TARIFF ORDER. True Up for FY & FY AND ARR FOR FY to FY AND TARIFF FOR FY

Transcription

1 ASSAM ELECTRICITY REGULATORY COMMISSION (AERC) TARIFF ORDER True Up for FY & FY AND ARR FOR FY to FY AND TARIFF FOR FY Assam Power Distribution Company Limited (APDCL) Petition No. 37/2016

2 Table of Contents INTRODUCTION CONSTITUTION OF THE COMMISSION TARIFF RELATED FUNCTIONS OF THE COMMISSION BACKGROUND MULTI YEAR TARIFF REGULATIONS, PROCEDURAL HISTORY STATE ADVISORY COMMITTEE MEETING... 7 SUMMARY OF APDCL S PETITION BACKGROUND TRUE-UP FOR FY AND FY AGGREGATE REVENUE REQUIREMENT FOR MYT CONTROL PERIOD PRAYERS OF APDCL...11 BRIEF SUMMARY OF OBJECTIONS RAISED, RESPONSE OF THE APDCL AND COMMISSION S COMMENTS...12 TRUING UP FOR FY AND FY METHODOLOGY FOR TRUING UP ENERGY SALES DISTRIBUTION LOSS ENERGY REQUIREMENT POWER PURCHASE DISALLOWED POWER PURCHASE COST DUE TO EXCESS LOSSES O&M EXPENSES DEPRECIATION INTEREST AND FINANCE CHARGES INTEREST ON WORKING CAPITAL INTEREST ON CONSUMER SECURITY DEPOSIT OTHER DEBITS NET PRIOR PERIOD EXPENSES/(INCOME) RETURN ON EQUITY...69 APDCL MYT Order for Control Period from FY to FY Page i

3 4.15 OTHER INCOME NON-TARIFF INCOME RECOVERY OF PAST REVENUE GAPS REVENUE/ GRANT SUBSIDY REVENUE FROM SALE OF POWER ARR AFTER TRUING UP OF FY AND FY ARR FOR MYT CONTROL PERIOD FROM FY TO FY INTRODUCTION ENERGY SALES CATEGORY-WISE ENERGY PROJECTED SALES DISTRIBUTION LOSS ENERGY BALANCE POWER PURCHASE OPERATION AND MAINTENANCE (O&M) EXPENSES CAPITAL INVESTMENT & FINANCING OF CAPITAL INVESTMENT DEPRECIATION INTEREST AND FINANCE CHARGES INTEREST ON WORKING CAPITAL INTEREST ON CONSUMERS SECURITY DEPOSIT PROVISION FOR BAD AND DOUBTFUL DEBTS RETURN ON EQUITY NON-TARIFF INCOME INCOME FROM MISCELLANEOUS CHARGES OPERATIONAL FUNDING SUPPORT REVENUE FROM SALE OF ELECTRICITY AGGREGATE REVENUE REQUIREMENT (ARR) AND REVENUE GAP/(SURPLUS) CUMULATIVE REVENUE GAP TILL FY & TARIFF FOR FY CUMULATIVE REVENUE GAP TARIFF FOR FY COST OF SUPPLY TARIFF PHILOSOPHY AND DESIGN CATEGORY-WISE CROSS-SUBSIDY FUEL PRICE AND POWER PURCHASE ADJUSTMENT CHARGES (FPPPA) APDCL MYT Order for Control Period from FY to FY Page ii

4 WHEELING CHARGES AND CROSS-SUBSIDY SURCHARGE INTRODUCTION ALLOCATION MATRIX WHEELING CHARGES APPLICABLE WHEELING LOSSES CROSS-SUBSIDY SURCHARGE APPLICABILITY OF TARIFF DIRECTIVES TARIFF SCHEDULE ANNEXURES ANNEXURE 1 - MINUTES OF THE 21 ST MEETING OF THE STATE ADVISORY COMMITTEE 177 APDCL MYT Order for Control Period from FY to FY Page iii

5 LIST OF TABLES Table 1: ARR for FY and for True Up as submitted by APDCL... 8 Table 2: ARR for FY to as submitted by APDCL (Rs. Crore)... 9 Table 3: Revenue Gap to be considered for recovery as submitted by APDCL (Rs. Crore)..10 Table 4: Energy Sales for FY and FY as submitted by APDCL (MU)...42 Table 5: Energy Sales for FY and FY approved by the Commission (MU) 44 Table 6: HT:LT ratio of Sales as submitted by APDCL (MU)...46 Table 7: Actual Distribution Loss for FY and FY computed by the Commission...47 Table 8: Distribution Loss for FY and FY Table 9: Energy Requirement approved by the Commission after True-Up for FY (MU)...48 Table 10: Energy Requirement approved by the Commission after True-Up for FY (MU)...49 Table 11: Power Purchase approved by the Commission after True-Up for FY (MU)...52 Table 12: Power Purchase approved by the Commission after True-Up for FY (MU)...54 Table 13: Excess Power Purchase Cost Disallowed by the Commission after True-Up for FY and FY (Rs. Crore)...56 Table 14: O&M Expenses for FY and FY as submitted by APDCL (Rs. Crore)...57 Table 15: O&M Expenses for FY and FY approved by the Commission (Rs. Crore)...60 Table 16: Depreciation for FY approved by the Commission (Rs. Crore)...62 Table 17: Depreciation for FY approved by the Commission (Rs. Crore)...62 Table 18: Interest and Finance Charges as submitted by APDCL for FY and FY (Rs. Crore)...63 APDCL MYT Order for Control Period from FY to FY Page iv

