Before the MP Electricity Regulatory Commission 5 TH Floor, "Metro Plaza", E-5, Arera Colony, Bittan Market : BHOPAL.

Transcription

1 In the Matter of - Before the MP Electricity Regulatory Commission 5 TH Floor, "Metro Plaza", E-5, Arera Colony, Bittan Market : BHOPAL. Petition 53 of 2013 Filing of application for True-up of the Transmission Tariff for FY Applicant - Madhya Pradesh Power Transmission Company Ltd., (MPPTCL), Shakti Bhawan, Jabalpur (MP). Respondents - i. MP Poorva Kshetra Vidyut Vitaran Company Ltd., Shakti Bhawan, Jabalpur. ii. MP Madhya Kshetra Vidyut Vitaran Company Ltd., Govindpura, Bhopal. iii. MP Paschim Kshetra Vidyut Vitaran Company Ltd., Pologround, Indore. iv. MP Audyogik Kendra Vikas Nigam, Indore (SEZ, Pithampur). The above named applicant respectfully begs to submit as hereunder; CHAPTER I PREAMBLE - The applicant is a Company registered under Companies Act 1956 on with its head quarter at Jabalpur, for the purpose of undertaking the Intra- State Transmission activities in the State of Madhya Pradesh. The activities of Generation, Transmission and Distribution have been looked after earlier in the State of Madhya Pradesh by an integrated utility i.e. Madhya Pradesh State Electricity Board (MPSEB) constituted under Section 5 of the Electricity (Supply) Act The Government of Madhya Pradesh enacted Madhya Pradesh Vidyut Sudhar Adhiniyam In the spirit of the said Act, the unbundling process of the MPSEB was initiated by registering the following five Companies; (i) Madhya Pradesh Power Generating Co. Ltd., Jabalpur (MPPGCL) (GENCO). (ii). Madhya Pradesh Power Transmission Co. Ltd., Jabalpur (MPPTCL) (TRANSCO). (iii). Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Ltd. Jabalpur (MPPKVVCL) (EAST DISCOM). (iv). Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd. Bhopal. (MPMKVVCL) (CENTRAL DISCOM). (v). Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. Indore (MPPKVVCL) (WEST DISCOM). To look after the electricity generation activities in the State of Madhya Pradesh. To look after the electricity transmission activities in the State of Madhya Pradesh. To undertake distribution of electricity in Eastern part of MP (Board s Jabalpur, Sagar and Rewa Regions). To undertake distribution of electricity in Central part of MP (Board s Bhopal and Gwalior Regions). To undertake distribution of electricity in Western part of MP (Board s Indore and Ujjain Regions). 1

2 Above mentioned Five Companies, which were registered in November 2001, entered into an Operation Management agreement with the MPSEB and worked as agents of the MPSEB from July 2002 to May The Companies started independent functioning w.e.f under a Cash Flow Mechanism as per the State Government order dated The MPPTCL has been separated from Cash Flow Mechanism w.e.f A Sixth Company, namely the MP Power Trading Company Ltd., has also been incorporated as per the State Government s notification dated specifying functions of TRADECO for the purchase of electricity in bulk from Generating Companies / Traders, from within and outside the State and supply electricity in bulk to the Electricity Distribution Companies in the State of Madhya Pradesh. The Company has now been named as MP Power Management Company Ltd., and entrusted with certain coordinating functions also. 1.1 SUBSEQUENT EVENTS - The important events related to power sector in MP, which took place after formation of Companies, are mentioned hereunder; 1.2 ENACTMENT OF ELECTRICITY ACT The Electricity Act 2003 has been enacted on Section 62 of the Act provides for determination of tariff for transmission of electricity by the appropriate Commission. 1.3 TRANSFER SCHEMES - First Transfer Scheme was notified on 1 st October 2003, regulating the transfer and vesting of functions, properties and interests, rights and liabilities of the MPSEB in the State Government and re-transfer and re-vesting thereof by the State Government in the Companies. The first transfer scheme has been amended vide notification 4003-FRS , Bhopal, dated 13 th June 2005, providing for the arrangements to discharge Terminal Benefit liabilities. The State Government vide notification 3474/FRS/17/2002 dated 3 rd June 2006 notified Madhya Pradesh Electricity Reforms Transfer Scheme Rules 2006, including Madhya Pradesh Power Trading Company as a transferee and modifying functions and Cash Flow Mechanism accordingly. The Company is now named as MP Power Management Company Limited. 1.4 STATE GOVERNMENT ORDER DATED 31 ST MAY The State Government vide order dated 31 st May 2005, notified the provisional Opening Balance Sheets of the Companies as on The Operation Management agreement between MPSEB and Companies stood terminated, and Companies started independent functioning w.e.f under a Cash Flow 2

