educational institutions viz. schools, colleges, universities, I.T.Is, hostels and residential quarters attached to the educational institutions. Hostels will be considered as one unit and billed without compounding.

(b)         Supply to hostels and/or residential quarters attached with the private educational institutions where separately metered. Hostels will be considered as one unit and billed without compounding

(c)          Supply to Govt. sports institutions/facilities including gymnasiums.

3.       Supply to all places of worship provided that concerned Sub-Divisional Officer (Distribution) certifies the genuineness of the place being used for worship by the general public.

4.       Supply to Sainik Rest Houses of the Rajya Sainik Board.

5.         Supply to Govt. hospitals, dispensaries & hospitals run by charitable institutions approved under Section 80G of the Income Tax Act

Schedule NRS- Availability  

1.                  Supply for lights, fans, appliances like pumping sets & air- conditioning units/plants, lifts, welding sets, small lathes, electric drills, heaters, battery chargers, embroidery machines, printing presses, ice candy machines, dry cleaning machines, power presses, small motors etc. in non-residential premises such as business houses, cinemas, clubs, offices, hospitals and private educational institutions viz. schools, colleges & Universities, hostels and residential quarters attached thereto where such institutions/installations are not covered under Schedule DS/BS, hotels/motels, departmental stores, shops, guest houses and restaurants. All private sports institutions /facilities including gymnasiums will also come under this category.

2.                  No separate circuit/connection under any other category will be permitted in the premises where supply is under this Schedule. However, a separate connection in a portion of a residential premises, used for regular conduct of business will be permissible. 

3.         Any of the following activities carried out in a part of a residential premises will be covered under this Schedule:

a)              Private Out-patient Clinics, Hospitals or Laboratories.

b)             PCOs

c)              Milk processing (other than chilling plants) for commercial purposes

d)             Offices of any other professional service provider.

Schedule BS –Availability

Supply for general or mixed loads exceeding 10 KW to MES, Defence Establishments, Railways, CPWD institutions, Irrigation Headworks, Jails, Police / Para military establishments / Colonies or other institutions like Universities, Hospitals, Medical Colleges, Educational institutions having mixed loads subject to a minimum of 25%  domestic load and Industrial load not exceeding 50%,  where further distribution will be under taken by the consumer. Institutions/installations having DS load less than 25% will be covered under the relevant schedule. Where Industrial  load of any installation  exceeds 50% of the total load such an installation will be charged applicable Industrial Tariff .

 

5.2              Introduction of Contract Demand in case of consumers covered under Schedule BS and Schedules DS/NRS having load exceeding 100 KW.

 

5.2.1    The Board submitted a proposal for introduction of Contract Demand (CD) in Schedule BS on the pattern of Schedule of Tariff for Large Industrial Power Supply (Schedule LS). The staff of the Commission redrafted the proposal for making it applicable to all Schedule BS Consumers and Schedules DS/NRS consumers having load in excess of 100 KW.

 

Salient features of the proposal are:

i)                    Maximum demand of all the above category of consumers to be recorded & meters to be reset every month on the pattern of Schedule LS consumers.

ii)                   Compatible Two Part Tariff (TPT) meters to be installed on the premises of all such consumers.

iii)                 Consumers may install connected load and or stepdown transformer capacity as required provided their maximum demand does not exceed the sanctioned CD.

In the event of maximum demand exceeding sanctioned CD, demand surcharge @ Rs.750 per KVA of excess demand over and above the sanctioned CD will be levied irrespective of the number of defaults.

iv)                 Adequate time given before introducing the scheme, enabling consumers to get their CD sanctioned and   for the installation of compatible TPT meters.

5.2.2    The proposal was put to public notice in March 2009 and objections from the public, Board and the State Govt. were invited. Public hearings were conducted alongwith those held for the ARR of 2009-10.

No objection on this issue was received from the public. However, a private University supported the proposal during one of the public hearings. Written comments from the Board were received where in it was contended that the concept of CD may not be introduced for Schedule BS consumers being given supply at LT, as these are mostly State Govt./Central Govt. departments/under takings which normally do not face any problem in load checking. Moreover, intelligent meters/Automatic Meter Reading (AMR) are yet to be introduced for these consumers. Supporting the introduction of CD for Schedule BS consumers being given supply at 11 KV or higher voltage, the Board further submitted that  transformer capacity should be limited to 200 % of the Contract Demand  for HT consumers and 120% of Contract Demand in case of EHT consumers. Govt. in its comments has mentioned that there does not appear to be any demand raised by HT/EHT Bulk Supply or other categories of consumers for introduction of the concept of contract demand as applicable to the Large Supply category and that the proposed amendments are based only on the request of one consumer. In addition, it has been mentioned that the introduction of this concept allows a consumer to reduce his contract demand which would have an adverse effect on revenue from monthly minimum charges payable by that consumer. Similarly, it is pointed out that such consumer would also be able to increase installed transformer capacity without increasing his maximum demand and avoid paying higher monthly minimum charges. 

5.2.3    The Commission notes that presently all Schedule BS consumers with load above 100 KW are given supply at 11 KV & different tariffs are specified for LT supply & HT supply. In case of HT consumers, total sum of distribution transformers and power transformer capacity in case of 33 KV & higher voltage consumers is the Contract Demand. Monthly Minimum Charges are based upon CD in case of HT/EHT consumers & load in the case of LT consumers. Transformer capacity surcharge is leviable @ Rs. 750 per KVA if the actual transformer capacity exceeds the sanctioned CD in case of HT/EHT consumers &  consumers are liable to pay load surcharge @ Rs. 750 per KW if Connected Load (CL) exceeds sanctioned load in case of LT consumers.

            In case of Schedules DS and NRS consumers with load exceeding 100 KW, the consumers are levied load surcharge @ Rs. 1500 per KW if CL exceeds sanctioned load. MMC is based upon sanctioned CL & tariff is single part and in 3 slabs for Schedule DS.

5.2.4    The Commission is unable to agree with the Board’s plea that CD should be introduced only for Bulk Supply consumers given supply at 11 KV or higher voltage, as the problem of demand measurement in case of LT consumers can be addressed after compatible meters with the TPT features are installed and these meters are being procured by the Board. The Commission also notes that the concept of contract demand had been introduced about two years back  in the case of Large Supply consumers, a step that was widely welcomed. On that basis it has been thought appropriate that this concept be extended to other high end consumers in the Bulk Supply, NRS and DS categories. In so far as the effect on monthly minimum charges is concerned, the Commission observes that the Govt. has itself admitted that the variations would be very small and the Commission feels that the overall benefit of such a measure would far outweigh the not very significant implications on the finances of the Board. The Commission further observes that there is no rationale in limiting the transformer capacity as suggested by the Board since there is no limit on transformer capacity in case of Schedule LS consumers. Moreover all such consumers shall also be liable to compensate the Board if there is any damage to the equipment of the Board owing to maximum demand exceeding CD.

The Commission therefore decides to introduce CD in case of all Schedule BS consumers and Schedules DS/NRS consumers with load exceeding 100 KW. These consumers may install the required load  but in case the maximum demand exceeds sanctioned CD, the consumer will be levied a demand surcharge @ Rs. 750 per KVA of demand in excess of sanctioned CD irrespective of number of defaults. The Commission also decides that Schedule BS consumers with CD of 100 KVA & above will be given supply at 11 KV. Tariff will continue to be single part as heretofore and MMC will be based on CD. There will be no limit on capacity of transformer(s) installed/ to be installed by the consumer.

However, adequate time is required to be given to consumers to get their CD sanctioned and for the Board to install compatible meters with TPT features. The Commission therefore decides to introduce CD for consumers of above categories w.e.f 1st April, 2010. The Board is directed to issue notice to all such consumers not later than 31st October, 2009 and install compatible meters before 31st March, 2010.

 

5.3              Issues relating to Power Factor surcharge and incentive.

5.3.1        Power factor surcharge & incentive for Schedule BS & Schedules DS/ NRS with load exceeding 100 KW.

5.3.1.1 It is well known that improvement in power factor is beneficial to both the utility and the consumers and helps to improve system conditions and thereby generally enhances the quality of power supply. As a small one time additional capital expenditure in this direction is more than compensated by the long term benefits reaped, a scheme to incentivize achievement of a benchmark power factor was included in the proposal prepared by the staff of the Commission for introducing CD to Schedule BS consumers and Schedules DS/NRS consumers with load exceeding 100 KW. The proposal makes it obligatory on the part of consumers of these Schedules to maintain a monthly power factor of 0.90 or more and also includes grant/levy of power factor incentive and surcharge upon consumers of these categories who achieve/failed to achieve the monthly average power factor in respect of their installations. The salient features of the proposal are:

(a)           All Schedule BS consumers and Schedules DS/NRS consumers  with load exceeding 100 KW and catered at 11 KV or higher voltage will maintain monthly average power factor (ratio of monthly KWh consumption to KVAh consumption), of not less than 0.90 in respect of their installation.

(b)           The consumers will install capacitors of requisite capacity to achieve the specified threshold power factor.

(c)           The Board will install compatible meters/metering equipment to record monthly KWh and KVAh consumption.

(d)           In case the monthly average power factor of the consumer falls below 0.90 then such a consumer will be levied power factor surcharge on the pattern applicable to Schedule LS (general category) and Schedule of Tariff for Medium Industrial Supply (Schedule MS) consumers. The power factor surcharge would be 1% of bill amount for each 0.01 fall in monthly average power factor below 0.90. The surcharge would be 2% for each 0.01 fall in power factor below 0.80. In case the monthly average power factor exceeds 0.90 the consumer would be allowed a rebate @ 0.25% on the bill amount for each 0.01 rise in power factor above 0.90.

(e)           The Board would be allowed time to install compatible meters/metering equipment & the consumer would install capacitors of adequate capacity in the intervening period.

5.3.1.2 The proposal was put to public notice in March, 2009 inviting objections/ comments of the general public, the Board and the Govt. Neither the Board nor any of the consumers sent any written objection or expressed reservations on the issue either in writing or in subsequent public hearings.

5.3.1.3 The Commission notes that presently there is no provision/requirement for consumers of these categories to maintain a minimum power factor. The Commission observes that improvement of power factor, specially in the case of big consumers, improves system voltage and helps in reduction of T&D losses. Benefits also flow to the consumer who can, with a relatively small investment, take advantage of the improved power factor rebates which, in effect, pay back the initial investment in a relatively short period. Presently, power factor rebates and surcharges are applicable only in the case of LS, MS and Railway Traction consumers. The Commission had in para 5.2 of its Tariff Order of 2008-09 observed that there is need to consider its extension to other categories of consumers as well. In pursuance thereof, the Commission had proposed that high end consumers falling under the BS, DS and NRS Schedules be required to maintain power factor at a given benchmark and they would be incentivised or penalized in case they did or did not achieve the specified power factor.

The Commission therefore decides to make it mandatory for all Schedule BS and Schedules DS/NRS consumers with load exceeding 100 KW & given supply at 11 KV or higher voltage to maintain a monthly average power factor of 0.90 w.e.f 1st April, 2010. The Board would duly inform consumers of these categories to this effect before 31st October, 2009 and also install compatible meters, metering equipments on the premises of all such consumers by 31st March 2010. During this period consumers would install capacitors of adequate capacity to achieve the prescribed power factor. From 1st April,  2010, consumers whose monthly average power factor  falls below 0.90  will be levied a power factor surcharge @ 1% of the bill amount for each 0.01 fall in power factor below 0.90. The surcharge will be @ 2% of the bill amount for each 0.01 fall in power factor below 0.80.

Consumers with a monthly average power factor exceeding 0.90 will be allowed a rebate @ 0.25% on the bill amount for each 0.01 rise in power factor above 0.90.

The bill amount will mean the consumption charges including demand charges, if any, in a month but not the bill amount payable on monthly minimum charges.

 

5.3.2        Power factor surcharge and incentive for Schedule SP Consumers.

 

5.3.2.1 With a view to improve system parameters/voltage profile and reduce T&D losses of the utility, the Commission in the draft Conditions of Supply of Electricity proposed to make it mandatory for Schedule of Tariff for Small Industrial Supply (Schedule SP) consumers to maintain a power factor of 0.88.

The salient features of the proposal are:-

i)                All new connections under Schedules SP are to be released after installing compatible meters to measure monthly average power factor.

ii)               The Board would install compatible meters on all existing consumers within a period of 18 months. Till meters are installed, the existing consumers will install capacitors of adequate capacity as specified in the Conditions of Supply to achieve power factor of 0.88.

iii)             Where meters have been installed, the consumers would be levied a power factor surcharge @ 1% of the bill amount for each 0.01 fall below 0.88 and @ 2% of the  bill amount for each 0.01 fall in power factor below 0.80. A consumer whose monthly average power factor exceeds 0.88, will be allowed a rebate @ 0.25% of the bill amount for each 0.01% rise in power factor above 0.88.

iv)             Where meters capable of measuring power factor are yet to be installed, consumers will be levied capacitor surcharge @ 10% of the bill amount, in case the consumers are found not to have installed capacitors of requisite capacity. In case some of the capacitors are nonfunctional, the surcharge will be leviable for the nonfunctional capacity on prorata basis. Levy of surcharge will be continued till consumers establish, to the satisfaction of the Board, that fully functional capacitors of adequate capacity have been installed.             

5.3.2.2 The draft Conditions of Supply were put to public notice in   November, 2008   and comments of the public, Board & the State Govt. were invited. Neither the Board/Govt. nor any consumer has conveyed any reservation to the proposal.

5.3.2.3  The Commission observes that while it is desirable that industrial consumers be required to maintain a specified power factor, it is also necessary to take note that very small industrial consumers might not benefit in adequate measure from such a prescription as the additional cost of meter rentals might exceed the benefit accruing from power factor rebates.

Accordingly, the Commission decides that existing Schedule SP consumers be given an option to either continue under the existing provisions specified in that Schedule or opt for installation of meter/metering equipment to measure the monthly average power factor whereafter the incentive/penalty as proposed would become applicable. Such consumers will be required to exercise their options by 31st December, 2009.

The Board will within a period of 18 months take necessary steps to install meters/metering equipment on the premises of those consumers who opt to come under this scheme to measure monthly average power factor, after which the SP consumers will be allowed a rebate @ 0.25% on the bill amount for each 0.01% rise in power factor above the threshold limit of 0.88. A power factor surcharge would be leviable @ 1% of the bill amount for each 0.01% fall in the power factor below 0.88. The rate of surcharge will be 2% of the bill amount for each 0.01% fall in power factor below 0.80.

The Commission also decides that till meters for measuring average power factor are installed, the existing consumers will be governed by the present provisions of Schedule SP.

All new consumers under the SP Schedule will be provided with meter/metering equipment to measure monthly average power factor and power factor rebates/surcharges would be applicable in the same manner as prescribed above.

The bill amount means the consumption charges including demand charges, if any, in a month but not the bill amount payable on monthly minimum charges.

 

5.3.3        Installation of capacitors for Schedule AP Consumers.

5.3.3.1   The draft Conditions of Supply  referred to in para 5.3.2 also contained a proposal for installation of capacitors to achieve optimum power factor in the case of Schedule of Tariff for Agricultural Pumping Supply (Schedule AP) consumers. Salient features of the proposal are;

i)        All tubewell consumers will be required to instal capacitors of requisite rating {ISI marked or of the make(s) standardized by the Board} before release of a new connection to achieve the power factor of 0.88 in respect of the consumer’s installation. It is further stipulated that existing consumers will install capacitors of requisite capacity specified in the Conditions of Supply within 6 months of approval of Conditions of Supply. All such consumers will be duly notified by the Board.

ii)       A consumer  found to have not installed adequate capacity of capacitors after expiry of notice period, will be levied a capacitor surcharge @ 10% of the bill amount or cost of energy on the basis of capacity of motor as the case may be.  Where some of the capacitors are found to be nonfunctional a surcharge will be levied for the nonfunctional capacity on prorata basis.

              iii)       The surcharge will continue to be levied till the consumer establishes to the satisfaction of the Board that functional capacitors of adequate capacity have been installed.

5.3.3.2   This proposal was also put to public notice for inviting objections from the public, Board and the Govt. Neither the Board/Govt. nor any consumer has sent any written objection/ reservations on the proposal.

5.3.3.3 The Commission notes that presently every tubewell consumer is required to install capacitors of requisite capacity before release of connection. The consumers are required to purchase capacitors of ISI mark only or from manufacturers approved by the Board. 

The Commission observes that installation of capacitors by all AP consumers is necessary in view of the resultant reduction in power input, enhancement in the efficiency of pump sets, improvement in systems voltage and reduction in T&D losses.

The Commission notes that new AP connections are to be released only after the applicants install capacitors of the capacity specified in the Conditions of Supply. The Commission is of the view that in addition, AP consumers similarly need to install capacitors before extensions in load are permitted or regularized by the Board. Given the large number of existing consumers in this category and the new connections released each year, the Commission feels that it is equally important that capacitors are not only installed but are kept functional as well. Towards this end, the Board should consider drawing up a suitable scheme that would incentivise consumers who maintain capacitors of the requisite capacity in working order and penalize those who do not.

 

5.3.4      Incentive for High Power Factor and surcharge for Low Power Factor in case of LS & Railway Traction Consumers.

5.3.4.1 Some Industrial Consumer Associations and Northern Railway have requested that rate of incentive for higher power factor should be equal to power factor surcharge leviable for low power factor. It has also been urged that Schedule LS consumers having PIU’s and Schedule of Tariff for Railway Traction (Schedule RT) consumers may be allowed incentive for higher power factor above 0.90 (instead of 0.95) as in the case of Schedule LS general industry consumers.

5.3.4.2 The Board in its response has stated that differential power factor incentive is due to various consumers having different inherent power factor.

5.3.4.3 The Commission notes that presently all LS  and RT consumers are required to maintain a monthly average power factor of 0.90 or more. Where monthly average power factor of a consumer falls below 0.90, the consumer is levied surcharge at the rates that have been specified. General industry LS consumers are allowed a rebate for higher power factor above a threshold limit 0.90 while PIU’s and RT consumers are allowed rebate only after achieving a power factor above 0.95 at the specified rates. 

The Commission had in its Tariff Order of 2004-05 observed that incentives should be available for actual improvement in system conditions and not just for maintaining the status quo. Accordingly, it had thought it necessary to fix suitable thresholds for different categories of industries keeping in view their basic inherent characteristics. It is observed that these findings remain equally valid at present and thus, consumers where the power factor is inherently higher need to be distinguished and allowed power factor incentive at improved benchmarks. For this reason, the Commission does not see sufficient justification for rebates to be allowed to RT and LS consumers having PIU’s at a power factor of less than 0.95. As regards equating power factor surcharge and rebates, the Commission observes that power factor rebates need in the long run to be calibrated in a manner that is advantageous both to consumer and the Board.  This would perhaps necessitate a detailed study after which the Commission would separately take a view in this regard. 

Accordingly, the Commission decides to continue with the existing practice in respect of low power factor surcharge and high power factor incentive for LS and RT consumers.

 

5.4         KVAH Tariff

5.4.1      Some Industrial Consumers/Consumer Associations have been calling for the introduction of KVAH Tariff in the case of industrial consumers.

5.4.2      The Board in its response has stated that the proposal for introduction of KVAH tariff is under discussion in the Board.

5.4.3      The Commission in its Tariff Order for 2006-07 had directed the Board to examine the issues related to introduction of KVAH tariff.

While doing so, the Board was required to focus on:

(i)                    Feasibility of introduction of KVAH tariff;

(ii)            Impact of introduction of KVAH tariff on different categories of consumers;

(iii)          Impact on the revenues of the Board;

(iv)         Proposed tariff structure for different categories of consumers;

(v)                    Present status of KVAH compatible meters on consumer premises and the implications  of installing such meters for all industrial and railway traction consumers;

(vi)                  Impact of introduction of KVAH tariff on reduction of T&D losses;

(vii)                 The position in this respect in other States;

(viii)               Feasibility of conducting energy accounting and audit with KVAH tariff.

 

In the tariff order for 2007-08 the Commission had observed that the Board’s proposal was not complete and most of the issues had not been addressed. The Commission had therefore reiterated that the Board should submit the proposal alongwith next ARR. In the Tariff Order of 2008-09 the Commission had observed that the purpose of introducing KVAH tariff had to some extent been achieved with the introduction from 2005-06 onwards of high power factor incentive and low power factor surcharge. It had also noted that introduction of KVAH Tariff was perhaps equally necessary in other categories such as NRS or even domestic consumers with higher loads. The Commission had accordingly concluded that the proposal in this respect could only be finalized after comments of the consumers and the Board have been obtained and considered.

5.4.4      The Commission notes that presently all LS, RT & MS consumers are required to maintain a monthly average power factor of 0.90 or more. Where monthly average power factor of a consumer falls below 0.90, the consumer is levied surcharge. LS consumers having general industry are allowed a rebate for higher power factor above the threshold limit of 0.90 at the rates specified in  Schedule LS. LS consumers having PIU’s and RT consumers are allowed rebate for power factor above 0.95 at the rates specified in the relevant Schedule. 

The Commission observes that the proposal to introduce KVAH tariff has been endorsed by a relatively small number of high-end LS consumers. On the other hand, the concept of surcharge for low power factor and rebate for achieving of high power factor is continuing for LS, RT and MS consumers for the last four years or so while this is now being introduced for the first time for SP, BS and DS/NRS consumers with loads exceeding 100 KW. Before taking a view as to the introduction of KVAH tariff, the Commission deems it proper to examine this matter separately taking into account not only the implications on the revenue stream of the Board but also the views of all categories of consumers who are proposed to be covered thereunder.

  The Commission therefore decides to continue the existing practice of levy of low power factor surcharge and high power factor incentive for LS, RT and MS consumers besides bringing other categories under the ambit of this system.

 

5.5         LT surcharge/HT or EHT rebate

5.5.1      The draft Conditions of Supply that were put to public notice by the Commission in November, 2008 and discussed in  a meeting of the State Advisory Committee held on 22nd January 2009 interalia contain the following proposals in respect of voltage surcharges and rebates :-

a)                  All consumers would be supplied/catered electricity at the voltage commensurate with the load/Contract Demand as specified in the Conditions of Supply.

b)                  The consumers who are supplied electricity at a lower voltage will convert to the specified voltage within a period of 18 months of the approval of the Conditions of Supply. The consumers will be levied surcharge as specified in General Conditions of Tariff and Schedules of Tariff till actual conversion to the prescribed   supply voltage.

c)                   In case there is any technical constraint in catering the supply at the specified voltage, the Board may agree to do so at lower voltage provided the consumer agrees to pay surcharge approved by the Commission.

d)                  No rebate will be given or surcharge levied where the consumers are catered at the voltage commensurate with his load/Contract Demand as specified in the Conditions of Supply or higher voltage.

5.5.2      The Industrial Consumers Association have raised the following issues:

i)          Conversion of supply voltage to the specified level should be linked to technical feasibility.

ii)                   The clause for levy of surcharge and or withdrawl of rebate should match with provisions of General Conditions of Tariff.

iii)                 The rebate should continue for existing as well as new consumers.

iv)                 The provisions regarding levy of surcharge should be applicable to new consumers only.

v)                  There is a need for upward revision of rebate from 3% to 10% to compensate the consumer for interest/depreciation on his investment, incremental transmission and transformation losses. Alternatively the tariff should be based on supply voltage and reflect cost of supply.

In the Advisory Committee it was pleaded that this proposal should be in line with the General Conditions of Tariff.

5.5.3    The Commission notes that as per existing General Conditions of Tariff and Schedules of Tariff, surcharges and rebates are being dealt with in the following manner.

i)                LT surcharge @ 20% is leviable on the consumption charges including demand charges, if any, or monthly minimum charges in the case of all Large Supply consumers of general category where supply is given at 400 volts against a base supply voltage of 11 KV,

ii)               consumers of all categories (except Railway Traction) getting supply at 33 KV/66 KV are entitled to a rebate of 3% while a rebate of 5% is allowed to consumers getting supply at 132 KV/220 KV. Such rebate is allowed on the consumption charges including demand charges, if any, or monthly minimum charges. However, no rebate is admissible for supply to Railway Traction as base supply voltage is 132 KV/220 KV.

iii)             Large Supply consumers with contract demand exceeding 2500 KVA and upto 4000 KVA catered at 11 KV are liable to pay a surcharge @ 10% on the consumption charges including demand charges, if any, or monthly minimum charges as compensation for transformation losses and  incremental line losses.

iv)             All arc furnace consumers irrespective of the quantum of contract demand and other Large Supply consumers having contract demand exceeding 4000 KVA catered at 11 KV are levied a surcharge @ 17.5% on the consumption charges including demand charges, if any, or monthly minimum charges.

v)              Medium Supply, Small Power, Domestic Supply and Non-Residential Supply consumers are allowed a rebate of 7.5% on their consumption charges including demand charges, if any, or monthly minimum charges where supply is catered at 11 KV or higher voltage against the supply voltage of 400 volts specified in the character of service.

The Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration.

The Commission further observes that there could be some consumers who are getting supply at a voltage higher than specified in the Conditions of Supply. Thus their investment in providing the  required infrastructure/sub-station and bearing maintenance cost thereof besides transformation losses & carrying cost of investment may need to be considered on a separate footing as their action is definitely helping the utility in reducing T&D losses.

In the light of the above observations, the Commission decides to discontinue all voltage rebates w.e.f 1st April, 2010. The Board will henceforth release all new connections or additional load/demand only at the specified voltage. Furthermore, the Board will take steps to ensure that existing consumers getting supply at voltages lower than the specified voltage will be provided supply at the specified voltage within a period of 18 months. In case there are constraints in releasing a new connection and/or additional load/demand at the prescribed voltage or in converting the supply voltage of an existing consumer, the supply may be given/continued to be given at a lower voltage on the condition of payment of surcharge specified in the General Conditions of Tariff.

The Commission further decides that an existing consumer getting supply at a higher voltage than that specified in Conditions of Supply will for the present be entitled to a rebate in Tariff at the prevailing rates specified in the General Conditions of Tariff.

 

 

5.6       Extra levy for private Hospitals

5.6.1  A private hospital has objected to levy of 25% extra tariff by the Board on  privately  managed heart care, MRI/CT Scan Centers and Super Specialty hospitals availing continuous supply. It has been urged that such consumers are providing health care and state of the art diagnostic & treatment facilities and have obtained the status of an essential service. It has also been stated that extra tariff is discriminatory as it is only applicable in the case of private but not Government hospitals. Moreover, with the levy of 25% extra tariff, the extra cost of energy becomes as high as 27.5% of the applicable NRS tariff which in any case is also one of the highest tariff categories.

5.6.2 The Board in its response has stated that levy of 25% extra tariff is applicable to only those heart care, MRI & CT Scan units etc. who have a load equal to or more than 100 KW and opt to have the status of an essential service and are catered through 11 KV independent feeder. It has been stated that these units/hospitals get uninterrupted supply on the pattern of essential services. These hospitals charge their patients at commercial rates which are substantially higher than those of Government hospitals. Moreover, by obtaining this facility these consumers benefit by not having to invest in DG sets and to source costly power therefrom.

5.6.3 The Commission notes that presently all privately managed Heart Care, MRI, CT Scan centres having loads not less than 100 KW, given supply at 11 KV or higher voltage and who have obtained independent feeders at their cost are given the status of an essential service and provided  uninterrupted supply. Such hospitals/facilities are charged 25% extra tariff for this facility.

The Commission observes that the affected consumers have the option to obtain the status of an essential service and thus get uninterrupted power on payment of additional charges. They also benefit from this facility to the extent that they are able to source better quality and continuous supply of power from the Board instead of having to make investments to create in-house generation capacity and obtaining extremely costly power from that source.

In the circumstances, the Commission holds that there is justification in the levy of 25% extra tariff on private hospitals and MRI/CT Scan centres obtaining continuous supply which are covered under NRS/BS schedules and have a minimum load of 100 KW and are supplied electricity through an independent feeder.

5.7       Peak Load Exemption Charges.

5.7.1    The Board has pleaded that Peak Load Exemption Charges (PLEC) be redetermined. It has been brought out that all Large Supply consumers except essential services are required to observe evening peak load hours restrictions. These restrictions are for 3 hours continuously with the time of imposing the restrictions varying according to the season. During these restrictions, consumers are allowed to run a part of their load and may seek permission of the Board for using higher loads on payment of PLEC. The Board has contended that power was being purchased during the Paddy season of 2008-09 at rates of about Rs.7 per unit in the peak hours and Rs. 6 during off peak hours. The rate of power purchased through the Indian Exchange in August 2008 was varying between Rs. 8-9 per unit in the peak hours and Rs. 6-7 otherwise. In the case of liquid fuel based power generation by NTPC, the price hovers around Rs. 13-14 per unit, while the present rate of UI for over drawal at a frequency below 49.2 HZ is Rs.7.35 with a 40% surcharge thereon. It has also been stated that the present rates of PLEC were specified in 1998 when the cost of Diesel was Rs. 9.87 per Ltr. as compared to present day cost of Rs. 32 per Ltr. The Board has, therefore, prayed that PLEC rates need to be suitably enhanced.

5.7.2    Industrial Consumers Associations have on the other hand pleaded that PLEC should not be levied on commitment basis but on the actual energy drawal by a consumer during peak hours. They have also opposed the proposed hike in rates keeping in view the prevailing recession in the market.

5.7.3    The Commission notes that even though peak load hour restrictions can be imposed on MS & LS consumers, these restrictions are being actually imposed on LS consumers only. Even so, MS consumers with a load of 50 KW & above are liable to be charged @ Rs.100 per KW or part thereof per month of sanctioned load in addition to the normal energy bill. In the case of LS consumers, charges are @ Rs. 120 per KW of permitted load less reduced load allowed to be used without additional charges, where permitted load during peak hours is upto 100 KW. When the permitted load exceeds 100 KW, charges are leviable @ Rs. 1.80 per KW per hour upto 65% of Contract Demand and Rs. 2.70 per KW per hour for exemption allowed beyond 65% of Contract Demand. The charges are calculated for a minimum period of 3 hours per day and are recoverable over and above the energy bill.

5.7.4    The Commission observes that the reasons given by the Commission in Tariff Order 2004-05 for levying PLEC on commitment basis still hold good. The Commission also observes that it is not feasible to measure energy payable at PLEC rates separately because the same meter would record energy consumption payable at normal tariff as well as PLEC. Therefore the Commission decides to continue to charge PLEC on commitment basis. The Commission further notes that even though there has been a substantial increase in purchase price of power from traders or through UI all these costs are taken into account in the ARR and the Commission presently allows their recovery from the consumers. The Board is, thus, not put to any loss in supplying power during peak hours and the Commission does not find adequate justification in the present circumstances for enhancement of PLEC.

The Commission therefore decides to continue the existing rates for levy of PLEC on commitment basis.

     

5.8     Tariff for growing of Vegetables and Floriculture.

5.8.1    An objection has been raised regarding the present practice of the Board in charging consumers growing vegetables or flowers in the open field conditions as well as in the Net House/Green House structures under the commercial category. It has been brought out that as per the Punjab Agriculture Produce Market Act 1961, agriculture produce means all produce, whether processed or not of agriculture, horticulture, animal husbandry or forest etc. It is further urged that guidelines of the National Horticulture Board, Ministry of Agriculture, GOI, specify that horticulture includes fruits, vegetables, root and rubber crops, mushrooms, honey, floriculture and medicinal plants. It is mentioned that both the State and the Central Government seek to promote Horticulture and Floriculture and in fact the GOI through the National Horticulture Mission provides subsidy for setting up of Net House/Green House structures. Moreover, farmers taking up Horticulture/Floriculture make considerable investment on the installation of micro irrigation systems which have the advantage of utilizing small quantities of water and energy. It has, accordingly, been argued that charging NRS rates for Horticulture and Floriculture is not only unfair but contrary to Government policy in promoting diversification of agriculture.

