HARYANA ELECTRICITY REGULATORY COMMISSION

Transcription

1 BEFORE HARYANA ELECTRICITY REGULATORY COMMISSION Filing of the Petition for True-Up of FY , Annual Performance review for FY and Annual Revenue Requirement for FY by Dakshin Haryana Bijli Vitaran Nigam Limited under HERC (Terms and Conditions for Determination of Tariff for Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 along with the other guidelines and directives issued by the Hon ble Commission from time to time and under Sections 42, 45, 46, 47, 61, 62, 64 and 86 of the Electricity Act 2003 read with the relevant guidelines. Filed by Dakshin Haryana Bijli Vitran Nigam Limited Hisar Superintending Engineer/Regulatory Affairs Regd. Office: C-Block, Vidyut Sadan, Vidyut Nagar, Hisar , Haryana (India) Date: 30 November Phone

2 Petition for True up of FY , APR FY and ARR for FY DAKSHIN HARYANA BIJLI VITRAN NIGAM LIMITED (A Power Distribution & Retail supply Utility, Govt. of Haryana) Regd. Office: C-Block, Vidyut Sadan, Vidyut Nagar, Hisar , Haryana (India) Phone Web Site: BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION, PANCHKULA IN THE MATTER OF: Filing of the Petition for True-up of FY , Annual Performance Review (APR) for FY , Annual Revenue Requirement (ARR) for FY by Dakshin Haryana Bijli Vitran Nigam Ltd. under HERC (Terms and Conditions for determination of tariff for generation, transmission, wheeling and distribution & retail Supply under Multi Year Tariff Framework) Regulations, 2012 and under Section 45, 46, 47, 61, 62, 64 and 86 of The Electricity Act 2003 read with the relevant guidelines. AND IN THE MATTER OF: DAKSHIN HARYANA BIJLI VITRAN NIGAM LIMITED (hereinafter referred to as "DHBVN ), having its registered office at Vidyut Sadan, Panchkula, Haryana. DHBVN (hereinafter Petitioner) respectfully submits as under: - The Petitioner is a State owned Distribution Company and registered under the companies Act, 1956, formed under corporatisation/ restructuring of erstwhile Haryana State Electricity Board (HSEB) and is credit worthy for the distribution and retail supply of electricity (License No. DRS-1 of 2004) in the South Zone of State Haryana. Pursuant to the enactment of the Electricity Act, 2003, every utility is required to submit its Annual Revenue Requirement (ARR) for the control period and Tariff Petitions as per procedures outlined in section 61, 62 and 64 of Electricity Act 2003, and the HERC (Terms and conditions for Determination of Tariff for Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 as amended from time to time. The Annual Revenue Requirement (ARR) petition for FY along with True-up for FY was filed by DAKSHIN HARYANA BIJLI VITRAN NIGAM LIMITED (hereinafter referred to as "DHBVN ) and accordingly the Hon ble Commission had issued the Tariff Order against the said petition on 1 st August, ii

3 Petition for True up of FY , APR FY and ARR for FY The present petition is being filed with the Hon ble Commission for True-up of FY , Annual Performance Review (APR) for FY and Annual Revenue Requirement (ARR) for FY This petition has been prepared in accordance with the provisions of Part VII- Principles for Determination of Tariff and Norms of Operation for Distribution Businessand Part VIII -Filing Of Aggregate Revenue requirement, as per the HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 along with Sections 61, 62 of the Electricity Act, 2003, 3. The present petition is being filed before the Hon ble Commission for True-up of FY , Annual Performance Review (APR) for FY and Annual Revenue Requirement (ARR and Tariff for FY ) considering the approved values of HERC Tariff Order dated 1 st August, 2016 and subsequent HERC tariff order 11 th July, DHBVN along with this petition is submitting the regulatory formats with data & information to an extent applicable and would make available any further information/ additional data required by the Hon ble Commission during the course of proceedings. 5. The current APR being filed has been discussed and being approved by the BODs of the DHBVN and Sh. Rajender Sabarwal, SE/Regulatory Affairs, DHBVN has been authorized to execute and file the said APR on behalf of DHBVN. 6. The Hon ble Commission has not extended the purview of Multi Year Tariff Regulation, 2012 to the FY Therefore, the Licensee in absence of any Regulation has determined the ARR of FY as per the current Multi Year Tariff Regulation, Also, the True-up of FY has been done as per the aforementioned regulations. 7. However, DHBVN is filing a petition before the Hon ble Commission while reserving its right to file any additional submissions and revised petition iii

4 Petition for True up of FY , APR FY and ARR for FY Prayers to the Commission: The petitioner respectfully prays that the Hon ble Commission may: Take the accompanying filing of DHBVN on record and accept the petition regarding true up of expenses and revenue for FY , Re-estimation of Revenue Requirement / Gap for FY and projected Revenue Requirement for FY ; Allow filing of any additional / supplementary submissions during the course of these proceedings; Allow return on equity as proposed; Allow the entire fixed charges of power purchase as the power is procured from the sources whose PPAs have been duly approved by the Hon ble Commission and also the energy charges of power procurement from these sources as proposed in the filing; Allow the Annual Revenue Requirement of the Nigam for the FY including the actual interest on all the loans which is real expenditure borne by the utility; Allow True-Up of FY along with the holding cost and the revised expenses as projected for FY in the Annual Revenue Requirement of FY ; To continue the current levels of Tariff to meet the expenses, the gap being funded through operational financing as proposed under UDAY scheme; To allow Additional Surcharge of Rs 1.21 per unit to be recovered from Open Access Consumers Condone any inadvertent omissions/errors/shortcomings and permit DHBVN to add/change/modify/alter this filing and make further submissions as may be required during the course of these proceedings; iv