3 Mechanism. The final Opening Balance Sheet as on has been subsequently notified on 12 th June The comparison of the two Balance Sheets is given in subsequent para. 1.5 FINAL OPENING BALANCE SHEET - The Government of Madhya Pradesh notified the final Opening Balance Sheet of MPPTCL and other Companies vide order 4068-FRS XIII Bhopal dated 12 th June 08. A copy of order alongwith Balance Sheet for MPPTCL is enclosed as Annexure-1. The comparison of provisional and final Balance Sheet as on is shown hereunder; (` in Crores) S. Particulars Amount as per Difference Provisional O.B.S. Final O.B.S. I. ASSETS - 1 Gross Block Accumulated Depreciation Net Fixed Assets C.W.I.P (-) Regulatory Assets (Pension) (-) Current Assets - i. Stock ii. Cash & Bank Balance iii. Loan & Advances iv. Sundry Receivables Total Current Assets TOTAL ASSETS (-) II. LIABILITIES - 1 Equity from GoMP (-) Loan from GoMP (ADB only) Loan from PFC Included in Capital Liabilities (-) Loan from SADA Included in Govt. (-) Liabilities 5 Capital Liabilities Payment due on Capital Liabilities Loan from MPSEB (-) Pension Liabilities (-) Current Liabilities - i. Staff Related Liabilities ii. Interest Accrued but not due iii. Other Current Liabilities Total Current Liabilities TOTAL LIABILITIES (-)

4 The stipulations made in the order dated 12 th June 08 are reproduced hereunder; (a). The final Opening Balance Sheet of the Companies appended to this order shall be final & binding on all the stake holders. (b). The Companies and Residual Madhya Pradesh State Electricity Board shall take necessary steps to appropriately intimate the changes, vis-à-vis the Provisional Opening Balance Sheets notified on 31 st May 2005, to all concerned statutory authorities and other Stake holders. (c). RAO-wise account code-wise details shall be provided to the Companies by Chief (Finance & Accounts), MPSEB. (d). The Guarantees extended by the State Govt. to various lenders, in respect of loans given by them to MPSEB, shall stand transferred in the name of the Company to whom such loans are allocated as per the final Opening Balance Sheets and these guarantees shall continue to be valid on the same terms & conditions, till the final discharge of the loan liability by the Company. (e). The Cash Flow Mechanism among the Residual MPSEB & the successor companies of MPSEB as prevailing on the date of this notification shall continue to operate till further orders. (f). There is no such item as Loan from MPSEB to the Companies in the final Opening Balance Sheets, therefore the directions earlier issued vide Energy Department s letter 300/13/2006 dated 18 th January 2006 stands withdrawn. (g). The assets of SLDC (Block Value Rs lakh) are included in the assets of Madhya Pradesh Power Transmission Company Limited. SLDC is not an Independent Company as yet and no separate Opening Balance Sheet is being notified for SLDC. (h). Loan amounting to Rs. 119 Crores was sanctioned by PFC under generation scheme for Marikheda HEP and allocated to MPPGCL. Out of this loan, Rs Crores relates to Transmission works which shall be payable by MPPTCL to MPPGCL on the same terms and conditions. (i). Liabilities towards SLR & PP bonds have been allocated to the Companies. However, the servicing of these liabilities shall continue to be done by MPSEB on behalf of the Companies. For accounting of these liabilities in the books of the companies, the MPSEB would provide all necessary information to the Companies regarding name of investors, amount of investment, the interest to be provided and payments falling due etc. from time to time alongwith intimation of (j). settlement of liabilities as and when the same take place for different investors. Company-wise allocation of Additional Contingent liabilities on account of Govt. of India order dated 4 th November 2004 in respect of bifurcation of assets & liabilities of MPEB between MPSEB & CSEB shall be separately notified by the State Govt. after final orders of the Supreme Court in O.S.-06/04. (k). The past unfunded pension liabilities of pensioners and employees of MPSEB existing as on 31 st May 2005 are to be assessed by Actuarial valuation and is therefore retained with Residual MPSEB for the time being. The actual pension/ gratuity payment shall be claimed by MP Power Transmission Co. Ltd., in its ARR till requisite fund equivalent to the past unfunded liabilities is built up in the manner provided in Rule 10 & 11 notified earlier vide 4003-FRS dated 13 th June (l). The matters pertaining to administration and accounting among Companies as well as statutory authorities regarding GPF, GTIS, SCLIS etc. shall continue to be looked after by MP Power Transmission Co. Ltd. 4

5 1.6 TRANSMISSION SERVICE AGREEMENT - In compliance to Para 5 of the State Government order dated , the five companies and MPSEB entered into a Transmission Service Agreement on 17 th June 2005, as per the draft approved and forwarded by MPSEB to the State Government. The Transmission Service Agreement dated 17 th June 05 provides The tariff and terms & conditions for the transmission services to be rendered by the Transco, shall be as per the tariff determined by the State Commission from time to time. The MPPTCL has therefore raised the bills of Transmission charges since as per the tariff determined by the Hon ble Commission from time to time. Hon ble Commission directed to enter into a long term Transmission Service Agreement. Accordingly, the Petitioner MPPTCL has entered into Transmission Service Agreement with the three Distribution Licensees on dates indicated hereunder; (i). East Discom (ii). Central Discom (iii). West Discom An agreement dated also exists between MPSEB and MPAKVN for SEZ, Pithampur which as now stands between MPPTCL and MPAKVN, as per Transfer Scheme. MPAKVN is a Long Term Open Access customer for MPPTCL, for its Special Economic Zone campus at Pithampur, Distt. Dhar near Indore. The copies of executed agreements have already been submitted to the Hon'ble Commission. 1.7 REGULATIONS & TARIFF PETITIONS / ORDERS FOR EARLIER PERIOD NOTIFICATION OF TARIFF REGULATIONS FOR FIRST CONTROL PERIOD Hon ble Commission notified on the Madhya Pradesh Electricity Regulatory Commission (Terms and conditions for determination of Transmission Tariff) Regulations Regulations were based on Multi Year Tariff principles and incorporate O&M norms for control period i.e. FY to FY The period of this MYT Regulation has expired on NOTIFICATION OF TARIFF REGULATIONS FOR SECOND CONTROL PERIOD Hon ble Commission has notified the MPERC (Terms and conditions for Determination of Transmission Tariff) Regulations, 2009 {RG-28 (I) of 2009} on , which are to remain in force for a period up to March 2012 from the date of commencement; Hon ble Commission, subsequently has also issued a fourth amendment extending the earlier mentioned control period up to March The instant True-up application for is governed by these Regulations & extension of the Regulations for FY