5.8.2    The Board in its response has not given any reason for charging such consumers under the NRS Schedule.

5.8.3    The Commission notes that energy consumption in the case of Horticulture and Floriculture could be either for irrigation or for purposes of climate control.

The Commission decides that electricity consumed to provide irrigation for horticulture/floriculture in open field conditions or net houses, green/hot houses should be covered under the AP Schedule. Power utilized for any other purpose needs to be separately metered and charged under the relevant schedule. 

 

5.9       Audit comments on the Annual Statement of Accounts of the Board for the year 2007-08 regarding Miscellaneous Income.

5.9.1    Audit comments on the annual statement of accounts of the Board for the year 2007-08 indicate that the income of the Board has been understated to the extent of Rs.151.10 crore by not including (i) deposits of Rs.103.89 crore outstanding for more than three years, (ii) deposits of Rs. 0.97 crore received against burnt meters and (iii) advance of Rs.46.24 crore received against sale of scrap.

5.9.2    In its response the Board has stated that out of Rs.103.89 crore, Rs.60.00 crore approximately has been identified as the receipt on account of Central Plan Assistance and efforts are being made to identify the details of the remaining amount. The receipt of Rs.0.97 crore against burnt meters can be treated as income only after the meters are checked and repaired in the Board’s laboratories and repair charges are accounted for as receipt and the balance is refunded to the consumers.  In case a meter has been burnt owing to any fault attributable to the consumer and is declared irreparable, the deposit is transferred to revenue of the Board. As regards the advance of Rs.46.24 crore received against sale of scrap in auction, this is adjusted as receipt only after the scrap is lifted by the bidder. In case the advance is treated as income before lifting the scrap, the Board will unnecessarily become liable to pay VAT and other taxes if the bidder fails to lift the material.

5.9.3 The Commission observes that there may be some merit in the interim reply of the Board. Accordingly, these receipts are for the present not being taken into account while determining the Non -Tariff   Income of the Board.  

The Commission decides that  the final outcome of these audit comments be reported by the Board in the next ARR, failing which the non tariff income of the Board would be re-determined on the basis of these audit comments in the next Tariff Order.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter - 6


Determination of Tariff

 

6.1              Annual Revenue Requirement

 

6.1.1        The Commission has determined the ARR of the Board for the year 2009-10 at Rs.12538.31 crore. It has simultaneously undertaken a true up of the year 2007-08 consequent upon the availability of audited accounts which has resulted in a net revenue gap (deficit) of Rs.803.31 crore. The review of 2008-09 indicates a surplus of Rs.332.23 crore, resulting in a consolidated gap of Rs.471.08 crore at the end of 2008-09.

 

6.1.2        The combined impact of the three exercises and the approved carrying cost of gaps indicates a gross revenue requirement of Rs.13219.35 crore for the year 2009-10. After making adjustment on account of non-tariff income and revenue from tariff at the existing level, the revenue gap accepted by the Commission for 2009-10 is Rs.1300.08 crore as shown in Table 4.29.

 

6.2              Determination of Retail tariff

6.2.1        In determining tariff, the Commission is guided by the principles laid down in Section 61 of the Act as well as its own Regulations which provide the framework for working out the ARR of a Power Utility and tariff for different categories of consumers. The Commission has also kept in mind the relevant aspects of the National Electricity Policy, National Tariff Policy, the norms adopted by it in earlier Tariff Orders and inputs received from consumers during the process of public hearings.

 

6.2.2        Income from tariff at existing rates taken into account for working out the percentage increase in tariff required to cover the gap, does not include income from sales to common pool consumers, outside State sales and PLEC.

 

6.2.3        The consolidated revenue gap of Rs.1300.08 crore for the year 2009-10 is, thus, required to be covered with an increase of 12.42% in the existing tariff across all categories including MMC, except common pool consumers, Outside State sales and PLEC.

6.2.4        The provisions of the Act, Tariff Policy and the Commission’s own Regulations require that there be a gradual movement towards reduction of cross-subsidies. Therefore, with this end in view, the Commission has decided to increase the tariff of Domestic Supply consumers with consumption upto 100 units, NRS and RT consumers by 42 paise/unit, and that of AP consumers by 45 paise/unit, being the highest subsidized category. The tariff for other consumer categories and MMC for all categories is to be increased by 9.51%, while there is no change in PLEC. The existing and revised tariffs are indicated in Table 6.1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6.1 : Existing and Revised Tariff for the Year 2009-10

Sr. No.

Category of consumers

Existing Tariff

Revised Tariff approved by the Commission 

Energy Rate (paise/kwh)

MMC (Rs/kw or part thereof)

Energy Rate (paise/kwh)

MMC (Rs/kw or part thereof)

A)

PERMANENT SUPPLY

 

 

1

Domestic

 

 

a)

Upto 100 units

240

32

282

35

b)

101 to 300 units

391

428

c)

Above 300 units

413

452

2

Non-Residential

449

115

491

126

3

Public lighting

440

As per 8 hrs / Day

482

As per 8 hrs / Day

4

Agricultural Pumpsets

i) Without Govt. subsidy 240 Ps / kwh or Rs.250/ BHP / Month

NA

i) Without Govt. subsidy 285  Ps / kwh or Rs.283/ BHP / Month

NA

ii) With Govt. subsidy     0

ii) With Govt. subsidy     0

5

Industrial

 

 

a)

Small power

358

95

392

104

b)

Medium

395

126

433

138

c)

Large

 

 

 

 

i)

General industry

395

113 /KVA

433

124 /KVA

ii)

PIU

395

298 /KVA

433

326 /KVA

iii)

Arc Furnace

395

298 /KVA

433

326 /KVA

6

Bulk Supply (including MES)

 

HT

398

186 /KVA

436

204 /KVA

LT

423

186 /KW

463

204 /KW

7

Railway Traction

470

190 /KVA

512

208 /KVA

8

Single Point Supply to cooperative group housing societies/ employers colony

413

60 /KVA

452

66 /KVA

B) SEASONAL INDUSTRY : COTTON GINNING, PRESSING AND BAILING PLANT, RICE SHELLERS / HULLER MILLS, RICE BRAN STABILIZATION UNITS (WITHOUT T.G. SETS) (SP, MS, LS)

a)

During Season (From 1st Sept to 31st May next year)

 

SP

358

348

392

381

 

MS

395

348

433

381

 

LS

395

313 /KVA

433

343 /KVA

b)

Off season

 

SP

424

NA

464

NA

 

MS

454

NA

497

NA

 

LS

454

NA

497

NA

C) ICE FACTORY & ICE CANDIES AND COLD STORAGE

a)

Season (April to July)

 

SP

358

474

392

519

 

MS

395

474

433

519

 

LS

395

427 /KVA

433

468 /KVA

b)

Off Season

 

SP

358

95

392

104

 

MS

395

95

433

104

 

LS

395

85 /KVA

433

93 /KVA

D) GOLDEN TEMPLE, AMRITSAR AND DURGIANA TEMPLE, AMRITSAR

a)

First 2000 units

Free

N.A.

Free

N.A.

b)

Beyond 2000 units

319

N.A.

349

N.A.

E) TEMPORARY SUPPLY

i)

Domestic

704

Rs.584 or Rs.116/KW whichever is higher

771

Rs.640 or Rs.127/KW whichever is higher

ii)

NRS

704

Rs.1170 or Rs.293/KW whichever is higher

771

Rs.1281 or Rs.321/KW whichever is higher

iii)

Industrial (SP,MS & LS)

As per tariff approved at A(5) above for permanent supply + 100%

Rs.468/KW of sanctioned load  for SP and MS and Rs. 421/KVA for LS

As per tariff approved at A(5) above for permanent supply + 100%

Rs.513/KW of sanctioned load  for SP and MS and Rs. 461/KVA for LS

iv)

Wheat Thresher

-do-

-do-

-do-

-do-

v)

Fairs, exhibition & melas Congregations

Bulk supply tariff as at A(6) + 50%

Rs.4683 per service

Bulk supply tariff as at A(6) + 50%

Rs.5128 per service

vi)

Touring Cinemas

a)

Lights and fans

704

For (a) and (b) Rs. 1170 or Rs. 293/KW of sanctioned load whichever is higher

771

For (a) and (b) Rs. 1281 or Rs. 321/KW of sanctioned load whichever is higher

b)

Motive load

Rate for Industrial permanent supply as at A(5) + 100%

Rate for Industrial permanent supply as at A(5) + 100%

 

Notes:

                                  i.            SC Domestic consumers with connected load upto 1000 watts will be given 200 units of free power per month in view of Govt subsidy;

                                 ii.            Non-SC BPL Domestic Consumers with connected load upto 1000 watts will be given 200 units free power per month in view of Govt subsidy;

                                iii.            AP consumers and consumers mentioned in (i) & (ii) will not be charged service charges and meter rentals in view of Govt subsidy;

                               iv.            Rebate for single point supply to Co-operative group housing societies/employers colony will be as per relevant Regulations notified by the Commission vide Notification No. PSERC/Secy/Reg-38 dated 13.5.2008. Presently, a rebate of 12% in addition to any other rebate on electricity consumption charges as admissible under General Conditions of Tariff and Schedule of Tariffs is admissible.

                                v.            All other charges including rentals and deposits which are being collected by the Board as per Schedule of General Charges, Supply Code and General Conditions of Tariff & Schedules of Tariff approved by the Commission, will be continued at the existing rates till these are reviewed by the Commission;

                               vi.            Checking of load of DS consumers will continue to be suspended.

6.3       Effect of revised tariff on cross subsidy

6.3.1    The Commission in its Tariff Regulations has defined cross subsidy for a consumer category as the difference between the average realisation per unit from that category and the combined average cost of supply, expressed in percentage terms. In this manner, the total quantum of cross subsidy generated and utilized in the system as worked out in Tariff Order 2008-09 is depicted in Table 6.2.

 

Table 6.2 : Aggregate quantum of cross subsidy for the year 2008-09

(Combined average cost of supply = 364.45 paise/unit)

Sr. No

Category

Energy Sales (MU)

Existing tariff (paise / unit)

Revenue with existing tariff (Rs. Crore)

PLEC + MMC etc.
(Rs. Crore)

Non tariff income (Rs. Crore)

Total Revenue (Rs. crore) (5+6+7)

Expected Revenue with average cost
(Rs. crore)

Cross Subsidy generated (+) Utilised (-) (8-9)

1

2

3

4

5

6

7

8

9

10

1

Domestic

 

 

 

 

 

 

 

 

a)

Upto 100

3925

240

942.00

23.26

52.85

1018.11

1430.47

-412.36

b)

101-300

1672

391

653.75

9.91

22.51

686.17

609.36

76.81

c)

>300 units

852

413

351.88

5.05

11.47

368.40

310.51

57.89

 

Total

6449

 

1947.63

38.21

86.84

2072.69

2350.34

 

2

NRS

2030

449

911.47

12.03

27.34

950.83

739.83

211.00

3

Public Lighting

149

440

65.56

0.88

2.01

68.45

54.30

14.15

4

Industrial

 

 

 

 

 

 

 

 

a)

SP

748

358

267.78

4.43

10.07

282.28

272.61

9.67

b)

MS

1542

395

609.09

9.14

20.76

638.99

561.98

77.01

c)

LS

9359

395

3696.81

195.20

126.03

4018.03

3410.89

607.14

 

Total

11649

 

4573.68

208.77

156.86

4939.30

4245.48

 

5

Bulk Supply

 

 

 

 

 

 

 

 

a)

HT

450

398

179.10

2.67

6.06

187.83

164.00

23.83

b)

LT

47

423

19.88

0.28

0.63

20.79

17.13

3.66

 

Total

497

 

198.98

2.95

6.69

208.62

181.13

 

6

Railway Traction

111

470

52.17

0.66

1.49

54.32

40.45

13.87

7

Common Pool

303

 

73.73

0.00

4.08

77.81

110.43

-32.62

8

Outside State

2036

 

1156.22

0.00

0.00

1156.22

742.02

414.20

9

AP

9408

240

2257.92

0.00

126.69

2384.61

3428.75

-1044.14

10

Total

32632

 

11237.36

263.50

412.00

11912.85

11892.73

1509.23

-1489.12

 

6.3.2    The position of cross subsidy levels in the system during the year 2009-10 with revised tariffs (as approved in para 6.2) is indicated in Table 6.3.

 

6.3.3        Since the Board has not provided category-wise details of MMC income, the same has been apportioned in the ratio of sale of energy to different categories, except AP, Common Pool and outside State sales. Similarly, the non-tariff income has been apportioned in the ratio of sale of energy to different categories except outside State sales while PLEC has been loaded to the LS category.

 

Table 6.3: Aggregate quantum of cross subsidy for the year 2009-10 at revised tariff

 (Combined average cost of supply = 402.76 paise/unit)

Sr. No

Category

Approved Energy Sales (MU)

Proposed Tariff (paise / unit)

Revenue with Proposed Tariff (Rs. crore)

PLEC + MMC etc. (Rs. crore)

Non tariff income (Rs. crore)

Total Revenue (Rs. crore) (5+6+7)

Expected Revenue with average cost (Rs. crore)

Cross Subsidy generated (+) Utilised (-) (8-9)

1

2

3

4

5

6

7

8

9

10

1

Domestic

 

 

 

 

 

 

 

 

a)

Upto 100

3902

282

1100.36

29.53

54.99

1184.88

1571.57

-386.69

b)

101-300

2016

428

862.85

15.26

28.40

906.51

811.96

94.55

c)

>300 units

1042

452

470.98

7.89

14.68

493.55

419.68

73.87

 

Total

6960

 

2434.19

52.68

98.07

2584.94

2803.21

 

2

NRS

2145

491

1053.20

16.23

30.22

1099.65

863.92

235.72

3

Public Lighting

148

482

71.34

1.12

2.09

74.55

59.61

14.94

4

Industrial

 

 

 

 

 

 

 

 

a)

SP

722

392

283.02

5.46

10.17

298.65

290.79

7.86

b)

MS

1522

433

659.03

11.52

21.44

691.99

613.00

78.99

c)

LS

9278

433

4017.37

194.34

130.72

4342.43

3736.81

605.61

 

Total

11522

 

4959.42

211.32

162.33

5333.07

4640.60

 

5

Bulk Supply

 

 

 

 

 

 

 

 

a)

HT

449

436

195.76

3.40

6.33

205.49

180.84

24.65

b)

LT

51

463

23.61

0.39

0.72

24.72

20.54

4.18

 

Total

500

 

219.37

3.79

7.05

230.21

201.38

 

6

Railway Traction

123

512

62.98

0.93

1.73

65.64

49.54

16.10

7

Common Pool

303

 

84.00

0.00

4.27

88.27

122.04

-33.77

8

Outside State

1307

 

798.00

0.00

0.00

798.00

526.41

271.59

9

AP

9814

285

2796.99

0.00

138.27

2935.26

3952.69

-1017.43

10

Total

32822

 

12479.49

286.07

444.03

13209.59

13219.40

1428.06

-1437.89

 

 

The subsidy likely to be generated at the revised level of tariff comes to Rs.1428.06 crore against which Rs.1437.89 crore cross subsidy is required leaving a deficit of Rs.9.83 crore.

 

6.3.4        Taking into account the quantum of cross subsidy in each consumer category determined in the Tariff Order of 2008-09 (Table 6.2) and as per revised tariffs brought out in Table 6.3, the gross quantum of cross subsidy from each category for the years 2008-09 and 2009-10 (revised tariff) is given in Table 6.4.

Table 6.4: Aggregate quantum of cross subsidy – comparison

Average Cost of supply 364.45 paise/unit for the year 2008-09

Average cost of supply 402.76 paise/unit for the year 2009-10

Sr. No.

Consumer categories

Quantum of Cross Subsidy in absolute terms

2008-09

2009-10

Energy Sales (MU)

Cross Subsidy (Rs Crore)

Energy Sales (MU)

Cross Subsidy (Rs Crore)

1

2

3

4

5

6

1

Domestic

 

 

 

 

a)

Upto 100

3925

-412.36

3902

-386.69

b)

101-300

1672

76.81

2016

94.55

c)

>300 units

852

57.89

1042

73.87

 

Total

6449

 

6960

 

2

NRS

2030

211.00

2145

235.72

3

Public Lighting

149

14.15

148

14.94

4

Industrial

 

 

 

 

a)

SP

748

9.67

722

7.86

b)

MS

1542

77.01

1522

78.99

c)

LS

9359

607.14

9278

605.61

 

Total

11649

 

11522

 

5

Bulk Supply

 

 

 

 

a)

HT

450

23.83

449

24.65

b)

LT

47

3.66

51

4.18

 

Total

497

 

500

 

6

Railway Traction

111

13.87

123

16.10

7

Common Pool

303

-32.62

303

-33.77

8

Outside State

2036

414.20

1307

271.59

9

AP

9408

-1044.14

9814

-1017.43

10

Grand Total

32632

1509.23

32822

1428.06

-1489.12

-1437.89

 

 

 

6.3.5        Further, the cross subsidy levels based on the tariffs determined in 2008-09 and 2009-10 (revised tariff) in %age terms is brought out in Table 6.5. 

 

 

 

 

 

 

 

 

 

 

 

Table 6.5:  Cross Subsidy Levels

 

Sr. No.

Consumer Category

Exiting Tariff

 

Revised Tariff

 

Combined Average Cost of supply
364.45 paise/unit

 

 

Combined Average Cost of supply
402.76 paise/unit

 

2008-09

 

2009-10

Energy Sales (MU)

Total Revenue (Rs Crore)

Realisation per unit (Paise per unit)

Cross Subsidy levels (%)

Energy Sales (MU)

Total Revenue (Rs Crore)

Realisation per unit (Paise per unit)

Cross Subsidy levels (%)

1

2

3

4

5

6

7

8

9

10

1

Domestic

 

 

 

 

 

 

 

 

a)

Upto 100

3925

1018.11

259.39

-28.83%

3902

1184.88

303.66

-24.61%

b)

101-300

1672

686.17

410.39

12.61%

2016

906.51

449.66

11.64%

c)

>300 units

852

368.40

432.39

18.64%

1042

493.55

473.66

17.60%

 

Total

6449

2072.68

321.40

 

6960

2584.94

371.40

 

2

NRS

2030

950.84

468.39

28.52%

2145

1099.65

512.66

27.29%

3

Public Lighting

149

68.45

459.40

26.05%

148

74.55

503.72

25.07%

4

Industrial

 

 

 

 

 

 

 

 

a)

SP

748

282.28

377.38

3.55%

722

298.65

413.64

2.70%

b)

MS

1542

638.99

414.39

13.70%

1522

691.99

454.66

12.89%

c)

LS

9359

4018.04

429.32

17.80%

9278

4342.43

468.04

16.21%

 

Total

11649

4939.31

424.01

 

11522

5333.07

462.86

 

5

Bulk Supply

 

 

 

 

 

 

 

 

a)

HT

450

187.83

417.40

14.53%

449

205.49

457.66

13.63%

b)

LT

47

20.79

442.34

21.37%

51

24.72

484.71

20.35%

 

Total

497

208.62

419.76

 

500

230.21

460.42

 

6

Railway Traction

111

54.32

489.37

34.28%

123

65.64

533.66

32.50%

7

Common Pool

303

77.81

256.80

-29.54%

303

88.27

291.32

-27.67%

8

Outside State

2036

1156.22

567.89

55.82%

1307

798.00

610.56

51.59%

9

AP

9408

2384.61

253.47

-30.45%

9814

2935.26

299.09

-25.74%

 

Grand Total

32632

11912.86

365.07

 

32822

13209.59

402.46

 

 

 

As per Regulations framed by the Commission, tariff is to be determined in such a way that it progressively reflects combined average unit cost of supply and the cross subsidy is eliminated by December, 2015. The Commission observes that, in consonance with the PSERC Tariff Regulations, there is a reduction in the cross subsidy levels of both the subsidized and subsidizing categories when compared to 2008-09.

 

6.4       Government Subsidies

 

6.4.1  After determining the ARR and tariff for the year 2009-10, the Commission in its letter No.2791/DIR/TR-84 dated August 7, 2009 (Annexure-IX), solicited the views of the Govt. regarding its plan to grant subsidy to any consumer or class of consumers under Section 65 of the Act. In the said letter, it was indicated that Govt. presently subsidizes AP consumers, SC and Non-SC BPL DS consumers up to 200 units per month. The Commission has determined AP consumption at 9814 MU for the year 2009-10. The requirement of funds for maintaining the same level of subsidy during 2009-10 is indicated in Table 6.6.

 

Table 6.6 : Requirement of Subsidy to maintain Status Quo during 2009-10

(Rs. crore)

 

Subsidy payable by the Govt.

AP +

Meter rentals

and service charges

SC DS + Meter rentals

and service charges

Non-SC BPL + Meter rentals

and service charges

Total

Subsidy for

2009-10

2796.99

(+) 8.00

2804.99

322.49

(+)13.13

335.62

   3.47

(+)0.17

    3.64

3144.25

 

 

The Govt. in its letter dated Sept. 2, 2009 (Annexure-X) has accorded approval for the grant of subsidy for the current year. Keeping this decision of the Govt. in view, the Commission has incorporated the same in the tariff structure in      Table 6.1.

 

            Besides, an amount of Rs.386.17 (260.37 + 125.80) crore is also determined as payable by the Govt. in para 3.15.4 and 4.13.11 of this order.

 

6.4.2    In para 6.8.8 of Tariff Order of 2008-09, the Commission had decided that the Govt. would make payment of subsidy in equal quarterly installments, in advance, at the beginning of each quarter. The Govt. in its letter No. 1/2/09-EB(PR)/ 497 dated July 9, 2009 has requested that payment of subsidy may be allowed in monthly installments. Taking into consideration the request of the Govt., the Commission decides that Govt. will henceforth make advance payment of subsidy to the Board in equal monthly installments at the beginning of each month. The amount to be paid to the Board for each month will, for the purpose of ease of reckoning, be one twelfth of the total amount of subsidy payable in any particular year as determined by the Commission. For the current year, the monthly installment will be worked out after adjustment of subsidy actually paid upto August, 2009. The Commission further directs the Board to submit a report on payment/credit of subsidy due to it within 15 days at the end of each quarter.

 

6.5       Tariff for purchase of NRSE Power

As per NRSE Policy–2006, notified by the Govt. and adopted by the Commission in its order dated 13/12/07, the rates for purchase of power from such projects during the year 2009-10 are as under:-

 

·         Biomass, Urban/Municipal/Industrial liquid/solid waste to energy and Wind power projects

403 Paise/Unit

·         Mini/Micro Hydel, Bagasse/Biomass

based Co-generation

381 Paise/Unit

·         Solar energy

811 Paise/Unit

 

  

6.6                Separate tariff for each Function

6.6.1        Though the Board is a vertically integrated utility, separate tariffs have been determined for generation, transmission & distribution in compliance with the directions of ATE by segregating the ARR of 2009-10 based on the information furnished by the Board in its letter dated 17/07/2009 and the audited accounts of 2007-08.

The allocation under each head (generation, transmission and distribution) is detailed at Annexure-V and the ROE is trifurcated on the basis of value of fixed assets of each function. In addition, the consolidated gap and carrying cost of gaps upto 2008-09 has been computed in proportion to the revenue requirement (in Table 6.7) of each function.

 

6.6.2        The segregated ARR worked out on the above basis is given in Table 6.7. The generation function has also been further divided into thermal and hydel taking into account the fact that the regulations for determining the tariff for these are different.

Table 6.7 : Segregation of ARR for 2009-10

                                                                                                                                 (Rs. crore)

Sr. No.

Item of expense 

Generation 

Transmission

 

Distribution

 

Total

 

Hydel

Thermal

Total

1

2

3

4

5

6

7

8

1

Cost of fuel

                  -  

  3,195.93

   3,195.93

                     -  

                 -  

       3,195.93

2

Cost of power purchase

                  -  

               -  

                -  

                     -  

    4,746.59

       4,746.59

3

Employee cost + FBT

           93.42

     245.07

       338.49

            156.19

    1,361.93

       1,856.60

4

R&M expenses

        111.59

     130.53

       242.14

              43.30

          90.70

          376.14

5

A&G expenses

             7.37

          5.05

         12.43

              13.60

          49.98

            76.00

6

Depreciation

        163.74

     200.98

       364.72

            116.26

        345.05

          826.02

7

Interest charges

        499.12

        99.42

       598.53

            135.79

        314.25

       1,048.57

8

Return on Equity

        148.12

        76.57

       224.70

              49.79

        137.97

          412.46

9

Total revenue requirement

     1,023.36

  3,953.55

   4,976.93

            514.94

    7,046.47

    12,538.31

10

Add: Consolidated Gap and carrying cost of gap ending 2008-09

           55.58

     214.73

       270.31

              27.99

        382.74

          681.04

11

Gross revenue requirement (9+10)

     1,078.94

  4,168.28

   5,247.24

            542.93

    7,429.21

    13,219.35

 

6.7            Generation tariff

6.7.1        The PSERC Tariff Regulations specify that the generation tariff will have the same components as laid down in the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations 2004 as amended by CERC from time to time. CERC by its notification dated 19th January, 2009 issued the Tariff Regulations for generation & transmission projects for the period 2009-14.

6.7.2        As per CERC Regulations, generation tariff comprises of :

(i)      Annual Fixed Charges (AFC) which include interest, depreciation, return on equity, O&M expenses, interest on working capital and cost of secondary fuel  and;

(ii)    Energy (variable) charges (for recovery of primary fuel cost).

 

These charges are recoverable on the basis of norms for thermal plants and hydel plants and are specific for each power plant.

 

6.7.3        In the case of thermal plants, AFC are payable on achievement of normative plant availability of 85%, whereas in the case of hydel stations, full AFC are payable on achievement of plant availability of 90%.

 

6.7.4        The Commission has assessed plant wise AFC on the basis of data provided by the Board as reproduced at Annexure-VI whereas proportion of generation cost under each head is given in Annexure-VII. Accordingly, the total revenue requirement for each plant is computed and indicated in Annexure-VIII. The plant wise AFC approved for 2009-10 is given in Table 6.8.

 

Table - 6.8 : Annual Fixed Charges – Generation – 2009-10

 

Sr. No.

Plant

Annual Capacity Charges ( Rs. in crore)

Net Generation (MU)

Fixed Charges (paise/unit)

1

2

3

4

5

A

Thermal Plants

1040.97

 

 

1

GGSTP

504.65

9119

55

2

GNDTP

178.24

2506

71

3

GHTP

358.08

6323

57

 

 

 

 

 

B

Hydel Plants

1,078.94

 

 

1

RSD

742.70

1726

430

2

Mukerian

70.81

1248

57

3

UBDC

31.66

445

71

4

Shanan

16.47

512

32

5

Anandpur Sahib

41.47

690

60

6

Micro Hydel

1.59

7

227

7

Bhakra Complex

61.56

 

NA

8

Dehar & Pong

112.68

 

NA

 

The AFC for hydel plants at Sr. No. (B) 7 and (B) 8 are determined by BBMB.

Accordingly, the total AFC recoverable in the case of thermal and hydel plants are:

 

i) Thermal        -           Rs. 1040.97 crore

ii) Hydel           -           Rs. 1078.94 crore

 

6.7.5        The AFC for both thermal and hydro plants will be payable on achievement of target availability as discussed in para 6.7.3.

 

6.7.6        Variable (energy) charges for thermal plants

 

The variable (energy) charges for a thermal plant are the primary fuel cost to be paid to the generators and are computed as cost per unit of ex-bus energy (energy sent out). As per approved ARR for 2009-10, the total fuel cost, excluding the cost of secondary fuel oil, for all the three thermal plants (including GHTP Stage - II) is Rs.3127.31 crore. These costs have been worked out plant wise and the variable charges per unit of energy sent out by each plant for 2009-10 is given in Table 6.9.

 

Table 6.9 : Variable (energy) charges – 2009-10

 

Sr. No.

Particulars

GNDTP

GGSTP

GHTP

1

2

3

4

5

1

Fuel Cost (Rs. in crore)*

467.30

1581.46

1078.55

2

Net Generation (MU)

2,506

9,119

6,323

3

Variable Charge per unit sold (Rs./kWh)

1.8647

1.7342

1.7058

 

* The plant wise fuel cost has been taken as approved by the Commission in Chapter - 4 instead of
as apportioned in Annexure – VIII.

 

6.7.7        Total Energy charges for generating plants

 

The total energy charges (fixed and variable charges) for generating plants as determined by the Commission are given in Table 6.10.

 

 

 

 

 

 

 

 

 

 

 

Table 6.10: Total energy charges – 2009-10

 

Sr. No.

Plant

Fixed Charges (paise/unit)

Variable Charges (paise/unit)

Total Charges (paise/unit)

1

2

3

4

5 = 3 + 4

A

Thermal Plants

 

 

 

1

GGSTP

               55

173

             228

2

GNDTP

               71

186

             257

3

GHTP

               57

171

             228

 

 

 

 

 

B

Hydel Plants

 

 

 

1

RSD

             430

                 -  

             430

2

Mukerian

               57

                 -  

               57

3

UBDC

               71

                 -  

               71

4

Shanan

               32

                 -  

               32

5

Anandpur Sahib

               60

                 -  

               60

6

Micro Hydel

             227

                 -  

             227

 

6.8       Transmission Tariff

6.8.1    The PSERC Tariff Regulations specify that transmission tariff will have the following components:

i)        Charges for use of the network

ii)       Operation charges

iii)     Reactive energy charges

 

6.8.2        The Board has not supplied the State Load Despatch Centre (SLDC) costs to arrive at operation charges. The reactive energy charges for Intra-State Open Access are to be realized from the customers as per the Regulations already notified by the Commission. Hence, only the charges for use of network are being assessed.

 

6.8.3        Charges for use of network are to be calculated in accordance with the methodology specified in the PSERC Tariff Regulations. The revenue requirement for transmission for 2009-10 works out to Rs.542.93 crore as given in Table 6.7 and the transmission capacity as furnished by the Board in the ARR for 2009-10 is 6705 MW. On this basis, the Commission determines the charges for use of the transmission network at Rs.2218.00/MW/Day.

 

6.9          Distribution / Wheeling

The revenue requirement for distribution for 2009-10 as per Table 6.7 is Rs.2682.62 crore (excluding the power purchase cost) while the distribution capacity is 6917 MW as furnished by the Board. Accordingly, the Commission determines wheeling charges as Rs.10625.00/MW/ day.

 

6.10     Open Access Charges

            As per the Open Access Regulations notified by the Commission, the Open Access charges for the year 2009-10 are computed in Table 6.11.

 

Table 6.11: Open Access Charges – 2009-10

 

Sr. No.

Open Access Charges

1

Transmission charges

Rs.2218/MW/Day

2

Wheeling charges

Rs.10625/MW/Day

3

Transmission+Wheeling charges payable by long term customers

Rs.4281/MW/Day

4

Transmission+Wheeling charges payable by short term customers

Rs.2569/MW/Day

5

Transmission + Wheeling charges for wheeling of power from NRSE projects

@ 2% of energy injected to the State grid irrespective of the distance

6

T&D losses

 

 

(i) For voltages at 66 kv and above @ 30% of normative   T&D losses

6.60%

 

(ii) For voltages below 66 kv  @ 50% of normative T&D losses

11.00%

7

Surcharge

Nil

8

Other charges such as additional surcharge, operation charges, UI charges, reactive energy charges shall be levied as per the Open Access Regulations/Tariff Regulations notified by the Commission.

 

Note: Examples of computation of Open Access Charges are provided in Annexure XI

 

 

 

6.11     Cost of supply and Cross subsidy

In compliance with the Order of the Appellate Tribunal for Electricity dated 26.5.2006, the Board was asked in the Tariff Order for 2007-08 to initiate a study for determination of cost of supply of electricity to different classes and categories of consumers. The Board, in its letter dated 07.08.2009 has intimated that it has invited bids from independent consultants for carrying out Cost of Service Study and these are being evaluated. In the light of the Appellate Tribunal’s directions, the Board needs to ensure that the process of engaging consultants for carrying out the proposed study is expedited and the findings of the study as well as its own views thereon are submitted to the Commission as early as possible.