6 Table 19: Interest on GoA and R-APDRP computed by the Commission for FY and FY (Rs. Crore)...64 Table 20: Interest and Finance Charges approved by the Commission for FY and FY (Rs. Crore)...65 Table 21: IoWC as submitted by APDCL for FY and FY (Rs. Crore)...66 Table 22: IoWC approved by the Commission for FY and FY (Rs. Crore).66 Table 23: Interest on CSD claimed by APDCL for FY and FY (Rs. Crore) 67 Table 24: Other Debits as submitted by APDCL (Rs. Crore)...68 Table 25: Prior Period Expenses/(Income) approved by the Commission for FY and FY (Rs. Crore)...69 Table 26: RoE approved by the Commission for FY and FY (Rs. Crore)...70 Table 27: Past Period Adjustments approved by the Commission (Rs. Crore)...72 Table 28 Revenue Grant/Subsidy for FY and FY as submitted by APDCL (Rs. Crore)...73 Table 29: ARR & Revenue Gap/(Surplus) approved in the Truing up for FY (Rs. Crore)...74 Table 30: ARR & Revenue Gap/(Surplus) approved in the Truing up for FY (Rs. Crore)...75 Table 31: Category-wise Growth Rates considered by APDCL for Sales Projection...78 Table 32: Category-wise Energy Sales Projected by APDCL for the Control Period (MU)...78 Table 33: Category-wise Energy Sales Projected by the Commission for the Control Period (MU)...80 Table 34: Distribution Losses Projected by APDCL for the Control Period...82 Table 35: Distribution Losses approved by the Commission for the Control Period...82 Table 36: Energy Balance for FY to FY as Projected by APDCL (MU)...83 Table 37: Energy Balance for FY to FY approved by the Commission (MU)...83 Table 38: RPO considered by APDCL for the Control Period from FY to FY (%)...85 APDCL MYT Order for Control Period from FY to FY Page v

7 Table 39: Power Purchase Quantum and Cost for the Control Period from FY to FY as submitted by APDCL...86 Table 40: RPO considered by the Commission for the Control Period from FY to FY (%)...91 Table 41: REC Purchase considered by the Commission for the Control Period from FY to FY Table 42: Power Purchase Quantum and Cost approved by the Commission for the Control Period from FY to FY Table 43: Approved Employee Expenses for the Control Period (Rs. Crore)...99 Table 44: Approved R&M Expenses for Control Period (Rs. Crore)...99 Table 45: Approved A&G Expenses for the Control Period (Rs. Crore) Table 46: Capital Investment Plan for FY to FY (Rs. Crore) Table 47: Funding for Capital Expenditure Schemes as submitted by APDCL (Rs. Crore). 102 Table 48: Capital Expenditure and Capitalisation achieved by APDCL (Rs. Crore) Table 49: Percentage of Capitalisation achieved by APDCL (Rs. Crore) Table 50: Capital Expenditure and capitalisation approved by the Commission (Rs. Crore) Table 51: Funding of Capitalised Works approved by the Commission (Rs. Crore) Table 52: Depreciation claimed by APDCL for the Control Period (Rs. Crore) Table 53: Depreciation approved for FY (Rs. Crore) Table 54: Depreciation approved for FY (Rs. Crore) Table 55: Depreciation approved for FY (Rs. Crore) Table 56: Salient Features of UDAY Scheme as submitted by APDCL (Rs. Crore) Table 57: Loan Schedule for the Control Period from FY to FY as submitted by APDCL (Rs. Crore) Table 58: Interest and Finance Charges as submitted by APDCL for Period from FY to FY (Rs. Crore) Table 59: Computation of Normative loan outstanding as on April 1, 2016 (Rs. Crore) APDCL MYT Order for Control Period from FY to FY Page vi

8 Table 60: Treatment of Loans under UDAY MoU as considered by the Commission (Rs. Crore) Table 61: Approved Interest on Loan Capital for FY to FY (Rs. Crore) Table 62: IoWC for the Control Period as Projected by APDCL (Rs. Crore) Table 63: Revised IoWC for the Control Period as Projected by APDCL (Rs. Crore) Table 64: IoWC approved by the Commission for the Control Period (Rs. Crore) Table 65: Interest on CSD for the Control Period as Projected by APDCL (Rs. Crore) Table 66: Interest on CSD for the Control Period approved by the Commission (Rs. Crore) Table 67: Provision for Bad and Doubtful Debts as Projected by APDCL (Rs. Crore) Table 68: Return on Equity projected by APDCL for the Control Period (Rs. Crore) Table 69: Return on Equity approved by the Commission for the Control Period (Rs. Crore) Table 70: Non-Tariff Income as submitted by APDCL for the Control Period (Rs. Crore) Table 71: Non-Tariff Income approved by the Commission for the Control Period (Rs. Crore) Table 72: Miscellaneous Income approved by the Commission for the Control Period (Rs. Crore) Table 73: Operational Funding Support considered by APDCL for the Control Period (Rs. Crore) Table 74: Revenue from Sale of Electricity for the Control Period (Rs. Crore) Table 75: ARR & Revenue Gap/(Surplus) for APDCL for the Control Period approved by the Commission (Rs. Crore) Table 76: Revenue Gap to be considered for recovery as submitted by APDCL (Rs. Crore) Table 77: Cumulative Revenue Gap/(Surplus) till FY approved by the Commission (Rs. Crore) Table 78: VCoS as submitted by APDCL for the Control Period (Rs./kWh) Table 79: Voltage-wise losses as submitted by APDCL for the Control Period (Rs./kWh) APDCL MYT Order for Control Period from FY to FY Page vii