6 1.7.3 NOTIFICATION OF REGULATIONS ON TERMINAL BENEFITS Hon ble Commission notified on the MPERC (Terms & Conditions for allowing Pension and Terminal Benefits Liabilities of personnels of the Board and successor Entities) Regulations, 2012 (G-38 of 2012) to prescribe for claim of Terminal Benefits of the Companies. 1.8 TARIFF PETITIONS AND ORDERS - The references of transmission tariff petitions submitted by MPPTCL for earlier periods, and orders thereon are tabulated hereunder; S Particulars Petition for determination of transmission charges for year Petition for determination of transmission charges for FY to FY under MYT Principles. Petition for True-up of Transmission Tariff for year Petition for True-up of Transmission Tariff for year Petition for True-up of Transmission Tariff for year Petition for determination of transmission charges for FY to FY under MYT principles Petition for True-up of Transmission Tariff for year Petition for True-up of Transmission Tariff for year Petition for True-up of Transmission Tariff for year Petition for True up of Transmission Tariff for year Petition Number Date of Filing Date of Order 111 of of of of of of of of (Revised on ) (Revised on ) of of CONSIDERATION OF FINAL OPENING BALANCE SHEET - On notification of the final Opening Balance Sheet (as on ), on 12 th June 08, the Annual Accounts of MPPTCL for year to have been prepared and got audited as per final Opening Balance Sheet. The True-up petitions for to were also submitted as per the final Opening Balance Sheet. The True-up petition for also contained the review of the tariff for and , based on the final Opening Balance Sheet. Thus True-up as per Final Opening Balance Sheet has been done upto

7 1.10 PETITION FOR TRUE-UP FOR FY The instant petition for True-up for is based on audited Annual Accounts of the Company for year , which have been prepared and got audited as per the final Opening Balance Sheet as on notified on 12 th June A copy of Audited Accounts has been submitted to the Hon ble Commission vide letter CFO/Accounts/111/1695 dated 5 th October ********* 7

8 CHAPTER II INTRA-STATE TRANSMISSION CAPACITY 2.1 INTRA-STATE TRANSMISSION SYSTEM - Intra-State Transmission System of MPPTCL comprises of EHV Lines and Sub-stations of various voltages. Position as on and is tabulated hereunder; S. Voltage As on As on Level EHV Lines EHV Sub-Stations EHV Lines EHV Sub-Stations Ckt. KMs Number MVA Capacity Ckt. KMs Number MVA Capacity KV KV KV KV TOTAL TRANSMISSION SYSTEM CAPACITY The transmission system capacity of Intra-State transmission system of MPPTCL is allocated to the Long Term Open Access customers including the Distribution Licensees. The transmission system capacity is therefore determined as per the MPERC (Terms and conditions for Intra-State Open Access in MP) Regulations, The Average Capacity of Intra-State transmission system is defined as; Average capacity means the average capacity in MW served by the Intra- State transmission system of the transmission licensee in the previous financial year, and shall be the sum of the generating capacities, connected to the transmission system and contracted capacities of other Long Term transactions handled by the system of Transmission Licensee. The power corresponding to Intra-State generating capacity is available to transmission system after deducting the auxiliary consumption. Similarly, power from the Central Sector generating stations is available at M.P. periphery after deduction of auxiliary consumption and losses in Inter-State transmission system. While determining transmission system capacity for the earlier control period, the above mentioned fact has been taken into consideration. The transmission system capacity for year has also been subjected to True-up on above mentioned basis. The Regulations provide that the Average Capacity during a year shall be taken as that served in previous year. Therefore, the transmission capacity during is taken as that existing as on The capacity for year is worked out taking into consideration the actual generating and contracted capacities as on based on State Government s notification dated

9 2.3 STATE GOVERNMENT ORDER FOR CAPACITY ALLOCATION The Government of Madhya Pradesh vide notification 2660/F-3-24/2009/ XIII dated has allocated the total available generating capacity. A copy of the notification is enclosed as Annexure-II. Based on the State Government order dated , the total Generating Capacity is summarized hereunder; In addition to the above capacity of 2145 MW from expected Generating Stations have been also allocated to Tradeco. 2.4 Hon ble Commission in the Transmission Tariff order dtd , considered the total capacity of 2145 MW allocated to the Tradeco (MPPMCL) as existing resulting in total Transmission capacity of MW. However, out of 2145 MW, only MW could come during Therefore, the Transmission capacity in True up now computed is much less than MW. 2.5 The State Government vide notification 2260-F XIII dtd. 19 th March 2013 has allotted generating capacities to Discoms. This notification has however not been taken into consideration as the Transmission capacity for an year as per definition is to be considered at the beginning of year. 2.6 TRANSMISSION CAPACITY FOR FY Transmission capacity for FY is to be worked out on the basis of generating capacity allocation as on The generating capacity allocation as on is computed as under; S. Particulars MW 1 Generating capacity MP Share as given in table in Para Additional allocation for Bundelkhand area