5 Petition for True up of FY , APR FY and ARR for FY Pass such Order, as the Hon ble Commission may deem fit and appropriate keeping in view the facts and circumstances of the case submitted by the Petitioner. Panchkula, Haryana Dated: Dakshin Haryana Bijli Vitran Nigam Limited Petitioner v

6 Petition for True up of FY , APR FY and ARR for FY Table of Contents CHAPTER 1. INTRODUCTION BACKGROUND INDIAN POWER SECTOR ALL INDIA INSTALLED CAPACITY PROFILE OF DHBVNL TRANSMISSION & DISTRIBUTION LOSSES REVENUE HT-LT RATIO REGULATORY FRAMEWORK CURRENT PETITION CHAPTER 2. TRUE-UP OF FY PRINCIPLES OF TRUE UP FOR FY POWER PURCHASE AND POWER PURCHASE COST ENERGY BALANCE OPERATION & MAINTENANCE EXPENSES EMPLOYEE EXPENSES REPAIR & MAINTENANCE EXPENSES ADMINISTRATIVE & GENERAL EXPENSES CAPITAL EXPENDITURE INTEREST COST ON LONG TERM LOANS INTEREST ON WORKING CAPITAL AND BORROWINGS INTEREST ON CONSUMER SECURITY DEPOSITS INTEREST ON BONDS TOTAL INTEREST & FINANCE COST DEPRECIATION RETURN ON EQUITY NON TARIFF INCOME EXPENDITURE DUE TO OTHER DEBTS TRUE UP OF RE SUBSIDY SUMMARY OF TRUE UP OF FY CHAPTER 3. ANNUAL PERFORMANCE REVIEW FOR FY AND ANNUAL REVENUE REQUIREMENT FOR FY PREAMBLE CAPITAL EXPENDITURE TRANSMISSION AND DISTRIBUTION LOSSES CAPITAL WORK IN PROGRESS ASSESSMENT OF ENERGY SALES FOR AND ENERGY AVAILABILITY FOR HARYANA FOR FY AND FY TRANSMISSION LOSSES ENERGY BALANCE DHBVNL OPERATION & MAINTENANCE EXPENSES COMPUTATION OF INFLATIONARY INDICES EMPLOYEE EXPENSES REPAIR & MAINTENANCE EXPANSES ADMINISTRATION & GENERAL EXPENSES SUMMARY OF O&M EXPANSES INTEREST & FINANCE CHARGES vi

7 Petition for True up of FY , APR FY and ARR for FY DEPRECIATION NON-TARIFF INCOME RETURN ON EQUITY INTEREST ON CONSUMER SECURITY DEPOSIT BAD AND DOUBTFUL DEBTS REVENUE ESTIMATION REVENUE FROM INTER-STATE SALES: REVENUE FROM FSA:... ERROR! BOOKMARK NOT DEFINED AGRICULTURE SUBSIDIES: TARIFF REQUIREMENT: TRUE UP OF RE SUBSIDY FOR FY CHAPTER 4. RECOVERY OF OUTSTANDING GAPS CHAPTER 5. ADDITIONAL SURCHARGE CHAPTER 6. COMPLIANCE TO DIRECTIVES ISSUED IN LAST TARIFF ORDER 81 CHAPTER 7. PRAYER vii

8 Petition for True up of FY , APR FY and ARR for FY List of Tables Table 1: Details of division and sub-division offices... 5 Table 2: Category wise Sales (MUs) for last six years... 5 Table 3: Power Purchase Details for FY Table 4: Power Purchase Details for FY for Haryana (in MU) Table 5: Energy Balance for FY Table 6: O&M Expenses for FY (Rs. Crore) Table 7: Employee Expenses for FY (Amt. in Rs. Crore) Table 8: R&M Expenses for FY (Amount in Rs. Crore) Table 9: A&G Expenses for FY (Rs. Crore) Table 10: Total Interest & Finance Cost for FY (Rs. Crore.) Table 11: True up of RE subsidy for FY Table 12: True Up of Expenses for FY (Rs. Crore) Table 13: Final True up of FY in Rs Cr Table 14: Summary of funding of capital expenditure in FY and Table 15: Scheme Wise details for the FY Table 16: Summary of CWIP (Rs. Crore) Table 17: Statement of sales for FY and FY (Mus) Table 18: Power Purchase Quantum Availability and Costs Projected for FY and FY Table 19: Summary of Power Purchase in Rs Cr Table 20: Energy Balance for DHBVN Table 21: Bulk Supply Tariff for DHBVN Table 22: Inflation factor for WPI & CPI Table 23: Employee Expenses for FY 2018 and FY (Amt. in Rs. Crores) Table 24: R&M Expenses for FY 2018 and FY (Amt. in Rs. Crores) Table 25: A&G Expenses for FY 2018 and FY (Amt. in Rs. Crores) Table 26: Summary of O&M Expenses for FY 2018 and FY (Amt. in Rs. Crores) Table 27: Loan Profile and interest Liability of the Nigam for FY (Amount in Crores) Table 28: Loan Profile and Interest Liabilities of the Nigam for FY (Amount in Crores) Table 29: Net Interest & Finance Charges (Amount in Crores)... Error! Bookmark not defined. Table 30: Asset wise Depreciation rate Table 31: Depreciation for FY (Amount in Crores) Table 32: Depreciation for FY (Amount in Crores) Table 33: Non-Tariff income for FY 2018 and FY (Amt. in Rs. Crores) Table 34: Return on Equity for FY 2018 and FY (Amt. in Rs. Crores) Table 35: Interest on Consumer Security Deposit for FY18 & FY19 (Amt. in Rs Crores) Table 36: Revenue Estimations for FY and FY (In Crs.) Table 37: Aggregate Revenue Requirement for FY and FY (Amt. in Rs Crores) Table 38: Aggregate Revenue Requirement of Wheeling and Retail Supply (Amount in Rs. Crores) Table 39: True up of RE subsidy for FY Table 40: Approved Per unit fixed cost of power purchase for FY Table 41: Details of backing down owing to Open Access and Open Access units Table 42: Calculation of Additional Surcharge for Second half of FY viii