 

6.12     Date of Effect

 

The Commission notes that the ARR of the Board for the year 2009-10 covers the complete financial year. The recovery of tariff, therefore, has to be such that total revenue requirement of the Board for the year 2009-10 is recovered in this period. 

 

The Commission, therefore, decides to make the revised tariffs applicable from April 01, 2009 and the tariff structure determined above shall remain operative till March 31, 2010. The recovery of arrears will be made by the Board in equal installments along with energy bills in the remaining months of the year.

 

This Order is signed and issued by the Punjab State Electricity Regulatory Commission on this the 8thth day of Sept, 2009.

 

Date:     8th Sept, 2009           

Place: CHANDIGARH

 

 

 

Sd/-

Sd/-

Sd/-

(S.S. PALL)

(BALJIT BAINS)

(JAI SINGH GILL)

MEMBER

MEMBER

CHAIRMAN

 

 

CERTIFIED

 

Sd/-

 (NAMITA SEKHON)

SECRETARY

 

PUNJAB STATE ELECTRICITY REGULATORY COMMISSION

CHANDIGARH

 

 

 

ANNEXURE-1

List of Objectors

Obj.

 No.

Name  & address of  the objector

Page

No.

1

Shri Shital Vij, Shri Devi Talab Mandir Prabandhak Committee, Mandir Marg, Tanda Road, Jalandhar City.

167

2

Shri Raghubir Singh Saini, H.No.4424, Ward No.2,  Narinder Colony, Ropar.

167

3

Shri Joginder Kumar, President, The Ludhiana Electroplaters Association, Gambhir Market, Gill Road, Ludhiana-141003.

168

4

Col. Angad Singh, (Retd.), Gen. Secretary, Consumers Protection and Grievances Redressal Forum (Regd.), K.No.831, Phase 3B-1, (Sector 60), S.A.S.Nagar (Mohali).

168

5

Shri V.K.Goyal, Chief Executive, Vardhman Spinning & General Mills, Chandigarh Road, Ludhiana-141011.

173

6

Joint Objection by

(1)   M/s S.S.Alloys & Steel Inds (Unit-2), Mandi Gobindgarh

(2)    M/s Dashmesh Castings (P) Ltd.,,   Mandi Gobindgarh

M/s Shiva Castings Private Limited,  Mandi Gobindgarh

176

7

Shri Harinder Puri, Secretary, Steel Furnace Association of India C/o Upper India Steel Mfg. & Engg. Co. Ltd. Dhandari Industrial Focal Point, Ludhiana-141010.

177

8

Shri R.K.Atoliya, Chief Electrical Distribution Engineer,  Northern Railway, Hd. Qrs., Baroda House, New Delhi

178

9

Shri P.K.Bhalla,Executive Director, . Mawana Sugars Ltd.(formerly known as Siel Limited),  5th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi-110125

180

10

Shri Bhupinder Singh, General Secretary, PSEB Engineers’ Association, 45, Ranjit Bagh, Near Modi Mandir, Passey Road,  Patiala

184

11

Shri Dalip Sharma, Regional Director, PHD Chamber of Commerce and Industry, PHD House, Sector 31-A, Chandigarh-160031.

189

12

Shri Balbir Singh Kharbanda, General Secretary, Cycle Trade Union (Regd.), Kharbanda Complex, Gill Road, Miller Ganj, Ludhiana-141003.

191

13

Shri Varinder Kapoor, General Secretary, United Cycle & Parts Mfrs. Association, Office: Near Campa Cola Chowk, Gill Road, Ludhiana-141003.

191

14

Shri Amar Singh, Consultant, Mandi Gobindgarh Induction, Furnace Association, C/O M/S Gain Castings Ltd., New Grain Market, Mandi Gobindgarh.

192

15

Shri A.Puri,General Manager (Projects & Materials), Punjab Alkalies & Chemicals Limtied, SCO.125-127, Sector 17-B, Post Box No.152, Chandigarh-160017.

194

16

Director, R.P.Multimetals Pvt. Ltd.  Mandi Gobindgarh

198

17

(1) Shri Palwinder Singh Bajwa, Chairman, House No.588, Sector 18-B, Chandigarh

(2) Shri Harpreet Singh Dhillon, Member Secretary, House No.1526, Sector34-D, Chandigarh

I.N.A.Rural Development Society, Mohali (Punjab)

(Head Office at C-136, Phase VIII, Industrial Area, Mohali.

199

 

 

18

(1)  Shri Palwinder Singh Bajwa, Chairman,House No.588, Sector 18-B,  Chandigarh.

(2) Shri Harpreet Singh Dhillon, Member Secretary, House No.1526, Sector 34-D, Chandigarh

I.N.A.Rural Development Society, Mohali (Punjab)

(Head Office at C-136, Phase VIII, Industrial Area, Mohali

199

19

Shri Bhupinder Singh, General Secretary, PSEB Engineers’ Association, 45, Ranjit Bagh, Near Modi Mandir, Passey Road, Patiala.

184

20

Shri Rajinder Sharma, President, Association of the PSEB Affiliated Schools (Pb.) Regd., Everest Public Sr. Secondary  School,  Moti Nagar, Ludhiana

199

21

Shri S.K.Seth, Engg.-in-Chief P.S.E.B. (Retd.), Consultant, Power Utilities Power Sale Purchase, CDM,  41-H, B.R.S.Nagar, Ludhiana

199

22

Shri S.K.Seth, Engg.-in-Chief P.S.E.B. (Retd.), Consultant, Power Utilities Power Sale Purchase, CDM, 41-H, B.R.S.Nagar, Ludhiana

199

23

Shri Shital Vij, Shri Devi Talab Mandir Prabandhak Committee, Mandir Marg, Tanda Road, Jallandhar City.

167

24

Shri Hardev Singh, Managing Director, Mithila Malleable Pvt. Ltd. C/o AMT International, G.T.Road, Sirhind Side, Mandi Gobindgarh-147301

200

25

Shri R.L.Mahajan, President, Technocrats Forum & Ex..-in-Chief PSEB

200

26

Power Engineer Associates, Ajit Road,  Bathinda-151001.

202

27

Shri R.L.Mahajan, President, Technocrats Forum & Ex..-In-Chief (Retd.) PSEB, 197-G,  B.R.S.Nagar, Ludhiana

200

28

Director,  Bansal Alloys & Metals Pvt. Ltd. (Unit-1 & II), G.T.Road, Sirhind Side, Mandi Gobindgarh

202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Annexure-II

 

Objections filed by various stake holders, response of PSEB and View of the Commission

 

The Commission would like to place on record, its appreciation to the participating consumers and organizations for the comprehensive inputs received both through the objections and in public hearings. In the following paras the objections filed, response of PSEB and view of the Commission on each of the objections have been briefly discussed.

 

Objection No. 1& 23: Shri Devi Talab Mandir Prabandhak Committee

Issue No.1: Parity of tariff

Free and concessional units of electricity may be allowed to Shri Devi Talab Mandir at par with Golden Temple and Durgiana Temple, Amritsar. Contributions are also made by Shri Devi Talab Mandir Prabandhak committee to Pradhan Mantri Relief fund, Bihar Relief fund, marriages of poor girls etc. Besides, the committee also carries other philanthropic activities. Approval for a Dental College has been accorded by GoP to the committee. The committee is also planning to open a school for girls.

Response of PSEB

Connections of Durgiana Mandir (1 connection) & Golden Temple (2 connections) are appearing under grid category of consumers. These categories of consumers are being charged at domestic tariff as per the direction of the Commission. However, providing subsidy to any consumer category is the prerogative of the Government of Punjab (GoP) as the cost owing to subsidized power has to be borne by it.

It is the prerogative of the Commission to consider.

View of the Commission

The present arrangements for supply of electricity to the Golden Temple and Durgiana Mandir have been in vogue for some time and the Commission does not propose any review. Given the large number of religious institutions in the State, it is perhaps inadvisable to further extend such concessions.

 

Objection No. 2:  Shri Raghubir Singh Saini

Issue No. 1:          ARR documents

ARR documents are not available in the field offices of PSEB (Ropar).

Response of PSEB

Copies of the ARR were kept at respective Chief Engineer & Circle offices. Incidentally, it may not have been available in Ropar. However, copy of the ARR was available online on PSEB’s website: www.psebindia.org.

View of the Commission

The Commission advises the Board to ensure availability of the ARR documents at all the designated offices.

Issue No. 2: PSEB losses

In spite of tariff revision every year, losses of PSEB are increasing and tariff revision is not uniform. Losses of the Board should not be passed on to the DS/NRS consumers.

Response of PSEB

All across the country, different categories of consumers are charged different tariff rates and any revision in tariff is rarely uniform. PSEB only implements the tariff as approved by the Commission. Every cross subsidization with respect to average cost of supply is done as per the directions of Tariff Order issued by the Commission.

View of the Commission

The Commission processes the ARR according to its notified Regulations, determines the cumulative revenue gap and accordingly revises the tariffs for various categories of consumers, to recover the same.

Issue No.3: Late payment of subsidy

Late payment of subsidy by the state government should be considered as a default by the applicable category of consumer and late payment surcharge may be levied by the Board on the Government. In case of default in payment of this subsidy, supply to AP consumers is not disconnected. At the same time, non-payment of dues attracts disconnection for other categories.

Response of PSEB

The Commission had allowed PSEB an amount of Rs.35.56 crore for FY 07-08 on account of interest levied on delayed payment of subsidy by the GoP in its Tariff Order of FY 2008-09. Likewise, PSEB has prayed to the Commission to allow interest payment owing to late payment of subsidy by the Government.

View of the Commission                                          

The Commission had specified that subsidy on account of free supply of electricity to AP consumers would be paid by the Govt. in four quarterly installments at the beginning of each quarter. In the event of delay on the part of the Govt., it is liable to pay interest on the delayed payment which compensates the Board. However, the manner of payment of subsidy has now been reviewed in Chapter 6 of this Tariff Order.

Objection No.3: The Ludhiana Electroplaters Association

Issue No. 1: Establishment Expenses

PSEB should reduce the excessive expenses especially on establishment which has projected more than 50% increase and tariff need not be increased. Thus the Board needs to curtail their undue expenses and adopt austerity measures. The industry cannot absorb the inefficiency and lapses of PSEB in view of the present melt down/ crisis in industrial sector.

Response of PSEB

For FY 09-10, PSEB has demanded Rs.3455 crore of employee expenses as against the Rs. 2244  crore for FY 08-09 keeping in view of the following two factors:

·          Increase on account of impending implementation of 6th Central Pay commission/5th Punjab Pay Commission’s Recommendations that calls for additional expenses of Rs.1008 crore on account of arrears w.e.f. 01.01.2006.

·          Annual increments, normal increase in Dearness Allowance & other allowances as announced from time to time.

PSEB has undertaken a number of austerity measures to decrease per head employee expenses which are as under:

·          PSEB has carried out very limited recruitment. Only need based hiring has been done to keep pace with increase in the number of substations, number of new connections, addition of thermal plants (GHTP Stage II)

·          Board has withdrawn the compassionate employment to dependents of deceased employees by providing solatium benefits, thereby reducing the manpower.

·          It has reduced the “Generation Incentive Allowance” by 10% w.e.f. March, 2003.

·          Board has done outsourcing of Security personnel posted at various locations by PESCO/pvt. agencies.

View of the Commission

The Commission allows employee cost/establishment expenses only on normative basis, irrespective of the amount claimed by the Board.

Also, refer para 4.9. 

Objection No. 4: Consumers Protection & Grievances Redressal Forum (Regd.)          

Issue No. 1:  T & D Losses

T & D losses should be brought down from the present level to 15-18% by taking effective steps and persuading the consumers to save electricity.

Response of PSEB

Following steps have been undertaken to increase public awareness for reduction of T&D losses:

·          For promotion of efficient use of Energy and its conservation in the State, comprehensive & time bound proposals for mandatory use of Efficient Lighting System for Commercial, Residential, Agricultural and Industrial consumers have been prepared and are under process.

·          Paper reading contests were/are organized in different schools of Punjab in which students participated in particular and public in general .They were encouraged to save energy  through these contests and through distribution of leaflets, handbills, stickers and literature on Energy Conservation.

·          Issued Commercial Circular 67/2007 and use of CFLs has been made mandatory on all the 10 lakh AP Tube well Kothas (20 lakh).

·          PSEB for its in house requirement has issued re-tender for procurement of CFL's T-8 36 W FTL along with Electronic chokes and HPSV lamps for replacement of present lighting system with Energy Efficient Lighting System in its buildings, colonies, thermal plants, substations etc.

·          PSEB had already launched wide publicity campaigns through all CE/Ops to take the following steps to educate the Public to use CFL’s & other energy efficient lighting fixtures :

a)       Banners & Hoarding be displayed in all office premises, Bill collection centers & main public places, courts & administration offices to educate the public.

b)       All the PSEB employees may ensure use of CFL’s and other energy efficient lighting fixtures in their houses to become role model for others.

c)       Local religious & social institutions be involved to create awareness by playing cassettes, Hokas & distributing pamphlets & bills.

View of the Commission

The Board would require taking multi-pronged action in order to reduce T&D losses including steps to persuade consumers to save electricity. In so far as the latter aspect is concerned, the Board has already been directed to draw up a Demand Side Management Plan which comprehensively addresses all energy conservation issues. The Commission expects that this plan would be finalized during this year and action initiated thereon.

 

Issue No. 2:          Use of CFLs and subsidy thereon

PSEB should support the use of CFLs to propagate the energy saving and there is a genuine need to supply CFLs on subsidized rates.

Response of PSEB

PSEB has already spent Rs.94 lakh (approx.) by launching publicity campaign through print and Electronic Media for educating the General and Industrial consumers about the mandatory use of CFLs and other Energy Efficient Lighting Fixtures and to discourage the use of in-efficient incandescent lamps & conventional tubes (with Electro-magnetic chokes) etc.

a)       PSEB has already issued Commercial Circular 67/2007 and has made the use of CFLs on all the 10 lakh AP Tube well Kothas mandatory. Thus 20 lakh incandescent lamps have been replaced by CFL.

b)       PSEB, for its in house requirement, has issued re-tender for procurement of CFL's, T-8 36 W FTL along with Electronic chokes and HPSV lamps which will be used for the replacement of present lighting system in its buildings, colonies, thermal plants, substations etc.

c)       Ministry of Power, through BEE, launched a scheme named BLY (Bachat Lamp Yojana) through which high quality CFLs are proposed to be made available at Rs. 10 to 15 per CFL. The scheme aims to reduce the CFL price so as to make it affordable. The Board is considering to implement BLY scheme in phased manner i.e.20% of incandescent lamps will be replaced by CFLs upto 2009-2010, 40% upto 2010-2011 and remaining 40% by 2011-2012. There are approximately 47 Lacs DS consumers in PSEB as on 31st March, 2009. Thus 188 Lacs Lamps (4 CFL for each consumer) are proposed to be replaced with CFLs.  However, 3,38,841 incandescent lamps have already been replaced with CFLs by DS consumers themselves upto 31.3.09.

d)       PSEB has formulated a scheme to select one village in each operation division to replace 100% incandescent lamps with CFLs in that village. 196 villages have been provided 100% CFL’s.

e)       Provision of subsidy for any energy efficient program is a prerogative of the Government of Punjab.

View of the Commission

Refer issue no.1 above.

Issue No. 3:  Subsidy

Instead of providing subsidy, quality of supply is the main need. Thus there should be changes in the policy of PSEB in favour of quality supply of electricity.

Response of PSEB

The provision of subsidy for any consumer category is a prerogative of the Government of Punjab. The Board further submits that the issues of Quality of supply emanates from the long length of feeders and distance of the connected consumer from the distribution network. The Board is making all efforts to improve the quality of supply and services to the consumers in rural areas. PSEB has undertaken various HVDS schemes under APDRP to improve quality of supply to rural areas. There are schemes for conversion of L.V.D.S. to H.V.D.S. system. This involves about 9.30 Lacs A.P Consumers. (Presently about 5.16 Lacs consumers are being fed from 3-Phase, 3 Wire system & 4.14 Lacs consumers being fed from 3-Phase, 4 Wire system.) These schemes are to be implemented after the approval of the above schemes by R.E.C. In phase-I (Conversion of 3-Phase, 3 Wire system to H.V.D.S) about 40 schemes have been sanctioned & 6 schemes are under consideration. The work of phase-I is expected to be complete by the end of financial year 2010-11. The phase-II of the project focusing on the conversion of 3-Phase, 4-Wire system to H.V.D.S is expected to be taken up parallely. in the financial year 2010-11 and exclusively in the financial year 2011-12. About 79,000, 3-Phase, 3-Wire consumers have already been converted into H.V.D.S. in the financial year 2007-08 and 2008-09.This conversion from LVDS to HVDS will mean lesser T&D losses and better quality of supply to rural areas.

View of the Commission

Minimum as well as Overall Standards of Performance have been specified in the PSERC (Electricity Supply Code and Related Matters) Regulations 2007. The Commission is presently putting in place a system for monitoring and enforcing these standards.

 

 

Issue No. 4: Use of Power by Malls

One multiplex is using power equivalent to ten villages. The gap between the demand and supply is widening. Therefore, agriculture and industrial sectors, which are main contributor to the state exchequer, need to be given priority.

Response of PSEB

All out efforts are being made to improve the quality of supply and services to the rural & industrial consumers. Board further submits that Malls/ multiplexes are being charged at NRS tariff which are quite higher than domestic rates of supply.

View of the Commission

Section 43 of the Electricity Act 2003 makes it obligatory for a distribution licensee to supply power on demand to any consumer. Accordingly, it is not possible to deny release of new connections. The Board should, however, take effective steps to augment generation capacity and tap power at reasonable rates from all available sources.

 

Issue No. 5:  Overstaffing of PSEB

The PSEB is overstaffed to the extent that 80,000 employees looking after 50 lacs consumers in Punjab, against 40,000 employees looking after 85 lacs consumers in Gujarat. There is need for retrenchment of staff.

Response of PSEB

           No response

View of the Commission

The employee cost of the Board is one of the highest in the country and there is no doubt that urgent steps need to be taken to right-size the Board’s staff strength. The Board has intimated that it has commissioned a study to go into the issue of manpower requirements and methodology for its rationalization. Also refer Objection no.3, issue no.1.

 

Issue No. 6: Losses

The PSEB is incurring losses due to government’s populist schemes. Government is not reimbursing the expenditure incurred by PSEB.

Response of PSEB

Govt. has already passed on the entire amount of subsidy due till 31.03.2009. However, PSEB also submits that the Commission had allowed Rs 35.56 crore for FY 07-08 on account of interest levied on delayed payment of subsidy by the Punjab Government in its Tariff Order of FY 2008-09. Likewise, in ARR FY2009-10 the Commission has been prayed to allow interest payment owing to late payment of subsidy by the Punjab Government.

View of the Commission

Govt. has, by and large, been paying subsidies determined by the Commission for free supply of power to AP consumers, SC DS consumers as well as non-SC BPL consumers. To the extent that payment of subsidy is not in conformity with the mode of payment prescribed by the Commission, interest is paid by the Govt. to the Board.

 

Issue No. 7: Central Grants

State is losing Central grant which would otherwise be available. State policy needs to be rehashed so that full use of Central Grants is made.

Response of PSEB

The Detailed Project Reports for all projects are prepared on the basis of their financial justification & benefit to consumers. These projects are not carried out just to use central grants & subsidies.

View of the Commission

The issue concerns the State Government and the Board.

Issue No. 8: Overdue Payment of Bills

Non payment of electricity bills by Punjab Government and many of its departments causes great loss to PSEB. PSEB should specify the detail regarding outstanding amount and steps taken to recover the amount.

Response of PSEB

All out efforts are made to recover the bills & arrears from the Government departments Surcharge is also levied on Government Departments as in the case of other consumers

View of the Commission                  

           The Commission expects all consumers to pay their electricity bills in time. Recently, Govt. in Department of Power, memo no.1349 dated 14.5.09 has given its consent to adjust the unpaid bills of its Departments amounting to Rs.53.43 crore against Govt. outstandings with the Board.

Also, refer Annexure-IV pertaining to compliance with the Directives.

 

Issue No. 9:  Power Generation

PSEB should enhance the power generation to keep pace with the development activities taking place in the State.

Response of PSEB                                                                                                                                                     

GHTP Unit 3 of 250 MW has been added in FY 08-09 and GHTP unit 4 of 250 MW will go into commercial operation mode soon. Latest Status of Major Power Plants is as below:

a) 1980(3x660) MW  Talwandi Sabo Thermal Power Project

TSPL has been fully handed over to lowest bidder M/s Sterlite. PPA has been signed on 1.9.2008.  Scheduled date of commissioning of first Unit of 660 MW is August 2012 (48 Months from Effective Date i.e 1.9.2008) and subsequent units shall be commissioned with gaps of 4 months each.

b) 1320 (2x660) MW Rajpura Thermal Power Project

Only a single bid of M/s Lanco Infratech ,Gurgaon was received  which was opened with approval from PSERC. High power negotiation committee was constituted under Chief Secretary, GOP. Rate quoted by M/s Lanco Infratech were negotiated by the committee and were approved by Council of Ministers.

c) 2640 (4x660) MW Gidderbaha Thermal Power Project Distt. Mukatsar

This project is to be developed on BOO basis. Gidderbaha Power Ltd, a wholly subsidiary of PSEB has been created to develop the project. Notification to acquire 2432 acres land has already been issued during August 2008. RfQ for the project has been published on 31.10.2008, issuance of RfP is awaiting for want of clearance of coal linkage from Ministry of Coal, GoI.

                In addition, Punjab has been allocated total of 2303.36 MW from 6 no. of UMPP’s (of total capacity 23522.4 MW).This power shall be available as & when these projects will be completed.

View of the Commission

The Board has opted to add additional generation capacity in the State on BOO basis. In the case of Talwandi Sabo Thermal Power Project, the site has already been handed over to the lowest bidder. The Board is seeking fresh bids for Rajpura Thermal Power Project whereas bids are yet to be invited in the case of Gidderbaha Project. There is, however, a need for speeding up the bidding process where it is yet to take place and to closely monitor progress where the project has been allotted.

 

Issue No. 10: Solar Energy

For conservation of the existing sources of power there is a need to harness solar energy for domestic and public purposes. Government should take steps to reduce initial cost.

Response of PSEB

Harnessing of solar energy is being looked after by Punjab Energy Development Agency.

View of the Commission

Government had in November, 2006 notified its policy for encouraging power generation from New and Renewable Sources of Energy which also includes solar energy.

 

Issue No. 11:  Nuclear Energy

Keeping in view the low cost of generation and other advantages of nuclear energy, nuclear plant should be located in Punjab as well.

Response of PSEB

Advantages of nuclear energy are well known and matters regarding installation of nuclear energy shall be followed as per the guidelines of the Central/ State Government. Site selection committee of NPCIL Mumbai (under Deptt. of Atomic Energy) had listed 3 sites out of 20 sites proposed in Punjab during 1983. After preliminary investigation Patran site near Daroli was considered.

View of the Commission

The development of nuclear power in India is taken care by NPCIL and Department of Nuclear Energy. These bodies are governed by the regulations framed by the Central Government and thus there is a need for the Govt. and the Board to pursue the matter with the concerned quarters.

 

Issue No. 12:  Theft

PSEB should take effective steps to stop theft of energy. PSEB staff has an important role to play in this regard.

Response of PSEB

Consistently efforts are being made for reducing theft. More than 25 lacs connections were checked and over 3 lacs detections made in FY 2007-08.

View of the Commission

The Electricity Act 2003 provides for stringent action in the case of theft of energy. The Govt. has also set up special police stations for the investigation of such offences and special trial courts have also been designated. The Commission expects the Board to control theft of electricity in right earnest. The efforts of the Board would be more focused if it segregates technical and commercial losses, undertakes energy audit upto the distribution level and continuously updates base line data to make energy audit more effective.

 

Issue No. 13:  Special Police Stations

PSEB should indicate the number of police stations and places where these will be established with timeline.

Response of PSEB

5 No. Police Stations have been created to deal with theft of power, one each at Patiala, Ludhiana, Jalandhar, Amritsar & Bhatinda with  45 staff members (including Inspectors, Head Constables , Constables)  and five  vehicles & motorcycles  sanctioned for these police stations. These police stations are functioning since 02.03.09.

View of the Commission

The factual information which was sought has been furnished.

Issue No. 14:  New Electricity Connections

PSEB is not having adequate electricity to meet the requirement. So, sanctioning of new connections by PSEB is a kind of cheating and misrepresentation and liable of prosecution under the Criminal law. PSEB should not be allowed to do so.

Response of PSEB

Providing electricity to all is a universal service obligation and Board cannot deny any consumer from seeking new connection.

View of the Commission

Refer Issue no.4 above.

 

Issue No. 15:  Staff Pay versus Performance

Despite the poor fiscal health of PSEB, the PSEB employees are amongst the highest paid in the country. The cost of generation of electricity, T& D losses, Supply to consumers, billing and recovery of bills do not justify the performance of the employees. There is need to prune the staff and its pay, perks and pension.

Response of PSEB

For FY 09-10, PSEB has demanded Rs.3455 crore of employee expenses keeping in view of the following two factors:

·          Increase on account of impending implementation of 6th Central Pay commission/ 5th Punjab Pay Commission’s Recommendations that calls for additional expenses of Rs.1008 crore on account of arrears w.e.f. 01.01.2006.

·          Annual increments, normal increase in Dearness Allowance & other allowances as announced from time to time.

PSEB has undertaken a number of austerity measures to decrease per head employee expenses which are as under:

·          PSEB has carried out very limited recruitment. Only need based hiring, of 250 engineers, has been done to keep pace with increase in the number of substations, number of new connections, addition of thermal plants (GHTP Stage II)

·          Board has withdrawn the compassionate employment to dependents of deceased employees by providing solatium benefits, thereby reducing the manpower.

·          It has reduced the “Generation Incentive Allowance” by 10% w.e.f. March, 2003.

·          Board has done outsourcing of Security personnel, posted at various locations, by PESCO/ pvt agencies.

View of the Commission

Refer issue no.5 above. Effecting cuts in the salaries of existing Board employees may not be legally tenable.

 

Issue No. 16:   Generation cost

The cost of generation in Punjab is one of the highest in the country. The generation cost of PSEB needs to be reduced.

Response of PSEB

PSEB’s Thermal Power Plants are one of the most efficient stations of their age across the country. However, it is mentioned that PSEB’s thermal plants are non pithead plants and thus their coal costs involve significant amount of coal freight costs resulting in higher cost of generation.

View of the Commission

The Commission allows generation costs on the basis of CERC norms. The Board, however, incurs high transportation costs for coal used in the thermal power stations which increases the generation cost as compared to pit head plants.

Issue No. 17: Free Electricity to Employees

There is no justification for supply of free electricity to employees of PSEB. This   should be stopped.

Response of PSEB

Free units of electricity (max.155 units per month) are provided to motivate the staff to enhance/ maintain the working efficiency. Despite regular retirements, in the last five years there has been no new recruitment. Further there is a continuous increase in quantum of work pertaining to increase the number of consumers and energy handled. The free supply of electricity is assumed to be a part of their salary structure and is given as a perk as is the case in other government organizations.

View of the Commission

Existing terms and conditions of service of the Board employees include free supply of electricity upto certain limits. As brought out in issue no.15 above, it may not be legally tenable to alter the terms and conditions of existing Board employees. Moreover, free electricity is included in the employee cost of the Board, increase in which is being allowed as per the Commission’s Regulations.

 

Issue No. 18: Tariff

PSEB should put its own house in order (in terms of the gap between the Revenue and Expenditure) to avoid increase in tariff.

Response of PSEB

Resultant gap in expenditure & revenue amounts does warrant an increase in tariff.

View of the Commission

The Commission processes the ARR according to its notified Regulations, determines the cumulative revenue gap and accordingly revises the tariffs for various categories of consumers, to recover the same.

Objection No. 5: Vardhman Spinning & General Mills

Issue No.1: General

An estimation of revenue requirement of PSEB has been made as per the principles laid down in The Electricity Act 2003, CERC‘s regulations 2004, Tariff orders passed by the Commission & decision of Appellate Tribunal for electricity. It is observed as follows:

a)       Board should maintain a separate Income & Expenditure account as approved by the Commission along with balance sheets as comparison tool between actual & approved expenditure.

b)       Need of fixing up a limit on maximum amount of power that can be supplied to agriculture at subsidized rate is stressed.

c)       Late payment of disbursement of subsidy by Government is putting undue pressure on PSEB’s finances, as it has to resort to short term borrowings from the market.

d)       Exact amount of capital diversions towards meeting revenue requirements should be calculated.

e)       PSEB should take action to recover defaulting amount of Rs 489 crore from different zones.

Response of PSEB

a)    Statement of Annual Accounts is prepared as per Electricity (Supply) Annual Account Rules of 1985 & as such it is infeasible to prepare separate Income & Expenditure Account.

b)    It is the prerogative of the Commission to consider this request/ suggestion.

c)     The Commission had allowed an amount of Rs 35.56 crore for FY 07-08 on account of interest levied on delayed payment of subsidy by the Punjab Government in its Tariff Order FY 2008-09. Likewise, PSEB has prayed to the Commission in the ARR to allow interest payment owing to late payment of subsidy by the Punjab Government.

d)    Accounts for FY 08-09 are not yet finalized. However, audited accounts of FY 07-08 have been sent to the Commission.

e)  All out efforts are being made by field offices to recover the defaulting amounts.

View of the Commission                                         

a)       The Commission has prescribed the format in which the ARR of the Board is to be submitted. It is true that costs claimed by the Board in the ARR may at times not reflect the actual costs that have been approved by the Commission in the past. However, the Commission follows a consistent policy in allowing various elements of cost and information as to the extent to which costs are likely to be allowed irrespective of the claims made in the ARR can be readily inferred from the Tariff Orders of the Commission.

b)       It may be difficult to evolve consumption norms for AP consumers given the fact that there are variations in the agro-climatic conditions and differing cropping patterns in the State. Even if such a norm were to be evolved, practical enforcement thereof would not be possible in the absence of complete metering of agricultural connections.

c)       Refer para 2.16 and para 3.15.

d)       Amount of diversion of capital funds has been worked out by taking into account the audited accounts for 2007-08. Refer para 2.14.11.

e)       On the whole, collection efficiency of the Board is presently at a satisfactory level. However, arrears undoubtedly need to be brought down to the minimum possible level.

Issue No.2: T&D losses

a)  The T&D loss level may not be revised upward from 19.5% in FY 2008-09 against 21% claimed by the PSEB in ARR FY 09-10. Keeping in view the wide disparity in T&D losses, as given in ARR FY 09-10, reduction in this loss level by 1% i.e 18.5% is achievable. Circle wise yearly T&D loss information should be provided in the ARR so as to identify areas lagging behind.

b)  Bulk Supply and Commercial category, having connected load above 50KW, should be made to maintain power factor of 0.9 by introducing power factor incentive & surcharge.

Response of PSEB

a)       A number of measures to reduce the T&D losses have been taken by the Board. In-fact, PSEB is achieving the targets set by itself i.e 22.70 % of T&D loss in FY 07-08 (achieved 22.53%). Circle wise yearly T&D loss information stands supplied to the Commission.

b)       It is prerogative of the Commission to introduce power factor surcharge & incentive for Bulk Supply consumers.

View of the Commission

a)   Refer para 4.2.  

b)   Refer para 5.3.1.

Issue No.3: Subsidy

a)       Power supplied to agriculture sector above approved level of consumption should be priced at actual power purchase price. Further, determination of this cost should be carried out at marginal power purchase cost on short term basis.

b)       Rs 3260 crore subsidy at the end of FY 08-09, which has not been released by the Government, should be released & interest due on account of late payment of subsidy should be deducted from the interest due on Government loans to the Board.

