ASSAM ELECTRICITY REGULATORY COMMISSION (AERC) TARIFF ORDER TRUING UP OF FY , APR OF FY AND ARR & TARIFF FOR FY

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1 ASSAM ELECTRICITY REGULATORY COMMISSION (AERC) TARIFF ORDER TRUING UP OF FY , APR OF FY AND ARR & TARIFF FOR FY Assam Power Generation Corporation Limited (APGCL) Petition No. 9/2015 ASSAM ELECTRICITY REGULATORY COMMISSION A.S.E.B. Campus, Dwarandhar, G. S. Road, Sixth Mile, Guwahati Website: aerc_ghy@hotmail.com

2 CONTENTS ORDER...x 1 INTRODUCTION CONSTITUTION OF THE COMMISSION TARIFF RELATED FUNCTIONS OF THE COMMISSION BACKGROUND AND BRIEF HISTORY PROCEDURAL HISTORY ADMISSION OF PETITION AND HEARING PROCESS STATE ADVISORY COMMITTEE MEETING SUMMARY OF ARR AND TARIFF PETITION TRUE UP FOR FY APR FOR FY AND REVISED ARR AND GENERATION TARIFF FOR FY SUMMARY OF OBJECTIONS RAISED, RESPONSES OF APGCL AND COMMISSION S COMMENTS TRUING UP FOR FY METHODOLOGY FOR TRUING UP BACKGROUND TRUE-UP FOR FY OPERATING CAPACITY AVAILABILITY / CAPACITY INDEX PLANT LOAD FACTOR (PLF) AUXILIARY ENERGY CONSUMPTION GROSS GENERATION AND NET GENERATION GROSS STATION HEAT RATE (GSHR) FUEL COST INCENTIVE FOR GENERATION EMPLOYEE EXPENSES i

3 REPAIR AND MAINTENANCE (R&M) EXPENSES ADMINISTRATION AND GENERAL (A&G) EXPENSES DEPRECIATION INTEREST AND FINANCE CHARGES INTEREST ON WORKING CAPITAL PRIOR PERIOD ITEMS RETURN ON EQUITY (ROE) INCOME TAX OTHER INCOME OTHER RECEIPT REVENUE FROM SALE OF POWER SUMMARY OF TRUE-UP FOR FY ANNUAL PERFORMANCE REVIEW FOR FY ANNUAL PERFORMANCE REVIEW AVAILABILITY / CAPACITY INDEX PLANT LOAD FACTOR (PLF) AUXILIARY ENERGY CONSUMPTION GROSS GENERATION AND NET GENERATION GROSS STATION HEAT RATE FUEL COST EMPLOYEE EXPENSES REPAIR AND MAINTENANCE EXPENSES (R&M EXPENSES) ADMINISTRATION AND GENERAL EXPENSES (A&G EXPENSES) DEPRECIATION INVESTMENT PLAN INTEREST AND FINANCE CHARGES INTEREST ON WORKING CAPITAL INCOME TAX ii

4 RETURN ON EQUITY (ROE) OTHER INCOME REVENUE FROM SALE OF POWER REVIEW OF ARR FOR FY REVISED ARR AND GENERATION TARIFF FOR FY INTRODUCTION GENERATION CAPACITY FOR FY BRIEF STATUS OF APGCL POWER STATIONS NAMRUP THERMAL POWER STATION (NTPS) (119.5 MW) LAKWA THERMAL POWER STATION (LTPS) (157.2 MW) KARBI LANGPI HYDRO ELECTRIC PROJECT (KLHEP) (100 MW) MYNTRIANG SHEP STAGE I (9 MW = 3X3 MW) & STAGE II (4.5 MW= 3X1.5 MW) NAMRUP REPLACEMENT POWER PROJECT (NRPP) GAS SUPPLY POSITION REVISED ARR AND GENERATION TARIFF FOR FY AVAILABILITY / CAPACITY INDEX PLANT LOAD FACTOR (PLF) AUXILIARY ENERGY CONSUMPTION GROSS GENERATION AND NET GENERATION GROSS STATION HEAT RATE (GSHR) FUEL COST OPERATION AND MAINTENANCE (O&M) EXPENSES FINANCING OF THE CAPITAL INVESTMENT DEPRECIATION INTEREST AND FINANCE CHARGES INTEREST ON WORKING CAPITAL RETURN ON EQUITY (ROE) iii

5 SPECIAL R&M EXPENSES (FOR KHLEP, LTPS UNIT 2 & UNIT 7) VIDE REVIEW ORDER DATED JULY 07, INCOME TAX OTHER INCOME SUMMARY GENERATION TARIFF FOR FY EFFECTUATION OF GENERATION TARIFF COMPLIANCE OF DIRECTIVES & NEW DIRECTIVES COMPLIANCE OF OLD DIRECTIVES NEW DIRECTIVES ANNEXURE iv