10 S. Particulars MW 3 Addition from expected capacity of 2145 MW, which have actually been commissioned 4 Allocation from Rihand & Matatila in UP Additional allocation from NTPC for SEZ Complex, Pithampur TOTAL Say MW Annexure-III attached to this Petition show total generating capacity allocation to MP as MW. From this, Auxiliary consumption has been reduced from the Generators within the State. For Generating Stations, outside the State, both the Auxiliary consumption as well Inter-State Transmission losses have been reduced. Station-wise details are given in Annexure-III. Based on above, Transmission capacity is worked out as MW for year TRANSMISSION CAPACITY ALLOCATION AMONG DISCOMS & SEZ - The capacity allocation to Discoms is proposed on the following basis. (i). (ii). Total transmission capacity (inclusive of 200 MW specific allocation for Bundelkhand Region in MPPKVVCL) available for a particular year is apportioned in the percentage ratio as indicated in State Government order dated SEZ allocation is treated as additional. The percentage takes care of Bundelkhand s allocation to East Discom. The capacity during the year is taken as that on 1 st April i.e. beginning of year. (iii). Since SEZ has availed additional power under Open Access from NTPC, and has been allocated capacity at MP periphery as 12 MW, same has been considered. (iv). The fractional allocation worked out has been rounded off. Based on above, the allocated transmission capacity proposed is tabulated hereunder; S. 1 2 Distribution Licensee MP Poorva Kshetra Vidyut Vitaran Company Ltd. Jabalpur. MP Madhya Kshetra Vidyut Vitaran Company Ltd. Bhopal. Percentage Allocation Capacity Allocation for (MW) 29.89% %

11 S. Distribution Licensee Percentage Allocation Capacity Allocation for (MW) 3 MP Paschim Kshetra Vidyut Vitaran Company Ltd. Indore % Total Discoms % SEZ Pithampur (Dhar) GRAND TOTAL As per Transmission Tariff Regulations, the Distribution Companies and the SEZ will share the transmission charges in the ratio of capacity allocated to them. ********* 11

12 CHAPTER III PERFORMANCE OF INTRA-STATE TRANSMISSION SYSTEM 3.1 TRANSMISSION LOSSES - Transmission losses in Intra-State system have reduced gradually during last years on account of the execution of Capital Plan. These are tabulated hereunder; Details FY-03 FY-04 FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11 FY-12 FY-13 Energy Received into System (MUs) Energy sent Out of System (MUs) Energy Lost (MUs) Transmission Loss (%) Reduction in Loss (%) As per the directives of the Hon'ble Commission, the MPPTCL is computing the voltage-wise transmission losses. The year-wise details are given hereunder; S. System Voltage Transmission Losses in Percentage KV 1.40% 1.26% 1.21% 1.20% 1.19% 1.18% 1.18% 1.22% KV 3.26% 3.41% 2.55% 2.51% 2.86% 2.56% 2.39% 2.11% KV 1.60% 1.29% 1.15% 1.17% 1.03% 0.86% 0.89% 0.92% Total % 5.00% 4.09% 4.09% 4.19% 3.74% 3.51% 3.30% System - It may be perused from above that losses have reduced mainly in 220 KV system, which was the area of concern earlier. 3.2 TRANSMISSION SYSTEM AVAILABILITY - Hon ble Commission has fixed a target of Transmission System Availability as 98% for year in the MYT Regulations. The Transmission System Availability achieved during the year is higher than the target fixed. This indicates proper maintenance of lines and sub-stations as well as prompt outage management. The achievements are shown hereunder; 12

13 S. System Voltage Transmission System Availability in % KV 99.37% KV 99.43% KV 99.46% 4 Target 98.00% 5 Total Achieved % 3.3 TRANSFORMER FAILURE - The MPPTCL is carrying out the maintenance of transformers periodically as per schedules laid down. This has resulted in controlling the transformer failures. The year-wise details are given below; S. 1 2 Particulars Auto- Transformers Power Transformers FY-10 FY-11 FY-12 FY-13 Nos. % Nos. % Nos. % Nos. % % % % % 3.4 INTERFACE POINTS - The MPPTCL's network is connected to Inter-State, Generating and Distribution Systems through 696 Interface points. Details are given hereunder; Metering Status GENCO -TRANSCO CGS/NHPC/NTPC/PGCIL OTHER STATE-TRANSCO OPEN ACCESS (SEZ) TRANSCO-DISCOM (E/Z) TRANSCO-DISCOM (C/Z) TRANSCO-DISCOM (W/Z) TOTAL ABT compliant meters have been installed on Interface points for implementation of Intra-State ABT. 13

14 3.5 ELECTRICAL ACCIDENTS - MPPTCL has ensured that its field staff observes safety regulations to avert the accidents. Accidents occurred during last four years are tabulated hereunder; S. Particulars FY FY FY FY Fatal Accident to Human Non-fatal Accident to Human Fatal Accident to Animals TOTAL NEW & EMERGING TECHNOLOGIES ADOPTED - The Company has strived hard to keep pace with the changing technologies and focused on use of new and emerging technologies and innovative techniques for an enhanced performance. Partial credit in achieving the afore-mentioned performance indicators can be attributed to the use of such technologies and innovative techniques. ********* 14

