CASE No. 69 of In the matter of

Transcription

1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai Tel. No /65/69 Fax Website: CASE No. 69 of 2018 In the matter of Petition of The Tata Power Company Ltd. (Distribution) for approval of Truing-up of FY , Truing-up for FY , provisional Truing-up for FY and Aggregate Revenue Requirement and Tariff for FY and FY Coram Shri Anand B. Kulkarni, Chairperson Shri I.M. Bohari, Member Shri Mukesh Khullar, Member ORDER Date: 12 September, 2018 In accordance with Regulation 5 of the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2015 (herein after referred as MYT Regulations, 2015 ), M/s. The Tata Power Company Limited (Distribution Business) (TPC-D), Homi Modi Street, Fort, Mumbai, has filed its Petition for Mid-Term Review (MTR) of third MYT Control Period including truing-up of FY and FY , provisional truing-up of , and Revised Aggregate Revenue Requirement (ARR) and Tariff for FY and FY The original Petition was filed on 25 January, 2018, and TPC-D submitted the revised Petition on 30 June, In exercise of its powers under Sections 62 (read with Section 61) and 86 of the Electricity Act, 2003 (herein after referred as the Act or EA, 2003 ) and all other powers enabling it in this behalf, and after taking into consideration the submissions made by TPC-D, the public and stake-holders and all other relevant material, the Commission issues the following. Case No. 69 of Mid Term Review for TPC-D Page 1 of 387

2 TABLE OF CONTENTS 1 BACKGROUND AND HISTORY BACKGROUND MYT ORDER FOR 2 ND CONTROL PERIOD FROM FY TO FY MID TERM PERFORMANCE REVIEW ORDER FOR 2 ND CONTROL PERIOD MULTI YEAR TARIFF (MYT) REGULATIONS, MYT ORDER FOR FY TO FY PETITION FOR APPROVAL OF MID-TERM REVIEW, ADMISSION OF THE PETITION AND PUBLIC PROCESS ORGANISATION OF THE ORDER SUGGESTIONS/OBJECTIONS, TPC-D S RESPONSES AND COMMISSION S RULINGS SALES POWER PURCHASE COST FIXED/DEMAND CHARGES CAPITAL EXPENDITURE AND CAPITALISATION TIME OF DAY TARIFF WHEELING CHARGES DEMAND SIDE MANAGEMENT (DSM) ENERGY CHARGES CATEGORISATION AND TARIFF DETERMINATION POWER FACTOR INCENTIVE AND KVAH BILLING FINANCIAL MANAGEMENT AND CONTROL CONSUMER SECURITY DEPOSIT INCOME TAX BILLING METERING DEPRECIATION CROSS-SUBSIDY SURCHARGE FUEL ADJUSTMENT CHARGES OPEN ACCESS O&M EXPENSES REVENUE FROM PROPOSED TARIFF OTHER ISSUES IMPACT OF ADDITIONAL CAPITALISATION Page 2 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

3 3.1 BACKGROUND REVISED CAPITALISATION FOR FY TRUING UP OF ARR FOR FY BACKGROUND SALES OPEN ACCESS CONSUMPTION DISTRIBUTION LOSSES AND ENERGY INPUT REQUIREMENT POWER PURCHASE QUANTUM AND COST OPERATION AND MAINTENANCE EXPENSES CAPITAL EXPENDITURE AND CAPITALISATION DEPRECIATION INTEREST ON LONG-TERM LOAN RETURN ON EQUITY INTEREST ON WORKING CAPITAL INTEREST ON CONSUMERS SECURITY DEPOSIT ADDITIONAL RETURN FOR HIGHER WIRES AND SUPPLY AVAILABILITY PROVISION FOR BAD AND DOUBTFUL DEBTS INCOME TAX CONTRIBUTION TO CONTINGENCY RESERVE DEMAND SIDE MANAGEMENT EXPENSES CHARGES PAYABLE TO RINFRA-D NON-TARIFF INCOME SHARING OF EFFICIENCY GAINS AND LOSSES FOR FY REVENUE FROM SALE OF ELECTRICITY AGGREGATE REVENUE REQUIREMENT FOR FY REVENUE GAP/(SURPLUS) FOR FY TRUING-UP OF ARR FOR FY BACKGROUND SALES DISTRIBUTION LOSSES AND ENERGY BALANCE POWER PURCHASE QUANTUM AND COST OPERATION AND MAINTENANCE EXPENSES CAPITALISATION AND MEANS OF FINANCE DEPRECIATION INTEREST ON LONG-TERM LOAN RETURN ON EQUITY Case No. 69 of 2018 Mid Term Review for TPC-D Page 3 of 387

4 5.10 INTEREST ON WORKING CAPITAL INTEREST ON CONSUMER SECURITY DEPOSIT PROVISION FOR BAD AND DOUBTFUL DEBTS CONTRIBUTION TO CONTINGENCY RESERVE INCOME TAX NON-TARIFF INCOME DEMAND SIDE MANAGEMENT EXPENSES CHARGES PAYABLE TO RINFRA-D SHARING OF GAINS AND LOSSES IN FY REVENUE FROM SALE OF ELECTRICITY FOR FY AGGREGATE REVENUE REQUIREMENT FOR FY REVENUE GAP/(SURPLUS) FOR FY PROVISIONAL TRUING-UP OF ARR FOR FY BACKGROUND SALES DISTRIBUTION LOSSES AND ENERGY BALANCE POWER PURCHASE QUANTUM AND COST OPERATION AND MAINTENANCE EXPENSES CAPITALISATION AND MEANS OF FINANCE DEPRECIATION INTEREST ON LONG TERM LOAN RETURN ON EQUITY INTEREST ON WORKING CAPITAL INTEREST ON CONSUMER SECURITY DEPOSIT PROVISION FOR BAD AND DOUBTFUL DEBTS CONTRIBUTION TO CONTINGENCY RESERVE INCOME TAX NON-TARIFF INCOME DEMAND SIDE MANAGEMENT EXPENSES CHARGES PAYABLE TO RINFRA-D AGGREGATE REVENUE REQUIREMENT FOR FY REVENUE FOR FY REVENUE (GAP) / SURPLUS REVISED ARR FOR FY AND FY BACKGROUND SALES Page 4 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

5 7.3 DISTRIBUTION LOSSES AND ENERGY BALANCE POWER PURCHASE QUANTUM AND COST OPERATION AND MAINTENANCE EXPENSES CAPITALISATION AND MEANS OF FINANCE DEPRECIATION INTEREST ON LONG-TERM LOAN RETURN ON EQUITY INTEREST ON WORKING CAPITAL INTEREST ON CONSUMERS SECURITY DEPOSIT PROVISION FOR BAD AND DOUBTFUL DEBT CONTRIBUTION TO CONTINGENCY RESERVE INCOME TAX NON-TARIFF INCOME DEMAND SIDE MANAGEMENT EXPENSES AGGREGATE REVENUE REQUIREMENT CUMULATIVE REVENUE GAP & REVISED CATEGORY-WISE TARIFFS FOR FY AND FY CUMULATIVE REVENUE GAP APPROACH FOR RECOVERY OF PAST REVENUE GAP WHEELING CHARGES CROSS-SUBSIDY STRUCTURE SUPPLY BUSINESS CHARGES CHARGES APPLICABLE TO OPEN ACCESS CONSUMERS RATIONALISATION OF TARIFF CATEGORIES REVISED TARIFFS EFFECTIVE FROM 1 SEPTEMBER, 2018 (FY ) REVISED TARIFFS EFFECTIVE FROM 1 APRIL, 2019 (FY ) SCHEDULE OF CHARGES BACKGROUND REVISION IN EXISTING SCHEDULE OF CHARGES NEW SCHEDULE OF CHARGES APPLICABILITY OF REVISED TARIFFS ANNEXURE I: REVENUE FROM REVISED TARIFF FOR FY ANNEXURE II: REVENUE FROM REVISED TARIFF FOR FY Case No. 69 of 2018 Mid Term Review for TPC-D Page 5 of 387

6 12 ANNEXURE III: TARIFF SCHEDULE FOR FY ANNEXURE IV: TARIFF SCHEDULE FOR FY APPENDIX APPENDIX 1 - LIST OF PERSONS WHO ATTENDED THE PRE-ADMISSION DISCUSSION HELD ON 15 JUNE, APPENDIX 2 - LIST OF PERSONS AT THE PUBLIC HEARING ON 3 AUGUST, Page 6 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

7 A&G AAD ABR AC ACOS APR ARR ATE/APTEL BARC BEST BHEL BLDC BPCL BPL CAGR Capex CBA CC CGRF COD CPD CPI CPP CSD CSR CSS DISCOM DL DPC DPC DPR DSM List of Abbreviations Administrative and General Advance Against Depreciation Average Billing Rate Alternating Current Average Cost of Supply Annual Performance Review Aggregate Revenue Requirement Appellate Tribunal for Electricity Bhabha Atomic Research Centre Brihanmumbai Electric Supply & Transport Undertaking Bharat Heavy Electricals Limited Brushless DC motor Bharat Petroleum Corporation Limited Below Poverty Line Compounded Annual Growth Rate Capital Expenditure Cost Benefit Analysis Consumer Contribution Consumer Grievance Redressal Forum Date of Commissioning Coincident Peak Demand Consumer Price Index Captive Power Plant Consumer Security Deposit Corporate Social Responsibility Cross-subsidy Surcharge Distribution Company Distribution Loss Delayed Payment Charge Delayed Payment Charge Detailed Project Report Demand Side Management Case No. 69 of 2018 Mid Term Review for TPC-D Page 7 of 387

8 DSS Distribution Sub-station EA, 2003/Act Electricity Act, 2003 ED Electricity Duty EHV Extra High Voltage EV Electric Vehicle FAC Fuel Adjustment Charge FBSM Final Balancing and Settlement Mechanism FBT Fringe Benefit Tax FY Financial Year G, T & D Generation, Transmission and Distribution G<>T Genration - Transmission Interface GFA Gross Fixed Assets GoM Government of Maharashtra GST Goods and Services Tax HO & SS Head Office and Support Services HP Horse Power HPCL Hindustan Petroleum Corporation Limited HT High Tension I/A Income Tax Act INR / Rs. Indian Rupees InSTS Intra-State Transmission System IoWC Interest on Working Capital IT/ITeS Information Technology / Information Technology enabled Services kva kilo Volt Ampere kvah kilo Volt Ampere hour kw kilo Watt kwh kilo Watt hour KYC Know Your Customer LCC Load Control Centre LF Load Factor LGBR Load Generation Balance Report LMC Load Management Charges Page 8 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

9 LSHS Low Sulphur Heavy Stock LT Low Tension M&M Mahindra & Mahindra Limited MAT Minimum Alternate Tax MCB Miniature Circuit Breaker MCGM Municipal Corporation of Greater Mumbai MCLR Marginal Cost of Lending Rate MD Maximum Demand MERC (SoP) Regulations, 2014 MERC (Standards of Performance of Distribution Licensees Period for Giving Supply and Determination of Compensation) Regulations, 2014 MERC/Commission Maharashtra Electricity Regulatory Commission MIAL Mumbai International Airport Ltd. MMC Act Mumbai Municipal Corporation Act MMRDA Mumbai Metropolitan Regional Development Authority MOD Merit Despatch MSEDCL Maharashtra State Electricity Distribution Company Ltd. MSLDC/ SLDC Maharashtra State Load Despatch Centre MTDC Maharashtra Tourism Development Corporation MTR Mid-Term Review MU Million Units MVA MegaVolt Ampere MW Mega Watt MYT Multi Year Tariff MYT Regulations, MERC (Multi Year Tariff) Regulations, MYT Regulations, MERC (Multi Year Tariff) Regulations, NCD Non Convertible Debenture NCPD Non-coincident Peak Demand NTI Non-Tariff Income NTP National Tariff Policy O&M Operation and Maintenance OA Open Access Case No. 69 of 2018 Mid Term Review for TPC-D Page 9 of 387

10 OLA Outside Licence Area PBT Profit Before Tax PF Power Factor POC Point of Connection PPA Power Purchase Agreement R&M Repair and Maintenance RA Regulatory Asset RAC Regulatory Asset Charge RE Renewable Energy REC Renewable Energy Certificate RInfra Reliance Infrastructure Limited RInfra-D Reliance Infrastructure Limited- Distribution Business RLNG Re-gasified Liquefied Natural Gas RoE Return on Equity RPO Renewable Purchase Obligation RPO Regulations, 2010 MERC (Renewable Purchase Obligation, its Compliance and implementation of REC framework) Regulations, 2010 RPO Regulations, 2016 MERC (Renewable Purchase Obligation, its Compliance and implementation of REC framework) Regulations, 2016 RPS Renewable Purchase Specification RTC Round the Clock SAIDI System Average Interruption Duration Index SBAR State Bank of India Advance Rate SBI State Bank of India SBI PLR State Bank of India Prime Lending Rate SFU Switch Fuse Unit SLDC State Load Despatch Centre SoC Schedule of Charges STPI Software Technology Park of India T<>D Transmission - Distribution Interface Tariff Regulations MERC (Terms and Conditions of Tariff) Regulations, 2005 TES Thermal Energy Storage TL Transmission Loss Page 10 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

11 TOD ToSE TPC TPC-D TPC-G TPC-T TPREL UI USO VAT VCOS WL WPI Time of Day Tax on Sale of Electricity The Tata Power Company Limited The Tata Power Company-Distribution Business The Tata Power Company-Generation Business The Tata Power Company-Transmission Business Tata Power Renewable Energy Limited Unscheduled Interchange Universal Service Obligation Value Added Tax Voltage wise Cost of Supply Wheeling Loss Wholesale Price Index Case No. 69 of 2018 Mid Term Review for TPC-D Page 11 of 387

12 List of Tables Table 3-1: Additional Capitalisation as submitted by TPC-D (Rs. Crore) Table 3-2: List of DSS commissioned by TPC-D (Rs. Crore) Table 3-3: Status of Physical Development in 11 Clusters (Rs. Crore) Table 3-4: Revised Depreciation & Closing GFA for FY as submitted by TPC-D (Rs. Crore) Table 3-5: Additional RoE for FY as submitted by TPC-D (Rs. Crore) Table 3-6: Interest on Loan for the additional Capitalisation for FY as submitted by TPC-D (Rs. Crore) Table 3-7: Total Impact of Additional Capitalisation including Carrying Cost for FY as submitted by TPC-D (Rs. Crore) Table 3-8: Impact of Additional Capitalisation in FY as approved by the Commission (Rs. Crore) Table 4-1: Category-wise Sales for FY as submitted by TPC-D (MU) Table 4-2: Direct Sales and Change-over Sales for FY as approved by the Commission (MU) Table 4-3: Open Access Consumption for FY in TPC-D licence area as approved by the Commission (MU) Table 4-4: Energy Input requirement for FY as submitted by TPC-D (MU) Table 4-5: Energy Input Requirement for FY as approved by the Commission (MU) Table 4-6 : Power Purchase from TPC-G in FY as submitted by TPC-D Table 4-7 : Power Purchase from TPC-G for FY as approved by the Commission Table 4-8: Renewable Purchase Obligation for FY as submitted by TPC-D (MU) Table 4-9: Renewable Energy Sources for FY as submitted by TPC-D (MW) Table 4-10: Total RE purchase for FY as submitted by TPC-D Table 4-11: Power Purchase from Solar and Non-Solar sources for FY as approved by the Commission (MU) Table 4-12: Power Purchased from Bilateral Sources and Imbalance Pool in FY as submitted by TPC-D Table 4-13: Bilateral Power Purchase Quantum & Cost for FY as approved by the Commission Table 4-14: Sale outside Licence Area for FY as submitted by TPC-D Table 4-15: Sale to Outside Licence Area for FY as approved by the Commission Page 12 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

13 Table 4-16: Transmission Charges & MSLDC Charges for FY as approved by the Commission (Rs. Crore) Table 4-17: Power Purchase Cost for FY as approved by the Commission Table 4-18: Brand Equity Expenses for FY as submitted by TPC-D Table 4-19: Actual O&M Expenses for FY as submitted by TPC-D (Rs. Crore) 95 Table 4-20: Normative O&M Expenditure for Wires Business for FY as submitted by TPC-D (Rs. Crore) Table 4-21: Normative O&M Expenditure for Supply Business for FY as submitted by TPC-D Table 4-22: Normative O&M Expenditure for Wires Business for FY as approved by the Commission (Rs. Crore) Table 4-23: Normative O&M Expenditure for Retail Supply Business for FY as approved by the Commission Table 4-24: Details of Brand Equity expenses as submitted by TPC-D Table 4-25: Actual O&M Expense for FY as approved by the Commission (Rs. Crore) Table 4-26: Capitalisation for FY as submitted by TPC-D (Rs. Crore) Table 4-27: Capitalisation disallowed by the Commission (Rs. Crore) Table 4-28: Capitalisation for FY as approved by the Commission (Rs. Crore) 104 Table 4-29: Depreciation for FY as submitted by TPC-D (Rs. Crore) Table 4-30: Depreciation for FY as approved by the Commission (Rs. Crore). 106 Table 4-31: Details of New Loans utilized for FY as submitted by TPC-D Table 4-32: Loan Allocation for FY as submitted by TPC-D (Rs. Crore) Table 4-33: Interest Computation for Wires Business and Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 4-34: Interest Computation for Wires Business and Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 4-35: Return on Equity for FY as submitted by TPC-D (Rs. Crore) Table 4-36:Return on Equity for Wires & Supply Business for FY as approved by the Commission (Rs. Crore) Table 4-37: Interest on Working Capital for FY as submitted by TPC-D (Rs. Crore) Table 4-38: Interest on Working Capital for FY as approved by the Commission (Rs. Crore) Table 4-39: Additional RoE for FY for Wires Business as approved by the Commission Table 4-40: Base and peak Load Demand of TPC-D for FY as submitted by TPC- D Case No. 69 of 2018 Mid Term Review for TPC-D Page 13 of 387

14 Table 4-41: Additional RoE for higher Supply Availability for FY as approved by the Commission Table 4-42: Provision for Bad & Doubtful Debts for FY as approved by Commission (Rs. crore) Table 4-43: Income Tax for FY as submitted by TPC-D (Rs. Crore) Table 4-44: Income Tax for FY as approved by the Commission (Rs. Crore) Table 4-45: Contribution to Contingency Reserves for FY as submitted by TPC-D (Rs. Crore) Table 4-46:Contribution to Contingency Reserves for FY for Wires and Supply Business approved by the Commission (Rs. Crore) Table 4-47 : DSM Expenses for FY as submitted by TPC-D Table 4-48: DSM Expenses for FY as approved by the Commission (Rs. crore) Table 4-49: Non-Tariff Income for FY as submitted by TPC-D (Rs. Crore) Table 4-50:Non-Tariff Income for FY as approved by the Commission (Rs. Crore) Table 4-51: Computation of Gain/(Loss) on O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Table 4-52:Sharing of (Gains)/losses on account of O&M Expenses for FY as approved by Commission (Rs. Crore) Table 4-53: Revenue of Wires Business and Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 4-54 : Total Revenue for Distribution Wires and Retail Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 4-55 : Total Revenue for Distribution Wires and Retail Supply Business for FY as approved by the Commission (Rs. Crore) Table 4-56: ARR for Wires Business for FY as approved by the Commission (Rs. Crore) Table 4-57: Aggregate Revenue Requirement for Supply Business for FY as approved by the Commission (Rs. Crore) Table 4-58 : Combined ARR for Wires and Retail Supply for FY as approved by the Commission (Rs. Crore) Table 4-59: Revenue Gap/ (Surplus) for Wires Business and Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 4-60 : Total Revenue Gap/(Surplus) for Distribution Business for FY as submitted by TPC-D (Rs. Crore) Table 4-61: Revenue Surplus for Wires Business for FY as approved by the Commission (Rs. Crore) Page 14 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

15 Table 4-62: Revenue Gap for Supply Business for FY as approved by the Commission (Rs. Crore) Table 4-63: Combined Revenue Gap for FY as approved by the Commission (Rs. Crore) Table 5-1: Category-wise Sales for FY as submitted by TPC-D (MU) Table 5-2: Category wise sales for FY as approved by the Commission (MU). 133 Table 5-3 : Distribution Loss for FY as submitted by TPC-D Table 5-4 : Distribution Loss for FY excluding 110 kv Sale as submitted by TPC- D Table 5-5: Energy Balance for FY as submitted by TPC-D (MU) Table 5-6: Energy Balance for FY as approved by the Commission (MU) Table 5-7 :Share of TPC-D in TPC-G s Generation Capacity for FY Table 5-8 : Unit wise Power Purchase from TPC-G for FY as submitted by TPC-D Table 5-9 : Power Purchase from TPC-G for FY as approved by the Commission Table 5-10: Renewable Energy Requirement for FY as submitted by TPC-D (MU) Table 5-11 : RPO Status for Mini / Micro Hydro as submitted by TPC-D (MU) Table 5-12 : Total Cost of RE Purchase for FY as submitted by TPC-D Table 5-13: Power Purchase from Solar and Non-Solar sources for as approved by the Commission (MU) Table 5-14: Power Purchase from External Sources for FY as submitted by TPC-D Table 5-15: Bilateral Power Purchase Quantum & Cost for FY as approved by the Commission Table 5-16 : Sale Outside Licence Area for FY as submitted by TPC-D Table 5-17 : Details of Marginal cost of purchase of TPC-D and Sale to Railways Table 5-18 : Source-wise details of Energy sale to Railways Table 5-19: Sale to Outside Licence area for FY as approved by the Commission Table 5-20: Transmission Charges and MSLDC Charges for FY as approved by the Commission (Rs. Crore) Table 5-21:Total Power Purchase Cost for FY as approved by the Commission149 Table 5-22: Brand Equity Expenses for FY as submitted by TPC-D (Rs Crore) 150 Table 5-23 : Actual O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Table 5-24: Escalation Rate for FY as submitted by TPC-D Case No. 69 of 2018 Mid Term Review for TPC-D Page 15 of 387

16 Table 5-25: Normative O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Table 5-26:Normative O&M Expenses for FY (stand-alone) as approved by the Commission (Rs. Crore) Table 5-27: Actual O&M Expense for FY as approved by the Commission (Rs. Crore) Table 5-28: Capitalisation for FY as submitted by TPC-D (Rs. Crore) Table 5-29: Capitalisation for FY as approved by the Commission (Rs. Crore) 155 Table 5-30: Depreciation for FY as submitted by TPC-D (Rs. Crore) Table 5-31: Depreciation for FY as approved by the Commission (Rs. Crore). 157 Table 5-32: Details of New Loan as submitted by TPC-D Table 5-33: Allocation of Loan for FY as submitted by TPC-D (Rs. Crore) Table 5-34: Interest on Loan Capital for FY as submitted by TPC-D (Rs. Crore) Table 5-35: Computation of Wt. Average rate of interest (Rs. Crore) Table 5-36: Interest Computation for Wires Business and Supply Business for FY as approved by the Commission by TPC-D (Rs. Crore) Table 5-37: Return on Equity for FY as submitted by TPC-D (Rs. Crore) Table 5-38:Return on Equity for Wires & Supply Business for FY as approved by the Commission (Rs. Crore) Table 5-39: Interest on Working Capital for FY as submitted by TPC-D (Rs. Crore) Table 5-40: Interest on Working Capital for FY as approved by the Commission (Rs. Crore) Table 5-41: Provision for Bad & Doubtful Debts for FY as approved by the Commission (Rs. Crore) Table 5-42: Contribution to Contingency Reserve for FY as submitted by TPC-D (Rs. Crore) Table 5-43: Contribution to Contingency Reserves for FY for Wires Business and Supply Business as approved by the Commission (Rs. Crore) Table 5-44: Income Tax for FY as submitted by TPC-D (Rs. Crore) Table 5-45: Income Tax for FY as approved by the Commission (Rs. Crore) Table 5-46: Non-Tariff Income for FY as submitted by TPC-D (Rs. Crore) Table 5-47:Non-Tariff Income for FY as approved by the Commission (Rs. crore) Table 5-48: DSM Expenses for FY as submitted by TPC-D (Rs. Crore) Table 5-49: DSM Expenses for FY as approved by the Commission (Rs. crore) Page 16 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

17 Table 5-50: Sharing of Efficiency Gains and Losses for O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Table 5-51: Computation of Efficiency Gain / (Loss) for IoWC for FY as submitted by TPC-D (Rs. Crore) Table 5-52:Sharing of (Gains)/losses on account of O&M Expenses for FY as approved by Commission (Rs. Crore) Table 5-53: Sharing of Efficiency Gain on account of lower than normative IoWC for FY , as approved by the Commission (Rs. Crore) Table 5-54 : Revenue from Wheeling Charges for FY as submitted by TPC-D (Rs. Crore) Table 5-55 : Revenue from Sale of Power for FY as submitted by TPC-D (Rs. Crore) Table 5-56: Total Revenue for FY as submitted by TPC-D (Rs. Crore) Table 5-57 : Total Revenue for Distribution Wires and Supply Business for FY as approved by the Commission (Rs. Crore) Table 5-58: ARR for Wires Business for FY as approved by the Commission (Rs. Crore) Table 5-59: ARR for Supply Business for FY as approved by the Commission (Rs. Crore) Table 5-60:ARR for Wires Business and Supply Business for FY as approved by the Commission (Rs. crore) Table 5-61: Revenue Gap/(Surplus) for Wires Business for FY as submitted by TPC-D (Rs. Crore) Table 5-62: (Revenue Gap/(Surplus) for Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 5-63: Combined Revenue Gap/(Surplus) for Distribution Business for FY as submitted by TPC-D (Rs. Crore) Table 5-64: Revenue Gap/(Surplus) for Wires Business for FY as approved by the Commission (Rs. crore) Table 5-65: Revenue Gap/(Surplus) for Supply Business for FY as approved by the Commission (Rs. Crore) Table 5-66: Combined Revenue Gap/(Surplus) for FY as approved by the Commission (Rs Crore) Table 6-1: Provisional Actual Sales for FY as submitted by TPC-D (MU) Table 6-2: Energy Sales for FY as approved by the Commission (MU) Table 6-3: Energy Input Requirement for Retail Supply Business - FY as submitted by TPC-D (MU) Case No. 69 of 2018 Mid Term Review for TPC-D Page 17 of 387

18 Table 6-4: Provisional Actual Distribution Loss for FY as submitted by TPC-D (MU) Table 6-5: Energy Balance for FY as approved by the Commission (MU) Table 6-6 : Provisional Power Purchase from TPC-G for FY as submitted by TPC- D Table 6-7: Power Purchase from TPC-G for FY as provisionally approved by the Commission Table 6-8: Renewable Energy Requirement for FY as submitted by TPC-D (MU) Table 6-9 : Provisional Actual RE Purchase for FY as submitted by TPC-D Table 6-10: RE Purchase for FY as provisionally approved by the Commission Table 6-11: Provisional Actual Bilateral Power Purchase Cost and Quantum for FY as submitted by TPC-D Table 6-12: Bilateral Power Purchase and Quantum & Cost for FY provisionally approved by the Commission Table 6-13: Provisional Actual Outside Licence Area Sale for FY as submitted by TPC-D Table 6-14: Sale Outside Licence area for FY as provisionally approved by the Commission Table 6-15: Transmission Charges and MSLDC Charges for FY as provisionally approved by the Commission (Rs. Crore) : Total Power Purchase Cost for FY as provisionally approved by the Commission Table 6-17: Escalation Rate for FY as submitted by TPC-D Table 6-18:Estimated O&M Expenses for Wires and Supply Business for FY as submitted by TPC-D (Rs. Crore) Table 6-19: O&M Expenses for FY as approved by the Commission (Rs. Crore) Table 6-20: Provisional Actual Capital Expenditure & Capitalisation for FY as submitted by TPC-D (Rs. Crore) Table 6-21: Capitalisation for FY as approved by the Commission (Rs. Crore) 196 Table 6-22: Estimated Depreciation for FY as submitted by TPC-D (Rs. Crore) Table 6-23: Depreciation for FY as approved by the Commission (Rs. Crore). 197 Table 6-24: Interest on Long-Term Loan for FY as submitted by TPC-D (Rs. Crore) Page 18 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