Response of PSEB

a)       It is the Commission’s prerogative to consider.

b)       Full subsidy of Rs 2601.7 crore from GoP for FY 08-09 has been received. The Commission had allowed an amount of Rs 35.56 crore for the FY 07-08 on account of interest levied on delayed payment of subsidy in its Tariff Order of FY 2008-09. Likewise, PSEB has prayed to the Commission to allow interest, due to late payment of subsidy by the Government, for the FY 08-09 as per the ARR. The amount will be reviewed in True up exercise of FY 2008-09 by the Commission in subsequent Tariff Order.

View of the Commission

a)  Refer issue no.1 (b) above.

b)  Refer Objection no.2, issue no. 3.

Issue No.4: Interest & Finance Charges                     

a)    While disallowing Rs 100 crore from interest claimed by the board on account of diversion of funds, the Commission has restricted the disallowed amount to the interest due on Government loan. There is a huge mismatch (amounting to Rs 4000 crore) between the assets and liabilities. Thus the board is constantly undertaking a corresponding burden of unproductive debt, which should not be considered as legitimate revenue expenditure for its pass through in the ARR.

b)  Full amount of interest, on diversion of funds, should be disallowed for FY 08-09 during true up exercise as well as for ensuing year FY 09-10. Further the diversion of funds amount should be updated with latest figures available.

c)   Short term loans taken for business activities should only be charged to the ARR and recovered from the consumers. The mismatch between the ARR approved by the Commission and actual expenses incurred by the Board should be met through internal accrual whereas due interest, on the subsidy, should be recovered from the Government.

d)  PSEB has been submitting very high working capital. The Board calculation of working capital requirement, using 2 months fuel cost as per CERC norms, is not in line with the Commission’s norm of 1 month for the same.

Response of PSEB

a)       Only interest on debt is allowed as revenue expenditure and justification for these interest & finance charges is mentioned in the ARR.

b)       The Commission has been disallowing interest of Rs 100 crore on account of diversion of funds to Board & has likewise disallowed Rs 289 crore to Government in year 2007-08 & Rs 209 crore for year 2008-09. However, reduction of disallowance to Government was due to adjustment of Rs 1362 crore subsidy against loan. Board had to raise short term loans to bridge this gap and should not be burdened with any more disallowance on this account.

c)       Apart from short term loan for business activities, it has to undertake short term loans for Rs 1362 crore of subsidy adjusted for Punjab Government loan & Rs 501 crore for non payment of excess interest paid to the Government.

d)  It has complied with CERC norms while taking two months fuel cost as basis for evaluation of interest on Working Capital.

 View of the Commission                                                                

a & b)   Refer  para 2.14, para 3.14 and para 4.13.  

c)  Refer para 2.16 and para 3.15.

d) The Commission allows working capital as per its notified Regulations. Refer para 2.14.6, para 3.14.10 and para 4.13.10.

Issue No.5: Over estimation of Loan requirement for capital expenditure

PSEB has been submitting very high Capital Expenditure against that approved by the Commission in various Tariff orders and the Commission should look into investment projections given by the Board for realistic assessment and likewise approve interest cost for capital works for FY 09-10.

Response of PSEB

For FY 08-09 & FY 09-10, loan requirement has been worked out on the basis of Annual Plan approved by the competent authority.

View of the Commission                                                                                                   

Refer para 4.13.2.

 

Issue No.6: Over capitalization of Ranjit Sagar Dam

Cost arising due to overcapitalization of RSD should be disapproved for revenue requirement purpose.

Response of PSEB

The Commission in its order dated 13.9.2007 has addressed this issue and has stated in para 2.6 that for the reasons brought out, the Commission is of the view that it is inadvisable and perhaps even impossible to re-determine the cost of RSD Project at this stage. The order further states that in so far as apportionment is concerned, this seems, on the whole, to have been fairly accomplished by the State Government with an open mind on the subject. Also, the issue was reviewed by the Chatha Committee which after going into all relevant aspects recommended that the apportionment of 79.1% and 20.9% between PSEB and the Irrigation Branch be retained. The Commission, accordingly, held that no interference is called for in the already determined and allocated cost of RSD Project.

View of the Commission

The Commission has in its Order of 13.09.2007 addressed the issue of RSD cost. Appeals against this Order are, however, pending before the ATE.

 

Issue No.7: Employee Cost

PSEB has been unable to control its employee cost and hence their employee expenses need to be capped for FY 07-08 & FY 08-09. For FY 09-10, if employee cost has to be increased, this increase should not be more than inflation for the year.

Response of PSEB

PSEB has undertaken a lot of measures to reduce its employee costs as discussed in the ARR. Employee costs consist of following uncontrollable factors that PSEB is incurring on actual basis

·          Annual Increments, normal increase in Dearness Allowance & other allowances as announced from time to time.

·          Terminal benefits, out flows to the retired employees and contribution to the terminal benefit for the existing employees.

·          BBMB Employee expenses, out flows on account of payments to employees of BBMB Plant.

These costs are in no way related to WPI/Inflation and hence the Commission is requested to allow these on actuals.

 

View of the Commission

Refer Objection no.4, issue no. 5.

Issue No.8: R&M Expenses 

In absence of any specific proposal ,which warrants an increase by over 10%; R&M expenses should be kept at approved level for the year at Rs 354.53 crore for FY 08-09  and for the year 2009-10, it may be increased by 7% WPI over approved figures for FY 08-09.

Response of PSEB

R&M expenses have been increased keeping in view additional assets created during the year and is in compliance with Tariff order FY 08-09 where the Commission has allowed PSEB to take into account assets added during the year.

View of the Commission

Increases in R&M expenses are allowed only as per the Commission’s Regulations.

 

Issue No.9: Depreciation charges

Depreciation charges have been calculated at the rates approved by the Commission in its Tariff order 2008-09. The Board has claimed an excess amount under this head for the FY 09-10.

 

Response of PSEB

Depreciation has been calculated at the rates of FY 07-08. New assets are added every year which change the asset mix and likewise depreciation rates have been kept at level of FY 07-08.

View of the Commission

Depreciation charges in 2009-10 will also be allowed as per rates approved by the Commission.

 

Issue No.10: Cross Subsidy

Category-wise cost of supply should be worked out. As per the National Tariff Policy, tariff of subsidized class of consumers should be increased suitably in next two years to bring it in the range of +20% of combined average cost of supply and likewise tariff of LS consumers may be rationalized and tariff of subsidized class may be increased.

Response of PSEB

LS tariff cross subsidy level has been gradually reduced from 22% in Tariff Order 2007-08 to 17.8% in T.O. 2008-09 and an expression of interest has been floated for carrying out consumer-wise cost of supply study.

View of the Commission                                    

A road map for reduction in cross subsidy has been notified in PSERC Tariff Regulations and the Commission is progressively moving towards that objective. The Board has already been directed to carry out a study of the category-wise cost of supply and it is only when these inputs are available that category-wise cost of supply can be worked out. Also refer Chapter 6 of this Order.

 

Issue No.11: Peak Load Exemption Charges (PLEC)

The Board has requested for review of PLEC charges in the ARR. In this regard, the following is submitted:

i)         Commercial consumers should also be charged additional rate of PLEC as done by MPERC who have levied 15% surcharge for energy consumed during evening peak load period by non-industrial and shopping mall.

ii)       ToD metering should be introduced for levying PLEC charges on actual consumption basis instead of the present practice of full exempted load. The meter installed in the LS industrial consumers has the features of recording demand and energy on ToD basis. MPERC has implemented the same.

Response of PSEB

PLEC is being levied since during peak load hours, maximum demand shoots up due to lighting load of DS, NRS and industrial consumers and thus, Board has to restrict the demand during this period and accordingly peak load restrictions are applied. The consumers drawing power during this period over and above the permissible limits are required to pay the PLEC charges more as PSEB has to purchase costly peak load power to meet the demand during peak load hours. For supplying power during peak hours it enters into advance contracts with the traders and hence, liability is fixed. Therefore, ToD metering is unjustified. However, it is the prerogative of the Commission to decide who receives exemption from these charges.

View of the Commission

Regarding levy of PLEC charges on actual consumption basis, refer para 5.7.4. The issue of extending the applicability of PLEC to other categories of consumers will be separately examined.

Objection No.6: M/s S.S. Alloys & Steel Inds., Dashmesh Castings (P) Ltd., Shiva Castings Private Ltd.

Issue No. 1: One Time Contract Demand Charges

It is requested to delete the clause one time contract demand charges which are being  levied as per ESR 51.2.7, 51.2.7.1, 51.2.7.2 if the CD is above 60% and upto 80% @ Rs.200 per KVA & above 80% @ Rs. 300% per KVA. Thus these charges are payable only on the basis of sanctioned load on KW basis.  Now the charging of load has been changed from KW to KVA and Advance Consumption Deposit (ACD) and Service Connection Charges (SCC) are applicable on KVA basis. Earlier the consumer had the option to restrict his demand as per the nature of the industry and for demand exceeding 60% one time contract demand charges were payable for 11 KV consumers but exempted for 33 or 66 KV consumers.

Response of PSEB

Charges are levied as per Electricity Supply Code & General Conditions of Tariff & Schedules of Tariff approved by the Commission. Presently, no one time contract demand charges are applicable.

View of the Commission

One time contract demand charges are not leviable as per the General Conditions of Tariff approved by the Commission.

Objection No.7: Steel Furnace Association of India

Issue No. 1: T & D Losses

The higher T&D losses claimed by the PSEB for the year 2007-08 and 2008-09 should not be allowed. For the year 2009-10, reducing the loss target by 1% as recommended by Abraham Committee, T & D loss level of 18.5% should be achievable.

Response of PSEB

A number of measures to reduce T&D losses have been taken and successfully achieved its own target i.e against 22.70 % in FY 07-08, PSEB achieved 22.53%. However, any further reduction will require significant efforts and resources and reducing below 19.5% for FY09-10 may not be practical and is out of sync with law of diminishing returns.

View of the Commission

Refer para 4.2.

Issue No. 2: Non Payment of Subsidy by the State Government

Government may be asked to provide subsidy amount due, along with interest cost. Further power supplied to agriculture sector, over and above the approved level of consumption, should be charged at actual power purchase cost. Similarly, subsidy on account of free power to SCs, non SCs domestic consumers, should be calculated and provided to PSEB.

Response of PSEB

It is the Commission’s prerogative to consider. However, it is informed that Board has received full subsidy of Rs 2601.73 crore from GoP for FY 08-09. The Commission had allowed an amount of Rs 35.56 crore for FY 07-08 on account of interest levied on delayed payment of subsidy by the GoP in its Tariff Order of FY 2008-09. Likewise, it is prayed that interest payment owing to late payment of subsidy by the GoP, be allowed as per ARR.

View of the Commission

Refer Objection no. 2, issue no.3.                              

Issue No. 3: Interest & Finance Charges – working capital & over estimation of capital expenditure for loan

    a)  PSEB is adopting different methods for calculating working capital resulting into higher projection of working capital. Commission may follow its own regulations

b) PSEB projects very high capital expenditure thereby claiming high loan    requirement. Accordingly, only reasonable expenditure be approved.

c)  As per decision of the APTEL, the interest on entire amount of the diverted funds should be disallowed.

Response of PSEB

a) CERC norms are followed while taking two months fuel cost as basis for evaluation of   Interest on Working Capital.

b)  Loan requirement have been worked out on the basis of Annual Plan approved by the competent authority.

c)  The Commission has been disallowing interest of Rs 100 crore on account of diversion of funds and likewise disallowed Rs 289 crore for Government in year 2007-08 & Rs 209 crore for year 2008-09.However, this reduction of disallowance to Government was due to adjustment of Rs 1362 crore subsidy against loan. However, Board had to raise short term loans to bridge this gap. Hence, PSEB shouldn’t be burdened with any more disallowance on account of diversion of funds.

View of the Commission                                     

a)       Refer para 2.14.6,  para 3.14. 10 and para 4.13.10.  

b)       Refer para 2.14.3, para 3.14. 2 and para 4.13.2.  

c)       Refer para 2.14.11, para 3.14.11and para 4.13.11.  

 

Issue No. 4: Employee Cost

The employee cost should be retained at the approved level for the year 2007-08, 2008-09. For the FY 2009-10, the increase in employ cost may be linked with increase in WPI.

Response of PSEB

PSEB has undertaken a lot of measures to reduce its employee costs as discussed in the ARR. Board also submits that Employee costs consists of following uncontrollable factors that PSEB is incurring on actual basis

·          Annual Increments, normal increase in Dearness Allowance & other allowances as announced from time to time

·          Terminal benefits, out flows to the retired employees and contribution to the terminal benefit for the existing employees

·          Out flows on account of payments to employees of BBMB

      These costs are in no way related to WPI and hence should be allowed on  

      actuals.       

 

View of the Commission

Refer para 2.10, para 3.10 and para 4.9.

Issue No. 5: R & M Expenses

In the absence of any specific proposal the R&M expenses, for the FY 09-10, should be increased by 10% over the expenses approved by the Commission for the year 2008-09.

Response of PSEB

R&M expenses have been increased keeping in view the additional assets being created during the year and is in compliance with Tariff order FY 08-09 whereby the Commission has allowed to take into account the assets added during the year.

View of the Commission

           Refer para 4.10.       

Issue No. 6: Depreciation charges

The depreciation charges claimed by the Board for FY 2009-10, should be approved after verification of actual figures related to addition in fixed assets.

Response of PSEB

Depreciation has been calculated at the rates of FY 07-08. New assets are added every year which change the asset mix. Likewise depreciation rates have been kept at level of FY 07-08.

View of the Commission

Actual figures for claiming depreciation are verified at the time of annual audit of assets and get reflected in the ‘true up’ for that year.

Issue No.7: General

The state industry is reeling under recession, therefore:

a)       Tariff of the subsidizing class i.e. industry should be reduced by increasing the tariff of subsidized class.

b)       Minimize the power cut on large industrial EHT and HT consumers.

c)       PLEC charges may be charged on big commercial consumers during peak load hours.

Response of PSEB

a) LS tariff‘s cross subsidy levels have been gradually reduced from 22% in T.O 2007-08 to 17.8% in T.O 2008-09. However, it is the Commission’s prerogative to consider and decide whether tariff of subsidized class is to be increased or state Government asked to compensate the Board through explicit subsidy.

b) All out efforts are being made by the Board to minimize power cuts on all categories of consumers.

c)  It is Commission’s prerogative to consider the matter.

View of the Commission                     

a)       Refer para 6.3.5.                 

b)       The interests of all categories of consumers are to be kept in view at the time of imposing power cuts.

c)       Refer Objection no.5, issue no. 11.

 

Objection No. 8: Northern Railway

The issues pertaining to  HT rebate, penalty for exceeding contract demand, higher tariff as compared to tariff of central generating stations, time bound revision of contract demand, power factor rebate, simultaneous metering of maximum demand, incentive for timely payment, rebate for newly electrified routes/sections, change of tariff category for domestic consumers, payment through  single bill, energy requirement for traction, implementation of MYT, rebate for maintenance and operation of distribution net work, minimum charges for supply on rural feeders, time for release of new connections/enhancement of load and meter testing charges are the same as taken up by the objector in the ARRs for FY 2007-08 and/or FY 2008-09 and the views of the Commission, after due examination afresh, are the same as expressed in the respective Tariff Orders. The remaining issues are dealt with hereunder:

Issue No.1: Traction Tariff

Northern Railway has been making timely payment, drawing uninterrupted power supply round the clock, and is contributing negligible T&D losses into the system. So, existing tariff rates @Rs 4.70 per unit for traction is not justified as average cost of power purchase for PSEB is only Rs 3.67 per unit.

Response of PSEB

Cross subsidy for Railway Traction is being gradually reduced in line with National Tariff Policy & PSERC Regulations and cross subsidy levels vis-à-vis Combined Average Cost of supply has been reduced from 39.73% in FY 07-08 to 34.28% in FY 08-09.  However, it is the Commission’s prerogative to decide.

View of the Commission                                  

Attention is invited to para 9.18 of Tariff Order 2004-05.

 

Issue No.2: Discriminatory Treatment of Traction Tariff

Existing traction tariff @ Rs 4.70 per unit is much higher than HT tariff @ Rs 3.95 per unit. It is in violation of directives of Ministry of Energy not to charge railways at a rate higher than HT industry and quoted the Appellate Tribunal of Electricity (ATE) judgment dated 28.11.07 in case of Northern Railway v/s UERC in appeal No. 219 of 2006 whereby ATE said that higher tariff to railways remained unexplained when Railways bears the cost of infrastructure network which is reduces the cost of supply.

Response of PSEB

Fixation of Traction Tariff is the prerogative of the Commission.

View of the Commission

Refer issue no.1 above.

 

Issue No.3: Cost of Supply

The Commission has been directed by Hon’ble Appellate Tribunal to determine the cost of supply of electricity to different classes and categories of the consumers. If category wise cost of supply is carried out, railway’s cost of supply would be the lowest as railways takes supply at 132/220 KV and as per National Tariff Policy, Tariff must be linked to cost of service and thereby traction tariff should be worked out and tariff should be progressively reduced to reflect cost of supply.

Response of PSEB

PSEB has floated Expression of Interest for Voltage wise & consumer category wise study of cost of supply. Copy of the report/study will be provided to the Commission as soon as it is available/ completed.

View of the Commission

Refer Objection no.5, issue no.10.

 

Issue No.4: T&D losses

T&D loss for FY 2009-10 should be less than 19.5% in line with recommendation of Abraham Committee as PSEB has set itself T&D loss level of 19.5% for FY 09-10. 90% AP consumption is unmetered and forms major chunk of T&D loss, so it should be brought into metering net to reduce T&D losses.

Response of PSEB

PSEB has undertaken a series of measures to reduce T&D losses and projected to reduce T&D losses to 19.5% by 2009-10. In states/ utilities where the T & D losses are on a higher side say 30-40%, it may be possible to achieve reduction in T & D losses to the extent of even 2-3% per annum. But in case of PSEB, where losses have been projected to reduce from 21% in FY 08-09 to 19.5% in FY 09-10, further reduction of T&D losses by even 1% is a very difficult task and requires significant amount of effort and resources. Moreover, considering energy handled by the system is increasing every year any further reduction from 19.5% seems impractical. PSEB plans to increase the no. of sample meters from 5.56% to 10% by the end of the year 2009-10 so that more accurate estimation of AP consumption could be carried out.

View of the Commission       

Regarding T & D loss reduction, refer para 4.2.

As regards 100% metering of AP consumers, refer Annexure IV pertaining to Compliance with the Directives. Further, in order to assess consumption in the AP category more accurately, the Commission had appointed an independent Agency. The findings in the report submitted by the Agency and accepted by the Commission, have been considered in this Tariff Order.

 

Issue No.5: Revenue gap

Revenue gap should be supported by Government subsidy and tariff of genuine consumers like railways should not be hiked. There should be reduction in Traction Tariff for FY 09-10. Tariff should be based on cost of supply to railways & at a level lesser than the tariff for HT Consumers.

Response of PSEB

Same as issue no. 3.

However, it is prerogative of the Commission on railway tariff lower than HT tariff.

View of the Commission                         

The funding of the revenue gap by subsidy is the prerogative of the Govt. The Commission takes all relevant factors into account in determining tariff applicable to different categories of consumers.

Issue No.6: Metering for Railway Traction

Meter for railway traction should be provided at traction substations instead of line sub station to minimize line losses.

Response of PSEB

Metering is being done at feeding substation as per Character of Service for Railway Traction.

View of the Commission

The issue will be separately examined by the Commission.

 

Issue No.7: Alternate supply arrangement for traction and levy of load violation charges

It is submitted that whenever there is a supply failure from PSEB & till such time the supply failure persists, the instances of maximum demand exceeding contract demand due to feed extension of adjacent TSS being fed by PSEB and vice versa should be ignored & no load violation charges should be levied for that period.

 

 

 

Response of PSEB

PSEB makes all out efforts to supply power to its consumers in every possible way and consumer should contact Board in case of any exigencies.

View of the Commission                   

The issue will be separately examined by the Commission.

 

Objection No.9: M/s Mawana Sugars Ltd. (formerly, Siel Ltd.)

Issue No. 1: Cost of Supply

As per tariff regulations under The Electricity Act 2003, the tariff should progressively reflect the cost of supply whereas as per 1998 Act, it was Average Cost of Supply.

Response of PSEB

PSEB has floated an Expression of Interest for carrying out Consumer category-wise & voltage-wise cost of supply study. On the completion of the study, actual cross subsidy /subsidy will be established for further action.

View of the Commission                                

Refer Objection no.5, issue no.10.

 

Issue No.2: Cross-Subsidy

The Commission has taken T&D losses at 25.52% without any basis and placed the burden on specified consumers & not general consumers. The fixation of tariff based on average cost of supply as presently done leads to cross subsidization of other consumer categories like industrial & commercial consumers. Tariff should be based on cost of supply, category & voltage wise.

Response of PSEB

Same as (1) above.

View of the Commission

Refer para 4.2 in respect of T&D losses. Refer to Objection no.5, issue no.10 for tariff to be based on category-wise and voltage -wise cost of supply.

 

Issue No.3: Interest

As per Hon’ble Supreme Court, ARR should contain only general borrowings and if interest relatable to borrowing on account of repayment of subsidy is included, the details have to be worked out by the Commission.

Response of PSEB

PSEB has prayed to the Commission to allow interest not only for general borrowings but also for delayed payment of subsidy, adjustment in subsidy by recall of loan of Rs.1362 crore, non refund of Rs.501 crore by GoP etc.

View of the Commission              

Refer para 4.13.

 

Issue No. 4: RSD cost

a) As per Appellate Tribunal of Electricity’s (ATE) order dated 26.5.06; ATE has questioned the distribution of RSD cost. However, the Commission order of 13.9.2007 addressed this matter in a partisan way by relying on the Chatha Committee’s report which was made in year 2005 much before tribunal’s order.

b) The ARR 09-10 is without any specific tariff proposal and the same has been submitted in a mechanical manner without giving proper heed to the orders of Hon’ble Supreme Court & Hon’ble ATE.

Response of PSEB

a) Issue of RSD project cost has been addressed in the Commission’s Order of 13.09.2007 .However, some consumers have filed an appeal in ATE against the Commission’s Order of 13.09.2007 and the matter is still pending.

b)  PSEB submits that as per past experience, the revenue gap is finally determined by the Commission by applying its own yardsticks / norms & is much lesser than what is projected by the PSEB in the ARR and hence, PSEB has not submitted its tariff proposal.

View of the Commission

a)       Refer Objection no.5, issue no.6.

b)       It is indeed desirable that the ARR should include specific tariff proposals as well. However, increase in tariff is to be effected to cover the gap between projected revenue and expenditure of the Board. An estimation of the tariff increase is therefore, possible even if the ARR does not specify the proposed tariff increases.

 

Issue No. 5: Fuel

There is a substantial reduction in crude oil prices leading to reduction in transportation cost of coal & fuel oil. Consequently, any increase in fuel cost projections is totally unjustified.

Response of PSEB

Any variation in fuel cost is duly accounted in the fuel cost adjustment (FCA) petition submitted to the Commission from time to time.

View of the Commission

Refer para 4.7. The transportation cost of coal and the oil is paid by the Board on actual basis to the railways/transporters.

 

Issue No. 6: Power Purchase

a) Power purchase figures are quite high and percentage increase in rupees amount is quite higher than rise in quantity. PSEB is purchasing large amounts of UI power. It needs to purchase power in a judicious & economic manner and should resort to demand management.  

b) Purchases through UI rate is being done either during paddy season or during peak load for meeting unexpected consumption of agricultural sector or other consumers for which industry is not responsible and likewise extra cost should be borne by the concerned sector.

c)  The Commission may fix the quantity and rate for purchase of power.

d)  The Commission may issue a directive  for setting up new power plants by raising funds from the market/ on BOOT or BOO basis (though preferably on its own) in addition to renovation & extension of existing plants. Co-generation and captive generation should be encouraged.

Response of PSEB

a) PSEB mainly rely on supplies from long-term contracts apart from its own generation. However, it is not feasible to meet short term, seasonal or peaking demand through long-term contracts only. Power trading is essential for meeting the short term demand at an optimum cost.  The traded power is sourced from coal/ hydro power plants, of which power production cost is mostly not more than Rs 4 per unit. But the price in most of the time blocks is much higher. The apparent reasons for rising trend in the sale price of short-term traded electricity are; increasing shortages of electricity increase in maximum rate under UI, absence of regulatory framework on price and increasing fuel costs. In case PSEB does not resort to traded power and/or does not requisition liquid/other costly fuel, long duration power cuts will be imperative on all categories of consumers which shall play havoc on State’s economy. Purchase of traded power and/or over drawl under UI mechanism allows PSEB to tide over short term/peak/seasonal shortages to certain extent thus containing/avoiding power cuts on its consumers.

b)  It is the Commission’s prerogative to decide on this matter.

c)  Placing an authorized cap rate on traded power unit cost is not feasible since its cost is determined by market forces and the market rate is likely to be above the cap rate, which will leave PSEB without any traded power. Moreover, CERC in its order dated 17.12.08 in the matter of ‘restricting the prices of electricity in short term market’ has not considered it appropriate to impose the caps without detailed examination of the related issues.

d) PSEB has already completed R&M of two units (Unit 1 and 2) of GNDTP at Bathinda each having a capacity of 110 MW. The fourth unit is planned for R&M w.e.f. October-09 which shall also enhance its capacity from 110 MW to 120 MW. After this unit, the third unit shall undergo R&M and capacity enhancement. As far as new projects are concerned, PSEB has already awarded the work of 1980 MW Talwandi Sabo Thermal Power station to M/s Sterlite on BOO basis. The allotment of work for Rajpura Thermal Project (1320MW) is under active consideration. Bidding process for 2640 MW Gidderbaha Thermal Power station has also been initiated. In addition, Punjab has been allocated total of 2303.36 MW from 6 UMPP’s (total capacity 23522.4 MW).This power shall be available as & when these projects will be completed.

However, it is the Commission prerogative to issue a directive in this regard.

View of the Commission               

a)       to c) Refer  para 4.8.

d)   Refer Objection no.4, issue no.9.

 

Issue No 7: Revenue Gap

As an appeal on the revenue gap for the FY 2007-08 and for FY 08-09 is pending with the ATE, the calculation of cumulative revenue gap for the FY 07-08, 08-09, 09-10 in the ARR of FY 09-10 is premature and erroneous.

Response of PSEB

No response

View of the Commission

As there is no stay by the Appellate Tribunal for Electricity in the case of the said appeal, the Commission is determining the revenue gap as per its notified Regulations.

 

Issue No. 8:  Employee cost

a)       Employee costs are on the higher side and instead of flat increase, which should be cut down through professional means. Firstly, for FY 09-10, Rs 2446 crore is quite high & secondly pay revision is going to be of the extent of 27% and not 40 % as indicated and furthermore only 50% of the arrears are proposed to be paid in the current financial year.

b)       Main features of M/s PWC’s report on rationalization of manpower be intimated.

c)       PSEB should be directed to find factual estimation for cost of supply of power for various categories of consumers, and the Commission may fix a time frame for estimation of cost of supply.

Response of PSEB

a)   PSEB has undertaken following measures for controlling employee costs

·         PSEB has carried out very limited recruitment .Only need based hiring has been done  to keep pace with increase in the number of substations, number of new connections, addition of thermal plants (GHTP Stage II).

·         Board has withdrawn the compassionate employment to dependents of deceased employees by providing solatium benefits, thereby reducing the manpower.

·         It has reduced the “Generation Incentive Allowance” by 10% w.e.f. March, 2003.

·         Board has done outsourcing of security personnel posted at various locations by PESCO/ Pvt. Agencies.

At the time of filing of ARR, 5th Punjab’s Pay Commission‘s report has not submitted so recommendations of 6th Central Pay Commission was taken. Furthermore, PSEB has made a wage formulation committee and actual implication of the Pay Revision could only be ascertained after the committee submits its report.

b)  M/s Price Waterhouse Coopers Pvt. Ltd’s initial report along with addendums is under discussions in various departments of the PSEB .Once, this is carried out and action plan along with the staffing studies will be submitted.

c) PSEB has floated an Expression of Interest for consumer category-wise & voltage-wise cost of supply.

View of the Commission

a)       Refer para 4.9.    

b)       Refer Objection no.4, issue no.5.

c)       Refer Objection no.5, issue no.10.

 

Issue No. 9: R&M/ A&G Expenses

As per CERC’s norm O&M costs should be increased at 4%. Basis of increase should be a mix of CPI & WPI. Normally, accepted formula is 70% increase on WPI & 30% based on CPI. It is suggested that normative increase should be lower of the two increases.

Response of PSEB

R&M /A&G Expenses are increasing every year due to addition of new assets into the system and it is prayed to the Commission to allow these on actuals.

View of the Commission

Irrespective of the amounts claimed by the Board, the Commission allows the expenses as per its own notified Regulations.

Refer para 4.10 and para 4.11.

Issue No. 10:  Interest

a)       It is submitted that once the amount of diversion of funds has been determined and principle of disallowance of the same has been upheld by Tribunal in its order of 26.05.2006, there is no reason why the relative amount of interest on the diverted funds be not disallowed in the particular year otherwise it would go against the interests of the consumers. Also, that during true up exercise, actual costs replace the estimates and therefore interest costs should have been evaluated after considering actual diversion of funds.

b)       Working capital loan has raised to Rs 6195 crore as on 31.03.2009 i.e about 6 month’s requirement as against 1 month norm. Working capital expenses have risen from Rs 370 crore in FY 08-09 to Rs 556 crore for FY 09-10. Since, this problem has been caused by delayed payment of subsidy by Government and this should not be included in ARR. Likewise, recovery of Rs 501 crore should be made from the Government and included in revenue receipts for the year and the interest on corresponding loan which PSEB took due to non payment of this amount should also be recovered from Government

Response of PSEB

a)       The Commission has been disallowing interest of Rs 100 crore on account of diversion of funds and likewise disallowed Rs 289 crore for Government in year 2007-08 & Rs 209 crore for year 2008-09.However, this reduction of disallowance to Government was due to adjustment of Rs 1362 crore subsidy against loan .However, Board had to raise short term loans to bridge this gap .Hence, PSEB shouldn’t be burdened with any more disallowance on account of diversion of funds. PSEB has already submitted the audited statement of Annual Accounts for FY 07-08 to the Commission whereas FY 08-09 Annual accounts are still under preparation.

b)       Apart from short term loan for business activities, it has to undertake short term loans of Rs 1362 crore of subsidy adjusted for Govt loan by Punjab Government & Rs 501 crore for non refund of excess amount of interest paid to the Govt & borrowings due to delayed payment of subsidy. It is thus prayed to the Commission to separately allow the interest on these items.

View of the Commission

a)  Refer para 4.13.11.

b)  Refer para 4.13.10 and para 4.13.4.

Issue No.11: Depreciation

In practice, actual life span of assets is quite high and therefore depreciation rates approved by the Commission are quite higher than what they actually are.

Response of PSEB

PSEB has carried out projections for the FY 09-10 on the basis depreciation rates for FY 07-08 actuals.

View of the Commission        

The Board works out depreciation on the basis of the life span of assets and function-wise rates of depreciation that have been prescribed for SEBs by the Govt. of India, Ministry of Power in its Notification No.SO-226(E) dated 29.3.1994.

 

Issue No.12: Peak Load Exemption Charges

PLEC charged are unjustified on continuous process industries. PSEB’s justification of levy of these charges because of higher cost of power purchase during peak times is unjustified as this cost is already included in power purchase budget and is accounted in ARR and this cost should be shared in the same manner as dealt in the case of costly power for paddy requirements.

PSEB’s current proposal for increase in PLEC charges for LS category as nearer to cost of diesel based power is unjustified. Private hospitals running on commercial basis get away without any weekly off days and power cuts @ only 25% extra tariff. This proposal is thereby highly discriminatory & under no circumstances PSEB’s proposal should be accepted.