15 CHAPTER IV TRANSMISSION PLAN EARLIER PLAN (11 TH FIVE YEAR PLAN) - The 11 th Plan for FY to FY , summed up for a financial value of ` Crores, with the following physical achievements; S. Particulars Unit Achievements KV Lines Ckt-KMs KV Lines Ckt-KMs KV Lines Ckt-KMs KV S/s MVA KV S/s MVA KV S/s MVA TH FIVE YEAR TRANSMISSION PLAN (FY TO FY ) - The total Plan amount is proposed as Crores, with EHV lines addition of Ckt. KMs and MVA capacity addition of MVA. The year-wise Physical and Financial details are tabulated hereunder; [A] PHYSICAL PLAN FY 2013 TO FY 2017 S. PARTICULARS YEARWISE PHYSICAL PROGRAMME ( ) TOTAL 12 th PLAN ( ) A EHV LINES (CKT KMS) KV Lines KV Lines KV Lines TOTAL CKT KMS B EHV SUB-STNS (MVA) KV Sub-stations KV Sub-stations KV Sub-stations TOTAL MVA C EHV SUB-STNS (Nos) KV Sub-stations KV Sub-stations KV Sub-stations TOTAL (Nos)

16 [B] FINANCIAL PLAN FY 2013 TO FY 2017 S. PARTICULARS (` in Lacs) YEARWISE INVESTMENT IN 12 TH PLAN ( ) TOTAL 12 th PLAN ( ) KV Lines KV Lines KV Lines TOTAL CKT KMS KV Sub-stations KV Sub-stations KV Sub-stations Misc. Works TOTAL (Sub-station) TOTAL (Transmission) The above mentioned Plan has been approved in principle by the Hon ble Commission as conveyed vide letter MPERC/D(T)/2329 dtd (order dtd ). The Plan is being executed with the loan assistance mainly from ADB, JICA, PFC and State Government support. 4.3 PHYSICAL PROGRESS DURING FY The physical progress during FY is tabulated hereunder; S. Particulars Unit Achievements in FY KV Lines Ckt.-KMs KV Lines Ckt.-KMs KV Lines Ckt.-KMs KV S/s Capacity addition MVA KV S/s Capacity addition MVA KV S/s Capacity addition MVA KV S/s added Nos KV S/s added Nos KV S/s added Nos. 5 Thus, 706 Ckt. KMs of EHV Lines and 8 new EHV Sub-stations have been added during the year MVA transformation capacity is added to the Transmission System. ******* 16

17 CHAPTER V TRUE UP FOR YEAR MULTIYEAR TARIFF FOR FY-10 TO FY-12 EXTENDED TO FY-13 - As per the MPERC (Terms & Conditions for determination of Transmission charges) Regulations, 2009 notified on read with second amendment to extend Regulations for FY , the MPPTCL submitted the petition for determination of transmission charges for FY-2013 on Hon'ble Commission determined the transmission tariff and approved ARR for the FY-2013 vide order dated Annual Transmission charges as approved by Hon'ble Commission are given in the following table; Annual Fixed Cost (Amount ` in Crores) S. Particulars FY O&M Expenses Terminal Benefits Depreciation Interest & Finance Charges Interest on Working Capital Return on Equity MPERC Fees Total S. (1) to (7) Less Non-tariff Income (-) Net Annual Fixed Cost PROVISION FOR TRUE-UP - Item 8 (Para 8.3 & 8.5) of MYT Regulations notified on as amended from time to time provides for True-up of tariff every year. The paras are reproduced hereunder; "8.3 A Transmission Licensee shall file a petition at the beginning of the tariff period and every year thereafter. A review shall be undertaken by the Commission to scrutinize and True-up the Tariff on the basis of the Capital expenditure and additional capital expenditure incurred in the year for which the true-up is being requested. However, in such true-up, any abnormal and uncontrollable variation can also be considered at the Commission s discretion. While determining O&M expenses norms, an element for payment of prior period arrears up to , on account of revision of pay scales of the employees in accordance with Sixth-pay Commission recommendations as implemented by the State Transmission Utility, has been included. This shall be also be trued up and for this purpose details of actual arrears payments shall be furnished. 8.5 The Tariff and True up filing shall be in accordance with and in the formats prescribed in MPERC (Details to be furnished and fees payable by licensee or generating Company for determination of tariff and manner of 17