19 Table 6-25: Interest on Loan Capital for FY as approved by the Commission (Rs. Crore) Table 6-26: ROE for FY as submitted by TPC-D (Rs. Crore) Table 6-27: Return on Equity for Wires & Supply Business for FY as approved by the Commission (Rs. Crore) Table 6-28: Interest on Working Capital for FY as submitted by TPC-D (Rs. Crore) Table 6-29: Interest on Working Capital for FY as approved by the Commission (Rs. Crore) Table 6-30: Estimated Contribution to Contingency Reserve for Wires Business for FY as submitted by TPC-D (Rs. Crore) Table 6-31: Contribution to Contingency Reserves for FY for Wires Business and Supply Business as approved by the Commission (Rs. Crore) Table 6-32:Estimated Income Tax for FY as submitted by TPC-D (Rs. Crore) 204 Table 6-33: Income Tax for the Period FY as submitted by TPC-D Table 6-34: Income Tax for FY as approved by the Commission (Rs. Crore) Table 6-35: Non-Tariff Income for FY as approved by the Commission (Rs. Crore) Table 6-36: Estimated DSM Expenditure for FY as submitted by TPC-D (Rs. Crore) Table 6-37: DSM Expenses for FY as approved by the Commission (Rs. crore) Table 6-38: ARR for Wires Business for FY as approved by the Commission (Rs. Crore) Table 6-39: ARR for Supply Business for FY as approved by the Commission (Rs. Crore) Table 6-40: ARR for Wires and Supply Business for FY as approved by the Commission (Rs. Crore) Table 6-41: Total Revenue for FY as submitted by TPC-D (Rs. Crore) Table 6-42: Revenue Gap/(Surplus) for Wires Business FY as submitted by TPC- D (Rs. Crore) Table 6-43: Revenue Gap/(Surplus) for Supply Business FY as submitted by TPC- D (Rs. Crore) Table 6-44: Revenue Gap/(Surplus) for Wire & Supply Business FY as submitted by TPC-D Table 6-45: Revenue Gap/(Surplus) for Wires Business for FY as approved by the Commission (Rs. Crore) Case No. 69 of 2018 Mid Term Review for TPC-D Page 19 of 387

20 Table 6-46: Revenue Gap/(Surplus) for Supply Business for FY as approved by the Commission (Rs. Crore) Table 6-47: Combined Revenue Gap/(Surplus) for FY as approved by the Commission (Rs Crore) Table 7-1: Variance of actual sales vis-à-vis approved sales as submitted by TPC-D (MU) Table 7-2: OA Sale for FY to FY as submitted by TPC-D (MU) Table 7-3 : Projected Sales for FY and FY as submitted by TPC-D (MU) Table 7-4: Category-wise CAGR considered for projection of Energy Sales Table 7-5 : Projected Sales for FY & FY as approved by the Commission (MU) Table 7-6: Distribution Loss for FY and FY as submitted by TPC-D. 222 Table 7-7: Energy Input requirement for FY and FY as submitted by TPC- D Table 7-8:Distribution Loss for FY and FY as approved by the Commission Table 7-9: Energy Input requirement for FY and FY as approved by the Commission Table 7-10: Approved Power Purchase Arrangement with TPC-G for FY as submitted by TPC-D Table 7-11: Power Purchase Arrangement with TPC-G for FY as submitted by TPC-D Table 7-12: Estimated Capacity Charge of TPC-G for FY and FY as submitted by TPC-D (Rs. Crore) Table 7-13 : Estimated Energy Charge from TPC-G for FY and FY as submitted by TPC-D Table 7-14 : Total Cost of Power Purchase from TPC-G for FY and FY as submitted by TPC-D (Rs. Crore) Table 7-15 : Revised Power Purchase Cost from TPC-G for FY as submitted by TPC-D Table 7-16: Annual Fixed Charges for FY and FY as approved by the Commission (Rs. crore) Table 7-17: Net Generation from TPC-G for FY and FY as approved by the Commission (Rs. crore) Table 7-18: Estimated Variable Cost of Purchase from TPC-G for FY and FY as approved by the Commission (Rs. crore) Page 20 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

21 Table 7-19: Total Cost of Power Purchase from TPC-G for FY and FY as approved by the Commission (Rs. crore) Table 7-20: Renewable Energy Requirement for FY and FY as submitted by TPC-D Table 7-21 : Non-Solar Generation availability for FY and FY as submitted by TPC-D Table 7-22: Non -Solar Purchase for FY and FY as submitted by TPC-D (MU) Table 7-23: Solar Generation for FY and FY as submitted by TPC-D 231 Table 7-24: Total Solar Procurement for FY and FY as submitted by TPC- D Table 7-25: Requirement of Mini / Micro Hydro for FY 19 and FY 20 as submitted by TPC- D Table 7-26: Source wise Cost of power purchase from RE for FY and FY as submitted by TPC-D Table 7-27: Source wise Cost of power purchase from RE for FY Table 7-28: Source wise Cost of power purchase from RE for FY Table 7-29: Bilateral Power Purchase Rate for FY and FY as submitted by TPC-D Table 7-30: Bilateral Power Purchase for FY as approved by the Commission 238 Table 7-31: Bilateral Power Purchase for FY as approved by the Commission 238 Table 7-32: Transmission Charges for FY & FY as submitted by TPC-D (MW) Table 7-33: Transmission Charges for FY and FY as approved by the Commission (Rs. Crore) Table 7-34: Share of Standby Charges & MSLDC Charges as submitted by TPC-D Table 7-35: Power Purchase Cost of TPC-D for FY as approved by the Commission Table 7-36: Power Purchase Cost of TPC-D for FY as approved by the Commission Table 7-37: O & M Expenditure for Wire Business and Supply Business for FY & FY as submitted by TPC-D Table 7-38: Normative O&M Expenses for FY & FY as approved by the Commission Table 7-39: Capitalisation for FY and FY as submitted by TPC-D (Rs. Crore) Table 7-40: Capitalisation for FY and FY as approved by the Commission (Rs. Crore) Case No. 69 of 2018 Mid Term Review for TPC-D Page 21 of 387

22 Table 7-41: Depreciation for Wire Business for FY 19 and FY 20 as submitted by TPC-D (Rs. Crore) Table 7-42: Depreciation for Supply Business for FY 19 & FY 20 as submitted by TPC-D (Rs. Crore) Table 7-43: Depreciation for Wire Business for FY and FY as approved by the Commission (Rs. Crore) Table 7-44 : Interest on Long Term Loan for Wire Business for FY & FY as submitted by TPC-D (Rs. Crore) Table 7-45 : Interest on Long Term Loan for Supply Business for FY and FY as submitted by TPC-D (Rs. Crore) Table 7-46: Interest on Loan Capital for FY and FY as approved by the Commission (Rs. Crore) Table 7-47: RoE for Wire Business for FY 19 and FY 20 as submitted by TPC-D (Rs. Crore) Table 7-48: RoE for Supply Business for FY 19 and FY 20 as submitted by TPC-D (Rs. Crore) Table 7-49: Return on Equity for FY and FY as approved by the Commission (Rs. Crore) Table 7-50: IoWC for Wires Business for FY & FY as submitted by TPC- D (Rs. Crore) Table 7-51: IoWC for Supply Business for FY & FY as submitted by TPC- D (Rs. Crore) Table 7-52: IoWC for FY and FY as approved by the Commission (Rs. Crore) Table 7-53: Security Deposit for FY to FY as submitted by TPC-D Table 7-54: Interest on CSD for Supply Business for FY and FY as approved by the Commission (Rs. Crore) Table 7-55: Contribution to Contingency Reserves for Wire Business and Supply Business for FY & FY as submitted by TPC-D (Rs. Crore) Table 7-56: Contribution to Contingency Reserve for FY and FY as approved by Commission (Rs. Crore) Table 7-57: Income Tax for FY & FY as submitted by TPC-D (Rs. Crore) Table 7-58: Income Tax for FY and FY as approved by Commission (Rs. Crore) Table 7-59: Non-tariff Income for FY and FY as approved by Commission (Rs. Crore) Page 22 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

23 Table 7-60 : Estimated ARR for Wire Business for FY and FY as approved by the Commission (Rs. Crore) Table 7-61: Estimated ARR for Supply Business for FY and FY as approved by the Commission (Rs. Crore) Table 7-62: Combined ARR for FY & FY as approved by the Commission (Rs. Crore) Table 8-1: Recovery of Principal and Interest for FY and FY as submitted by TPC-D (Rs. Crore) Table 8-2: Balance Recovery of Principal Amount as submitted by TPC-D Table 8-3: Cumulative Revenue Gap/(Surplus) at end of FY as approved by the Commission in MYT (Rs. Crore) Table 8-4: Balance amount of Regulatory Asset as computed by the Commission (Rs. Crore) Table 8-5: Cumulative Revenue Gap for Additional Capitalisation as computed by the Commission (Rs. Crore) Table 8-6: Incremental Revenue Gap for FY as submitted by TPC-D (Rs. Crore) Table 8-7: Cumulative Revenue Gap for FY as submitted by TPC-D (Rs. Crore) Table 8-8: Cumulative Revenue Gap after True-up for FY as approved by the Commission (Rs. Crore) Table 8-9: Revenue Gap for FY & FY for Distribution Business (Rs. Crore) Table 8-10: Cumulative Revenue Gap for FY as submitted by TPC-D (Rs. Crore) Table 8-11: Cumulative Revenue Gap/(Surplus) for True-up for FY as approved by the Commission (Rs. Crore) Table 8-12: Cumulative Revenue Gap/(Surplus) as submitted by TPC-D (Rs. Crore) Table 8-13: Cumulative Revenue Gap/(surplus) as approved by the Commission (Rs. Crore) Table 8-14: Recovery of Past Revenue Gap for Wire Business as submitted by TPC-D (Rs. Crore) Table 8-15: Average Cost of Supply for FY and FY as submitted by TPC- D (Rs. Crore) Table 8-16: Comparison of Proposed Vs Approved Average Cost of Supply as submitted by TPC-D (Rs. /kwh) Table 8-17: Regulatory Assets recoverable in FY and FY as approved by the Commission ((Rs. Crore) Case No. 69 of 2018 Mid Term Review for TPC-D Page 23 of 387

24 Table 8-18: Past Revenue Gaps recoverable in FY and FY as approved by the Commission ((Rs. Crore) Table 8-19: Total ARR for recovery for FY and FY as approved by the Commission (Rs. Crore) Table 8-20: Average Cost of Supply and Tariff Increase approved by the Commission ((Rs. Crore) Table 8-21: Wheeling Charges for FY and FY as submitted by TPC-D Table 8-22: Wheeling Charges for FY and FY as approved by the Commission Table 8-23: Category-wise Cross Subsidy Structure for FY and FY as proposed by TPC-D Table 8-24: Category-wise Cross Subsidy Structure for FY & FY as approved by the Commission Table 8-25: Average RAC for FY as proposed by TPC-D Table 8-26: Distribution Loss for HT & LT as proposed by TPC-D Table 8-27: Aggregate Transmission & Wheeling Charges for HT & LT for FY and FY as submitted by TPC-D Table 8-28: Per Unit Carrying Cost as submitted by TPC-D (Rs. /kwh) : Distribution Loss for HT (33 kv and 11 kv) and LT level for FY and FY as approved by the Commission Table 8-30: Aggregate Transmission and Wheeling Charges for HT & LT for FY and FY as approved by Commission (Rs./kWh) Table 8-31: Cross-subsidy Surcharge for FY and FY as approved by Commission (Rs./kWh) Table 9-1: Charges for Testing of Meters as proposed by TPC-D (Rs.) Table 9-2: Actual cost of Meter testing as proposed by TPC-D (Rs.) Table 9-3: Charges for Testing of Meters as approved by the Commission (Rs.) Table 9-4: Activities for processing Application for Open Access submitted by TPC-D (Rs.) Table 9-5: Open Access Charges as approved by the Commission (Rs.) Table 9-6: Cost of processing Net metering Application as submitted by TPC-D (Rs.) Table 9-7: Proposed Charges for processing Address Change / Address Correction Applications as submitted by TPC-D Table 9-8: Charges of Disconnection of Consumer on consumer s request as submitted by TPC-D Page 24 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

25 1 BACKGROUND AND HISTORY 1.1 BACKGROUND TPC is an integrated Utility engaged in Generation, Transmission and Distribution business of electricity. TPC-D has been granted a Distribution Licence by the Commission for the distribution and supply of electricity in and around Mumbai for 25 years from August 15, On the basis of this Licence, which is valid up to August 14, 2039, TPC-D is entitled to distribute and supply electricity to the public for all purposes in accordance with the provisions of the Act. 1.2 MYT ORDER FOR 2 ND CONTROL PERIOD FROM FY TO FY In its dated 28 June, 2013 in Case No. 179 of 2011 ( the previous MYT ), the Commission approved the ARR for FY to FY and retail tariffs and Wheeling Charges for FY to FY , in accordance with the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 (herein after referred as MYT Regulations, 2011 ) 1.3 MID TERM PERFORMANCE REVIEW ORDER FOR 2 ND CONTROL PERIOD In its dated 26 June, 2015 in Case No. 18 of 2015 ( the previous MTR ), the Commission approved the true-up for FY and FY , provisional truing up for FY and revised ARR and Tariff for FY MULTI YEAR TARIFF (MYT) REGULATIONS, 2015 The Commission notified the MYT Regulations, 2015 on 8 December, 2015, applicable for the 3 rd Control Period from FY to FY , and the First Amendment to the MYT Regulations, 2015 was notified on 29 November, MYT ORDER FOR FY TO FY In its dated 21 October, 2016 in Case No. 47 of 2016 ( MYT ), the Commission approved the true-up for FY , provisional true up for FY and approved the ARR for FY to FY and retail Tariffs and Wheeling Charges for FY to FY for TPC-D. Case No. 69 of 2018 Mid Term Review for TPC-D Page 25 of 387

26 TPC-D filed a Review Petition on the MYT, and the Commission issued the Review on 22 November, 2017 in Case No. 165 of PETITION FOR APPROVAL OF MID-TERM REVIEW, ADMISSION OF THE PETITION AND PUBLIC PROCESS The MYT Regulations, 2015 specify that the Mid-Term Review (MTR) of TPC-D s performance shall be undertaken during the third quarter of FY , and the MTR Petition is required to be filed by 30 November, TPC-D filed its MTR Petition for approval of truing-up of FY and FY , provisional truing-up of FY and revised ARR and tariff for FY to FY on 25 January, The Commission directed TPC-D to address the data gaps raised before the first preadmission meeting held on June 15, 2018, for which the authorised Institutional Consumer Representatives were invited. At the meeting, TPC-D was asked to provide additional information and clarifications on the issues raised, and to submit a revised Petition incorporating all the necessary data and changes. The list of persons who attended this meeting is at Appendix-I. TPC-D submitted its replies to the data gaps and filed its revised Petition on 4 July, 2018, with the following main prayers: 1. Approve the entire capitalisation carried out during FY and its impact for the future period. 2. Accept the Truing-up for FY in accordance with the guidelines & principles outlined in MYT Regulations, Accept the Truing-up for FY in accordance with the guidelines & principles outlined in MYT Regulations, 2015 and its first amendment notified on 29 th November, Accept the Provisional Truing up for FY and revised projections for FY and FY in accordance with the guidelines & principles outlined in MYT Regulations, 2015 and its first amendment notified on 29 th November, Approve the Wheeling Charges, Cross Subsidy Surcharge, Regulatory Asset Charge Page 26 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

27 and other charges as proposed in the Petition for the period FY to FY Evoke its power under Regulation 102 of the MYT Regulations, 2015 & power under Regulation 100 of MYT Regulations, 2011 in order to allow for deviations from the MYT Regulations, wherever sought in this Petition. The Commission admitted the MTR Petition on 4 July, In accordance with Section 64 of the Act, the Commission directed TPC-D to publish its Petition in the prescribed abridged form and manner to ensure adequate public participation, and to reply expeditiously to the suggestions and objections received. TPC-D issued a Public Notice inviting suggestions and objections from the public. The Public Notice was published in the daily newspapers Hindustan Times, The Indian Express and The Financial Express (English), and Saamna and Loksatta (Marathi) on 6 July, The copies of the MTR Petition and its summary were made available for inspection/purchase at TPC-D s offices and on its website (ww.tatapower.com). The Public Notice and Executive Summary of the Petition were also made available on the websites of the Commission ( / ) in downloadable format. The Public Notice specified that the suggestions and objections, in English or Marathi, may be filed with proof of service on TPC-D, latest by 30 July, The Commission received written suggestions and objections, as well as oral submissions on various issues at the Public Hearing held on 3 August, 2018 at 10:00 hrs at 1 st Floor, Centrum Hall, Centre No. 1, World Trade Centre, Cuffe Parade, Colaba, Mumbai The list of persons who attended the Public Hearing is at Appendix-2. The Commission has ensured that the due process contemplated under law to ensure transparency and public participation was followed at every stage and adequate opportunity was given to all concerned to file their say. The suggestions and objections made in writing as well as during the Public Hearing, along with TPC-D s responses and the Commission s rulings have been summarised in Section 2 of this. Case No. 69 of 2018 Mid Term Review for TPC-D Page 27 of 387

28 1.7 ORGANISATION OF THE ORDER This consists of the following Sections as outlined below: Chapter 1 provides a brief history of the regulatory process undertaken by the Commission. A list of abbreviations with their expanded forms has been included. Chapter 2 lists out the suggestions and objections received in writing as well as during the Public Hearing. These have been summarized issue-wise, followed by the response of TPC-D and the rulings of the Commission. Chapter 3 details Impact of Additional Capitalisation in FY after due approval of Network Rollout Plan for TPC-D Chapter 4 details the Truing-up of FY Chapter 5 details the Truing up of FY Chapter 6 details the Provisional Truing up of FY Chapter 7 details the revised Aggregate Revenue Requirement for FY and FY Chapter 8 details the Cumulative Revenue Gap/(Surplus), Tariff Philosophy and revised category-wise Tariffs for FY and FY Chapter 9 details the Commission s rulings on the revision to Schedule of Charges sought by TPC-D Annexure I details the Revenue estimation from the revised tariffs for FY Annexure II details the Revenue estimation from the revised tariffs for FY Annexure III details the approved Tariff Schedule for FY Annexure IV details the approved Tariff Schedule for FY Page 28 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

29 2 SUGGESTIONS/OBJECTIONS, TPC-D S RESPONSES AND COMMISSION S RULINGS 2.1 SALES Hindustan Petroleum Corporation Limited (HPCL) submitted that from the past s of the Commission, it is observed that RInfra-D and TPC-D have submitted different numbers regarding the change-over sales. HPCL requested the Commission to approve change-over sales only after reconciliation of numbers between RInfra-D and TPC-D so as to avoid any difference in the numbers submitted by both Licensees. TPC-D s Response The change-over sales considered by TPC-D is grossed up by Normative Losses based on the methodology approved by the Commission. TPC-D and RInfra-D reconcile the monthly change-over sales based on which MSLDC carries out the final settlement. The data has been submitted to the Commission. Commission s Ruling The Commission has reconciled the change-over sales reported by TPC-D and RInfra-D for FY , FY and FY , and the detailed explanation in this regard is elaborated in Chapter 4 of this, in the true-up for FY POWER PURCHASE COST Mumbai International Airport Pvt. Ltd. (MIAL) submitted that the bilateral power purchase proposed by TPC-D is around 30% of total units of power to be purchased, and the rate proposed is Rs. 3.50/per kwh and Rs. 4.32/kWh for FY and FY , respectively, against the earlier purchase rate of Rs. 2.87/kWh. MIAL submitted that this increase is more than 50%, which is not realistic and should not be allowed by the Commission. MIAL submitted that the Commission should review the prudence of the rate and fix the rate at Rs. 3.13/kWh, as per the MYT. Shri Mahaveer Kumar Jain submitted that TPC-D should provide the breakup of the cost of power showing the Fixed Cost, Variable Cost, Prompt Payment Charges availed, Delayed Payment Charges (DPC) paid and other Charges paid, which will clarify whether TPC-D has taken advantage of prompt payment scheme and also whether DPC is paid by TPC-D. HPCL submitted that the cost of power purchase from TPC-G has increased in FY and FY by Rs Crore and Rs Crore, respectively, and requested the Case No. 69 of 2018 Mid Term Review for TPC-D Page 29 of 387

30 Commission to do the prudence check before allowing such increase in the power purchase cost. HPCL stated that TPC-D has purchased RE power from some sources such as Visapur at rates above the preferential Tariff. HPCL stated that as this approach has been disallowed by the Commission in the MYT, the Commission should continue the same approach and allow RE purchase at preferential tariff only. HPCL further stated that rate of power purchase from TPC-G for FY was Rs per kwh as against the approved rate of Rs per kwh, while the bilateral and UI power purchase were done at the rate of Rs per kwh against approved Rs per kwh. HPCL submitted that TPC-D could have purchased more power from bilateral and UI sources to reduce the power purchase cost, whereas TPC-D has proposed to reduce the purchase from bilateral and UI sources from approved MU to MU for FY and from approved MU to MU for FY HPCL stated that TPC-D has claimed that the rate of sale to Indian Railways is much higher than the marginal cost of power purchase, and the benefit received from this sale is passed on to the consumers. It sold MU to railways at average rate of Rs per unit amounting to revenue of Rs Crore. HPCL submitted that the power purchase from UI and short-term sources at Rs. 2.93/kWh and Rs. 2.62/kWh are intended for sale to Licensee s consumers. TPC-D has purchased power at the weighted average rate of Rs. 4.09/kWh from TPC-G. HPCL added however, that TPC-D has purchased power from TPC- G at rates higher than Rs. 4.45/kWh, at which sale was made to Railways. HPCL added that as per the Agreement with Railways, there are some penalty clauses for purchase below 44 MU, which have been referred in the MYT. Also, Railways is taking power from TPC- D as Licensee and part of the power is being taken as a consumer. HPCL mentioned that this inconsistent stand of Railways should not be allowed, and if Railways is recognised as a Licensee, then the whole power should be taken from TPC-D as a Licensee only. HPCL requested the Commission to undertake detailed prudence check and allow the sale to Railways only if it is beneficial to the consumers. TPC-D s Response As regards the objection of MIAL, TPC-D submitted that it has long-term PPA with TPC-G for FY and the balance requirement of power after supply from long-term sources will be met through short-term sources for FY TPC-D has considered the bilateral power purchase rate equal to the existing weighted average rate of power available in the market for last 6 months and added POC Charges of Rs. 0.35/kWh and proposed a rate of Rs. 3.50/kWh. The rates of short-term power are market-driven and depend upon the availability and demand for power. Page 30 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

31 For FY , TPC-D expects a supply shortfall of around MW over and above the proposed tie-up, for which TPC-D will explore procurement from external sources. The rate of power purchase considered is Rs. 4.32/kWh, which is equal to the rate derived from the outcome of the recent Case 1 bidding in Maharashtra. In case TPC-D is able to continue the tie up with all Units of TPC-G in FY , the balance seasonal peaking requirement would be met through short-term sources and the rate assumed would then be Rs. 3.50/kWh based on the past 6 months short-term market rates. As regards Shri Jain s submission, TPC-D submitted that it has provided the breakup of Fixed Cost and Variable Cost in its MTR Petition. TPC-D procures power through long-term contracts with TPC-G and since it is an inter-departmental adjustment, it does not attract any prompt payment discount. However, it avails prompt payment discount whenever it procures short-term power to meet its Peak Load requirement. As regards the objection of HPCL, TPC-D submitted that TPC-G has filed a separate Petition for Tariff determination and true-up for which the prudence check will be done by the Commission. The Commission will approve the Tariff of TPC-G, which will become applicable for TPC-D. TPC-D denied the objection that it had procured RE power above the Preferential Tariff approved by the Commission. TPC-D submitted that in case of purchase from 4 MW Visapur plant, TPC-D has claimed Wheeling Charges paid to the Distribution Licensee, based on the ATE Judgment. TPC-D submitted that the power purchase from TPC-G is under long-term contract and the same cannot be compared with short-term contracts as both have their own advantages and disadvantages. To ensure reliability and quality power supply at optimum cost, Distribution Licensees have to balance the procurement, to ensure reliable and quality power supply at optimum cost. As regards Outside License Area Sale, TPC-D submitted that it has already submitted the month-wise details of sale made to Railways during FY to FY in its Petition. Commission s Ruling As regards power purchase from short-term sources rather than TPC-G, every Distribution Licensee is required to optimise its power purchase cost by arranging for power from a mix of long/medium/short-term sources, in such a manner to maximise the assurance of power supply and minimise the cost of power purchase. Also, the rates for short-term power tend to fluctuate significantly depending on the demand-supply scenario prevalent in the country, Case No. 69 of 2018 Mid Term Review for TPC-D Page 31 of 387

32 and it would be unwise to depend too much on short-term power to meet the needs of the Distribution Licensee. The Commission has approved the Power Purchase Arrangement between TPC-D and TPC-G for FY , and TPC-D has been directed to submit its plan for tying-up its energy requirement for FY in the most optimum manner. The purchase of power from different contracted sources has to be undertaken on the principles of least cost despatch by applying the principles of Merit Despatch. The rates for purchase from bilateral sources have been considered based on the latest prevailing prices. The rates for power purchase from different Units of TPC-G have been considered as approved by the Commission in TPC-G s MTR dated 12 September, 2018 in Case No. 65 of Further, it may be noted that though the Commission has considered the cost of power purchase from TPC-G s Units in FY also for the purpose of this, presently TPC-D has no Power Purchase Arrangement with TPC-G for FY , and the fact that the Commission has considered such cost in this does not mean that the Commission has approved the purchase of power from TPC-G s Units in FY The Commission has allowed the Wheeling Charges on RE purchase from the 4 MW Visapur plant, while approving the power purchase cost for FY onwards, in line with the approach adopted by the Commission in the Review dated 12 January, 2018 in Case No. 4 of 2017 filed by BEST. The Commission has undertaken a detailed analysis of the economics of the Sale outside Licence Area by TPC-D to Railways, as elaborated in Chapter 5 of this, in the true-up for FY As regards HPCL s contention that Railways should not be allowed to take power supply from TPC-D both as a Distribution Licensee and as a consumer, it has been clarified by TPC- D that Railways is taking supply as a consumer at certain 22 kv and one 6.6 kv interconnection points, while all the EHV inter-connection points are being supplied power under the Licensee Business. 2.3 FIXED/DEMAND CHARGES MIAL submitted that TPC-D has proposed Demand Charges of Rs. 275/kVA for FY , which is after considering the increase of more than 14% over Rs. 240/kVA for FY Similarly, TPC-D has proposed Demand Charges of Rs. 285/kVA for FY as compared to Rs. 260/kVA approved in the MYT. MIAL stated that such steep hike on Page 32 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

33 year-on-year basis is not justified. MIAL added that the Commission in its MYT has decided to increase the Fixed/Demand Charges gradually by around 10-12% over the whole Control Period, whereas TPC-D has proposed a hike of 24% over the Control Period, which will be a huge burden on all customers and should not be permitted by the Commission. HPCL submitted that the Commission has already decided to gradually increase the Demand Charges by around 10-12% over the Control Period, and had accordingly determined the Demand Charges for FY and FY HPCL submitted that however, TPC-D has proposed to increase the Demand Charges to Rs. 275/kVA as compared to Rs 250/kVA approved by the Commission for FY , and to Rs. 285/kVA as compared to Rs. 260/kVA approved by the Commission for FY , without giving any clarification for the same. HPCL requested the Commission to not approve the proposed escalation in Demand Charges as proposed increase will add an additional financial burden of Rs Crore on HPCL. Mumbai Metropolitan Region Development Authority (MMRDA) submitted that the Demand Charges proposed by TPC-D for FY are Rs. 285/kVA, which represented increase of 9.62% with respect to existing Charges, and increase by 14% to with respect to Charges levied by Delhi Metro. MMRDA requested the Commission to reject the proposed increase in Demand Charges and to reduce the Demand Charges to Rs. 150/kVA. Shri Savio Pinto submitted that LT Commercial and LT Industrial slab up to 20 kw should be subjected to Demand Metering and Demand Charges, as the absence of Demand Metering often leads to violation of load slab limit. He also suggested that the LT Commercial and LT Industrial categories should be re-categorised, both in terms of Sanctioned Load and single phase/three phase connection, by creating three slabs in LT II and LT III categories, viz., 0-10 kw, kw, and above 50 kw Sanctioned Load. Shri Pinto added that in order to increase the recovery of Fixed Costs, there should be an increase in Maximum Demand (MD) Charges with the increase in Sanctioned Load slab, instead of having the same MD Charges for all slabs. In his rejoinder to TPC-D s reply, Shri Pinto submitted that TPC-D should clarify regarding the percentage of its Fixed Cost to be recovered from Fixed Charges and Demand Charges. Shri Pinto submitted that in its reply, TPC-D has referred to action taken only when the MD meter is exceeding 20 kw, however, the load slab limit should refer to Connected Load, which is always higher than MD recorded. Shri Pinto further added that average MD will be 70% of the Connected Load and the rule of waiting for MD to exceed the load limit 3 times in a year before approaching the Case No. 69 of 2018 Mid Term Review for TPC-D Page 33 of 387

