Paschim Gujarat Vij Company Ltd.

Transcription

1 BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR CASE NO. Filing of the Petition for True Up of FY & Determination of Multi-Year ARR for FY to FY & Determination of Final ARR for FY & Determination of Tariff for FY Under GERC (Multi Year Tariff) Regulations, 2016 along with other Guidelines and Directions issued by the GERC from time to time AND under Part VII (Section 61 to Section 64) of the Electricity Act, 2003 read with the relevant Guidelines Filed by:- Paschim Gujarat Vij Company Ltd. Corp. Office: OFF NANA MAVA ROAD, LAXMINAGAR, RAJKOT Save Energy for Benefit of Self and Nation

2 BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR Filing No: Case No: IN THE MATTER OF Filing of the Petition for True Up of FY , Determination of Multi-Year ARR for FY to FY , Determination of Final ARR for FY and Determination of Tariff for FY under GERC (Multi Year Tariff) Regulations, 2016 along with other Guidelines and Directions` issued by the GERC from time to time AND under Part VII (Section 61 to Section 64) of the Electricity Act, 2003 read with the relevant Guidelines AND IN THE MATTER OF Paschim Gujarat Vij Company Limited, Off Nana Mava Road, Laxminagar, Rajkot PETITIONER Gujarat Urja Vikas Nigam Limited Sardar Patel Vidyut Bhavan, Race Course, Vadodara CO-PETITIONER THE PETITIONER ABOVE NAMED RESPECTFULLY SUBMITS Paschim Gujarat Vij Company Limited Page 1

3 TABLE OF CONTENTS SECTION 1. INTRODUCTION PREAMBLE INTRODUCTION MULTI YEAR TARIFF REGULATIONS, SUBMISSION BY PGVCL TO THE HON BLE COMMISSION SECTION 2. EXECUTIVE SUMMARY PREAMBLE TRUE UP OF FY MULTIYEAR ARR PROJECTIONS FROM FY TO FY REVENUE GAP FOR FY PROPOSED CHANGES IN THE TARIFF STRUCTURE FOR FY SECTION 3. TRUE UP FOR FY PREAMBLE PRINCIPLES FOR TRUE UP FOR FY CATEGORY WISE SALES DISTRIBUTION LOSSES ENERGY REQUIREMENT AND ENERGY BALANCE POWER PURCHASE COST CAPITAL EXPENDITURE FUNDING OF CAPITALISATION FIXED COST FOR FY OPERATION & MAINTENANCE EXPENSES DEPRECIATION INTEREST & FINANCIAL CHARGES INTEREST ON WORKING CAPITAL PROVISION FOR BAD DEBTS RETURN ON EQUITY TAXES NON-TARIFF INCOME FOR FY AGGREGATE REVENUE REQUIREMENT FOR FY SHARING OF GAINS & LOSSES SHARING OF GAIN/ (LOSS) FOR FY REVENUE FOR FY REVENUE GAP / SURPLUS FOR FY SECTION 4. DETERMINATION OF MULTI-YEAR ARR PROJECTIONS FROM FY TO FY PREAMBLE PROJECTION OF ENERGY REQUIREMENT FOR FY TO FY DISTRIBUTION LOSSES ENERGY BALANCE ENERGY REQUIREMENT PROJECTION FOR PGVCL ESTIMATION OF ARR FOR CONTROL PERIOD FY TO FY POWER PURCHASE COST FOR CONTROL PERIOD FOR FY TO FY CAPITAL EXPENDITURE FOR THE CONTROL PERIOD FUNDING OF CAPEX OPERATION & MAINTENANCE EXPENSES Paschim Gujarat Vij Company Limited Page 2

4 4.10. PROVISION FOR BAD AND DOUBTFUL DEBTS DEPRECIATION INTEREST ON LOAN INTEREST ON WORKING CAPITAL RETURN ON EQUITY TAXES NON-TARIFF INCOME PROJECTED MULTI-YEAR ARR FOR FY TO FY UNDER MYT CONTROL PERIOD SECTION 5. DETERMINATION OF FINAL ARR FOR FY AND PROJECTED ARR & REVENUE GAP FOR FY PREAMBLE PROJECTION OF FINAL ARR FOR FY REVENUE GAP/ (SURPLUS) FOR FY WITH EXISTING TARIFF REVENUE FROM FPPPA CHARGES REVENUE PROJECTION FOR OTHER CONSUMER RELATED INCOME AGRICULTURE SUBSIDY TOTAL REVENUE FOR FY ESTIMATED REVENUE GAP/ (SURPLUS) FOR FY PROPOSED CHANGES IN THE TARIFF STRUCTURE FOR FY SECTION 6. COMPLIANCE OF DIRECTIVES SECTION 7. PRAYER SECTION 8. ANNEXURE 1: TARIFF SCHEDULE FOR FY GENERAL SECTION 9. ANNEXURE 2: TARIFF FILING FORMATS Paschim Gujarat Vij Company Limited Page 3

