REVISED BUSINESS PLAN FOR MYT CONTROL PERIOD FY TO FY

Transcription

1 REVISED BUSINESS PLAN FOR MYT CONTROL PERIOD FY TO FY Submitted to HIMACHAL PRADESH ELECTRICITY REGULATORY COMMISSION, SHIMLA By HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED, SHIMLA February, 2014

2 TABLE OF CONTENTS TABLE OF CONTENTS... ii LIST OF TABLES... iv LIST OF FIGURES... v LIST OF ABBREVIATIONS INTRODUCTION Background Objective of Business Plan BRIEF ABOUT HPSEBL Mission of HPSEBL Area served Organisation structure: Roles & Responsibilities Human resources IT & Other Initiatives Activities related to Consumer Service Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) R-APDRP (Part-B) Financial Restructuring Plan SWOT ANALYSIS SALES Load Growth Consumer Growth Energy Sales Growth OWN GENERATION Generation from own generating stations of HPSEBL POWER PURCHASE PLAN Quantum of Power Purchase Power purchase from other generating stations Power Purchase Projection Methodology T & D LOSS TRAJECTORIES & ENERGY BALANCE Transmission and Distribution Losses TRANSMISSION CHARGES Nov, 2013 ii

3 9. CAPITAL INVESTMENT PLAN Capital Investment plan for Distribution schemes Capital investment plan for Generation Schemes Phasing of capital expenditure ESTIMATION OF ARR Operation & Maintenance Expenses Depreciation Interest & Finance Charges Provision for bad and doubtful debts Non tariff income Return on equity ARR summary Nov, 2013 iii

4 LIST OF TABLES Table 1: Hydro generating plants of HPSEBL... 6 Table 2: SWOT Analysis Table 3: Past years load growth Table 4: Projected load growth during Control Period (FY to FY ) Table 5: Past years consumer growth Table 6: Projected consumer growth during Control Period (FY to FY ) Table 7: Past years growth energy sales growth (MUs) Table 8: CAGR for past years Table 9: Projected energy sales growth during Control Period (FY to FY ). 20 Table 10: Past years net generation from own plants Table 11: Projected own generation during Control Period (FY to FY ) Table 12: Total Power Purchase Cost from Own Generation Table 13: Power Purchase from Other Key Generating Stations Table 14: Power Procurement from GoHP (Free Power Allocation of GoHP in MUs) Table 15: Total Power Purchase Cost from GoHP Table 16: Power procurement from NTPC owned plants Table 17: Total Power Purchase Cost from NTPC Stations Table 18: Power procurement from NPCIL plants Table 19: Total Power Purchase Cost from NPCIL Stations Table 20: Power Procurement from NHPC plants Table 21: Total Power Purchase Cost from NHPC Stations Table 22: Power procurement from THDC plants Table 23: Total Power Purchase Cost from THDC Stations Table 24: Power procurement from SJVN Stations Table 25: Total Power Purchase Cost from SJVN Table 26: Power procurement from shared stations Table 27: Total Power Purchase Cost from Other CGS and shared stations Table 28: Additional Solar Power Requirement Table 29: Power procurement from other stations Table 30: Total power purchase cost from other stations Table 31: Power Purchase (MUs) from other sources Table 32: Total Power Purchase Cost from other sources Table 33: Overall Power Purchase (MUs) Table 34: Total Power Purchase Cost Table 35: Average Cost of Power Procurement (INR/ Unit) Table 36: Proposed T&D Loss Trajectory Table 37: Energy Balance Table 38: Summary of Transmission Charges (INR Cr) Table 39: Scheme Wise CAPEX Plan Nov, 2013 iv

5 Table 40: CAPEX summary Table 41: Funding summary Table 42: K factor calculation Table 43: WPI Table 44: R&M Expenses Table 45: CPI Table 46: Growth factor for employee costs Table 47: Employee Expenses for 3rd Control Period (Rs. Crs) Table 48: A&G norms Table 49: Projections for applying A&G norms Table 50: A&G Expenses for 3rd Control Period (Rs. Crs) Table 51: Asset details for depreciation calculations Table 52: Depreciation for 3rd Control Period (Rs. Crs) Table 53: Interest on new & existing loans Table 54: Interest on working capital Table 55: Total interest and finance charges Table 56: Provision for Bad and Doubtful Debt for last 3 years (Rs. Crs) Table 57: Provision for Bad and Doubtful Debt for 3rd Control Period (Rs. Crs) Table 58: Non Tariff Income for 3rd Control Period (Rs. Crs) Table 59: Return on equity Table 60: Annual Revenue Requirement for 3 rd Control Period (Rs. Crs) Table 61: Wheeling ARR for 3 rd Control Period (Rs. Crs) Table 62: Retail Supply ARR for 3rd Control Period (Rs. Crs) LIST OF FIGURES Figure 1: District map of HP... 5 Figure 2: Organisation structure of HPSEBL... 7 Nov, 2013 v