9 Table 80: VCoS computed by the Commission for the Control Period (Rs./kWh) Table 81: ACoS approved by the Commission for FY Table 82: Full Cost Tariff approved by the Commission for FY Table 83: Category-wise Cross-Subsidy approved for FY Table 84: Allocation Matrix for Separation of ARR for Wires Business and Retail Supply Business for FY Table 85: Separation of ARR for Wires Business and Retail Supply Business for FY (Rs. crore) Table 86: Wheeling Charges approved by the Commission for FY Table 87: Wheeling Losses approved by the Commission for FY Table 88: Cross-Subsidy Surcharge for HT I and HT II Industry category for FY APDCL MYT Order for Control Period from FY to FY Page viii

10 List of Abbreviations A&G ABC ABITA ABT ABP ABR ACoS ADB AEGCL AERC APDCL APDRP APGCL APM APR ARR APSEIP APSIP APTEL ASEB AT&C ATPA BPL CAEDCL CAGR CAIDI CAIFI CBDF CEA CERC CGRF CGS Administrative & General Aerial Bunched Conductors Assam Branch of Indian Tea Association Availability Based Tariff Average Basic Pay Average Billing Rate Average Cost of Supply Asian Development Bank Assam Electricity Grid Corporation Limited Assam Electricity Regulatory Commission Assam Power Distribution Company Limited Accelerated Power Development Programme Assam Power Generation Corporation Limited Administered Pricing Mechanism Annual Performance Review Aggregate Revenue Requirement Assam Power Sector Enhancement Investment Programme Assam Power Sector Investment Programme Appellate Tribunal for Electricity Assam State Electricity Board Aggregate Technical and Commercial Assam Tea Planters Association Below Poverty Line Central Assam Electricity Distribution Company Limited Compound Aggregate Growth Rate Customer Average Interruption Duration Index Customer Average Interruption Frequency Index Collection Based Distribution Franchisee Central Electricity Authority Central Electricity Regulatory Commission Consumer Grievance Redressal Forum Central Generating Station APDCL MYT Order for Control Period from FY to FY Page ix

11 COD Date of Commercial Operation CPC Central Pay Commission CPI Consumer Price Index CPSU Central Public Sector Utility CSD Consumer Security Deposit CSS Cross-subsidy Surcharge CTU Central Transmission Utility CWIP Capital Work In Progress DA Dearness Allowance D/C Double Circuit DD Demand Draft DDUGJY Deendayal Upadhyay Gram Jyoti Yojana DELP Domestic Efficient Lighting Programme DISCOM Distribution Company DMS Distribution Management System DPR Detailed Project Report DSM Demand Side Management DT/DTR Distribution Transformer EA, 2003 The Electricity Act, 2003 ECBC Energy Conservation Building Code EE Energy Efficiency EHV Extra High Voltage EPC Engineering Procurement & Construction ERP Enterprise Resource Planning ERS Emergency Restoration System FINER Federation of Industry & Commerce of North Eastern Region FPPPA Fuel Price and Power Purchase Adjustment FY Financial Year GFA Gross Fixed Assets GMRETCL GMR Energy Trading Company Limited GoA Government of Assam GoI Government of India GPF General Provident Fund APDCL MYT Order for Control Period from FY to FY Page x

12 HEP HH HP HT HV HVCMS IOCL IPDS ISTS IT IWC/IoWC JICA JNNSM kv kva kw kwh LAEDCL LED LOA LT LTC LV MAT MIS MNRE MoP MOU MRI MU MW MYT NEEPCO Hydro Electric Project Household Horse Power High Tension High Voltage High Value Consumer Management System Indian Oil Corporation Limited Integrated Power Development Scheme Inter State Transmission System Information Technology Interest on Working Capital Japan International Cooperation Agency Jawaharlal Nehru National Solar Mission kilo Volt kilo Volt Ampere kilo Watt kilo Watt Hour Lower Assam Electricity Distribution Company Limited Light Emitting Diode Letter of Award Low Tension Leave Travel Concession Low Voltage Minimum Alternate Tax Management Information System Ministry of New and Renewable Energy Ministry of Power Memorandum of Understanding Meter Reading Instruments Million Unit Mega Watt Multi-Year Tariff North Eastern Electric Power Corporation Limited APDCL MYT Order for Control Period from FY to FY Page xi

13 NEP NERPSIP NESSIA NHPC NLCPR NTPC O&M OA OEM OPGW PFA PFC PGCIL PLF PTCIL R&M RAPDRP REC RGGVY ROE ROW RPO Rs. SAC SAIDI SBI PLR S/C SECI SHEP SOP SPV STU National Electricity Policy North Eastern Region Power System Improvement Project North Eastern Small Scale Industries Association NHPC Ltd. Non-lapsable Central Pool of Resources NTPC Ltd. Operation and Maintenance Open Access Original Equipment Manufacturer Optical Ground Wire Power for All Power Finance Corporation Limited Power Grid Corporation of India Limited Plant Load Factor PTC Indian Limited Repairs and Maintenance Restructured Accelerated Power Development & Reforms Programme Renewable Energy Certificate Rajiv Gandhi Grameen Vidyutikaran Yojana Return on Equity Right of Way Renewable Purchase Obligation Rupees State Advisory Committee System Average Interruption Duration Index State Bank of India Prime Lending Rate Single Circuit Solar Corporation of India Limited Small Hydro Electric Project Standards of Performance Special Purpose Vehicle State Transmission Utility APDCL MYT Order for Control Period from FY to FY Page xii