5 LIST OF TABLES TABLE 1 : TRUE UP FOR FY TABLE 2 : SUMMARY OF CONTROLLABLE AND UNCONTROLLABLE FACTORS FOR FY TABLE 3 : REVENUE GAP FOR FY TABLE 4 : MULTI-YEAR PROJECTED ARR FOR FY TO FY TABLE 5 : TOTAL PROJECTED REVENUE FOR FY AT EXISTING TARIFF TABLE 6: ESTIMATED REVENUE GAP/ (SURPLUS) FOR FY AT EXISTING TARIFF TABLE 7 : CATEGORY-WISE SALES TABLE 8 : DISTRIBUTION LOSSES TABLE 9 : ENERGY REQUIREMENT AND ENERGY BALANCE TABLE 10 : NET POWER PURCHASE COST TABLE 11 : GAIN/ (LOSS) ON ACCOUNT OF DISTRIBUTION LOSSES FOR FY TABLE 12 : GAINS / (LOSS) - POWER PURCHASE EXPENSES TABLE 13 : CAPITAL EXPENDITURE TABLE 14 : FUNDING OF CAPITALISATION TABLE 15 : OPERATION & MAINTENANCE EXPENSES TABLE 16 : TREATMENT OF OPERATION & MAINTENANCE EXPENSES TABLE 17 : EMPLOYEE COST FOR FY TABLE 18 : REPAIR & MAINTENANCE COST FOR FY TABLE 19 : ADMINISTRATION & GENERAL EXPENSES FOR FY TABLE 20 : OTHER DEBITS FOR FY TABLE 21 : FIXED ASSET AND DEPRECIATION FOR FY TABLE 22 : TREATMENT OF DEPRECIATION TABLE 23 : INTEREST & FINANCE CHARGES TABLE 24 : TREATMENT OF INTEREST & FINANCE CHARGES TABLE 25 : INTEREST ON WORKING CAPITAL TABLE 26 : PROVISION FOR BAD DEBTS TABLE 27 : RETURN ON EQUITY TABLE 28 : TREATMENT OF RETURN ON EQUITY TABLE 29 : PROVISION FOR TAXES TABLE 30 : TREATMENT OF INCOME TAX TABLE 31 : TREATMENT OF NON-TARIFF INCOME TABLE 32 : AGGREGATE REVENUE REQUIREMENT FOR FY TABLE 33 : NET GAIN/ (LOSS) FOR FY TABLE 34 : REVENUE FOR FY TABLE 35 : REVENUE GAP FOR FY TABLE 36 : HISTORICAL TREND IN CATEGORY-WISE UNITS SOLD (MUS) TABLE 37 : CATEGORY-WISE CAGR OF UNITS SOLD TABLE 38 : CATEGORY-WISE NO. OF CONSUMERS TABLE 39 : CAGR OF NO. OF CONSUMERS TABLE 40 : CATEGORY-WISE CONNECTED LOAD (MW/MVA) TABLE 41 : CAGR OF CONNECTED LOAD TABLE 42 : PGVCL NEW CONNECTIONS TO AGRICULTURE CONSUMERS TABLE 43 : PGVCL SALES TO AGRICULTURE CONSUMERS (METERED) TABLE 44 : GROWTH RATE FOR SALES, NO. OF CONSUMERS AND CONNECTED LOAD TABLE 45 : PROJECTION OF SALES (MUS) Paschim Gujarat Vij Company Limited Page 4

6 TABLE 46 : PROJECTION OF NO. OF CONSUMERS TABLE 47 : PROJECTION OF CONNECTED LOAD (MW/MVA) TABLE 48 : DISTRIBUTION LOSS FOR FY TO FY TABLE 49 : ENERGY BALANCE FOR FY TO FY TABLE 50 : CONSOLIDATED ENERGY REQUIREMENT FOR FY TO FY (MUS) TABLE 51: EXISTING CAPACITY ALLOCATION WITH GUVNL TABLE 52: NEW CAPACITY ADDITION FROM FY TO FY TABLE 53: ADDITIONAL CAPACITY ENVISAGED FOR FY TO FY TABLE 54: DECOMMISSIONING/ PPA EXPIRY OF PLANTS TABLE 55: RPO TARGET (%) TABLE 56: PROCUREMENT FROM RE FOR MEETING PROJECTED RPO TABLE 57 : POWER PURCHASE COST FOR THE FY TABLE 58 : POWER PURCHASE COST FOR THE FY TABLE 59 : POWER PURCHASE COST FOR THE FY TABLE 60 : POWER PURCHASE COST FOR THE FY TABLE 61 : POWER PURCHASE COST FOR THE FY TABLE 62 : TRANSMISSION CHARGES FROM FY TO FY TABLE 63 : GUVNL COST FROM FY TO FY TABLE 64: TRADING MUS ENVISAGED FROM FY TO FY TABLE 65: FIXED COST FOR DISCOM FOR FY TO FY TABLE 66: VARIABLE COST FOR DISCOM & TRADING UNITS FOR FY TO FY TABLE 67: GUVNL NET POWER PURCHASE COST FOR FY TO FY TABLE 68: ALLOCATION OF POWER PURCHASE COST- DGVCL TABLE 69: ALLOCATION OF POWER PURCHASE COST- MGVCL TABLE 70: ALLOCATION OF POWER PURCHASE COST- PGVCL TABLE 71: ALLOCATION OF POWER PURCHASE COST- UGVCL TABLE 72: TOTAL REVENUE GAP/ (SURPLUS) TABLE 73: BULK SUPPLY TARIFF FOR FY TABLE 74: BULK SUPPLY TARIFF FOR FY TABLE 75: BULK SUPPLY TARIFF FOR FY TABLE 76: BULK SUPPLY TARIFF FOR FY TABLE 77: BULK SUPPLY TARIFF FOR FY TABLE 78: CAPITAL EXPENDITURE PLAN TABLE 79: FUNDING PLAN OF CAPITAL EXPENDITURE TABLE 80: AVERAGE O&M EXPENSES ARRIVED FOR BASE YEAR FY TABLE 81: COMPARISON OF O&M EXPENSES FOR ACTUALS OF FY AND PROJECTED AS PER GERC NORMS FOR FY TABLE 82: CONSOLIDATED DISCOM DATA FROM FY TO FY TABLE 83: CAGR GROWTH RATES FROM FY TO FY TABLE 84: PROPOSED O&M EXPENSES FOR FY TO FY TABLE 85: BAD AND DOUBTFUL DEBTS FOR FY TO FY TABLE 86: DEPRECIATION FOR FY TO FY TABLE 87: INTEREST & FINANCIAL CHARGES FOR FY TO FY TABLE 88: INTEREST ON WORKING CAPITAL FOR FY TO FY TABLE 89: RETURN ON EQUITY FOR FY TO FY TABLE 90: TAXES FOR FY TO FY Paschim Gujarat Vij Company Limited Page 5