Response of PSEB

PSEB has already presented its case in the ARR and has prayed to the Commission to review & refix these charges as deemed fit.

View of the Commission

Refer para 5.7.                                                                                                                                                                                                                                                                                                    

 

Issue No.13: Agriculture Consumption

As per PSEB’s projections, there is nearly 50% increase in AP consumption over 3 years, so there is some serious flaw in methodology being used to suppress T&D losses. The analysis carried out of MU/MW of agricultural load vis-à-vis ‘other’ loads and found that average is higher in agriculture’s case as compared to ‘others’ even when AP consumers hardly get power for 4-5 hrs. The report by committee under Mr A.K.Aggarwal be made public. The Commission is requested to correctly & scientifically evaluate the AP consumption as it will reduce the higher amount of cross subsidy paid by the Industry.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Response of PSEB

Over the years Agriculture load has increased due to release of new connections, VDS schemes, gradual reduction in water table etc. which has resulted in increased AP Consumption. PSEB further submits that report by Committee headed by Mr A.K.Aggarwal is awaited. The Commission is currently undertaking a study for evaluation of AP consumption which is being discussed with Board.

para 4.13.10 and para 4.13.4.

View of the Commission

Refer Objection no. 8, issue no.4.

 

Issue No.14: Investment Plan

a)       Investment plan projections are on a higher side against the previous performances.

b)       Against requirement of Rs 5016 crore, Rs 1500 crore relating to depreciation, ROE, consumer contribution must be offset as directed by Appellate Tribunal.

c)       Amount of Rs 618crore for Tubewell be either recovered from consumers or Government in form of capital subsidy. Similar exercise is needed for earlier tariff orders.

d)       Expenditure on R&M plants should correspondingly benefit in form of additional generation and not reduction as shown in case of Thermal & Hydro plants.

e)       Rs 3453 crore spent on T&D and quality of supply improvement be related to corresponding reduction in T&D losses (to be quantified) and improvement in quality of supply.

Response of PSEB

a)       Investment plan for FY 08-09 & FY 09-10 are based on Annual Plan projections of the Board.

b)       Depreciation is being used for repayment of principal & in actual terms there has been no return on equity and in actual Board is suffering commercial loss.

c)       Providing subsidy to any activity is the prerogative of the Govt of Punjab as the cost owing to subsidy has to be borne by it.

d)       Reduction in thermal plants generation is due to regular scheduled R&M of the plants. Generation from Hydro power units is dependent on water availability and as such when water available is less, lesser units are generated.

e)       Shifting of Meters outside Consumer’s Premises is being carried out & replacement of  incandescent lamps with CFL’s in Domestic sector is proposed through Bachat Lamp Yojana and further proposes to convert L.V.D.S. (Low Voltage Distribution system) to H.V.D.S. (High Voltage Distribution system) & has undertaken/proposed to undertake series of measures for Energy efficiency through Demand Side Management (DSM) in Agriculture Sector. Moreover, PSEB has set itself T&D loss target of 17% by 2011-12 as per the T&D loss trajectory submitted in the ARR Petition.

View of the Commission

a)  The Commission takes the actual performance of the Board in the previous years into account before determining the size of the Investment Plan.

b)  There is no such specific direction in any of the orders of the ATE. Only consumer contribution has to be off-set and the Commission determines the size of actual Investment Plan after doing so. The depreciation is to be utilized for replacement of depreciated assets and can only be used for repayment of capital loans. ROE is not resulting in any actual profits for the Board which could be available for the purposes of the Investment Plan.

c)       As per the Supply Code, a consumer has to pay Rs. 3600 per BHP as his contribution and any expenditure in excess thereof has to be borne by the Board. The projected amount for release of tubewell connections is proposed in respect of the latter.

d&e)It may not be possible to correlate reduction in T&D losses or improvement in the performance of thermal/hydel plants to the quantum of investment made.

 

Issue No.15: Energy Requirement

Difference in DS categories MU’s in case of formats supplied by PSEB need to be explained.

Response of PSEB

PSEB has inadvertently adjusted 673 MUs (6692-6019) for FY 08-09 for Domestic Category and 778 MUs (7240-6462) for FY 09-10. These units corresponds to  subsidy given/projected to be given for SC-DS & Non-SC BPL consumers for FY 08-09 (Rs 263 cr) & FY 09-10 (Rs 294cr).This information already stands supplied to the Commission as part of deficiency requirements.

View of the Commission

The Board has clarified that sale to DS category was inadvertently projected as 6019 & 6462 MU instead of 6692 & 7214 MU for the year 08-09 and 09-10 respectively.

 

Issue No.16: Non-Tariff Income

For FY 08-09 @ 4.8% growth rate for non-tariff income should be Rs 464 crore and likewise for FY 09-10, it should be Rs 485 crore.

The purported revenue gap in the ARR be rejected as appeals for FY 08-09 & FY 09-10 are still pending in Appellate Tribunal and that no tariff be fixed on the basis of proposed ARR.

Response of PSEB

PSEB has envisaged an increase of 4.8 % from FY 08-09 to FY 09-10 only. figures for FY 08-09 are based on half yearly actuals & half yearly projections. PSEB has prayed to the Commission to approve the Aggregate Revenue Requirement for FY 09-10 & pass such other and further orders as deemed fit and proper in the facts and circumstances of the case.

View of the Commission

Elements of non-tariff income include items such as meter/service line rentals, late payment surcharge, theft and pilferage of energy, miscellaneous receipts, miscellaneous charges, wheeling charges, interests on staff loans and advances, interest on advances to suppliers, income from trading, income from staff welfare activities, excess found on physical verification, investments, fines, call deposits and bank balances. As it is not possible to estimate an annual growth for most of these items, non-tariff income is reckoned on the actuals/estimates reported by the Board.

 

Objection No.10 & 19: PSEB Engineers’ Association

Issue No.1: AP Consumption

a)       PSEB should ensure segregation of 11 KV tube well feeders.

b)       PSEB should ensure that sample meters are in proper working condition and has suggested that there should be quarterly assessment of actual consumption on the basis of sample meter readings

c)       If actual amount of supply is exceeding approved amount of supply as given in the ARR then additional subsidy should be paid by Government

d)  ARR does not give details of reactive power corresponding to 11699 MUs and should provide the following details:

·          kVarh shunt capacitors on tubewells as on 1.4.2008 and as on 31.3.2009.

·          Action plan/ target for adding LT shunt capacitors upto 31.3.2010.

·          Estimated reactive load on system in MVAR and in million kVarh corresponding to 11699 MUs.

·          MU per year saving in losses in case the requisite LT shunt capacitors are provided on all AP connections.

Response of PSEB

a)       Conversion of 11 KV 3 phase 4 wire feeders with 3 phase 3 wire feeders for segregation of  11 KV tubewell feeders with rural load is being carried out through two contractors on turn-key basis and the work is in progress.

b)       All out efforts are made to keep sample meters in proper working condition.

c)       The subsidy issue is the prerogative of Government of Punjab/Hon’ble Commission.

d)       As on 01.04.2008, LT shunt capacitors aggregating 1985 MVAR are installed at the consumer premises of 9, 81,157 agriculture consumers having connected load of 5606 MW. Similarly, as on 31.03.2009, LT shunt capacitors aggregating 2192 MVAR are installed at the consumer premises of 10, 32, 616  agriculture consumers having connected load of 6096MW.

View of the Commission 

a) & d) The issues do not directly pertain to the ARR though these are desirable steps to be considered and acted upon by the Board.

b)    Refer para 4.1.3. The Commission has dwelt upon the need for ensuring that defective sample meters are kept at a normative minimum. Sample meter readings are taken on a monthly basis and the Commission is of the view that no particular advantage would accrue in quarterly assessment of consumption.

c)     Requirement of additional subsidy is duly considered in review and true up.

 

Issue No.2: T&D losses

a) There should be a PERT Program for implementation of loss reduction measures across the state that gives emphasis on low cost high return measures. PSEB needs to augment its transmission system to reduce overloading and improve voltage & reliability of supply and should disclose number of power transformers & grid substations that are overloaded and action plan for reduction of transmission losses.

b)  T & D losses should be computed separately for each 11 KV and higher voltage feeder and put on PSEB’s website and updated quarterly.

c)  Loss reduction action plan should be carried out feeder-wise starting from those feeders with highest losses.

d)  PSEB to give the list of those grid sub stations where due to overloading the tube- well feeder groups can not overlap and have to run in 3 groups of 8 hours each.

e)    PSEB should be directed to compile MVARH as well as MWH data of every 11 KV rural/ tube-well feeder as recorded at the sub-station meter since lower power factor directly contribute to higher losses.

Response of PSEB

a)       It has planned to undertake Rs 622 crore for investment in various transmission works in annual plan of the Board for FY 09-10.

b to e) Suggestions are taken note of.

View of the Commission

a) Refer issue no.1 (a) & (d) above.

b) to e) The Board needs to consider acting upon the suggestions as a part of its overall strategy to reduce T&D losses.

 

Issue No.3: Energy availability

a)       COD of Lehra Unit-IV has still not been achieved as against PSEB date of 1.1.2009 given in the ARR.  PSEB need to give specific grounds for non-achievement of COD and its effect upon energy availability.

b)       MOEF’s regulation has been flouted, which prevent to transport coal with more than 34% ash content beyond 1000 Kms as it is stated that ash content of coal for Ropar plant is more than 40%.

c)  With present stocks of 7-8 days of coal and almost nil stock of crushed coal, it would be extremely difficult to maintain full generation during the paddy/ monsoon months. PSEB may be directed to give its emergency action plan for building up of coal stocks and loss of generation due to fuel constraints.

d) The reasons cited for low coal stock in CEA daily report for Lehra Mohabbat is inadequate linkage’ capacity mentioned as 920 MW. PSEB may be asked to give an action plan for ensuring that the linkage for Lehra Mohabat is matching with the enhanced capacity of the station.

Response of PSEB

a) CoD of Unit-IV has not been achieved till date due to the following persisting discrepancies, which are yet to be attended to by M/s BHEL, CEP 4B Motor Replacement, HPBP Oil supply Unit Problem, ESP Fields Problem Mill Reject System Commissioning, LRSB Commissioning, ID Fan outlet gate blowers grouting pending, PA Fan Vibration system, AWRS Incomplete, Fire fighting system incomplete, ID Fan 4B protection problem, Leakage of Oil from GT-4 etc.

b)  Average ash content of coal at GGSTP stands at around 32.81% for the year 2008-09.

c)  Fuel stock at GGSTP is sufficient for 7 days and every effort is being made to build stocks of coal and crushed coal.

d)  Coal requirement for all of the 4 units of GHTP is sent to the CEA/Ministry of Power for approval of CIL/Ministry of Coal who are being stressed upon to allocate the coal linkages as per requirement in SLC & pre-SLC meetings.

View of the Commission

a)       The reasons for non achieving CoD of Lehra Unit–IV have been indicated by the Board. However, the energy being generated before CoD is being utilized in the grid for meeting the demand of the State. Any shortfall in scheduled generation will need to be compensated by purchases from other sources.

b,c&d) The issues are primarily management related and need to be taken note of  by the Board.

Issue No.4: Fuel cost of infirm generation

As per CERC norms applicable w.e.f 7.1.2008 for 09-14, the cost of infirm energy be calculated at UI rate and the capital cost reduce to that extent after accounting for fuel expenses. ARR states that the fuel cost of infirm generation will be added to capital cost of Lehra Stage II and the infirm generation would be supplied to the State consumers at zero tariff.  However, this energy has been supplied to the consumers at UI rates. Therefore, the UI charges of the infirm generation of 1168.1 MUs need to be included in the ARR 08-09.

Response of PSEB

No response.

View of the Commission

Refer para 2.7.3.

 

Issue No.5: Specific Oil Consumption /Station Heat Rate/Operating norms

a)       CERC revised its norms for the 5 year block 2009-14 with effect from 1.4.2009 in which thermal plants that are unable to meet the prescribed norms have been allowed relaxed norms as recommended by CEA for these stations. Thereby, petitioner has proposed that actual specific oil consumption & actual SHR for each station in FY 08-09 may be adopted as the norm for FY 09-10 separately for Ropar, Lehra, Bathinda and further PSEB should give action plan for each thermal plant for reduction of SHR. Certain SERCs have allowed relaxed norms even for new stations.

b)       UPERC Regulations 2009 prescribes a trajectory for reduction of SHR for the older stations and MERC is working on the issue of practically achievable norms.

c)       PSEB may tie up with NTPC for a time bound action plan to improve the station heat rate of PSEB stations.

Response of PSEB

a,b,c) It is Commission’s prerogative to consider.

View of the Commission                                   

Refer Commission’s Order dated 19.8.09 in Petition no.15 of 2008.

 

Issue No.6: Generation Cost (Thermal)

Since, Lehra Mohabbat’s Unit IV could not be put on commercial run by 01.01.09 so requisite tables in the ARR should be revised and capacity of Lehra Mohabbat’s Stage II should be kept at 250 MW instead of 500 MW .Further, coal & oil cost incurred during trial run is necessary to be booked under capital cost head of Lehra Stage II.

Response of PSEB

At the time of preparation of ARR; the COD of Unit IV of GHTP was expected to be in Jan 2009.

View of the Commission        

Refer para 4.4.1 and para 2.7.3.

Issue No.7: Power Purchase

a)  PSEB is purchasing traded power @ around Rs 8 per unit (after taking into account 21% T&D losses) and since maximum consumer tariff is around Rs 4 per unit, the power purchase is having a direct & adverse impact on financial health of the Board.

b)  There is a need for long term measures to add generation capacity. The Commission can advice the state Government under provisions of the Electricity Act 2003 and that as per the National Electricity Policy power planning should be done on 5 years short term and 15 years on long term basis.

Response of PSEB

a)       Bulk of power supply to Punjab is mainly tied in long-term contracts. The bulk suppliers are mostly the central generating stations besides a few IPPs. CERC regulates the price of bulk supply on the basis of its Terms and Conditions of Tariff. Thus, most of the existing bulk supply is locked up in long term contracts having station-wise tariff, usually in two-part viz., capacity charge and energy charge. The norms of tariff and efficiency of inter-state generating stations have been progressively improved to have overall economy and to ensure reasonable prices of bulk tariff. The prices of bulk electricity from CERC regulated generating stations have been stable and reasonable. In fact the capacity charge of a station progressively reduces with time. PSEB mainly rely on supplies from these long-term contracts apart from its own generation. However, it is not feasible to meet short term, seasonal or peaking demand through long-term contracts only. Power trading is essential for meeting the short term demand at an optimum cost. The traded power is sourced from coal/hydro power plants, of which power production cost is not more than Rs 4 per unit in almost all the cases. But the price in most of the time blocks has been much higher. The apparent reasons for rising trend in the sale price of short-term traded electricity are; increasing shortages of electricity increase in maximum rate under UI, absence of regulatory framework on price and increasing fuel costs. Under the circumstances, in case PSEB does not resort to traded power and/or does not requisition liquid/other costly fuel, long duration power cuts will be imperative on all categories of consumers which shall play havoc on State’s economy.

 b)  It is the Commission’s prerogative to decide on the matter.

 

View of the Commission       

a)   Refer para 4.8.

b)   Refer Objection no. 4, issue no. 9.

Issue No.8: Capacity addition

a)       In purview of National Electricity Policy & Tariff Policy, Commission is required to direct PSEB to reduce the high cost of Power Purchase by undertaking measures for capacity addition. It has further laid stress on increased state’s role in investment for capacity addition in scenario where private projects have been delayed for long. Instead, GoP’s present policy to depend on 100% investment from private sector is in clear violation of para 5.8.1 & para 5.8.2 and 6.1 of National Tariff Policy .Furthermore, it has stressed on the need of joint sector project of centre & state as alternative method of capacity addition.

b)       Nuclear power generation & pumped storage Hydro schemes need to be strongly considered.

c)       The Commission may direct Board & Government to draw up a time bound action plan for capacity addition in Punjab.

Response of PSEB

a)       Board has already awarded the work of 1980 MW Talwandi Sabo Thermal Power Station on BOO basis. The process of re-bidding for Rajpura Thermal Project has been initiated. Bidding process for 2640 MW Gidderbaha Thermal Power station has also been initiated to meet long term power requirements of the state.

b)       Advantages of nuclear energy are well known and matters regarding installation of nuclear energy shall be followed as per the guidelines of the Central/State Government Site selection committee of NPCIL, Mumbai under Department of Atomic Energy had listed 3 sites out of 20 sites proposed in Punjab during 1983. After preliminary investigation, Patran site near Daroli was considered. Further, PSEB plans to set up Hydro projects viz. Mukerian (Stage II), Micro Hydel, Ropar (1.7MW), UBDC Stage III (85MW), Shahpur Kandi & Shapur Kandi Extension projects are in pipeline.

c)       It is the Commission’s prerogative to decide on this matter.

View of the Commission

Refer Objection no.4, issues no. 9 and 11.

Issue No.9: Capping on traded volume & rate

a)       The  following price caps could be imposed under the purview of CERC’s order which states that  the state Commission may impose limits on prices at which their state utilities may procure short term power, taking into account relevant factors & implications:

        Maximum:                     Rs 6/unit

        Average   :                     Rs 4.65/unit

Also, the following restrictions may be put:

i)        Rate of UI drawl should be restricted to Rs 6 per unit, which corresponds to 49.36 Hz. Practically; PSEB should not overdraw from Grid below 49.36 Hz.

ii)       Below 49.2 Hz there is a 40% surcharge, and thus it is proposed that there should be a ban on over drawl below 49.2 Hz.

b)       PSEB did an over drawl of Rs 1 crore in just five days from 1st to 5th April 2009 at frequency below 49.2 Hz and is thereby liable for action under Section 142 of Act for violation of Grid Code.

c)       The Commission may set up following two trajectories for PSEB:

i)         Trajectory for capacity addition on year to year basis

ii)       Trajectory for curbing exponential rise of power purchase costs

d)   Although in the ARR it is stated that the quantum for UI purchase in FY 2009-10 is nil though UI billing of Rs.2465.85 lakh for 327.67 LUs at overall rate of Rs.7.53/ unit for the period 30.3.2009 to 26.4.2009 has been booked in the NRPC account.

Response of PSEB

a)       Placing an authorized cap rate on traded power unit cost is not feasible since its cost is determined by market forces and the market rate is likely to be above the cap rate, leaving PSEB without any traded power. Moreover, CERC in its order dated 17.12.08 in the matter of ‘restricting the prices of electricity in short term market’ has not considered it appropriate to impose the caps without detailed examination of the related issues.

It is the Commission’s prerogative to decide on this matter.

b& d)  It is fully aware that over-drawl below 49.2 Hz is in violation of IEGC clauses which renders it liable to penalty but sometimes violations do occur momentarily when state’s own generation is not favorable due to sudden loss of any TPS. PSEB carries out purchases of traded power and/or over drawl under UI mechanism to tide over short term/peak/seasonal shortages to certain extent thus containing/avoiding power cuts on its consumers which may play havoc with the state’s economy.

c)   It is the Commission’s prerogative to consider.

View of the Commission

a, c-ii & d)  Refer  para 4.8.5.

b) Action, if any, is to be taken by CERC.

c-i) Refer Objection no. 4, issue no.9.

Issue No.10: Availability of Power from new sources

Energy availability should be revised with latest status of power plants available as of now. NTPC Koldam is to be commissioned in 2010 -11(As per CEA’s list updated on 31-3-2009) but its units are being booked in 2009-10 and similarly power from RAPP 5 and 6 should be nil in FY 08-09 as their commissioning date is likely to shift further.

Response of PSEB

NTPC Koldam has shifted further but at the time of preparation of data for ARR the commissioning was projected in 2009-10. The power position with regard to commissioning of RAPP 5 and 6 is presently uncertain. No energy from these stations has been scheduled till date. However, ARR data is based on projections available at the time of preparation. Further, energy availability of Baglihar taken as 598 MUs is in order.

View of the Commission

The Board needs to take note of latest status of power availability from new sources in its ARR projections.

 

Issue No.11: Employee cost

O&M costs of three thermal stations of Punjab are lesser vis-à-vis CERC norms thereby indicating an anomaly in disallowing employee expenses by the Commission. It has also submitted that compliance of Supply Code would mean requisite manpower but large number of posts is lying vacant in generation & transmission system that is affecting operational efficiency. Keeping in view these factors, employee expenses should be allowed on actuals.

Response of PSEB

It is the Commission’s prerogative to consider the request.

View of the Commission

Refer para 4.9. Being an integrated utility, the Commission determines the employee cost of the Board as a whole and not function-wise.

 

Issue No.12: Renovation & Modernization

Action plan for improving SHR of thermal stations & expenditure proposed on the improving the SHR and action plan for reduction in T&D losses & cost on the reduction in T&D losses may also be included under R&M expenses.

Response of PSEB

It is the Commission’s prerogative to decide on this matter.

View of the Commission

The Commission has been approving the Investment Plan on the basis of the Board’s proposals and its past performance in being able to spend the amounts allocated. Important renovation and modernization proposals if included in the Annual Investment Plan are duly considered by the Commission.

 

Issue No.13: Interest & Finance Charges

The revenue expenditure is far in excess of revenue income resulting in short term borrowings and consequent component of interest on short term borrowings as claimed in ARR. In several states, when power purchase limit allowed by the state Commission has been exhausted, the Government gave a cash grant to the Discom for making additional power purchase over & above quantum allowed by the Commission. Same should be allowed in Punjab. The Commission may direct GoP to refund/ repay the excess payment to PSEB, along with interest as determined by Commission along with the commitment for payment of subsidy by GoP.

Response of PSEB

It is the Commission’s prerogative to consider this matter.

View of the Commission

Giving cash grant for making additional power purchases is in the nature of subsidy and it is the prerogative of the Govt. to subsidize any category of consumers.

 

Issue No.14: Delayed payment of subsidy by GoP

Interest on delayed payment of subsidy is required to be recovered from GoP and not passed on to the consumers.  Similarly, interest on Rs 501 crore is required to be paid by GoP to PSEB along with refund payment of principal amount. This is a fit case for Commission to issue a directive.

Response of PSEB

It is the Commission’s prerogative to consider this matter.

View of the Commission

Refer para 2.14.12 & 2.14.13.

Issue No.15: Working Capital Loan & Over Draft

The Commission needs to consider that when any expenditure is disallowed, the cash liability has to be met by increased borrowings which lead to increased interest liability and debt trap. Current situation shows that primary objective of the National Electricity Policy as well as Tariff Policy to ensure financial health and turnaround of power sector stands defeated & the Commission needs to analyze the causes.

Response of PSEB

It is the Commission’s prerogative to consider this matter.

View of the Commission

The Commission disallows expenditure incurred by the Board only when there is no justification for passing on the cost to the consumers. Govt. and the Board need to ponder over the rising debt and accumulated loans of the Board and decide upon measures necessary to contain it.

 

Issue No.16: Proposal for ensuring timely payment of subsidy

Following steps need to be taken to ensure no default occurs this year:

a)       Annual Subsidy be restricted to quantum of budget provision as mandated in Sec 5.5.4 of National Electricity Policy.

b)       Government to give commitment for advance quarterly payment of subsidy and to give no objection for levy of full tariff if there is a default in advance payment of subsidy.

c)       Present quantum of subsidy as per vote-on-account is corresponding to Rs 2601.73 crore/year. In case subsidy requirement is higher, the necessary budget provision would be made.  PSEB has worked out subsidy requirement of Rs 3102 crore in para 22.1.1 of the ARR.

d)       Commission may include in its Order a provision that in case of default in payment of subsidy exceeding 15 days, the board would charge full tariff from 16th day onwards.

Response of PSEB

a,b,c)  It is the Commission’s prerogative to consider.

d)  PSEB is regularly giving monthly status report to the Commission. However, it is the Commission’s prerogative to decide on the matter.

View of the Commission

Govt. has, by and large, paid subsidy due to the Board in 2008-09. Govt. is liable to pay interest to the extent such payment is delayed.

 

Issue No.17: Non Achievement of prime objective of National Electricity Policy

a)       Rising cumulative revenue gap for FY 09-10 shows that primary objective of NEP & Tariff policy has been defeated.

b)       Format 2(A) Page 7 of 53 needs to be updated/ revised as Unit IV of Lehra Mohabbat has not achieved CoD as projected. Similarly UI figure for Format 7 B, Page 20 of 53 needs to be revised in lieu of actual position.

c)       Out of Rs 780crore interest of working capital loan shown in Format 15 for FY 09-10, Rs 223.56 crore is attributed to the Government and should not be recovered from the consumers through tariff and instead should be recovered from GoP.

Response of PSEB

a)        It is the Commission’s prerogative to decide on this matter.

b)       At the time of filing of ARR, this information was unavailable.

c)        It is Commission’s prerogative to decide on this matter.

View of the Commission                   

a)  Refer issue no.15 above.

b) The Commission has considered the data as projected by the Board. Any subsequent variation gets accounted for in the review/true up.

c) Refer para 4.13.4 & 4.13.12.

Issue No. 18: Malana II  

In view of PSEB’s information in the hearing of 11.5.2009 on the petition of power cuts that Malana II is delayed, power availability of 83.55 MU from Malana II in the ARR should be considered nil.

Response of PSEB

ARR considers information available at the time of preparation.

View of the Commission                      

Any change in power availability from Malana II will be duly considered in review.

Objection No.11: PHD Chamber of Commerce and Industry

Issue No. 1: T&D losses

T & D losses are mainly due to theft which can be checked by providing metering for all consumers including tubewells and public water supply. PSEB has undertaken some initiatives to reduce losses but unable to achieve the targets set by the Commission as huge capital investment is required which PSEB is currently unable to provide. Unless the existing system is renovated; it is not possible to achieve the targets.

 

 

 

Response of PSEB

PSEB has envisaged large scale investment in APDRP schemes in FY 09-10 to reduce T&D losses to 19.5% by the end of FY 09-10. PSEB has planned to raise the fund from external market borrowings, capital subsidies & grants from the central & state Government.

View of the Commission     

Refer para 4.2.

 

Issue No.2: Power purchase

Cost of power purchase to the tune of Rs 7265 crore is much on the higher side and mainly used for supplying power to agriculture sector during paddy season. However, in no way should industry or any other sector be burdened for power supplied to agriculture either in form of subsidy or power cuts.

Response of PSEB

Being a policy issue, the Commission may consider.

View of the Commission

Cost on power purchase is incurred for supplying power to all categories of consumers and not only for agriculture sector. However, concern over rising cost of power purchase from traders has been addressed in Para 4.8.5.

 

Issue No. 3: Employee cost

Employee cost is on a higher side and additional burden of pay revision need to be borne by state Government & should not be recovered through ARR.

Response of PSEB

PSEB has asked Rs 3455 crore for FY 09-10 keeping in view of the  not only  due to arrears of  Rs.1008 crore due to pay revision proposed by the 5th Pay Commission but also due to annual increments, normal increase in Dearness Allowance & other allowances as announced from time to time. It is prerogative of the Commission to recover this additional cost through ARR or from Government of Punjab.

View of the Commission

Refer para 4.9.  

 

Issue No. 4: Interest & finance charges

Increase in short term borrowing is due to late payment of subsidy by the Government & recall of overdue loans. It has further reiterated the Commission’s Order where it is clearly indicated that subsidy has to be paid in cash and should not be adjusted against any subsidy and as such the loans may be adjusted against pending subsidy and not against the current subsidy.

Response of PSEB

Currently subsidy by GoP is paid in cash and for the year FY 08-09, Board has received full subsidy of Rs 2601.73 crore (inclusive of Rs 35.56 crore for FY 07-08 as interest levied on delayed payment). Further, Board has prayed to the Commission to allow additional interest charges due to adjustment of Rs 1362crore subsidy against Government loans & non-refund of interest of Rs 501 crore paid in excess by the Board to GoP.

View of the Commission

Interest is being paid by the Govt. on any late payment of subsidy to the Board. Adjustment of loan against subsidy had been discussed in para 4.13.4 of T.O. 2008-09. 

 

Issue No.5: Agriculture consumption

The agriculture consumption on the basis of 5% sample meters has not been approved by the Commission. PSEB has not implemented various measures suggested in PAU report. The Commission is requested to direct PSEB to provide energy meters to all the tubewell for proper energy accounting.

Response of PSEB

As on 31st March 2008, 53858 sample meters were installed for assessment of AP Consumption and further addition of about 46142 sample meters has been proposed, thereby raising the sample metering level to about 10.33% of total AP connections for more accurate assessment of AP consumption. Board has issued instructions vide CC No.64/2008 dated 31.10.2008 for compliance of the observations / shortcomings as pointed out in para 3.2.3 of Tariff Order 2008-09. Moreover in compliance to the directions issued in the Minutes of Meeting held under the Chairmanship of Hon'ble Chief Minister Punjab on 8.1.2008, a Committee headed by Sh.A.K.Aggarwal, Advisor/Finance, PSEB had been constituted for analyzing the data of agriculture consumption. The system/ procedure for determining AP consumption is being examined in detail by the Committee.

View of the Commission

Refer para 4.1.3 & Annexure IV pertaining to Compliance with the Directives.

 

Issue No. 6: Peak load exemption to the Industry

Exemption must be given without insisting on the condition that only continuous process industry is eligible for it as various industries having domestic /export commitments are paying very higher rate during this time.

 

Response of PSEB

Same as in Objection no.5, issue no.11.

View of the Commission

The issue is being separately considered by the Commission.

 

Issue No. 7: Surplus Assets

Surplus assets which PSEB would not be using in future need to be disposed off & income generated from such assets may be used for development/ improvement works.

Response of PSEB

PSEB has awarded a work order for physical verification of fixed assets, valuation of fixed assets & other allied works. Further assessment will be carried out once this exercise is completed.

View of the Commission

The Commission trusts that the Board will complete the exercise by 31.3.2010 and take suitable action where warranted.

 

Objection No.12: Cycle Trade Union (Regd.)

Issue No.1: Increase in tariff

PSEB has carried out projections for financial year on the basis of false figures and in light of these quoted figures it has requested the Commission not to increase any kind of tariff along with the monthly minimum charges of all consumers of Punjab.

Response of PSEB 

The projections for FY 09-10 have been made with careful assessment of PSEB’s functions and on the basis of norms laid down by the Commission. ARR Petition also includes the requisite details of the actual audited expenditure (duly audited by Auditor General, Punjab) incurred in the year FY 2007-08 for true up. PSEB further submits that the gap between the expenditure and revenue at existing tariff warrants an increase in tariff for FY 2009-10.

View of the Commission  

The Commission processes the ARR according to its notified Regulations, determines the cumulative revenue gap and accordingly revises the tariffs for various categories of consumers, to recover the same.

Objection No.13: United Cycle & Parts Mfrs. Association

Issue No.1: Tariff

As the Punjab Government has paid the cost incurred on AP consumption & subsidy for SC DS consumers, there is no financial burden on PSEB for supplying power to these consumer categories. PSEB has also got revenue from VDS schemes & Non Tariff Income. Besides, with the decrease in the number of employees in FY09-10 the expenditure of the Board is bound to decrease Further the industries are going through recession and many industries are at door step of closure. Hence it is requested to PSERC not to increase tariffs of electricity in this FY

Response of PSEB

The revenue gap worked out has given due consideration to subsidy received from the Government for AP consumers & SC-DS/Non SC BPL consumers .The Board has not been receiving subsidy from the Government on time and likewise has to pay interest on short term loans raised from the market to cover the gap. This extra cost has been duly accounted in the ARR. Further, although the employee strength is expected to decrease to 65387 at the end of FY 09-10, still Rs 3455crore  have been demanded for employee expenses for FY 09-10 as against the Rs 2244 crore for FY 08-09 keeping in view of the following two main factors:

·          Increase on account of impending implementation of 6th Central Pay Commission/5th Punjab Pay Commission’s recommendations that calls for additional expenses of Rs 1008 crore on account of arrears w.e.f 01.01.2006.