34 consumers, actually refers to the Disconnection of the supply for MD based consumers having Sanctioned Load higher than 20 kw. Bharat Petroleum Corporation Limited (BPCL) submitted that TPC-D has proposed an increase in Demand Charges from Rs. 260 per kva to Rs. 285 per kva from 1 April, 2019, which will lead to an impact of Rs.1.39 Crore on BPCL. BPCL stated that it strongly opposed the Tariff increase proposed by TPC-D. Mahindra & Mahindra Ltd. (M&M) requested the Commission to consider a rationalised Tariff structure for FY , by either exempting or lowering the Fixed/Demand Charges for electricity used for Electric Vehicles (EV) charging. Shri Rakshpal Abrol submitted that Fixed/Demand Charges are already approved in the MYT for the 3 rd Control Period and should not be increased further. Shri Abrol submitted that TPC-D s MTR Petition should not be accepted as TPC-D has breached Section 61(f) of the EA, Shri Abrol added that TPC-D has not improved the distribution system and does not have any right to increase the Fixed Charges and Demand Charges as proposed. Shri Abrol further added that the Demand Charges must be based on kw and not on kva as consumption is measured under Ohm s Law. TPC-D s Response As regards the objection of MIAL, TPC-D submitted that the Tariff applicable should be considered on an overall basis. The Average Billing Rate (ABR) of HT Public Service category is proposed to be reduced as compared to that in FY and is also lower than that approved for FY and hence, the total outgo for MIAL is expected to reduce if the Tariff is approved as proposed. As regards the objection of HPCL and BPCL, TPC-D submitted that the increase proposed in ABR for FY is 5% over that in FY and 1% for FY over FY , for HPCL and BPCL. TPC-D has proposed a reduction in Tariff for FY as compared to the Tariff approved for FY in the MYT in Case No. 47 of Further, TPC-D is taking efforts to maintain similar Tariff for FY and FY by reducing Tariff of FY and increasing Tariff of FY as compared to that approved in the MYT. As regards the objection of MMRDA, TPC-D submitted that the Tariff proposed in the present Petition is for FY and FY TPC-D is of the understanding that significant loading of the Metro is only post FY Hence, any Tariff proposed for FY Page 34 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

35 and FY may not have a significant impact on MMRDA during the proposed period as the Demand itself would be low. As regards the objection of Shri Pinto, TPC-D submitted that although MD metering is not applicable to the consumer categories of LT III Industrial and LT II Commercial having Load below 20 kw, if the consumer exceeds the load limit, then as part of vigilance activity, a letter is sent to the consumer and if it happens for more than 3 times in a year, then TPC- D advises the concerned consumer to change their Tariff category, and recovers the differential Charges from the consumer through the bill. As regarding the objection to uniform Demand Charges, TPC-D submitted that it has proposed the Tariff for FY and FY in line with the Tariff already approved by the Commission for all consumer categories. TPC-D stated that if the Commission changes the tariff philosophy based on the suggestion, the consumers shall be charged accordingly. As regards the suggestions made by M&M, TPC-D submitted that it appreciates the efforts taken by M&M in the EV space, and has supported this endeavour by proposing a subsidized Tariff for the promotion of EV, with the proposed Tariff being lower than the proposed Tariff for LT I-Residential category for FY and FY TPC-D added that it has proposed only Fixed Charges and not Demand Charges, with the proposed Energy Charges being lesser than Rs. 5.50/kWh. TPC-D has also proposed to extend the Tariff of EV charging stations to be applicable for charging of electric batteries as well, which may be used for supplementary power supply in residential, Commercial, Industrial, or any temporary application and thus, encourage users to replace DG sets. Commission s Ruling As regards the suggestion of making Demand metering and Demand Charges applicable to LT Commercial and LT Industrial consumers with Sanctioned Load up to 20 kw, the Commission is of the view that these are smaller consumers and would typically have lower load factor, and levying Demand Charges on the basis of recorded Demand would result in such consumers having to pay much higher charges. Hence, the Commission has retained the concept of Fixed Charges for LT Commercial and LT Industrial consumers with Sanctioned Load up to 20 kw. The single-phase or three-phase connections are required to be released to consumers in accordance with MERC (Standards of Performance of Distribution Licensees, Period of Case No. 69 of 2018 Mid Term Review for TPC-D Page 35 of 387

36 Giving Supply and Determination of Compensation) Regulations, As regards the suggestion of re-categorising the Sanctioned Load slabs in LT II and LT III categories, the Commission is of the view that such a change cannot be introduced without assessing the implications of the change, both in terms of revenue to the DISCOM as well as the impact of tariff on the consumers. If such a change is proposed by the DISCOM along with the necessary supporting data, then the Commission can consider the same, based on the impact assessment. There is no inconsistency in Demand Charges being levied on the basis of kva of Contract/Billing Demand, as Demand is recorded in kva. The Commission has carefully considered the proposals made by EV manufacturers and TPC-D, and has approved promotional Tariffs for EVs, by carving out a separate category, as elaborated in Chapter 8 of this. The Commission s detailed Tariff Philosophy vis-à-vis overall tariff increase/reduction, reduction in cross-subsidies, increase/decrease in Fixed/Demand Charges, Wheeling Charges, Energy Charges and Regulatory Asset Charges (RAC), along with the approved category-wise Tariffs for FY and FY , have been elaborated in Chapter 8 of this. 2.4 CAPITAL EXPENDITURE AND CAPITALISATION HPCL submitted that TPC-D has claimed the capitalisation of Rs Crore, which is Rs Crore over and above capitalisation approved in the MYT. TPC-D has also separately claimed the impact of Rs Crore including Carrying Cost, towards additional capitalisation, for FY HPCL requested the Commission to direct TPC- D to submit all necessary documentary evidences, cost-benefit analysis, cost sheets, physical status, etc., separately for the capitalisation proposed before and after the issue of ATE Judgment, which should be available in the public domain. HPCL further requested the Commission to allow the capitalisation only after detailed scrutiny and prudence check of all the documents submitted by TPC-D. HPCL submitted that when the distribution network of the other Licensee in the same area already exists, duplication of network should be strictly avoided and execution of capital schemes should be under the strict scrutiny of the Commission. HPCL requested the Commission to disallow such duplication of work and unnecessary capitalisation undertaken by TPC-D to avoid the burden on consumers, and to provide details of the allowable scheme- Page 36 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

37 wise capitalisation amount in the MTR to ensure transparency. HPCL also requested the Commission to disallow any Carrying Cost as TPC-D was not able to submit the details of capital schemes, which led to delay in the finalisation of the decision. HPCL submitted that the ATE Judgment was issued in November 2014, however, the final decision in the matter has been taken in June Hence, the consumers should not be burdened with additional Carrying Cost for the fault of others. MIAL submitted that the Commission had approved the additional Capex infused by TPC- D in the previous Tariff s. MIAL submitted that TPC-D has asked for recovery of huge capital expenditure of Rs. 991 Crore, and the Commission should carry out the necessary prudence check to determine that the already approved capex has been utilised in an efficienct manner and that there are no idle assets, before considering TPC-D s request for additional capex, so as to ensure that the consumer is not burdened with additional Tariff. RInfra-D submitted that the capitalisation claimed by TPC-D has neither any reference to the Commission s in Case No. 50 of 2015 nor demonstration as to how the capitalisation claimed in the MTR Petition is in compliance with the ATE Judgment. RInfra- D requested the Commission to direct TPC-D to submit all evidence in support of capitalisation claimed by it in the relevant years in the MTR Petition so as to demonstrate its compliance with the ATE Judgment. RInfra-D further stated that if any assets are created in violation of the ATE Judgment, it will allow TPC-D to illegitimately connect consumers, which it would otherwise not be able to, and provide TPC-D to compete for new connections, which it otherwise could not, if the Judgment had been complied with and such network had not been created in the first place. TPC-D s Response As regards the objection of HPCL, TPC-D submitted that has provided all relevant details regarding capitalisation for the period from FY to FY and projections for FY and FY , to the Commission. TPC-D has also provided a cost-benefit analysis report and response to the queries raised by the Commission, with all relevant details, which have also been uploaded on the website. TPC-D stated that it has always submitted all the required details on time to the Commission and hence, there is no question of disallowance of Carrying Cost due to TPC-D. As regards the objection of RInfra-D, TPC-D stated that it has carried out capitalisation as per the principles laid down by the Commission and submitted a detailed scheme-wise reconciliation for capitalisation for all years, hence, RInfra-D s comments are incorrect. Case No. 69 of 2018 Mid Term Review for TPC-D Page 37 of 387

38 As regards the Objection of MIAL, TPC-D submitted that there is a set procedure institutionalized by the Commission for providing In-principle clearance for the proposed capital expenditure and a detailed prudence check is done while approving the final capitalisation carried out by any Distribution Licensee, thus, MIAL s suggestion is already in place as a process done by the Commission. Commission s Ruling The Commission has undertaken a detailed scheme-wise scrutiny and prudence check of the capitalisation claimed by TPC-D for each Year, which has been elaborated in the respective Sections of this, while discussing the year-wise expenses and revenue. 2.5 TIME OF DAY TARIFF Shri Mahaveer Kumar Jain submitted that there is increased awareness amongst the public and if the peak hour charges and non-peak hour rebates are increased, it will be easier to manage the demand of the system. Shri Jain stated that in the LT-II (A) Commercial as well as Residential category, there are consumers having annual consumption in excess of 6000 units. Shri Jain proposed that a new tariff category should be created for common activities within Residential Societies, where the power is used for pumping of water, common lighting, lift and similar uses for multiple households of building/premises. Shri Jain suggested that ToD tariff should be made applicable for such categories to encourage them to change the usage timings. Shri Jain added that there should be wide publicity by way of special details on the bills of such consumers about ToD, which will not only force them to change their timing but also take advantage of ToD tariff. Shri Jain further submitted that the ToD meters should be installed for the consumers who have Sanctioned Load above 15 kw, which will have negligible cost implication but will increase the revenue. M&M requested the Commission to include the ToD tariff structure to encourage charging of EVs during off-peak hours. TPC-D s Response As regards the objection of Shri Jain, TPC-D submitted that the Commission may consider the comments regarding creation of a separate category for common services by society or other form where the power is used for pumping of water, common lighting, lift and similar uses for multiple households of building/premises and provide appropriate Tariff category, if so required. TPC-D requested the Commission to consider the comments regarding the applicability of ToD tariff for the categories proposed and decide accordingly. TPC-D also requested the Page 38 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

39 Commission to consider the comments regarding the applicability of ToD tariff for load above 15 kw. TPC-D requested the Commission to include the EV category under ToD Tariff structure, as proposed by M&M. Commission s Ruling The Commission is of the view that it may not be practical to implement ToD Tariff for Residential category consumers or LT II (A) Commercial category consumers or for the common load in Residential societies, as these consumers cannot shift their load to different hours to reflect the ToD tariff. The Distribution Licensee may propose such a Scheme with all necessary details regarding the cost-benefit analysis, based on which the Commission can take a view. Further, as stated in earlier s, the applicability of ToD tariff and change in time-slots and rates of ToD Tariff have to be seen holistically across all the Distribution Licensees, and cannot be based on the load pattern and demand-supply of any one Distribution Licensee. The Commission has deliberated on this issue in the Section on Tariff Philosophy. 2.6 WHEELING CHARGES HPCL and MIAL submitted that TPC-D has proposed Wheeling Charges of Rs. 1.08/kWh as against the existing Rs. 0.88/kWh for FY , and Rs. 1.09/kWh as against the existing Rs. 0.92/kWh for FY for HT-I category. HPCL added that TPC-D has proposed 44% increase in the ARR of the Wires Business without giving any substantial reasons. HPCL further added that TPC-D s Wheeling Charges are already high in comparison to that of other Licensees and a further increase will adversely affect the consumers interest, and will also result in an extra financial burden of Rs. 1.9 Crore on HPCL for its consumption at 22 kv level. HPCL requested the Commission to direct TPC- D to provide all relevant documents and explanation for the proposed increase and the Commission may take a reasonable decision after being satisfied regarding the same. MIAL submitted that such increase in the Wheeling Charges of almost 25% will burden MIAL and will result in increased cost to Airport users. RInfra-D submitted that TPC-D has determined the Wheeling Charges for HT and LT Level by considering total sales of network consumers as well as OA consumers, wherein the sales of network consumers are inclusive of sales at 110/132 kv level. RInfra-D submitted that this is a contravention of the Commission s in Case No. 45 of 2017, wherein the Case No. 69 of 2018 Mid Term Review for TPC-D Page 39 of 387

40 Commission has ruled that HPCL is connected at EHV level, Wheeling Charges are not applicable to it. RInfra-D requested the Commission to determine Wheeling Charges of all Distribution Licenses in the State of Maharashtra uniformly, by excluding EHV costs and EHV sales from such determination, as is being done presently for MSEDCL. RInfra-D submitted that this is logical, as these consumers do not use the distribution network and the only distribution activities are meter reading, billing, bill distribution, collection, etc., which are recovered through the Demand Charges and Energy Charges levied by the Supply Business. RInfra-D submitted that TPC-D s approach of including the EHV sales in the denominator for determination of Wheeling Charges significantly suppresses the Wheeling Charges and provides TPC-D with an undue competitive advantage, as the suppressed Wheeling Charges reduce the overall tariff, and influences the consumers decision in case of switch-over as well as new consumers. RInfra-D added that in the MYT of TPC- D, the Commission has not excluded the EHV sales while calculating the Wheeling Charges. However, the Commission s views clearly show that the inclusion of EHV sales in the computation of Wheeling Charges for TPC-D suppresses the Wheeling Charges. RInfra-D submitted that such decisions could be taken in consumer interest in case of monopoly, however, in case of competition, such decision distorts the competition and fair play. BPCL submitted that the proposed increase in Wheeling Charges from Rs. 0.92/kWh to Rs. 1.09/kWh from 1 April, 2019 will have an impact of Rs 2.98 Crore, and strongly opposed any Tariff increase. M&M requested the Commission to exempt the electricity used for EV charging from Wheeling Charges. Shri. Rakshpal Abrol submitted that Wheeling Charges are already approved for the 3 rd MYT Control Period and it should not be hiked for FY and FY Shri. Abrol submitted that the change-over consumers are not liable to pay Wheeling Charges of TPC- D but have been paying Wheeling Charges, and they are approximately 6,50,000 in number. Shri Abrol submitted that the proposal to impose Cross-Subsidy Surcharge should not be accepted. MMRDA submitted that TPC-D has proposed Wheeling Charges from present level of Rs. 0.92/kWh to Rs 1.09/ kwh with an increase of 18.03%. This will increase the operational cost of the Metro, which indirectly reflects into Public fares. MMRDA requested the Commission to reduce the Wheeling Charges to Rs. 0.50/kWh. Page 40 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

41 TPC-D s Response TPC-D submitted that it has filed its MTR Petition in accordance with Regulation 5.1 (b) of MYT Regulations, 2015, and proposed revised Tariff for FY and FY As regards the objection of HPCL, BPCL, and MIAL, TPC-D submitted that the increase proposed in ABR for FY is 5% over that in FY and 1% for FY over FY , for HPCL and BPCL. TPC-D has proposed a reduction in Tariff for FY as compared to the Tariff approved for FY in the MYT in Case No. 47 of Further, TPC-D is taking efforts to maintain similar Tariff for FY and FY by reducing Tariff of FY and increasing Tariff of FY as compared to that approved in the MYT. As regards the objection of RInfra-D, TPC-D submitted that it has computed the Wheeling Charges based on the principles set by the Commission in its MYT dated 21 October, 2016 in Case No. 47 of 2016 for the entire Control Period, wherein the Commission has continued its philosophy of including the EHV sales in the HT sales and computation of Wheeling Charges has been done accordingly. Further, the Commission in the Tariff of TPC-D has provided a 2% discount to consumers connected on EHV level. TPC-D added that for no Licensee in Mumbai, have the Wheeling Charges been determined on the basis of voltage level till date. Hence, RInfra-D s comment regarding TPC-D having an undue advantage is completely baseless. In the case of MSEDCL, the voltage wise Wheeling Charges have been determined for the first time in the MYT, and not in the MTR. TPC-D added that the Commission had adopted the above philosophy uniformly across all Distribution Licensees of Mumbai to balance consumer tariffs. RInfra-D is deliberately trying to interpret the prevalent practice of the Commission, which has been followed for all these years as a distortion of competition and fair play, even when currently the Wheeling Charges of RInfra-D are lower than that of TPC-D. TPC-D submitted that the Commission, while exercising its inherent powers under the Electricity Act, 2003, has the authority to decide the Tariff Philosophy to be followed over a Control Period duly taking care of the interests of all the stakeholders and ensuring that the level playing field is maintained for all Licensees. Hence, TPC-D urged the Commission to take a holistic view of the impact of voltage-wise Wheeling Charges especially on the low-end consumers before deciding to deviate from its own philosophy adopted for the entire Control Period. Case No. 69 of 2018 Mid Term Review for TPC-D Page 41 of 387

42 As regards the suggestion of M&M, TPC-D submitted that it has proposed only Fixed Charges and not Demand Charges for the promotion of EVs, and the Energy Charges proposed are lower than Rs. 5.50/kWh. Commission s Ruling The Commission has determined the revised Wheeling Charges for TPC-D for FY and FY , based on the units wheeled and the ARR approved in accordance with the MYT Regulations, 2015, as elaborated in Chapter 7 of this. The Wheeling Charges are payable by all consumer categories, and hence, it is not possible to exempt any category from the same. However, the Commission has approved promotional Tariffs for EVs, by carving out a separate category, as elaborated in Chapter 8 of this. As regards the issue of whether the EHV cost and Sales should be considered for determining the Wheeling Charges, the Commission has deliberated on the same and come to a reasoned decision in this regard, keeping in view the MYT Regulations and previous s of the Commission, as elaborated in Chapter 8 of this. 2.7 DEMAND SIDE MANAGEMENT (DSM) HPCL submitted that TPC-D has claimed DSM Expenses for various DSM programmes such as Energy Audit, Ceiling Fan, Split AC, Refrigerator, LED Lighting, Thermal Energy Storage etc. HPCL submitted that these expenses are allowed to TPC-D only and not to other Distribution licensee as part of ARR. HPCL stated that TPC-D has not submitted any costbenefit analysis, Reduction in Power Purchase Cost and benefit accrued to the consumers against these expenses, hence, these expenses should not be allowed by the Commission. Shri Mahaveer Kumar Jain submitted that TPC-D should consider the promotion of BLDC Fan for Residential consumers, TES for air conditioning and Energy Audit for all consumers, it will facilitate energy saving for consumers and DISCOM. Shri Jain requested TPC-D to create consumer awareness in housing societies and help people to understand the objective and availability of scheme so that more consumers are able to avail the scheme. TPC-D s Response TPC-D is implementing DSM programmes after thorough scrutiny under the DSM Regulatory Framework established by the Commission and the main aim of the programme is to create awareness about the energy saving activities. TPC-D submitted that once the proposals are approved, it follows a systematic process for creating awareness and Page 42 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

43 implementing the approved DSM schemes. TPC-D added that it provides a quarterly report of DSM programmes to the Commission, which includes the scheme-wise progress of all DSM schemes, which is also discussed in the Consulting Committee comprising all Distribution Licensees. Commission s Ruling The expenses against DSM Schemes are included in the ARR, only if the Schemes are approved as per the DSM Regulatory framework. 2.8 ENERGY CHARGES HPCL submitted that TPC-D has proposed Energy Charges for HT-I category for FY Rs per kwh, which is more than Rs per kwh in comparison to the Energy Charges approved in the MYT for FY HPCL stated that since at present TPC-D has no PPA for FY and in the absence of PPA after 1 April, 2019, the actual cost of power purchase will vary because of change in sources of purchase, which will change the economics of Tariff. HPCL further submitted that the Energy Charges proposed by TPC-D for HT-I category for FY is contradictory to TPC-D s proposed remedies in para of MTR Petition, in which TPC-D has stated that keeping lower Energy Charges will attract OA consumers back to TPC-D. HPCL stated that HPCL s annual average consumption from TPC-D is 100 MU and the increase of Energy Charges will result in an increased burden of Rs Crore on HPCL. Shri Savio Pinto submitted that the existing Energy Charges for HT I- Industry category are lower than that of HT-II Commercial category, however, TPC-D in its MTR Petition, has proposed to increase the Energy Charges of HT-I category higher than that of HT-II Commercial category. Similar is the case for LT Industry and LT Commercial. Shri Pinto submitted that the Tariff for Industry should be lower than that for Commercial category, or equal in the worst case. Shri Pinto submitted that TPC-D s proposal is inconsistent with State and Central Government policy of continuously supporting Industry and also with Proposals made by other DISCOMs in State, which have proposed to keep the Energy Charges of Industry cheaper than that of Commercial category. In his rejoinder to TPC-D s reply, Shri Pinto stated that TPC-D is only defending its proposal by comparing ABR of HT Industrial and HT Commercial. Shri Pinto added that if Electricity Duty, Municipal Property Taxes and Water Taxes for Industrial consumers are lower than why not the HT I Industrial Tariff. Shri Pinto submitted that TPC-D has proposed to increase the Energy Charges in such a manner that the Energy Charges of LT-II (B) Commercial is lower than that of LT-II (A) Case No. 69 of 2018 Mid Term Review for TPC-D Page 43 of 387

44 Commercial, which in turn is lower than that of LT II (C) Commercial category. Shri Pinto added that TPC-D has proposed a similar illogical tariff for LT III (A) Industrial and LT III (B) Industrial category. Shri Pinto suggested that this is illogical, and the Tariff of LT II (B) Commercial cannot be lower than that of LT II (A) Commercial, and the Tariff of LT III (B) Industrial cannot be lower than that of LT III (A) Industrial category, as the Energy Charges should increase with increase in Sanctioned Load, or at most be equal. In his rejoinder, Shri Pinto said that if ABR is to be compared, then ABR computation should factor in higher MD Charges paid by LT II (B) and LT II (C) category against Fixed Charges paid by LT II (A) category, and MD Charges paid by LT III (B) category against Fixed Charges paid by LT III (A) category, instead of only comparing Energy Charges. MIAL submitted that TPC-D has proposed a steep increase in the Energy Charges to Rs per kwh for FY and Rs per kwh for FY MIAL stated that this steep increase Rs per kwh or 26% is not justified. MIAL added that as per TPC-D s MYT, no RAC was to be levied from FY However, while TPC-D has discontinued RAC of Rs per kwh from FY , it has proposed to increase the Energy Charges, which defeats the whole purpose of the Commission discontinuing RAC. BPCL submitted that TPC-D has proposed an increase in Energy Charges from Rs to Rs per kwh from 1 April, 2019 which will make an impact in the electricity bill by 5.67 Crore, and strongly opposed any Tariff increase. Shri Rakshpal Abrol submitted that Energy Charges are already approved for the 3 rd MYT Control Period and they should not be increased for FY and FY MMRDA submitted that the Energy Charges proposed for FY by TPC-D of Rs. 6.24/kWh as against existing Rs. 4.90kWh, are very high and will increase the passenger fares of Metro. MMRDA submitted that the Energy Charges should be kept same at the existing level as earlier approved by the Commission. The Energy Charges for Metro should also be kept lower than Railway Tariff. TPC-D s Response As regards the objection of HPCL, BPCL, and MIAL, TPC-D submitted that the increase proposed in ABR for FY is 5% over that in FY and 1% for FY over FY , for HPCL and BPCL. TPC-D has proposed a reduction in Tariff for FY as compared to the Tariff approved for FY in the MYT in Case No. 47 of Further, TPC-D is taking efforts to maintain similar Tariff for FY and Page 44 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

45 FY by reducing Tariff of FY and increasing Tariff of FY as compared to that approved in the MYT. As regards the objection of Shri Pinto, the proposed Tariff arises out of various components and revenue recoverable from this Tariff is specific to the category itself. The proposed ABR for HT I Industry and HT II Commercial are similar for FY & FY Further, there are no specific Regulations, which states that HT-I Industry Tariff should be cheaper than HT-II Commercial. TPC-D stated that it has no objection if the HT-I Industry ABR is kept lower than HT-II Commercial ABR after ensuring that the revenue recovery of TPC-D through Tariff will not be adversely affected and meets its ARR requirements. TPC-D submitted that Energy Charges are not the appropriate parameter to compare the Tariffs across categories. The ABR, i.e., the revenue earned per unit may be a more appropriate measure for comparison. As regards the objection of MIAL, TPC-D submitted that the Tariff applicable should be considered on an overall basis. The Average Billing Rate (ABR) of HT Public Service category is proposed to be reduced as compared to that in FY and is also lower than that approved for FY and hence, the total outgo for MIAL is expected to reduce if the Tariff is approved as proposed. As regards the objection of Shri Abrol, although the Tariff is approved for FY and FY in TPC-D s MYT, TPC-D has filed the MTR Petition and proposed the revised Tariff for FY and FY , in accordance with Regulation 5.1(b) of the MYT Regulations, As regards the objection of MMRDA, TPC-D submitted that the Tariff proposed in the present Petition is for FY and FY TPC-D is of the understanding that significant loading of the Metro is only post FY Hence, any Tariff proposed for FY and FY may not have a significant impact on MMRDA during the proposed period as the Demand itself would be low. Commission s Ruling The observation regarding the design of Energy Charges applicable to LT II-Commercial category is incorrect. The Energy Charges of LT II (A) category is the lowest, followed by that of LT II (B), followed by that of LT II (C). The Commission determines the reduction of cross-subsidies based on the Average Billing Rate (ABR), which reflects the incidence of Case No. 69 of 2018 Mid Term Review for TPC-D Page 45 of 387

46 the Fixed/Demand Charges based on the respective Load Factor, as well as the Energy Charges. The ABR of LT II (C) is the highest, followed by that of LT II (B), and finally by that of LT II (A). The Commission s detailed Tariff Philosophy vis-à-vis overall tariff increase/ reduction, reduction in cross-subsidies, increase/decrease in Fixed/Demand Charges, Wheeling Charges, Energy Charges and Regulatory Asset Charges (RAC), along with the approved category-wise Tariffs for FY and FY , have been elaborated in Chapter 8 of this. 2.9 CATEGORISATION AND TARIFF DETERMINATION The Dilip Vengsarkar Foundation submitted that it provides cricket coaching to underprivileged, orphan, and other Children at Chembur. At present, it has an electricity connection under LT II (A) Commercial category. Because of the increase in Tariff over the years and due to high expenditure, it is unviable to undertake such noble work. Hence, it requested the Commission to include its activity under Public Services category so that foundation can save some expenditure towards the electricity bill and can provide better coaching facilities to underprivileged children. Shri Savio Pinto submitted that there are only two slabs of Connected Load for LT III Industrial category, whereas there are three slabs of Connected Load for LT II Commercial category. Shri Pinto suggested that there should be identical number of slabs for LT Industrial and LT Commercial category, to avoid discrimination. He further added that energy charges should increase with increase in consumption slab. However, the same is illogical in case of TPC-D. Also, energy charges for Industrial have historically always been cheaper than Commercial. Further, he added that absence of demand metering for lower slabs for Commercial and Industrial category and negligence by Distribution Licence /Electrical Inspection Authority may lead to violation of load slab limit. Shri Pinto submitted that as per the Commission s, LT Industrial/HT Industrial Tariff categories are applicable for IT/ITES Units as defined by Maharashtra State IT/ITES Policy 2015, in force, subject to the IT/ITES Units having valid Permanent Registration Certificate, in the absence of which, LT/HT Commercial tariff would be applicable. Shri Pinto submitted that Temporary Registration Certificates are still in existence, which are not valid for Industrial Tariff. Shri Pinto submitted that State IT/ITES Policy and Industrial Tariff applicability under the Policy are within the domain of Department of Industries and not the DISCOM or the Commission. He sought clarification from TPC-D and the Commission Page 46 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