7 TABLE 91: NON-TARIFF INCOME FOR FY TO FY TABLE 92: PROJECTED MULTI-YEAR ARR FOR FY TO FY TABLE 93 : PROJECTED FINAL ARR FOR FY TABLE 94 : PROJECTED ARR FOR FY TABLE 95: PROJECTED SALES (MUS) FOR FY TABLE 96: REVENUE AT EXISTING TARIFF FOR FY TABLE 97: REVENUE FROM FPPPA CHARGES FOR THE FY TABLE 98: OTHER CONSUMER RELATED INCOME FOR FY TABLE 99: AGRICULTURE SUBSIDY FOR FY TABLE 100: TOTAL REVENUE FOR FY TABLE 101: ESTIMATED REVENUE GAP FOR FY AT EXISTING TARIFF Paschim Gujarat Vij Company Limited Page 6

8 ABBREVIATIONS 1. ARR Aggregate Revenue Requirement 2. DGVCL Dakshin Gujarat Vij Company Limited 3. FPPPA Fuel and Power Purchase Price Adjustment 4. FY Financial Year 5. GEB Erstwhile Gujarat Electricity Board 6. GERC Gujarat Electricity Regulatory Commission 7. GERC MYT Regulations, 2016 GERC (Multi Year Tariff) Regulations, GETCO Gujarat Energy Transmission Corporation Limited 9. GoG Government of Gujarat 10. GoI Government of India 11. GSECL Gujarat State Electricity Corporation Limited 12. GUVNL Gujarat Urja Vikas Nigam Limited 13. kv Kilo Volt 14. kva Kilo Volt Ampere 15. kvah Kilo Volt Ampere Hour 16. kwh Kilo Watt Hour 17. MGVCL Madhya Gujarat Vij Company Limited 18. MU Million Units (Million kwh) 19. MVA Mega Volt Ampere 20. MW Mega Watt 21. MYT Multi Year Tariff MYT Control 22. FY , FY , FY , FY & FY Period 23. O&M Operation & Maintenance 24. PGVCL Paschim Gujarat Vij Company Limited 25. UGVCL Uttar Gujarat Vij Company Limited Paschim Gujarat Vij Company Limited Page 7

9 SECTION 1. INTRODUCTION 1.1. PREAMBLE This section presents the background and reasons for filing this Petition INTRODUCTION The Government of Gujarat (hereinafter referred to as GoG ) notified the Gujarat Electricity Industry (Reorganization and Regulation) Act 2003 (herein after called as Act ) in May 2003 for the reorganization of the entire power sector in the State of Gujarat Pursuant to the above, Government of Gujarat in their letter vide GO / 19th August 2003 had directed GEB to form four Distribution Companies (Discoms) based on geographical location of the circles. Accordingly the four distribution companies had been incorporated with the Registrar of Companies (RoC) on September 15th, Paschim Gujarat Vij Company Limited (PGVCL) is one of the distribution companies engaged in distribution of electricity in the west zone area of Gujarat The Paschim Gujarat Vij Co. Ltd obtained its Certificate of Commencement of Business on the 15th October, However, the company did not commence its commercial operations during the financial year ending 31st March, The Company has started its commercial function w.e.f. 1st April The Gujarat Electricity Regulatory Commission (hereinafter referred to as GERC or the Hon ble Commission ), an independent statutory body constituted under the provisions of the Electricity Regulatory Commissions (ERC) Act, 1998 and is currently under purview of the Electricity Act, GERC is vested with the authority of regulating the power sector in the State inter alia including determination of Tariff for electricity consumers The Hon ble Commission has issued the GERC (Multi Year Tariff) Regulations 2011 which was made effective from 1st April 2011 onwards Under section 62 of the Electricity Act, 2003 and under the GERC MYT Regulations, PGVCL had filed its Annual Revenue Requirement for the Second Control Period (FY to FY ) and Determination of Tariff for the FY to the Hon ble Commission on 12th May In respect to the above Petition, the MYT Order was issued by the Hon ble Commission on 6th September The Hon ble Commission had allowed an increase in the Tariff for some categories and the new Tariff was effective from 01st September In the above Order, the Hon ble Commission had also approved the ARR for all the years of the Second Control Period i.e. FY to FY As per the provisions stipulated in Regulation 29.8 of the GERC MYT Regulations, 2011 licensees were required to file the Petition for Mid-Term Performance Review of Business Plan for the purpose of truing up of FY , modification of ARR for remaining years of the Control Period (FY Paschim Gujarat Vij Company Limited Page 8

10 and FY ), Revenue from the sale of power at existing tariffs and charges for the ensuing year (FY ). Revenue gap for the ensuing year (FY ) calculated based on ARR approved in the MYT Order and truing up for the previous year and determination of Tariff for FY and Order on which was passed on 29th April, As per the provisions stipulated in Regulation 29.8, licensees were required to file the Petition for the Truing Up of FY and determination of Tariff for FY and Order on which was passed on 31st March, GERC order dated 02nd December, 2015 on the Petition 1534/2015 had stated the following: We decide that the approved ARR of FY of the licensees / generating companies concerned be considered as provisional ARR of the licensees / generating companies for FY We also decide that the licensees / generating companies shall file the ARR for FY based on the MYT Regulations, for FY to FY and the true up for the same shall also be governed as per the new MYT Regulations Accordingly, licensees were required to file the Petition for the Truing Up of FY and determination of Provisional ARR for FY and determination of Tariff for FY and Order on which was passed on 31st March, Hon ble Commission notified the Gujarat Electricity Regulatory Commission (Multi-Year Tariff) Regulations, 2016 ( GERC MYT Regulations, 2016 ) on 29th March 2016 and shall be applicable for determination of tariff in all cases covered under the regulations from 1st April, 2016 onwards MULTI YEAR TARIFF REGULATIONS, Under section 62 of the Electricity Act, 2003 and under the MYT Regulation, 2016 along with other guidelines and directions issued by the GERC from time to time, PGVCL is required to file a Petition for Truing-Up for FY and Determination of Multi-Year ARR for FY to FY and Tariff Petition for FY to the Hon ble Commission. The relevant extracts of the MYT Regulations, 2016 are given in the following paragraphs. Section of MYT Regulations, 2016: 3.1 The Commission shall determine tariff within the Multi-Year Tariff framework, for all matters for which the Commission has jurisdiction under the Act, including in the following cases: 1. Supply of electricity by a Generating Company to a Distribution Licensee; Paschim Gujarat Vij Company Limited Page 9