6 TABLES TABLE 2.1: SUMMARY OF TRUE-UP FOR FY AS SUBMITTED BY APGCL (RS. CRORE)... 8 TABLE 2.2: APR FOR FY AS SUBMITTED BY APGCL (RS. CRORE)... 9 TABLE 2.3: REVISED ARR AND GENERATION TARIFF FOR FY AS SUBMITTED BY APGCL TABLE 4.1: OPERATING GENERATION CAPACITY OF APGCL FOR FY TABLE 4.2: TARGET AVAILABILITY / CAPACITY INDEX FOR RECOVERY OF FULL FIXED CHARGES TABLE 4.3: ACTUAL AVAILABILITY / CAPACITY INDEX FOR FY AS SUBMITTED BY APGCL (%) TABLE 4.4: TARGET PLF FOR EFFICIENCY INCENTIVE TABLE 4.5: PLF APPROVED BY THE COMMISSION AND ACTUALS AS SUBMITTED BY APGCL FOR FY TABLE 4.6: PLF APPROVED FOR TRUING UP FOR FY (%) TABLE 4.7: AUXILIARY ENERGY CONSUMPTION FOR FY TABLE 4.8: BREAK-UP OF AUXILIARY ENERGY CONSUMPTION SUBMITTED BY APGCL FOR FY TABLE 4.9: AUXILIARY ENERGY CONSUMPTION APPROVED FOR TRUING UP FOR FY TABLE 4.10: GROSS GENERATION AND NET GENERATION FOR FY (MU) TABLE 4.11: GROSS AND NET GENERATION APPROVED FOR TRUING UP FOR FY (MU) TABLE 4.12: GROSS STATION HEAT RATE FOR FY (KCAL/KWH) TABLE 4.13: ACTUAL WEIGHTED AVERAGE GCV AND PRICE OF GAS CONSIDERED BY THE COMMISSION FOR TRUING UP FOR FY TABLE 4.14: APPROVED FUEL COST FOR TRUING UP FOR FY TABLE 4.15: INCENTIVE COMPUTATION FOR THERMAL STATIONS FOR FY TABLE 4.16: INCENTIVE COMPUTATION FOR HYDRO STATION FOR FY TABLE 4.17: DEPRECIATION APPROVED FOR TRUE-UP FOR FY (RS. CRORE) TABLE 4.18: DEPRECIATION ON ASSETS CREATED OUT OF GRANTS/SUBSIDIES AND CONSUMER CONTRIBUTION (RS. CRORE) TABLE 4.19: INTEREST AND FINANCE CHARGES APPROVED BY THE COMMISSION FOR FY (RS. CRORE) TABLE 4.20: INTEREST ON WORKING CAPITAL APPROVED BY THE COMMISSION v

7 FOR FY (RS. CRORE) TABLE 4.21: OTHER INCOME (RS. CRORE) TABLE 4.222: SUMMARY OF TRUE-UP FOR FY (RS. CRORE) TABLE 5.1: AVAILABILITY / CAPACITY INDEX FOR FY TABLE 5.2: PLANT LOAD FACTOR FOR FY TABLE 5.3: AUXILIARY ENERGY CONSUMPTION FOR FY TABLE 5.4: GROSS GENERATION AND NET GENERATION FOR FY (MU) TABLE 5.5: GROSS STATION HEAT RATE FOR FY (KCAL/KWH) TABLE 5.6: GSHR COMPUTATION FOR APGCL THERMAL POWER PLANTS FOR FY TABLE 5.7: WEIGHTED AVERAGE GCV AND LANDED PRICE OF GAS FOR FY TABLE 5.8: FUEL COST CALCULATION FOR FY TABLE 5.9: FUEL COST FOR FY (RS. CRORE) TABLE 5.10: EMPLOYEE EXPENSES FOR FY (RS. CRORE) TABLE 5.11: R&M EXPENSES FOR FY (RS. CRORES) TABLE 5.12: A&G EXPENSES FOR FY (RS. CRORE) TABLE 5.13: DEPRECIATION FOR FY (RS. CRORE) TABLE 5.14 INVESTMENT PLAN FOR FY TABLE 5.15: INTEREST AND FINANCE CHARGES FOR FY (RS. CRORE) TABLE 5.16: INTEREST ON WORKING CAPITAL FOR FY (RS. CRORES) TABLE 5.17: INCOME TAX FOR FY (RS. CRORE) TABLE 5.18: RETURN ON EQUITY FOR FY (RS. CRORE) TABLE 5.19: OTHER INCOME FOR FY (RS. CRORE) TABLE 5.20: SUMMARY OF APR FOR FY (RS. CRORE) TABLE 6.1: OPERATING GENERATION CAPACITY FOR FY TABLE 6.2: GAS SUPPLY POSITION FOR FY TABLE 6.3: AVAILABILITY / CAPACITY INDEX FOR FY TABLE 6.4: REVISED PLANT LOAD FACTOR PROJECTED FOR FY TABLE 6.5: APPROVED PLANT LOAD FACTOR FOR FY TABLE 6.6: REVISED AUXILIARY ENERGY CONSUMPTION PROJECTED FOR FY TABLE 6.7: APPROVED AUXILIARY ENERGY CONSUMPTION FOR FY TABLE 6.8: REVISED GROSS GENERATION AND NET GENERATION PROJECTED FOR FY (MU) TABLE 6.9: APPROVED GROSS GENERATION AND NET GENERATION FOR FY (MU) vi