6 LIST OF ABBREVIATIONS Sr. No Abbreviations Descriptions 1. A&G Administrative and General 2. AC Auxiliary Consumption 3. APR Annual Performance Review 4. ARR Aggregate Revenue Requirement 5. AS Accounting Standard 6. CAGR Compound Annual Growth Rate 7. CAPEX Capital Expenditure 8. CERC Central Electricity Regulatory Commission 9. CGS Central Generating Station 10. CoS Cost of Supply/ Service 11. CPPs Captive Power Plants 12. Crs Crores 13. CWIP Capital Work in Progress 14. DF Distribution Franchisee 15. Discom Distribution Companies 16. DPS Delayed Payment Surcharge 17. DS Domestic Service 18. DSM Demand Side Management 19. DTC Distribution Transformer 20. EA/The Act The Electricity Act F&A Finance & Accounts 22. FY Financial Year 23. GFA Gross Fixed Assets 24. G.O. Government Order 25. GoI Government of India 26. GoHP Government of Himachal Pradesh 27. HP Himachal Pradesh 28. HR Human Resource 29. HRA House Rent Allowance 30. HT High Tension 31. HEP Hydro Electric Power 32. IPP Independent Power Producers 33. KV Kilo Volt 34. kva Kilo Volt Ampere 35. kvah Kilo Volt Ampere Hour 36. kw Kilo Watt Nov, 2013 Page 1

7 Sr. No Abbreviations Descriptions 37. kwh Kilo Watt Hour 38. LF Load Factor 39. LT Low Tension 40. MD Maximum Demand 41. MOD Merit Order Despatch 42. MoP Ministry of Power 43. MOU Memorandum of Understanding 44. MU Million Units (Million kwh) 45. MVA Mega Volt Ampere 46. MW Mega Watt 47. MYT Multi Year Tariff 48. NEP National Electricity Policy 49. NTP National Tariff Policy 50. NTPC National Thermal Power Corporation 51. O&M Operation & Maintenance 52. PAF Plant Availability Factor 53. PF Provident Fund 54. PFC Power finance Corporation 55. PLF Plant Load Factor 56. PLR Prime Lending Rate 57. PPA Power Purchase Agreement 58. PSD Power Service Division 59. REC Rural Electrification Corporation 60. R&M Repair and Maintenance 61. ROE Return on Equity 62. RPO Renewable Purchase Obligation 63. Rs Rupees 64. SBI State Bank of India 65. SLM Straight Line Method 66. SHR Station Heat Rate 67. T&D Transmission and Distribution 68. HPSEBL Himachal Pradesh State Electricity Board Limited 69. HPERC Himachal Pradesh Electricity Regulatory Commission 70. w.e.f With effect from 71. Y-o-Y Year on Year Nov, 2013 Page 2

8 1. INTRODUCTION 1.1. Background Himachal Pradesh is a mountainous state having altitudes ranging from 350 mtrs to 6,975 mtrs with climate conditions varying from semi-tropical to semi-arctic. The total population of Himachal Pradesh as per 2011 census was 68,56,509 with population density being 123 persons per sq. km. Focused work for putting together a strong electrical network in the state began in August, 1953 under the Public Works Department, when the first electrical division was established. Subsequently a department of M.P.P & Power was formed in April, The Himachal Pradesh State Electricity Board was constituted on 1 st September, 1971 in accordance with the provisions of Electricity Supply Act (1948). It functioned as Distribution, Generation as well as Transmission licensee for the state of Himachal Pradesh up to 10th June, 2010, when the Government of Himachal Pradesh, in exercise of the power conferred to it, by Section 131 (2), 132, 133 and other applicable provisions of the Electricity Act 2003, vide the Himachal Pradesh Power Sector Reforms transfer Scheme, 2010 transferred the functions of generation, distribution and trading of electricity to Himachal Pradesh State Electricity Board Limited (HPSEBL) Himachal Pradesh State Electricity Board Limited (HPSEBL), having its registered office at Vidyut Bhawan, Shimla, is responsible for supply of uninterrupted & quality power to all categories of consumers in Himachal Pradesh at the most seconomical rates The key duties being discharged by HPSEBL are: Laying and operating of such electric line, sub-station and electrical plant that is primarily maintained for the purpose of distributing electricity in the area of supply of HPSEB Ltd., notwithstanding that such line, sub-station or electrical plant are high pressure cables or overhead lines or associated with such high pressure cables or overhead lines; or used incidentally for the purpose of transmitting electricity for others, in accordance with Electricity Act or the Rules framed there under. Operating and maintaining the existing generating stations and shall establish, operate and maintain generating stations, tie-lines, sub-stations and dedicated transmission lines connected there with as per the provisions of the Act and the Rules framed there under Arranging, in-coordination with the Generating Company(ies) operating in or Nov, 2013 Page 3