47 regarding the legality of the, as well as proof that TPC-D has followed the. Shri. Pinto further added that why this came specific clause came out in the 2016 if there were already laid down rules in IT/ITES Policy 2015 & earlier IT/ITES Policy Shri Pinto sought clarification about the Tariff applicable to IT Parks as it is not specifically mentioned in the MYT. He further submitted that he has referred to the Tariff category of the Common Meters of IT Parks (For Common Utilities) as the IT/ITES Units are supposed to have Individual Meters. IT/ITES Policy 2003 & 2009 clarified Industrial Tariff Applicability only to Individual IT/ITES Units. The IT Park Common Meter Tariff been clarified by the State Industries Department only in IT/ITES Policy This is a major issue with some other DISCOM, especially MSEDCL. Some Cases were referred to CGRF & verdicts given are questionable with IT/ITES Policy 2015 in mind. Shri. Pinto further submitted that there are some occasions where the Industrial power License is in the name of the owner/landlord while the end user is New Tenant. To justify the Industrial category, the Industrial Power Licence should be in the name of End User. If the end consumer is not having the Industrial Power Licence then the Industrial Tariff is not applicable for them and entire past period tariff/duty should be charged to them. Shri. Pinto suggested that annual inspection by DISCOM should be made mandatory and all Industrial Tariff category with IT/ITES LOI certificates who have availed Industrial Tariff should be investigated and if some irregularity is found, Industrial Tariff should be made invalid and for the entire past period Tariff/ Duty should be levied. Independent annual site Inspections is must for proper vigilance. Shri Pinto submitted that since an industrial consumer requires a valid Industrial Power Licence to avail billing under Industrial category, the Licence details including the validity period of the same, should be reflected in the billing system of the DISCOM. Shri Pinto submitted that in the absence of a valid Industrial Power Licence, the default Tariff and Electricity Duty should be charged as per the Commercial category. Shri Pinto submitted that neglecting invalid Industrial Power Licence by the DISCOM leads to under-recovery of revenue from such consumers thereby burdening the other consumers, while under-recovery of Electricity Duty leads to loss of revenue to the State Government. Shri. Pinto further added that nothing in the existing Supply Code Regulations prevents TPC-D from printing the Industrial Licence/Validity in the electricity bill and permission from the Commission is also not required for implementation of such step. He suggested that this will remove all ambiguity regarding validity of Industrial Power Licence. Case No. 69 of 2018 Mid Term Review for TPC-D Page 47 of 387

48 Mumbai International Airport Pvt Ltd (MIAL) submitted that Airports fall under category of transport and air travel which has no longer remained a luxury. MIAL added that 90% of the seats in flights originating and culminating at Chhatrapati Shivaji International Airport, Mumbai are economy class, where advance fares are even lower than 3-AC train fares. MIAL further submitted that the Chhatrapati Shivaji International Airport, Mumbai should be included in category HT V (B) for Metro & Mono Rail so that the benefit of low fares can be passed on to people. Zoomcar India Private Limited submitted that in order to achieve the targets set by Government of India under National Electric Mobility Mission Plan, 2020, the tariff structure for EV Charging should be 50% of the existing domestic Tariff rate in the range of INR 2-4/kWh. It further added that the attractive tariff rate would incentivise the setting up of Public Charging Infrastructure and consequently incentivise more consumers to switch to electric vehicles in cities like Mumbai, Pune, Nagpur, etc. It further submitted that TPC-D has recognised the need for separate tariff category in their Tariff proposal, however, Tariffs proposed by TPC-D are not in sync with the best practices in other States in India. Mahindra & Mahindra Ltd. submitted that TPC-D in its Petition has included a separate EV consumer Tariff in LT category. The energy charges of this category come out to Rs. 6/kWh including the RAC and Wheeling Charges (with increasing Wheeling Charges in FY ). It requested the Commission to consider the rationalised tariff structure for FY and FY as volume of electric vehicles operating currently will be low. The promotional tariffs can be extended to the consumers in the range of Rs. 5 to 5.5 per unit. Tariffs can be re-considered at the next Petition considering evolution in technology and cost of infrastructure and volume of electric vehicles. They further requested to include this category in Time of Day tariff structure to encourage a pattern in charging behaviour during off-peak hours. They also requested to either exempt EV charging from demand charges and wheeling charges or specify the lower level of demand charges and wheeling charges. Municipal Corporation of Greater Mumbai (MCGM) submitted that by using the Waste Processing Facilities such as Organic Waste Converter neither the individual housing societies, markets, hotels, restaurants and hospitals nor MCGM are going to incur any profits and hence, the levy of commercial/industrial Tariffs for operation of Organic Waste Converter is not justified. MCGM added that by use of Organic Waste Converter by individual housing societies, markets, hotels, restaurants and hospitals, almost 60 to 65% of biodegradable waste generated in the city of Mumbai on daily basis will be disposed off on site and reduce the burden on the dumping ground for disposal of waste. Hence, MCGM requested the Commission to approve residential Tariff for the consumption of electricity Page 48 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

49 for Waste processing Facilities such as Organic Waste Converters, Bio-methanation plant and vermi-composting units, etc., instead of levying commercial/industrial rates, in order to encourage all the residential societies, restaurants, hotels, etc. to opt for waste disposal through composting or bio-methanation within the premises. TPC-D s Response As regards the objection of Dilip Vengsarkar Foundation, TPC-D submitted that the Commission decides the categorisation of consumers according to their usage for charging of Tariff for consumption and accordingly Distribution Utilities levy the Tariff to the consumers. The Commission may grant appropriate Tariff category considering the purpose, ensuring that the Distribution Utility is revenue neutral. As regards the applicability of two slabs for LT III Industrial and three slabs for LT II Commercial category, TPC-D submitted that the consumers categories have been considered as determined by the Commission and the change in Tariff category is the prerogative of the Commission. As regards the objection of Shri. Pinto regarding Tariff applicable for IT/ITES Units, TPC- D submitted that, based on the clause 5A(iii) of Maharashtra IT/ITES policy 2015, it is applying LT Industrial or HT Industrial Tariff to the consumers of IT only after the submission of permanent IT registration certificate issued from Directorate of Industries and Development Commissioner or Software Technology park of India (STPI) which is valid for certain period and the same is mentioned on the certificate. After the expiry, the consumers have to submit the renewed certificate to avail the benefit of the Industrial Tariff for their consumption. As regards the objection of Shri. Pinto regarding Tariff category applicable to IT parks, TPC- D submitted that, as per Annexure -VII (Schedule of Electricity Tariffs) to the in Case of 47 of 2016 dated October 21, 2016, Tariff for LT III: LT Industry on page 376 where the applicability of Tariff for IT parks is specially mentioned. The extract of the is given below: This Tariff category shall be also be applicable for use of electricity/ power supply by an Information Technology (IT) or IT-enabled Services (ITES) Unit as defined in the applicable IT/ITES policy of Government of Maharashtra. Where such unit does not hold the relevant permanent registration certificate the Tariff shall be as per the LT II category and the LT III tariff shall apply to it after receipt of such permanent registration Certificate and till it is valid. Case No. 69 of 2018 Mid Term Review for TPC-D Page 49 of 387

50 As regards the objection regarding the validity of Industrial Power License, TPC-D submitted that the Application processing system is in place and proper procedure is followed for any consumer Category. The Billing is done through the SAP system. As per existing Supply Code, the printing of Industrial License on electricity bill of all Industrial consumers, with details like Agency issuing License & Importantly validity of the License is not mandatory. However, as per GOM directive, details of ED exemptions on the bills is in place. Further with refence to conducting time bound government audit, TPC-D submitted that the monthly and quarterly reports are submitted to electrical inspector for ED and tax on sale of electricity. As per request, this data is being shared with the office of electrical inspector. As regards the objection regarding the Industrial Power License on the name of end consumer, TPC-D submitted that it is following all the guidelines as provided by Directorate of Industries in IT/ITES policy TPC-D billing is done through the SAP, and the system is in line with all rule and regulations. In case of IT/ITES registration certificate, TPC-D accept the permanent certificate on which validity is mentioned and applicability of Industrial Tariff to such consumer is only till the validity of the certificate. If the validity of certificate get expires, the consumer has to submit the renewed certificate falling which Commercial Tariff is applicable to such consumers. As regards the objection of MIAL, TPC-D submitted that it has maintained the Tariff categories as determined by the Commission. Further, the Tariff categorisation is the prerogative of the Commission who may decide appropriate tariff categorisation based on the suggestion received. Further, it is noted that an appeal filed by MIAL for Tariff categorisation is sub-judice before ATE. As regards the objection of Zoomcar India Private Limited and Mahindra & Mahindra Ltd., TPC-D submitted that it has proposed a new Tariff category for Electric Vehicle Charging Stations with a subsidised Tariff, lesser than proposed tariff of LT-I residential ( ) consumer category, for FY and FY Further, TPC-D submitted that it has proposed the fixed charges of Rs. 110 per connection per month, not the demand charges. Also, the energy charges are proposed as Rs per unit for FY , which is lower than Rs per unit as suggested by Objectors. Further, TPC-D has proposed to extend the tariff of EV charging stations, also to be applicable to electric batteries, which may be used for supplementary power supply in residential, commercial, industrial or any temporary applications, this will encourage users to replace the use of DG sets. Page 50 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

51 As regards the objection of MCGM, TPC-D submitted that the Commission decides the categorisation of consumers according to their usage for charging of tariff for consumption and accordingly, the Distribution Licensees levy Tariff to the consumers. At present, there is no separate consumer category for such organic waste converters, bio-methanation plant, and vermi composting Units etc. The Commission may provide the appropriate tariff category for such consumption. As the organic waste converters, bio-methanation plant & vermi composting Units are the need of the hour, the Commission may provide appropriate tariff category for such consumption. Commission s Ruling The Commission does not find any merit in the stakeholder s comment that the presence of only 2 slabs for LT Industrial category as against 3 slabs for LT Commercial category amounts to discrimination against the LT Industrial category. The Tariff applicable for LT Industrial category is generally lower than that applicable to LT Commercial category. It is clarified that the Applicability of Tariff and the Tariff payable by any consumer category is solely within the prerogative of the Commission, and the Commission has linked the eligibility of receiving electricity supply at Industrial tariff to the IT/ITES consumers who have the necessary Certificate issued by the Department of Industries. The Distribution Licensee is required to implement the Commission s s related to consumer categorisation and Tariff, without any deviation, in accordance with the provisions of the Electricity Act, 2003 and the Regulations notified by the Commission. In case of any change of use, the Distribution Licensee has all the necessary powers to take appropriate action against such consumers. The Commission has no evidence to believe that the same is not being followed by the Distribution Licensee. The Commission recognises the need to encourage all the residential societies, restaurants, hotels, etc. to opt for waste disposal through composting or bio-methanation within the premises. The Commission has carefully considered the suggestions made by MCGM, RInfra-D and TPC-D in this regard, and has ruled on the tariff applicability for these activities, when they are undertaken by different entities, as elaborated in the Tariff Philosophy Section of this. As regards the tariff category and applicability for EV charging, the Commission carefully considered the suggestions made by Stakeholders and has ruled on tariff applicability in this regard, in Tariff Philosophy Section of this. Case No. 69 of 2018 Mid Term Review for TPC-D Page 51 of 387

52 As regards the request of Dilip Vengsarkar academy, the Commission is of the view that cricket coaching activity cannot be classified under Public Service category, and would be classified under Commercial category POWER FACTOR INCENTIVE AND KVAH BILLING Mumbai International Airport Pvt Ltd (MIAL) submitted that the Power Factor incentive system was introduced with an aim to get support from consumers to improve the system conditions and allow the consumers to recover the cost of power factor correction equipment through incentives. If the discontinuation of incentive is allowed by the Commission, then it would lead to falling of the Power Factor and will burden the Transmission Lines and reduced the capacity. Since, Mumbai has already transmission constraints, the discontinuation will prove to be counter-productive and will only add the problems. Further, MIAL submitted that TPC-D has proposed to introduce kvah based billing from FY onwards. TPC-D has considered 0.95 as base power factor for conversion of kwh to kvah without any rationale. The base Power Factor should be 1. Further, MIAL added that this method would require the consumers to purchase new meters and therefore an extra burden will be added. Hindustan Petroleum Corporation Limited (HPCL) submitted that the present mechanism of PF Penalty/Incentive is more effective as PF penalty and incentive amount is shown separately in billed amount. Some consumers have already installed PF correction equipment after recognising PF penalty in the bill. However, in the proposed mechanism, penalty/incentive will not be visible as Power Factor threshold will be considered as part of Tariff determination. Further, TPC-D proposed the conversion of Tariff at Power Factor of 0.95 which is without any study or back up data. Power Factor is very high compared to normal PF for each category. If Tariff is fixed at 0.95 pf, the consumer having lower Power Factor will lose out in Energy Bill and will also deteriorate the distribution system. HPCL further submitted that the present mechanism Power Factor Penalty/ Incentive should be continued and separate study may be undertaken to understand the present level of power factor for all licensee in the state. Further, as a change of metering, installation of appropriate meters, consumer awareness, etc would be necessary, the proposal should be put up for consultation among all stakeholders and should be implemented from next MYT Control Period. RInfra-D submitted that TPC-D has prayed for kvah based billing in the MTR Petition. If kvah based billing is introduced then it should be introduced for both licensees i.e. TPC-D and RInfra-D. RInfra-D further submitted that the proposal could be put up for consultation Page 52 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

53 among all stakeholders as change of metering, etc. would be necessary and; subsequent implementation, if at all, in the next MYT Control Period. Further, it is stated that, if kvah billing is introduced then the cost of replacement of meters for categories, whose meters are currently incompatible for kvah billing, should be allowed in the Tariff. TPC-D s Response As regards the objection of HPCL and MIAL, TPC-D submitted that kvah billing does not remove the power factor incentive but only becomes an inbuilt mechanism for passing the PF incentive /penalty instead of separately passing it through an incentive/penalty. The incentives provided till date were so high that cost of the Power Factor equipment installed by the consumer would have been recovered many times over through incentive. Further, TPC-D submitted that consumers are mandated to maintain the power factor to a certain level as per Electricity Supply Code, Hence, power factor improvement equipment has to be installed by the consumer irrespective of the incentives provided. The incentives are applicable only if the power factor is maintained above a certain limit. The kvah billing is well adopted in many states. TPC-D proposed to consider the base power factor as 0.95 for conversion of kwh to kvah as it is the base for deciding the incentive currently. The current HT meters have the facility for the kvah billing and meters may not be required to be replaced in the majority of cases. Further, TPC-D added that MIAL has continuously maintained the power factor of 0.995, hence it would still earn an incentive through kvah billing. As Regard the objection of RInfra-D, TPC-D submitted that it has proposed kvah billing and it is to be introduced as proposed. RInfra-D may make a submission in their Tariff Petition for the similar requirement of kvah billing. Commission s Ruling As regards the introduction of kvah Billing and applicability of power factor incentive/penalty mechanism, the Commission has carefully considered the submissions made by TPC-D and other stakeholders and has dealt the issue in Tariff Philosophy Section of this FINANCIAL MANAGEMENT AND CONTROL Hindustan Petroleum Corporation Limited (HPCL) submitted that, as per MYT Regulations, 2015, every Distribution Licensee has to prepare separate accounting statements for their regulated business and submit it to the Commission for Truing up purpose. It stated that Case No. 69 of 2018 Mid Term Review for TPC-D Page 53 of 387

54 TPC-D has not submitted a separate accounting statement for their distribution business for FY and submitted an allocation statement for that. HPCL further stated that allocation statement has no sanctity and instead of rejecting, the Commission accepted the Petition. HPCL requested the Commission not to consider the Truing-up of FY and its impact shall be not passed on to consumers. Shri Mahaveer Kumar Jain submitted that TPC-D in its MTR Petition has not attached audited Financial Statements. Shri Jain added that Regulation 8 of MYT Regulations, 2015 mandates the documents to be submitted with MTR Petition, viz., audited balance sheet, profit & loss account and cash flow statement, and auditors report of each licensed or regulated business. Shri Jain added that TPC-D should submit budget along with budgeted balance sheet, profit & loss account and cash flow statement in the format in which audited data are presented for the respective period for comparison of the performance of accounts and financial status. He further added that use of resources by TPC-D of other division and group companies and use of property of TPC-D by other group companies or related parties shall be identified and strictly prohibited. There would have been a lot of transactions for other companies or divisions and are not linked to TPC-D s business. Hence, disallowing such transactions and recovering market prices for use of each of property by other divisions and other group companies shall be required. He further added that by allowing the use of space for other division, there is a loss of potential revenue, if the same been given in open tender basis. Therefore, use of any resources must be on 100% transparent and shall be on open tender basis with prior approval of the Commission. He further added that no one will get the information about the cash and bank balances of Mumbai licensee which would have been used by other divisions and cost of such funds/ facilities will be charged to Mumbai Licence Business. In order to avoid this, there is need to have a certificate from Chartered Accountant to make sure that Mumbai Licence funds are not used for other division. TPC-D s Response As regards the objection of HPCL and Shri Jain, TPC-D submitted that duly certified Accounting Statement for FY was submitted in the data gap Response submitted through the letter No. CREG/MUM/MERC/2018/142 dated June 14, 2018 as a part of the main Petition. TPC-D submitted that the submission of HPCL is not correct and it has not considered the entire submission of TPC-D. TPC-D has also submitted the Auditor s Statement and Auditors GFA statement. Page 54 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

55 As regards the objection of Shri Jain regarding the use of property/resources by other divisions and group companies and use of property by companies of Group / Related Parties, TPC-D submitted that any intercompany transactions are based on Arm s Length Principle. Commission s Ruling For FY , TPC-D has submitted the Accounting Statements mandated under the MYT Regulations, 2015, separately for the regulated Distribution Business, and the reconciliation statement reconciling the expenses and revenue claimed in the MTR Petition vis-à-vis the amounts appearing in the accounts, based on which, the Commission has approved the expenses and revenue, after prudence check. The capital related expenses and O&M expenses are allowed on normative basis, based on the expenses incurred for the regulated Distribution Business. As regards the use of property of TPC-D by other divisions and group companies, the Commission is of view that the rental income arising out of such activities shall be considered under Income from Other business. However, TPC-D has not submitted any such income in the present Petition as well as part petitions. In view of this, the Commission directs TPC-D to disclose the use of property of TPC-D by other divisions and group companies, if any and submit the details like type of arrangement, sharing of expenses, rental income, etc. during the next MYT Petition before the Commission CONSUMER SECURITY DEPOSIT Shri Mahaveer Kumar Jain submitted that, as per the Supply Code Regulations, 2005 and past Tariff s, there are specific provisions to recover Consumer Security Deposit (CSD) from consumers based on annual assessment if there is an increase. However, there is no information as to how much overdue CSD on this account is unrecovered, therefore the cost of such deposit is missed from the reduced cost, which would have been there. Shri Jain added that if overdue CSD had been recovered in a timely manner, there would have been lower working capital requirement, and hence, lower working capital interest burden. TPC-D s Response TPC-D submitted that it follows due process regarding the collection of CSD as per MERC Regulations and yealy submits the relevant data to the Commission. Case No. 69 of 2018 Mid Term Review for TPC-D Page 55 of 387

56 Commission s Ruling The Distribution Licensees are required to do the needful to ensure that the due amount of CSD is recovered from consumers. It may be noted, however, that under the MYT Regulations, 2015, the rate of interest on CSD and IoWC is the same, i.e., Marginal Cost of Lending Rate (MCLR) plus 150 basis points, and hence, there is no impact on the ARR on account of under-recovery of CSD INCOME TAX Shri Mahaveer Kumar Jain submitted that TPC-D has not provided computation of Income and Tax Liability and Income Tax Return, which would reveal the correct status of all the disallowances /periodical disallowances due to violation of law, tax benefits applicable and availed, tax liability working, etc. He further added that the benefits of Section 80 I/A claimed in Income Tax Returns are not being passed on in the present Petition. Income tax is required to be charged based on actual income tax as per audited accounts. He further submitted that, without verifying the details of computation of Income tax liability, the Commission should disallow the claim on the basis of unaudited values. TPC-D s Response TPC-D has computed the Income Tax based on the approved methodology by the Commission in its various tariff orders as per MYT Regulations, TPC-D has submitted all the relevant data sought by the Commission in its data gap queries on the Income Tax. Commission s Ruling The Commission has computed the Income Tax for FY and FY while carrying out the truing up as per the provisions of MYT Regulations, While approving the Income Tax, the Commission has considered the benefits under 80 IA and the same has been elaborated in detailed in Section 4 and Section 5 of this BILLING Shri Mahaveer Kumar Jain submitted that TPC-D has not provided any data on the bill generation efficiency. The delay in billing has a cascading effect on the finances of TPC-D, which will in turn impact the consumers. Shri. Savio Pinto submitted that there is under-recovery of revenue for DISCOM due to the presence of deficient & negligent billing standards. He stated that difference in tariff rates between categories of consumers requires proper billing standards & procedures to be Page 56 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

57 maintained by the Electricity DISCOM to prevent under-recovery of revenue. Due to such under-recovery the residential consumer is overburdened. Shri Pinto further submitted that an Independent body audit should be conducted for Industrial category billing of the DISCOM for last 10 years period whenever there is a significant difference in the Tariff rates of Industrial & Commercial consumers. Whenever past license is found invalid, Industrial Tariff category is not applicable & Entire Past Period Tariff / Duty Refund should be obtained. Shri. Pinto sought clarification about the adoption of new conditions of supply 2015, which will reduce the past billing mistakes and will avoid any legal hurdle. Shri. Pinto added that if the DISCOM has wrongly billed Tariff category (Under Billed OR Over Billed) to a Consumer in the past, the recovery (Debit OR Credit) should be for the entire past period that is clearly proved. TPC-D s Response As regards the objection of Shri. Jain, TPC-D submitted that billing is done on the same date in case of HT consumers. Moreover, for LT consumers, meter reading is recorded and uploaded on 5 th of every month and then the bill is raised on the 6 th of every month. As regards the Objection of Shri. Pinto regarding need of vigilant tariff billing systems, TPC- D submit that it has responded to the letter dated November 15, 2017 to the Commission, as suggestion received from the Commission. Commission s Ruling The period of bill rectification in case of billing errors as well as the time period for raising bills after meter reading, have to be in accordance with the prevalent Supply Code Regulations, METERING Shri Pinto submitted that for LT Commercial and LT Industrial consumers, electronic smart meters are used which record Maximum Demand. Shri Pinto stated that MD is an indirect measure of Connected Load, if diversity factor is considered. Shri Pinto added that if a high diversity factor of 80% is considered, a consumer in the category of 0-20 kw load should be investigated for recorded MD of 16 kw. Similarly, a consumer in the kw load category should be investigated for recorded MD of above 40 kw. Shri Pinto submitted that violation of Connected Load limit leads to under-recovery of revenue from such consumers thereby increasing the burden on honest consumers. He further submitted that there should be upgradation of Billing Software to change Billing category to next higher in case the Case No. 69 of 2018 Mid Term Review for TPC-D Page 57 of 387

58 recorded MDs exceed the upper load limits of Tariff category. In a rejoinder, he added that TPC-D, has about 85,955 LT Commercial & Industrial consumers in 0-20 kw Load Slab Category and can provide the data of recorded MD above 14 kw. He submitted that TPC-D should ask 0-20 kw consumers to update their load records by asking for Licenced Electrical Contractor certified actual connected Load details. Shri Pinto submitted that the rule of single meter for single premises is often flouted because of poor vigilance. Shri Pinto said that in some Commercial and Industrial buildings, the Builders apply for individual meter for individual premises, which are later sold or leased to other Parties who combine multiple premises as per their need. Shri Pinto stated that in the absence of regular vigilance inspections by the DISCOMs, the combined multiple premises get billed by multiple meters, i.e., lower load based Tariff. Shri Mahaveer Kumar Jain suggested that Smart meters should be used for billing of HT and LT consumers having annual billing above Rs. 50 lakh. He further added that Smart meter costs around Rs. 15,000 as compared to regular meter of cost around Rs per meter. This will increase the capital expenditure per consumer. However, this expenditure will reduce the delay in billing from the date of meter reading and benefit of which will accrue to TPC-D and ultimately public at large. TPC-D s Response As regards the objection of Shri. Pinto regarding exceeding Demand for LT Commercial and LT Industrial consumers, TPC-D submitted that vigilance team analyses data at frequent intervals. The cases where there is suspect of load being used beyond Sanctioned Load, actions are being taken as per the procedure laid down in line with appropriatee Regulations. As regards the objection of Shri. Pinto regarding Single premises Single meter, TPC-D submitted that, as a process, it provides one meter for one premise. If at all anywhere it remains, TPC-D will change the same as a part of the process. As regards the suggestion of Shri Jain, TPC-D further requested the Commission to consider the comments on Smart Meter for billing of the consumer. The Draft National Tariff Policy 2016 dated 30 May, 2018 also recommended the use Smart meters. TPC-D will follow the approval process laid down for implementation of Smart meters in Mumbai. Page 58 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

59 Commission s Ruling The prevalent stipulations regarding charges in case the recorded demand exceeds the Contract Demand are sufficient, and have been in place for several years now. For consumers who are billed on the basis of Sanctioned Load, the Demand is not recorded. As regards enforcement of the rule of single meter for single premises, the DISCOMs are required to ensure strict adherence to this rule, by regular vigilance. As regards the installation of smart meters for identified consumer categories, the Commission will take a view on the same based on the DPRs to be submitted by the DISCOMs and approve the same, in accordance with the capex approval Guidelines notified by the Commission DEPRECIATION Hindustan Petroleum Corporation Limited (HPCL) submitted that TPC-D has claimed Depreciation for supply business at an average Depreciation rate of 6.58% for FY and 6.33% for FY and FY Supply Business mainly includes the meters and other equipment. The Depreciation rate of meters as per MYT Regulations, 2015 is 5.28%, which is much lower than the average Depreciation rate claimed by TPC-D. HPCL requested the Commission to approve such higher Depreciation rate after due prudence check. TPC-D s Response TPC-D submitted that it has calculated the depreciation considering the rates specified in the MYT Regulations, The asset wise details of Depreciation for Wires Business and Supply Business is submitted in MTR Petition. The higher Depreciation was on account of higher depreciation of IT-related assets capitalised during FY and FY and; the depreciation rates of which are as per the Depreciation Schedule specified in MYT Regulations, Hence, the submission made by objector is not correct. Commission s Ruling The Commission has approved Depreciation for FY as per rates specified in MYT Regulations, 2011 and for FY onwards, as per rates specified in MYT Regulations, While approving the Depreciation for the respective years, the Commission has undertaken detailed prudence check, which has been elaborated in Section 4, Section 5 and Section 6 of this. Case No. 69 of 2018 Mid Term Review for TPC-D Page 59 of 387

60 2.17 CROSS-SUBSIDY SURCHARGE MMRDA submitted that levy of cross-subsidy charges for metro is not rational as it is a public mode of transport. It further added that the increase in Cross subsidy will indirectly burden the public by increase in fares. MMRDA requested that being a purely public utility service for common men, Metro category should be exempted from cross subsidy surcharge. Hindustan Petroleum Corporation Limited (HPCL) submitted that TPC-D has proposed Cross Subsidy Surcharge (CSS) of Rs. 1.81/kWh as against the existing CSS of Rs. 1.26/kWh for the HT-1 category for FY HPCL further submitted that the Commission had granted TPC-D an increased rate of Rs. 1.26/kWh for FY vide its dated October 21, 2016 as against the proposed CSS of Rs. 0.74/kWh by TPC-D in its MYT Petition. The proposed CSS by TPC-D in present Petition for HT-I category for FY is more than 20% of ACoS, which is contrary to the formula of Tariff Policy. The proposed CSS, if allowed, will result in an extra burden on HPCL, which will be borne by customers of HPCL. The proposed CSS will be tariff shock to Open Access consumers. HPCL requested the Commission to cap the CSS at a reasonable rate. Bharat Petroleum Corporation Limited (BPCL) has submitted that BPCL- MR is a partial Open Access consumer of TPC-D and is availing power at 22 kv network of TPC-D. TPC- D has proposed a drastic increase in Cross-Subsidy Surcharge from Rs per unit to 1.81 per unit from 1 April, 2019 which will result in an increase cost of BPCL and will make Open Access power uneconomical. BPCL strongly opposed any Tariff hike proposed by TPC-D in their MTR Petition. TPC-D s Response As regards the objection of MMRDA, TPC-D submitted that the Tariff proposed in the present Petition is for FY and FY TPC-D is of the understanding that significant loading of the Metro is only post FY Hence, any Tariff proposed for FY and FY may not have a significant impact on MMRDA during the proposed period as the Demand itself would be low. As regards the objection of HPCL, TPC-D submitted that it has calculated CSS as per the methodology approved by the Commission in MYT based on the National Tariff Policy which is capped at 20% of ABR. The Tariff proposed for HT Industry for FY is Rs. 9.06/kWh, therefore ceiling limit for CSS within 20% of Rs. 9.06/kWh works out to Rs. 1.81/kWh. Page 60 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