8 TABLE 6.10: REVISED GROSS STATION HEAT RATE PROJECTED FOR FY (KCAL/KWH) TABLE 6.11: APPROVED GROSS STATION HEAT RATE FOR FY (KCAL/KWH) TABLE 6.12: WEIGHTED AVERAGE GCV AND LANDED PRICE OF GAS FOR FY TABLE 6.13: APPROVED WEIGHTED AVERAGE GCV AND LANDED PRICE OF GAS FOR FY TABLE 6.14: APPROVED FUEL COST FOR FY TABLE 6.15: REVISED EMPLOYEE EXPENSES PROJECTED FOR FY (RS. CRORE) TABLE 6.16: APPROVED EMPLOYEE EXPENSES FOR FY (RS. CRORE) TABLE 6.17: REVISED R&M EXPENSES PROJECTED FOR FY (RS. CRORE). 87 TABLE 6.18: APPROVED R&M EXPENSES FOR FY (RS. CRORE) TABLE 6.19: REVISED A&G EXPENSES PROJECTED FOR FY (RS. CRORE).. 89 TABLE 6.20: APPROVED A&G EXPENSES FOR FY (RS. CRORE) TABLE 6.21: APPROVED INVESTMENT PLAN FOR FY (RS. CRORE) TABLE 6.22: FINANCING OF THE CAPITAL INVESTMENT FOR FY APPROVED BY THE COMMISSION IN THE MYT ORDER DATED NOVEMBER 21, TABLE 6.23: REVISED FINANCING PLAN FOR CAPITAL INVESTMENT FOR FY (RS. CRORE) TABLE 6.24: APPROVED DEPRECIATION FOR FY (RS. CRORE) TABLE 6.25: APPROVED DEPRECIATION FOR FY TABLE 6.26: APPROVED INTEREST AND FINANCE CHARGES FOR FY (RS. CRORE) TABLE 6.27: INTEREST ON WORKING CAPITAL PROJECTED BY APGCL FOR FY (RS. CRORE) TABLE 6.28: APPROVED INTEREST ON WORKING CAPITAL FOR FY (RS. CRORE) TABLE 6.29: APPROVED RETURN ON EQUITY FOR FY (RS. CRORE) TABLE 6.30: APPROVED ARR FOR FY (RS. CRORE) TABLE 6.31: REVISED APPROVED GENERATION TARIFF FOR FY vii

9 List of Abbreviations A&G ABT ADB AEGCL AERC APC APDCL APDRP APGCL APM APR ARR ASEB BTPP CEA CTPS EPC FPPPA FY GAIL GCV GFA GoA GoI GSHR IDC KLHEP kv kva kw kwh LRPP LTPS MAT Misc MMSCMD MoP MU MW MYT NCV NPC Administrative & General Availability Based Tariff Asian Development Bank Assam Electricity Grid Corporation Limited Assam Electricity Regulatory Commission Auxiliary Power Consumption Assam Power Distribution Company Limited Accelerated Power Development and Reforms Programme Assam Power Generation Corporation Limited Administered Price Mechanism Annual Performance Review Annual Revenue Requirement Assam State Electricity Board Bongaigaon Thermal Power Plant Central Electricity Authority Chandrapur Thermal Power Station Engineering Procurement Construction Fuel and Power Purchase Price Adjustment Financial Year Gas Authority of India Limited Gross Calorific Value Gross Fixed Assets Government of Assam Government of India Gross Station Heat Rate Interest During Construction Karbi Langpi Hydro Electric Project Kilo Volt Kilo Volt Ampere Kilo Watt Kilo Watt Hour Lakwa Replacement Power Project Lakwa Thermal Power Station Minimum Alternate Tax Miscellaneous Million Metric Standard Cubic Metres per day Ministry of Power Million Unit Mega Watt Multi-Year-Tariff Net Calorific value National Productivity Council viii

10 NRPP NTPC NTPS PAF PGCIL PLF PPAC R&M ROE Rs. SHR T.C. TEC WHRU Namrup Replacement Power Project National Thermal Power Corporation Namrup Thermal Power Station Plant Availability Factor Power Grid Corporation of India Limited Plant Load Factor Petroleum Planning and Analysis Cell Repairs and Maintenance Return on Equity Rupees Station Heat Rate Transportation Cost Techno Economic Clearance Waster Heat Recovery Unit ix

11 ASSAM ELECTRICITY REGULATORY COMMISSION Guwahati Present Shri Naba Kumar Das, Chairperson Shri Dipak Chakravarty, Member Petition No. 9/2015 Assam Power Generation Corporation Limited (APGCL) -Petitioner ORDER (Passed on July 24, 2015) (1) The Commission vide its Order dated November 21, 2013, approved the Multi Year Tariff for the Assam Power Generation Corporation Limited (APGCL) for the period of FY to FY (2) Regulation 6.1 of the Assam Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2006 (hereinafter referred to as the AERC Tariff Regulations, 2006) specifies that the generating company shall file a Tariff Petition annually before the Commission to determine changes to the current tariff not later than 1 st December,except in case an extension is granted by the Commission upon application. (3) The APGCL filed a Misc. Petition on November 25, 2014 praying for extension of time to submit the Petition for approval of Annual Revenue Requirement (hereinafter called as ARR ) and Tariff for FY along with Annual Performance Review(herein after called as APR ) of FY up to December 20, 2014.The Commission, vide its Order dated December 06, 2014, granted extension of time up to December20, 2014, for filing of Petition for Truing Up of FY , Annual x

12 Performance Review (hereinafter called as APR ) of FY and the approval of revised ARR and Tariff for FY (4) The APGCL filed the Petition (Petition No.9/2015) for Truing Up of FY , APR of FY and approval of Revised ARR and tariff for FY on December 20, 2014 under Section 62 of the Electricity Act, 2003, and Regulation 5, 6, & 7 of the AERC Tariff Regulations, 2006.However, the APGCL submitted the Audited Statement of Accounts for FY on April 07, (5) The Commission, on preliminary scrutiny, found that the above Petitions filed by the APGCL were incomplete with regard to some material information. Therefore, additional data and clarifications on the Petition were sought for from the APGCL from time to time and replies were received. The Commission in the larger interest of the consumers as well as the Petitioner and abiding by the statutory obligation of tariff determination, admitted the Petitions on April 13, (6) Although, the Petitions of the APGCL were admitted on April 13, 2015, the Commission continued to receive additional clarifications from the APGCL on various aspects as late as up to June 20, (7) After the Petitions were admitted, in accordance with Section 64 of the Electricity Act 2003, the Commission directed the APGCL to publish a summary of the ARR and Tariff filings in local dailies to ensure due public participation. Copy of the Petitions and other relevant documents were also made available to consumers and other interested parties at the offices of the APGCL. Copy of the Petition was also made available on the websites of the Commission and the APGCL. (8) Meanwhile, the Petition filed by the APGCL, were also discussed in the meeting of the State Advisory Committee (constituted under Section 87 of the Electricity Act, 2003), convened on May 08, 2015, at Administrative Staff College, Khanapara, Guwahati. (9) Further, a Public Notice was issued by the APGCL inviting objections/suggestions from objectors on or before May 15, The notice was published in eleven (11) newspapers of the State on April 23, 2015 in English and vernacular. (10) The Commission received objections from seven (7) objectors on the Petitions filed by the APGCL. Also, the replies were provided by the APGCL on the objections to the concerned individuals/ parties. The Hearing was held at District Library, Guwahati xi