9 outside the State, for the supply of electricity required within the State and for the distribution of the same in the most economical and efficient manner; Supplying electricity, as soon as practicable to any person requiring such supply, within its competency to do so under the said Act; Preparing and carrying out schemes for distribution and generally for promoting the use of electricity within the State Objective of Business Plan The Himachal Pradesh Electricity Regulatory Commission (HPERC), in exercise of the powers conferred on it by section 181 of the Electricity Act 2003 (Act 36 of 2003) and all other powers, has issued HPERC (Terms and Conditions for Determination of Wheeling Tariff and Retail Supply Tariff) Regulations, 2011 along with Amendment 1, 2012 and Amendment 2, 2013, and HPERC (Terms and Conditions for Determination of Hydro Generation Tariff) Regulations, 2011 along with Amendment 1, 2011 and Amendment 2, 2013, hereinafter referred to as MYT Regulations As per the Regulations, Business plan comprising of Generation business (with plant-wise details) for the entire control period and Distribution business containing details regarding sales/ demand forecast, T&D loss reduction trajectory, power procurement plan, capital investment plan, financing structure, O&M cost estimates, etc. for the control period is required to be filed before the Hon ble Commission as part of the Tariff Filing before the beginning of the Control Period Accordingly, HPSEBL had filed the MYT Petition and Business Plan along with the requisite fee on 30/11/2013 bearing No. 141/2013. However, in response to Commission s letter No. HPERC/ MYT3/ HPSEBL/ , dated 05/12/2013, HPSEBL is hereby filing the revised Business Plan for 3rd Control Period (FY to FY ) based on the available data for the FY and provisional data of previous 3 years HPSEBL has prepared the Business Plan taking cognizance of the existing internal factors and external business environment affecting the business. HPSEBL submits that the Business plan being a dynamic document may need to be updated at periodic intervals taking into account the changes in the internal and external environment and these changes would be intimated to the Hon ble Commission from time to time. Nov, 2013 Page 4

10 2. BRIEF ABOUT HPSEBL 2.1. Mission of HPSEBL Uninterrupted, Reliable and Quality Power Supply to all our Consumers on competitive rates 2.2. Area served The total area of Himachal Pradesh state is 55,673 Sq. Km. HPSEBL is the sole distribution licensee of the state and caters to entire HP. It serves its consumers in one of the most difficult and varying terrains when compared to other states of India HPSEBL s distribution operations are divided into three operations zones viz. North, South and Central for ensuring efficient customer services and improved management. The zones are further divided into 12 operation circles which cover the 12 districts of the state. Figure 1: District map of HP Courtesy: Nov, 2013 Page 5

11 2.2.3 Generation In addition to supply of electricity to the end consumers of the state, HPSEBL also generates hydro electricity via its 21 plants of varying MW capacity. The total installed capacity of these plants in FY is MW The following table gives the list of the 21 hydro-generating stations being operated by HPSEBL along with their installed capacities Name of Station Table 1: Hydro generating plants of HPSEBL Installed Capacity (MW) Year of commissioning Giri Andhra Gumma Bhaba Nogli Ghanvi Bhaba Aug Chaba Bassi Binwa Gaj Baner Khauli Rukti Rong-Tong Chamba Sal-II Killar Holi Thirot Larji Total capacity Organisation structure: Roles & Responsibilities The Chairman of HPSEBL is the official head of HPSEBL, while day to day management is handled by the Managing Director. The Managing Director is supported by five Directors Civil, Technical, Operations, Personnel and F&A, along with one Executive Director Personnel and one Chief engineer Planning & Monitoring. Nov, 2013 Page 6

12 2.3.2 The Directors are in turn supported by an efficient team of Chief Engineers, Superintending Engineers, Executive Engineers, and so on. Chairman Managing Director Director (Civil) Director (Technical) Director (Operations) Director (F&A) Director (Personnel) CE (P&M) CE (PCA) CE (SO&P) CE (OP/South) CAO ED (Personnel) SE (P&M) Civil CE (I & P) CE (Generation) CE (OP/North) SE (P&M) Electrical CE (ES) CE (OP/Central) CE (Comm) CE (MM) 2.4. Human resources Figure 2: Organisation structure of HPSEBL HR Department of HPSEBL focuses on work in the areas of manpower management, customer relations and skills development. It strongly believes in training employees for better development of employees and thereby prepared structural need based training calendar for its employees The total sanctioned strength for was out of which 20,861 was the on-ground employee strength. There has been a growth in the employee strength for HPSEBL in and the total strength now stands at 21,367 which include the sanctioned new recruitment of 616 posts There is a need to ascertain the training of the existing human resource and to identify their core competencies with an aim to enhance their skills and finally Nov, 2013 Page 7

13 place them in appropriate job positions. HPSEBL endeavours to conduct training at periodic intervals for capacity building of its manpower Recruitment Policy: For the purpose of recruitment, HPSEBL follows a broad classification of Services into Technical and Non-Technical Staff. The Technical Staff comprises of engineers, supervisors and technicians. The rest of the staff forms the Non-Technical staff, viz. accounts, HR, security etc The appointment for a post, it is either made by promotion or by direct recruitment. HPSEBL has chalked out its future manpower requirements for expansion projected and it is proposed that recruitments to the tune of 616 posts across technical and non-technical categories shall be carried out during and The future projections for recruitment are under consideration Health and Safety Management: HPSEBL is of the firm belief that the health and safety of the employees is of paramount importance. HPSEBLis committed to identifying and assessing all types of occupational health and safety risk and takes proactive steps to reduce the significant risk in turn to reduce the occurrences of accidents. The measures taken are listed under: One well established dispensary is situated in the campus of HPSEBL Head office, Shimla for the employees of HPSEBL. Efforts are being made to create awareness of occupational health and safety in all employees, contractors and contract labour and training them adequately for safe working practices IT & Other Initiatives At the utility level, many IT initiatives are under implementation in HPSEBL which focus on consumer service and better governance. Various processes are identified for which IT applications are developed and automation of the process is undertaken. The automated processes are deployed in modular form as and when the system is tested and stabilized. The various IT initiatives are discussed in the following paras In-house Activities Nov, 2013 Page 8