61 As regards the objection of BPCL, TPC-D submitted that it has proposed reduction in tariff in FY as compared to tariff for FY approved in MYT. Further, it is stated that CSS is outcome of the calculation as per the methodology approved by the Commission in line with Tariff Policy. CSS is capped at 20% of Average Billing Rate. Commission s Ruling The Commission s philosophy regarding the determination of CSS has been elaborated in detailed in Tariff Philosophy Section of this FUEL ADJUSTMENT CHARGES Shri. Rakshpal Abrol submitted that TPC-D is permitted to impose Fuel Adjustment Charges in addition to the Tariff rate which includes many other expenses. However, no alteration is permissible as specified in Section 62(4). Further, there is an issue of Cross-Subsidy surcharge and Regulatory Asset Charges as FAC is collected as per formula approved by the Commission. TPC-D s Response TPC-D has not responded to this objection. Commission s Ruling Section 62(4) of the Electricity Act, 2003 provides the amendment of tariff during the year under terms of fuel surcharge formula specified by the Commission. The present FAC mechanism is as per Regulation 10 of MYT Regulations, The distribution licensees are levying FAC computed as per formula specified in MYT Regulations, 2015 and regularly submitting the same to the Commission for post-facto approval OPEN ACCESS Hindustan Petroleum Corporation Limited (HPCL) submitted that in the approved MYT, the income from Open Access consumers was not approved. However, as per public notice Table No. 15, Income from Open Access consumers has been shown as Rs Crore. TPC-D s Response TPC-D submitted that revenue from Open Access consumers was collected by TPC-D during FY Hence, the same has been reduced from the total Aggregate Revenue Requirement of TPC-D. Case No. 69 of 2018 Mid Term Review for TPC-D Page 61 of 387

62 Commission s Ruling The Commission has considered the revenue from Open Access consumers to reduce the ARR for Wires Business and Supply Business O&M EXPENSES Hindustan Petroleum Corporation Limited (HPCL) submitted that, for Truing-up of FY , TPC-D claimed that Outside License area sale should be considered while computing the Normative O&M Expenses. However, O&M expenses are pertaining to services provided to the consumers. It added that outside licence area sale is the primary utilization of unsold power. TPC-D has benefitted TPC-G by entering into a transaction with Railways. TPC-D is not liable for O&M expenses for Railways as Railways is not a customer of TPC-D. It further added that, while calculating the sharing of gains and losses, TPC-D has claimed uncontrollable expenditure citing some justification. HPCL requested the Commission to reject the computation of normative O&M expenses submitted by TPC-D and also not to accept the claim for Uncontrollable expenses. TPC-D s Response In case of Outside licence area sales considered for computing the normative O&M expenses, TPC-D has considered the sale outside license area along with the sale from Direct & Changeover Consumer and requested the Commission to consider these sales while determining the normative O&M expenses, since revenue earned from the same is utilised to reduce the power purchase cost of TPC-D. Further, in case of Uncontrollable treatment in sharing of efficiency Gains/(losses), the uncontrollable expenditure includes the property tax levied by the MCGM, which is statutory and uncontrollable in nature. The difference between the property tax payable prior to the treatment and post-amendment is considered by TPC-D as an uncontrollable expense. The Regulations 12.1(d) defines uncontrollable factors, which includes Taxes as uncontrollable expenses. The ATE in its judgement in Appeal no. 173 of 2009 supported in favour of Tata power and supported the treatment of uncontrollable nature of statutory expenses while computing efficiency Gains/(losses) on account of variation in O&M expenses. Commission s Ruling For computation of normative O&M Expenses for Supply Business for FY , the Commission has not considered outside licence area sales. Further, the Commission has analysed the actual O&M expenses for FY and FY The detailed analysis and ruling of the Commission in this regard is elaborated in Section 5 and Section 6 of this. Page 62 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

63 2.21 REVENUE FROM PROPOSED TARIFF RInfra-D submitted that TPC-D in its MTR Petition has not considered revenue on account of Power Factor Incentive/ Penalty, Load Factor Incentive, and Prompt Payment Discount for considering the revenue at proposed tariffs as per usual practice. The actual Incentive/Penalty, LF Incentive and Prompt Payment Discount for FY as submitted by TPC-D are Rs Crore. RInfra-D stated that similar amount of revenue shortfall will be there for FY and FY as well. If the same is not considered then, it will result in revenue gap at the time of True-up, which will be passed on to consumers with carrying cost. RInfra-D submitted that it is important to determine the tariffs of both RInfra- D and TPC-D considering the uniform principles in view of competition. Further, RInfra-D requested the Commission to consider the effect of these incentives and discounts at the time of tariff determination for FY and FY and; if not then the same should also be considered while tariff determination of RInfra-D. TPC-D s Response As regards the objection of RInfra-D, TPC-D submitted that it has not considered PF/LF incentive & Cash discount while projecting the Tariff as these factors are uncertain and depend upon the type of Load maintained by consumer and payment Schedule of the consumer. Since these factors are unknown at the time of projections, TPC-D has not considered the same. Further, TPC-D added that there will be no separate PF incentive since TPC-D has proposed kvah billing. Commission s Ruling For computing the revenue from the proposed tariff, the Commission has considered the revenue on account of Power Factor Incentive/ Penalty, Load Factor Incentive, and Prompt Payment Discount, etc. as per usual practice. The same has been elaborated in Section 8 of this OTHER ISSUES Shri Mahaveer Kumar Jain requested the Commission to consider to have update of Load certificate say every 3 year for Load up to 50 kw and every year for Load above 50 kw. He added that this will make sure that Load data remains updated which will help DISCOM to have a correct data of Actual actual load. Shri Jain further submitted that there are some cases which shows that while granting the new connection KYC requirements is not followed by TPC-D. He requested the Commission Case No. 69 of 2018 Mid Term Review for TPC-D Page 63 of 387

64 to direct TPC-D to have all the consumer KYC completed where the ID Proof and Address Proof are updated and the name must be of legal entity for which the ID proof and address proof are submitted. He submitted that KYC should be made mandatory to be updated every 3 year or such other period as may be necessary. Shri Rakshpal Abrol requested the Commission that Schedule of Charges under Regulation 18 of MERC Electricity Supply Code Regulations be maintained as amended in the year There should not be any revision of Service Connection Charges and increase in cost/fee for change of name and other Charges be approved. HPCL submitted that the proposed revenue for HT-I category is 31% more than approved MYT for FY and 62% more than approved MYT for FY It is added that due to increase as submitted by TPC-D, it will make a financial impact of about Rs. 37 Crore which will ultimately result in other commodity prices. It requested the Commission to consider this proposal after thorough scrutiny as any increase will directly impact the consumers. Shri. Abrol submitted that Sanctioned Load above 40 A must be provided with Four Wires with One being Neutral and three-phase - R, Y, B phase of 400/440 Volts, with Suitable Sealed Fuse Cut Out (SFU) or MCB of 63 Amps per phase before the Meters, in order to protect the Wires and Meters installed by the Distribution Licensees. Presently, it is advised to install MCB. TPC-D s Response As regards Shri Jain s Objection, TPC-D submitted that, at present, it follows the procedure and collection of documents for new consumers and for the name change as per the Commission s Supply Code Regulations. TPC-D requested the Commission to consider the comments of the objector regarding Load Certificate. As regards the Shri. Abrol objection, TPC-D submitted that as per the Commission direction vide letter MERC/Tech/Tariff/4688 dated November 15, 2017, all Distribution Licensees have to submit their proposal for revision in Schedule of Charges if any, along with the MTR Petition of the Distribution Licensee. TPC-D has submitted the proposal for revision in Schedule of Charges. In its proposal, TPC-D has not requested revision of Service Connection Charges or charge for Change of name as submitted. As regards HPCL Objection, the Tariff proposed by TPC-D is in the range of +/-20% of the ACoS as per Tariff policy. Page 64 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

65 Commission s Ruling As regards the issue of KYC compliance, the Distribution Licensees are required to ensure that the appropriate documentation is in place while issuing fresh connections. As regards the issue of load certificate and release of 4-wire connections, the same is not relevant to the subject matter, and are required to be dealt with in accordance with the Supply Code Regulations/Standards of Performance Regulations. The Commission s detailed analysis of the proposed modifications to the Schedule of Charges is given in Chapter 9 of this. The Commission has approved the Revenue Gap/(Surplus) of TPC-D after detailed prudence check of all expenses and revenue, and based on the cumulative Revenue Gap/(Surplus) and the category-wise sales and prevalent cross-subsidies, the category-wise tariffs are determined, as elaborated in Chapter 8 of this. Case No. 69 of 2018 Mid Term Review for TPC-D Page 65 of 387

66 3 IMPACT OF ADDITIONAL CAPITALISATION 3.1 BACKGROUND The Commission, in the MYT dated October 21, 2016 in Case No. 47 of 2016 had not considered the entire capitalisation of FY during the Truing Up of FY The relevant extract of the Tariff is reproduced below: 3.5 TPC-D's Network Roll-out Plan is pending before the Commission in Case Nos. 182 of 2014 and 50 of 2015, and impacts the capitalisation to be considered in FY till 28 November, 2014 (the date of the ATE Judgment) and thereafter. TPC-D has claimed total capitalisation of Rs crore and Rs crore for the Wires Business and Supply Business, respectively. For the Supply Business, based on the schemes approved in principle, the capitalisation has been considered as Rs crore. For the Wires Business, TPC-D has claimed actual capitalisation till 28 November, 2014 of Rs crore, out of the total capitalisation of Rs crore claimed for FY As the decision is pending, for the purposes of the present, the Commission has taken capitalisation in the Wires Business equal to 50% of that claimed by TPC- D, which works out to Rs crore, which incidentally is close to the capitalisation claimed till 28 November, This approval is subject to the final decision of the Commission in Case Nos. 182 of 2014 and 50 of 2015, and the true-up for FY will be subject to revision to that extent. The capitalisation allowed by the Commission for the Wires Business and Supply Business for FY is shown in the Table below: Table 3-26: Capital Expenditure and Capitalisation for FY approved by Commission (Rs. crore) As can be seen from the above, the Commission has considered only Rs Crore instead of Rs Crore capitalised by TPC-D, and approved the financial parameters of Return on Equity (RoE), Interest on Loan and Depreciation based on the same. Page 66 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

67 Further, the Commission in its in Case No. 50 of 2015 stated as follows: 16. However, under its Capital Investment Guidelines, the Commission first approves proposed major capital expenditure schemes (above Rs. 10 crore, or smaller clubbed schemes exceeding this limit) in principle. In subsequent Tariff determination proceedings, the Commission considers the capitalisation of the expenditure on such schemes after prudence check, including cost-benefit analysis, whether the assets have been commissioned and put to use and the nature and reasons for any deviations from the initial approvals. In the context of para. 59 of the ATE Judgment, the Commission will accordingly consider, during the forthcoming Mid-Term Review, the capitalisation of Rs crore on schemes said to have been initiated before 28 November, 2014 and to have now been completed. TPC-D should provide supporting material for the purpose in its Petition at that time. In view of the above, TPC-D in the present MTR Petition, has submitted the revised capitalisation from FY along with scheme-wise details and claimed the impact of additional capitalisation for Depreciation, Interest on Loan Capital, and Return on Equity. The same has been discussed in the subsequent paragraphs of this Section. 3.2 REVISED CAPITALISATION FOR FY TPC-D s Submission TPC-D submitted that it has considered the entire capitalisation of Rs Crore for FY The additional Capitalisation submitted by TPC-D is shown in the following Table: Table 3-1: Additional Capitalisation as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition DPR Capitalisation allowed in MYT Actual DPR Capitalisation for FY Balance Capitalisation to be claimed Commission s Analysis and Ruling The Commission in the MYT has not considered the entire capitalisation for FY and subsequent years in view of pending approval of the Network Rollout Plan. The Commission issued the on 12 June, 2018 in Case No. 182 of 2014 on the Petition filed by TPC-D for approval of Network Rollout Plan. In the, the Commission has not approved addition of network elements and the capital expenditure plan proposed by TPC- D for Mumbai Suburban area, where RInfra-D is another parallel licensee. Rather, the Case No. 69 of 2018 Mid Term Review for TPC-D Page 67 of 387

68 Commission has stipulated the principles and modalities for releasing connections to new and existing consumers in suburban Mumbai considering the principles laid down by ATE regarding the need for avoiding the network duplication. Further, the Commission passed its on 14 August 2017 in Case No. 50 of 2015, in the matter of Petition filed by TPC-D in accordance with ATE Judgment dated 28 November, 2014 in Appeal No. 246 of 2012 seeking approval of commissioning and capitalisation of Distribution Network development works on which considerable investment has been made. The relevant extract of the Commission s in Case No. 50 of 2015 is given below: This Petition has been filed in pursuance of the following directions in the ATE Judgment dated 28 November, 2014: 58..Tata Power should therefore, be restricted to lay down its network only in areas where laying down of parallel network would improve the reliability of supply and benefit the consumer and also for extending supply to new consumers who seek connection from Tata Power. Tata Power s Rollout Plan should therefore, be restricted to only such areas 59. However, where Tata Power has already made considerable investment in constructing the distribution system in pursuance of the directions of the State Commission, it should be allowed to be commissioned and capitalized, to feed the consumers as decided by the State Commission. Tata Power may submit a proposal to State Commission in this regard which the State Commission shall consider and decide after hearing the concerned parties including RInfra. The reference in para. 59 is to the investment undertaken by TPC-D on the basis of the Commission s dated 22 August, 2012 in Case No. 151 of 2011 requiring it to develop its network to supply consumers in 11 Clusters in its licensed area. 11. TPC-D has categorised its capital expenditure works into (I) Basic Infrastructure works: metering and automation of the distribution system, (II) South Mumbai Schemes: capital expenditure works in the area overlapping that of BEST, (III) Mumbai Suburban Schemes: those approved prior to the in Case No. 151 of 2011 in the area common to RInfra-D and TPC-D, and (IV) Mumbai Suburban Schemes: capital expenditure works approved by the Commission for 11 Clusters in pursuance of its in Case No. 151 of According to TPC-D, only Category IV Schemes are covered by para. 59 of the ATE Judgment. That being the case, the works of the remaining categories do not require the Commission s approval. Page 68 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

69 12. By their very nature, no issue of network duplication arises in the Category I works of providing meters to consumers and automation of the Distribution System across TPC-D s area of supply. Hence, the Commission agrees that such works do not fall within the purview of para. 59 of the ATE Judgment. 13. Category II comprises capital expenditure schemes in the area common to BEST and TPC-D, whereas the ATE Judgment is primarily concerned in the present context with the area common to TPC-D and RInfra-D. In particular, the principle of minimising network duplication when consumers can be provided supply using the other Distribution Licensee s existing network is not relevant to that area since BEST is not obliged to provide Open Access to TPC-D for supplying to its consumers, and consequently there is no option but for TPC-D to lay its own network to supply them. Thus, duplication of the distribution network is unavoidable in this area. Therefore, para. 59 of the ATE Judgment does not apply to capital expenditure schemes undertaken by TPC-D in the BEST area. 14. TPC-D has bifurcated the capital expenditure schemes in the area overlapping that of RInfra-D into a. Schemes approved in principle by the Commission prior to its in Case No. 151 of 2011 (Category III), and b. Schemes undertaken in pursuance of that (Category IV). TPC-D contends that Category III schemes do not fall within the purview of para. 59 of the ATE Judgment since the ATE has allowed it to lay its network to serve new consumers. The Commission notes that the ATE Judgment allows TPC-D to commission and capitalise substantial investment made by it till the issue of the Judgment. Further, TPC-D has itself proposed to include its future capital expenditure subsequent to the ATE Judgment in its Network Roll-out Plan submitted in Case No. 182 of 2014 (in which the has now been issued). Hence, the Category III the capitalisation of schemes commissioned upto 28 November, 2014 will be considered by the Commission during the forthcoming Mid-Term Review (MTR) considering the in-principle approvals given initially and after prudence check. (Emphasis Added) 15. Category IV schemes comprise works undertaken in pursuance of the Commission s in Case No. 151 of TPC-D has stated that, out of schemes of Rs crore approved in principle, works of Rs. 294 crore were completed before the ATE Judgment, i.e. 28 November, Works of Rs (started prior to the ATE Judgment) were in progress when this Petition was filed. During its pendency, these works in progress were also completed by Case No. 69 of 2018 Mid Term Review for TPC-D Page 69 of 387

70 31 March, 2016 and they may be capitalized in terms of para 59 of the ATE Judgment. They include procurement of material and erection and commissioning of services, including last-mile connectivity. According to TPC- D, these works were initiated much before the ATE Judgment. The Commission will consider the expenditure on these works and its capitalisation considering the initial in-principle approvals and after prudence check at the time of the forthcoming MTR. TPC-D has not made any claim with regard to the remaining amount of Rs crore as these works have not been initiated. 16. RInfra-D has contended that these proceedings have been rendered futile as TPC-D has already commissioned capital works of Rs crore which were in progress at the time of the ATE Judgment. RInfra-D also alleged that TPC-D has grossly deviated from the scope of the in-principle approvals given by the Commission. However, under its Capital Investment Guidelines, the Commission first approves proposed major capital expenditure schemes (above Rs. 10 crore, or smaller clubbed schemes exceeding this limit) in principle. In subsequent Tariff determination proceedings, the Commission considers the capitalisation of the expenditure on such schemes after prudence check, including cost-benefit analysis, whether the assets have been commissioned and put to use and the nature and reasons for any deviations from the initial approvals. In the context of para. 59 of the ATE Judgment, the Commission will accordingly consider, during the forthcoming Mid-Term Review, the capitalisation of Rs crore on schemes said to have been initiated before 28 November, 2014 and to have now been completed. TPC-D should provide supporting material for the purpose in its Petition at that time. In light of the above, TPC-D was asked to provide the following details regarding the capitalization of DPR amounting to Rs. 979 Crore i.e., for Category III DPR. (a) Details of HT Consumer Sub-station (CSS) commissioned (name of HT CSS, Location, area, name of cluster, date of commissioning) (b) Details of LT CSS commissioned (name of LT CSS, Location, area, name of cluster, date of commissioning) (c) Details of Distribution Sub-station (DSS) commissioned (name of DSS, location, area, name of cluster, date of commissioning) (d) Number of consumers supply released on TPC-D s own wires (cluster wise and year wise) (e) Original scope of work in terms of number of HT CSS/LT CSS/DSS/33kV Cable/11 kv cable/lt cable/number of Distribution transformers/power transformers and the actual work done in terms of these items and item-wise reason for deviations. Page 70 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

71 TPC-D submitted the above details. As per the details provided by TPC-D, it is seen that TPC-D has commissioned 6 Nos. of DSS under this DPR. The details are as follows: Table 3-2: List of DSS commissioned by TPC-D (Rs. Crore) Sr. No. Name of DSS Cluster Commissioning date 1 Arogyanidhi DSS Arogyanidhi 14 August, Raheja Reflection Vasant Utsav 4 October, Akruti Jaychandan Mira Bhayandar 31 March, ESIC Hospital Vasant Utsav 18 November, Raheja Exotica Malad BMC Lagoon 18 June, Oberoi JVLR Saki 31 March, 2015 TPC-D also provided the list of CSS commissioned under this DPR. As per the list, TPC- D has commissioned 179 Nos. of CSS under this DPR. The objective of this DPR was to establish distribution network in Mumbai suburban area in identified 11 clusters as directed by the Commission in dated 22 August, 2012 in Case No. 151 of 2011, so as to enable TPC-D to supply to consumers on its own wires. TPC-D provided the cluster-wise and yearwise number of consumers for which supply was released by TPC-D on its own wires. As per the details provided, it is seen that TPC-D has released connections to 27,572 consumers on its own wires under this DPR. TPC-D also provided the reasons for Original scope of work in terms of number of HT CSS/LT CSS/DSS/33kV Cable/11 kv cable/lt cable/number of Distribution transformers /power transformers and the actual work done in terms of these items and item-wise reason for deviations. TPC-D re-submitted the details provided in Case No. 50 of The physical development of network in 11 Clusters along with its cost break-up, vis-à-vis the Scope of Work as approved by the Commission (in its in-principle approval dated 12 November, 2012) has been provided by TPC-D as shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 71 of 387

72 S. No. 1. Network element Distribution Sub-Station (DSS) Table 3-3: Status of Physical Development in 11 Clusters (Rs. Crore) Unit Approved as per DPR by the Commission Works completed as on 28 th November, 2014 Works in Progress (WIP) as on 28 th November, 2014 Network completed including WIP as on 31 st March, 2016 Nos Approved Capex not utilized as per ATE kv Line Km kv Line Km Consumer Sub-Station (CSS) Nos LT Line Km Total Approval Rs. crore The Commission notes that there are deviations in the work executed by TPC-D on the following aspects: (a) 33 kv Line (b) Consumer Sub-station (CSS) (c) LT line TPC-D has provided the reasons for deviations vis-à-vis the Commission s approved quantity as follows: (a) 33 kv Underground Cables: TPC-D had estimated a cable length of approximately 15 km of 33 kv incomers for each DSS (Total 6 Nos. of DSS) totalling 90 km. However, based on site routings, 76.8 km of 33 kv cable was actually used to complete incomers for the 6 Nos. of DSS. Another 49 km of 33 kv cable network was used for creating N-1 interconnections between DSS, augmentation of source of existing DSS and for laying LILO network for feeding new 22/0.4 kv CSS. (b) 11/0.4 kv CSS: As per the projections of the approved DPR, 50 Nos. of CSS were planned to be commissioned within a year. However, an additional 129 Nos. of CSS were commissioned by TPC-D from the time of approval of the DPR till FY (3.5 years). Further, two years have passed since the issue of ATE Judgment. Page 72 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

73 During this period, TPC-D was obliged to commission its distribution network and connect to consumers upon their demand. (c) LT Network: In view of the additional CSS commissioned to meet consumer demand, there has been an addition of 149 km of last mile connectivity (LT network) to provide connection to new consumers and proposed switch-over consumers who had approached TPC-D during this period. The Commission had directed TPC-D to ensure that within one year of the in Case No. 151 of 2011, it has rolled out its entire network in 11 clusters. As pointed out by TPC- D, 50 Nos. of CSS were planned to be completed in one year as per the above directions. However, after the expiry of one-year period from the, TPC-D had to install new CSS to adhere to the consumer s request for supply, which resulted into commissioning of additional 129 Nos. of CSS. The Commission accepts the justification given by TPC-D. In light of the above analysis, the Commission approves the capitalization of Rs Crore as claimed by TPC-D for FY and Rs Crore for FY against the DPR for investment schemes for Distribution activities in 11 clusters vide letter no. MERC/CAP/DPR/ /01800 dated 12 November, The capitalization towards other DPR schemes amounting to Rs Crore has also been approved considering earlier in-principle approval. Non-DPR capitalization (including HOSS allocation) of Rs Crore is being allowed in accordance with Regulations, as the same are below 20% of the approved DPR capitalization for FY Thus, the total capitalization for FY is Rs Crore including the SAP DPR capitalization Impact of Additional Capitalisation for FY TPC-D s Submission TPC-D submitted the Depreciation considering the total capitalisation for FY and the revised closing GFA as shown in the following Table: Table 3-4: Revised Depreciation & Closing GFA for FY as submitted by TPC-D (Rs. Crore) Particulars Formula FY Opening GFA a Addition b Retirement c 0.86 Closing GFA d=a+b-c Depreciation claimed in MYT Petition e Depreciation approved in MYT f Case No. 69 of 2018 Mid Term Review for TPC-D Page 73 of 387

74 Particulars Formula FY Additional Depreciation to be claimed g=e-f 6.34 Depreciation Rate h=e/(a+d/2) 5.08% TPC-D submitted the revised closing equity and Return on Equity (RoE) on the balance capitalisation of FY , including additional RoE for higher than target Availability of the Distribution Wires, as shown in the following Table: Table 3-5: Additional RoE for FY as submitted by TPC-D (Rs. Crore) Particulars FY Regulatory Equity at the beginning of the year Capitalised Assets during the year Equity portion of expenditure on Capitalized Asset Less: Equity portion of the asset decapitalized 0.26 Regulatory Equity at the end of the year Return Computation Rate of RoE 15.50% Return on Regulatory Equity at the beginning of the year Return on Equity portion of capitalisation during the year Total Return on Regulatory Equity Additional RoE for higher Wires Availability 0.23 Total Return on Regulatory Equity Approved in the MYT along with Additional RoE Additional RoE to be claimed 5.45 Further, TPC-D submitted the Interest on Loan Capital for the additional capitalisation as shown in the following Table: Table 3-6: Interest on Loan for the additional Capitalisation for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Average Interest rate (%) 10.83% 10.83% Opening Balance of Loan Drawal during the year Repayment of loan Closing balance of Loan Difference to be claimed Interest on loan capital The total impact of the additional capitalisation claimed by TPC-D for FY is shown in the following Table: Page 74 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

75 Table 3-7: Total Impact of Additional Capitalisation including Carrying Cost for FY as submitted by TPC-D (Rs. Crore) Particulars Month Rate Amount (Rs. Crore) Depreciation 6.34 Return on Equity 5.45 Interest on Loan Capital 8.47 Grand Total Carrying cost for FY % 1.49 Carrying cost for FY % 2.89 Carrying cost for FY % 2.08 Carrying cost for FY % 1.92 Total Impact of Additional Capitalisation including Carrying Cost TPC-D submitted that the total impact of consideration of actual Capitalisation during FY works out to Rs Crore, which has been considered by TPC-D while determining the total Revenue Gap/(Surplus) for the future period. Commission s Analysis and Ruling Based on the principle adopted while truing up for FY and as per provisions of MYT Regulations, 2011, the Commission has computed the impact of additional capitalisation on Depreciation, RoE and Interest on Loan Capital as shown in the following Table: Table 3-8: Impact of Additional Capitalisation in FY as approved by the Commission Sr. No. Particulars 1 Depreciation (Rs. Crore) MYT MTR Petition Approved in this 1.1 Opening GFA 1, , , Addition of GFA during the year Retirement of GFA during the year Closing GFA 1, , , Wt. Avg. rate of Depreciation 5.05% 5.08% 5.08% 1.6 Depreciation Interest on Loan Capital 2.1 Opening Normative loan Addition of normative loan during year Case No. 69 of 2018 Mid Term Review for TPC-D Page 75 of 387

76 Sr. No. Particulars MYT MTR Petition Approved in this 2.3 Repayment of normative loan during the year 2.4 Closing normative loan Rate of Interest (%) 10.83% 10.83% 10.83% 2.6 Interest on Loan Capital Return on Equity 3.1 Opening Equity Addition of Equity Less: Equity portion of the asset (0.26) (0.26) (0.26) decapitalized 3.4 Regulatory Equity at the end of the year Rate of Return (%) 15.50% 15.50% 15.50% 3.6 Total Return on Equity Additional RoE for higher Wires Availability 4 Total ( ) Total impact for recovery The treatment of the above Revenue Gap/(Surplus) is discussed along with the treatment of Cumulative Revenue Gap/(Surplus), in Chapter 8 of this. Page 76 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