13 on June 04, The details are discussed in the relevant sections of this tariff order. (11) The Commission, now in exercise of its powers vested in it under Sections 61 and 62 of the Electricity Act, 2003 and all other powers enabling it in this behalf, and taking into consideration the submissions made by the Petitioners, objections and suggestions received from stakeholders and all other relevant materials on record, has carried out the true-up for FY , Annual Performance Review for FY , and determined the revised ARR and Generation Tariff for FY , and accordingly, issues this Order making the new tariff effective from August 1, (12) The Commission further directs the APGCL to publish a Public Notice intimating the revised generation tariff, before the implementation of the Order in English and Vernacular newspapers and on the website of the APGCL. (13) Accordingly, the Petition no. 9 of 2015 stands disposed of. Sd/- (D. Chakravarty) Member, AERC Sd/- (N. K. Das) Chairperson, AERC xii

14 1 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, 2001.The first proviso of Section 82(1) of the Electricity Act, 2003(36 of 2003) (hereinafter referred to as the Act ) has ensured continuity of the AERC under the Electricity Act, AERC came into existence in August 2001 as a one-man Commission. Considering the multidisciplinary requirements of the Commission, it was made a multi-member Commission comprising of three Members (including Chairperson) from January 27, The Commission started functioning as a multi-member Commission on joining of two Members from February 1, The Commission is mandated to exercise the functions conferred on it under Section 86 of the Act and to exercise the powers conferred under Section 181 of the Electricity Act, 2003 (36 of 2003) (hereinafter referred to as the Act). 1.2 TARIFF RELATED FUNCTIONS OF THE COMMISSION Under Section 86 of the Act, the Commission inter-alia has the following tariff related functions: (a) to determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be within the State; (b) to regulate electricity purchase and procurement process of distribution utilities including the price at which the electricity shall be procured from the generating companies, from other licensees or from other sources through agreements for purchase of power for distribution and supply within the State; (c) to facilitate intra-state transmission and wheeling of electricity; (d) to promote competition, efficiency and economy in the activities of the electricity industry to achieve the objects and purpose of this Act Under Section 61 of the Act in the determination of tariffs, the Commission is to be guided by the following: 1

15 (a) (b) (c) (d) (e) (f) The principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; The electricity generation, transmission, distribution and supply are conducted on commercial principles; The factors, which would encourage competition, 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; The interests of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner; 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; The National Electricity Plans formulated by the Central Government including the National Electricity Policy and National 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 decides to grant any subsidy to any consumer or class of consumers in the tariff determined by the Commission, the State Government shall pay the amount in advance 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 by the State Government (Section 65 of the Act). 1.3 BACKGROUND AND BRIEF HISTORY This Order relates to Petition No. 9 of 2015 filed by APGCL before the Commission for true-up for FY , APR for FY and approval of revised ARR and generation tariff for FY for sale of electricity to APDCL. APGCL is one of the successor entities of the erstwhile ASEB and owns and operates the Generating Stations previously owned by ASEB. APGCL started functioning as a separate entity 2

16 from December 10, 2004 as per the Assam Electricity Reforms First Transfer Scheme, which was notified by the Government of Assam vide PEL. 151/2003/Pt/165 dated December 10, The Government of Assam, vide notification No. PEL.151/2003/Pt/349 dated August 16, 2005 issued Orders to give effect to the reorganization of the Assam State Electricity Board and finalization of the provisional transfers effected as per the provisions of the Electricity Act, 2003 and First Transfer Scheme. The Government of Assam notified the opening Balance Sheet, which was updated and finalized based on the Audited Statement of Accounts of ASEB as on March 31, 2005 under Notification No: PEL.114/2006/120 of August 29, The Commission notified the AERC Tariff Regulations, 2006 vide No. AERC.2005/19 dated April 28, 2006, which was published in the Assam Gazette on May 24, It was stated that it shall come into force from the date of their publication in the Official Gazette of the Govt. of Assam, i.e., w.e.f May 24, As per Regulation 1.2(d), the Regulations shall apply to all Generating Companies operating in the State of Assam, which are not subject to the jurisdiction of the CERC, which include Generating Companies that are owned or controlled by Central Government or Generating Companies with a composite scheme of generation and sale in more than one State Assam Power Generation Corporation Limited The Assam Power Generation Corporation Limited, hereinafter named as APGCL, is the successor corporate entity of erstwhile ASEB formed pursuant to the notification of the Government of Assam, notified under sub-sections (1), (2), (5), (6) and (7) of Section 131 and Section 133 of the Electricity Act 2003 (Central Act 36 of 2003), for the purpose of transfer and vesting of functions, properties, interests, rights, obligations and liabilities, along with the transfer of personnel of the Board to successor entries. Further, APGCL is a Company incorporated with the main object of generation of electricity in the State of Assam and is a Generating Company under the various provisions of the Electricity Act, Commission s Orders for the first Control Period APGCL filed the MYT Petition for the first Control Period for determination of Annual Revenue Requirement for FY , FY and FY on February 8, 2010 in accordance with the AERC Tariff Regulations,