14 Official Website of HPSEBL The HPSEBL has hosted its official website ( and most of the important information relating to public and official use has been put on the site. The some of the important information are as under: Application Forms for new connections. Current tariff rates of all categories of Consumers. Link for Online Bill Payment of bills. Toll free number for registering of complaints. Tenders notifications. Material Specifications. Statistical Data. Contact numbers of officers. Beside these, other useful information pertaining to consumers, employees & suppliers are also hosted on the website Employee Information System Web based system is in place for displaying the Personal, Posting, Promotion Information of Gazetted Employees. The link for the same is available in the Employees Corner of the website of HPSEBL Outsourced Activities: R-APDRP (Part-A): The Ministry of Power has sanctioned DPR s for 14 eligible towns under Part- A of the R-APDRP scheme for HPSEBL. The objective of the program is reduction of Aggregate Technical and Commercial (AT&C) losses to 15% in project areas. The total project cost for Part-A under R-APDRP is Rs Cr.: a) Meter Data Acquisition System (MDAS); b) Energy Audit(EA); c) Identity & Access Management System is proposed at data centre level; d) Management Information System (MIS) containing DW & BI tools is proposed at data centre level; e) Enterprise Management System (EMS) and Network Management System (NMS) which is part of hardware, is proposed at data center level; Data Center at Shimla is functional. Modems in 14 towns are already installed. Integration of Legacy Application i.e. GIS, Computerized Billing etc. with R-APDRP modules has been completed. 13 towns namely Bilaspur, Kullu, Sundernagar, Chamba, Hamirpur, Una, Solan, Yol, Paonta, Dharamshala,Baddi and Mandi have been declared Go-Live. Shimla is planned to be declared during December Nov, 2013 Page 9

15 ERP/SAP The work of implementation of ERP (SAP) was allotted to M/s TCS In this project; the following modules of ERP (SAP) are to be implemented in HPSEBL. 1. Financial Management and Accounting 2. Human Resource Management including payroll 3. Project Management 4. Materials Management 5. Maintenance Management 6. Availability Based Tariff and A Dash Board for Senior Management for MIS purpose shall also be available. The total cost of the project is approximately Rs Cr. 1st Phase covering Head Office and Operation Circle Shimla except Theog and Sunni Electrical Divisions have been declared Go Live in the month of March, nd Phase covers the entire Board and left out modules, which is expected to go live in a phased manner till March, Computerized Billing and Energy Accounting Package Computerized Billing and Energy Accounting Package (IT Package) was implemented under the Accelerated Power Development and Reform Program (APDRP) launched by Ministry of Power (MOP). Under this project, the activities of the operation sub-divisions are computerized through functionalities such as Pre-billing Activities, Billing Activities, Post Billing Activities, Legal & Vigilance Activities, Store Management at sub-division level, Customer Relationship Management, Electrical Network Management & Energy Accounting/Auditing and Management Information System (MIS). The award was placed on M/S HCL Infosystems, Noida for an amount Rs Cr. The project has been implemented in 132 subdivisions of 27 divisions and 12 circles covering more than 12 lakh consumers. Centralized data center and call center has also been established at Vidyut Bhawan, Shimla GIS/GPS Based asset Mapping including Consumer Indexing and Valuation of Assets of HPSEB Ltd. HPSEBL has decided to carry out GIS/GPS based asset mapping including consumer indexing and valuation of assets for the whole HPSEB, which will be used as the base for computerization of billing, energy accounting, electrical network management and to create fixed assets registers with its present value for its three wings namely Generation, Transmission and Distribution after proper reconciliation with latest balance sheet of the Board. Pilot project has since been completed for operation circle Shimla. For remaining 11 circles, field related Nov, 2013 Page 10

16 activities of the project have been completed and approval of data by HPSEBL is in progress. Valuation report for all circles shall be finalized by March Updation of GIS/GPS data in 14 R-APDRP towns has been awarded for next five years as per the requirement of R-APDRP project New IT Initiatives: Smart Grid Pilot project at Kala Amb in Himachal Pradesh HPSEB Ltd. has prepared a pilot project worth Rs. 27 Crores. The Govt. of India has approved the DPR for Rs Crores out of which Ministry of Power shall bear Rs Crores and the balance funding has to be arranged by HPSEB Ltd. through financial institutions like REC. HPSEBL proposes to implement Smart Grid Pilot in Kala Amb with a payback period of 3 years by deployment of Smart Grid Technologies to improve the system performance by reduction in peak power by 6 MVA, reduce outages, improve consumer engagement and satisfaction and improve HPSEBL s overall financial performance by implementing AMI, DSM and GIS based outage management system Wi-Fi facility in Vidyut Bhawan Campus Wi-Fi facility is proposed to be installed in the Vidyut Bhawan Campus during to resolve the network connectivity issues in the campus being faced in implementation of various IT initiatives Expansion of AMR It is proposed to cover all the consumers above 50 KW which comes to 32,000 consumers under the AMR in a phased manner across the state utilizing the existing infrastructure developed under R-APDRP Expansion of Computerized billing It is proposed to start computerized billing in 61 subdivisions using standard platform during After stabilization and analyzing the performance it is proposed to shift the billing of 132 subdivisions where computerized billing has already been implemented to this platform in a phased manner GIS/GPS data updation in Non R-APDRP area Updation of GIS/GPS data in non R-APDRP area of the state is proposed to be done and utilize the same in various electrical network applications SCADA/DMS A pilot project for the control and monitoring of all un-manned 33kV and above Substations being commissioned in the State is envisaged to be setup at the DR Center Poanta. Nov, 2013 Page 11