77 4 TRUING UP OF ARR FOR FY BACKGROUND TPC-D submitted that it has filed its MTR Petition for final truing up of expenditure and revenue for FY based on actual and audited costs and revenue, vis-à-vis the amounts provisionally approved by the Commission in the MYT in Case No. 47 of 2016, taking into consideration the MYT Regulations, 2011 and the principles laid down according to various ATE Judgments. In this Section, the Commission has analysed all the elements of actual expenditure and revenue of TPC-D for FY and, after prudence check, has undertaken the truing up of expenses and revenue. 4.2 SALES TPC-D s Submission TPC-D submitted that it is supplying power to consumers either through its own network to Direct consumers or through the network of other Distribution Licensee to change-over consumers. TPC-D submitted that there was 7% increase in the total number of consumers (direct plus change-over) in FY over that in the previous year, with direct consumers (connected to its network) increasing from 74,946 to 91,252 and change-over consumers increasing from 5,43,476 to 5,73,155. The comparison of actual category-wise sales for FY with the sales approved in the MYT, are given in the Table below: SI. Table 4-1: Category-wise Sales for FY as submitted by TPC-D (MU) Category LOW TENSION CATEGORIES Direct Sales MYT Change-over Sales Total Direct Sales MTR Petition Change-over Sales 1 LT I - Residential (BPL) LT I - Residential units units Units Above 500 units (balance units) LT II - Commercial (A) 0-20 kw (B) > 20 kw & <50kW (C) > 50kW LT III - LT Industrial below 20 kw Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 77 of 387

78 SI. 4 5 Category LT IV - LT Industrial above 20kW LT V - Advertisement & Hoardings, incl. floodlights & neon signs Direct Sales MYT Change-over Sales Total Direct Sales MTR Petition Change-over Sales Total LT VI Streetlights LT VII Temporary Supply (A) TSR Temporary Supply Religious (B) TSO Temporary Supply Others LT VIII Crematoriums and 8 Burial Grounds - 9 LT IX- Agriculture LT X Public Services LT IX(A)-Public Services Govt Hosp. & Edu Inst LT IX(B)-Public Service Others Sub-Total HIGH TENSION CATEGORIES 11 HT I - Industry HT II - Commercial HT III Group Housing Society HT IV - Temporary Supply HT V(A) -Railways /33 kv kV HT V(B) -Railways Metro & Monorail HT VI -Public Services HT VI(A)- Publ. Serv. Govt. Hosp. & Edu. Inst HT VI(B) Public Services Others Sub-Total day adjustments 2.21 (15.36) (13.15) GRAND TOTAL TPC-D submitted that the total sales for FY were MU as compared to MU provisionally approved in the MYT Tariff, and the major difference was on account of TPC-D inadvertently considering a negative 15 days adjustment of MU for change-over consumers instead of a positive 15 days adjustment of MU, in its MYT Petition. Commission s Analysis and Ruling The Commission observed that there was a difference in the category-wise change-over sales reported by RInfra-D and that reported by TPC-D, which was not explained by the grossing Page 78 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

79 up of RInfra-D s distribution losses by TPC-D while billing the consumers. The Commission sought reconciliation of the category-wise change-over sales from RInfra-D and TPC-D. In its response, TPC-D submitted that it has considered the figures of change-over consumers as per revenue billed. Further, TPC-D and RInfra-D have settled the actual energy supplied by TPC-D to change-over consumers for each month, which is used for Energy Balance by Maharashtra State Load Despatch Centre (MSLDC) and the same has been considered in the ARR. TPC-D added that this energy used for settlement is grossed by Losses approved by the Commission to arrive at the energy requirement at T <>D interface. TPC-D states that the combined sales, i.e., HT plus LT sales reported by TPC-D and RInfra-D has been reconciled, and there is only a small difference. TPC-D submitted that the total billed sales of change-over consumers for FY is MU, while actual grossed up energy settled with RInfra-D is MU at T<>D interface. Similarly, total Billed sales of change-over consumers for FY is MU while actual grossed up energy settled with RInfra-D is MU at T<>D periphery. TPC-D submitted that the difference between the LT sale submitted by RInfra-D and TPC-D is due to the method of presentation of the data. In its reply to the same query, RInfra-D submitted that the change-over sales provided by TPC-D is at T<>D interface level, and submitted the comparison of change-over sales as reported by RInfra-D and TPC-D after grossing down the sales reported by TPC-D with the wheeling losses for respective years. Based on the comparison, RInfra-D submitted that the difference between sales to HT categories as reported by RInfra-D and by TPC-D is not significant, except in case of HT commercial. RInfra-D clarified that it has reported sales as per its meter reading, and that one possible reason for difference vis-à-vis TPC-D could be that TPC-D may have reported sales to HT Commercial change-over consumers, after subtracting open access consumption. As regards the sales to LT changeover consumers, RInfra-D submitted that the difference between RInfra-D submission and TPC-D submission could be because RInfra-D has considered consumption as per RInfra-D s meter reading cycle, whereas TPC-D s consumption would be as per TPC s meter reading cycles. Also, RInfra-D has the records of category of different change-over consumers as prevalent at the time of their change-over. If consumers undergo change in category after migration, then RInfra-D would continue to report its sales in the original category, while TPC-D would report it in the new category. This is particularly true for consumers in commercial/public Service categories. Based on the above explanation and reconciliation provided by TPC-D and RInfra-D, the Commission has approved the actual sales to own consumers and change-over sales for FY Case No. 69 of 2018 Mid Term Review for TPC-D Page 79 of 387

80 as submitted by TPC-D, as the same is based on revenue billed. The sales approved by the Commission for FY is summarised in the Table below: Table 4-2: Direct Sales and Change-over Sales for FY as approved by the Commission (MU) Direct Sales Change-over Sales Approved Particulars MYT MTR Approved in MYT MTR in this Petition this Petition Energy Sales OPEN ACCESS CONSUMPTION TPC-D s Submission TPC-D submitted the category-wise Open Access (OA) consumption in its licence area as MU for FY Commission Analysis and Ruling The Commission has approved the actual OA consumption in TPC-D s licence area for FY as submitted by TPC-D in the Petition, as shown in the Table below: Table 4-3: Open Access Consumption for FY in TPC-D licence area as approved by the Commission (MU) MTR Approved in Particulars MYT Petition this OA Consumption DISTRIBUTION LOSSES AND ENERGY INPUT REQUIREMENT TPC-D s Submission TPC-D submitted that it has computed the actual Distribution Losses by considering the sale of direct consumers, OA sale, and the ABT meter reading at T<>D interface. The actual Distribution Loss of TPC-D s distribution network in FY was 0.44% as against (0.37) % approved by the Commission in MYT. The Transmission Losses for FY have been considered as 3.92%, based on MSLDC s Grid Transmission Loss statement for FY TPC-D has computed its energy requirement at Intra-State Transmission System (InSTS) level excluding the credit given to OA consumers. The actual Distribution Loss and Energy Input requirement for FY are shown in the Table below: Page 80 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

81 Table 4-4: Energy Input requirement for FY as submitted by TPC-D (MU) Particulars MYT MTR Petition TPC-D Sales (Retail) with 15 days Adjustments Bill credit given to OA consumers Total Sales Distribution Losses (%) (0.37%) 0.44% ABT Meter reading at T<>D Interface OA wind credit at T<>D Interface Energy Requirement for TPC-D consumers at T<>D interface Sales to change-over consumers Bill credit given to OA consumers Sale to Change-over consumers after adjusting for OA wind credit Wheeling Loss RInfra-D Network 0.00% 0.00% Energy Requirement for Change-over consumers Total Energy Requirement at T<>D Transmission Loss 3.92% 3.92% Total Energy Requirement at G<>T Surplus Sale/ (Purchase) - OLA Sale Total Energy Requirement at G<>T Interface The net energy input requirement works out to MU for FY including sale Outside Licence Area (OLA). Commission s Analysis and Ruling The Commission has considered the actual Transmission Losses of 3.92% for FY based on inputs from MSLDC. The change-over sales have been considered as approved earlier in this Section. The Commission has considered the energy drawn by TPC-D at T<>D interface as MU, based on State-wide DISCOM-wise energy drawal data provided by MSLDC, as per usual practice. The Commission has considered the actual Open Access sale for FY as approved earlier in this Section. Accordingly, the Distribution Losses and Energy Balance approved the Commission after final true-up for FY are shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 81 of 387

82 Table 4-5: Energy Input Requirement for FY as approved by the Commission (MU) Particulars MYT MTR Petition Approved in this TPC-D Sales (Retail) with 15 days Adjustments , Bill credit given to OA consumers Total Sales Distribution Losses (%) (0.37%) 0.44% 0.44% ABT Meter reading at T<>D Interface OA wind credit at T<>D Interface Energy Requirement for TPC-D consumers at T<>D interface Sales to change-over consumers , Bill credit given to OA consumers Sale to Change-over consumers after adjusting for OA wind credit Wheeling Loss RInfra-D Network 0.00% 0.00% 0.00% Energy Requirement for Change-over consumers Total Energy Requirement at T<>D Transmission Loss 3.92% 3.92% 3.92% Total Energy Requirement at G<>T The Distribution Loss computed by the Commission for FY , after final true-up, by considering the energy drawn by TPC-D at T<>D interface-based on the MSLDC data, works out to 0.44% as against the approved loss trajectory of 1.02%. Although TPC-D has computed the Distribution Losses for FY as 0.44%, it has not sought sharing of Efficiency Gains on account of the lower than normative Distribution Losses. The Commission had approved the Distribution Loss trajectory of 1.02% for FY considering the projected increase in the LT distribution network by TPC-D and lower HT:LT ratio. However, TPC-D has not expanded the LT distribution network as anticipated. At the same time, the total Distribution Losses of TPC-D, at 0.44%, are on the lower side. Hence, no sharing of Efficiency Losses has been considered on this count for FY Page 82 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

83 4.5 POWER PURCHASE QUANTUM AND COST TPC-D s Submission TPC-D submitted that it has met its total energy requirement for FY from different sources, viz., TPC-G, Renewable Energy (RE) sources, bilateral purchase and Imbalance Pool Procurement from TPC-G TPC-D s Submission TPC-D submitted that it purchases power on long-term basis from the various generating units of TPC-G. TPC-D has a long-term Power Purchase Arrangement with TPC-G, which contributes 62% of its total energy requirement. TPC-D submitted the break-up of the Unitwise and fuel-wise cost of power purchase from TPC-G during FY TPC-D submitted that in addition to above allocation, it has purchased power from Unit 6 under the direction from MSLDC. TPC-D had requested TPC-G to keep the Unit 6 of capacity 500 MW under economic shutdown on account of its high cost of power. However, Unit 6 was required to run under the direction of MSLDC to address grid constraints scenarios in Mumbai during FY When the generation from Unit 6 was required for meeting the demand of Mumbai power system, it was shared by all Mumbai Distribution Licensees on the basis of sharing of transmission charges, as per the arrangement arrived at in the meeting held by Principal Secretary (Energy), Government of Maharashtra (GoM) on March 24, In line with the above, TPC-D purchased 8.67 MU from Unit 6 during FY at average rate of Rs. 7.87/kWh, at a total cost of Rs Crore. The total power purchase from TPC-G during FY has been presented in the Table below: Table 4-6 : Power Purchase from TPC-G in FY as submitted by TPC-D Unit Quantum Variable Charges Fixed Cost Total Cost (MU) (Rs. Crore) (Rs. Crore) (Rs. Crore) Unit 4 (0.71) Unit Unit 6 (5.62) Unit Unit Bhira Bhivpuri Khopoli Incentive Case No. 69 of 2018 Mid Term Review for TPC-D Page 83 of 387

84 Unit Quantum (MU) Variable Charges (Rs. Crore) Fixed Cost (Rs. Crore) Total Cost (Rs. Crore) Unit 6 actuals as per MSLDC Directions Total TPC-D submitted that the total power purchase cost from TPC-G is Rs Crore for purchasing MU at average power purchase rate of Rs. 4.29/kWh for FY Commission s Analysis and Ruling For prudence check of actual power purchase, the Commission sought Load Generation Balance Report (LGBR) for 15 minutes time interval for FY and also details of the Merit Despatch (MOD) followed for power purchase by TPC-D, including details of backing down of Units of TPC-G s Contracted Units in FY separately for each month, tariff considered for MOD, Technical Minimum level, etc. The Commission analysed the power purchased by TPC-D from each source and considered the actual quantum purchased by TPC-D from TPC-G as per LGBR. Further, the Commission sought the reconciliation of cost of purchase from TPC-G with cost of purchase submitted in Allocation Statement. After verification of the MTR Petition of TPC-D and TPC-G, the Commission observed that the actual cost of purchase submitted by TPC-D is the same as the actual revenue from sale of power submitted by TPC-G in its MTR Petition. Further, TPC-G has billed separately for Unit 6 generation under MSLDC directions and the same has been accepted by the Commission. In view of the above, the Commission approves the quantum and cost for power purchased from TPC-G as shown in the following Table: Table 4-7 : Power Purchase from TPC-G for FY as approved by the Commission MYT MTR Petition Approved in this Source Rate Rate Cost Rate Quantum Cost (Rs. Quantum Cost (Rs. Quantu (Rs./ (Rs./ (Rs. (Rs./ (MU) Crore) (MU) Crore) m (MU) kwh) kwh) Crore) kwh) TPC-G 3, , , , , , Renewable Purchase Obligation (RPO) TPC-D s Submission TPC-D submitted that as per RPO Regulations, 2010, RPO requirement for FY is 9.00% comprising 8.50% from non-solar RE Sources and 0.5% from Solar Generating Sources. It also includes 0.2% of the Non-Solar RPO Obligations, which is to be met from Page 84 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

85 Mini/Micro Hydel sources. The details of RE power procured during FY is given in the Table below: Table 4-8: Renewable Purchase Obligation for FY as submitted by TPC-D (MU) Renewable Source Notation % RPO for FY InSTS Obligation Previous year obligations Preferential Tariff purchase Met through REC Total Shortfall/ (Surplus) A B C=A*B D E F G=E+F H=C+D+G RE Other than Mini Hydro and a 8.48% Solar Mini Hydro b 0.02% Total Non- Solar c = a+b 8.50% Solar d 0.50% Total e =c+d 9.00% The Commission issued the in Case No. 171 of 2016 dated June 16, 2017 in the matter of RPO verification for FY , in which it has stated as follows: 17. The Commission notes that TPC-D has 1) fulfilled its stand-alone Solar RPO target for , with a surplus of MUs, and a cumulative surplus of 0.22 MUs for the period from FY to FY ; 2) fulfilled its stand-alone Mini/Micro Hydro RPO target for FY , with a surplus of 1.90 MUs, but has a cumulative shortfall of 1.55 MUs; 3) fulfilled its stand-alone Non-Solar RPO target for FY , with a surplus of 1.89 MUs, and also has a cumulative surplus of MUs. 18. In its earlier in Case No 18 of 2016 dated 31 August, 2016 (on RPO compliance verification for FY ), the Commission had allowed TPC-D to compensate for the shortfall against its Mini/Micro Hydro RPO targets by purchase of Non-Solar RECs to that extent in FY to meet any shortfall still remaining for the period up to FY The Commission notes that TPC- D has made efforts to procure energy from Mini/Micro Hydro Projects prior to and during FY by floating tenders three times, lastly in November, 2016, but has not received any response. By purchasing additional Non-Solar RECs equivalent to 2.92 MUs, it has fulfilled its stand-alone Mini/Micro Hydro RPO target for FY with a surplus of 1.90 MUs. However, it still has a cumulative shortfall of 1.55 MUs which can be met in FY As regards the stand-alone and cumulative surplus against the Solar and Non-Solar RPO as at the end of FY , the Commission notes that the Case No. 69 of 2018 Mid Term Review for TPC-D Page 85 of 387

86 Central Electricity Regulatory Commission (CERC) REC Regulations (Third Amendment) dated 30 December, 2014 provides Distribution Licensees the option to obtain tradeable RECs against the excess over the RPO target by applying to the Central Agency for issue of RECs provided certain conditions are met. In pursuance of its dated 11 January, 2016 in Case No 39 of 2015, the Secretariat of the Commission has issued certificates in the prescribed format to enable Reliance Infrastructure Ltd. to approach the Central Agency accordingly in respect of the excess over its Solar and Non-Solar RPO targets in FY and FY TPC-D may explore this option in the first instance. (emphasis added) TPC-D had purchased non-solar and Solar RE power from various sources as well as through the REC mechanism. TPC-D has long-term tie ups with wind and solar generators. The generation sources details are as given below: Table 4-9: Renewable Energy Sources for FY as submitted by TPC-D (MW) Plant Capacity (MW) TPC-D Tie Up Aux. Consumption Ex-Bus Brahmanvel % 11 Khandke % 50 Sadawaghapur % 17 Visapur % 10 Agaswadi % 49 Visapur % 32 Wind (Total) % 170 Solar % 27 Total TPC-D submitted that it has purchased MU from Non-Solar RE Sources and MU through REC certificates, thereby fulfilling the non-solar RPO for FY except for Mini/Micro Hydro power. TPC-D further submitted that it has not received any positive response, despite advertisements in the newspapers, for procurement of RE from Mini/Micro Hydro power plants. It also approached a Mini/Micro Hydro Generator, M/s. Water-source Technologies Pvt. Ltd. However, its plant was proposed to be commissioned in FY With all its efforts, TPC-D has met the standalone Mini / Micro Hydro RPO for FY and in addition, 1.89 MU of the shortfall of 3.44 MU up to FY Accordingly, the shortfall up to FY to be met till FY stands at 1.55 MU. Page 86 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

87 The Commission, in its dated 20 December, 2013 in Case No. 159 of 2013, had allowed TPC-D to meet its Solar Obligation on a cumulative basis up to FY TPC- D submitted that it has met its cumulative Solar RPO target and is having a surplus of 0.22 MU at the end of FY This has been achieved through the existing contracts of TPC- D and includes the long-term agreement with Tata Power Renewable Energy Ltd. (TPREL) for 25 MW solar power plant at Palaswadi, which became operational in FY The Commission in the in Case No. 171 of 2016 dated June 16, 2017 suggested that TPC-D has requested for Issuance of Certificate for Excess of Non-Solar energy procurement in FY to the tune of 1.89 MU (Non-Solar) and 0.22 MU for Surplus Solar, through its letter CREG/MUM/MERC/2017/259 dated November 13, The Commission through its Letter No: MERC/LEG/Case No171 of 2016 /REC/ /4925 dated December 14, 2017 has recommended for issuance of RECs for the above Surplus. Since, FY is almost over, TPC-D submitted that it will utilise these RECs during FY for fulfilment of its RPO for that year. TPC-D further submitted that RE power was purchased during FY from 4 MW Visapur plant of TPC-G. The said plant is connected to the Distribution Network of Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) and hence, TPC-D pays Wheeling Charges and Wheeling Losses towards this purchase. TPC-D, based on the issued by the Commission in Case No. 4 of 2017 in the matter of Review Petition of BEST Undertaking has added Wheeling Charges of Rs 0.27 Crore in the RE purchase. The details of the total Power Purchase through RE sources by TPC-D during FY is given in the Table below: Table 4-10: Total RE purchase for FY as submitted by TPC-D RE Purchase Quantum Cost (Rs. Rate (MU) Crore) (Rs./kWh) Non-Solar RE Purchase Solar RE Purchase Non-Solar REC Solar REC 7.74 Grand Total Commission s Analysis and Ruling The Commission asked TPC-D for source-wise actual quantum of RE purchase, landed cost and other details of RE purchase in FY The Commission has analysed the details submitted by TPC-D regarding the purchase of RE power. In the MYT, at the time of Case No. 69 of 2018 Mid Term Review for TPC-D Page 87 of 387

88 provisional truing up for FY , the Commission had disallowed the Wheeling Charges and Wheeling Losses for the purchase of power from Visapur (4 MW). However, the same has been allowed in this, in line with the Commission s views in the in Case No. 4 of Further, TPC-D was also asked to submit the documentary evidence for purchase of Solar and Non-Solar RECs for FY , which were submitted by TPC-D. The Commission has verified the details of REC purchase with documentary evidences submitted by TPC-D. The Commission approves the Solar REC purchase for quantum of MU at rate of Rs. 3.50/kWh, and approves purchase of Non-Solar REC for quantum of MU at rate of Rs. 1.50/kWh. The Commission has approved the Solar and non-solar RE purchase for FY , as shown in the Table below: Table 4-11: Power Purchase from Solar and Non-Solar sources for FY as approved by Particulars Quant um (MU) the Commission (MU) MYT MTR Petition Approved in this Cost (Rs. crore) Rate (Rs./ kwh) Quant um (MU) Cost (Rs. crore) Rate (Rs./ kwh) Quant um (MU) Cost (Rs. crore) Rate (Rs./ kwh) Solar RE Purchase Solar REC Purchase Non-Solar RE purchase Non-Solar REC Purchase Total RE procurement Power Purchase from Bilateral Sources and Imbalance Pool TPC-D s Submission TPC-D submitted that it has purchased MU at an average price of Rs per kwh from Bilateral Sources in FY In addition, TPC-D also purchased power from the Imbalance Pool to the extent of MU at Rs kwh, considering the availability of low cost power to TPC-D under the Final Balancing & Settlement Mechanism (FBSM). The rate for purchase of power through FBSM has been computed based on the amount paid by TPC- D towards provisional FBSM Bills. TPC-D submitted that MSLDC has issued provisional FBSM Bills only till January, TPC-D will consider the impact of the revised amount if any, once the final bills are issued by MSLDC in the future period. The break-up of power Page 88 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

89 purchase from Bilateral Sources and Imbalance Pool for FY , is given in the Table below: Table 4-12: Power Purchased from Bilateral Sources and Imbalance Pool in FY as submitted by TPC-D Particulars Quantum (MU) Cost (Rs. Crore) Rate (Rs./kWh) Bilateral Sources Power Purchase through FBSM Total Commission s Analysis and Ruling The Commission asked TPC-D to clarify whether the power from Bilateral Sources was procured through competitive bidding and, if not, the reasons, and also to clarify whether it was purchased on RTC basis or for specific hours. TPC-D stated that it has purchased power from bilateral sources through competitive bidding in FY and submitted the results of the competitive bidding. TPC-D clarified that the power was purchased on RTC basis as well as for specific hours and submitted the copies of Agreements for the short-term power purchased. The Commission after prudence check, has accepted TPC-D s submission in this regard, and accordingly approved the quantum and cost of power purchase from bilateral sources. The Commission asked for the reasons for purchasing short-term power, if any, in view of the backing down of the long-term sources of power purchase, and for instances where shortterm power purchased through competitive bidding had not been scheduled due to transmission constraints. TPC-D stated that it procures power on short-term basis primarily for the shortfall in meeting the demand of consumers. Scheduling/backing down of long-term sources is carried out by MSLDC on a day-ahead and real-time basis as per the State MOD stack, which results in cheaper power from the State Pool for the Distribution Licensees. TPC-D clarified that there have been no instances where the short-term power purchased through competitive bidding has not been scheduled due to transmission constraints. The Commission had approved the ceiling rate for bilateral power purchase as Rs. 3.13/kWh for FY in the previous MTR. As against this, TPC-D has purchased actual quantum of MU of power at the rate of Rs. 3.13/kWh. TPC-D has also purchased Case No. 69 of 2018 Mid Term Review for TPC-D Page 89 of 387

90 MU of power under FBSM at the rate of Rs. 2.52/kWh. As the quantum of shortterm power procured and the weighted average rate of power purchase were within the approved limits for power purchase from bilateral sources, separate approval from the Commission was not required. The Commission has analysed the details of actual short-term power purchase in FY , and notes that MU were procured at the average rate of Rs per kwh, which is within the stipulated ceiling. The Commission notes that the quantum of energy purchased through the Imbalance Pool is significantly high, at around 10% of the overall power purchase quantum and almost half the quantum of power purchased through the bilateral sources. Though the rate of power purchase through the Imbalance Pool is lower than that of bilateral sources, the Imbalance Pool mechanism should not be treated as a source of procuring power and is only meant for settling the deviations in the real-time power interchange between various pool participants. Accordingly, TPC-D should plan its power procurement in a way that the purchases from the Imbalance Pool are minimised. The purchase quantum under the Imbalance Pool has been corrected based on the input from MSLDC. The Commission has approved the power purchase from Bilateral Sources and Imbalance Pool for FY , as shown in the Table below: Table 4-13: Bilateral Power Purchase Quantum & Cost for FY as approved by the Source Bilateral Purchase Imbalance Pool Total Short-term Purchase Commission MYT MTR Petition Approved in this Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) , , , , Sale outside Licence Area TPC-D s Submission TPC-D submitted that it had sold surplus energy of 1.77 MU in September, 2015 in the Power Exchange. In addition, TPC-D had entered into an Agreement dated February 2, 2016 with Indian Railways for supply of 80 MW power from February, 2016 at a rate of Rs per Page 90 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

91 kwh. The amount received from sale of surplus energy has been utilised to reduce the total power purchase cost of TPC-D. Based on the above, the month-wise Sale outside Licence Area for FY is as given in the Table below: Table 4-14: Sale outside Licence Area for FY as submitted by TPC-D Month Quantum (MU) Cost (Rs. Crore) Rate (Rs./kWh) Sep-2015 (1.77) (0.70) 3.94 Feb-2016 (26.38) (11.58) 4.39 Mar-2016 (41.32) (18.14) 4.39 Total (69.47) (30.43) 4.38 Commission s Analysis and Ruling The Commission notes that TPC-D has sold surplus energy of 1.77 MU in the month of September 2015 at rate of Rs. 3.94/kWh, which is accepted by the Commission. Further, TPC-D entered into an Agreement with Indian Railways dated February 2, 2016 for supply of 80 MW power from February 2016 at rate of Rs per unit. During FY , TPC-D has sold the surplus energy of MU in February 2016 and MU in March, 2016 at rate of Rs. 4.39/kWh. The detailed analysis for this transaction has been discussed in subsequent Chapter on Truing up for FY , as surplus energy under this Agreement has been sold for only two months of FY Based on the analysis, the Commission approves the Sale of surplus energy made to Indian Railways in the month of February, 2016 and March, 2016 as submitted by TPC-D. Accordingly, the Commission approves Sale to Outside Licence Area for FY as shown in the following Table: Table 4-15: Sale to Outside Licence Area for FY as approved by the Commission Source Sale to Outside Licence Area Stand-by Charges TPC-D s Submission MYT MTR Petition Approved in this Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) (69.47) (31.15) 4.48 (69.47) (30.43) 4.38 (69.47) (30.43) 4.38 TPC-D submitted that it has paid Rs Crore towards Standby Charges for FY as determined in the MYT in Case Nos. 179 of 2011 dated June 28, 2013 for April and May, 2015 and as per Case No. 47 of 2015 dated June 26, 2015 for the balance months Case No. 69 of 2018 Mid Term Review for TPC-D Page 91 of 387

92 of FY In addition to the above Standby charges, TPC-D has purchased the actual Standby energy amounting to Rs Crore during FY The same has been considered in the cost of power purchase. Thus, the total cost of Standby arrangement for FY works out to Rs Crore (Rs Crore Crore). Commission s Analysis and Ruling The Commission approves the actual Stand-by Charges of Rs Crore paid by TPC-D for FY for the purpose of truing up Transmission Charges and MSLDC Charges TPC-D s Submission TPC-D submitted that MSLDC Charges and Transmission Charges amounted to Rs Crore and Rs Crore for FY TPC-D has paid Transmission Charges as determined in the in Case No. 123 of 2014 dated August 14, 2014 for first 2 months of FY For the balance months, TPC-D has paid the Transmission Charges as per the in Case No. 57 of 2015 dated June 26, 2015 applicable from 1 June, Further, TPC-D submitted that it has paid Rs Crore towards MSLDC charges during FY , based on the MSLDC Budget in Case No. 178 of 2013 dated March 7, 2014 for April, 2015 to September, 2015 and based on the in Case No. 218 of 2014 dated October 20, 2015 for October, 2015 to March, Commission s Analysis and Ruling The Commission has approved the actual Transmission Charges and MSLDC Charges paid by TPC-D for FY , which are as per the applicable InSTS Tariff s and MSLDC Budget s, as shown in the Table below: Table 4-16: Transmission Charges & MSLDC Charges for FY as approved by the Commission (Rs. Crore) Particulars MYT MTR Petition Approved in this Transmission Charges MSLDC Charges Total Page 92 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

93 6.4.2 Summary of Power Purchase Costs for FY Based on the above, the summary of the approved and actual Power Purchase Cost of TPC-D for FY is provided in the Table below: Particulars (TPC-G) including generation from Unit 6 under MSLDC Direction Purchase from RE Sources Table 4-17: Power Purchase Cost for FY as approved by the Commission Quantum (MU) MYT MTR Petition Approved in this Cost (Rs. Crore) Rate (Rs./ kwh) Quantum (MU) Cost (Rs. Crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. Crore) Rate (Rs./ kwh) Bilateral Purchase FBSM Purchase Sale outside Licence Area (69.47) (31.15) 4.48 (69.47) (30.43) 4.38 (69.47) (30.43) 4.38 Stand-by Charges Transmission Charges MSLDC Charges Total Power Purchase Case No. 69 of 2018 Mid Term Review for TPC-D Page 93 of 387