17 The Commission, after following the due procedure, issued the MYT Order for the Control Period from FY to FY on May 16, APGCL filed the Petition for approval of Annual Performance Review for FY and truing up for FY and FY on June 06, 2012.APGCL further filed the Petition for approval of revised Annual Revenue Requirement and determination of generation tariff for FY on September 28, 2012.Thereafter, the Commission passed the tariff order on true-up for FY and FY , Annual Performance Review for FY and determination of revised ARR and generation tariff for FY on February 28, Commission s Orders for the second Control Period APGCL filed the MYT Petition for the second Control Period for determination of Annual Revenue Requirement for FY , FY and FY on January 31, 2013, in accordance with the AERC Tariff Regulations, Further, APGCL filed the Petition for true-up for FY and APR for FY on March 21, The Commission, after following the due procedure, issued the MYT Order for the Control Period from FY to FY on November 21, 2013, along with true-up for FY and APR for FY APGCL filed the Petition for approval of Annual Performance Review for FY (Petition No 13/2013) on November 28, APGCL further filed the Petition for truing up for FY and approval of revised Annual Revenue Requirement and determination of generation tariff for FY (Petition No14/2014) on February 27, As directed by the Commission APGCL further submitted the revised petition for truing up for FY , APR of FY and approval of revised Annual Revenue Requirement and determination of generation tariff for FY incorporating additional information requirements on April 10, The Commission passed the tariff order on true-up for FY , APR for FY and determination of revised ARR and generation tariff for FY on November21,

18 1.4 PROCEDURAL HISTORY APGCL filed the Petition for True-up for FY , Annual Performance Review for FY and revised ARR and generation Tariff for FY on December 20, However, APGCL submitted the Audited Statement of Accounts on April 10, As directed by the Commission, APGCL further submitted the revised petition for truing up for FY , APR of FY and approval of revised Annual Revenue Requirement and determination of generation tariff for FY incorporating additional information requirements on April 10' ADMISSION OF PETITION AND HEARING PROCESS The Commission conducted the preliminary analysis of petition submitted by APGCL and found that the petition was incomplete due to some need of some material information. Therefore, the Commission sought additional clarification on the petition from APGCL, as required from time to time. The key additional clarifications were sought from February 26, 2015, March 11, 2015, March 20, 2015 and April 06, Based on the additional information requirements, the Commission has also conducted discussions/ meetings with APGCL on March 11, 2015, March 20, 2015, April 06, In response to the additional information sought by the Commission, APGCL submitted the additional information from time to time. The key additional information was submitted by APGCL on March 07, 2015, March 16, 2015 and March 26, Further, based on the additional information requirement, discussions and technical validation sessions, APGCL submitted revised petition on April 10, As such, the Commission admitted the petition of APGCL for True up of FY , APR of FY and ARR of FY on April 13, Additionally, after admission of the petition, APGCL continued to submit further clarifications till June 20, In accordance with Section 64 of the Electricity Act, 2003, the Commission directed APGCL to publish its application in the abridged form and manner to ensure due public participation. A Public Notice was published by APGCL inviting objections / suggestions from objectors on or before May 15, The notice was published in the following eleven (11) newspapers on April 23,

19 Date Newspapers Language The Assam Tribune English The Sentinel English The Telegraph English Asamiya Pratidin Assamese Dainik Asom Assamese April 23, 2015 Amar Asom Assamese Janasadharan Assamese Dainik Jugasankha Bengali Samayik Prasanga Bengali Purbanchal Prahari Hindi Dainik Purvoday Hindi The time limit for submitting objections/suggestions was stipulated in accordance with the AERC (Conduct of Business) Regulations, Moreover, the same was also in line with the time limit given by most of the State Electricity Regulatory Commissions in India, as well as the time allowed by the Commission in earlier tariff proceedings The Commission has considered the objections received from various objectors and also invited the objectors to take part in the Hearing process for presenting their views in person before the Commission, if they so desired. Also, a comprehensive Notice was published in the following seven (7) newspapers on May 27, 2015 in Assamese and English language. Accordingly, the Commission scheduled the Hearing on the matter on June 04, 2015 at Assam District Library Auditorium, Guwahati. 6

20 Date Name of Newspaper Language The Assam Tribune English The Sentinel English Amar Asom Assamese Asamiya Pratidin Assamese Dainik Janambhumi Assamese Dainik Jugasankha Bengali Purbanchal Prahari Hindi All the written representations submitted to the Commission and the oral submissions made before the Commission during the Hearing and the responses of APGCL have been carefully considered while issuing this tariff order. The issues raised by different consumers and consumer groups along with the response of APGCL and views of the Commission are elaborated in Chapter 3 of this Order. 1.6 STATE ADVISORY COMMITTEE MEETING The meeting of the State Advisory Committee (constituted under Section 87 of the Electricity Act, 2003) was convened on May 08, 2015at Assam Administrative Staff College, Khanapara, Guwahati. The Members of SAC were briefed on the Petitions of APGCL. The suggestions made by the members of SAC have been duly taken into consideration by the Commission while finalizing the tariff order. The minutes of the meeting are appended to this Order as Annexure