17 R-APDRP next phase The MoP is considering extension of R-APDRP program to towns with population greater than 5000 in the next phase of this program under which 16 new towns are proposed to be covered commencing from onwards 2.6. Activities related to Consumer Service HPSEBL has established a customer care centre for telephonic booking of customer complaints. It is 24x7 call centre and works for the following objectives: improving consumer services; minimizing the fault detection and rectification time by monitoring the occurrence; improving performance of service by analyzing outage data and computing reliability of network; achieving Service Level Guarantees, improving Service Level Performance and fulfilling Service Level Expectations of the customer HPSEBL has also been maintaining the Standards of Performance as per HPERC (Distribution Performance Standards) Regulations ensuring complete satisfaction to the consumer Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) Against the sanctioned amount of Rs crores, the Govt. of India has released an amount of Rs crores and HPSEB Ltd. has incurred an expenditure of about Rs. 296 crores. Only 5% work is remaining in remote and tribal areas of the state. In all other areas the work is complete RGGVY schemes envisaged under 12 th Plan coverage of villages and habitations with population above 50 are being considered. Hence it is pertinent to bring out that in Himachal Pradesh number of villages as per 2011 census are out of which villages have population above 100 and there are 4474 villages which are having population below 100. HP being a special category State, the condition of coverage for villages and habitations has been relaxed which are having population above 50. The position of electrification of villages under RGGVY is as under: Un-electrified villages to be taken for 91 electrification Total Villages electrified upto October, Total Villages to be electrified under RGGVY 8 Programme Nov, 2013 Page 12

18 2.8. R-APDRP (Part-B) R-APDRP (Part B) scheme has been sanctioned for 14 towns in HP, having population 10,000 and above as per 2001 census, for an amount of Rs crores. An expenditure of Rs Crores has been incurred in the 14 towns of HP as on The works are progressing well Financial Restructuring Plan The Ministry of Power, Government of India vide notification dated 5 th Oct, 2012 has notified Financial Restructuring Scheme for DISCOMs. The State DISCOM i.e HPSEB Ltd. has prepared draft Financial Restructuring Plan in consultation with State Bank of India, the nodal bank on the basis of GoI notification and submitted the Plan to Himachal Pradesh State Electricity Regulatory Commission and Government of Himachal Pradesh. The HPERC has given In-Principle approval to the draft Plan of HPSEB Ltd As per Scheme, the eligible amount is Rs Crore plus Rs cr. (Liability for Purchase of Power as on 31/03/2012). HPSEB Limited will float the bonds amounting to Rs Crore and balance is to be serviced through Financial Restructuring Plan (FRP) submitted to nodal bank. Nov, 2013 Page 13

19 External Attributes of the Environment Internal Attributes of the Organisation HPSEBL Business Plan MYT Control Period: FY to FY SWOT ANALYSIS As part of the development of a strategic plan for any organization, it is necessary to understand the inherent competitive advantage of the company as well as the risk surrounding its business environment. Like any other businesses, it is very important for HPSEBL to evaluate the environment both internal and external while charting out its growth path. The aim of a SWOT analysis is to identify the key internal and external factors that are important for achieving the objectives of the company The SWOT analysis is a strategic planning technique used to assess the internal and external environment in which the company operates and competes. These come from within the company's unique value chain. The information being used for the SWOT analysis is grouped into two main categories: Internal factors The strengths and weaknesses internal to the organization; External factors The opportunities and threats presented by the external environment to the organization; This section provides the analysis of the strengths, weaknesses, opportunities and threats as perceived by HPSEBL. These are summarized in the following table: Table 2: SWOT Analysis Helpful In achieving the objective STRENGTHS Quality Power Supply Lower Losses Efficient Customer Service Setting up of CGRF OPPORTUNITIES Business Growth due to Improved Life Style Harmful In achieving the objective WEAKNESS Ageing Distribution Network Uncertainties of Hydro generation Ageing Manpower THREATS Increase in Coal Prices Increasing Avg CoS ARR Gap Nov, 2013 Page 14