14 SLDC TBCB TOD TVS UAEDCL UI UDAY VCoS WB WPI State Load Dispatch Centre Tariff Based Competitive Bidding Time of Day Technical Validation Session Upper Assam Electricity Distribution Company Limited Unscheduled Interchange Ujwal DISCOM Assurance Yojana Voltage-wise Cost of Supply The World Bank Wholesale Price Index APDCL MYT Order for Control Period from FY to FY Page xiii

15 ASSAM ELECTRICITY REGULATORY COMMISSION Guwahati Present Shri Naba Kumar Das, Chairperson Shri Dipak Chakravarty, Member Shri Subhash C. Das, Member Petition No. 37/2016 Assam Power Distribution Company Limited (APDCL) - Petitioner ORDER (Passed on March 31, 2017) (1) The Commission, vide its Order dated November 21, 2013, approved the Multi Year Tariff applicable for the Assam Power Distribution Company Limited (hereinafter referred to as APDCL ), for the period from FY to FY Subsequently, the Commission has issued the Tariff Order for FY on November 21, 2014, and for FY on July 24, 2015 in accordance with the provisions of the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Tariff) Regulations, 2006 (herein after referred as Tariff Regulations, 2006 ). (2) The Commission, in exercise of the powers conferred under Section 61 read with Section 181(2) (zd) of the Act, has notified the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Multi Year Tariff) Regulations, 2015 (hereinafter referred as MYT Regulations, 2015 ) on June 2, These Regulations are applicable for determination of Tariff for Generation, Transmission, SLDC, Wheeling and Retail Supply for the Control Period of three financial years from April 1, 2016 onwards up to APDCL MYT Order for Control Period from FY to FY Page xiv

16 March 31, These Regulations are applicable to all existing and future Generating Companies, Transmission Licensees and Distribution Licensees within the State of Assam. (3) Regulation 6 of the MYT Regulations, 2015 requires the Generating Company, Transmission Licensee, SLDC Business and Distribution Licensee to file the Business Plan for the entire Control Period by 1 st July of the year preceding the first year of the Control Period, i.e., before the filing of Multi Year Tariff (MYT) Petition. (4) However, considering that APDCL was preparing and filing the Business Plan for the first time, the Commission vide letter dated August 29, 2015 directed APDCL to file the Business Plan Petition by November 1, (5) APDCL, vide Letter dated October 30, 2015, requested for time extension for filing of Business Plan Petition for the Control Period. Thereafter, on direction of the Commission, APDCL filed a Petition for condonation of delay and time extension on November 16, The Commission granted time extension as sought by APDCL and directed APDCL to submit the Business Plan Petition for the Control Period from FY to FY by December 10, (6) APDCL filed the Business Plan Petition for the Control Period from FY to FY on December 10, 2015 along with a Petition for condonation of delay. (7) The Commission carried out preliminary analysis of the Business Plan Petition submitted by APDCL as mentioned above. Thereafter, APDCL was directed to submit replies on all observations and clarifications sought by the Commission by February 12, The same was submitted on April 8, (8) The Commission conducted the Technical Validation Session (TVS) on the Business Plan Petition on April 27, 2016 and directed APDCL to submit additional information and the revised Petition, duly approved by the Board of Directors, giving the realistic Business Plan after incorporating all revisions in technical and financial parameters. (9) Based on the discussions held during the TVS and after incorporating the additional information/clarifications, APDCL submitted revised Business Plan along with the replies to the queries raised during the Technical Validation Session on May 25, APDCL MYT Order for Control Period from FY to FY Page xv

17 (10) Further, APDCL submitted the copy of the Board Resolution approving the revised Business Plan duly certified by the Company Secretary, during the hearing held on July, 26, This process delayed the issuance of Business Plan Order. (11) The Commission issued the Order on the said Business Plan on September 1, 2016 and directed APDCL to file the MYT Petition, including the forecast of Aggregate Revenue Requirement for FY to FY , true-up for FY and FY , actuals of FY (6 months), and projected tariff for FY and FY (12) As per directives of the Commission vide Order dated September 1, 2016, APDCL has to file its MYT Petition (Petition No. 37/2016) for Control Period from FY to FY on or before November 1, APDCL has filed the Petition for approval of the ARR and tariff for the Control Period from FY to FY on November 2, (13) The Commission conducted preliminary analysis of the Petition submitted by APDCL and found that the Petition was incomplete in material particulars. Therefore, additional data and clarifications on the MYT Petition were sought from APDCL vide letter dated December 1, 2016 and December 8, 2016 and these were submitted by them on December 15, 2016 & December 22,2016 respectively. (14) The Commission observes that there were several inconsistencies in the Petition, and even the revised Petition submitted by APDCL contained discrepancies. In the interest of time, the Commission admitted the Petition and raised additional queries in order to clarify the discrepancies, inconsistencies, and data gaps, and also directed APDCL to submit the consolidated revised documents in order to avoid confusion. However, APDCL did not submit the duly reconciled consolidated revised documents, and the replies to queries also contained inconsistencies. As the regulatory process has to be completed within the stipulated time, the Commission has relied upon data considered to be more accurate/reliable within the multiple conflicting data available with the Commission, and has made appropriate assumptions wherever necessary. The Commission may be constrained to reject such Petitions in the future, and APDCL should take the necessary due diligence before submitting the Petitions and replies. (15) The Commission held an Admissibility Hearing on December 17, 2016, and admitted the Petition (Petition No. 37/2016) vide Order dated December 17, On admission of the Petitions, in accordance with Section 64 of the Electricity Act 2003, the Commission APDCL MYT Order for Control Period from FY to FY Page xvi