11 2. Intra-State transmission of electricity; 3. SLDC Fees and Charges; 4. Intra-State Wheeling of electricity; 5. Retail sale of electricity. (Emphasis Added) Section 17 of the GERC MYT Regulations, 2016: 17.2 The filing for the Control Period under these Regulations shall be as under: a) MYT Petition shall comprise of: i. Truing up for FY to be carried out under Gujarat Electricity Regulatory Commission (Multi-Year Tariff) Regulations, 2011: Provided that Truing up for FY for SLDC shall be carried out under Gujarat Electricity Regulatory Commission (Levy and Collection of Fees and Charges by SLDC) Regulations, 2005; ii. Multi-Year Aggregate Revenue Requirement for the entire Control Period with year-wise details; iii. Revenue from the sale of power at existing tariffs and charges and projected revenue gap or revenue surplus, for the second year of the Control Period under these Regulations, viz., FY ; iv. Application for determination of final ARR for FY and determination of tariff for FY SUBMISSION BY PGVCL TO THE HON BLE COMMISSION Under section 62 of the Electricity Act, 2003 and GERC MYT Regulations, 2016, PGVCL hereby submits the Petition for True-up of FY , Determination of Multi-Year ARR for FY to FY , Determination of final ARR for FY and Determination of Tariff for FY to the Hon ble Commission for approval. Paschim Gujarat Vij Company Limited Page 10

12 SECTION 2. EXECUTIVE SUMMARY 2.1. PREAMBLE This section highlights the summary of the and Multi-Year ARR Projections from FY to FY and Revenue gap/surplus for FY TRUE UP OF FY PGVCL has worked out its actual Aggregate Revenue Requirement (ARR) for FY based on the audited accounts and the principles adopted by the Hon ble Commission in its previous Orders The actual expenses have been compared against those approved for FY in the Tariff Order dated 29th April, The detailed comparison of various cost components with the values approved by the Hon ble Commission has been presented in the next Chapter on True up of FY A summary of the actual ARR for Truing-up of FY compared with the approved ARR for FY is presented in the table given below: TABLE 1 : TRUE UP FOR FY FY FY (Approved) (Actual) Deviation 1 of Power Purchase 9, , (1,335.41) 2 Operation & Maintenance Expenses (327.35) 2.1 Employee (115.82) 2.2 Repair & Maintenance (76.59) 2.3 Administration & General Charges (7.80) 2.4 Other Debits (82.59) 2.5 Extraordinary Items Net Prior Period Expenses / (Income) - (0.94) Other Expenses Capitalised (352.64) (307.15) (45.49) 3 Depreciation (7.87) 4 Interest & Finance Charges Interest on Working Capital Provision for Bad Debts (54.06) 7 Sub-Total [1 to 6] 10, , (1,693.53) 8 Return on Equity (12.08) 9 Provision for Tax / Tax Paid (3.96) 10 Total Expenditure (7 to 9) 10, , (1,709.56) 11 Less: Non-Tariff Income (28.78) 12 Aggregate Revenue Requirement (10-11) 10, , (1,680.78) In line with the provisions of the GERC MYT Regulations, 2011 PGVCL has computed the gains and losses on account of controllable and uncontrollable parameters and its proposed sharing mechanism The cost components have been segregated into controllable and uncontrollable factors as per the methodology outlined in Regulation 25 of the GERC MYT Regulations, Summary of the difference allocation to Paschim Gujarat Vij Company Limited Page 11

13 controllable & Uncontrollable factors is outlined as per the table below: TABLE 2 : SUMMARY OF CONTROLLABLE AND UNCONTROLLABLE FACTORS FOR FY Gain/(Loss) Gain/(Loss) FY FY due to due to No (Approved) (Actual) Controllable Uncontrollabl. Factors e Factors 1 of Power Purchase 9, , (210.61) (1,124.80) 2 Operation & Maintenance Expenses (200.21) (127.14) 2.1 Employee (115.82) Repair & Maintenance (76.59) Administration & General Charges (7.80) Other Debits (82.59) 2.5 Extraordinary Items Net Prior Period Expenses / (Income) - (0.94) Other Expenses Capitalised (352.64) (307.15) - (45.49) 3 Depreciation (7.87) 4 Interest & Finance Charges Interest on Working Capital Provision for Bad Debts (54.06) - 7 Return on Equity (12.08) 8 Provision for Tax / Tax Paid (3.96) 9 ARR (1 to 8) 10, , (464.88) (1,244.68) 10 Non - Tariff Income (28.78) 11 Total ARR (9-10) 10, , (464.88) (1,215.89) As per the mechanism specified in the GERC MYT Regulations, 2011 PGVCL proposes to pass on a sum of 1/3rd of total gain/(loss) on account of controllable factors i.e. Rs. (154.96) Crores and total gain/(loss) on account of uncontrollable factors i.e. Rs. ( ) Crores to the consumers. Adjusting these to the net Aggregate Revenue Requirement, PGVCL has arrived at the Revised Aggregate Revenue Requirement for FY at Rs. 12, Crores This revised Aggregate Revenue Requirement is compared against the revised income under various heads including Revenue with Existing Tariff of Rs. 10, Crores, Other Consumer related Income of Rs Crores, Agriculture Subsidies of Rs Crores, summing up to a Total Revenue of Rs. 11, Crores. Accordingly, total Revenue Gap of PGVCL for FY after treatment of gain/(loss) due to controllable / uncontrollable factors is computed at Rs Crores as shown in the table below: TABLE 3 : REVENUE GAP FOR FY FY Aggregate Revenue Requirement originally approved for FY , Add: Gap/(Surplus) of FY Add: DSM Programme expenditure Gain / (Loss) on account of Uncontrollable factor to be passed on to Consumer (1,215.89) 5 Gain / (Loss) on account of Controllable factor to be passed on to Consumer (1/3rd of Total Gain / Loss) (154.96) 6 Revised ARR for FY ( ) 12, Paschim Gujarat Vij Company Limited Page 12