20 Strengths: Quality Power Supply: HPSEBL has been providing quality and reliable power supply to its consumers with low voltage fluctuations and power supplied at a stable frequency. Lower Losses: HPSEBL has been very proficient in reducing the Distribution losses to 13.43% up to over the last few years. HPSEBL has been and shall always be committed towards taking the best possible measures to minimise distribution losses by adopting pro-active approach and adopting best practices prevalent in the distribution sector in India. Efficient Customer Service: HPSEBL has been providing efficient services to its consumers and has also initiated 24 x 7 Call Centres ensuring better services to its consumers round the clock. Setting up of Forum for Redressal of Consumer Grievances HPSEBL has constituted Forum for Redressal of Grievances of consumers of electricity having jurisdiction to entertain complaints within the area of its distribution licensee, under section 42 of the Electricity Act 2003 at Shimla. Weakness: Ageing Distribution Network: HPSEBL has been supplying electricity for a very long time and has also been maintaining its network. However, with passage of time the Distribution Network has started showing signs of ageing and this shall lead to deterioration in performance of HPSEBL, if adequate and timely steps are not taken. Uncertainties of Hydro Generation: The own generation of HPSEBL is essentially Hydro. This involves many uncertainties such as the vintage of hydro stations, dependency on the quantum of rainfall which leads to uncertainty of generation on a year on year basis. However, prudent steps taken to ascertain demand for power and proper scheduling for purchase of power with due consideration to own generation quantum would help mitigate the uncertainty of hydro power generation. Ageing Manpower: The Board faces a major challenge in term of ageing manpower across technical and non-technical category. In order to mitigate this challenge the board has done proper planning to recruit adequate manpower timely and ensure proper succession planning in all departments. Opportunity: Business growth due to improved lifestyle: Over the last few years, the state has been experiencing a surge in the population as well as tourism activities. Also due to Nov, 2013 Page 15

21 the improved lifestyle in the area of distribution licencee of a similar kind of trend shall continue to follow in the near future. As such, HPSEBL foresees an expansion of Customer base and load growth in its license area. Increased focus on hydro-generation: Many IPPs are in various stages of commissioning hydro-generating plants in the state. This increased focus on utilizing the available hydro-potential by various power sector players is likely to further improve long term power availability. Threats Increase in Coal Prices: It is a well known fact that the recent increase in imported Coal prices is causing some serious strains to the power utilities. As a result of this, generators at the central level are seeking increase in tariffs. If such increase in tariff is allowed in the near future, this increase will have to be borne by the consumers. HPSEBL feels that this shall cause hardship on its consumers. Further, the capital cost of newer hydro power plants has gone up substantially resulting in higher power tariff from new generating units, both under central sector as well as private power generating companies. Increasing ACS-ARR Gap: Average Cost of Supply (CoS) of energy at consumer doorstep has been increasing over the years owing to impact of inflation on various cost heads, however corresponding increase in Average Rate of Realisation (ARR) from all category of consumers is not commensurate. As of FY12, the ACS-ARR gap has reached to 0.61 Rs./unit (ACS=5.28 Rs./unit and ARR=4.67 Rs./unit) Open Access: With increased focus on providing open access to large consumers, it is likely that HPSEBL might lose out on these economically attractive consumers. Hence, it would need to ensure that quality of service to these consumers is sustained and an economical tariff is levied from them, ensuring customer stickiness. Nov, 2013 Page 16

22 4. SALES 4.1. Load Growth Table 9 below summarizes the growth in sanctioned load over the past 6 years. The highest growth of 11.2% has been seen in the Large Industrial category. Overall growth for the state has been 6.3%. Table 3: Past years load growth Consumer Category (MW) FY 8 FY 9 FY 10 FY 11 FY 12 FY 13 5 Year Actual Actual Actual Actual Actual Actual CAGR Domestic (Including Antodaya) % Non Domestic Non Commercial % Commercial % Temporary % Small & Medium Industrial Power Supply 3.66% Large Industrial Power Supply % LT/HT % EHT % Govt., Irrigation & Water Supply % Public Lighting % Agricultural % Bulk Supply % Total % The y-o-y growth in the load for each category has been projected for the control period based on the past 5 years CAGR. Table 4: Projected load growth during Control Period (FY to FY ) Consumer Category (MW) FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 RE Proj. Proj. Proj. Proj. Proj. Domestic (Including Antodaya) Non Domestic Non Commercial Commercial Temporary Small & Medium Industrial Power Supply Large Industrial Power Supply LT/HT EHT Govt., Irrigation & Water Supply Public Lighting Agricultural Bulk Supply Total Nov, 2013 Page 17

23 4.2. Consumer Growth HP has witnessed a steady rise in the number of consumers due to natural growth of population. The rural electrification within the state as on stands at 99.9% (as per CEA report) The Table 7 below summarizes category wise growth in consumers over the past 6 years. As can be seen in the table, overall average consumer growth has been around 2.5% p.a. Table 5: Past years consumer growth FY 8 FY 9 FY 10 FY 11 FY 12 FY 13 Consumer Category 5 year Actual Actual Actual Actual Actual Actual CAGR Domestic (Including Antodaya) 2.5% Non Domestic Non Commercial 7.3% Commercial % Temporary % Small & Medium Industrial Power Supply 0.3% Large Industrial Power Supply 9.0% LT/HT % EHT % Govt., Irrigation & Water Supply 7.9% Public Lighting % Agricultural % Bulk Supply % Total % Annual Growth in the number of consumers for the 3rd MYT Control Period is projected on the basis of the y-o-y growth in the consumers in past 5 years across different categories. The overall CAGR for these 5 years comes out to be 2.5% as mentioned above Nov, 2013 Page 18