·          Annual Increments, normal increase in Dearness Allowance & other allowances as announced from time to time

The revenue earned from VDS schemes & Non tariff income has been duly accounted for while computation of the resultant gap in the ARR.

View of the Commission               

Refer Objection no.12, issue no.1.

 

Issue No.2: Electricity theft cases

a)       HDF formula for assessment of electricity charges as per The Electricity Act 2003 calls for an investment of big amount and it is difficult for the consumer to deposit 33 to 50% of disputed amount of alleged theft case in the court.

b)       PSEB has installed the metering equipment outside premises on the walls. This has made equipments protection very difficult and an easy target of mischief & vandalism. Therefore, meters may be installed on the poles as precautionary measure

 

 

Response of PSEB

a)       The Board intends to continue with current HDF formula. However, the Commission may have a look into this matter.

b)       Under the T&D loss reduction roadmap, the Board has started shifting energy meters outside the premises of the consumers by installing these outside in “Meter Pillar Boxes” or in standard Meter Cupboard on the outer walls of the consumer Premises/ poles. This has resulted in decrease in Input units & increase in units billed & consequent increase in revenue. This has also resulted in decrease in overall demand on the feeder and thereby reducing the T&D losses.

View of the Commission

a)       This is not an ARR issue. However, procedure for dealing with theft cases has been specified in Regulation 37 of PSERC (Electricity Supply Code & Related Matters) Regulations, 2007.

b)       This is not an ARR issue. However, the concern of the objector has been addressed in Regulation 21.2 (c) of PSERC (Electricity Supply Code & Related Matters) Regulations, 2007.

 

Issue No.3: T&D losses

Remedial steps should be taken by the Board to avoid electrical leakage & line losses by re-sagging the loose spans of 11 KV & LT feeders and all cables with joints must be replaced to avoid leakage & electric accidents. All earthing systems of substations, transformers, EHT, HT & LT structures need to be earthed. Further, generally burnt & defective meters are not replaced and hence, consumers are charged energy bills on average basis at higher rates. If these remedial steps are taken, PSEB would not need any revision in tariff.

Response of PSEB

PSEB has undertaken a series of measures to reduce T&D losses and has been able to successfully reduce its T&D losses from 23.92% (FY 06-07) to 22.53% (FY 07-08). PSEB  has been making all out efforts for re-sagging the loose spans of feeders & earthing of substations, transformers, EHT, HT & LT structures and due attention is being given on replacement of  burnt or defective meters. The gap between expenditure and revenue at the existing tariff warrants an increase in tariff for FY 2009-10.

View of the Commission

This is mainly a maintenance related issue, not relevant to ARR.

 

Objection No.14: Mandi Gobindgarh Induction Furnace Association

Issue No.1: PLEC charges

Enhancement of Peak Load Exemption charges is unjustified and is against Contract demand Agreement. As per the agreement, consumer can not increase agreed demand otherwise penalty is imposed. At time of agreement, it was known that it is a continuous process industry. Moreover, increased load during peak hours is not caused due to LS industry but due to increase in load of other categories of consumers. Hence, these charges are unreasonable.

Response of PSEB

Keeping in view of the load mix of various categories of the consumer, the additional demand during evening peak hours on account of GSC consumers can only be met by imposing peak load restrictions on industrial consumers. This is already covered in A & A form signed with the consumers at the time of release of connection. As such the contention of the Association is not agreed.

View of the Commission

Refer para 5.7.

Issue No. 2: Cross subsidy

Petitioner has submitted that as per section 61(g) of the Electricity Act 2003 & Regulation 7(1) & 7(2) of PSERC (Terms & Conditions for Determination of Tariff) regulations the cross subsidy is required to be eliminated in ten years from the year 2005-06.Hence, the tariff of LS consumers for FY 09-10 should be reduced by at least 40% from the level of FY 2005-06.

Response of PSEB

National Tariff Policy states that the tariffs should be +/- 20% of the Average Cost of Supply. LS tariff’s cross subsidy levels has been gradually reduced from 22% in T.O 2007-08 to 17.8% in T.O 2008-09. The latest amendment to the Act clearly specifies that the cross- subsidy is to be gradually reduced, and not necessary eliminated, in the manner specified by the Appropriate Commission.

View of the Commission

Refer Objection no.5, issue no.10.

 

Issue No.3: Government subsidy

The interest burden on loans raised due to delayed payment of subsidy should not be passed on to the consumer other than subsidized consumers.

As per books of PSEB, Rs 3074.91crore loan is outstanding as payable to the state Government (for which Board is paying interest) against which it has suggested that Rs 5704 crore of subsidy dues (Rs 2602 cr for FY 08-09 & Rs 3102 cr for FY 09-10) should be adjusted and for the balance amount, Government should be asked to pay in time so that interest burden is not passed on to the consumer. Further, means & methods should be established to avoid delays in subsidy that are affecting consumers other than subsidized category and this account between Government & PSEB may be appropriately settled as per law.

Response of PSEB

The Commission had allowed PSEB an amount of Rs 35.56 crore for FY 07-08 on account of interest levied on delayed payment of subsidy by the Punjab Government in its Tariff Order FY 2008-09. Likewise, PSEB has prayed in the ARR for allowing interest payment owing to late payment of subsidy by the Punjab Government GoP has already paid the due subsidy for FY 08-09 i.e of Rs 2601.73 crore and Board’s projected amount for Rs 3102 crore is yet to be approved by GoP. PSEB further submits that for FY 07-08, Govt of Punjab had recalled its loan of Rs 1362 crore & had adjusted the same against the due subsidy .Hence, Government loan amount has become Rs 1714 crore (Rs 3074.91cr-Rs 1362cr). The Commission had disallowed interest of Rs 100 crore each year on account of diversion of funds and has likewise disallowed Rs 289 crore for Government in year 2007-08 & Rs 209 crore for year 2008-09.

PSEB has paid Rs 85.99 crore as interest to GoP in FY 07-08 but in FY08-09 it has not paid any interest to the Government.

View of the Commission

Refer para 2.14.12, 2.14.13 & 2.16, para 3.14.4 & 3.15, para 4.13.4 and  para 6.4.

 

Issue No. 4: T & D losses & agriculture consumption

Board’s claim for AP consumption of 11699 MU for FY 09-10 needs to be collaborated with the calculation based on the sample study presently carried out with satisfactory level of sample meters. Installation of energy meters be carried out on priority since it will correctly identify T&D losses and 70 % of the required investment (meters for 11 lakh AP sets will cost Rs 227 cr) can be covered from consumer security deposits & rest 30% of expenditure could be borne by the PSEB and subsequent savings of T&D losses can be passed on to other consumers.  As per Section 55 of The Electricity Act 2003, Board needs to provide 100% metering. But as per PSEB’s response to the Commission’s directive, the Board has pleaded that matter is pending before the Hon’ble Supreme Court though no stay had been granted. As there is no stay, this provision of the Electricity Act should be given rightful importance.

Response of PSEB

PSEB has planned to increase total number of sample meters from 5.56% to 10% of total AP consumption for more accurate projections of unmetered sales and has proposed to increase the number of sample meters from 53,858 to 1, 00,000 by the end of FY 09-10.

View of the Commission

Refer Objection no.8, issue no.4

 

Issue No.5: Energy balance

Board has shown rising dependence on power purchase at the rates double than power generation and the power situation is bound to collapse. The growth rate is almost four times for AP consumption (19.79% v/s approved 5%).Thus, this increase if allowed will put proportionately higher tariff on non-subsidized categories. In case growth in consumption is allowed without availability of power, the sufferings of consumers will increase due to additional power cuts. Thus, the growth may be allowed as per availability of power to have a balanced Energy Balance.

Response of PSEB

Power purchase needs have increased as there has been limited capacity addition in the past with the notable exception of Lehra Mohabbat Stage 2. However, a number of power projects are in pipeline like Talwandi Sabo, Goindwal Sahib, Gidderbaha Power, Nabha Power which are likely to make Punjab a power surplus state in the future. However, for FY 09-10, it has to resort to Power purchase from external sources and has thus prayed to the Commission to allow the power purchase costs in full. For AP Consumption, PSEB submits that due to good rainfall in the state in FY 08-09, AP Consumption was estimated to be lower than FY 07-08 .However, PSEB expects that monsoon would not be as favorable in the FY 09-10 as it was in FY 08-09 and hence, AP Consumption is bound to be higher. Thus, PSEB has applied 8% growth rate twice on FY 07-08 figures to evaluate AP Consumption for FY 09-10.

View of the Commission

Refer Objection no. 4, issues no. 4 & 9.

 

Issue No. 6: Power Purchase

Every year Board is making arrangements for power purchase for AP category during paddy season. Additional power purchase should also be made for Industrial consumers who give extra margin of profit to PSEB. More profit shall mean further reduction in power cuts and therefore, Board be directed to purchase more power.

Response of PSEB

It is Commission’s prerogative to decide on this matter.

 

 

 

 

View of the Commission

Power purchases have to be made to cover the gap between demand and supply but these have to be effected prudently keeping its cost in view at all times. Power cuts, if necessary, have to be imposed fairly taking into account the interests of different categories of consumers.

 

Issue No. 7: Interest Cost

The trend of increase in these costs should be contained and reasons for its increase must be addressed purposefully. This increase has been due to non-adequate tariff increase, non payment of subsidy for years 1997-2002, delayed payment of subsidy, non refund of excess interest of Rs 501 crore etc. Thus, in light of the provisions of The Electricity Act 2003, payment of subsidy in time by Govt will reduce PSEB’s interest & finance burden and in case GoP doesn’t pay this subsidy in time, then the burden of interest may not be passed on to the consumers and should be borne by state Government It is thus prayed that reasons highlighted by the Board are addressed with just approach and consumers are not burdened with unjustified interest & finance costs.

Response of PSEB

PSEB has prayed to the Commission to consider non-adequate tariff increase, non payment of subsidy for years 1997-2002, delayed payment of subsidy, non refund of excess amount of interest of Rs 501 crore paid to the Government in its ARR. However, it is the Commission’s prerogative to decide whether Government or Consumer is to be burdened.

View of the Commission

It is the Commission’s endeavour to ensure that the consumer is not burdened with unjustified interest and finance costs. It may be noted, however, that the question of non-payment of subsidy for the years 1997 to 2002 has been addressed by the Commission in its Order 13.9.2007. The issue regarding excess payment of interest is dealt with in para 2.14.12 & 2.14.13. As regards delayed payment of subsidy, the Govt. is liable to pay interest thereon.

 

Issue No. 8: Annual Revenue Requirement

a)       Current financial crisis, as shown by the PSEB, is matter of great concern for LS consumers as they are suffering from scheduled & unscheduled power cuts. Thus flow of finance for working capital and for development projects may be adequately allotted so that Board may take remedial steps to contain this trend of revenue gap.

b)       Furthermore, outstanding from various state Government departments as reflected in ARR must be recovered with priority by specific direction and monthly reviewing and the state Government may be called upon to pay all the dues to the Board.

Response of PSEB               

a)       It is the Commission’s prerogative to consider this matter.

b)       Department of Finance, GoP has agreed to adjust the recoverable amount from Govt Department’s against Government Loans to be paid by the PSEB vide L.D No. 7(1)44/03-3FF/4/162.

View of the Commission                         

a)       The Commission has been liberal in approving the Investment Plan of the Board. Usually, actual expenditure of the Board on the Investment Plan is less than the amount approved.

b)       Refer Objection no.4, issue no.8.

 

Issue No. 9: Tariff & cost of supply

Cross subsidy of LS category should be reduced by 40% from levels of FY 2005-06 as the expected growth of this category is less than projected growth of subsidized category of consumers.

Response of PSEB

PSEB submits that LS tariffs cross subsidy levels had been reduced from 22% in T.O 2007-08 to 17.8% in T.O 2008-09. However, it is the Commission’s prerogative to decide on this matter.

View of the Commission      

Refer Objection no.5, issue no.10.

Objection No. 15: Punjab Alkalies & Chemicals Ltd.

Issue No.1: Cross subsidy 

a)       As per the provisions of National Tariff Policy & the Electricity Act 2003, the Commission has fixed the time frame for elimination of cross subsidy by the year 2015. However, instead of gradual reduction, cross subsidy burden on objector has increased from 31 paisa to 53 paisa in 2008-09. A road map should be drawn for elimination of cross subsidy by the year 2015.

b)       A study of cost of supply of electricity for different categories be done by PSEB to ascertain average cost of supply for elimination of cross subsidy.

c)       There should be a limit of consumption by subsidized category beyond which normal tariff should be charged or the Government should make good of the increased consumption. Benefit of lowest slab in the domestic tariff should be limited to consumers who can not afford to pay for electricity consumption and who restrict their consumption to 100 units.

d)       Burden of high T&D losses should be passed on to contributing consumers and not on high voltage consumers as T&D loss in their case is minimal and also tariff to any category should be in line with its cost of supply.

Response of PSEB            

a)  National Tariff Policy states that the tariffs should be +/- 20% of the Average Cost of Supply. The industrial tariffs in Punjab are at about 16.34% above the Combined Average Cost of supply @ 364.45 paisa/unit (As per Tariff Order 2008-09). The latest amendment to the Act specifies that the cross subsidy is to be gradually reduced, and not necessary eliminated, in the manner specified by the Appropriate Commission and as such National Tariff Policy discusses reduction in cross subsidy at percentage level & not in absolute terms.

b)  PSEB has floated an Expression of Interest for carrying out Consumer category wise Voltage wise Cost of supply study.

C & d) It is  the Commission’s prerogative to consider .

View of the Commission           

a)  The Commission has already notified the road map for reduction in cross subsidy in its Tariff Regulations 2005 and accordingly determines the tariff so that it progressively reflects combined average unit cost of supply, in next ten years.The cross subsidy may have increased in absolute terms but has reduced in percentage terms.

b & d) The Commission directs the Board to submit the report on Cost of Supply study within six months from the date of issue of this Tariff Order.

c)    Attention is invited to para 6.6 of Tariff Order 2007-08.

Issue No. 2: Agricultural consumption

More than 50% growth in the last 4 years is incomprehensible and increase in AP consumption from 2006-07 to 2007-08 is unjustified .Also, AP consumption of 11699 MU for FY 09-10 over 20 % increase from actual consumption of FY 08-09 is not palatable

Response of PSEB

Over the years load of AP consumers has increased due to release of new connections, various VDS schemes and gradual reduction in water table etc thereby increasing AP Consumption over these years. Due to good rainfall in the state in FY 08-09 AP Consumption of power was estimated to be lower than FY 07-08 .However, monsoon is not likely to  be as favorable in the FY 09-10 hence, AP Consumption is bound to be higher. Thus, PSEB has applied 8% growth rate on FY 07-08 figures to evaluate AP Consumption for FY 09-10.

View of the Commission

Refer Objection no.8, issue no. 4.

 

Issue No.3: Interest cost

Increase in interest cost by more than 100% in a year has no justification. Moreover, interest on working capital has also increased due to delayed payment of subsidy from GoP. Any interest on loan taken by PSEB due to non payment of subsidy by the Government should not be charged to the consumers.

Response of PSEB

PSEB has provided requisite justification for increase in interest charges in the ARR and submitted documentary evidence. The Commission had allowed an amount of Rs 35.56 crore for FY 07-08 on account of interest levied on delayed payment of subsidy by the Punjab Government in its Tariff Order of FY 2008-09. Likewise, PSEB has prayed for allowing interest payment owing to late payment of subsidy by the Punjab Government.

View of the Commission

Refer para 4.13.

 

Issue No.4: Re-allocation of Ranjit Sagar Dam cost

As per ATE’s judgment of 26-05-2006, Rs 5700 crore of RSD cost had to be judiciously reallocated between Irrigation & Power sector. After relying on Chatha Committee report, it has been decided to write back Rs 1322 crore out of Rs 4538 crore (79.1% of Rs 5700 cr.  PSEB’s original share).However, this relief is small.

Response of PSEB

The Commission in its order dated 13.9.2007 has addressed this issue and has stated in para 2.6 that for the reasons brought out, the Commission is of the view that it is inadvisable and perhaps even impossible to re-determine the cost of RSD Project at this stage. The order further states that in so far as apportionment is concerned, this seems, on the whole, to have been fairly accomplished by the State Government with an open mind on the subject. Also, the issue was reviewed by the Chatha Committee which after going into all relevant aspects recommended that the apportionment of 79.1% and 20.9% between PSEB and the Irrigation Branch be retained. The Commission, accordingly, held that no interference is called for in the already determined and allocated cost of RSD Project.

View of the Commission

Refer Objection no.5, issue no.6.

 

Issue No.5: Power purchase

a)       Increased power purchase for FY 09-10 in the state is owing to 4% reduction in load factor of thermal power plants & increased agricultural consumption. The Commission may review the power generation in the State due to good rain & snow and allow minimum required power to be purchased from outside the state.

b)       The Commission may fix both quantity and rate at which power may be purchased & ensure not to purchase power beyond authorized rate and beyond Rs 4 per unit, Commission’s permission be obtained and there should not be any purchase from liquid fuel sources.

c)       Industrial consumers should not be loaded for UI purchased during paddy season for agriculture or during peak hours as their requirement is uninterrupted during the year and is not generally linked with season.

Response of PSEB

a)       There is a reduction in load factor of thermal power plants due to scheduled R&M. For increase in AP consumption refer response to issue no. 2 above.

b)       PSEB mainly rely on supplies from long-term contracts apart from its own generation. However, it is not feasible to meet short term, seasonal or peaking demand through long-term contracts only. Hence, power trading is essential for meeting the short term demand at an optimum cost. The traded power is sourced from coal/hydro power plants, of which power production cost is mostly not more than Rs 4 per unit but the price in most of the time blocks has been higher. The apparent reasons for rising trend in the sale price of short-term traded electricity are; increasing shortages of electricity, increase in maximum rate under UI, absence of regulatory framework on price and increasing fuel costs. Under the circumstances, in case PSEB does not resort to traded power and/or does not requisition liquid/other costly fuel, long duration power cuts will be imperative on all categories of consumers which shall play havoc on State’s economy. As regards placing an authorized cap rate on traded power unit cost; this is not feasible since its cost is determined by market forces and the market rate is likely to be above the cap rate, leaving PSEB without any traded power. In normal course liquid fuel based power is not scheduled in the day ahead schedule of NRLDC except only in the extreme shortage situation. Sometimes NRLDC allocates liquid fuel based generation to the overdrawing states during low frequency period, so some of the allocation from liquid fuel based generation booked by the NRLDC is beyond the control of PSEB.

c)       It is the Commission’s prerogative to consider this matter.

View of the Commission             

a to c) Refer para  4.4 and para 4.8. 

 

Issue No.6: T&D losses

Any increase in AP consumption (over & above approved consumption) should either be charged to the consumers or borne by the Government and not charged to other consumers in the shape of T& D losses. Further, PSEB should control theft & pilferage and not charged to HT consumers as theft is not possible at high voltages. T&D losses, if pegged down to targets fixed by the Commission, shall substantially reduce tariff & average cost of supply.

Response of PSEB

PSEB has been consistently making efforts for reducing theft. More than 25 lakhs connections were checked and over 3 lakhs detections made in FY 2007-08.

However, it is the Commission prerogative to decide on the loading of theft & increase in AP consumption over & above approved levels.

View of the Commission                           

For AP consumption, refer para 4.1.3.

For T & D losses, refer para 4.2.

 

Issue No.7: Employee expenses

Any additional expenditure should be met by way of internal efficiency improvement or by way of reducing costs over & above the performance level fixed by the Commission who may allow WPI increase during FY 09-10.

 

Response of PSEB

PSEB has undertaken a lot of measures to reduce its employee costs as discussed in the ARR. Employee costs consist of following uncontrollable factors that PSEB is incurring on actual basis

·          Annual Increments, normal increase in Dearness Allowance & other allowances as announced from time to time.

·          Terminal benefits, out flows to the retired employees and contribution to the terminal benefit for the existing employees.

·          BBMB Employee expenses, out flows on account of payments to employees of BBMB Plant.

These costs are in no way related to WPI/Inflation and hence the Commission is requested to allow these on actuals.

View of the Commission

Refer para 4.9.

Issue No.8: PLEC

PLEC should be recovered from consumers who are responsible for increase in demand during Peak load hours and not on consumers who are receiving continuous power. The proposal of refixing PLEC is biased against LS consumers as current rates are very high vis-à-vis average cost of power. Furthermore, private hospitals running on commercial lines are only charged 25% extra. Hence, these PLEC charges should not be accepted.

Response of PSEB

PSEB has already presented it case in the ARR and prayed to the commission to review & refix these charges.

View of the Commission                     

Refer para 5.7.     

Issue No.9: Transit loss of coal

It has suggested that CERC norm of 0.8% transit loss of coal should be applicable for PSEB also.

Response of PSEB

PSEB submits that coal transit loss for GNDTP and GHTP Stage-I & II have been taken on the basis of the actual data available from the respective stations till Sept’08 and CERC norms for the second half of FY08-09 whereas for FY 09-10, the loss for GNDTP and GHTP Stage-I & II has been assumed to be 2% as approved by the Commission in the Tariff Order for FY 08-09. For GGSSTP, the Coal Transit loss for FY08-09 has been taken on the basis of the actual data available and projection for the second half of FY08-09. The coal transit loss for GGSSTP for FY 09-10 has been done on the basis of projections for the second half of FY 08-09 and taken as 2.0%. PSEB does not have control in reducing coal transit loss beyond a certain level due to many uncontrollable external factors. Moreover, PSEB’s thermal plants are non pit head plants and thus Board has prayed to the Commission not penalize due to the impact of these uncontrollable external factors.

View of the Commission

Attention is invited to para 4.7.2 of Tariff Order FY 2006-07, where the issue has been discussed in detail.

 

Issue No.10: Power factor incentive

Power factor incentive should be rationalized and equal for all i.e 0.25% rebate for every 1% increase in pf beyond 90% (Currently for LS & PIU the incentive is above 0.9 & 0.95 p.f respectively)

Response of PSEB

Differential Power Factor incentive is due to consumers having different inherent power factor like Railway Traction (0.93 to 0.94) whereas other HT consumers have somewhat lower p.f. These incentives are for gradual improvement in power factor gradually. However, it is the Commission’s prerogative to decide.

View of the Commission

Refer para 5.3.4. 

 

Issue No. 11: KVAH tariff 

Implementation of KVAH tariff is suggested.

Response of PSEB

The proposal of KVAH tariff is under discussion in the Board.

View of the Commission

Refer para 5.4.

 

 

Issue No.12: Tariff

As the Board is not following most of the directives, the Commission may consider reducing the tariff for the FY 09-10.

Response of PSEB

The resultant gap in expenditure & revenue amount does warrant an increase in tariff.

View of the Commission

Refer Objection no.2, issue no.2.

Objection No.16: R.P. Multimetals Pvt. Ltd.

Issue No. 1: PLEC

 As per the ESR 168.1.1, exemption from peak load hours restrictions has been categorized under three different categories of large scale consumers mainly:

a.       General Industries are allowed to run maximum load of 10% of their sanctioned contract demand or 50 KW whichever is less.

b.       Induction furnace consumers are allowed to run a load of 5% of their sanctioned load of 50KW per furnace whichever is less.

c.        Arc furnaces are allowed to run 5% of their sanctioned contract demand.

 

These categories are allowed to run the load without payment of any additional charges over and above the normal tariff. If such a consumer avails peak load exemption of 100 KW, then as per ESR 168.1.2.1 additional payment of Rs.120/- per KW per month is levied for the exemption allowed minus eligible exemption over and above normal energy bill. A consumer with 2 induction furnaces is allowed 100 KW to run a load without any additional payment during peak load hours.

However, when such a consumer seeks PLEC at 100 KW and agrees to pay additional payment, the following questions arise:

i)         What will be minus eligible exemption?

ii)       What are the additional charges over and above the normal tariff?

iii)      What will be the maximum load to run during peak load hours i.e 100KW as per 168.1.1 i.e. exemption from peak load hours restriction plus additional PLEC at 100 KW as per 168.1.2.1 totaling 200KW or only 100 KW?

PSEB restricts the load to run at 100 KW only and also charges Rs. 6000/- per month extra in their energy bill. It is submitted they are denying the benefit of clause 168.1.1. i.e. exemption from peak load hours restriction. It is requested to remove this misinterpretation by PSEB and clarify the same or these clauses may be redrafted /amended to have a clear view of the availability of minimum eligible load to run during peak load hours restriction.

Response of PSEB

a)       The LS Consumers who are availing peak load exemption  of 100 KW shall be charged over and above of their normal energy charges @ Rs.120/- per MW per month for load of ( 100 KW/eligible  exemption limit as per Para -3 of PR Circular No.2/98) KW.

b)       The LS Consumers who are availing peak load exemption of more than 100 KW shall be charged extra over & above their normal energy bill @ Rs.1.80/-per KW per hour if their exemption does not exceed 65% of the Sanctioned Contract Demand at 0.9 power factor and @ Rs.2.70 per KW per hour for the exemption above 65% of the Sanctioned Contract Demand at 0.9 power factor.

As per present regulations SE/DS is empowered to grant peak load of 100 K.W(Fixed) and the charges payable by the consumer are Rs.120/- per K.W. per month for load of ( 100 KW – eligible exemption limit as Para 3 of PR Circular No.2/98 ) KW.

If the consumer wants the PLE more than 100 KW then the same is to be allowed by CE/SO&C and the PLEC will be as per Para 2 above. In case of mixed load, the eligible exemption without payment of peak load exemption charges will be the sum total of eligible exemption calculated on the basis of nature of the process and load of each process and exemption permitted as per rules for that process. In view of this the queries of the objector are replied as under:

i)   The minus minimum eligible exemption will be the eligible exemption without payment of peak load exemption charges. In case consumer has one furnace the eligible exemption will be 5% of the Sanctioned Contract Demand or 50 KW whichever is less. In case the consumer has two furnaces then eligible exemption will be 5% of Sanctioned Contract Demand or 100 KW whichever is less.

ii)  The peak load exemption charges calculated under Para 1 and 2 above are payable over and above the normal tariff.

iii) In case the consumer has two furnaces and his Sanctioned Contract Demand is more than 2222 KVA, then the eligible exemption will be 100 KW without payment of peak load exemption charges.

It is further clarified that the consumer having connection for Sanction Contract Demand more than 2222KVA, comprising of two furnaces shall be eligible to run 100 KW load during peak load restriction hours and he is not eligible to seek peak load exemption of more than 100 KW from SE/DS concerned as he is already eligible to run 100 KW peak load during peak load restriction hours, without payment of any additional charges. If the consumer wants more than 100 KW load during peak load hours, he needs to approach CE/SO&C and in such a case, he shall be billed peak load exemption charges for the load sought to run during peak load hours.

View of the Commission

Being a personal matter, the consumer is free to approach the Commission in his individual capacity.

 

Issue No.2: No objection certificate

The requirement of NOC by way of an affidavit from seller be dispensed with in case of DS/NRS consumers as seller might have shifted and an affidavit may not be possible in certain cases as sometimes seller resort to extra payment from the purchaser for issuing the affidavit. Accordingly, an application for change of name with registration deed be accepted and allowed as such.

Response of PSEB

This matter does not pertain to ARR. However, the Commission may have to look into this matter.

View of the Commission

The issue does not pertain to ARR. However, it will be dealt with in the ‘Conditions of Supply’ being finalized by the Commission.

 

Objection No.17 & 18: I.N.A. Rural Development Society

Issue No.1: Tariff for horticulture/vegetable/floriculture cultivation under green houses etc.

The Commission is requested to clearly mention in the Tariff Order under the sub-head agricultural pump-sets appearing (at serial no. 4 under Head A) Permanent supply that Agricultural Pump-sets also includes Horticulture/Vegetable/Floriculture cultivation/crops under Green House etc. so that farmers growing vegetables /Floriculture are not harassed and penalized for adopting latest technologies in the field of agriculture.

Response of PSEB

It is the prerogative of the Commission to consider.

View of the Commission

Refer para 5.8.

 

Issue No.2: Tariff for dairy farming

The farmers who are carrying out Dairy Farming have to bear electricity charges under Domestic Power Supply or as Small Power Industrial consumer. However, agricultural consumer are paying electricity charges at 240 paisa /Kwh or Rs 250/bhp/month and are duly subsidized by the Government The Commission is requested to create a separate category of consumers for dairy farming in the Tariff Order for which the rate may be indicated at the same level as applicable to AP consumers

Response of PSEB

It is the prerogative of the Commission to consider creation of separate category of consumers for Dairy Farming.

View of the Commission

Attention is invited to para 5.2.6 of Tariff Order FY 2006-07, where the issue has been discussed in detail.

 

Objection No.20: Association of PSEB Affiliated Schools (Pb.) Regd., Everest Public Sr. Sec School

Issue No.1: Tariff category

Electricity charges for the affiliated schools should be on the basis of Domestic rates as against NRS rates and should be similar to Govt/ Aided Schools since unlike them, they are not getting any grant or aid from  the Government but are providing quality education to lacs of student of the state.

Response of PSEB

It is the prerogative of the Commission to consider.

View of the Commission

Refer para 5.1.

Objection No. 21 & 22: Er. S. K. Seth

Issue No.1: Purchase of power from IPP/ Co-generator

i)         PSEB is resorting to power purchase @ Rs 8-10 per unit while it is not procuring cheaper power from various co-generators/ IPPs situated in the state. By purchasing power from co-generators/ IPPs, PSEB will further gain on account of 20% T&D losses.

ii)       In view of rising cost of Biomass from Rs. 1300 -1800 to Rs.4000 per Ton, the Commission needs to revise the rates of Biomass Power adopted by PEDA while finalizing NRSE policy.

 Response of PSEB

i)         It is not procuring Power @ Rs 8-10 per unit under UI as it overdrew 483 MUs of energy from the grid at an average rate of Rs 6.04 per unit during the year 2008-09 while the average rate during April 09 was Rs 6.61 per unit  for an overdrawl of 56 MUs. PSEB procured substantial quantum of power from IPPs in Punjab @ Rs 3.75 per unit during the year 2008-09.Further PSEB had also invited tenders for short term power purchase of power to meet its demand for paddy season 2009. However, an exorbitant rate of Rs 7.25 per unit was quoted which was not accepted by PSEB being on the higher side. Considering the same, it is submitted that IPP power is not cheaper vis-à-vis UI.

ii)       The Commission may consider.

View of the Commission

i)   The issue will be separately examined by the Commission.

ii)  Refer Commission’s Order dated 13.12.2007. The developers are free to approach    the Commission for the purpose at the appropriate stage.

 

Issue No.2: Extra levy for private Hospitals

Levy of extra 25% tariff on Satguru Pratap Singh Apollo Hospital is not approved by the Commission and not mentioned in Board’s own ESR. Even at the time of extension of load from 1199 MW to 1999 MW, there was no mention of this extra Tariff. Hospitals are already paying a higher tariff @ 449 paise under NRS category as compared to overall average rate of 364 paise per unit, thus paying extra tariff of 25% which is highly discriminatory. The actual effect of this extra tariff is 27.5% (25% + 10 % E.D). Further railways, military & defense installations, AIR, TV etc are also essential services but are not charged any extra tariff even though Railways & TV are working totally on commercial principles and exempted from this levy. This extra levy should be withdrawn as it is irrational, discriminatory, and arbitrary & is not approved by PSERC.

Response of PSEB

Private hospitals are being given un-interrupted power supply through independent feeders for less than 1 MW load & thus as such charges of additional 25% tariff are fully justified. Otherwise they have to face frequent power cuts which are imposed on Category-I consumers. Further these additional charges are being recovered by private Hospitals from their patients as hefty operation, room rent & consultancy charges etc. PSEB has already exempted charity hospitals from the levy of these additional surcharges. Electricity Duty is being collected by Board on behalf of Government of Punjab.

View of the Commission

Refer para 5.6.