9 Petition for True up of FY , APR FY and ARR for FY ix

10 Petition for True up of FY , APR FY and ARR for FY Chapter 1. Introduction 1.1 Background Indian Power Sector The Indian power sector has witnessed versatile changes over the last decade post the passage of The Electricity Act, These changes include introduction of significant reform measures, enhanced regulatory regime, increased level of private sector participation, development of state-of-theart grid linking the entire country and focus on renewable energy generation. Energy requirement and supply is a strategic input and one of the key drivers for economic and social development behind any growing country. As energy plays a very vital role in industrial production, economic growth and common man s life, it has become extremely essential to boost the growth in energy segment for the growth of the Country. With growing demand in the energy requirement, the annual per capita energy consumption has grown significantly. However the low per capita consumption in the Country as compared to the world average indicates significant potential for sustainable growth in the demand of electricity. All INDIA PER CAPITA CONSUMPTION (IN KWH) P E R C A P I T A C O N S U M P T I O N Page 1

11 Petition for True up of FY , APR FY and ARR for FY Distribution is the most critical segment of electricity business chain. The distribution segment is still largely government owned and will require sustained attention of the authorities if the sector performance is to improve. The real challenge of reforms in the power sector lies in efficient management of the distribution sector. It is therefore necessary to improve the distribution infrastructure and the management of distribution utilities. 1.2 All India Installed Capacity India is one of the largest power-generating countries in the world with an installed capacity of 3, 26,832 MW (as of March, 2017). Over the last 11years, the installed capacity of the country has grown at a CAGR of 8.57%. All India Installed Capacity (In Mw) As On March 2017 Similarly, the electricity generation increased from about 5.1 Billion units in 1950 to 1,153.5 BU (including imports) in the year (till Jan-2017). The Page 2

12 Petition for True up of FY , APR FY and ARR for FY per capita consumption of electricity in the country has also increased from 15 kwh in 1950 to about 1,122 kwh in the year Out of census villages, 5, 95,160 villages (99.6%) have been electrified as on Regional grids have been integrated into a single national grid with effect from thereby providing free flow of power from one corner of the country to another through strong inter regional AC and HVDC links. As a result, the All India peak demand (MW) as well as energy (MU) shortage have registered steady decline. The peak shortage and energy shortage were 1.63% and.66% respectively during FY India Fuel Wise Share In Installed Generation Capacity (MW) As on Mar 17 Fuel Wise Share in installed Generation 1% 8% 11% 35% 40% 5% 0% Coal Gas Diesel Thermal Nuclear Hydro Res All India Peak and Energy Deficit March % 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 12.70% 9.80% 10.60% 9.00% 10.10% 8.50% 8.50% 8.70% 4.50% 4.70% 3.20% 4.20% 1.63% 3.60% 2.11% 0.66% FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 Energy Deficit Peak Deficit Page 3

13 Petition for True up of FY , APR FY and ARR for FY Profile of DHBVNL The Company is a Distribution Licensee within the meaning of Section 2 (17) of Electricity Act 2003 and pursuant to the Section 14 of the Electricity Act. Further, Section 42 and 43 of the Electricity Act 2003 prescribes the following duties of the Distribution Licensee: To develop and maintain an efficient, co-ordinated and economical distribution system; To supply electricity on an application of the consumer in accordance with the provisions specified in the Electricity Act 2003; To provide non-discriminatory open access to the consumers; To establish a forum for redressal of grievances of the consumers; Since DHBVN has been vested with the function of distributing power by the State Government of Haryana, the Business Scope of the Company falls within the legal framework as specified in the Act and can include: To develop and maintain an efficient, co-ordinated and economical distribution system; To Operate the existing distribution infrastructure efficiently & effectively; Merchant Sale of Power in the event of availability of surplus power after meeting the requirement of own consumers with whom the capacity is contracted presently; Page 4