24 Table 6: Projected consumer growth during Control Period (FY to FY ) Consumer Category FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 RE Proj. Proj. Proj. Proj. Proj. Domestic (Including Antodaya) Non Domestic Non Commercial Commercial Temporary Small & Medium Industrial Power Supply Large Industrial Power Supply LT/HT EHT Govt., Irrigation & Water Supply Public Lighting Agricultural Bulk Supply Total Energy Sales Growth Table 11 below presents the category-wise energy sales for the past 5 years. The overall growth in sales has been 7.9% p.a., mainly contributed by increase Large Supply and Commercial Category. Table 7: Past years growth energy sales growth (MUs) Consumer Category FY 8 FY 9 FY 10 FY 11 FY 12 FY 13 5 Year MUs Actual Actual Actual Actual Actual Actual CAGR Domestic (Including Antodaya) % Non Domestic Non Commercial % Commercial % Temporary % Small & Medium Industrial Power Supply 3.57% Small Industrial Power Supply % Medium Industrial Power Supply % Large Industrial Power Supply % LT/HT % EHT % Govt., Irrigation & Water Supply % Public Lighting % Agricultural % Bulk Supply % Total % For the 3 rd MYT control period (FY to FY ) the load growth projections have been made on the basis of category-wise historical CAGRs. The historical category wise CAGRs are as follows: Nov, 2013 Page 19

25 Table 8: CAGR for past years CAGR CAGR CAGR Considered for projections 3 years 5 years Domestic (Including Antodaya) 8.00% 13.32% 8.87% Non Domestic Non Commercial 6.00% 5.92% 6.67% Commercial 7.00% 10.17% 10.49% Temporary 2.05% -1.45% 2.05% Small & Medium Industrial Power Supply 3.57% 5.51% 3.57% Small Industrial Power Supply 2.00% 3.17% -0.05% Medium Industrial Power Supply 5.34% 6.56% 5.34% Large Industrial Power Supply 0.00% 6.85% 7.35% LT/HT 3.50% 6.96% 6.87% EHT 6.00% 6.70% 7.96% Govt., Irrigation & Water Supply 5.00% 3.05% 6.27% Public Lighting 2.00% 3.53% 1.98% Agricultural 8.00% 8.38% 11.83% Bulk Supply 2.00% -8.10% 2.99% The growth in energy sales has been calculated on a monthly basis since the energy requirement varies a lot during the various seasons of the year in HP. The MUs sold are identified for each month and for each consumer category. The increase in the MUs for the particular month is noted for the last 3 years and the same has been projected in the following years of the control period in order to get the energy sales for the whole year. Table 12 summarizes the projections of category wise increase in energy sales over the control period (FY to FY ), comparing them to the approved sales in the 2 nd APR order of FY for the 2 nd Control Period. Table 9: Projected energy sales growth during Control Period (FY to FY ) Consumer Category FY 14 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 MUs Approved RE Proj Proj Proj Proj Proj Domestic (Including Antodaya) Non Domestic Non Commercial Commercial Temporary Small & Medium Industrial Power Supply Small Industrial Power Supply Medium Industrial Power Supply Large Industrial Power Supply LT/HT EHT Govt., Irrigation & Water Supply Public Lighting Agricultural Bulk Supply Total Nov, 2013 Page 20

26 5. OWN GENERATION 5.1. Generation from own generating stations of HPSEBL The performance trajectories such as Annual Fixed Cost, Auxiliary consumption are based on the current condition of the existing plant, the age of the plant, water availability etc. HPSEBL would like to submit that so far as the performance of Hydro plants is concerned, they are dependent on the quantum of rainfall received in the catchment areas as well as the quantum of actual water release from the connected dams. Hence, they tend to vary over the years The following table gives the historical energy generation at HPSEBL s own generating plants Table 10: Past years net generation from own plants Yearly Power Availability (MUs) Power Availability (MUs) from HPSEBL Stations Actual Actual Actual RE Stations FY FY FY FY Bhaba Bassi Giri Andhra Ghanvi Baner Gaj Larji Khauli Binwa Thirot Gumma Holi Bhaba Aug Nogli Rongtong Sal-II Chaba Rukti Chamba Killar Uhl III - BVPCL Ghanvi II Total Nov, 2013 Page 21

27 5.1.3 The MUs generated by each plant have been projected while keeping their actual generation for the last years in mind. Out of the above mentioned plants, GoHP has a share of 12% in Ghanvi, Baner, Gaj, Larji, Uhl III and Ghanvi II. Hence, HPSEBL receives 88% of the overall generation from all of these plants. Rest 12% is also received by the HPSEBL system through GoHP. The design and energy of the plants varies a lot during the winters and summers. Hence, monthly projections of the MUs are done so as to get a better idea of the requirement and generation Based on the above operational parameters, the capacity of the power plant and the average generation for the past 3 years, the revised estimates for and projections for the control period of the net generation is given in the following table: Table 11: Projected own generation during Control Period (FY to FY ) Yearly Power Availability (MUs) Power Availability (MUs) from HPSEBL Stations Proj. Proj. Proj. Proj. Proj. Stations FY FY FY FY FY Bhaba Bassi Giri Andhra Ghanvi Baner Gaj Larji Khauli Binwa Thirot Gumma Holi Bhaba Aug Nogli Rongtong Sal-II Chaba Rukti Chamba Killar Uhl III - BVPCL Ghanvi II Total Nov, 2013 Page 22