 

Objection No.24: Mithila Malleable Pvt. Ltd.

Issue No. 1:  PLEC

PLEC & other penalties are to be fixed under section 62 of the Electricity Act 2003 where differentiation in terms of various factors may be made. The permission sought by PSEB is not according to the Act. PSEB can straight away suggest a calibrated additional charge for the electricity consumption during peak load/ restriction periods. It is suggested that there should be no additional charge for load/consumption upto 10% of the contracted load and beyond this a percentage of basic tariff may be charged for additional consumption/load say 25% or 50%. The Commission has, already in its tariff orders, fixed the charges for exceeding the demand at Rs 250/KVA per month irrespective of the number of defaults. PSEB is only required to fix a limit of the load/ demand during peak hour period and charge the same as per the charges already determined by the Commission.

Response of PSEB

The contention of Petitioner is not agreeable as it presumes that PSEB has the dedicated power & transmission system to meet the demand of the industry and the lighting load of General Supply Consumers. Factually, during paddy season, agricultural load is also to be met during peak load hours. In view of several constraints of the T&D system during peak load hours, the request of PSEB to impose peak load restrictions on industrial consumers is fully justified.

View of the Commission

The issue will be separately examined by the Commission.

Objection No.25 & 27:  Technocrats Forum

Issue No.1: Realistic assessment of AP consumption

AP consumption is of utmost importance since lower side assessment will result in unduly lower receipt of revenue in form of subsidy from Government and vice versa whereas higher assessment will suppress actual T&D losses. Analysis of AP consumption committee headed by Advisor, Finance be reviewed by the Commission and made public for comments.

Response of PSEB

Board has been carrying out sample metering to evaluate unmetered AP Consumption and has planned to increase sample size from 5.56% to 10% of total AP connections for more accurate estimation of AP consumption. The report of AP consumption committee headed by Advisor, Finance is awaited and will be shared with Public & the Commission for comments on its receipt.

View of the Commission

Refer Objection no.8, issue no. 4.

Issue No.2: Provisions of the Electricity Act 2003 & Tariff Policy

a)       Section 61(g) of The Electricity Act 2003 lays down that tariff should progressively reflect the cost of supply and also reduces & eliminates cross subsidies within a period to be specified by the Commission.

b)       National Tariff Policy stipulates that tariff is within +/- 20% of average cost of supply latest by 2010-11 and that Tariff should be at least 50% of CoS for designated groups like SC& BPL. The Commission is requested to give due consideration to these provisions while fixing the tariff for subsidized categories.

Response of PSEB

As per Tariff Order of 2008-09, except for the subsidizing categories, cross subsidy level is already less than 20%, except for NRS, Public lighting and Railway traction. PSEB has floated an expression of interest for consumer category wise & voltage wise cost of supply study done in Punjab. However, it is the Commission prerogative to consider this matter.

View of the Commission                                 

a)  Refer Objection no.5, issue no.10.

b) Refer para 6.3.5. 

Issue No.3: Revenue expenditure

The Commission may direct the Board to project another set of figures for Revenue Expenditure giving effect to Commission’s earlier directives, to enable the consumers to understand the scope for reduction in Board’s projected expenditure.

Response of PSEB

PSEB prepares its Statement of Annual Accounts as per Electricity (Supply) Annual Account Rules of 1985 & as such it is infeasible to prepare separate Income & Expenditure Account.

View of the Commission                     

Refer Objection no.5, issue no.1 (a).

 

Issue No.4: Quality of commercial service

Whenever a consumer visit offices to get redressed of problems related to correction of their bills, sundry charges etc, the problems are not redressed promptly and consumers feel more aggrieved with the putting off attitude of Employees. The Commission may direct the Board to bring the requisite changes in the work culture compatible with commercial working where buyers are treated with utmost courtesy & efficiency. Necessary deterrents & disincentives prevalent in corporate sector may be introduced to bring desired change in the work culture.

Response of PSEB

This matter does not pertain to ARR Petition and should be addressed separately.

View of the Commission

The issue is not related to the ARR.  However, the Board would be well advised to consider imparting special training to its employees aimed at improving work culture and consumer friendliness.

 

Issue No.5: PSEB Assets

The Commission may get confirmation from the Board that a detailed list of assets is available with the Board and system of regular monthly updating be introduced .Further, obsolete & redundant possessions & property be disposed of.

Response of PSEB

PSEB has awarded a work order for physical verification of fixed assets, valuation of fixed assets & other allied works. Assessment of further utilization of Board’s Assets will be carried out once this exercise is complete.

View of the Commission

Refer Objection no.11, issue no.7.

 

Issue No.6: Energy conservation through DSM

The Commission may direct the Board to achieve energy Conservation in the industrial sector also through DSM as this offers much larger scope than the Domestic Consumption compared to Industrial Consumption.

Response of PSEB

PSEB proposes to undertake Demand Side Management by persuading industrial consumers to take measures like installation of CFL lamps in place of incandescent lamps & installation of energy efficient motors.

View of the Commission

Refer Objection no.4, issue no.1.

 

Issue No.7: Use of KVAH meters for industrial consumers

Board may be directed to examine feasibility of using KVAH meters (instead of KWH meters) for measuring industrial consumption, while introducing two part tariff as this would self drive consumers to achieve unity power factor.

Response of PSEB                                 

The proposal for KVAH Tariff is under discussion within the Board while issue of two part tariff has been already addressed in Tariff Order of FY 2008-09.

View of the Commission                  

Refer para 5.4.      

 

Issue No.8: Tariff revision

In the absence of specific recommendations of PSEB in the ARR for bridging the revenue gap, it is difficult for consumers to offer their comments on the ARR.

Response of PSEB

The Commission adopts its own yardsticks/norms for evaluation of revenue gap & evaluation of tariff and thus, PSEB did not submit its tariff proposal.

View of the Commission

Refer Objection no.9, issue no.4 (b).

 

Issue No.9: Public notice

Public notice inviting comments should highlight important data/parameters impacting tariff determination to enable the consumers to visualize the ARR at a glance and submit comments in a meaningful manner.

Response of PSEB

Public notice is issued as directed and framed by the Commission.

View of the Commission                                

The public notice is issued to draw attention to the ARR which is otherwise available on the website and in the offices of the Board. However, a comparative itemwise summary of the ARR is also given in the public notice.

 

Objection No. 26: Power Engineer Associates

Issue No.1: Bulk supply tariff

a)       Bulk Supply Tariff is much higher than domestic & industrial tariff and is slightly less than NRS tariff. Even ACD rates are more than double the ACD for domestic, NRS & Industrial Connections. 

b)       Also, PSEB is unnecessarily penalizing the B.S consumers on the plea that they can not resell energy to their tenants/service providers. Distribution organization west zone, Bathinda has imposed a penalty of Rs.97, 98,645/- recently on this account on Adesh Institute of Medical Sciences and Research.

c)       It is requested to reduce the B.S tariff and also streamline the instructions for resale of electric supply to the legal tenants/service providers in the same premises of the bulk supply connections to avoid unnecessarily financial burden & harassment to genuine B.S. consumers.

Response of PSEB

a)       The fixation of Tariff is the prerogative of the Commission.

b)       This matter does not pertain to ARR and should be addressed separately.

c)       It is prerogative of the Commission to decide.

View of the Commission

a)  The B.S. Tariff fixed by the Commission is reasonable.

b)  Consumers aggrieved by the imposition of penalty can seek redress through the existing Consumer Grievances Redressal Mechanism.

c)  The Commission will separately examine the need to modify instructions for resale of electricity to tenants/service providers located in the premises of BS consumers.

 

Objection No. 28:  Bansal Alloys & Metals Pvt. Ltd.

Issue No.1: Refund of charges

The objector is a 66 KV consumer since 1996, having cluster arrangement with another (Unit-II) with a total sanctioned contract demand of the cluster 15830 KVA.  The capacity of the 66/11 KV transformer is 12.5/16 MVA.  They have obtained permission from the office of Chief Engineer (Comm.) to increase the capacity of the transformer to 25 MVA under ESR clause 4.3.1.1 for which they were directed to pay service connection charges @ 5% of the prevalent rate of SCC for the transformer capacity over and above 120% of the sanctioned CD and accordingly paid Rs.270180/- with the application. It is stated that as per general conditions of Tariff & Schedule of Tariff for LS consumers approved by the commission & circulated by the PSEB vide CC No. 36/06 dt. 14-07-06, there is no such clause according to which above said charges are payable.

Response of PSEB

The general conditions of tariff and schedule of tariff for LS consumers as approved by the Commission covers only Tariff related matters but the charges being levied by the Board for transformer capacity over and above 120% of the sanctioned contract demand is not a tariff related matter, thus was not covered under CC No. 36/06. The charges for the petitioner are thus levied as per ESR Clause No.4.3.1.1. The existing power transformer capacity of the consumer was 12.5/16 MVA against total sanctioned contract demand of 15830 KVA, which was within 120% of the total sanctioned contract demand. However afterwards the consumer requested for increase in transformer capacity to 25 MVA which was more than 120% of his total sanctioned contract demand and thus, charges as per ESR 4.3.1.1 were recovered.

View of the Commission

Being a personal matter, the consumer is free to approach the Commission in his individual capacity.

 

 

29: Government of Punjab

The observations of the Government of Punjab on the ARR are summarised below, along with the view of the Commission:

 

1:  Interest of stakeholders

PSERC should apply realistic norms in line with the trends in rest of the country. These norms should aim to safeguard the interests of stake holders including consumers, PSEB and the Government.

View of the Commission

The Commission applies the norms as per its Tariff Regulations. Interests of all the stake holders are kept in view while determining the ARR of the Board and passing of the Tariff Order.

 

2:  Disallowance on account of fuel cost/power purchase/employees cost

Regulatory Commission needs to strike a right balance between the requirement of the commercial viability of the distribution licensee and consumer’s interest. Continuous disallowance by the Commission in employees cost, interest and finance charges, fuel costs, power purchase cost etc. in the successive tariff orders has badly impaired the financial health of the Board. The disallowance in the fuel costs being made by the Commission do not seem to be fair keeping in view the performance of the thermal power stations of the PSEB. PSERC should appoint some expert group to carry out a study on the lines of CERC for PSEB generating stations for finalizing the norms.

View of the Commission

Refer Commission’s Order dated 19.8.09 in Petition no. 15/2008.     

 

3: Employees cost

The Commission had allowed full employees cost to PSEB considering it a legitimate cost of supply of electricity for the year 2002-03. The employees cost allowed in 2002-03 referred to a particular number of employees in different cadres. It is felt that the Commission should allow actual cost of these employees including retiral benefits and those retired after 2002-03, as a committed liability of PSEB.

View of the Commission

The Appellate Tribunal in its Order dated 26.5. 2006 observed that the employee cost of the Board as per different parameters is the highest when compared with other SEBs in the country and initiatives of the Board in curtailing employee cost have remained ineffective. Keeping in view the observations of the Tribunal, the Commission has been determining employee cost of the Board as per its Tariff Regulations, 2005 which allows increase in employee cost at the rate of WPI increase per annum. As regards retiral benefits, these are allowed as per actuals for 2009-10 in terms of amended Tariff Regulations of the Commission.

Refer para 2.10, para 3.10 and para 4.9.

4: Agricultural consumption

The projection of AP consumption at 11699 MU for the year 2009-10 by the PSEB is neither justified nor proper. It is gathered that the Commission has appointed the consultants for verification of AP consumption for 2007-08. The report of the consultants may be shared with the Government before finalization of AP consumption for 2007-08. The AP consumption after due verification is not expected to work out more than 8960 MU for 2007-08.

View of the Commission

Refer para 2.2.3, para 3.2.3 and para 4.1.3. 

 

5: Installation of meters

The Commission should direct the PSEB to increase number of sample meters to one lac in a time bound manner. PSEB should also be directed to install meters at distribution transformers serving the AP consumers in a time bound manner to get a more realistic assessment of AP consumption.

View of the Commission

Refer para 4.1.3.

 

6: T&D Losses

The State Government feels that although the desirability to bring down the T&D losses is beyond question, the approach adopted by the Commission has not yielded any positive results in the last 6 years. It would therefore be appropriate that the Commission should reset T&D loss reduction trajectory by taking into consideration the actual T&D losses that may be determined by the Commission for 2007-08 based on AP consumption and to achieve the ultimate T&D loss target of 15% by 2012 as per the guidelines of Ministry of Power, Government of India.

View of the Commission

Refer para 4.2.

 

 

 

7: Interest on Govt. loans

The State Government has stated that disallowance of interest on Govt. loans for 2006-07, 2007-08 and 2008-09 by the Commission is neither fair nor justified. It has further stated that the matter being already before Appellate Tribunal for electricity, the Commission should allow payment of interest by the Board on Govt. loans as was being done before 2007-08 until the matter is decided by the Appellate Tribunal.

View of the Commission

Detailed reasons for disallowance of interest on account of diversion of capital funds for revenue purposes have been given in the Commission’s Order dated 13.9.2007 passed in compliance of the directives of the Appellate Tribunal Judgment dated 26.5. 2006. 

 

8: Return on Equity / ROR

The State Govt. has stated that the Board has neither paid ROE/ROR amounting to Rs.2108 crore from 2002-03 to 2008-09 to the State Govt. nor this amount has been converted into debt or equity. It has further stated that the Commission should direct the Board to pay the entire amount of ROE/ROR allowed by the Commission from 2002-03 to 2008-09 to the State Govt. along with interest. 

View of the Commission

ROE/ROR is allowed to the Board as per the Tariff Regulations of the Commission.   ROE/ROR becomes payable to the owner only if the utility is in profit and the amount becomes available. In a situation, where the Board has huge accumulated losses, the question of  disbursement of ROE/ROR to the Govt. does not arise.

 

9: Subsidy Payment:

The Govt. has intimated that subsidy for AP, SC and Non SC/BPL DS consumers would be continued as before in larger public interest. The firm commitment would be given after the determination of Tariff for these categories by the Commission and intimation of the same to the Govt. Further the Govt. has requested the Commission to allow the State Govt. to pay the subsidy on monthly basis.

View of the Commission:

Refer para 6.4.

 

 

ANNEXURE –III

 

Minutes of the Meeting of the State Advisory Committee of the Punjab State Electricity Regulatory Commission held on June 9, 2009.

 

            The meeting of the State Advisory Committee was held in the office of the Commission at Chandigarh on June 9, 2009. The following were present:

 

1.         Shri Jai Singh Gill,                                           Ex-Officio Chairman.

            Chairman, PSERC,

            Chandigarh.

 

2.         Mrs. Baljit Bains,                                             Ex-Officio Member.

            Member, PSERC,

            Chandigarh.

 

3.                  Shri Sarvjit Singh, Administrative Officer        Ex-Officio Member

            on behalf of  Secretary, Food  Supplies

            & Consumer Affairs, Govt. of Punjab,

            Chandigarh.                                                               

 

4.                  Secretary/Deptt. of Power,                                         Member

            Govt. of Punjab, Deptt. of Power,

            Chandigarh.                                                               

           

5.                  Shri K.D. Chaudhry                                                     Member

            Member/Distribution,   PSEB, The Mall,

                        Patiala.                                                                                   

 

6.         Shri K.K. Singla,                                                          Member.

Chief Engineer/Commercial, PSEB, The Mall,

                        Patiala.

 

7.         Shri Y.P. Mehra,                                                          Member.

                        Ex-Technical Member, PSEB,

                        # 12, Ram Bagh Colony, Behind GPO,

                        Patiala.

 

8.         Shri P.K. Jain, Asstt. Labour Commissioner              Member.

on behalf of Labour Commissioner,

Department of Labour & Employment,

                        Government of Punjab, Chandigarh.

 

9.         Shri Amarjit Goyal representative                               Member.

                        PHDCCI, Punjab Committee,

                        Sector 31-A, Chandigarh.

 

 

 

10.       Shri R.K. Atoliya,                                                         Member.

Chief Electrical Engineer,

                        Northern Railway, Baroda House,

                        New Delhi.

 

11.       Shri D.R. Kataria, Jt. Dir (Agri.) on behalf of               Member.

Director (Agriculture), Department of Agriculture,

            Government of Punjab, Chandigarh.

 

12.       Prof. R.S. Ghuman,                                                    Member.

                        Professor, Deptt. of Economics,

Punjabi University,

                        Patiala.

 

13.       Shri Rohit Chhabra, representative                            Member.

RED (NC) on behalf of  Executive Director

NCR-HQ, National Thermal Power Corporation,

                        R&D Building, Sector-24,

                        Noida.

 

14.       Shri Bhagwan Bansal,                                                Member.

                        Punjab Cotton Factory, Ginners Association (Regd.),

Shop No. 109, New Grain Market,

                        Muktsar.

 

15.       Shri Sarbagh Singh,                                                    Member.

                        Passi Nagar, Pakhowal Road,

                        Ludhiana.

 

16.       Shri Gurmit Singh Palahi,                                           Member.

                        Secretary, National Rural Development Society,

                        VPO Palahi, Teh. Phagwara,

                        District Kapurthala.

 

            17.       Smt. Namita Sekhon,                                                  Secretary.

                        Secretary, PSERC,

                        Chandigarh.

 

1.         The Chairman welcomed the Members to the meeting of the State Advisory Committee and thanked everyone present for having spared time to attend the meeting. The Chairman thereafter requested the Members for their valuable suggestions/issues.

2.         Shri Amarjit Goyal while appreciating the efforts of the Commission in bringing the improvement as well as transparency in the working of the Board raised the following views:

(i)         The cumulative gap of the Board’s ARR is very high.                                   

(ii)        Though the Board has made efforts in reducing the employees’ cost still it is on the higher side. He stressed the need of expediting the findings of the report of the Committee constituted for this purpose.

(iii)               Senior level posts in the Board should be reduced.

(iv)              Payment of subsidy on account of free power from 1997-2001 should be paid by the State Government.

(v)                The apportionment of RSD cost between Irrigation and Power needs to be reviewed. Commission should constitute an expert Committee as per orders of the APTEL for determination of allocation of RSD cost between Irrigation and Power departments.

(vi)              The cross subsidy should be worked out at the cost of supply, voltage wise as well as category wise.

(vii)             Power supply to the farm sector is highly subsidized. Cross subsidy should be decreased by increasing AP supply rate to atleast Rs. 3.00 per unit.

(viii)           All connections including AP should be metered to reduce theft.

(ix)              T&D losses need to be reduced.

(x)                There are excessive power cuts during paddy season. Extra power purchase at higher rates during paddy season should be charged from the Government who is giving subsidy for free power to AP consumers and no burden should be passed on to the Industrial Consumers on this account.

3.         Shri D.R. Kataria, Jt. Director Agriculture appreciated the efforts of the Board for installation of more sample meters for correct assessment of AP consumption. He intimated that new techniques have been developed which could reduce the time for paddy plantation and desired the Board to supply power for minimum 10 hours to tube well connections from 10th June.

 

4.         Shri. Y.P. Mehra pointed out the following issues:

(i)         The domestic supply consumption in 2008-09 has been shown as reduced, the reasons for the same need to be ascertained.

(ii)        The Board has admitted that they cannot adhere to the norms being set by the Commission and continue to work without making efforts for compliance of these norms. Commission should find out some means to ensure that the norms/orders of the Commission are complied with by the Board.

(iii)               Investible assets should not be allowed to be diverted for revenue expenditure.

(iv)              New power projects should be taken up by PSEB for which the Commission should advise the State Government.

(v)                AP consumption is increasing and the per MW consumption in agriculture is higher than all other categories.

(vi)              Not much has been done by the Board with regard to T&D loss reduction, which is linked with AP consumption.  More investment is required in the shape of capacitor additions for containing the losses.

(vii)             Pilot project study for improving the efficiency of AP pump sets should be carried out by the Board.

(viii)           Quantity of traded power needs to be capped and there should be not much difference in RE and true up expenditure. Moreover cost of power purchased should be proportionate to the increase in its quantity. 

(ix)              There should not be much difference between RE and True Up values.

(x)                Working Capital Loan is much more than permissible.

(xi)              Employee cost and pay revision arrears should be paid as per actuals to the Board.

(xii)             Depreciation rates taken in the ARR are on the higher side and need to be refined.

(xiii)           Investible funds are not shown in the investment plan.

(xiv)           Investment on any renovation work should be made after analyzing the cost benefit from such works.

(xv)            Coal of higher ash content (more than 35%) is not  to be transported over a distance of more than 1000 Kms. and should not be purchased  which adds to ash  disposal  problem as well as payment of excessive freight.

(xvi)           Sufficient funds should be provided to go ahead for the execution of Shahpur Kandi project.

(xvii)         Captive generation needs to be encouraged by offering higher power purchase cost due to increased input cost.

(xviii)        Power factor surcharge and rebate should be equal.

(xix)           High voltage rebate should be rationalized in view of higher surcharge.

(xx)            KVAH tariff and Two Part tariff need to be introduced.

(xxi)           Reasons for decrease in non tariff income need to be examined.

(xxii)         AP consumption after certain limit should be charged at non subsidized rate as per APTEL orders.

(xxiii)        The rate proposed for peak load exemption is high whereas power is purchased for AP supply and is also used by other categories of consumers.

(xxiv)       There is a quantum jump in R&M expenditure of the order of 20% in place of 4% which needs to be looked into.

(xxv)         The amount of Rs. 618 Crore shown in the investment plan for release of tube well connections should not be charged to the consumers. It should be charged to the Govt.

(xxvi)       Rs. 29 Crore have been provided for Micro Hydel Projects which in fact is in the purview of PEDA & needs to be looked into.

5.         Shri Bhagwan Dass Bansal suggested that as cotton ginning is a seasonal  Industry working  for 5 months only, timings of power cuts to this industry should be fixed in such a way so as to avoid harassment. He also suggested that special awareness programme for use of CFLs should be organized by the Board. He also pointed out that the paper used by the checking parties of the Board is of a poor quality and should be improved.

 6.        Shri Sarbagh Singh opined that stress should be laid on the increase of hydel generation in the State. He also pointed out that T&D loss of the Board has not been reduced in addition coal transit loss also needs to be reduced. He further pointed out that the figures of defaulting amount have not been shown in the ARR which need to be indicated. Regarding theft of energy, Shri Singh observed that it is on the higher side and needs reduction and also suggested that wherever unauthorized load is detected by the flying squad, the same should be regularized after getting the necessary security and service connection charges etc.

7.         Shri Gurmit Singh Palahi pointed out that the power purchase cost projected in the ARR is very high. He stressed the need for exploring the NRSE sources such as solar, biomass and baggase. He suggested encouraging the participation of villagers/panchayats in such projects. He pointed out that LD system in the villages is in a bad shape and should be renovated by providing suitable funds for the same. He maintained that until there is any improvement in the quality of supply of power, no tariff increase should be allowed.

 

8.         Prof. R.S. Ghuman was of the view that:

i)          The Commission should advise the State Government for taking up the generation projects in the public sector rather than depending entirely on the private sector and that the competitive environment envisaged in the Electricity Act and various policies of the Central Government can not be achieved by offering all works to the private sector. Instead of rebidding of the Project, the Rajpura Thermal project should be given to the Board for execution as the Board has trained and tested manpower.

            ii)         The State government should mobilize the resources for putting up power             projects in the public sector possibly in collaboration with                            NTPC specially when the 11th plan envisages more than 75% capacity         addition is in    the public sector.

            iii)         On power trading it was pointed out that over the last 5 years,         component of power purchased through trading has increased from 28%       to 46%.

iv)        A.P subsidy   must be sustainable and with some rationale. Subsidies are more of disaster management rather than long term curative measures. These freebies result in important area like Education & Health sectors getting ignored.

            v)         Interest component is increasing in the ARR.

vi)        Tubewells applications are pending for the last 10-15 years whereas tubewell connections are being released under OYT scheme.

            vii)        The cumulative revenue gap from the years 07-08, 08-09 & 09-10 is           increasing &    Board is in debt trap.

9.         Shri P.K. Jain, Asstt. Labour Commissioner, Deptt. of Labour & Employment, GoP, Chandigarh desired that the “Contract Labour (Regulation and Abolition)  Act,1970 & The Building and other Construction Workers Act,1996” should be adhered to by PSEB. Further, the Board needs to register as ‘principal employer’.

10.       Sh. R.K. Atoliya from Northern Railway pointed out that their comments have already been submitted for the consideration of the Commission.

11.       Shri Rohit Chhabra of NTPC pointed out that the target set out for release of  AP connections should be fixed keeping in view the availability of power. The Board should set a trajectory for 100% metering of AP connections. He was also of the view that cross-subsidies should be reduced in view of Electricity Act provisions, which would benefit open access as well.

12.       Secretary, Deptt. of Power, GoP, was of the view that efficiency, health of the Board and quality of power should improve. He pointed out that increase in the gap is worrisome with cumulative losses, mounting debt and the energy gap is increasing.  Power purchase cost, he feels needs to go down. Extensive   power cuts are not acceptable to any of the consumers.   He agreed that there are some structural/policy issues which need to be addressed in line with the provisions of the Act. The Govt. is open for partnership with NTPC in adding new generation capacity for which it has written to GoI to sort out the bottlenecks. He clarified that AP subsidy up to May 31, 2009 has been paid to the Board and, in future, monthly payments are envisaged. He also observed that T&D losses of the Board are high and need to be reduced, and that the Board’s investment plan is not resource based. He also informed that Govt. is coming up with a policy for release of tube-well connections pending for the last 10-15 years as also a policy to facilitate NRSE and captive generators to freely sell power outside the State. He was of the opinion that the issue of apportionment of cost of RSD project should not be reopened; moreover with the coming of the Shahpur Kandi project, generation cost of the power from RSD and Shahpur Kandi is likely to decrease with the apportionment of cost of Shahpurkandi Project. He also informed that it is for the first time that the Govt. has had to give a guarantee to enable loans being raised by the Board to meet the requirement of working capital. He invited members to give their views with regard to reforms and release of AP connections. Further, he felt that the Commission will have to take a reasonable view for implementation of 5th Punjab Pay Commission Report.

13.              Member/Distribution informed that a pilot project for improving efficiency of the tube wells is already going on with 2000 tube wells taken on a sample basis.  He justified the proposal of the Board for increase in PLEC. He also clarified that the charges proposed for availing Peak Load Exemption are for use of electricity for 3 hours, whereas in the case of uninterrupted supply to hospitals, the extra charges of 25% are levied on the consumption of electricity.  He felt that there is potential of saving 1500 MW power through demand side management for which the Board is taking the necessary steps.

 

            Chairman assured the members that their comments would be taken into consideration by the Commission. He also clarified that the  issue of  short payment of subsidy for the period 1997-2002 and apportionment of RSD cost between Irrigation and Power components already stands settled by the Commission through its order dated 13.9.2007. As regards unescapable employee cost of the Board, the Chairman informed that the Commission is at present considering amending its Tariff Regulations to take that aspect into account, it is imperative at the same time to undertake a work study for benchmarking staff, strength and productivity. Referring to the DSM initiatives, he observed that the effective DSM measures require multi-pronged initiatives and the Board needs to evolve a comprehensive strategy in this respect.

 

            The meeting ended with a vote of thanks to the Chair.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annexure-IV                                                                                                                                                                                                                                         

COMPLIANCE WITH DIRECTIVES ISSUED IN CHAPTERS 4 & 5 AND ANNEXURE-IV

OF TARIFF ORDER  FY 2008-09

 

 

An overview of the Directives issued to the Board in the Tariff Order FY 2008-09 and status of their implementation is summarized below:

 

Sr.

No.

Issues

 

 

Directive in Tariff Order

FY  2008-09

PSEB’s reply

 

 

PSERC’s comments

1.

Energy Audit and T&D Loss Reduction.

Background

The Commission noted that the Board engaged Consultants for a period of 5 years for comprehensive IT road -map and multi-stage IT implementation which would include various activities like creation of IT infrastructure (Hardware, Software and Net-working), ERP implementation in the entire Board and implementation of specific engineering solutions like energy audit, meter data management (AMR and RMR), load forecasting, CIS and CRM etc.

 

The Commission expected that the objective of linking incentives/ disincentives to the performance of employees would be suitably built into the monitoring system being devised. The Commission desired to be apprised of the annual

targets in the implementation of the computerization scheme.

The issue of T&D loss reduction was discussed in detail in para 4.2. As no further T&D loss trajectory was fixed, the Commission observed that it will separately take up this matter with the Board and based on their overall strategy in this regard, draw up the milestones for the next phase of loss reduction. In doing so, the implementation of preliminary steps such as the base line data survey, segregation of technical and commercial losses as well as energy audit will also be taken into account.

 

Directive

(i) To apprise the Commission regarding the targets and achievements of the implementation of IT solutions with an inbuilt monitoring system linking incentives/ disincentives to the performance of employees.

 

(ii) Take steps such as the base line data survey, segregate the technical and commercial losses and energy audit for drawing up  the trajectory for T& D loss reduction.

 

Two no. work orders  for carrying out energy audit at GHTP Lehra Mohabbat have been placed upon the following firms:-

i)     M/s Electrical Research & Development Association Vadodara.

ii)    M/s The Energy and Resources Institute, New Delhi.

  The aforesaid energy audit firms have submitted the draft energy report after carrying out all the energy audit activities. GHTP has studied the draft energy audit reports and submitted its comments to both the firms. Final energy audit reports are being awaited from aforesaid firms.

 

   T&D loss level is one of the most important performance key indicators for any power utility. Accurate estimation of T&D losses is crucial not only for working out energy required but also essential for its control and reduction. A comprehensive action plan for introducing energy accounting audit and working out T&D losses at any point of time at various levels has been envisaged for implementing through out the state. Electronic meters capable of online monitoring & control of various parameters including energy accounting will be installed on 11 KV feeders upto Distribution T/Fs (DTs).

 

Status of AMR Project:-

 

  The Automated Remote Meter Reading (AMR) project for 11 KV and above feeders (Transmission and Sub Transmission network) is under implementation. The Energy Centre for energy accounting and auditing along with network monitoring of the distribution feeders has been set up at Patiala. The detailed status of roll out of project is as under:-

 

a)                The Work Awarded to M/s Easun Reyrolle, Bangalore, Installation & commissioning of AMR  compatible energy meters of AP feeders taken up under Phase-I and to be completed by end June 09.

b)  IT hardware for BCS (Base Central Station) has been installed and commissioned at Energy Centre at Patiala.

c)  Installation and Communication hardware (Data Concentrator Unit i.e. DCUs) and field wiring has been completed and existing L&T make meters are being got upgraded to make them compatible with GPRS based AMR system.

d)  Connectivity: M/s Airtel the Connectivity service providers for AMR system has commissioned its VPN net work for providing GPRS service for the AMR system.

e)  Energy Centre has been set up and commissioned at Patiala.

f)    At present the AP feeder MIS is being generated at Energy Centre Patiala for about 1250 Nos AP metering points at sub-stations falling under DS Zones South, Central, and West. Further roll out for AP feeder AMR covering the complete PSEB (about 2300 Nos) is scheduled to be completed by end June 2009. The Phase-II of project covering the remaining metering points under AMR (about 5500 Nos) shall be taken up w.e.f. July 2009 by utilizing the upgraded meters being made available by M/s L&T.

  PO for purchase of 350 Nos. 600 KVAR capacitors has been placed on M/s WSI and for purchase of 975 Nos. 450 KVAR capacitors have been placed on M/s BHEL.

 

  PSEB has filed a petition No.15 of 2008 that Tariff Regulations providing for T&D loss level norms requires reconsiderations, as T&D loss trajectory should be linked to the actual investment done by PSEB. There are various reasons like un-availability of funds, lack of supplier’s interest etc., which lead to under achievement as compared to the plan. Such reasons for under achievement are not in control of PSEB.

 

In the absence of the yearly targets and the Board’s achievements against them, the Commission is unable to comment on the steps being taken by the Board for carrying out the energy audit and T & D loss reduction. Attention is also invited to para 4.2 of this Tariff Order.

