Chapter 11

Directives to PSEB
    Section 61 of the Electricity Act, 2003 mandates on the Commission the function of determination of tariff for electricity and also details factors which will be kept in mind by the Commission while doing so.

    In pursuance of this mandate of the Act, the Commission had issued certain directives in public interest as part of its last two Tariff Orders. The Commission, therefore, views the compliance of the directives as an essential part of the obligations of the PSEB where under it recovers the tariffs approved by the Commission. The Commission is, however, constrained to note that the PSEB has failed to comply with most of the directives. Status of compliance of earlier directives has been discussed in detail in Chapter4. It is nonetheless necessary that a sincere attempt at compliance with the directives must be demonstrated by the PSEB.
11.1 Establishment of Depreciation Reserve Fund
    The Board is directed to submit a proposal regarding creation of Depreciation Reserve Fund in its ARR for the FY 2005-06 or during its processing. The proposal should contain a proper system to ensure that money in the proposed Depreciation Reserve Fund is not diverted by the Board for unauthorized purposes. (Reference para 8.1 of Chapter 8).
11.2 General Provident Fund Account
    The Board is directed to submit a detailed proposal for creation of a separate General Provident Fund Account in its ARR for the FY 2005-06 or during its processing. The proposal should contain a specific system to ensure that deposits in General Provident Fund Accounts of the employees are deposited in this account without any undue delays and withdrawals from this Account are restricted to authorized purposes only. (Reference para 8.2 of Chapter 8).
11.3 Regulatory Reserve
    The Board is directed to create Regulatory Reserve of the level approved by the Commission and the details of the same may be supplied to the Commission in its ARR for the year 2005-06 or during its processing. The Regulatory Reserve would be used for the purposes to be determined by the Commission. (Reference para 10.8 of Chapter 10).
11.4 Energy Audit & T&D Loss Reduction
    The Board is directed to carry out energy audit of all 11 KV and higher voltage feeders supplying electricity to individual consumers. Energy audit is also required to be carried out for all 33 KV and higher voltage feeders/ lines and grid substations. The energy audit needs to be carried out monthly and responsibility fixed where there are variations. After completion of metering on all consumers by June 9, 2005 as per Section 55 of the Electricity Act, 2003, energy audit can be undertaken and feeder-wise losses worked out. Adequate steps should be taken to minimize commercial losses. This would require immediate replacement of defective/ dead stop/ tampered meters and intensive checking of consumers to detect pilferage of energy. Employees conniving with the consumers need to be penalised. (Reference para 4.1.4 of Chapter 4).
11.5 Agricultural Consumption
    The Board is directed to increase the sample size of meters installed for assessment of agricultural consumption. The number of meters should not be less than 2% of the total number of agricultural pump sets in the state. The Board is also directed to ensure that final report from the Punjab Agricultural University is received within three months of issue of this Tariff Order.

    The Board is further directed to compare the normative electricity consumption computed on the basis of sample meters with that of 11 KV feeders supplying power exclusively for the tubewells. (Reference para 4.1.6 of Chapter 4).
11.6 Employees Costs
    PSEB is directed to implement the directions already given by the Commission in Tariff Orders for the year 2002-03 and 2003-04, in letter and spirit to reduce the manpower costs to the level approved by the Commission by taking effective measures and therefore, improve financial health of the Board on sustainable basis. It is essential so that the new entities to be carved out under the Electricity Act, 2003 become financially viable to compete with the new players in the scenario envisaged in the Act. Also, proposals for determination of performance parameters for deciding the approved level of employees costs in future years may also be submitted. (Reference para 8.3 of Chapter 8).
11.7 Fixed Assets Registers (FAR)
    The Commission directs the Board to confirm the completion of Fixed Assets Registers within six months and ensure that these are updated regularly. (Reference para 4.1.12 of Chapter 4).
11.8 Improvement in Quality of Service
    The Board is directed to take appropriate steps to improve quality of service, especially quality of supply to its consumers. The quality of power being supplied to consumers, especially in the rural areas, needs substantial improvement. Adequate steps need to be taken so that reliable, uninterrupted and quality power is made available to the consumers for the maximum possible period. (Reference para 4.1.9 of Chapter 4).
11.9 Two Part Tariff
    The Board is directed to prepare a detailed and well considered proposal for introduction of Two Part Tariff for LS and Railway Traction categories and submit the same to the Commission along with its ARR and Tariff Application for the next year. The proposal of the Board should cover other categories as well especially MS & SP, if not some others also. (Reference para 9.1 of Chapter 9).
11.10 Penalty for Unauthorized Loads
    The Board is directed to come up with a suitable and practical proposal for identification and assessment of unauthorized load installed by DS consumers. The Board is directed to submit the proposal along with its ARR and Tariff Application for the year 2005-06 or during its processing immediately thereafter. Meanwhile, the Board is directed to suspend the checking of connected load for DS consumers. (Reference para 9.4 of Chapter 9).
11.11 KVAH Tariff
    The Board is directed to submit a detailed paper on the introduction of Kvah tariff at least for Medium Supply, Large Supply and Railway Traction categories in the ARR for FY 2005-06 (Reference para 9.8 of Chapter 9).
11.12 General Conditions of Tariff
    The Board is directed to submit a detailed proposal for revision of General Conditions of Tariff in line with the Electricity Act, 2003. The proposal may be submitted either along with ARR 2005-06 or during the processing of the same. (Reference para 9.24 A of Chapter 9).
11.13 Issue of Commercial Circulars by the Board
    The Board is directed not to issue, without prior approval of the Commission, any commercial circulars effecting tariff structure already approved by the Commission through this Tariff Order.
11.14 Parallel Operation Charges
    The Board is directed to furnish full justification of parallel operation charges being recovered from consumers. The detailed proposal may be submitted with the next ARR and Tariff Application for the year 2005-06 or during the processing of the same. (Reference para 9.24 E of Chapter 9).
11.15 Metering Plan
    The Board is directed to prepare revised Metering Plan and take requisite action to provide correct meters on all consumers to meet with the requirement of Section 55 of the Electricity Act, 2003. Copy of the Metering Plan be supplied to the Commission. (Reference para 4.1.4 of Chapter 4).
11.16 Coal Transit Loss
    The Commission directs the Board to reduce Coal Transit loss from approved ceiling of 2% in 2004-05 to 1% in 3 years with yearly reduction target of 0.33% for all the thermal plants. (Reference para 7.9 of Chapter 7).
11.17 Improvement of Generation
    The Commission directs the Board to reduce the period of outage of machines at all the stations by critically examining maintenance schedules of all the machines to the extent possible to improve upon the generation. (Reference para 7.6.1 of Chapter 7).

    The Commission hopes that the Board will be taking effecting steps to ensure compliance of the above directives.

    This order is signed and issued by the Punjab State Electricity Regulatory Commission on this the 30th day of November, 2004.

    Date : NOVEMBER 30, 2004

    PLACE : CHANDIGARH

    -sd-           -sd-
    L.S. DEOL          R.S.MANN
    MEMBER          CHAIRMAN
    CERTIFIED
    -sd-
    SECRETARY
    PUNJAB STATE ELECTRICITY REGULATORY COMMISSION
    CHANDIGARH
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