18 directed APDCL to publish a summary of the ARR and Tariff filings in local dailies to ensure due public participation. A copy of the Petitions and other relevant documents were also made available to the consumers and other interested Parties at the office of the Managing Director of APDCL, and offices of the Deputy General Manager of each circle of APDCL. A copy of the Petition was also made available on the websites of the Commission and APDCL. (16) Accordingly, a Public Notice was issued by the APDCL inviting objections/suggestions from objectors to be submitted on or before January 30, The notice was published in six (6) leading newspapers of the State on January 7, (17) Meanwhile the Commission received requests for extending the time limit for filing objections/suggestions from some consumers/consumer organizations. The Commission positively considered the requests from different stakeholders, and extended the time limit for filing objections/suggestions up to February 7, (18) The Commission received suggestions and objections from eight (8) stakeholders on the Petitions filed by APDCL. The objectors were notified about the place, date and time of Hearing, to enable them to take part in the Hearing to be held at District Library Auditorium, Guwahati on February 28, The Hearing was held as scheduled. The details are discussed in the relevant Chapters of this Tariff Order. (19) The Petitions were also discussed in the meeting of the State Advisory Committee (SAC) (constituted under Section 87 of the Electricity Act, 2003) held on March 4, 2017 at Assam Administrative Staff College, Khanapara, Guwahati. (20) The Commission, now in exercise of its powers vested under Sections, and 86 of the Electricity Act, 2003 and all other powers enabling it in this behalf and taking into consideration the submissions made by the Petitioner, objections and suggestions received from objectors and all other relevant materials on record, has carried out the True-up for FY and FY , approval of ARR for the Control Period from FY to FY , and determination of distribution and retail supply tariff for FY , as detailed in subsequent Chapters of this Order. (21) The Commission further directs APDCL to publish a Public Notice intimating the revised distribution and retail supply tariff before the implementation of this Order in English and Vernacular newspapers and on the website of APDCL. APDCL MYT Order for Control Period from FY to FY Page xvii

19 (22) The approved Retail Supply Tariffs, Wheeling Charges and CSS for FY shall be effective from April 10, 2017 and shall continue until replaced by another Order by the Commission. (23) Accordingly, the Petition 37/2016 stands disposed of. Sd/- (S. C. Das) Member, AERC Sd/- (D. Chakravarty) Member, AERC Sd/- (N. K. Das) Chairperson, AERC APDCL MYT Order for Control Period from FY to FY Page xviii

20 INTRODUCTION 1.1 Constitution of the Commission The Assam Electricity Regulatory Commission (hereinafter referred to as the AERC or the Commission) was established under the Electricity Regulatory Commissions Act, 1998 (14 of 1998) on February 28, The first proviso of Section 82(1) of the Electricity Act, 2003 (hereinafter referred as the Act or the EA, 2003) has ensured continuity of the Commission under the Electricity Act, The Commission is mandated to exercise the powers and functions conferred under Section 181 of the Electricity Act, 2003 (36 of 2003) and to exercise the functions conferred on it under Section 86 of the Act from June 10, Tariff related Functions of the Commission Under Section 86 of the Act, the Commission has the following tariff related functions: a) To determine the tariff for electricity, wholesale, bulk or retail, as the case may be; b) To regulate power purchase and procurement process of the distribution utilities including the price at which the power shall be procured from the generating companies, generating stations or from other sources for transmission, sale, distribution and supply in the State; c) To promote competition, efficiency and economy in the activities of the electricity industry to achieve the objects and purposes of this Act Under Section 61 of the Act in the determination of tariffs, the Commission is to be guided by the following: a) The principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; b) That the electricity generation, transmission, distribution and supply are conducted on commercial principles; c) That factors which would encourage efficiency, economical use of the resources, good performance, optimum investments, and other matters which the State commission considers appropriate for the purpose of this Act; APDCL MYT Order for Control Period from FY to FY Page 1

21 d) The interests of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner based on their customer category cost of supply; e) That the tariff progressively reflects the cost of supply of electricity at an adequate and improving level of efficiency and also gradually reduces cross subsidies; f) The National Power Plans formulated by the Central Government including the National Electricity Policy and Tariff Policy In accordance with the provisions of the Act, the Commission shall not show undue preference to any consumer of electricity in determining the tariff, but may differentiate according to the consumers load factor, power factor, voltage, total consumption of energy during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required (Section 62 of the Act) If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the Commission, the State Government shall pay the amount to compensate the person affected by the grant of subsidy in the manner the Commission may direct as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government (Section 65 of Act 2003). 1.3 Background The Government of Assam notified Vide Memo No. PEL151/2003/Pt./165 dated December 10, 2004, the restructuring of the erstwhile Assam State Electricity Board (ASEB) into five entities, namely; (i) Assam Electricity Grid Corporation Limited (AEGCL) to carry out function as State Transmission Utility (STU) (ii) Assam Power Generation Corporation Limited (APGCL) to carry out function of generation of electricity in the State of Assam (iii) Three Electricity distribution companies, namely, Lower, Central and Upper Assam Distribution Company Limited, respectively, to carry out functions of distribution and retail supply of electricity in the districts covered under each company area All Companies are duly incorporated with the Registrar of Companies as per the APDCL MYT Order for Control Period from FY to FY Page 2