94 4.6 OPERATION AND MAINTENANCE EXPENSES TPC-D s Submission TPC-D submitted that the actual O&M Expenses for FY were Rs Crore. TPC-D submitted that the actual O&M Expenses for Wires Business and Supply Business have been adjusted to the following extent: Brand Equity Expenditure The Commission has directed to compute Brand Equity based on the Revenue earned in the previous year. In view of this, there is a difference between the actual Brand Equity expense and the amount arrived at on the basis as directed by the Commission. The share of Brand Equity and computation of the same is based on the methodology adopted by the Commission. TPC-D submitted that the Brand Equity expenditure based on the Commission approved methodology has been allocated to the Wires Business and Supply Business based on the actual Brand Equity expenditure of the respective Businesses. The working of the Brand Equity Expenditure is as given below: Table 4-18: Brand Equity Expenses for FY as submitted by TPC-D Particulars Formula FY Revenue from Mumbai Licensed Area Businessbased on Allocation Statement for FY a Add: Cash Discount pertaining to Mumbai Licensed Area b Add: Income in respect of services rendered pertaining to Mumbai Licensed Area c 0.80 Add: Delayed Payment Charges pertaining to Mumbai Licensed Area d 7.21 Total Revenue to be considered for Mumbai Licensed Area e=a+b+c+d Contribution to Tata Brand Equity f=0.25%*e 5.22 Service 14%+VAT@4% g= (taxes) * f 0.94 Total contribution to Brand Equity including Service Tax h=f+g 6.16 Expenditure Related to Demand Side Management The Commission in the truing up for FY in Case No. 47 of 2016 has adopted a different approach for approval of DSM expenditure as compared to approvals given in earlier years and had not considered the expenditure towards employees working for implementation of DSM activities. This issue of non-consideration of the entire DSM expenditure was raised by TPC-D in its Review Petition against the MYT, which was not accepted by the Commission. TPC-D submitted that it has now filed an Appeal before Page 94 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

95 ATE on this disallowance and the matter is sub-judice. TPC-D submitted that it has reduced the DSM expenditure of Rs 2.33 Crore in FY from the total O&M expenditure and claimed the same separately. The O&M Expenses for FY for the entire Distribution Business, along with the break-up for Wires and Supply Business, are shown in the following Table: Table 4-19: Actual O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Employee Expenses Administration & General Expenses Repairs and Maintenance Expenses Sub-total Less: Brand Equity considered in the Accounts (0.64) 5.98 DSM Expenses Add: Allocation of Brand Equity Expenses to TPC-D as per MERC methodology (0.74) 6.90 Total O&M Expenses TPC-D further submitted that while computing the normative O&M Expenses, it has considered the total energy wheeled through TPC-D Network, i.e., energy wheeled for Direct consumers and energy wheeled for OA consumers. Accordingly, based on MYT Regulations, 2011, the normative O&M expenses for the Wires Business for FY is shown in the following Table: Table 4-20: Normative O&M Expenditure for Wires Business for FY as submitted by TPC-D (Rs. Crore) Particulars Unit FY MYT MTR Petition Norms for O&M For Wheeled Energy Paise/kWh R&M Expenses % of GFA 2.00% Parameters for O&M Expenses Wheeled Energy MU Opening GFA Rs Crore O&M expenses Case No. 69 of 2018 Mid Term Review for TPC-D Page 95 of 387

96 Particulars Unit FY MYT MTR Petition A&G and Employee Rs Crore R&M Rs. Crore Total O&M Expenses Rs Crore For computing the normative O&M expenses for the Supply Business, TPC-D considered the sale outside Licence Area along with the sale from Direct and Change-over Consumers. TPC-D requested the Commission to consider sale outside licence area while determining the normative O&M expenses, since Revenue earned from the same is utilised to reduce the power purchase cost of TPC-D. Table 4-21: Normative O&M Expenditure for Supply Business for FY as submitted by Particulars Norms for O&M expenses For No. of Consumers in Supply Business TPC-D Units FY MYT MTR Petition Paise/kWh For R&M Expenses % of GFA 0.25% Parameters for O&M Expenses Sales- Direct+ Changeover + OLA) MU Opening GFA Rs. Crore O&M expenses A&G and Employee expenses R&M Expenses 0.31 Total Normative O&M Expenses Rs. Crore TPC-D submitted the total Normative O&M expenses for the Wires Business and Supply Business as Rs Crore as against the actual O&M expenses of Rs Crore for FY Commission s Analysis and Ruling For computation of normative O&M expenses for FY , the norms are specified for TPC-D in MYT Regulations, For the purpose of truing up, the Commission approves the O&M expenses on normative basis as per the provisions of the MYT Regulations, Further, the Commission has considered the actual O&M Expenses for sharing of efficiency gains and losses as per Regulation 14 of MYT Regulations, The Commission notes that while computing the normative O&M expenses for the Supply Business for FY , TPC-D has considered the sale of outside licence area as part of Page 96 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

97 sales. However, the O&M norms specified in the MYT Regulations, 2011 are towards energy sales to consumers of the Supply Business, whereas TPC-D has sold power outside licence area to Indian Railways. Hence, the Commission has not accepted TPC-D s proposal for consideration of sale outside licence area for computation of normative O&M Expenses. Further, while computing the normative O&M expenses for the Wires Business for FY , TPC-D has considered the energy wheeled for Direct consumers and energy wheeled for OA consumers, which has been accepted by the Commission. Accordingly, the Commission has computed the normative O&M Expenses for FY as shown in the following Table: Table 4-22: Normative O&M Expenditure for Wires Business for FY as approved by Particulars the Commission (Rs. Crore) Unit MYT MTR Petition Approved in this Norms for O&M For Wheeled Energy Paise/kWh R&M Expenses % of GFA 2.00% 2.00% 2.00% Parameters for O&M Expenses Wheeled Energy MU , , Opening GFA Rs. Crore , , O&M expenses A&G and Employee Rs Crore R&M Rs. Crore Total O&M Expenses Rs Crore Table 4-23: Normative O&M Expenditure for Retail Supply Business for FY as Particulars Norms for O&M expenses For No. of Consumers in Supply Business approved by the Commission Unit MYT MTR Petition Approved in this Paise/kWh For R&M Expenses % of GFA 0.25% 0.25% 0.25% Parameters for O&M Expenses Sales MU , Opening GFA Rs. Crore O&M expenses A&G and Employee expenses R&M Expenses Total Normative O&M Expenses Rs. Crore Case No. 69 of 2018 Mid Term Review for TPC-D Page 97 of 387

98 The Commission observed that there was a difference between the actual O&M expenses submitted in MTR Petition vis-à-vis expenses shown in Allocation Statement and Audited Accounts, and sought the reconciliation of the same from TPC-D. In its reply, TPC-D accepted the difference in expenses claimed and submitted that the expenses as per Allocation Statement may be considered. Accordingly, the Commission has considered the actual O&M Expenses of Rs Crore, including Rs Crore of Employee Expenses, Rs Crore of A&G Expenses and Rs Crore of R&M Expenses as against total O&M expenses of Rs Crore submitted in the MTR Petition. As regards Brand Equity expenses, the Commission asked TPC-D whether Service Tax is actually payable on the Brand Equity expenses and whether the same has been paid by TPC- D. TPC-D submitted the year-wise Service Tax, VAT and Swachh Bharat Cess paid by TPC during FY along with the documentary evidences, which have been verified by the Commission. Further, the Commission observed that Brand Equity expenses claimed by TPC-D were around 10% higher than that considered in the Accounts for FY , FY and FY TPC-D has submitted that in totality, Brand Equity expenses paid by TPC and claimed are the same. TPC-D was asked to justify the same by giving the break-up of Brand Equity expenses actually paid/allocated for TPC-G, TPC-T and TPC-D and the comparison of the same with the Brand Equity expenses claimed in the Petition for respective years. In reply, TPC-D submitted the following details: Partic ulars Claime d in ARR Table 4-24: Details of Brand Equity expenses as submitted by TPC-D FY FY FY FY Tota l Diff. As per A/C Diff. Claime d in ARR As per A/C Diff. Claime d in ARR As per A/C Diff. Claime d in ARR As per A/C TPC-G TPC-T TPC-D Total Diff. From the above Table, it is observed that Brand Equity expenses are claimed higher than actual expenses in FY and FY and lower than actual expenses in FY and FY However, for last four (4) years, the Brand Equity expenses claimed by TPC as a whole are slightly lower than the actual Brand Equity expenses paid. In this context, the ATE, in its Judgment dated 15 July, 2009 in Appeal No. 138 of 2008, had allowed pass through of the Brand Equity expenses for TPC-D, on the premise that Page 98 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

99 TPC-D was benefiting in several ways on account of the arrangement with Tata Sons. While the Commission has since been allowing pass through of the Brand Equity expenses in accordance with the ATE Judgment, the Commission is of the view that it is necessary to evaluate whether TPC-D is still benefiting from the arrangement, to avail which, it is paying the Brand Equity fees to Tata Sons. Hence, though the amount of Brand Equity is approved, it is being kept aside by the Commission, and not being passed through at this point in time. TPC-D is directed to submit all the necessary details and justification for being allowed pass through of the Brand Equity expenses along with its next Petition, and if the Commission is satisfied that TPC-D is benefiting from the arrangement, then the Brand Equity expenses shall be allowed to be passed through, with the associated Carrying Cost, if applicable. Further, the Commission notes that TPC-D has included the expenses towards centenary celebrations in actual A&G expenses. As regards the clarification of the same, TPC-D submitted that these expenses are incurred towards celebration of 100 years of Tata Power in order to pay tribute to all those who contributed to the history of Tata Power and spread awareness, celebrations in the form of organising functions, knowledge fairs, display banner, etc. The Commission is of the view that expenses incurred towards Centenary Celebrations should not be recovered from the consumers. In the past, the Commission has disallowed similar expenses towards Corporate Social Responsibility. In view of this, the Commission has disallowed the expenses of Rs Crore towards Centenary Celebrations for FY In view of the above, the Commission has not considered Brand Equity expenses in the ARR for FY Further, the Commission has deducted the DSM expenses approved for FY from the actual O&M Expenses. In view of the above, the Commission approves the actual O&M Expenses for TPC-D, for the purpose of truing up for FY , as shown in the following Table: Table 4-25: Actual O&M Expense for FY as approved by the Commission (Rs. Crore) Particulars MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Employee Expenses Administration & General Expenses Repairs and Maintenance Expenses Case No. 69 of 2018 Mid Term Review for TPC-D Page 99 of 387

100 Particulars MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Sub-total Less: Brand Equity considered in the (0.64) (0.64) Accounts Less: DSM Expenses Less: Expenses towards Centenary Celebration Add: Allocation of Brand Equity Expenses to TPC-D as per MERC (0.74) methodology Total O&M Expenses The sharing of efficiency gains and losses for O&M Expenses for FY has been undertaken in the subsequent paragraphs of this Chapter. 4.7 CAPITAL EXPENDITURE AND CAPITALISATION TPC-D s Submission TPC-D submitted that the actual capitalisation was Rs Crore for the Wires Business and Rs Crore for the Retail Supply Business as against Rs Crore and Rs Crore, respectively, approved in the MYT in Case No. 47 of TPC-D submitted that as the on Network Roll Out Plan of TPC-D was pending, the Commission in MYT in Case No. 47 of 2016 had approved the capitalisation based on the average capitalisation approved for the three-year period from FY to FY , for the Wires Business. TPC-D submitted that for the purpose of Truing up, it has considered the actual capitalisation for FY The details of capital expenditure and capitalisation for Wires Business and Supply Business and break up of DPR and Non-DPR as submitted by TPC-D are shown in the following Table: Table 4-26: Capitalisation for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Business Capital Capitalisation Expenditure Supply Business Capital Capitalisation Expenditure Approved in the MYT Non-DPR Schemes DPR Cases Ratio Non-DPR: DPR 11.83% 5.68% Page 100 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

101 Wires Business Supply Business Particulars Capital Capital Capitalisation Capitalisation Expenditure Expenditure Total TPC-D submitted that the capitalisation under the DPR category for Wires Business is Rs Crore and under Non-DPR category is Rs Crore. The ratio of Non-DPR to DPR works out to 11.83%. Similarly, for the Supply Business, the capitalisation under DPR category is Rs Crore whereas the Non-DPR capitalisation is Rs Crore, which makes the ratio of Non DPR to DPR 5.68%. Thus, in both the Businesses, the Non-DPR is well within the limit of 20% of DPR schemes, set by the Commission. TPC-D submitted that it has considered the normative debt:equity ratio of 70:30 for funding of capitalisation for FY Commission s Analysis and Ruling As discussed in an earlier Chapter of this, Commission has allowed the capitalisation of Rs Crore for FY in light of dated 14 August, 2017 in Case No. 50 of 2015 and DPR for investment schemes for Distribution activities in 11 clusters vide letter no. MERC/CAP/DPR/ /01800 dated 12 November, In light of the TPC-D s submission in Case No. 50 of 2015 and the Commission s ruling in the, TPC-D was asked to justify the capitalization claimed for the category IV schemes (i.e. Mumbai Suburbs Network Development in 11 identified Clusters Approved as per Case No. 151 ) in FY amounting to Rs Crore. Further as regards to Category III schemes (i.e. Mumbai Suburbs Distribution Activity Schemes for new consumers Approved prior to Case No. 151 ), TPC-D was asked to justify the capitalization for FY onwards. In response, TPC-D stated as follows: The Commission had provided In-principle clearance to two DPRs for development of the network in Mumbai Suburban Area and connection to new consumers as follows: In-principle clearance of the investment scheme for Distribution activities in Mumbai Suburban Licence Area vide letter no. MERC/CAP/DPR/ /00811 dated 9th July, 2012 for Rs Crores. In-principle clearance of the investment schemes for Distribution activities in 11 clusters vide letter no. MERC/CAP/DPR/ /01800 dated 12th Case No. 69 of 2018 Mid Term Review for TPC-D Page 101 of 387

102 November, 2012 for Rs Crores which included capital expenditure of Rs Crores approved vide letter dated 9th July, Therefore, the amount approved through the DPR approval dated 9th July, 2012 becomes Rs Crores as explained in the Table below: Table 1: Summary of DPR approvals granted for Mumbai Suburban Area As can be seen from the Table 1 above, the approved value of DPR 1 approved on 9 July, 2012 stood revised at Rs Crore, the approved value of DPR 2 approved on 12 November, 2012 was Rs Crore and the combined approval of both the DPRs taken together was Rs Crore. In Case No. 50 of 2015, TPC-D had provided the status of DPR 2 i. e., DPR with approved scheme value of Rs Crore, which was the subject matter of the Petition. According to the submission in the said Petition, TPC-D had submitted a capitalisation of Rs Crore till 31 March, 2016 against this DPR and surrendered the balance Rs. 484 Crore to the Commission. Hence, there was no amount available against this DPR to spend and capitalise in FY The capitalisation of Rs Crore in FY was done against DPR 1 approved by the Commission. The details of the same are provided in the Table below: Table 3 Capitalisation against DPRs 1 and 2 Particulars DPR 1 DPR 2 Combined DPR 1 & DPR 2 Approved value of DPR 1 and DPR 2 as per Table 1 above a Amount surrendered as per Case No. 50 of 2015 (Refer Table 2 above) b Balance amount available c=a-b Amount capitalised till 31st March, 2016 against DPRs d Balance amount pending for capitalisation on 1st April, 2016 e=c-d Amount capitalised in FY f Page 102 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

103 It may be noted that the capitalisation carried out in FY in majority of the schemes is part capitalisation (residual capitalisation) where major portion of the capitalisation of individual schemes was carried out in previous years. Hence, it is difficult to give the details of assets capitalised each small scheme in FY However, the details of assets capitalised in FY have been provided for 13 schemes which contribute to around 74% of the total capitalisation claimed in FY For the balance schemes, capitalisations carried out at the fag end of a scheme have been provided, which are primarily towards civil, administration and last mile connectivity related activities as it is difficult to pinpoint an asset towards these. The Commission has gone through the list submitted by TPC-D for the assets capitalized in FY for claiming the capitalization of Rs Crore. The Commission notes that the list also contains major assets such as Transformers, RMUs, Substations, cables, feeder pillars and it is therefore difficult to accept TPC-D s submissions that these are residual capitalization. The Commission has noted major issue regarding the capitalization claimed by TPC-D towards DPR 2 (i.e., DPR for Distribution activities in Mumbai Suburban Licence Area vide letter no. MERC/CAP/DPR/ /00811 dated 9 July, 2012 for Rs Crore.). TPC-D has stated that part amount of this DPR, i.e., Rs Crore was included in other DPR of Rs. 979 Crore making the cost of DPR as Rs Crore. The Commission notes that as per TPC-D s own submission in Case No. 50 of 2015, this DPR belongs to category III-DPR, i.e., DPR for Mumbai Suburban Schemes: those approved prior to the in Case No. 151 of 2011 in the area common to RInfra-D and TPC-D. Considering the stand taken by the Commission in Case No. 50 of 2015 for Category III schemes, the Commission has considered the capitalization till FY (i.e., year in which the ATE Judgment was issued) and not considered the amount of Rs Crore claimed by TPC-D in FY On similar lines, the Commission has disallowed the capitalization for the following DPRs. Table 4-27: Capitalisation disallowed by the Commission (Rs. Crore) DPR name FY FY FY Consumer Schemes in the North Mumbai Area Distribution Activities in Mumbai Suburban License Area for FY Distribution Activities in the South-Central Mumbai Area (Consumer Schemes where Tata Power's network already exists) Case No. 69 of 2018 Mid Term Review for TPC-D Page 103 of 387

104 DPR name FY FY FY Consumers Schemes in the Mumbai License Area - Phase 3 (Consumer Schemes where Tata Power's network already exist) Grand Total The Commission also scrutinized the capitalization for other DPR schemes and has considered approval of only those schemes, which have been approved In-principle by the Commission. Two DPRs have been approved by the Commission during the proceedings of present MTR Petition. The Commission has considered capitalization towards these two DPRs in accordance with the In principle approval accorded by the Commission. As regards the financing of the capitalisation, the Commission observed that while calculating interest, depreciation and RoE, TPC-D has not reduced the amount of Consumer Contribution (CC) from the opening GFA and amount capitalised during the year. The Commission asked TPC-D to confirm the amount of CC towards creation of fixed assets. TPC-D submitted that it has computed the depreciation, ROE and interest without considering the CC. Accordingly, the Commission considers the financing of Capitalisation for FY as per normative debt:equity ratio of 70:30. The Capitalisation and its financing approved by the Commission for the purpose of Truing up for FY is shown in the following Table: Table 4-28: Capitalisation for FY as approved by the Commission (Rs. Crore) Wires Business Supply Business Particulars Approved Approved MYT MTR MYT MTR in this in this Petition Petition Capitalisation Financing of Capitalisation Consumer Contribution Equity Debt Total Page 104 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

105 4.8 DEPRECIATION TPC-D s Submission TPC-D submitted that it has computed the Depreciation for FY in accordance with the MYT Regulations, The Depreciation for FY works out to Rs Crore for Wires Business and Rs Crore for Supply Business. The average depreciation rate on the Opening and Closing GFA for FY worked out to 5.28% for Wires Business and 6.58% for Supply Business. TPC-D submitted the computation of Depreciation for FY as shown in the following Table: Table 4-29: Depreciation for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening GFA Addition Retirement 0.00 (0.23) 0.00 (0.09) Closing GFA Depreciation % Depreciation as an average of Opening and Closing GFA 5.05% 5.28% 4.78% 6.58% Further, TPC-D submitted that the Depreciation Rate for the Retail Supply Business is higher because of higher Depreciation rates for IT related assets capitalised during FY and FY Commission s Analysis and Ruling As per Regulation 31.5 of the MYT Regulations, 2011, Depreciation has to be calculated based on the average of opening and closing value of assets as approved by the Commission. For computation of Depreciation for FY , the Commission has taken the Opening Balance of GFA for Wires Business and Supply Business as equal to the closing balance approved for FY in this after considering the additional capitalisation. The Commission has considered asset addition for FY as per the capitalisation approved for the year. The retirement of assets has been considered based on the submission made by TPC-D. The Commission sought the reconciliation of GFA submitted in MTR Petition vis-à-vis audited account/allocation statement. TPC-D submitted the GFA details duly certified by Statutory Auditor for FY and the Commission has accepted the same. Based on the asset head-wise computation of depreciation submitted by TPC-D for FY , the Case No. 69 of 2018 Mid Term Review for TPC-D Page 105 of 387

106 Commission observed that average rate of depreciation for some asset-heads are higher than the scheduled depreciation rate specified in the MYT Regulations, In reply, TPC-D submitted the revised computation of depreciation for FY vide reply CREG/MUM/MERC/2018/248 dated August 30, 2018 along with details of assets, asset head considered for that asset and applicable depreciation rates. As regards higher depreciation rate (more than 5.28%) for Plant and Machinery in Supply Business, it is observed that average depreciation rate is slightly more than 5.28% because of assets like communication equipment, AC equipment and IT equipment, having depreciation rate of 6.33%, 9.50% and 15%, respectively, being considered under Plant and machinery. In this regard, though the Commission has considered the depreciation on such assets for the purpose of Truing up for FY , TPC-D should re-visit the classification of such assets under appropriate asset head. Accordingly, the Commission has considered the weighted average rate of depreciation of 5.26% for Wire Business and 5.97% for Supply Business. The Commission has approved the depreciation after truing up for FY as shown in the following Table: Table 4-30: Depreciation for FY as approved by the Commission (Rs. Crore) Particulars MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Opening GFA , Addition Retirement Closing GFA , Wt. Avg. Depreciation Rate (%) 5.05% 5.28% 5.26% 4.73% 6.58% 5.97% Depreciation INTEREST ON LONG-TERM LOAN TPC-D s Submission TPC-D submitted that it has considered the actual capitalisation, both for Distribution Wires and Retail Supply Business for computing the Interest on Debt. In the past, it has taken various long-term loans to finance the capital expenditure projects in line with the Debt: Equity structure of 70:30. TPC has availed fresh loan from IDFC Bank (Sanctioned amount: Rs. 250 Crore, Amount drawn: Rs. 70 Crore) and HDFC Bank (Sanctioned amount: Rs. Page 106 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

107 250 Crore, Amount drawn: Rs. 70 Crore) and also drawn the balance amount from Kotak Mahindra Bank (Sanctioned amount Rs. 250 Crore, Amount drawn Rs Crore). The details of new loans availed in FY are given in the following Table: Table 4-31: Details of New Loans utilized for FY as submitted by TPC-D HDFC Loan Amount 250 Crore Rate of Interest % p.a. linked to Base Rate. Repayment 2 Years moratorium, Quarterly repayment of 6.5 % of Drawal amount Schedule per annum for the first 10 years and 35 % in the last year. IDFC Loan Amount 250 Crore Rate of Interest % p.a. linked to Base Rate. Repayment Schedule 2 Years moratorium, Quarterly repayment of 6.5 % of Drawal amount per annum for the first 10 years and 35 % in the last year. The loans from various banks had been allocated to different businesses (Generation, Transmission and Distribution) based on their respective ratios of capitalisation in FY The balance loan is assumed to be financed through normative loan. The allocation of loans for various Businesses is given in the Table below: Table 4-32: Loan Allocation for FY as submitted by TPC-D (Rs. Crore) Particulars Notatio n U4 to 7 & Hydro U-8 Generation Transmission Distribution Total GTD Distribution Wires Retail Supply Capitalisation a Debt b=0.7*a % c=b/b% 26% 4% 29% 36% 35% 100% 33% 2% Kotak d=c*d IDFC HDFC Normative Considering the above, the actual loan drawal and interest rates, the weighted average Interest Rate for FY works out to 10.70% for Wires Business and 10.55% for Supply Business. TPC-D submitted the Interest on Loan Capital for FY as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 107 of 387

108 Table 4-33: Interest Computation for Wires Business and Supply Business for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Business Supply Business MYT MTR Petition MYT MTR Petition Opening Balance Drawals during the year Repayment Closing Balance Interest Rate 10.83% 10.70% 10.58% 10.55% Interest Expenses TPC-D further submitted that other Finance Charges including Commission and Brokerage Charges, for FY amounted to Rs Crore, comprising Rs Crore for Wires Business and Rs Crore for Supply Business. Commission s Analysis and Ruling As sought by the Commission, TPC-D submitted certificates from the Banks whose loans are outstanding, showing the outstanding amounts and applicable interest rates as on 1 April, For computation of interest on long-term loans for FY , the Commission has considered the opening balance of loans for the Wires Business and Supply Business as equal to the closing balance approved for FY in this, as discussed in the previous Section. The repayment has been considered as equal to the Depreciation for the year, in accordance with the MYT Regulations, The Commission has taken the weighted average interest rate of actual loans at the beginning of the year, as per the MYT Regulations, For computation of the weighted average interest rates, it has considered the opening balance and applicable interest rates of the portion of actual loans allocated to the Distribution Business. The weighted average interest rate for FY has accordingly been taken as 10.70% and 10.55% for the Wires Business and Supply Business, respectively, as submitted by TPC-D. Accordingly, the Commission has approved the interest on long-term loans for FY for the Wires Business and Supply Business, as given in the following Table: Page 108 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

109 Table 4-34: Interest Computation for Wires Business and Supply Business for FY as Particulars submitted by TPC-D (Rs. Crore) MYT MTR Petition Approved in this Wires Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.83% 10.70% 10.70% Interest on Loan Capital Retail Supply Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.58% 10.55% 10.55% Interest on Loan Capital In addition to the above, the Commission has approved the Finance Charges for FY amounting to Rs Crore, comprising Rs Crore for Wires Business and Rs Crore for Supply Business RETURN ON EQUITY TPC-D s Submission TPC-D submitted that it has determined RoE for Wires Business and Supply Business considering the entire capitalisation during FY in line with the MYT Regulations, The revised Closing Equity for FY has been arrived after considering the impact of entire capitalisation as discussed in earlier Section of this and the same has been considered as Opening Equity for FY Accordingly, TPC-D submitted the RoE for Wires Business and Supply Business for FY as Rs Crore and Rs 7.08 Crore, respectively, as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 109 of 387

110 Table 4-35: Return on Equity for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Business MYT MTR Petition Supply Business MYT MTR Petition Regulatory Equity at the beginning of the year Capitalised Assets during the year Equity portion of Expenditure on capitalised Assets Less: Equity portion of the assets decapitalised 0.00 (0.07) 0.00 (0.03) Regulatory Equity at the end of the year Rate of Return 15.50% 15.50% 17.50% 17.50% Return on Regulatory Equity at the beginning of the year Return on Equity portion of capitalisation during the year Total Return on Equity Commission s Analysis and Ruling To determine the equity eligible for returns as per the Regulations, the Commission has considered the opening equity for FY as the same as the closing equity of FY as approved in this. The equity added during the year has been considered as equal to 30% of the approved capitalisation during FY The Commission has applied the rate of RoE of 15.50% and 17.50% for Wires Business and Supply Business, respectively, in accordance with the Regulations. In view of the above, the RoE approved by the Commission for FY is as summarized in the Tables below: Table 4-36:Return on Equity for Wires & Supply Business for FY as approved by the Particulars Regulatory Equity at the beginning of the year Equity portion of capitalisation during the year Reduction in Equity Capital on account of Commission (Rs. Crore) MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Page 110 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

111 Particulars retirement / replacement of assets Regulatory Equity at the end of the year MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Rate of ROE 15.50% 15.50% 15.50% 17.50% 17.50% 17.50% Return on Regulatory Equity at the beginning of the year Return on Equity portion of capitalisation during the year Total Return on Regulatory Equity INTEREST ON WORKING CAPITAL TPC-D s Submission TPC-D submitted that the working capital requirement has been computed in accordance with the MYT Regulations, The interest rate of 14.75% is considered for computation of Interest on Working Capital (IoWC) based on the Interest Rate approved in the MYT in Case No. 47 of TPC-D submitted that it has reduced the cost of power purchase from TPC-G and power purchase cost from its own Wind Farms, while computing the working capital requirement. The IoWC for FY for Wires Business and Supply Business is shown in the following Table: Table 4-37: Interest on Working Capital for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Business MYT MTR Petition Supply Business MYT MTR-D Petition One-twelfth of the amount of O&M Expenses One-twelfth of the sum of the book value of stores, materials and supplies Two Months equivalent of expected revenue from sale of electricity at the prevailing tariff Less: Amount of Security Deposit Case No. 69 of 2018 Mid Term Review for TPC-D Page 111 of 387