21 2 Summary of ARR and Tariff Petition APGCL filed a Petition on November 25, 2014 praying for extension of time for submission of Petition for approval of ARR and Tariff for FY along with APR of FY up to December20, 2014 and Commission granted extension of time up to December20, 2014, for filing of Petition for Truing Up of FY , APR of FY and the approval of revised ARR and Tariff for FY Accordingly, APGCL filed the Petition for True-up for FY , Annual Performance Review for FY and revised ARR and generation Tariff for FY on December 20, 2014, which was admitted on April 13, TRUE UP FOR FY The summary of true-up for FY submitted by APGCL is as shown in the Table given below: Table 2.1: Summary of true-up for FY as submitted by APGCL (Rs. Crore) Particulars Approved MYT Order Amount claimed Dated November 21, for True-Up 2013 INCOME Revenue from tariff & Misc. Charges Revenue from Secondary Energy Charges of KLHEP 2.51 Total revenue from Sale of Power Other Income Total revenue income EXPENDITURE Fuel Cost Employee Expenses R&M Expenses A&G Expenses Depreciation Interest & Finance Charges Provision for taxes Prior period items Return on Equity (ROE) Interest on working Capital

22 Particulars Approved MYT Order Dated November 21, 2013 Amount claimed for True-Up Adjustment of Truing Up for FY Total Revenue Requirement Add: Incentive for generation for FY Add: Incentive for Secondary Energy generation for FY Gross Expenditure Revenue Surplus(+) / Shortfall(-) APGCL claimed a Revenue Gap of Rs Crore for FY and requested the Commission to allow the proposed Revenue Gap of FY in the ARR for FY APR FOR FY AND REVISED ARR AND GENERATION TARIFF FOR FY The summary of APR for FY and revised ARR and generation tariff for FY submitted by APGCL, is as shown in the Table given below: Table 2.2: APR for FY as submitted by APGCL (Rs. Crore) Fixed Charges Particulars Operation and Maintenance expenses Approved Tariff Order Dated November 21, 2014 Proposed in this petition Employee expenses Repair and Maintenance expenses Administrative and General expenses Interest and Finance Charges Interest on Working Capital Income Tax Depreciation Return on Equity Less: Other Income Total Fixed Charges Fuel Cost

23 Approved Tariff Order Particulars Dated November 21, 2014 True up for Impact of revised true up Proposed in this petition Annual Revenue Requirement Power Generation (MU) Gross Generation Auxiliary Consumption Net Generation Generation Tariff (Rs./kWh) Fixed Cost Fuel Cost Tariff Table 2.3: Revised ARR and Generation Tariff for FY as submitted by APGCL Fixed Charges Particulars Operation and Maintenance expenses Approved MYT Order Dated November 21, 2013 Proposed in this petition Employee expenses Repair and Maintenance expenses Administrative and General expenses Interest and Finance Charges Interest on Working Capital Income Tax Depreciation Return on Equity Less: Other Income R&M expense approved vide letter no AERC 442/ 2014/15" Order n Review petition on Tariff order for FY dated Total Fixed Charges Fuel Cost True-up for FY Annual Revenue Requirement Power Generation (MU) Gross Generation Auxiliary Consumption

24 Particulars Approved MYT Order Dated November 21, 2013 Proposed in this petition Net Generation Generation Tariff (Rs./kWh) Fixed Cost Fuel Cost Tariff APGCL has submitted that it has projected the ARR for FY based on the current position of the generating Units and gas availability from various gas sources, gas pricing, inflation trend, etc. APGCL has proposed the ARR of Rs Crore as against Rs Crore approved by the Commission for FY in the MYT Order dated November 21, This is exclusive of proposed Revenue Gap of Rs Crore for Truing Up of FY

25 3 Summary of Objections raised, responses of APGCL and Commission s comments The Commission has received objections/ suggestions from seven (7) objectors on the Petitions filed by APGCL from the following objectors: Sl. No. Name of the Objector 1. All Assam SSI Association, Industrial Estate, Guwahati 2. Assam Bidyut Grahak Adhikar Parisad 3. Assam Branch of Indian Tea Association, Guwahati 4. Consumers Legal Protection Forum 5. Federation of Industry & Commerce of North Eastern Region 6. Krishak Mukti Sangram Samiti & Gana Mukti Sangram 7. Shri Jayanta Deka and others APGCL has submitted its responses to the objections/suggestions from the objectors. The Commission held the Hearing at District Library, Guwahati on June 4,2015. Six objectors attended the Hearing and submitted their views/suggestions. All the written representations submitted to the Commission and oral submissions made before the Commission in the Hearing and the responses of APGCL have been carefully considered while issuing this tariff order. The objections/suggestions made by the objectors and responses of the Petitioner have been dealt with in this Chapter. The major issues raised by the objectors are discussed below along with the response of APGCL and views of the Commission. All the objections/suggestions received in written on the ARR and Tariff Petition along with those raised during the course of Hearing, have been grouped and addressed issuewise hereunder. Issue No. 1: Truing-up to be done before calculating ARR for Objections: The Federation of Industry & Commerce of North Eastern Region has requested the Hon ble Commission to first carry out True-up and pass on the benefit of any excess charge to the consumers before arriving at ARR and tariff for Comments of the Commission: 12