28 5.1.5 A new plant Ghanvi-II, with installed capacity of 10 MW, is scheduled to be commissioned in March Based on the price per unit rates of the cost of power for the plants, the total power purchase cost from Own generation for HPSEBL is as follows: Table 12: Total Power Purchase Cost from Own Generation Stations FY FY FY FY FY FY INR Cr RE Proj. Proj. Proj. Proj. Proj. Bhaba Bassi Giri Andhra Ghanvi Baner Gaj Larji Khauli Binwa Thirot Gumma Holi Bhaba Aug Nogli Rongtong Sal-II Chaba Rukti Chamba Killar Uhl III - BVPCL Ghanvi II Total Nov, 2013 Page 23

29 6.1. Quantum of Power Purchase 6. POWER PURCHASE PLAN The petitioner has to arrange the power requirement of its distribution license area. In the previous sections, the projected sales and the demand requirement for the license area has been arrived at and based on the same, the power requirement for the control period has been discussed in this section. Apart from the own generation of HPSEBL plants (as discussed in previous sections), HPSEBL also currently purchases power from various other sources. The main categories of the generation plants are as follows: Central Generating Stations (NTPC, NHPC, NJPC and NPC) HP Quota of BBMB Independent Power Producers (IPP) Bilateral Purchase from other states Purchase of Power from GoHP (Free Power Quota of GoHP under qualified projects) Equity power from Nathpa Jhakri Hydro Power Station Short term contingency purchases from power exchanges 6.2. Power purchase from other generating stations In Chapter 4, the own generation of HPSEBL was discussed. In addition to self generation, HPSEBL also procures energy from various other generating stations that are present in HP or in other surrounded states. Below mentioned are the various categories of these generating stations: Category GoHP Free Power NTPC Plants UMPP Orissa Table 13: Power Purchase from Other Key Generating Stations Description HPSEBL receives the power from GoHP for the plants that are deemed to provide 12% of their power generated to the Government of HP. GoHP sells this power to HPSEBL at a commission determined rate HPSEBL receives power from the NPTC thermal power plants throughout the year as per allocated quota. The total allocated capacity from NTPC owned plants ~ 1283 units (FY 14) increasing on yoy basis up to 3207(FY 19) The power procurement from the UMPP Orissa has been tied up and this shall be of the order of some 700 MUs yearly. However, given the current status of the bidding, it is not envisaged to get commissioned within this control period (FY 15- FY19) Nov, 2013 Page 24

30 NPCIL NHPC THDC Other CGS and shared stations SJVNL SHEPs Currently, HPSEBL is procuring power from NAPP and RAPP (V & VI) stations for some 200 MUs yearly. It is planned that HPSEBL shall receive around 180 MUs of energy from RAPP (VII & VIII) from FY Currently, HPSEBL receives around 300 MUs of energy from various NHPC plants present in HP and in Uttarakhand. With the upcoming hydro plants, it is envisaged that the power procurement from NHPC plants shall increase to 850 MUs by FY HPSEBL receives around 135 MUs from Tehri Hydro Plant and Koteshwar under SOR These include Bhakra Nangal and other share stations such as Shanan, Dehar and Pong. Overall drawal from these stations is somewhere around 1150 MUs yearly. HPSEBL procures ~ 169 MUs of power from Nathpa Jhakri station under SoR quota power. In addition, HPSEBL currently also procures 12% power (Allocated to GoHP against free power) at commission determined price. However, from December 2013 onwards, HPSEBL will surrender its right on 12% free power. However, it will start procuring 22% (GoHP equity power) from December 2013 onwards till the end of the control period. Rampur Power Station is expected to be commissioned by end of FY 14 and is expected to provide ~ 50 MUs of energy annually till the end of the control period. There are various small hydro power plants of various capacities. These are generally divided into less than 5 MW plants, 5 MW to 25 MW plants and greater than 25 MW plants. Overall these plants provide more than 1000 MUs of energy yearly to HPSEBL 6.3. Power Purchase Projection Methodology Power Procurement from GoHP (Free Power Allocation of GoHP) HPSEBL has procured power from GoHP, (12 % free power share of GoHP) from CGS stations as well as own stations and IPPs directly connected to HPSEBL network upto October However, from December 2013 onwards, significant quantum of free power (12 % free power share of GoHP) in will be swapped with the Equity power of GoHP ( 22% Equity power of Govt of HP) from Nathpa Jhakri HEP for the rest of the base year and control period. Under this swapping arrangement, the free power share of GoHP shall be withdrawn from all central generating stations except from Chamera-I, II, III and Baira Sul. There will be no impact on power flow from generating stations which are owned by HSEBL or directly connected with HSEBL network. Table 14: Power Procurement from GoHP (Free Power Allocation of GoHP in MUs) Stations Plant capacity Share MUs MW % Actual RE Proj. Proj. Proj. Proj. Proj. Baira Siul % Nov, 2013 Page 25