14 Petition for True up of FY , APR FY and ARR for FY Other associated business like providing Training, Research and Development activities, Technical consultancy services and O&M related services; Contracts for outsourcing of distribution related activities, joint venture participation; Table 1: Details of division and sub-division offices Name of Circle Total No. of Division Total No. of Sub-Division Sirsa 3 13 Hisar 3 13 Bhiwani 3 17 Rewari 3 9 Gurgaon-I 2 8 Gurgaon-II 2 7 Palwal 2 11 Faridabad 4 18 Narnual 2 8 Jind 3 12 Fatehabad 2 11 DHBVN The following table shows the total sales from FY to FY as per actual audited accounts: Table 2: Category wise Sales (MUs) for last six years Category FY FY FY FY FY FY Domestic 2, , , , , , Non-Domestic 1, , , , , , HT Industry 3, , , , , , Lift Irrigation LT Industry Agriculture 3, , , , , , Bulk Supply Railway Traction Street Lighting Page 5

15 Petition for True up of FY , APR FY and ARR for FY Category FY FY FY FY FY FY Public Water Work Total 13, , , , , , CATEGORY-WISE SALES MIX YEAR-WISE 20, , , , FY FY FY FY FY FY Domestic Non Domestic HT Industry Lift Irrigation LT Industry Agriculture Bulk Supply Railway Traction Street Lighting PWW As seen from the above figure Domestic category and Agriculture consumption although varying but remains the highest (51.50% in FY17) consuming category followed by HT Industrial at 22.82%. The HT Industrial and LT Industrial contribute for more than 27.36% of the total consumption. Page 6

16 Petition for True up of FY , APR FY and ARR for FY Transmission & Distribution losses TRANSMISSION & DISTRIBUTION LOSSES 24.74% 24.25% 26.11% 26.45% 23.29% 23.71% 23.66% 24.47% 24.47% 22.50% 22.38% 21.14% FY FY FY FY FY FY AT&C T&D The Transmission & Distribution loss depends upon various factors such as size of the network, energy demand, connected Load etc. The Transmission Losses in the power system cannot be totally eliminated. However, efforts are undertaken to reduce T&D loss to the desired permissible level. Currently, DHBVN is serving consumers of which around are domestic consumers. Given below is a graph depicting the number of consumers across different categories for the period from FY to FY (Up to July), It can be seen that the number of consumers have increased over the period. The majority of the consumers are in the LT-Domestic category followed by LT Commercial Category. Consumer Mix for last six years Category FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 (H1) DOMESTIC 19,61,524 22,22,212 22,90,331 23,69,349 24,52,966 25,25,579 NON-DOMESTIC 2,28,923 2,56,616 2,68,741 2,82,654 2,95,444 3,02,684 LT INDUSTRIAL 44,204 47,010 48,403 49,073 49,619 49,747 HT INDUSTRIAL 5,624 6,340 6,494 6,804 7,052 7,348 AGRICULTURE METERED 1,59,789 1,94,999 2,06,679 2,11,062 2,16,106 2,19,771 Page 7

17 Petition for True up of FY , APR FY and ARR for FY Category FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 (H1) AGRICULTURE UN-METERED 79,689 93,379 92,343 92,138 92,459 91,601 LIFT IRRIGATION PUBLIC WATER WORKS 9,568 10,855 11,434 11,821 12,132 12,200 BULK SUPPLY RAILWAYS STREET LIGHT ,004 1,127 1,206 1,226 TOTAL 24,90,793 28,33,132 29,26,290 30,24,914 31,27,849 32,11,053 DHBVN has been purchasing majority of its power from Central Generating Stations (CGS) as per the allocation decided by Ministry of Power. The purchase cost from FY to FY is based on audited accounts. PER UNIT POWER PURCHASE COST POWER PURCHASE ( RS/KWH) FY FY FY FY FY FY The figure depicts per unit rate of power purchase for DHBVN during last 6 years. The significant increase in power purchase cost is mainly on account of huge dependence on external sources for purchase of power and the increase in fuel cost of generating stations. Page 8

18 Petition for True up of FY , APR FY and ARR for FY Revenue The revenue generated from the consumption of electricity to various categories is shown in the chart below. Even though no. of consumers of HT consumers is very few, the highest revenue is obtained from the HT Industrial consumers i.e. of the total revenue. LT Domestic Category with the highest no. of consumers generates only revenue. Revenue from sale of power in the year FY % 2% 1% 5% 1% 1% 4% 24% 36% 19% Domestic Non - Domestic HT Industry LT Industry Lift Irrigation Agriculture Bulk Supply Railway Traction Street Lightning Public Water Works 1.6 HT-LT Ratio The ratio of Secondary line length to its concerned Primary distribution line length is one of the important factors that influence the performance of primary distribution. Over the years, large scale expansion of the urban system and rural electrification programme in the State of Haryana has resulted in considerable expansion of High Tension (HT) distribution network. The size of the distribution transformers has been constantly increasing to meet the increasing demand due to load growth. Page 9