14 FY Revenue from Sale of Power 10, Other Income (Consumer related) Total Revenue excluding Subsidy (7 + 8) 11, Agriculture Subsidy Total Revenue including Subsidy (9+10) 11, Revised Gap after treating gains/(losses) due to Controllable/ Uncontrollable factors (6-11) MULTIYEAR ARR PROJECTIONS FROM FY TO FY The Hon ble Commission in March 2016 came up with its Gujarat Electricity Regulatory Commission (Multi-Year Tariff) Regulations, 2016 applicable from 1st April Accordingly, the Aggregate Revenue Requirement for FY to FY as per GERC MYT Regulations, 2016 is projected as below: TABLE 4 : MULTI-YEAR PROJECTED ARR FOR FY TO FY FY FY FY FY FY of Power Purchase Operation & Maintenance Expenses 2.1 Employee , Repair & Maintenance Administration & General Charges Other Debits Extraordinary Items Net Prior Period Expenses / (Income) Other Expenses Capitalised (392.71) (415.17) (438.92) (464.03) (490.57) 3 Depreciation , Interest & Finance Charges Interest on Working Capital Provision for Bad Debts Sub-Total (1 to 6) 11, , , , , Return on Equity Provision for Tax / Tax Paid Total Expenditure (7 to 9) 12, , , , , Paschim Gujarat Vij Company Limited Page 13

15 11 Less: Non-Tariff Income FY FY FY FY FY Aggregate Revenue Requirement (10-11) 12, , , , , PGVCL requests Hon ble Commission to approve Multi-Year ARR for the MYT control period from FY to FY Further, PGVCL also requests Hon ble Commission to approve Final ARR for FY as mentioned in the Table above REVENUE GAP FOR FY The sales projections for FY as per GERC MYT Regulations, 2016 is MUs Based on projected sales & existing retail tariff, revenue from sale of power works out to Rs. 8, Crore for FY The Revenue from FPPPA charges for FY has been projected considering the base rate of 143 paise per unit as Rs. 3, Crore The income under the head Other Consumer Related Income and Agriculture subsidy for FY has been considered same as that of actuals for FY Based on the above projections, the total revenue of the company comprises of revenue from sale of power at existing tariff, FPPPA charges, other consumer related income and Agriculture Subsidy. Total revenue for FY is as shown below: TABLE 5 : TOTAL PROJECTED REVENUE FOR FY AT EXISTING TARIFF FY Revenue with Existing Tariff 8, FPPPA 143 paisa/kwh 3, Other Income (Consumer related) Agriculture Subsidy Total Revenue including subsidy (1 to 4) 13, The revenue gap of Rs crores after true up exercise of FY is also considered for estimating revenue gap/(surplus) for FY Based on the above, the estimated revenue gap/ (surplus) for FY at existing tariff is as outlined in the table below: TABLE 6: ESTIMATED REVENUE GAP/ (SURPLUS) FOR FY AT EXISTING TARIFF FY Aggregate Revenue Requirement for FY , Revenue Gap from True up of FY Paschim Gujarat Vij Company Limited Page 14

16 3 Total Aggregate Revenue Requirement for FY FY , Revenue with Existing Tariff 8, FPPPA 143 paisa/kwh 3, Other Income (Consumer related) Agriculture Subsidy Total Revenue including subsidy for FY (4 to 7) 13, Gap/(Surplus) (3-8) The Hon ble Commission is requested to approve the above mentioned gap PROPOSED CHANGES IN THE TARIFF STRUCTURE FOR FY There are no changes/revision/modification proposed in the tariff structure by the company for FY Paschim Gujarat Vij Company Limited Page 15

17 SECTION 3. TRUE UP FOR FY PREAMBLE This section outlines the performance of PGVCL for FY In line with the provisions of the GERC MYT Regulations, 2011, PGVCL hereby submits the True-Up Petition comparing the actual performance of PGVCL during FY with the forecast approved by the Hon ble Commission vide Mid-Term Review Order dated 29th April, PRINCIPLES FOR TRUE UP FOR FY As per MYT Tariff Regulations, 2011, the Hon ble Commission is required to undertake the True-Up of the licensees for FY based on the comparison of the actual performance of the past year with the approved estimates for such year. Section 22.1 of the GERC MYT Regulations, 2011 is read as below: Where the Aggregate Revenue Requirement and expected revenue from tariff and charges of a Generating Company or Transmission Licensee or Distribution Licensee is covered under a Multi-Year Tariff framework, then such Generating Company or Transmission Licensee or Distribution Licensee, as the case may be, shall be subject to truing up of expenses and revenue during the Control Period in accordance with these Regulations In line with the provisions of MYT Regulations, 2011, PGVCL has filed this Petition for True-Up for the year FY Information provided in the True- Up for FY is on the basis of audited actual performance and considering principles adopted by the Hon ble Commission in its previous Orders. The actual performance has been compared with the approved numbers as per the Order dated 29 th April, Accordingly, actual data for revised Aggregate Revenue Requirement, revenue and gap for FY are given in the following paragraphs of this chapter For the purpose of True-Up all the expense heads have been categorized into Controllable and Uncontrollable factors. A head-wise comparison has been made between the values approved by the Hon ble Commission and the actual values for various expenditures for FY CATEGORY WISE SALES The actual category wise sales for FY were MUs as against the approved sales of MUs. The table below highlights the comparison of actual category wise sales of PGVCL against that approved by the Hon ble Commission vide its Tariff Order. TABLE 7 : CATEGORY-WISE SALES Sales (MUs) FY (Approved) FY (Actual) A LT Consumers 1 RGP GLP Paschim Gujarat Vij Company Limited Page 16