18 making an application) Regulations, 2004 (as amended from time to time) by 15 th October every year." It may be mentioned that in the Regulations dtd. 7 th December 2012 for next control period, the date of submission of Tariff / True up Petition has been prescribed as 15 th November every year. Hon ble Commission vide notification dated 19 th December 2008 amended the Formats for submission of Tariff True-up Petitions. The information is therefore furnished in amended Formats attached to this Petition as; (i) TUT - S1 to S3 (ii) TUT A-1 (iii) TUT 1 to 19 (iv) TUT F-1 (v) TUT P1 to P3. In the Transmission Tariff Regulations notified on , it has been stipulated that truing up of the Transmission Tariff during the tariff period FY-10 to FY-12 will be considered on the basis of Audited Statement of Accounts for the uncontrollable factors subject to cost being prudent. The applicant has already submitted the True-up petitions based on Audited Accounts for FY to , and Hon ble Commission has issued the True-up orders from to based on Final Opening Balance Sheet. 5.3 TRUE-UP FOR The Auditor s Report and Accounts for year have been sent to the Hon ble Commission vide letter CFO/Accounts/111/1695 dtd. 5 th October The instant True-up is based on the above mentioned Audited Accounts which have been prepared as per final Opening Balance Sheet dated 12 th June 2008 and as directed through Hon ble Commission s order dtd. 12 th December 2013, the approach taken by Hon ble MPERC during Truing up of has been followed. ******* 18

19 CHAPTER VI OPERATION & MAINTENANCE EXPENSES O&M EXPENSES DURING FY Hon'ble Commission has allowed O&M expenses of ` Crores for FY These include Employee Cost, A&G and Repairs & Maintenance expenses during the year. It was however mentioned that if progress achieved is more than quantities considered in this order, higher amount of O&M will be allowed. The provision is based on the O&M Norms notified in second amendment of Transmission Tariff Regulation, brought out hereunder; Norms for O&M Expenses S. Particulars LINES (` Lacs / 100 Ckt. KM / Annum) KV Line KV Line KV Line 26.0 BAYS (` Lacs / Bay / Annum) KV Bay KV Bay KV Bay 11.2 Hon ble Commission while allowing O&M Expenses for the year, considered the following length of EHV Lines and Bays for the FY-13, being average of the projected capacity as on and The O&M expenses for year have been allowed as ` Crores, considering following parameters; S. Particulars O&M Norms ` in Lacs Parameters taken for FY-13 O&M Expenses allowed for (rounded to ` In Lacs) KV Line /100 Ckt-KM Ckt-KM KV Bays 15.9 /Bay 72 Nos KV Line /100 Ckt-KM Ckt-KM KV Bays 11.9 /Bay 496 Nos KV Line (incl of 66 KV) /100 Ckt-KM Ckt-KM KV Bays /Bay 1536 Nos TOTAL Say ` Crores 19

20 6.2 PROVISION FOR TRUE UP OF O&M EXPENSES - Item 37 (Para 37.1 & 37.2) of MYT Regulations dated provides that True up of O&M expenses will depend on length of lines and number of Bays. The relevant paras are reproduced hereunder; 37.1 The O&M expenses comprise of employee cost, repairs & maintenance (R&M) cost and administrative & general (A&G) cost. The norms for O&M expenses have been fixed on the basis of circuit kilometers of transmission lines and number of bays in sub-station. These norms exclude pension, terminal benefits and incentive to be paid to employees, taxes payable to the Government, MPSEB expenses and fee payable to MPERC. The Transmission Licensee shall claim the taxes payable to the Government and fees to be paid to MPERC separately as actual. The claim of pension and terminal benefits shall be dealt as per Regulation The total allowable O&M expenses for the Transmission Licensee shall be calculated by multiplying the average number of bays and 100 ckt-km of line length for the Year with the applicable norms for O&M expenses per bay and per 100 Ckt-km respectively. In support of its claim for allowable O&M expenses, the Licensee shall submit before the Commission, the actual or projected circuit kilometers of line lengths and number of bays for each voltage level separately for each Year of the Tariff Period as the case may be. 6.3 NETWORK EXPANSION AND O&M EXPENSES FOR FY The average assets on the basis of actual progress made during the year and the allowable O&M expenses for FY-13 based on approved norms, work out as under; S. Particulars KV Line in Ckt-kms KV Line in Ckt-kms KV Line in Ckt-kms KV Bay in Nos KV Bay in Nos KV Bay in Nos. As on Assets As on Average Approved Norms for ` Lacs/ 100 Ckt-KM ` Lacs/ 100 Ckt-KM ` Lacs/ 100 Ckt-KM ` Lacs/ Bay ` Lacs/ Bay ` Lacs/ Amount (` in Lacs) Bay Total O&M Cost on the basis of Bays and Lines Say ` Crores List of Lines and Bays added during is enclosed as Annexure-IV A&B. The relevant details of O&M Expenses are given in Formats TUT-3 to TUT-5. 20

21 The amount of arrears of Wage Revision paid during FY is ` Crores for MPPTCL. 6.4 PROVISION FOR ARREARS OF WAGE REVISION IN REGULATIONS - Para 3(iii) of Regulations {AGR-28(I) (iv) of 2012} notified on amended Para 27.3 is as under; 27.3 For first Financial Year of control period, the impact of implementation of 6 th Pay Commission recommendations has been considered in employees cost, which has been in subsequent Years. The Commission has also considered expenditure on payment of arrears upto during the financial years to as one third each year based on estimate submitted by the Transmission Licensee. Any unpaid arrears standing at the end of the control period from FY to FY shall be treated on actually paid basis for FY The actual arrears payments made in each year of the control period shall be trued up vis-à-vis those provided in the O&M charges. Accordingly ` Crores are being claimed as O&M Expenses above normative claim for MPPTCL only (excluding SLDC). 6.5 CLAIM OF O&M EXPENSES TRUE UP - S. Net True up of O&M Expenses for FY is tabulated hereunder; Particulars Amount (` Crores) 1 O&M claim as per O&M Norms worked out in Para 6.3 above O&M claim for Wage Revision payment s as per Para Total O&M claim (1+2) O&M Expenses allowed in Tariff order for FY True up amount of O&M Expenses (3-4) 5.95 Net True up Claim (O&M): 5.95 Crores ******* 21