19 Petition for True up of FY , APR FY and ARR for FY HT:LT Ratio FY FY FY FY FY FY FY FY (H1) 1.7 Regulatory Framework The Hon ble Commission had issued HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 (herein MYT Regulations) notified on 5thDecember 2012 and 1 st amendment on 7 th November, However, the Hon ble Commission has not notified MYT Regulation for control period starting from FY or extended the current MYT Regulation, 2012 to the year FY In absence of any regulation for determination of ARR for FY , MYT Regulations has been adopted. The provisions of MYT Regulation is as follows: a) Sales / demand forecast for each consumer category and sub-categories for each year of the control period and the methodology and rationale used; b) Power procurement plan based on the sales forecast and distribution loss trajectory for each year of the control period. The power procurement Page 10

20 Petition for True up of FY , APR FY and ARR for FY plan should also keep in view energy efficiency and demand side management measures; c) A set of targets proposed for other controllable items such as collection efficiency, recovery of bad debts, working capital, quality of supply targets etc. The targets shall be consistent with the capital investment plan and business plan approved by the Commission; d) Expected revenue from the licensed business, non-tariff income and income from other business for the control period and other matters considered appropriate by the distribution licensee(s); e) Number of consumers in each category, connected load in kw and estimate of the cost of supply for various consumer categories per kw and per kwh f) The ARR for various years of the control period, the revenue gap and tariff proposal for meeting the revenue gap for last year of the control period. The tariff proposal should be based on the cost of supply for various consumer categories and the cross-subsidy reduction road map. g) Proposal for meeting the projected cumulative revenue gap for last year of the control period which shall include mechanism for meeting the proposed revenue gap, tariff revision for various consumer categories etc. h) A statement of the effect of the proposed tariff changes on a typical small, average and large consumer in each tariff class. For this purpose, a typical small consumer is defined such that within the tariff class, 90% of the consumers supplied under that tariff within a 12 month period would have greater total expenditure on tariff charges than the small consumer. Similarly, a typical large consumer is defined such that 90% Page 11

21 Petition for True up of FY , APR FY and ARR for FY of the consumers supplied under the tariff would have lesser expenditure over a 12 month period than the typical large consumer. The average consumer shall be defined as a consumer having expenditure on tariff charges equal to the average expenditure in that tariff class. 1.8 Current petition This petition for True-up of FY , Annual Performance Review (APR) for FY and Annual Revenue Requirement for FY is being submitted by Dakshin Haryana Bijli Vitran Nigam Limited. The current petition has been prepared in accordance with the provisions of the following Acts/Policies/Regulations: a) Electricity Act 2003; b) National Electricity Policy; c) National Tariff Policy; d) HERC (Terms and Conditions for Determination of Tariff for Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 and applicable current amendments; e) HERC (Terms and conditions for grant of connectivity and open access for intra-state transmission and distribution system) Regulations, 2012 and applicable current amendments; DHBVN has made genuine efforts for compiling all relevant information relating to this APR for FY and ARR & Tariff petition for FY , as required by the Regulations issued by the Hon ble Commission and has also made every effort to ensure that information provided to the Hon ble Commission is accurate and free from material errors. However, there may Page 12

22 Petition for True up of FY , APR FY and ARR for FY be certain deficiencies owing to the compilation of accounts of Petitioner company and hence, DHBVN prays to the Hon ble Commission that the information provided be accepted for the current filing and at the same time DHBVN assures that it is taking appropriate measures to improve its management information system for improved data collection. Page 13

23 Petition for True up of FY , APR FY and ARR for FY Chapter 2. True-up of FY Principles of True Up for FY DHBVN is carrying out the true up exercise for FY , based on audited annual accounts of the Petitioner Company for the period from 1 st April 2016 to 31 st March The Annual Accounts for the above period are submitted along with petition as Annexure 1: Provisional Annual Accounts for FY As per Para 4.2 of Haryana Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, The Commission shall adopt Multi Year Tariff (MYT) framework for determination of ARR/tariff for each year of the Control Period from FY However, there shall be annual determination of ARR/tariff for the utilities for FY for their respective businesses as per these regulations. Hence, Hon ble Commission shall undertake the True-up of Aggregate Revenue Requirement of the Licensee for period of FY , based on the comparison of the actual performance of the year with the approved estimate for the period of FY It is submitted by the petitioner that approved figures presented in this chapter for FY are taken from the HERC Order on Distribution & Retail Supply ARR & Tariff of DHBVNL & DHBVN, dated 1 st August, Page 14

24 Petition for True up of FY , APR FY and ARR for FY Accordingly, revised actual figures of expenditure, Aggregated Annual Revenue Requirement, Revenue and Consequent Gap for FY is provided in following paragraphs of this section. 2.2 Power Purchase and Power Purchase Cost The Power Purchase operation for DHBVN is undertaken by an administrative body called Haryana Power Purchase Cell (HPPC). The cell is operated through representatives from both the Haryana Discoms. The power requirement is met mainly through following resources: i. NTPC ii. iii. iv. NHPC NPC HPGCL v. BBMB vi. Open Access & Others The details of power procured quantum and cost from various sources and Commission approved quantum and cost for FY is shown in the following table. Page 15