22 Companies Act Further, in exercise of power under Section 172 of the Electricity Act 2003, the State Government authorized ASEB to continue its trading functions by periodic notification till September In May 2009, as per GOA notification No PEL.41/2006/199 dated May 13, 2009, in accordance with the Assam State Reform (Transfer and merger of Distribution Functions and undertakings) scheme, 2009, CAEDCL and UAEDCL distribution companies merged with the LAEDCL, thereby forming one distribution Company for the State The name of the Company was changed from LAEDCL to Assam Power Distribution Company Limited (APDCL) vide Certificate of Incorporation dated October 23, The Government of Assam vide Notification dated March 12, 2013 dissolved ASEB under Section 131 of the Act with effect from March 31, The Commission notified the AERC (Terms and Conditions for Determination of Tariff) Regulations, 2006 (hereafter referred to as Tariff Regulations, 2006) vide Notification No. AERC.2005/19 dated April 28, 2006, which was published in the Assam Gazette on May 24, In accordance with Regulation 5.3 of the Tariff Regulations, 2006, the tariff will be determined on the basis of the principles enunciated under the Multi Year Tariff principle for a period of three years commencing from April 1, APDCL had filed the MYT Petition for the Control Period from FY to FY on January 31, The Commission, after following the due regulatory process, issued the Tariff Order on November 21, Subsequently, the Commission has issued the Tariff Order for FY on November 21, 2014 and for FY on July 24, 2015 in accordance with the provisions of the Tariff Regulations, Multi Year Tariff Regulations, The Commission, in exercise of the powers conferred under Section 61 read with Section 181(2) (zd) of the Act, has notified the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Multi Year Tariff) Regulations, APDCL MYT Order for Control Period from FY to FY Page 3

23 2015 (hereinafter referred as MYT Regulations, 2015 ) on June 2, These Regulations are applicable for determination of Tariff for Generation, Transmission, SLDC, Wheeling and Retail Supply for the Control Period of three financial years from April 1, 2016 onwards up to March 31, These Regulations are applicable to all existing and future Generating Companies, Transmission Licensees and Distribution Licensees within the State of Assam Regulation 6 of the MYT Regulations, 2015 requires the Generating Company, Transmission Licensee, SLDC Business and Distribution Licensee to file the Business Plan for the entire Control Period by 1 st July of the year preceding the first year of the Control Period, i.e., before the filing of Multi Year Tariff (MYT) Petition However, considering that APDCL was preparing and filing the Business Plan for the first time, the Commission vide letter dated August 29, 2015 directed APDCL to file Business Plan Petition by November 1, APDCL, vide Letter dated October 30, 2015, requested for time extension for submission of Business Plan Petition for the Control Period. Thereafter, on direction of the Commission, APDCL filed a Petition for condonation of delay and time extension on November 16, The Commission granted time extension as sought by APDCL and directed APDCL to submit the Business Plan Petition for the Control Period from FY to FY by December 10, APDCL filed the Business Plan Petition for the Control Period from FY to FY on December 10, 2015 along with a petition for condonation of delay The Commission carried out preliminary analysis of the Business Plan Petition submitted by APDCL as mentioned above. Thereafter, APDCL was directed to submit replies on all observations and clarifications sought by the Commission by February 12, The same was submitted on April 8, The Commission conducted the Technical Validation Session (TVS) on the Business Plan Petition on April 27, 2016 and directed APDCL to submit additional information and the revised Petition, duly approved by the Board of Directors, giving the realistic Business Plan after incorporating all revisions in technical and financial parameters Based on the discussions held during the TVS and after incorporating the additional information/clarifications, APDCL submitted revised Business Plan along with the replies to the queries raised during the Technical Validation Session on May 25, Further, APDCL submitted the copy of the Board Resolution approving the revised APDCL MYT Order for Control Period from FY to FY Page 4

24 Business Plan duly certified by the Company Secretary, during the hearing held on July, 26, This process delayed the issuance of Business Plan Order The Commission issued the Order on the said Business Plan on September 1, 2016 and directed APDCL to file the MYT Petition, including the forecast of Aggregate Revenue Requirement for FY to FY , true-up for FY and FY , actuals of FY (6 months), and projected tariff for FY and FY Accordingly, APDCL has filed the present Petition for approval of Aggregate Revenue Requirement for the Control Period from FY to FY and tariff for FY as per MYT Regulations, 2015, along with True-up for FY and FY as per Tariff Regulations, Procedural History As per directives of the Commission vide Order dated September 1, 2016, APDCL has to file its MYT Petition for Control Period from FY to FY on or before November 1, APDCL has filed the Petition (Petition No. 37/2016) for approval of the ARR and tariff for the Control Period from FY to FY on November 2, The Commission conducted preliminary analysis of the Petition submitted by APDCL and found that the Petition was incomplete in material particulars. Therefore, additional data and clarifications on the MYT Petition were sought from APDCL vide letter dated December 1, 2016 and these were submitted by them on December 15, 2016 and December 22, 2016, respectively The Commission observes that there were several inconsistencies in the Petition, and even the revised Petition submitted by APDCL contained discrepancies. In the interest of time, the Commission admitted the Petition and raised additional queries in order to clarify the discrepancies, inconsistencies, and data gaps, and also directed APDCL to submit the consolidated revised documents in order to avoid confusion. However, APDCL did not submit the duly reconciled consolidated revised documents, and the replies to queries also contained inconsistencies. As the regulatory process has to be completed within the stipulated time, the Commission has relied upon data considered to be more accurate/reliable within the multiple conflicting data available with the Commission, and has made appropriate assumptions wherever necessary. The APDCL MYT Order for Control Period from FY to FY Page 5