22 CHAPTER VII TERMINAL BENEFITS EXPENSES TERMINAL BENEFITS ALLOWED FOR FY Hon ble Commission has notified the MPERC (Terms & Conditions for allowing Pension and Terminal Benefits liabilities of personnel of Board and successor Entities) Regulations, 2012 (G-38 of 2012) on 20 th April Para 1.2 of the Regulations provide; These Regulations shall come into force with immediate effect from the date of their publication in the official Gazette of the Government of Madhya Pradesh. For Tariff determination purposes its provisions will be given effect to in the financial year following the year of its publication. Hon ble Commission therefore in its order dtd allowed the Terminal Benefits for FY on the earlier practice of Pay as you go basis. It has been mentioned in Para 2.35 of the order. The Commission has recently passed Tariff order for retail supply on 31 st March 2012 for FY wherein, the Commission has allowed Terminal Benefit and Pension expenses for FY on provisional basis on Pay as you go principles payable to MP Transco to the extent of ` Crores in Para 3.89 of that order. The same is considered in this order also. The actual expenses for this period shall be considered during the process of True up of Transmission Tariff for FY Therefore; Total Terminal Benefits for all the Companies allowed for FY ` Crores 7.2 TERMINAL BENEFITS AS PER AUDITED ACCOUNTS - The Audited Accounts of the MPPTCL, listed out the following expenses against Terminal Benefits for FY as compared to previous year i.e. FY ; TERMINAL BENEFIT COST - PARTICULARS AS AT AS AT (A) CASH - Gratuity Pension Leave Encashment TOTAL (A) (B) PROVISIONS - Gratuity Pension Leave Encashment Provision for employees of MPPMCL TOTAL (B) TOTAL (A+B)

23 7.3 TRUE-UP CLAIM FOR TERMINAL BENEFITS - As per directive of Hon ble Commission, the E.L. encashment on retirement is to be excluded from Terminal Benefit claims, and treated as Employee Cost. Accordingly, only Pension, Gratuity are considered for claim of Terminal Benefits True-up for FY (Shown in Annexure-IX). The claim is given in the following table; (Amount ` in Crores) S. Particulars Terminal Benefit Expenses REMARKS Cash Provision Total 1 Pension The provisioning for 2 Gratuity employees of MPPTCL 3 Provision for employees & MPPMCL has been of MPPMCL made in accordance with TOTAL Accounting Principles. True-up for FY is worked out hereunder; (Amount ` in Crores) S. Particulars Cash Provision Total 1 Claim for the year Allowed in MYT order True-up ******* 23

24 CHAPTER VIII DEPRECIATION OPENING BALANCE SHEET - The Government of Madhya Pradesh has notified the final Opening Balance Sheet on 12 th June 2008 in the position of The fixed assets transferred are shown as hereunder; (i) Opening Gross Block ` Crores (ii) Accumulated Depreciation ` Crores (iii) Net Fixed Assets ` Crores The petitioner had claimed the true-ups for the year s upto , on the basis of final opening Balance Sheet and the data base submitted then. The development upto in respect of Opening Gross Block, Accumulated Depreciation is shown in the following table; S. Date as on Gross Fixed Assets (Amount ` in Crores ) Accumulated Net Fixed depreciation Assets CHANGE IN REGULATIONS ON DEPRECIATION Transmission tariff regulation up to period provided for claiming depreciation on Straight Line Method. In line with the mention in National Tariff Policy to avoid the need of AAD for repayment of loans, Hon ble CERC rationalized the depreciation rates and formula. Hon ble MPERC also rationalized the depreciation formula in the tariff regulations notified on Whereas the other provisions in this regard remain the same, the important changes are in respect of rates and formula for charging depreciation mentioned in para 25(1) (e) & (f) of the regulations as reproduced hereunder; 25.1 (e) Depreciation shall be calculated annually based on straight line method and at the rates specified in Appendix-II to these Regulations for the assets of the Transmission System. Provided that, the remaining depreciation value as on 31 st March of the Year closing after a period of 12 Years from Date of Commercial Operation shall be spread over the balance useful life of the assets. 24