25 Table 3: Power Purchase Details for FY Power Purchase Source NTPC Approved Power Purchase in Haryana for FY Quantum in Mus Total Power Purchase Cost Rs. Million Units in MU Actuals Power Purchase in FY UHBVN DHBVN Haryana Amount in Rs Million Units in MU Amount in Rs Million Units in MU Amount in Rs Million Singrauli STPS 1, , , , , , Rihand I , Rihand II , Rihand III , , Unchhahar I Unchhahar II Unchhahar III Anta CCPP Auraiya CCPP Dadri CCPP Faridabad CCPP , , , , , Farakka STPS Kahalgaon I Kahalgaon II , , Kol Dam , NCTPS NHPC Salal I , Page 16

26 Power Purchase Source Approved Power Purchase in Haryana for FY Quantum in Mus Total Power Purchase Cost Rs. Million Units in MU Actuals Power Purchase in FY UHBVN DHBVN Haryana Amount in Rs Million Units in MU Amount in Rs Million Units in MU Amount in Rs Million Bairasiul Tanakpur Chamera I Chamera II Chamera-III Dhauliganga Dulhasti Uri Uri-II Sewa II Parbati-III SJVNL SJVNL (NathpaJhakri) SJVNL Rampur HEP Tehri (THDC) , , Koteshwar HEP NAPP RAPP (3-4) , , RAPP (5-6) Others Page 17

27 Power Purchase Source Approved Power Purchase in Haryana for FY Quantum in Mus Total Power Purchase Cost Rs. Million Units in MU Actuals Power Purchase in FY UHBVN DHBVN Haryana Amount in Rs Million Units in MU Amount in Rs Million Units in MU Amount in Rs Million HPGCL 17, , , , , , , , BBMB 2, , , , , DVC Mejia-B , , , Koderma DVC , , DVC Raghunathpur CGPL, Mundra 2, , , , , , , Sasan UMPP 3, , , , , , , , Tala, HEP PTC GMR 1, , , , , , , PTC Baglihar , PTC Lanco Amarkantak , , , , , , PTC Karchamwangtoo , , , , IGSTPP, Jhajjar 1, , , , , , , , Pragati Gas Bawana , Adani Power Ltd. 9, , , , , , , , Teesta III MGSTPS, CLP, Jhajjar Small Hydro 4, , , , , , , , Bhoruka Page 18

28 Power Purchase Source Approved Power Purchase in Haryana for FY Quantum in Mus Total Power Purchase Cost Rs. Million Units in MU Actuals Power Purchase in FY UHBVN DHBVN Haryana Amount in Rs Million Units in MU Amount in Rs Million Units in MU Amount in Rs Million P&R Gogripur Puri Oil Mill HPSEB/MITTAL SMALL HYD , , , , Biomass Projects , , Cogeneration Plants Solar Plants PGCIL Transmission Charges 8, , , , BANKING POWER 1, , , , , , Short Term UI PGCIL-UI HVPNL-UI SLDC and Open Acess charges - 1, , , Total PP Cost 53, ,03, , , , ,19, , ,12, Prior Period 3, , , Total PP Cost Excluding HVPN Charges 53, ,03, , , , ,23, , ,19, HVPN Transmission Charges - 6, , , Total PP Cost incl. of all charges 53, ,03, , ,02, , ,30, , ,32, Page 19

29 Table 4: Power Purchase Details for FY for Haryana (in MU) Power Purchase Haryana Approved Actual Difference Power Purchase Quantum Further, it is submitted that average actual per unit cost comes out at Rs per unit; higher than the average approved per unit cost of Rs per unit; the actual average per unit cost is higher than approved levels due to increase in actual power purchase cost from various sources as compared to approved. The appellant submits herewith that in actual for FY , the power allocation ratio is 44% and 56% for UHBVN and DHBVN respectively. The petitioner would like to submit that even actual power purchases are in line with the approval by Hon ble Commission. The Petitioner prays to the Hon ble Commission to approve the actual power purchase quantum of 28, MU and associated power purchase cost Rs. 13, Crore of DHBVN for FY as per the Annual Accounts as summarized in the table above. 2.3 Energy Balance The Energy Balance for FY is shown below: Table 5: Energy Balance for FY Particulars Unit FY Total Power purchase * Mus 28, Sale outside the State including Banking &UI Mus 2, Purchase for sale within the state (a-b) Mus 26, Less Transmission losses Mus 1, Transmission Losses % 3.69% Power available for sale Mus 25, Sales within the state (excluding Agriculture) Mus 14, Sales within the state - Agriculture Mus 5, Page 20

30 Particulars Unit FY Total Sales* Mus 19, Distribution Loss % 22.50% DHBVN requests the Hon ble Commission to approve the same. 2.4 Operation & Maintenance Expenses The Operation & Maintenance Expenses of the company includes Employee Expenses; Repair & Maintenance Costs and Administrative and General Expenses. Employee Expense consists of salaries, dearness allowance, bonus, terminal benefits in the form of pension & gratuity, leave encashment and staff welfare expenses. Repairs and Maintenance Expenses go towards the day to day upkeep of the distribution network of the Company and form an integral part of the Company s efforts towards reliable and quality power supply as also in the reduction of losses in the system. Administrative expenses mainly comprise of rents, telephone and other communication expenses, professional charges, conveyance and travelling allowances and other debits. A comparison of Actual against the approved Net O&M Expenses (after deducting the capitalization) is highlighted in the following table. Page 21