26 The Commission has carried out True-up exercise based on submissions of APGCL, Audited Statement of Accounts of APGCL and prudence check by the Commission. The detailed component wise analysis of True-up is covered in the later chapter of this order. The impact of True-up has been taken up while calculation of ARR requirement for FY Issue No. 2: PLF, Plant Availability and Generation Objections: The Assam Branch of Indian Tea Association (ABITA) submitted that in spite of the lenient approach adopted by the Commission for approving the technical parameters for the generating stations of APGCL, the actual technical parameters achieved by the Petitioner for FY indicate poor performance of the plants. As per ABITA, the primary reason for the non-achievement of the technical parameters is the nonimplementation of the Renovation & Modernisation schemes resulting in frequent forced shut downs. ABITA further submitted that the non-achievement of the technical parameters is attributable to APGCL and accordingly, ABITA has requested the Commission not to allow the same to be passed to the consumers. The Federation of Industry & Commerce of North Eastern Region (FINER) has also objected on similar lines stating that while APGCL could achieve the generation targets for NTPS, LTPS with WHRU and KLHEP for FY However, the target with respect to Myntriang SHEP has not been met due to delay in commissioning of the plant. Similarly for FY , as per APGCL s estimate, APGCL is not expected to meet the generation target for KLHEP and Myntriang SHEP (due to delay in commissioning of plant). The objectors have pointed out that, there has been consistent failure on the part of generating company to complete new generating units as per projections in MYT. FINER, has also pointed out that during the MYT petition Hearing also, there were objections made on the projection made for new capacity addition and today those objections have been proved to be correct.. The FINER has requested APGCL to ensure timely completion of ongoing projects. Assam Bidyut Grahak Adhikar Parisad has also observed that there is decrease in generation of APGCL. They further mentioned that the delay in power generation projects leading to procurement of power from outside state at higher cost. Krishak Mukti Sangram Samiti & Gana Mukti Sangram has submitted that, the state s own generation was MW as on April 30, 2015, as per the data of Government of India. It received MW from Central sector and MW from private 13

27 sector, showing that MW was received from others out of the total allocation of MW. They further submitted that at present APGCL does not have any project to increase its own generation. Krishak Mukti Sangram Samiti &Gana Mukti Sangram further submitted that, as per the available information, the total electricity production of Assam is only 1% of the total electricity production of India, while Gujarat, Rajasthan, Karnataka, Maharashtra and Punjab produces 8% and undivided Andhra Pradesh produces 12% (Share of State/UT s in State Sector generation in ). Also, the per capita consumption in Assam is 250 kwh while the all India average per capita consumption is 884 kwh. Among the big states, the per capita consumption in Punjab, Gujarat and Haryana were 1799 kwh, 1663 kwh and 1628 kwh respectively. The lowest per capita consumption is in Bihar which is 134 kwh. (As per FY data). The objector submitted that more steps should be taken for increasing the production and consumption in Assam. However the yearly demand for tariff increase is being made by utilities, as a regular practice. Further, Krishak Mukti Sangram Samiti & Gana Mukti Sangram submitted that, the electricity consumption is one of the main indicators of development which is getting reduced due to the huge increase in the tariff. Response of APGCL: In response to objections above, APGCL submitted that actual PLF of APGCL is more than the normative PLF values both of LTPS and NTPS in the FY mainly due to successful R&M carried out. APGCL constantly endeavours to improve the performance of its power stations and hence has achieved even higher PLF than the normative PLF for NTPS and LTPS. APGCL has submitted that, For FY : The commissioning of Myntriang SHEP Stage-II Project was delayed due the following reasons i. Loss of valuable work days due to local issues such as frequent bandh calls ii. Redesigning of the project for enhancing capacity by 3 MW in Stage-I and by 1.5 MW in Stage-II, from the earlier planned capacity of 6 MW for Stage I and 3 MW for Stage II. The 3 MW capacity for Stage II has already been commissioned in FY For FY : The generation of Hydro projects like KLHEP depends on the availability of water which is beyond the control of APGCL. KLHEP generated less than the target generation due to less amount of rainfall in the 14

28 monsoon season in the FY Further, Myntriang SHEP Stage-II suffered heavy damages in the sudden flash flood caused by the torrential rain on August 22, 2014 and had to be shutdown intermittently. For the above reasons, it could not achieve target generation for the FY APGCL has further submitted that, the detailed reasons for delay in commissioning of new projects vis-a-vis schedule proposed in the MYT Petition for to is mentioned below, which are beyond the control of APGCL. 100 MW NRPP: The projected was initially proposed to be commissioned in FY However, due to various reasons, the commissioning of the project was delayed as mentioned below: i. Continuous poor progress of works due to poor management of site by BHEL s sub-contractors due to deployment of insufficient machineries & labourers hampered progress of works. ii. Non availability of sufficient skilled manpower. iii. Unfavourable Weather (In the whole year, only 5 months was only favourable for ground work). However, at present the project work is progressing at a better pace than earlier after selection of new sub-contractors by BHEL on constant persuasion by APGCL. The NRPP (63 MW), in open cycle mode, is expected to be commissioned in August, MW LRPP: Delay was mainly due to delay in the selection of EPC contractors. For selection of EPC contractors. re-tendering was done and bid submission date had to be extended several times due to receipt of only single bid initially. 6 MW Lungnit SHEP: The contract with the EPC contractor had to be cancelled due to very slow progress of work. Subsequently, the project got involved into litigations with the cancelled EPC contractor. After that tendering process was started to select new EPC contractor. However, due to high price bid than the estimated project cost, the decision on EPC contractor selection is pending at the moment. Myntriang SHEP Stage-I: Myntriang SHEP Stage-I suffered the same problems during construction like that of the Stage-II project mentioned above. This project has also been redesigned to 9 MW from earlier 6 MW. Project work is presently going on 15