25 Commission may be constrained to reject such Petitions in the future, and APDCL should take the necessary due diligence before submitting the Petitions and replies The Commission held an Admissibility Hearing on December 17, 2016, and admitted the Petition (Petition No. 37/2016) vide Order dated December 17, On admission of the Petition, in accordance with Section 64 of the Act, the Commission directed APDCL to publish its application in the abridged form and manner to ensure due public participation The copies of the Petition and other relevant documents were made available to consumers and other interested parties at the office of the Managing Director of APDCL, and offices of the Deputy General Manager of each circle of APDCL. APDCL was also directed to make the copy of the Petition available on its website. A copy of the Petition was made available on the website of APDCL ( and also on the website of the Commission ( in downloadable format. A Public Notice was issued by APDCL inviting objections/suggestions from stakeholders on or before January 30, 2017, which was published in the following newspapers on January 7, Date Name of Newspaper Language The Sentinel English The Assam Tribune English Asamiya Pratidin Assamese Dainik Janambhumi Assamese Purbanchal Prahari Hindi Dainik Jugasankha Bengali The time limit for submitting objections/suggestions was stipulated in accordance with the AERC (Conduct of Business) Regulations, Meanwhile the Commission received requests for extending the time limit for filing objections/suggestions from some consumers/consumer organizations. The Commission positively considered the requests from different stakeholders, and extended the time limit for filing objections/suggestions up to February 7, TVS with APDCL to discuss and sort out data gaps and shortcomings was conducted in the office of the Commission on January 28, While examining the revised APDCL MYT Order for Control Period from FY to FY Page 6

26 submission, the Commission observed additional data requirements vis-à-vis replies to original data requirement, which were sought from APDCL vide letter dated March 3, The Commission considered the objections received and sent communication to the objectors to take part in Hearing process by presenting their views in person before the Commission. Accordingly, the Commission scheduled a Hearing in the matter on February 28, 2017 at District Library Auditorium, Guwahati. In this context, Notices were dispatched to the objectors personally/by Registered Post stating the date and time of Hearing. Also, a comprehensive Notice was published in the 6 Nos. newspapers on February 8, 2017 in Assamese and English language. The Hearing was held at District Library Auditorium, Guwahati on February 28, 2017 as scheduled All objectors/respondents who participated in the Hearing were given the opportunity to express their views on the Petition. All the written representations submitted to the Commission and oral submissions made before the Commission in the Hearing and the responses of APDCL have been carefully considered while issuing this Tariff Order. The major issues raised by different consumers and consumer groups along with the response of APDCL and views of the Commission are elaborated in Chapter 3 of this Order. 1.6 State Advisory Committee Meeting A meeting of the State Advisory Committee (SAC) (constituted under Section 87 of the Act) was convened on March 4, 2017 and members were briefed on the MYT Petition of APDCL. The minutes of the SAC meeting are appended to this order as Annexure 1. APDCL MYT Order for Control Period from FY to FY Page 7

27 Summary of APDCL s Petition 2.1 Background APDCL submitted the Petition on October 31, 2016 seeking approval for Aggregate Revenue Requirement for the Control Period from FY to and determination of Retail Tariff for FY , along with True up for FY and FY True-up for FY and FY APDCL submitted True-up for FY and FY based on the audited accounts. The summary of Aggregate Revenue Requirement and Revenue Gap/(Surplus) claimed by APDCL for FY and FY is shown in the following Table: Table 1: ARR for FY and for True Up as submitted by APDCL (Rs. Crore) Sr. No. Particulars FY FY Cost of Power Purchase Operation and Maintenance Expenses Employee Cost Repair and Maintenance Administrative and General Expenses Depreciation Interest and Finance Charges 4.1 Interest on Working Capital Interest on Consumer Security Deposit Other Finance Charges Provision for Bad and Doubtful Debts 6 Net Prior Period Expenses 6.23 (95.05) 7 True-Up Adjustment 7.1 Amortization of Regulatory Asset Others Sub-Total Add: Return on Equity Total Expenses Less: Non-Tariff Income Aggregate Revenue Requirement Revenue with approved Tariff (including FPPPA) APDCL MYT Order for Control Period from FY to FY Page 8

28 Sr. No. Particulars FY FY Other Income Targeted Subsidy Other Subsidy Total Revenue after Subsidy Revenue Gap/(Surplus) Aggregate Revenue Requirement for MYT Control Period APDCL has projected Aggregate Revenue Requirement of Rs Crore for FY , Rs Crore for FY and Rs Crore for FY as detailed in the Table below: Sr. No. Table 2: ARR for FY to as submitted by APDCL (Rs. Crore) Particulars FY FY FY Cost of Power Purchase Operation and Maintenance Expenses 2.1 Employee Cost Repair and Maintenance Administrative and General Expenses Power Purchase Surcharge Interest and Finance Charges 5 Interest on PFC Loan Interest on GoA Loan Other Interest and Finance Charges Depreciation Interest on Working Capital Provision for Bad and Doubtful Debts Total Expenses Add: Return on Equity Less: Non-Tariff Income Less: Miscellaneous Income Less: Operational funding support from GoA APDCL MYT Order for Control Period from FY to FY Page 9