18 Sales (MUs) FY (Approved) FY (Actual) 3 Non-RGP & LTMD Public Water Works Agriculture Unmetered Agriculture metered Public Lighting LT Total (A) B HT Consumers 8 Industrial HT Railway Traction HT Total (A) Grand Total (A + B) C Licensees (Kandla Port Trust) Grand Total (A + B + C) DISTRIBUTION LOSSES In FY , the actual distribution losses were 24.73% as against the approved level of 23.00%. The table below highlights the comparison of actual distribution losses of PGVCL against that approved by the Hon ble Commission vide its Tariff Order. TABLE 8 : DISTRIBUTION LOSSES FY (Approved) FY (Actual) 1 Distribution Losses 23.00% 24.73% The MYT Regulations, categorise the Distribution Losses as a controllable factor and accordingly any gain or loss on account of this would be shared with the consumers as per the provisions of the Regulations PGVCL submits that it has achieved a significant reduction in distribution losses during recent years. The Hon ble Commission had approved the distribution loss levels for PGVCL at 23.00% for FY PGVCL shall still continue its efforts to lower distribution losses further Since PGVCL has losses higher than those approved by the Hon ble Commission, its effect has been discussed in the section relating to power purchase and the gains and losses has been captured there itself ENERGY REQUIREMENT AND ENERGY BALANCE The gross energy requirement of PGVCL is as follows given in the table below: TABLE 9 : ENERGY REQUIREMENT AND ENERGY BALANCE FY FY S. Unit (Approved) (Actual) 1 Energy Sales MUs 20, ,188.93* MUs 5, , Distribution Losses % 23.00% 24.73% 3 Energy Requirement MUs 26, , Paschim Gujarat Vij Company Limited Page 17

19 S. Unit FY FY (Approved) (Actual) 4 Transmission Losses MUs 1, , Total Energy to be input to Transmission System MUs 27, , Pooled Losses in PGCIL System MUs Total Energy Requirement MUs 27, , *Energy sales to licensee (KPT) of MUs not included The gross energy requirement for subsequent sale to the consumers in FY is 29, MUs as compared to 27, MUs as approved by the Hon ble Commission POWER PURCHASE COST The company has been currently allocated share of generation capacities as per the scheme worked out by GUVNL. In order to minimize power purchase cost, GUVNL adopts the Merit Order Despatch principles for despatching power from the generating stations based on the demand and accordingly power gets allocated to PGVCL The actual power purchase from GUVNL is different from allocation because the demand from PGVCL is not constant and it varies from time to time The total power purchase cost of PGVCL for FY consists of the basic power purchase cost, transmission charges payable to GETCO and PGCIL and the Discom s share of GUVNL cost. Based on the same, the comparison of the approved and the actual cost of power purchase are as shown below: TABLE 10 : NET POWER PURCHASE COST FY FY (Approved) (Actual) A 1 Power Purchased from GUVNL 10, Power Purchased from CPP / Wind Farms Power Purchased from Solar Reactive Energy charges Uninterrupted Interchange Charges , B Income 1 Sale of Power to GUVNL Unscheduled Interchange 6.25 Net Power Purchase (A-B) 9, , The variation in the approved and the actual power purchase expenses is on account of various reasons including change in approved cost of power, change in quantum of power purchased allowed, consequent changes in the transmission charges payable and change in cost allocation to GUVNL The quantum of power purchase depends upon the sales during the year as well as the losses in the system. The actual distribution losses in PGVCL distribution network have been higher than the approved level but the sales were also higher than that approved by the Hon ble Commission and hence, the quantum of power purchased was higher than the approved quantum of Paschim Gujarat Vij Company Limited Page 18

20 power required As per the MYT Regulations, the Hon ble Commission has categorised the variation in the price of fuel and/ or price of power purchase according to the FPPPA formula approved by the Hon ble Commission as an uncontrollable factor. Further, the Hon ble Commission has also identified the variation in the number or mix of consumers or quantity of electricity sold to consumers as an uncontrollable factor. Thus the variation in the above factors affects the power purchase expenses and results into either a loss or gain. Accordingly, any gain or loss on this account is to be entirely passed on to the consumers as per the methodology approved by the Hon ble Commission In addition to the above, there is an incidence of higher power purchase cost on account of the higher Distribution Losses as compared to the losses approved by the Hon ble Commission. These losses has resulted in higher power purchase expenses as the quantum of power required to be purchased to meet the same level of demand would be higher hence resulting in the losses as explained below: TABLE 11 : GAIN/ (LOSS) ON ACCOUNT OF DISTRIBUTION LOSSES FOR FY Unit FY (with Approved Distribution Losses) FY (with Actual Distribution Losses) 1 Energy Sales MUs 21, , Distribution Losses MUs 6, , % 23.00% 24.73% 3 Energy Requirement MUs 27, , Saving due to Distribution Losses MUs (632.47) 5 Average Power Purchase Rs./Unit Gain/(Loss) due to Dist. Losses (210.61) As can be seen from the above, the total loss on account of higher distribution losses as compared to approved is Rs Crores. This loss is categorised as on account of controllable factors and the appropriate treatment is given below: 1 Total Power Purchase TABLE 12 : GAINS / (LOSS) - POWER PURCHASE EXPENSES FY (Approved) FY (Actual) Deviation Gain/(Loss) due to Controllable Factor Gain/(Loss) due to Uncontrollable Factor 9, ,540,09 ( ) (210.61) (1,124.80) Thus, as can be seen from the above table, the power purchase gain/(loss) due to controllable & uncontrollable factors are Rs. (210.61) Crores and Rs. (1,124.80) Crores respectively which would have to be passed on to the consumers as per the methodology approved by the Hon ble Commission CAPITAL EXPENDITURE Capital expenditure incurred by PGVCL in FY was Rs Crores. The actual capital expenditure by PGVCL during the FY is Rs Crores higher than that approved by the Hon ble Commission. The Paschim Gujarat Vij Company Limited Page 19