 

The Board is also advised to furnish a comprehensive IT implementation plan with yearly targets and achievements.

2.

Agriculture Consum-

ption

Background

While the Board had, by and large, implemented the methodology of computing AP consumption based on the findings of the PAU Report, the shortcomings in this respect were highlighted in para 3.2.3 of the Tariff Order of 2008-09 and observed that the correctives required for a more accurate estimation of AP consumption will emerge from the independent study proposed to be undertaken.

 

Directive

(i) The Board was to make up for the shortcomings for complete implementation of the PAU report.

 

(ii)The Board was to carry out an independent study for a more accurate estimation of AP consumption.

  

In respect of short comings as pointed out in para 3.2.3 of Tariff Order 2008-09, instructions vide CC No.64/2008 dated 31.10.2008 have been issued for compliance of the observations / shortcomings. Moreover, there is quite progress in respect of sample meters to be representative of proportion of submersible to monoblock pump sets. Sample Meters on submersible motors have been increased from 39.23% in 3/2008 to 47.58% in 3/2009.

 The sample size has been increased to 55616 Nos for 1019508 Nos flat rate AP connections ending March 2009.

      Status in respect of  decision of PSERC to carry out an in-house Pilot Study in respect of Mohali & Ropar Circles is same as submitted in ARR/Tariff Revision Petition for FY 2009-10.

     Moreover, status in respect of report of the Committee headed by Sh. A. K. Aggarwal, Advisor/Finance, PSEB is still awaited.

 

 

 

 

The Commission had appointed an independent agency for validation of AP consumption. The findings of the study conducted by the agency have been taken into account in this Tariff Order.

3.

Improve-ment in Quality of Service.

Background

The Commission had noted that with the implementation of the UPS scheme in rural areas, it was now possible to treat rural and urban areas on the same footing while considering the question of imposing cuts etc. This aspect was to be considered by the Board.

 

The Commission had also observed that it was not necessary to link the placing of reliability indices on its website with the larger issue of   implementation of the IT system. The Commission, accordingly, had reiterated that the reliability indices be placed on the Board’s website without any further delay.

 

Directive

(i) To treat the rural areas at par with urban areas for imposing power cuts.

 

(ii) To put the Reliability Indices on the website of the Board without linking it with the comprehensive IT implementation program.

     

In Punjab, all the rural areas have been covered under Urban Pattern supply (UPS). Power cuts are imposed to meet the gap between demand and supply on different categories of consumers on real time basis. Every effort is made to impose power cuts of almost equal duration on rural and urban consumers. However due to different mix of consumers i.e. domestic and industrial, different life styles in urban and rural areas, the actual quantum of power cuts in rural and urban areas used to differ previously. Nevertheless PSEB is now gradually imposing nearly identical duration of power cuts in case of rural and urban consumers; in this context the detailed power Supply Position of the state for the year 2008-09 is enclosed as per Annexure-1. It indicates  that the average quantum of power cuts on UPS categories during the year was 2.32 hours per day while the average power cut on urban categories (average of District Hq., Urban / Industrial (Cat-1) Main Cities categories) is 2.06 Hr/day. Considering the fact that the rural vs urban power cuts during the year 2007-08 were 3.19 hrs./day and 1.45 Hrs/day respectively. It is concluded that the disparity had been mitigated to a large extent.

 

 

Reliability index for feeders at district headquarters and feeders in cities having population more than one lakh has been monitored on daily and monthly basis. However, for the remaining 11 kv feeders, the reliability index has been monitored at circle level. Board is in the process of putting RI on the website through IT system. Also, a link has been provided to the SO & C Organisation on the PSEB website. Where power supply schedule as well as power cuts and relocations to industries etc. also available.

 

The Commission observes some improvement in achieving parity in the supply of power to the rural areas, but there is further scope of improvement.

 

 The directive for putting up the Reliability Indices on the Board’s website as per the Electricity Supply Code has not been implemented which may now be complied with and a report to this effect be furnished within one month of the issue of this Tariff Order.

 

 

4.

Two Part Tariff.

Background

The Commission observed that the data had been received and the issue dealt with in Chapter-5.

 

 

 

 

 

The matter has already been dealt in Tariff Order 2008-09 by the Hon’ble Commission.

 

The Tariff Policy provides for implementation of Two Part Tariff featuring separate fixed and variable charges and for fixing ToD tariff on priority for large consumers (say consumers with demand exceeding 1 MW).

 

The Commission is awaiting a compre-hensive proposal from the Board.

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KVAH Tariff.

Background

The Commission observed that the Board had submitted relevant data, along with its views as to the merits /demerits of KWh/KVAH based tariff without any analysis of the practicability of introducing KVAH tariff and its implications for different categories of consumers. The issue was further discussed in Chapter 5.

 

Directive

Analyse the practicability of introducing KVAH tariff.

 

The proposal for KVAH Tariff is under discussion in the Board and will be submitted separately.

 

The Commission has introduced power factor surcharge/ incentive for BS and DS/NRS consumers with load exceeding 100 KW and SP consumers in this Tariff Order. Since more consumers have now been covered for levy of power factor surcharge/incentive, the Board needs to take into account the overall impact and submit a comprehensive report on the implications of introducing KVAH tariff.

6.

Bulk Supply Tariff.

Background

The Commission observed that the requisite information had been received and issue was dealt in Chapter-5.

 

Directive

To clearly identify and define the type of consumers who can be covered under this category.

 

The proposal for Bulk supply Tariff is under discussion in the Board and will be submitted separately.

 

 

The Commission in this Tariff Order has inter-alia effected suitable amendments in the BS Schedule.

 

 7.

Metering Plan.

Background

The Commission noted the lack of any substantial progress regarding metering of AP connections and reiterated the need to effect 100% metering of AP connections.

 

Directive

(i) Implement 100% metering for the AP category.

 

All consumers except AP have been provided meters. As on 31.3.2009, 55616 nos. sample meters have been installed for estimation of AP consumption of 1019508 Nos. Flat Rate Connections. PSEB has decided to increase this sample size to 1 Lac for which Instructions have been issued vide CC No.64/2008 dated 31.10.2008.

Status in respect of report of the Committee headed by Sh. A. K. Aggarwal, Advisor/Finance, PSEB is still awaited.

      Decision in respect of SLP filed by PSEB in Supreme Court of India on 5.8.2006 is still awaited.    

 

The Commission notes lack of progress regarding metering of AP connections and reiterates its directive to implement 100% metering of AP connections as mandated in section 55 of the Electricity Act 2003.

 

8.

Employee Cost.

Background

The Commission observed that the continuing high Employee Cost of the Board is a matter of grave concern. The Commission noted that a study has been commissioned in this respect and observed that the Board will, in the shortest time frame possible, draw up a road map to bring down these costs to normative levels.

 

Directive

Draw a road map to bring down the employee cost of the Board to normative level.

 

 

M/s PricewaterhouseCoopers Pvt. Ltd. has been awarded the work to conduct detailed staffing study on man power requirement across different business groups of PSEB including action plan. Staffing study for PSEB has been started by the firm.

Till date M/s PwC has submitted some volumes of reports with respect to Generation, Transmission, Distribution and Secretariat wing covering certain items of work mentioned in work order. However, the complete report on staffing study covering all items of work mentioning the scope of study/deliverables is yet to be submitted by the Consultants.

PSEB has taken various steps to control the employee costs, such as imposing complete ban on creation of new posts, frozen of fresh recruitment against retirements/death cases; as such PSEB has been able to save Rs.1290.56 Cr on employee cost in the last year on account of retirements in recent years. The No. of employees of the Board  as on 31.3.2008 is as under:

Technical          = 40371 Nos.

Non-Technical   =25942 Nos.

Total                  =66313 Nos.

PSEB has filed petition No. 15 of 2008 before PSERC for amendment/ modification of the provisions (Terms & Conditions for determination of Tariff) of the Regulations- 2005 (Employees Costs).

 

Refer para 4.9 of this Tariff Order.

 

 

 9.

Fixed Assets Register.

Background

The Board was advised to ensure regular updating of Fixed Assets
Registers/Cards.

 

Fixed Assets Registers /Cards are being maintained and updated regularly.

 

 

The Commission notes the compliance.

 

10.

Receiv-

Ables.

Background

There does not appear to be any progress in the reduction of receivables with total outstandings as on 31.3.2007 having actually increased when compared with the corresponding figure for the previous year and the increasing trend continuing in 2007-08. Arrears of Govt. Departments and amounts pending in the DSCs have also similarly increased. Clearly, the Board needs to put in strenuous efforts to ensure that arrears are substantially reduced.

 

Directive

Reduce the receivables including the amount due from the Government and due to pending cases in DSCs etc.

 

GoP has agreed to adjust the outstanding amount of Government departments against the GoP loan outstanding with PSEB. Statement showing age wise analysis of defaulting amount upto 31.3.2009 (un-audited) is enclosed as per Annexure II of memo. no. 847 dated 29.5.09. (Abstract given  below)

                                      (Rs. In Crore)

Head         As on 31.3.08        As on 31.3.09

GoP                56.35                          51.48

Court

Cases          122.74                         150.17

DSC

cases             35.83                          37.93

PDCO

cases           106.90                        107.61

Others          156.38                        150.76

Total            478.20                        497.95

  

The Commission notes that there is no improve-ment in reducing the receivables as the amount has increased from Rs.478.20 Cr. (31.3.08) to Rs.497.95 Cr. (31.3.09).  

 

As the Govt. has reportedly consented to adjust its dues against outstanding loans, the Board needs to take immediate action to liquidate this amount.

 

 Reducing the receivables on account of amounts involved in pending DSC & PDCO cases is within the control of the Board and it should make concerted effort to substantially reduce the same.

11.

Manage-

ment Infor-

mation System (MIS).

 Background

The Commission noted that only about 10% of the funds of IT related schemes had been utilized upto August 2007. The Commission observed that the Board would ensure optimum utilization of all funds available under APDRP Scheme at the end of the financial year. The Commission presumed that the implementation of different IT applications in the Board for which consultants had been appointed would include an IT enabled MIS system as well. The Board was advised to indicate the time frame for putting such an MIS in place.

 

Directive

(i) Ensure optimum utilization of available funds for APDRP Schemes.

 

(ii) Indicate time line for implementing the IT based MIS system.

 

As per the Directive of MoP /GoI all the 26 Nos APDRP Schemes for the 10th plan have been closed and total expenditure booked to APDRP as verified by MoP/GOI consultants (NTPC) is Rs.462.74 Cr. The 11th Plan R-APDRP has been launched by MoP/GoI for which DPRs for part-A are being prepared.          

          In line with the decision of the Board for pursuing the phase wise implementation of IT in PSEB in different activities are being carried out by the relevant quarters:

i) Human Resources Information System (HRIS)

  Under this project, service book data of the various employees was sought to be captured from across the state which was later to be digitized for eventual use in the application software being developed namely the personnel Information system and payroll, GPF, Loan, Leave and Pension accounting systems. Data entry of almost all employees has been completed and monthly updation of records required due to movement of employees is under process.

II) GIS mapping: - Under the R-APDRP IT initiatives of MoP/GoI, GIS mapping of assets (Electrical network) falling in the jurisdiction of 45 cities of Punjab shall be taken up soon.

iii)                 The   Centralized Electricity Call Centre (ECC) catering to no supply complaints of consumers of 6 cities, Patiala, Ludhiana, Mohali, Bathinda, Jallandhar & Amritsar is being commissioned at Ludhiana. Further the localized Customer Care Centres (CCCs) are being set up at Ludhiana & Bathinda under commissioning.

iv) Spot Billing: Additional 500 Nos spot billing machines have been deployed to achieve spot billing in 20 divisions The job for out sourcing of spot billing in other 20 division have been awarded in May-09 and to be taken up by the vendors soon.

v) Inventory Management: The store inventory management project has been developed in-house in PSEB.  Trial run has been successfully demonstrated at Mohali Store. The same is being rolled out at Patiala and Ludhiana Stores and further commission is under way.

vi)    Load forecasting: PSEB has already submitted database of all the consumer categories such as their demand, energy consumption so as to facilitate accurate forecasting in future. A load forecasting module is already in place under systems operation organization installed under aegis of PGCIL ULDC scheme.

 vii)  On line computerization: The Basic Study Report (BSR) submitted by the IT consultants M/S PwC was approved in 12.2008. The consultants

have been providing necessary program management support in the on going IT projects like AMR implementation in PSEB Sub-Stations, E-payment facility for Internet bill payment etc. However, with the upcoming  R-APDRP Scheme, which has major thrust on IT implementation under Central Government Funding, PSEB has under taken IT implementation under R-APDRP, for which M/S Wipro Ltd., has been engaged as IT  consultants under R-APDRP through limited tendering of 20 Nos empanelled IT consultants. M/s PwC could not qualify as empanelled IT consultants under R-APDRP as notified by M/s PFC the Nodal Agency for R-APDRP, in Jan.09 as such the status of M/s PwC consultancy assignment is under review.   

 

The Commission regularly requires authenticated ARR and Regulatory Information Management System (RIMS) related data. It is desirable that the Board creates a system where the Commission can directly access such data online. Modalities for the same need to be worked out at an early date.

 

 

12.

Energy Conserva-

tion.

Background

The Commission noted the measures proposed to be undertaken by the Board to incentivise energy conservation. The Board was advised to report on the progress achieved in the implementation of these measures at the time of filing next ARR.

The capacitor installation programme enclosed with the ARR depicted a substantial MVAR capacity yet to be added. Moreover, the total installed capacity had been intimated to be upto 31.3.2007 whereas the total planned capacity addition was depicted only upto 31.3.2006, which needed updation.

Information on Circle-wise capacitor installation plan was yet to be received and the Commission   had reiterateed that it be

submitted at the earliest.

 

Directive

(i)Inform the achievements in energy conservation measures.

 

(ii) Update and indicate the information on the circle wise capacitor installation programme.

 

 

i. PSEB for its in house requirement has issued re-tender for procurement of CFLs T-8 36 W FTL along with Electronic chokes and HPSV lamps for replacement of present lighting system with Energy Efficient Lighting System in its buildings etc. This re-tender amounting to Rs.10 crore (Approx) has been issued by the office of CE/MM, PSEB, Patiala

ii. PSEB has already issued Commercial Circular 67/2007 and has made mandatory the use of CFLs on all the 10 lac AP Tube well Kothas ( 20 lac).

iii.  PSEB has already spent Rs.94 lac (Approx.) by launching publicity campaign through print and Electronic Media for educating and appealing the General and Industrial consumers for mandatory use of CFLs and other Energy Efficient Lighting Fixtures and to discourage the use of in-efficient yellow bulbs and conventional tubes alongwith Electro-magnetic chokes etc.

iv For promotion of efficient use of Energy and its conservation in the State of Punjab, comprehensive & time bound proposals for mandatory use of Efficient Lighting System for Commercial, Residential, Agriculture and Industrial consumers have been prepared and are under process.

v. The paper reading contest organized in different schools of Punjab to which students participated in particular and public in general. They were encouraged to save energy by use of CFLs and Energy Efficiency Electrical appliances through these contexts and distribution of leaf lets handbills, stickers and literature of Energy Conservation. 20 No. paper reading contests were carried during the year 2007-08 and the covering of those were also done by the electronic Media and publicity given in leading News Papers and Telecasted on T.V. Channels.

vi. State Level function of Energy conservation was celebrated on 14th December, 2007 at Bathinda. The paper reading contest was carried out by calling the students of all the leading schools of Bathinda and the prizes were distributed. Industrialists, Farmer and consumers took active part in the function. The industrialists dealing with Energy Conservation, PEDA Chandigarh and PAU Ludhiana have provided the stalls to give awareness among the masses for Energy Conservation.

vii. Stalls were arranged in Five Number Kisan Melas Organized by PAU Ludhiana, Pamphlets, hand bills, stickers and other educative material distributed to the farmers and public to make them aware about energy conservation and use of CFL’s. the banners, posters, Audio Tapes and Video Films were shown to give attraction to the farmers and public in these Melas.

viii. The proposal for replacement of present lighting system with Energy Efficient lighting System for domestic Consumers under Demand Side Management (DSM) , Bachat lamp Yojna (BLY)  and CDM is also under consideration with PSEB & BEE which will be implemented  by March 2009 positively.

 

ix. Energy Conservation Directorate installed a stall regarding energy conservation at Khatkar kalan, Distt, Nawanshehar on the occasion of Bharat Nirman Public Information Campaign to build awareness for energy Conservation among the public by distributing Pamphlets, stickers and Hand bills and displaying banners etc.

 

 

 The Board has already been directed to draw up a Demand Side Management plan which comprehensively addresses all energy conservation issues. The Commission expects that this plan would be finalized within this year and action initiated thereon.

 

 

It is noted that compliance on the whole has not been up to the mark. The Commission intends to further interact with the Board for still better compliance of the directives.

…………………………..

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annexure-V

Apportionment of Cost among various functions as per

Board's Audited Accounts for the year 2007-08

Sr. No.

Particulars

Hydel

Thermal

Total Generation

Transmission

Distribution

Total

Common Assets / Expenses

  A – ASSETS

 

Direct

5,847.98

3,023.12

8,871.10

1,965.69

5,447.20

16,283.99

 

 

Apportioned

     49.11

    25.39

74.49

              16.51

         45.74

136.74

    136.74

 

Total (Amount)

5,897.09

3,048.51

8,945.59

1,982.20

5,492.94

16,420.73

 

 

Total (%)

35.91%

18.56%

54.48%

12.07%

33.45%

100.00%

 

  B – EXPENSES

1

Power Purchase Cost

0

0

0

0

6020.37

6,020.37

 

 

Power Purchase Cost - %

0.00%

0.00%

0.00%

0.00%

100.00%

100.00%

 

2

Fuel Cost

0

2535.22

2,535.22

0

0

2,535.22

 

 

Other Fuel Related Costs

0

15.61

15.61

0

0

15.61

 

 

Sub Total

0

2550.83

2550.83

0

0

2,550.83

 

 

Add: Fuel Related Losses

0

74.97

74.97

0

0

74.97

 

 

Total

0

2625.80

2625.80

0

0

2,625.80

 

 

Total Fuel cost (%)

0.00%

100.00%

100.00%

0.00%

0.00%

100.00%

 

3

Repair & Maintenance

 

 

 

 

 

 

 

 

Direct

80.64

94.33

174.97

31.29

65.54

271.80

 

 

Apportioned

7.48

8.75

16.24

2.90

6.08

25.22

25.22

 

Less: Capitalisation

0.92

1.08

1.99

0.36

0.75

3.10

3.10

 

Total (Amount)

87.20

102.00

189.22

33.83

70.87

293.92

 

 

Total (%)

29.67%

34.70%

64.38%

11.51%

24.11%

100.00%

 

4

Employee Cost

 

 

 

 

 

 

 

 

Direct

79.78

209.28

289.06

133.38

1163.05

1,585.49

 

 

Apportioned

28.56

74.92

103.48

47.75

416.36

567.59

567.59

 

Less Capitalisation

5.93

15.55

21.48

9.91

86.42

117.81

117.81

 

Total (Amount)

102.41

268.65

371.06

171.22

1492.99

2,035.27

 

 

Total (%)

5.03%

13.20%

18.23%

8.41%

73.36%

100.00%

 

5

Administration & General

 

 

 

 

 

 

 

 

Direct

6.49

4.45

10.94

11.97

43.99

66.90

 

 

Apportioned

2.44

1.67

4.11

4.50

16.52

25.13

25.13

 

Less Capitalisation

2.17

1.49

3.66

4.00

14.67

22.33

22.33

 

Total (Amount)

6.76

4.63

11.39

12.47

45.84

69.71

 

 

Total (%)

9.70%

6.64%

16.34%

17.89%

65.76%

100.00%

 

6

Depreciation & Related Debits (net)

 

 

 

 

 

 

 

 

Direct

129.89

159.43

289.32

92.23

273.72

655.27

 

 

Apportioned

2.31

2.84

5.15

1.64

4.87

11.66

11.66

 

Less Capitalisation

0.35

0.43

0.78

0.25

0.74

1.77

1.77

 

Total (Amount)

131.85

161.84

293.69

93.62

277.85

665.15

 

 

Total (%)

19.82%

24.33%

44.15%

14.08%

41.77%

100.00%

 

7

Interest & Finance Charges

 

 

 

 

 

 

 

 

Direct

515.10

102.59

617.69

140.14

324.33

1,082.16

 

 

Apportioned

1.54

0.31

1.85

0.42

0.96

3.23

3.23

 

Less Capitalisation

105.56

21.02

126.58

28.72

66.47

221.77

221.77

 

Total (Amount)

411.08

81.88

492.96

111.84

258.82

863.62

 

 

Total (%)

47.60%

9.48%

57.08%

12.95%

29.97%

100.00%

 

8

Return on equity (in ratio of assets)

148.12

76.57

224.70

49.79

137.97

412.46

412.46

 

Return on equity - %

35.91%

18.56%

54.48%

12.07%

33.45%

100.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annexure-VI

Proportion of Plant-wise cost of Generation for 2007-08 (As per information submitted by PSEB)

(Units in MKWH)

(Rs. in Lacs)

Sr.

No.

Particulars

HYDEL

THERMAL

Total

RSD

Mukerian Hydel

UBDC

UHL

Anandpur Sahib

Micro Hydel

Bhakra Complex

Dehar & Pong

Total

GGSSTP

GNDTP

GHTP

Total

1

2

3

4

5

6

7

8

9

10

11=(3 to 10)

12

13

14

15=(12 to 14)

16=(11+15)

1

MKWH generated during the year

1538.48

1361.95

428.03

540.42

709.64

7.00

2474.49

1681.13

8741.14

9806.17

3007.90

3642.63

16456.70

25197.84

2

MKWH use in auxiliaries

5.84

33.51

5.40

6.84

5.62

0.00

0

0

57.21

828.57

344.63

325.60

1498.80

1556.01

3

MKWH sent out

1532.64

1328.44

422.63

533.58

704.02

7.00

2474.49

1681.13

8683.93

8977.60

2663.27

3317.03

14957.90

23641.83

4

Total depreciated capital cost of generating assets in use at the beginning of the year including share of G.E.

382092.4

21561.9

4855.6

1857.9

11572.1

774.5

5142.4

11390.7

439247.4

32933.3

149.6

57931.5

91014.5

530261.8

5

Total capital expenditure on generation assets brought in use during the year with date of commissioning including share of G.E.

-10.13

822.63

25.09

0

35.74

9

9064.3

495.81

10442.44

-20545.16

510.59

116.67

-19917.90

-9475.46

 

 

6

COST OF GENERATION

i)

Fuel

0

0

0

0

0

0

0

0

0

162262.52

51569.24

48748.34

262580.1

262580.1

ii)

Oil water & stores

0

0

0

0

0

0

0.9

219.09

219.99

1279.59

393.26

83.19

1756.04

1976.03

iii)

Salaries & wages including contribution made for pension Provident Superannuation of Officer/servants + Fringe benefit tax (FBT)

1038.68

2110.21

1633.36

867.77

1473.65

0.02

1597.25

875.82

9596.76

13373.71

9808.22

3830.91

27012.84

36609.6

iv)

Operating, Mtc. Repairs & Renewals

54.36

139.59

161.47

128.32

214.45

7.74

1851.2

5290.73

7847.86

4574.89

1452.7

1733.43

7761.02

15608.88

v)

Rents Rates Taxes & Insurance

0

0

0

0

0

0

0

0

0

0

0

0

0

0

vi)

Proportionate of Genral Admn. Charges attributable to generation

199.07

174.05

171.01

116.28

60.48

0

87.22

34.34

842.45

274.68

135.37

171.32

581.37

1423.82

vii)

Any other expenses (to be specified Depriciation) including share of G.E.

10741.87

947

264.26

132.84

363.54

21.31

683.53

503.84

13658.19

6447.1

475.8

9024.54

15947.44

29605.63

viii)

Interest

38180.19

2154.55

485.19

185.65

1156.33

77.39

513.84

1138.2

43891.34

3290.82

14.95

5788.75

9094.52

52985.86

 

Total cost of Generation

50214.17

5525.4

2715.29

1430.86

3268.45

106.46

4733.94

8062.02

76056.59

191503.31

63849.54

69380.48

324733.33

400789.92

 

Cost of Generation per KWH in paisa

327.63

41.59

64.25

26.82

46.43

152.09

19.13

47.96

87.58

213.31

239.74

209.16

217.1

169.53

 

 

 

Annexure-VII

PLANT-WISE PROPORTION OF GENERATION COST FOR THE YEAR 2007-08 (AS PER ANNEXURE VI)

(in %) 

Sr.

No.

Particulars

HYDEL

THERMAL

RSD

Mukerian Hydel

UBDC

UHL

Anandpur Sahib

Micro Hydel

Bhakra Complex

Dehar & Pong

Total

GGSSTP

GNDTP

GHTP

Total

1

2

3

4

5

6

7

8

9

10

11=(3 to 10)

12

13

14

15=(12+13+14)

1

MKWH generated during the year

17.60%

15.58%

4.90%

6.18%

8.12%

0.08%

28.31%

19.23%

100.00%

59.59%

18.28%

22.13%

100.00%

2

MKWH use in auxiliaries

10.21%

58.57%

9.44%

11.96%

9.82%

0.00%

0.00%

0.00%

100.00%

55.28%

22.99%

21.72%

100.00%

3

MKWH sent out

17.65%

15.30%

4.87%

6.14%

8.11%

0.08%

28.50%

19.36%

100.00%

60.02%

17.81%

22.18%

100.00%

4

Net Fixed Assets

86.99%

4.91%

1.11%

0.42%

2.63%

0.18%

1.17%

2.59%

100.00%

36.18%

0.16%

63.65%

100.00%

5

Capital Expenditure during the year

-0.10%

7.88%

0.24%

0.00%

0.34%

0.09%

86.80%

4.75%

100.00%

103.15%

-2.56%

-0.59%

100.00%

6

COST OF GENERATION

 

 

 

 

 

 

 

 

 

 

 

 

 

i)

Fuel Cost

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

61.80%

19.64%

18.57%

100.00%

ii)

Oil water & stores

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.41%

99.59%

100.00%

72.87%

22.39%

4.74%

100.00%

iii)

Employee Cost + FBT

10.82%

21.99%

17.02%

9.04%

15.36%

0.00%

16.64%

9.13%

100.00%

49.51%

36.31%

14.18%

100.00%

iv)

R & M Expenses

0.69%

1.78%

2.06%

1.64%

2.73%

0.10%

23.59%

67.42%

100.00%

58.95%

18.72%

22.34%

100.00%

v)

Admn. & General charges

23.63%

20.66%

20.30%

13.80%

7.18%

0.00%

10.35%

4.08%

100.00%

47.25%

23.28%

29.47%

100.00%

vi)

Other Expenses including Depriciation

78.65%

6.93%

1.93%

0.97%

2.66%

0.16%

5.00%

3.69%

100.00%

40.43%

2.98%

56.59%

100.00%

vii)

Interest

86.99%

4.91%

1.11%

0.42%

2.63%

0.18%

1.17%

2.59%

100.00%

36.18%

0.16%

63.65%

100.00%

 

Total cost of Generation

66.02%

7.26%

3.57%

1.88%

4.30%

0.14%

6.22%

10.60%

100.00%

58.97%

19.66%

21.37%

100.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annexure-VIII

Plant-wise Revenue Requirements for the FY 2009-10

(on the basis of Annexure VII)

(Rs. in crore)

Sr.
No.

Item of expense

Hydel*

RSD

MHP

UBDC

Shanan

ASHP

Micro Hydel

Bhakra Complex

Dehar & Pong

Thermal*

GGSSTP

GNDTP

GHTP

Basis of Apportionment (from Annexure VI)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

1

Cost of fuel

-

-

-

-

-

-

-

-

-

3,195.93

1,974.94

627.66

593.33

Fuel Cost

2

Employee cost + FBT

93.42

10.10

20.54

15.90

8.45

14.35

-

15.55

8.53

245.07

121.34

88.98

34.75

Employee Cost

3

R&M expenses

111.59

0.78

1.98

2.30

1.82

3.05

0.11

26.32

75.23

130.53

76.95

24.43

29.15

R & M Expenses

4

A&G expenses

7.37

1.74

1.52

1.50

1.02

0.53

-

0.76

0.30

5.05

2.38

1.18

1.49

Rent, Rates, Taxes and Insurance

5

Depreciation

163.74

128.78

11.35

3.17

1.59

4.36

0.26

8.19

6.04

200.98

81.25

6.00

113.73

Net Fixed Assets

6

Interest charges

499.12

434.18

24.50

5.52

2.11

13.15

0.88

5.84

12.94

99.42

35.98

0.16

63.28

Interest on Depriciated  Cost of Genenration

7

Return on Equity

148.12

128.85

7.27

1.64

0.63

3.90

0.26

1.73

3.84

76.57

27.70

0.13

48.74

Net Fixed Assets

8

Total Revenue Requirement

1,023.36

704.43

67.16

30.03

15.62

39.34

1.51

58.39

106.88

3,953.55

2,320.54

748.54

884.47

 

9

Add: Consolidated Gap and carrying cost of gap for 2008-09

55.58

38.27

3.65

1.63

0.85

2.13

0.08

3.17

5.80

214.73

126.69

40.80

47.24

In proportion to Total Revenue Requirement

10

Gross revenue requirement (8+9)

1,078.94

742.70

70.81

31.66

16.47

41.47

1.59

61.56

112.68

4,168.28

2,447.23

789.34

931.71

 

Annexure-IX

 

 

 

 

 

 

 

Annexure-X

 

 

 

 

 

 

 

 

 

Annexure XI

 

COMPUTATION OF OPEN ACCESS CHARGES - EXAMPLES

 

 

Case 1:     Charges for Open Access customer for 5 MW at 11 KV availing Intra-State Open Access for one month

 

Sr.No.

Particulars

Charges for 5 MW Capacity for 1 month (Rs.)

1

No of units to be delivered to the consumer

36,00,000 units

2

T&D Losses at 11 KV

11.00% (50% of T&D loss determined by the Commission)

3

Units required to be injected in the System

4044944 units

4

Transmission & Wheeling Charges @ 10.7 paise unit

Rs.432809

5

Operating Charge @ Rs 1000 /day

Rs.30,000

6

OA Application Registration Fee

Rs.10,000

7

Net Open Access Charge

Rs.472809

8

Effective Open Access Charge (Unit)

13.13 paise/unit

 

Note:

1         Open Access customer will also have to bear the cost of 4,44,944 units lost in Transmission & distribution besides Open Access charges.

2         Electricity Duty and Octroi are statutory levies which are chargeable as per State Government notification(s).

3         Reactive energy charges, cross subsidy surcharge, additional surcharge, interconnection charges, standby charges, parallel operation charges, connectivity charges and any other charges shall be payable as per the regulations of the Commission.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case 2:     Charges for Open Access customer for 10 MW at 66 KV availing Intra-State Open Access for one month

 

 

 

Sr.No.

Particulars

Charges for 10 MW Capacity for 1 month (Rs.)

1

No of units to be delivered to the consumer.

72,00,000 units

2

T&D Losses at 66V

6.60% (30% of T&D loss determined by the Commission)

3

Units required to be injected in the System

7708779 units

4

Transmission & Wheeling Charges @ 10.7paise unit

Rs.824839

5

Operating Charge @ Rs 1000 /day

Rs.30,000

6

OA Application Registration Fee

Rs.10,000

7

Net Open Access Charge

Rs.864839

8

Effective Open Access Charge (Unit)

12.01 Paise/unit

 

Note:

1.       The Open Access customer will also have to bear the cost of 5,08,779 units lost in Transmission & distribution besides Open Access charges.

2.       Electricity Duty and Octroi are statutory levies which are chargeable as per State Government notification(s).

3.       Reactive energy charges, cross subsidy surcharge, additional surcharge, interconnection charges, standby charges, parallel operation charges, connectivity charges and any other charges shall be payable as per the regulations of the Commission.