31 Table 6: O&M Expenses for FY (Rs. Crore) Particulars Approved Actual Difference Employee Expense Administration & General Expense Repair & Maintenance Expense (64.54) Terminal Liability Total 1, , As seen from the table above; the total O&M Expenses for FY have been provided along with the approved expenses for the year. DHBVN prays the Hon ble Commission to approve the same. 2.5 Employee Expenses The Employees cost' includes the cost incurred by the distribution licensees on their employees who are presently working as well as for their retired employees. The cost of working employees includes salary, dearness allowance and other allowances such as HRA, CEA, LTC, medical reimbursement etc. However, in case of retired employees and those who would retire during the year, the distribution licensees have to discharge financial liabilities towards pension, gratuity, leave encashment benefit etc. DHBVN has incurred Terminal Benefits of Rs. 420 Crore, Basic salary expenses of employees as Rs Crore dearness allowance expense of employees as Rs Crore, and Rs Crore as other allowances. The summary of the actual employee expenses for FY vis-à-vis the expenses approved by the Hon ble Commission has been given in the table below: Table 7: Employee Expenses for FY (Amt. in Rs. Crore) Particulars Approved Actual Difference Basic Salary (49.70) Page 22

32 Particulars Approved Actual Difference Dearness Allowance (DA) Expenditure on Contract Employees Other allowance Terminal benefits (84.62) Gross Employee Expense , (134.32) Less Expenses Capitalised Net Employee Expenses , DHBVN prays the Hon ble Commission to approve the actual Employee Expense for FY of Rs Crore against the approved expense of Rs Crore per the details given in above table. 2.6 Repair & Maintenance Expenses Repair and Maintenance expenditure is dependent on various factors. R&M cost is meant for the upkeep of the system. Every asset requires repair and maintenance at some point and in order to keep the system healthy and running the Petitioner has to incur substantial amount on R&M to keep its assets running. DHBVN has been trying its best to ensure uninterrupted operations of the system and accordingly has been undertaking necessary expenditure for R&M activities to keep the system health and maintain the quality indices. The summary of the comparison of the actual R&M expenses for FY visà-vis the expenses approved by the Hon ble Commission has been given in the table below: Table 8: R&M Expenses for FY (Amount in Rs. Crore) Particulars Approval Actual Difference Repair and maintenance Expenses (64.54) It is submitted that as per the available accounts of FY , the R&M expenses, work out to be Rs Crore, which is computed as 1.00% of Avg. GFA for FY Page 23

33 DHBVN prays the Hon ble Commission to approve the actual R&M Expense for FY of Rs Crore against the approve expense of Rs Crore as per the details given in above table. 2.7 Administrative & General Expenses The actual A&G Expense for FY is Rs Crore against Rs Crore as approved by the Hon ble Commission. There is a slight increase in the A&G expenses incurred over the approved level. The summary of the comparison of the actual A&G expenses for FY visà-vis the expenses approved by the Hon ble Commission has been given in the table below: Table 9: A&G Expenses for FY (Rs. Crore) Particulars Approved Actual Difference Gross A&G Expenses Less: Expenses Capitalised Net A&G Expenses DHBVN prays the Hon ble Commission to approve the actual A&G Expense for FY of Rs Crore as per the details given in above table. 2.8 Capital Expenditure The Hon ble Commission approved a Capital Expenditure of Rs Crore for DHBVN for FY As per the audited accounts of DHBVN for FY ; the Capital Expenditure for DHBVN for FY is Rs Crore. DHBVN, thus requests the Hon ble Commission to approve the same. 2.9 Interest Cost on long term loans The Hon ble Commission has allowed an amount of Rs Crore as interest cost on borrowings for FY However, the Gross Interest on Capex Loans Page 24

34 in actual were Rs Crore, with interest capitalised being Rs Crore and Net Interest on Capex Loans being Rs Crore Interest on Working Capital and Borrowings The Hon ble Commission has allowed the interest on borrowings for working capital as per the MYT Regulation. In case of DHBVN, Hon ble Commission had approved the working capital requirement of Rs rate of 11.30% on this borrowing amount to Rs Crore. However, the interest on borrowings for working capital as per actual are Rs Crore as per the audited accounts for FY Interest on Consumer Security Deposits The Hon ble Commission has allowed Rs Crore as interest on consumer security deposit for FY However, the actual expenses under this head work out to be Rs Crore DHBVN thus prays to the Hon ble Commission to approve the actual Expense for interest on consumer security deposit for FY as per the details given above Interest on Bonds It is submitted that Government of India has notified Ujwal Discom Assurance Yojana (UDAY) scheme for operational and financial turnaround of power distribution companies (DISCOMs), on 20 th Nov 2015 under which State shall take over 75% of Discom debt as on 30 th September, 2015 over two years 50% of Discom debt shall be taken over in FY and 25% in FY The schedule of takeover of loan has been given as under: Page 25