21 scheme-wise capital expenditure incurred in FY against approved by the Hon ble Commission is as shown below: A B C D Schemes TABLE 13 : CAPITAL EXPENDITURE FY (Approved) FY (Actual) Deviation Paschim Gujarat Vij Company Limited Page 20 Distribution Schemes Normal Development Scheme System Improvement Scheme (88.44) Electrification of hutments (17.20) Scheme for meters Others Harijan Basti - Petapara Total Rural Electrification Schemes Special Component plan (9.48) RE Normal + Tatkal Total Non Plan Schemes - RAPDRP (99.22) SCADA/DMS Total Other New Schemes - Fencing to Distribution Transformer Aerial Bunch Conductors HVDS (18.44) Under Ground System at Pilgrim Places like Dwarka, Somnath, Bhavnath (Junagadh) etc. and important GIDC area JGY Load Shedding Transformers Smart village (1.76) Solar AG Pumps (35.55) DISS (44.58) Coastal area scheme (26.91) Total (87.42) E Capital Expenditure Total 1, , (17.63) Scheme wise deviation in capital expenditure is explained as under: Normal Development: Under the head Normal Development Scheme, generally expenses are incurred to meet with the Supply Obligation which is mainly based on the numbers of applications received. Therefore, during the FY , company had to incur Rs Crores against approved Rs Crores. System Improvement: Under the head System Improvement, PGVCL carries out renovation/replacement of old Distribution line, bifurcation of feeder, installation/augmentation of Distribution Transformer etc. System Improvement is carried out on requirement basis with the objective to improve reliability of power supply and also to reduce distribution loss. Company incurred Rs Crores against approved Rs Crores. RE Scheme: Under the head RE Schemes, Company releases Agriculture Category connections. Following the directive of Hon ble Commission, Company has maximised the targets for releasing the Connections of

22 Agriculture category. Accordingly, during FY Company released more than Agriculture connections during the year at the cost of Rs Crores against approved Rs. 675 Crores. Following the policy framed by State Government, Company has started releasing connection in the Dark Zone area too from the year R- APDRP: R-APDRP (Restructured Accelerated Power Development & Reforms Programme) is the Central Sector Scheme. GoI has appointed Power Finance Corporation (PFC) as the Nodal Agency. The basic purpose of the scheme is to reduce AT&C Losses in the urban areas. Accordingly, all the towns having population more than 30,000 have been covered under this scheme. PGVCL has 36 such towns, covering 84 sub divisions. Scheme will be implemented in two parts: Part-A (IT Infrastructure establishment) and Part-B (Distribution strengthening and modernization). Moreover, three towns having population more than 4 lakhs and energy input more than 350 MUs /year have been identified for installing SCADA/DMS system, which are Rajkot, Bhavnagar and Jamnagar. Part-A includes: Establishment of baseline data and adoption of IT applications for meter reading, billing & collection; energy accounting & auditing; MIS; redressal of consumer grievances; establishment of IT enabled consumer service centers etc. Part-B includes: Renovation, modernization and strengthening of 11 kv level Substations, Transformers/Transformer Centers, Re-conductoring of lines at 11 kv level and below, Load Bifurcation, feeder separation, Load Balancing, HVDS (11 kv), Aerial Bunched Conductoring in dense areas, replacement of electromagnetic energy meters with electronics meters, Installation of capacitor banks and mobile service centers etc. Scheme is to be implemented as per the guidelines issued by PFC from time to time. Company has spent Rs Crores during the FY under this scheme. SCADA/DMS: The objective of reducing Aggregate Technical and Commercial (AT&C) losses in the project areas can be achieved by plugging pilferage points, supply of quality power, faster identification of faults & early restoration of power, proper metering, strategic placement of capacitor banks & switches and proper planning & designing of distribution networks. The real time monitoring & control of the distribution system through state-of-the art SCADA/DMS system encompassing all distribution substations & 11 KV network would help in achieving this objective of R-APDRP. For deriving maximum benefits it is essential that necessary upgradation of distribution Paschim Gujarat Vij Company Limited Page 21

23 S/S & 11kV network shall be carried out to meet the SCADA/DMS requirements. SCADA is to be implemented through SCADA Implementation Agency (SIA). High Voltage Distribution System (HVDS): Company is having large nos. of Low Tension category consumers. To eliminate low voltage distribution and to have better voltage profile as well as for reduction in Technical loss and associated commercial loss company has proposed to shift over on High Voltage Distribution System by erecting small capacity Transformer matching with the connected load of individual consumer or very small group of consumers in phased manner. During the year company has incurred Rs Crore as against approved Rs. 100 Crores. Coastal Area Scheme: PGVCL covers largest costal area of the state. Majority of the Distribution network of the Company is Overhead type. Overhead network is highly susceptible to environmental changes in general and particularly in coastal area. To provide better quality power supply in the coastal belt, Company undertakes various activities like renovation of Distribution network, Distribution Transformer review, providing Aerial Bunch Conductor, conversion of LT Distribution network into High Voltage Distribution System etc. Scope of work is planned depending on time to time requirement and exigency of work. Accordingly, Company has spent Rs Crores during FY against approved Rs. 30 Crores. Underground Network: Government of India has notified Integrated Power Development System. One of the main components of the scheme is to convert existing Overhead System to Underground System. To implement the scheme in integrated manner, the earlier proposed Underground schemes for Pilgrim area etc. couldn t be implemented. However, now it has been taken up and during the current year it will be implemented FUNDING OF CAPITALISATION The funding of actual capitalisation is done through various sources categorised under four headings namely: Consumer Contribution, Grants, Equity and Debt. The detailed breakup of funding of capitalised asset during FY is mentioned in the table below. TABLE 14 : FUNDING OF CAPITALISATION FY FY (Approved) (Actual) Deviation 1 Capitalization 1, , (76.97) 2 Less : Consumer Contribution Grants (18.89) 4 Balance CAPEX 1, , (210.69) 5 70% (147.49) 6 30% (63.21) Paschim Gujarat Vij Company Limited Page 22