29 and the project is expected to be commissioned in December In the Revised Tariff Petition for the FY APGCL has considered the open cycle commissioning of NRPP (63 MW GT part only) and Myntriang 13.5 MW MSHEP St.-I & II as the new capacity addition. APGCL is putting all effort to complete its ongoing projects in time. In its reply to Krishak Mukt Sangram Samiti &Gana Mukti Sangram, APGCL submitted that to meet the ever growing energy demand of the state of Assam to the extent feasible, APGCL, at the initiative of Govt. of Assam, has emphasized on development of large capacity thermal power projects based on coal & natural gas available in this region as stated below. The following projects are currently under construction / bidding /DPR/planning stage by APGCL for capacity addition. i. Ongoing Projects SI. No. Name of the Project Fuel Capacity (MW) Status I Namrup Replacement Power Project (NRPP) Gas Turbine Unit Natural Gas 100 Approximately 65% project work is completed. Open cycle Commissioning is expected in December Myntriang Stage-1 (3x3 MW) and Enhancement of Stage II (1x1.5 MW enhancement from 2x1.5 MW) N/A (Hydro) 10.5 Approximately 57% project work is completed. Commissioning is expected in December 2015 ii. New Projects / Projects in Pipeline Sl. No. Name of the Project Fuel Capacity (MW) Expected Date of Commissioning Present Status 1 Lakwa Replacement Power Project Natural Gas 70 (Nominal) 2 years from issue of Work Order Technical bid evaluation is completed and sent to ADB for approval. 2 Lower Kopili Hydro Electric Power Project N/A (Hydro) years from issue of Work Order Recasting of DPR as per the CEA advice is under finalization. DPR is expected to be approved by CEA by July'15. The issue of pending clearances for the project has been pursued by Govt. of Assam with the Govt. of India. 16

30 Sl. No. Name of the Project Fuel Capacity (MW) Expected Date of Commissioning Present Status 3 Borpani Middle Stage- II Small Hydro Electric Power Project --Do years from issue of Work Order DPR has been approved by APGCL Board on December 03, Preliminary survey work for road and building is in progress. 4 Cachar Power Project Natural Gas 30 (Nominal) 2 years from issue of Work Order APGCL was the sole bidder in the Open Tender floated by ONGCL for sale of Gas from Bhubaudar and Banskandi fields in Cachar District. Gas linkage is awaited. GoI has been pursued by GoA for early allocation of Gas 5 6 NTPS Solar PV Projects LTPS Solar PV Project Solar Energy 2 --Do year from issue of Work Order To be Proposed under Jawaharlal Nehru National Solar Mission (JNNSM). DPR is under preparation. 7 8 Borpani Middle Stage- I SHEP Borpani Barrage Toe SHEP N/A (Hydro) 21 --Do years from issue of Work Order DPR under preparation 9 Titabor Power Project Natural Gas 40 (nominal) MoPNG and ONGCL are being pursued for allocation of gas from small pockets of gas around Titabor area 10 Amguri TIDP --Do Deferred due to nonavailability of gas 17

31 iii. JV Project SI No. Name of the Project Fuel Capacity (MW) Expected Commissioning date Present Status 1. Margherita Thermal Power Project Coal and 1/2 years from issue of Work Order 1. Proposed as a JV project with NEEPCO with 49% stake of APGCL Bigha land allotted to APGCL by GOA 3. Water off-take permission received 4. Amended Terms of Reference was received from MOE&F, Hearing for environment clearance was held on March 22, DPR is being prepared by TCE 6. Coal linkage is awaited. The issue of early allocation coal for the project is continuously being pursued by Govt. of Assam with the Govt. of India 2. Revival of Chandrapur Thermal Power Project -- Do and 1/2 years from issue of Work Order 1. JV project- M/s IAPL 2. Environment Clearance received. 3. Coal linkage is awaited. 4. Govt. of Assam has pursued with Govt. of India for early allocation of coal for the project In reply to the observation of Assam Bidyut Grahak Adhikar Parishad, APGCL has submitted that instead of decrease in generation, APGCL has shown increasing trend of generation as stated below. Further, APGCL had achieved its highest ever Gross generation of MU in the FY APGCL Total Gross Gen. In(MU) Total Energy Supplied to APDCL (MU) APGCL further submitted that it is planning for more capacity addition in the coming years (as shown in table above) and making an determined effort to implement this plan to boost its generation capacity considerably to meet the ever growing energy demand of the State of Assam to the extent feasible. 18

32 Comments of the Commission: For Truing up purpose the Commission has considered SLDC certificate for the proof of plant availability. Although the recovery of the fixed costs of APGCL is dependent on the availability rather than the PLF of its stations, higher PLF is desirable as it leads to optimal utilisation of capital investment incurred. The Commission observes that the actual generation of the thermal generating stations of APGCL is more than the approved generation level for FY For FY , the Commission has considered 10 months actual availability as per SLDC certificate for approving the plant availability. Since the petitioned value is similar to actual 10 month availability, the petitioned availability has been allowed. Similarly for PLF of thermal plants, as the petitioned value were higher than normative value, the Commission has considered petitioned PLF for generation calculation. The gross generation for hydel plants has been taken as per petition. For , the Commission has taken generation figure as per submission of APGCL, which has been projected based on gas availability and number of days of operation, however, the target for availability and PLF will be considered as same as in MYT order for true-up in future. It shall be noted that, the Commission has specified the normative PLF for the generating stations of APGCL keeping in view the vintage of the Units, availability of gas and maintenance schedule required for the upkeep of the Units and hence no deviation from the same will be considered in True-up. The Commission had directed APGCL to obtain prior approval of the capital investment for the Renovation & Modernisation schemes to be implemented by APGCL. Further, the Commission, in its MYT Order for FY to FY dated November 21, 2013 has already directed APGCL to expedite all the Renovation & Modernisation schemes required for the optimal performance of its Stations. The Commission has also given directives to APGCL for submission of project status and reason for delays. The Commission directs APGCL to make all out efforts for maximum generation from its existing Stations as the availability of adequate generation capacity within the State would reduce the dependence on the import of power and the inherent transmission constraints. Issue No. 3: Auxiliary Energy Consumption 19