35 Break up of State Govt Takeover of Loans Particulars FY 16 FY 17 FY 18 FY 19 FY 20 Grant (%) 11.25% 11.25% 11.25% 11.25% 11.25% Grant (Cr) 3, , , , ,892.5 Equity (%) 3.75% 3.75% 3.75% 3.75% 3.75% Equity (Cr) 1, , , , ,297.5 Debt (%) 35.00% 45.00% 30.00% 15.00% 0.00% Debt (Cr) 12, , , , The Amount taken over by the Government of Haryana will been converted into grant in 5 tranches and in the meantime the interest cost of such bonds which has not been converted into grants by the GoH has to be borne by the Licensee only. The Licensee in the FY has borne interest cost of Rs Cr total Interest on UDAY bonds. Before UDAY, the interest on FRP bonds was borne by the Government of Haryana, However, after the UDAY scheme the same is being borne by the Licensee. In the FY , an expense of Rs 0.12 Cr has been incurred by the licensee to service the cost of FRP bonds. Also, an amount of Rs has been paid toward HVPN Bonds Total Interest & Finance Cost The total Interest Expense as per the audited annual accounts of DHBVN for FY vis-à-vis approved by the Hon ble Commission is shown in the table below: Table 10: Total Interest & Finance Cost for FY (Rs. Crore.) Category Approved Actual Gross Interest on Capex Loans Less: Interest Capitalized Net Interest on Capex Loans Page 26

36 Category Approved Actual Interest on Working Capital Loans Interest on FRP Borrowings 0.12 Interest on HVPNL Bonds Interest on UDAY Loans Interest on Consumer Security Deposits Other Interest and Finance charges 3.53 Total DHBVN prays the Hon ble Commission to approve the actual interest & finance expenses for FY as per the details provided in the table given above Depreciation The Hon ble Commission, in its order approved a net depreciation of Rs Crore after adjusting for depreciation on consumer s contribution. The actual opening GFA for FY is at Rs. 6, Crore and closing balance is at Rs. 7, Crore; the corresponding gross depreciation for FY works out to be Rs Crore and net depreciation (after adjusting for depreciation on consumer s contribution and grants of Rs Crores) comes out at Rs Crore. The Hon ble Commission is requested to approve the same Return on Equity As per the available annual accounts of DHBVN for FY ; the RoE works out to be Rs Crore. However, the Hon ble Commission has been disallowing any returns on equity in the past. The Petitioner would like to submit that as per the Hon ble APTEL Judgment dated 18 th April, 2012 on Appeal No. 102 of 2011, HVPNL was allowed ROE as per Regulation 17 of the HERC (Terms and conditions for determination of transmission tariff) Regulations, 2008, 14% per annum. Page 27

37 Further it is submitted that not allowing any returns to the Nigam would result in financial burden and financial stress to Nigam; therefore, the Hon ble Commission is requested to approve the return on 14% to the distribution licensees as well Non Tariff Income The Non Tariff Income approved by Hon ble Commission for DHBVN in FY was Rs Crore. As per the available annual accounts of DHBVN for FY ; the Actual Non-Tariff Income comes to Rs Crore. The Nigam has not considered the delayed payment surcharge for FY The Nigam submits that delayed payment surcharge is collected against the receivables from the consumers that are not received in time. As there is a delay in receiving the revenue, the Nigam has to procure additional working capital. Therefore, the revenue received on account of delayed payment surcharges is not income of the Nigam, rather it s a carrying cost recovered from consumers to pay the interest on the increased portion of working capital which occur because of delay in receiving the revenue. Therefore, it is requested that the revenue from delayed payment surcharge should not be considered as income of the Nigam. The Hon ble Commission is requested to approve the same Expenditure due to other debts It is submitted that as per the annual accounts of DHBVNL, there is an amount of Rs Crore which includes amount Rs Cr on account of provision for bad and doubtful debts, recorded under the head of other debts. The amount consists of expenditure on account of revenue amount refunded, misc. losses and written off amount as well as amount of unrealised surcharge from consumer. Page 28

38 The Hon ble Commission is requested to approve the same for FY True up of RE subsidy The total agricultural sales approved by the Hon ble Commission in FY were 9094 MU and against the same a subsidy of Rs Crore for DHBVN and DHBVN was allowed. This amounts to a per unit subsidy of Rs. 6.52/unit. Based on the feeder data, the actual agricultural sales, following HERC methodology of 16% losses on AP Feeder data emerges to MU for DHBVN and MU for DHBVN. Therefore, for total sales of MU, the eligibility of subsidy emerges to Rs. 5, Crores ( MU*Rs per unit). Consequently, post true up, the outstanding subsidy emerges to Rs Crore. Table 11: True up of RE subsidy for FY Particulars FY Total RE subsidy allowed by HERC in Tariff order for (Rs Crs) 5, Total Agricultural sales approved by HERC in T.O (Mus) 9, Approved Per unit Subsidy (Rs./unit) 6.52 Agriculture Sales based on Feeder data minus 16% losses (Mus) UHBVN 4, Agriculture Sales based on Feeder data minus 16% losses (Mus) DHBVN 5, Agriculture Sales based on Feeder data minus 16% losses (Mus) 9, Eligibility of subsidy based on actual sales of (Rs. Crs) 5, Subsidy Outstanding/(Surplus) (Rs. Crs) Summary of True up of FY The table below provides an overview of the difference between the approved expenditure for FY under consideration vis-à-vis the actual expenditure incurred by the Nigam. Thus, the difference in approved and actual expenditure as per the summary table below for DHBVN and DHBVN may be allowed to the distribution licensees along with separate allocation of RE subsidy to the Discoms for FY Page 29