24 The interest and finance charges incurred for the debt funding portion have been discussed in the paragraph 3.12 and the Return on the Equity under paragraph 3.15 of the Petition FIXED COST FOR FY The fixed cost of PGVCL for FY has been determined in accordance with the GERC MYT Regulations, As outlined under the regulations, the fixed cost for PGVCL has been determined under the following major heads: Operation and Maintenance Expenses Depreciation Interest and Finance Charges Interest on Working Capital Income Tax Return on Equity Net Annual Revenue Requirement of PGVCL has been computed after netting off expenses capitalised and non-tariff income For the purpose of True Up, all the heads mentioned above have been categorized into Controllable or Uncontrollable in line with provisions of GERC MYT Regulations, A head wise comparison of cost has been made between the values approved by the Hon ble Commission vide Tariff Order dated 29th April, 2014 and the actual expenses of PGVCL in FY OPERATION & MAINTENANCE EXPENSES Operations and Maintenance (O&M) Expenses of PGVCL consists of the following elements: Employee Expenses Repairs and Maintenance s Administrative and General Expenses Employee expenses comprise of salaries, dearness allowance, bonus, terminal benefits in the form of pension & gratuity, leave encashment and staff welfare expenses Repairs and Maintenance expenses are incurred towards the day to day upkeep of the distribution network and form an integral part of the efforts towards reliable and quality power supply as also in the reduction of losses in the distribution system Administration & General expenses mainly comprise of rents, telephone and other communication expenses, professional charges, conveyance and travelling allowances, etc PGVCL is also required to include the expenses of the following items of the ARR into O&M expenses by the Hon ble Commission: Other Debits Paschim Gujarat Vij Company Limited Page 23

25 Extraordinary Items Net Prior Period Expenses / (Income) Other Expenses Capitalised After the combination of all the above parameters for FY , PGVCL s actual O&M expense was Rs Crores which is inclusive of Employee cost of Rs Crores, Repair & Maintenance Charges of Rs Crores and Administration & General Expenses of Rs Crores along with other debits, extraordinary items, net prior period expense/ (income) and other expenses capitalized against the approved O&M expense which is Rs Crores. TABLE 15 : OPERATION & MAINTENANCE EXPENSES FY FY (Approved) (Actual) Deviation 1 Employee (115.82) 2 Repair & Maintenance (76.59) 3 Administration & General Charges (7.80) 4 Other Debits (82.59) 5 Extraordinary Items Net Prior Period Expenses / (Income) - (0.94) Other Expenses Capitalised (352.64) (307.15) (45.49) 8 Operation & Maintenance Expenses (327.35) Comparison of actual O&M charges during FY with the value approved by the Hon ble Commission reflects net gain/(loss) of Rs. (200.21) Crores on account of controllable factors and gain/(loss) of Rs (127.14) Crores on account of uncontrollable factors to PGVCL. TABLE 16 : TREATMENT OF OPERATION & MAINTENANCE EXPENSES Gain/(Loss) Gain/(Loss) FY FY due to due to No (Approved) (Actual) Controllable Uncontrollable Factor Factor 1 Employee Expenses (115.82) - 2 Repair & Maintenance (76.59) - 3 Administration & General Charges (7.80) - 4 Other Debits (82.59) 5 Extraordinary Items Net Prior Period Expenses / (Income) - (0.94) Other Expenses Capitalised (352.64) (307.15) - (45.49) 8 Total O&M Expenses (200.21) (127.14) Employee The actual employee cost for FY were Rs Crores. The employee cost incurred by the company is purely on the basis of the guidelines issued by competent authorities like the state government. Hence, the entire expenditure estimated by the company is a legitimate expenditure and any variation is purely beyond its control. Accordingly, PGVCL has estimated a gain/ (loss) of Rs. (115.82) Crores on account of controllable employee cost. Paschim Gujarat Vij Company Limited Page 24

26 The summary of the comparison of the actual employee expenses for FY vis-à-vis the expenses approved by the Hon ble Commission is given in the table below: TABLE 17 : EMPLOYEE COST FOR FY Gain/(Loss) due Gain/(Loss) due to FY FY to Controllable Uncontrollable (Approved) (Actual) Factor Factor 1 Employee (115.82) - Repair & Maintenance Repair and Maintenance expenditure is dependent on various factors. The assets of PGVCL are old and require regular maintenance to ensure uninterrupted operations. PGVCL has been trying its best to ensure uninterrupted operations of the system and accordingly has been undertaking necessary expenditure for R&M activities. The GERC MYT Regulations, 2011 provides for R&M expenditure as a controllable expenditure. The actual R&M cost for FY is Rs Crores including amount incurred in restoration of damage due to natural calamities like flood & cyclones. Accordingly, on the basis of comparison of actual R&M expenditure of PGVCL with the values approved by the Hon ble Commission, there is a gain/(loss) of Rs. (76.59) Crores as indicated in the table below: 1 Repair & Maintenance TABLE 18 : REPAIR & MAINTENANCE COST FOR FY FY (Approved) FY (Actual) Gain/(Loss) due to Controllable Factor Gain/(Loss) due to Uncontrollable Factor (76.59) - Administration & General Expenses The actual A&G expense for FY were Rs Crores. As per the provisions of the GERC MYT Regulations, 2011 A&G expenses are categorised as controllable expenses and accordingly, the comparison of value approved by the Hon ble Commission with the actual A&G expenses of PGVCL shows a gain/(loss) of Rs. (7.80) Crores as highlighted in the table below: 1 Administration & General Charges TABLE 19 : ADMINISTRATION & GENERAL EXPENSES FOR FY FY (Approved) FY (Actual) Gain/(Loss) due to Controllable Factor Gain/(Loss) due to Uncontrollable Factor (7.80) - Other Debits As per the G.R. No: NPL/452014/UOR-40/M dated issued by Government of Gujarat to waive the delayed payment charges debited up to to weak Nagar Palikas under One Time Settlement of their dues through Gujarat Municipal Finance Board, PGVCL had waived off delay payment charges amounting to Rs Crores in its audited accounts for FY Paschim Gujarat Vij Company Limited Page 25