29 Sr. No. Particulars FY FY FY Net Aggregate Revenue Requirement Revenue from sale of surplus power Revenue from sale of power within state at present tariff (including govt. subsidy as well as paisa per unit w.e.f. December, 2016) Revenue Gap/(surplus) APDCL has thus estimated the total revenue gap as shown in the Table below: Table 3: Revenue Gap to be considered for recovery as submitted by APDCL (Rs. Sr. No. Particulars Crore) Revenue Gap 1 Revenue Gap after Truing up of FY Revenue Gap after Truing up of FY Revenue Gap estimated for FY Estimated Revenue Gap for FY Total APDCL submitted that the total revenue deficit of Rs Crore cannot be entirely recovered in a single year as it would result in a tariff shock for consumers. APDCL proposed to recover the total revenue gap of Rs Crore pertaining to FY in FY and the rest may be kept as Regulatory Assets to be liquidated in the subsequent years with adequate carrying cost In order to recover Rs crore additional revenue in FY , APDCL proposed category-wise tariffs with average increase of 6%, with no hike in tariff for Jeevan Dhara (BPL Category) consumers and minor increments in both fixed as well as energy charge for other category of consumers in such a manner so as not to burden any particular category. APDCL submitted that the fixed charge of tariff for all APDCL MYT Order for Control Period from FY to FY Page 10

30 consumer categories has not been revised for more than the last decade. Mostly, the energy charge has been increased as the power supply position was not very impressive and any increase in fixed charge would have put a lot of burden on the consumers as they would end up paying more. With the improved power supply position, APDCL has proposed increase in the fixed charge component so as to ensure full fixed cost recovery. 2.4 Prayers of APDCL APDCL, in its Petition, has prayed as reproduced below: 1. To admit this petition and determination of ARR for FY to FY To allow recovery of Revenue Gap for FY to FY as given in the petition, in addition to past period dues. 3. To allow APDCL to file the truing up petition of past years along with tariff proposal for FY by 30 th November To grant any other relief as the Hon ble Commission may consider appropriate. 5. Pass any other order as the Hon ble Commission may deem fit and appropriate under the circumstances of the case and in the interest of justice. APDCL MYT Order for Control Period from FY to FY Page 11

31 Brief Summary of Objections Raised, Response of the APDCL and Commission s Comments The Commission has received comments/suggestions from the following eight (8) stakeholders on the Petition filed by APDCL: Sr. No. Name of Objector 1 Assam Bidyut Grahak Adhikar Parishad 2 Grahak Suraksha Sanstha 3 Shri Anuj Kumar Baruah 4 Assam Branch of Indian Tea Association (ABITA), Guwahati 5 North Eastern Small Scale Industries Association (NESSIA) 6 Federation of Industry & Commerce of North Eastern Region (FINER) 7 Shri Jayanta Deka 8 Premier Cryogenics Ltd In addition to the above, Assam Tea Planters Association (ATPA) and Ulubari Smashan Committee submitted their comments on APDCL s Petition during the Public Hearing APDCL has submitted its responses to the objections/ suggestions received from the above objectors The Commission considered the objections/ suggestions received and notified the objectors to take part in the Hearing process by presenting their views in person before the Commission, if they so desired The Commission held the Hearing at Assam District Library Auditorium, Guwahati on February 28, The objector/s attended the Hearings and submitted their views/suggestions. All the written representations submitted to the Commission and the oral submissions made APDCL MYT Order for Control Period from FY to FY Page 12

32 before the Commission in the Hearing and the responses of APDCL have been carefully considered while issuing this Tariff Order The objections/suggestions made by the objectors and responses of the Petitioner are briefly dealt with in this Chapter. The major issues raised by the objectors are discussed below along with the response of the Petitioner (APDCL) and views of the Commission While all the objections/suggestions have been given due consideration by the Commission, only, major responses/objections received related to the ARR and Tariff Petition and also those raised during the course of Hearings have been grouped and addressed issue-wise, in order to avoid repetition. Issue 1: Revenue (Gap)/Surplus Objection ABITA and ATPA submitted that APDCL has claimed huge amount of Revenue Gap for FY and FY , which prima-facie seems to be unjustified as the same have no linkage with the principles set under the Tariff Regulations, ABITA submitted that APDCL has proposed to recover cumulative Revenue Gap of Rs Crore, which would translate to an increase of 26% over the existing tariff, while as per ABITA s calculation, APDCL should be in a position to earn a Revenue Surplus for all the three years of the Control Period. ABITA requested the Commission to disallow the proposed exorbitant Revenue Gap projected by APDCL, which does not have any basis. Shri Jayanta Deka submitted that as per Table 4, revenue deficit is Rs Crore (upto FY ) and APDCL has proposed to decrease the deficit by revising the tariff in FY Shri Deka added that such a huge deficit has occurred due to lapses/negligence /inaction of APDCL, who is proposing to impose such a burden upon the consumer. ATPA submitted that the Commission should true-up for FY and FY and give credit to the consumers for the excess tariff paid by the consumers. APDCL MYT Order for Control Period from FY to FY Page 13