25 Provided further that the Consumer contribution or capital subsidy/ grant etc. for asset creation shall be treated as per the Accounting Rules notified and in force from time to time. 25.1(f) In case of the existing Projects, the balance depreciable value as on shall be worked out by deducting the cumulative depreciation including Advance Against Depreciation as admitted by the Commission upto from the gross depreciation value of the assets. The rate of depreciation shall be continued to be charged at the rate specified in Appendix-II till cumulative depreciation reaches 70%. Thereafter, the remaining depreciable value shall be spread over the remaining life of the asset such that the maximum depreciation does not exceed 90%. Appendix-II of the regulations provides for depreciation rates for different category of Assets. 8.3 ASSET DATA BASE FOR WORKING OUT DEPRECIATION The Petitioner has finalized an Asset Register with the Gross Fixed Assets & Accumulated Depreciation figures matching with Opening Balance Sheet as indicated in Para 8.1 of this Petition. This base is utilized for extending the data base till ; the salient features of the database are; (i) (ii) (iii) (iv) (v) The Gross Fixed Assets & Accumulated Depreciation figures in this database is matched as per Final Opening Balance Sheet notified on 12 th June 2008 in the position of The works Capitalized during subsequent years have been entered in the data base till The Depreciation rates after have been taken as per Hon ble MPERC s Regulations applicable from time to time. Depreciation working formula is as per Straight Line Method of Depreciation The Depreciation ceases to further add-up as soon as the Depreciation reaches 90% of Opening Gross Block. Balance 10% is scrap value. 8.4 UPDATION IN THE DEPRECIATION MODEL SOFTWARE The Asset data base has been modified in light of above mentioned provisions in the following respect; (i) (ii) In case of assets created on or after , the depreciation rates as per Appendix-II of the Regulation will continue up to 31 st March of the year closing after a period of 12 years. Thereafter rate automatically changes equal to remaining depreciation out of 90% limit divided by the balance life of assets. In case of assets commissioned prior to , the depreciation w.e.f will be booked at the rates mentioned in Appendix-II of regulations till the depreciation reaches 70% of the book value. Thereafter the 25

26 rate of depreciation automatically changes as equal to 20% residual value (90% - 70%) divided by remaining life of assets. (iii) All assets are depreciated to maximum 90% of book value. Thereafter no depreciation is charged. (iv) Hon ble Commission has prescribed the procedure to account for the Depreciation on Assets formed under Consumers Contribution. Hon ble Commission also mentioned to review this since , the date of Opening Balance Sheet transfer. No works funded through Consumers Contribution Assets have been capitalized upto Such Assets have been capitalized in and The Depreciation on these Assets have been computed as per other Assets. Thereafter, these Assets are tabulated separately in Depreciation Model and Depreciation charged on these has been subtracted from total Depreciation claim. Since the adjustment has been given in Depreciation itself, the amortization is not shown again as other income. No Depreciation has been charged by the MPPTCL against contributory works, till FY CHANGE IN YEARLY DEPRECIATION BECAUSE OF ASSET REGISTER RECONCILIATION Regarding reconciliation of Asset Register, it was earlier submitted that this work got delayed due to the fact that the MPSEB has not furnished the estimate-wise details of Assets while transferring the Asset through Final Opening Balance Sheet dtd. 12 th June 2008 in the position of It has also been submitted that the Assets from are final and reconciled with the accounts. As mentioned earlier, a Committee had been formed to finalize this job. The Assets have been identified and reconciled with the Opening Gross Block of the Opening Balance Sheet. On finalization of the Asset details as on , a small difference was expected. The Asset Register has since been finalized and because of change in base constituents some difference vis-à-vis the amount earlier claimed under Depreciation has been observed. These yearly differences of accumulated depreciation are tabulated below; S. Date as on Table I: Earlier Claimed (` in Crores ) Gross Net During During the Accumulated Fixed Fixed the year year Depreciation Assets Assets GFA Depreciation TOTAL

27 Table II: Now claimed due to change in Data base ( ` in Crores ) Gross Net During Accumulated Date as on Fixed Fixed the year depreciation Assets Assets GFA S. During the year Depreciation * * * * Depreciation Net off of CC TOTAL Difference of Table I & II above : (-) ADDITION OF ASSETS DURING FY Assets worth ` Crores have been capitalized during year The list of assets capitalized along with certificate is enclosed as Annexure V. Assets worth ` Crores have been withdrawn making a net addition of ` Crores. It is pertinent to mention here that, while capitalizing the Assets (` Crores) the IDC capitalized is only ` Crores as against total IDC of ` Crores, after adjusting interest earned amounting to ` Crores on Fixed Deposits. Since ` Crores are reduced in Assets as per Accounting Standard-16 (AS-16), this has not been again considered in Non Tariff Income. Details in this regard are given in subsequent Chapter DEPRECIATION FOR FY As per above procedure, the depreciation (excluding depreciation on assets formed under consumer s contribution) for computed from reconciled Asset Register and comparison from last year is mentioned below; YEAR At the beginning of Year (Amount ` in Crores) Gross Fixed Assets Provision For Depreciation Net Fixed Assets Addition During Year At End of Year At the beginning of Year Addition During Year At End of Year At the beginning of Year At the End of Year The category-wise details for FY are given in TUT-7 & DEPRECIATION ON 47 WORKS CAPITALIZED IN Under Petition 75/2012, vide the order on True up of Transmission Tariff for FY dtd. 2 nd February 2013, Hon ble Commission had not allowed 27

28 Capitalization of 47 of works at that stage. As the reconciliation process is now complete and the above works do not appear in the list of works previously capitalized, it is prayed that corresponding Depreciation of these works amounting to ` 1.59 Crores disallowed previously in True up of be allowed as prior period expenses. 8.9 TRUE-UP OF DEPRECIATION FOR FY (i). Depreciation claim as per Para 8.7 above ` Crores (ii). Depreciation amount to be adjusted as per Para 8.5 (-) ` Crores (iii). Depreciation claimed as per Para 8.8 ` 1.59 Crores (iv) Depreciation allowed in MYT order dated NET - True-up Claim - ` Crores ` Crores (-) ` Crores Net True-up for Depreciation (-) ` Crores ****** 28