112 Particulars Wires Business MYT MTR Petition Supply Business MYT MTR-D Petition One-month equivalent of cost of power (excluding TPC-G cost) Total Working Capital Rate of Interest (% p.a.) 14.75% 14.75% 14.75% 14.75% Interest on Working Capital TPC-D submitted IoWC for FY as Rs Crore and Rs Crore for the Wires Business and Supply Business, respectively, totalling to Rs Crore as against the provisionally approved IoWC of Rs Crore. Commission s Analysis and Ruling The Commission asked TPC-D about the basis for considering 1/12 th of sum of book value of stores, material and supplies including fuel for FY as Rs Crore. TPC-D submitted that it has computed 1/12 th of book value of stores, based on the actual monthwise data available for Wires Business and Supply Business. The Commission has approved the IoWC for TPC-D's Wires Business and Supply Business for FY in accordance with Regulations 35.3 and 35.4 of the MYT Regulations, The SBAR of 14.75% at the time of filing the Petition has been taken for calculating IoWC. Accordingly, the Commission has approved the IoWC for FY for the Wires Business and Supply Business, as given in the following Tables: Table 4-38: Interest on Working Capital for FY as approved by the Commission (Rs. Particulars Crore) MYT FY MTR Petition Approved in this Wires Business One-twelfth of the amount of O&M Expenses One-twelfth of the sum of the book value of stores, materials and supplies Two months of the expected revenue from sale of electricity at the prevailing tariffs Total Working Capital Rate of Interest (%) 14.75% 14.75% 14.75% Interest on Working Capital Retail Supply Business One-twelfth of the amount of O&M Expenses Page 112 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

113 Particulars MYT FY MTR Petition Approved in this One-twelfth of the sum of the book value of stores, materials and supplies Two months of the expected revenue from sale of electricity at the prevailing tariffs Less: Amount of Security Deposit from retail supply consumers Less: One-month equivalent of cost of power purchased other than TPC-G Total Working Capital Rate of Interest (%) 14.75% 14.75% 14.75% Interest on Working Capital INTEREST ON CONSUMERS SECURITY DEPOSIT TPC-D s Submission TPC-D submitted that the interest on Consumer Security Deposits (CSD) from Supply Business consumers is considered on the basis of actual Interest paid during the year. The actual interest on CSD paid was Rs Crore as against Rs Crore approved by the Commission during provisional truing up for FY Commission s Analysis and Ruling The Commission has approved the actual interest of Rs Crore on CSD paid by TPC- D to consumers, for the purpose of truing up for FY ADDITIONAL RETURN FOR HIGHER WIRES AND SUPPLY AVAILABILITY Additional RoE for Wires Business TPC-D s Submission TPC-D submitted that the Commission has approved the Target Wires Availability of 99.52% for FY in its previous MYT. The additional RoE based on the actual Wires Availability for FY is claimed as Rs Crore. Commission s Analysis and Ruling The Commission has considered the target Wires Availability as 99.52% in accordance with the target stipulated in the previous MYT for the additional RoE on account of higher Wires Availability in FY For computing the additional RoE on Wires Business, Case No. 69 of 2018 Mid Term Review for TPC-D Page 113 of 387

114 the Commission has considered the SAIDI as submitted by TPC-D. Accordingly, the Commission approves the additional RoE as given in the following Table: Table 4-39: Additional RoE for FY for Wires Business as approved by the Commission Particulars Units Notation MTR Petition Approved in this No. of Consumers interruption durations Min a No. of Consumers Nos. b SAIDI Min c =a/b SAIDI Hrs. c1=c/ Wire Availability for FY % d=1-(c/8760) * % 99.99% Wire Availability as per Norms % e 99.52% 99.52% Wire Availability for additional entitlement % f=(d-e)/ % 0.05% Regulatory Equity at the beginning of the year Rs Crore g Regulatory Equity at the end of the year Rs Crore h Additional Return on Regulatory Rs k=average(g Equity Crore,h)*f Additional RoE for Retail Supply Business TPC-D s Submission TPC-D submitted that the additional RoE for Retail Supply Business is to be allowed based on Target Supply Availability approved in the MYT. TPC-D submitted the Base Load and Peak load for FY as shown in the following Table: Table 4-40: Base and peak Load Demand of TPC-D for FY as submitted by TPC-D Base InSTS Peak InSTS Base Load Peak Load Transmission Month Loss MW MW % a b c d e Apr % May % Jun % Jul % Aug % Sep % Oct % Nov % Dec % Remarks Includes Chola & Suburban Railways Page 114 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

115 Base InSTS Peak InSTS Base Load Peak Load Transmission Month Loss Remarks MW MW % a b c d e Jan % Includes Suburban Feb % Mar % Min /Max Load % Railways Without Railway Min /Max load The additional RoE based on the actual Supply Availability for FY is submitted as Rs Crore. Commission s Analysis and Ruling The Commission has considered the Target Supply Availability as 100% in accordance with the target stipulated in the MYT, for the additional RoE on account of higher Supply Availability in FY For computing the additional RoE for the Supply Business, from the data submitted by TPC-D, the Commission has considered the base contracted capacity as MW and peak contracted capacity of MW for FY As regards the consideration of Base Load and Peak Load, the Commission observes that TPC-D has considered the Base Load as 276 MW, which is the minimum value of monthly Base Load recorded in February TPC-D has neglected the seasonal variation in Base Load. For computing the Base Load for FY , the Commission has considered the seasonal variation and the average Base Load for all months has been considered as Base Load for FY Accordingly, Base Load for FY has been considered as 411 MW. Further, it is observed that for computing Peak Load for FY , TPC-D has considered the difference between Peak Demand and Base Load. However, Peak Load should be the maximum load recorded during any month of the year. Accordingly, the Commission has considered the Peak Load of 881 MW for FY Accordingly, the Commission approves the additional RoE on account of higher than target achievement of Supply Availability, as given in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 115 of 387

116 Table 4-41: Additional RoE for higher Supply Availability for FY as approved by the Commission Particulars Unit Notation MTR Approved in Petition this Unit 5 MW a Unit 7 MW b Unit 8 MW c Base Contracted Capacity MW d=a+b+c Actual Base Load MW e Base Load supply availability % f=d/e 164% 110% Unit 6 MW g Hydro MW h Wind and Solar MW i Supa Plus Nivade MW j Bilateral Power Purchase MW k Peak Contracted capacity MW l=sum(g:k) Actual Peak Load MW m Peak load supply Availability MW n=l/m 155% 106% Supply Availability % o=f*75%+n*2 5% 161% 109% Target Supply Availability % p 100% 100% Additional Return % q=(o-p)/10 6% 1% Regulatory Equity at the Rs Crore r beginning of the year Additional Return on Regulatory Equity Rs Crore v=average(r,s) *q PROVISION FOR BAD AND DOUBTFUL DEBTS TPC-D s Submission TPC-D submitted that it has made a provision of Rs Crore towards Bad and Doubtful Debts for the Wires Business and Rs.2.69 Crore for the Supply Business for FY The total amounts to Rs Crore for the Distribution Business as a whole. Commission s Analysis and Ruling Regulations 78.6 and 92.9 of the MYT Regulations, 2011 for Wires Business and Supply Business, respectively, specify the maximum provision for bad and doubtful debts for a year as 1.5% of the receivables of the respective businesses, provided that it is within 5% of the receivables. For applying these provisions, the Commission has allocated the total value of receivables in the ratio of the respective ARRs of the Wires Business and the Supply Business. Page 116 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

117 The Commission has approved the provision for bad and doubtful debts for FY for the Wires Business and the Supply Business at 1.5% of the receivables of the respective businesses. It has also verified that the total provision for bad and doubtful debts for each of the two Businesses has not exceeded 5% of their respective receivables. Accordingly, the Commission has approved the provision for bad and doubtful debts for FY as submitted by TPC-D, as shown in the following Table: Table 4-42: Provision for Bad & Doubtful Debts for FY as approved by Commission Particulars Provisions for Bad and Doubtful Debts 4.15 INCOME TAX TPC-D s Submission MYT (Rs. crore) Wires Business MTR Petitio n Approved in this MYR Supply Business MTR Petitio n Approved in this TPC-D has computed the Income Tax for FY for Wires Business and Retail Supply Business based on the Revenue earned through TPC- D Consumers, Non-Tariff Income, Sale outside Licence Area and the actual expenses incurred for FY as per Regulatory Profit Before Tax (PBT) methodology. TPC-D submitted the Income Tax as Nil for Wires Business and Rs Crore for Supply Business for FY as shown in the following Table: Table 4-43: Income Tax for FY as submitted by TPC-D (Rs. Crore) MTR Petition Particulars Formula Wires Business Supply Business Total Revenue A , Less: Incentive and efficiency gains B 0.75 (26.06) Total Expenses C , Profit Before Tax D = A - B - C (66.89) 1, Tax Adjustment Add: Depreciation considered in Expenses E Other disallowance while computing IT F Total Tax Disallowances G = E + F Less: Tax Depreciation H Case No. 69 of 2018 Mid Term Review for TPC-D Page 117 of 387

118 Page 118 of 387 Particulars Formula Wires Business MTR Petition Supply Business Other expenses allowed for computing Income Tax I Deduction - U/s 80 IA J Total Tax Allowances K = H + I + J Total Taxable Income L = D + G - K (333.13) 1, Carry forward losses of previous years M 0 (1,107.77) Total taxable income after considering business loss of previous year N = L + M (333.13) (51.94) Corporate Tax Rate O % % Tax Payable at Normal rate (Corporate Tax Rate) P = N*O MAT Computation Profit Before Tax Q (66.89) 1, Add: Disallowances under Income Tax Disallowance U/s 14A R Interest under Income Tax Act S Provision for doubtful debts T Provision for diminution in share value U Dividend from foreign subsidiary V Total Disallowances under Income Tax (U/s 14 W = R + S + A, provision for doubtful debt) T + U + V Less: Deduction under Income Tax (Exempt Income, FBT, Wealth Tax, Withdrawal from Income) X Book Profit Y = Q + W - X (62.69) 1, MAT Rate Z 21.34% 21.34% Tax payable under MAT AA = Y*Z Tax Applicable Commission s Analysis and Ruling AB = max (P, AA) The Commission notes that TPC-D has submitted the Income Tax computation separately for Wires Business and Supply Business. The Commission notes that combined Income Tax has been computed till FY , which has been allocated to the Wires Business and Supply Business. However, in FY , the Commission has computed the Income Tax separately for Wires Business and Supply Business as per TPC-D s submission. In case of TPC-D, it is observed that if the Income Tax is computed separately, the overall Income Tax allowed would be higher and there would be an additional burden on the consumers. The Income Tax allowed is not actual Income Tax paid by TPC-D, and the calculated Income Tax for regulatory business based on regulatory PBT method. The objective for allowing Income Tax is not to earn more revenue from ARR. Also, the regulated Distribution Licensee business comprises the Wires Business and Supply Business. Hence, it would be more appropriate to consider combined Income Tax, and then allocate the same to the Wires Business and Supply Business. Case No. 69 of 2018 Mid Term Review for TPC-D

119 The Commission has computed Income Tax in accordance with Regulation 34.1 of MYT Regulations, 2011and as specified in ATE Judgment dated 2 December 2013 in Appeal No. 138 and 139 of As specified in the Regulations and the ATE Judgment, the Commission has arrived at Income Tax paid based on Regulatory Profit Before Tax (PBT) considering the normative cost allowed by the Commission. The ratio with regard to tax liability is calculated on the regulatory income and cost within the MYT regime considering the applicable tax depreciation for computation of the Income Tax. Accordingly, the calculation of Income Tax provides the tax payable for the Regulatory business whereby all the items of ARR and Revenue are considered on normative basis for tariff purposes. Also, in line with MYT Regulations, 2011, no efficiency gains and incentive earned are considered for computation of Tax on PBT basis. In view of the above, for the purpose of truing up for FY , the Commission has computed the combined Income Tax for Wires Business and Supply Business and the same has been allocated based on revenue of the respective Business. Accordingly, the Commission has computed the Income Tax for FY as shown in the following Table: Table 4-44: Income Tax for FY as approved by the Commission (Rs. Crore) Particulars Notation Approved in this Total Revenue A Total Expenses B Profit Before Tax C = A B Tax Adjustment Add: Depreciation considered in Expenses D Other disallowance while computing IT E Total Tax Disallowances F = D + E Less: Tax Depreciation G Other expenses allowed for computing Income Tax H 6.22 Deduction - U/s 80 IA I Total Tax Allowances J = G + H + I Total Taxable Income K = C + F J Carry forward losses of previous years L ( ) Total taxable income after considering business loss of previous year M = K + L (471.43) Corporate Tax Rate N 34.61% Tax Payable at Normal rate (Corporate Tax Rate) O = M*N - MAT Computation Profit Before Tax P Case No. 69 of 2018 Mid Term Review for TPC-D Page 119 of 387

120 Particulars Notation Approved in this Add: Disallowances under Income Tax Disallowance U/s 14A Q - Interest under Income Tax Act R - Provision for doubtful debts S 6.89 Provision for diminution in share value T - Dividend from foreign subsidiary U - Total Disallowances under Income Tax (U/s 14 A, V = Q+ R + S + provision for doubtful debt) T + U 6.89 Less: Deduction under Income Tax (Exempt Income, FBT, Wealth Tax, Withdrawal from Income) W MAT Rate X 21.34% Tax payable under MAT Y = W*X Tax applicable for Wire and Supply Business AB = max (O, Y) The above computed Income Tax has been allocated to Wires Business and Retail Supply business in proportion to their revenue. Accordingly, the Commission approves the Income Tax of Rs Crore for Wires Business and Rs Crore for Supply Business CONTRIBUTION TO CONTINGENCY RESERVE TPC-D s Submission The Contribution to Contingency Reserves for Wires Business and Supply Business has been worked out considering the provisions of Regulation 36.1 of the MYT Regulations, 2011.The contribution to Contingency Reserve for FY as submitted by TPC-D is shown in the following Table: Table 4-45: Contribution to Contingency Reserves for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particular MYT MTR Petition MYT MTR Petition Contribution to Contingency Reserves Commission s Analysis and Ruling As per Regulation 36 of MYT Regulations, 2011, the contribution to the Contingency Reserves in a year shall be between 0.25% and 0.50% of the original cost of fixed assets. The Commission sought details of actual investment made by TPC-D and different rates for various securities accumulated under Contingency Reserves. In reply to this, TPC-D submitted that it has made investment of Rs Crore during FY This includes the investment of Rs. 10 Crore on March 15, 2017 under Govt. of India Bond 26/12/2019 at interest rate of 6.79% and Rs Crore on March 31, 2017 under Govt. of India Bond Page 120 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

121 19/12/2022 at interest rate of 6.84%. Further, TPC-D also submitted the details of interest rates of various securities accumulated under Contingency reserves. The Commission has approved the Contribution to Contingency Reserves for Wires and Supply Business for FY at 0.25% of the approved value of the Opening GFA for the respective Businesses as shown in the Table below: Table 4-46:Contribution to Contingency Reserves for FY for Wires and Supply Particulars Business approved by the Commission (Rs. Crore) MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Opening Balance of GFA , % Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Contribution to CR DEMAND SIDE MANAGEMENT EXPENSES TPC-D s Submission TPC-D submitted DSM expenses of Rs Crore for FY towards various schemes as shown in the following Table: Table 4-47 : DSM Expenses for FY as submitted by TPC-D DSM Program Amount (Rs. Crore) Energy Audit Program 0.08 Ceiling Fan Program 0.26 Split AC Program 0.48 Refrigerator Program 0.97 LED Lighting Program 0.30 Thermal Energy Storage Program 0.21 Standard Offer Program 0.03 Grand Total 2.33 Commission s Analysis and Ruling The Commission has approved the following DSM expenses, after prudence check and based on TPC-D's revised submissions. In line with the approach adopted in previous, the Commission has not considered the Staff cost under DSM expenses. The same shall be considered as part of total O&M expenses. DSM expenses approved by the Commission for FY is shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 121 of 387

122 Table 4-48: DSM Expenses for FY as approved by the Commission (Rs. crore) Particulars MYT MTR Petition Approved in this DSM expenses CHARGES PAYABLE TO RINFRA-D TPC-D s Submission TPC-D has paid Rs Crore towards Wheeling Charge, Rs Crore towards Cross Subsidy Surcharge (CSS) and Rs Crore towards Regulatory Asset Charge (RAC) to R Infra-D for change-over consumers during FY based on the rates approved by the Commission. For the purpose of the computation of ARR, TPC-D has not been considered the above charges as these are collected and paid to RInfra-D. Commission s Analysis and Ruling The Commission has not considered charges payable to RInfra-D as part of ARR as well as revenue for TPC-D NON-TARIFF INCOME TPC-D s Submission TPC-D submitted the Non-Tariff Income as Rs Crore for FY This income comprises Rs Crore and Rs Crore of recurring and non-recurring items, respectively. The Non-Tariff Income for Wires Business and Supply Business is shown in the following Table: Table 4-49: Non-Tariff Income for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Recurring items Rent Interest from Contingency Reserves Investment Income from services rendered Non-Recurring items Sale of Scrap & Stores Sale of Fly Ash Delayed Payment Charges VAT Refund accrued Compensation Net Service Connection Charges Liquidated Damages Miscellaneous Revenue Page 122 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

123 Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Interest on Delayed Payments Re: Eps Interest on Loans & Advances Staff Interest Re: IT Refund Total Non-Tariff Income Commission s Analysis and Ruling The Commission has accepted TPC-D s submission and accordingly approved the Non- Tariff Income for FY as shown in the Table below: Table 4-50:Non-Tariff Income for FY as approved by the Commission (Rs. Crore) Wires Business Supply Business Particular MYT MTR Petition Approved in this MYT MTR Petition Approved in this Non-Tariff Income SHARING OF EFFICIENCY GAINS AND LOSSES FOR FY TPC-D s Submission TPC-D submitted that O&M Expenses would qualify for sharing of efficiency gains and losses as per the MYT Regulations, Accordingly, the computation for arriving the gains and losses for O&M expenses for FY is shown in the following Table: Table 4-51: Computation of Gain/(Loss) on O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Sr. Wires Supply Particulars No Business Business Total 1 Normative O&M Expenses Actual O&M Expenses Uncontrollable Expenditure Actual O&M considered for Gain/(Loss) Efficiency Gain/(Loss) for O&M Expenses 1.12 (39.08) 6 Efficiency Gain/(Loss) to be passed on to the Consumers 0.37 (13.03) TPC-D submitted that it has worked out the efficiency gain amount of Rs Crore for Wires Business and efficiency loss of Rs Crore for Supply Business to be passed on to the consumers. Case No. 69 of 2018 Mid Term Review for TPC-D Page 123 of 387

124 Commission s Analysis & Ruling The sharing of Efficiency Losses/ (Gains) on the difference between the actual and the normative O&M Expenses has been undertaken considering O&M Expenses as controllable under the MYT Regulations, 2011, the reasons for which have been elaborated in the paragraphs on O&M expenses, as shown in the Table below: Table 4-52:Sharing of (Gains)/losses on account of O&M Expenses for FY as approved by Commission (Rs. Crore) Particulars Wires Business Supply Business Normative O&M Expenses Actual O&M Expenses Efficiency (Gain)/Loss /3 rd Sharing with consumers to be passed on to consumers REVENUE FROM SALE OF ELECTRICITY TPC-D s Submission TPC-D submitted the revenue of the Wires Business and Supply Business for FY as shown in the following Table: Table 4-53: Revenue of Wires Business and Supply Business for FY as submitted by Particulars TPC-D (Rs. Crore) MTR Petition Supply Business Demand Charges + Fixed Charges Energy Charges Power Factor Incentive/ Penalty (153.30) Load Factor Incentive (33.90) 15 Day adjustment FAC Billed (76.90) Revenue from RAC Cash Discount (39.90) Total Revenue Wires Business Revenue from Wheeling Charges including wheeling Charges paid by OA Consumers TPC-D submitted that it has recovered Rs Crore from Wheeling Charges (Revenue from Direct & OA consumers towards wheeling) and Rs Crore from the Retail Page 124 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

125 Consumers during FY TPC-D further submitted that it has recovered revenue of Rs Crore from OA Consumers towards Operating Charges and Cross Subsidy Surcharge (CSS), excluding revenue of Transmission charges from OA consumers to the tune of Rs 5.48 Crore. TPC-D submitted the total Revenue for FY as shown in the following Table: Table 4-54 : Total Revenue for Distribution Wires and Retail Supply Business for FY as submitted by TPC-D (Rs. Crore) Particulars MTR Petition Revenue from Sale of Power Revenue from Wheeling Charges Revenue from Operating Charges & CSS from Open Access Consumers 5.28 Total Revenue Commission s Analysis and Ruling The Commission has reconciled the revenue for sale of power submitted in the Petition visà-vis revenue stated in Audited Accounts and Allocation Statement for FY The Commission has considered the revenue from Sale of power and revenue from Wheeling Charges as submitted by TPC-D. Further, as regards the revenue from Open Access Consumers, the Commission has considered the revenue from Transmission Charges of Rs Crore as part of the revenue for FY , as the MERC DOA Regulations, 2016 were applicable from FY onwards. Accordingly, revenue from Open Access consumers has been considered as Rs Crore as against Rs Crore submitted by TPC-D. In view of the above, the total revenue from Wires Business and Supply Business for FY as approved by the Commission is shown in the following Table: Table 4-55 : Total Revenue for Distribution Wires and Retail Supply Business for FY as approved by the Commission (Rs. Crore) Particulars MTR Petition Approved in this Revenue from Sale of Power Revenue from Wheeling Charges Revenue from Operating Charges & CSS from Open Access Consumers Total Revenue Case No. 69 of 2018 Mid Term Review for TPC-D Page 125 of 387

126 4.22 AGGREGATE REVENUE REQUIREMENT FOR FY The approved ARR for the Wires Business and Supply Businesses for FY is shown in the following Table: Table 4-56: ARR for Wires Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No. Petition this 1 Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Provision for bad and doubtful debts Contribution to contingency reserves Income Tax Other Finance Charges Sharing of Efficiency (Gain)/loss in O&M Expenses - (0.37) Total Revenue Expenditure Add: Return on Equity Capital Additional RoE due to higher Wires Availability Aggregate Revenue Requirement Less: Non-Tariff Income Add: Revenue Gap/(Surplus) of previous years (199.71) (199.71) (199.71) 16 Net Aggregate Revenue Requirement The main reasons for the difference between the Wires ARR claimed by TPC-D and that approved in this for FY are: 1. O&M expenses approved in this are slightly lower than that claimed by TPC- D, after sharing of the efficiency losses in this regard. 2. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY and FY after due prudence check by the Commission. 3. Income Tax approved in this for FY is higher than that claimed by TPC-D, on account of computation of combined Income Tax for Wires and Supply Business and then allocated to Wires Business. The approved ARR for the Supply Business of TPC-D is shown in the following Table: Page 126 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

127 Table 4-57: Aggregate Revenue Requirement for Supply Business for FY as approved Sr. No. Particulars by the Commission (Rs. Crore) MYT MTR Petition Approved in this 1 Power Purchase Expenses including Standby Charges Intra-State Transmission Charges MSLDC Fees & Charges O&M Expenses Depreciation Interest on Loan Capital Interest on Working Capital Interest on Security Deposit Provision for bad and doubtful debt Contribution to Contingency Reserve Income Tax DSM Expenses Other Finance Charges Share of Efficiency (Gain)/loss in O&M Expenses Total Revenue Expenditure , Add: Return on Equity Capital Additional RoE due to higher Supply Availability Aggregate Revenue Requirement , Less: Non-Tariff Income Less: Income from OA consumers Past recoveries Revenue Gap/(Surplus) of previous years ARR from Retail Supply business , The main reasons for the difference between the Supply ARR claimed by TPC-D and that approved in this for FY are: 1. O&M expenses approved in this are slightly lower than that claimed by TPC- D, after sharing of the efficiency losses in this regard. 2. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY and FY after due prudence check by the Commission. 3. Income Tax approved in this for FY is lower than that claimed by TPC-D, on account of computation of combined Income Tax for Wires and Supply Business and then allocated to Supply Business. Case No. 69 of 2018 Mid Term Review for TPC-D Page 127 of 387

128 4. Income from OA consumers approved in this is higher as against the submission of TPC-D because of inclusion of Transmission Charges paid by OA consumers. 5. Additional RoE for higher supply availability approved in this is lower than values claimed by TPC-D because of appropriate consideration of actual base load and peak load for FY The approved combined ARR requirement for the Distribution Business is shown in the following Table: Table 4-58 : Combined ARR for Wires and Retail Supply for FY as approved by the Sr. No. Particulars Commission (Rs. Crore) MYT MTR Petition Approved in this 1 Power Purchase Expenses including Standby Charges Intra-State Transmission Charges MSLDC Fees & Charges O&M Expenses Depreciation Interest on Loan Capital Interest on Working capital Interest on security deposit Provisions for bad and Doubtful Debts Contribution to Contingency Reserves Income Tax DSM Expenses Other Finance Charges Share of Efficiency (Gain)/Loss in O&M Expenses Total Revenue Expenditure , Add: Return on Equity capital Add: Additional RoE due to higher Availability Aggregate Revenue Requirement , Less: Non- Tariff Income Less: Income from OA consumers Past Recoveries Revenue Gap/(surplus) of previous years Aggregate Revenue Requirement of Distribution Business , Page 128 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

129 4.23 REVENUE GAP/(SURPLUS) FOR FY TPC-D s Submission TPC-D submitted the Revenue Gap/(Surplus) of Wires Business and Supply Business for FY as shown in the following Table: Table 4-59: Revenue Gap/ (Surplus) for Wires Business and Supply Business for FY as Sr. No Particulars submitted by TPC-D (Rs. Crore) MYT Wires Business MTR Petition Diff. MYT Supply Business MTR Petition Diff. 1 Net ARR Revenue (1.50) (25.00) Revenue Gap/ 3 (56.81) (28.44) (Surplus) TPC-D submitted that there is Revenue Surplus of Rs Crore for Wires Business and Revenue Gap of Rs Crore for Retail Supply Business for FY TPC-D submitted the combined Revenue Gap/(Surplus) for FY as shown in the following Table: Sr. No Table 4-60 : Total Revenue Gap/(Surplus) for Distribution Business for FY as Particulars submitted by TPC-D (Rs. Crore) MYT MTR Petition Difference 1 Net Aggregate Revenue Requirement Revenue (26.50) 3 Revenue Gap/ (Surplus) Commission s Analysis and Ruling Considering the approved components of ARR and Revenue for FY , the Commission has approved the Revenue Gap/(Surplus) for FY as shown in the Tables below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 129 of 387

130 Table 4-61: Revenue Surplus for Wires Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No Petition this 1 Net Aggregate Revenue Requirement Revenue from Wheeling Charges Revenue Gap/ (Surplus) (56.81) (28.44) (20.47) Table 4-62: Revenue Gap for Supply Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No Petition this 1 Net Aggregate Revenue Requirement , Revenue from Sale of power , Revenue Gap/ (Surplus) , The combined Revenue Gap for FY as approved by the Commission is shown in the Table below: Sr. No. Table 4-63: Combined Revenue Gap for FY as approved by the Commission (Rs. Particulars Crore) MYT MTR Petition Approved in this 1 Total ARR for Wires Business and Supply Business (A) , Total Revenue , Gap/ (Surplus) , Hence, the Commission has approved a Revenue Surplus of Rs crore for the Wires Business and a Revenue Gap of Rs. 1, crore for the Supply Business for FY , resulting in a total Revenue Gap of Rs crore. The treatment of the above Revenue Gap/(Surplus) is discussed along with the treatment of Cumulative Revenue Gap/(Surplus), in Chapter 8 of this. Page 130 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

131 5 TRUING-UP OF ARR FOR FY BACKGROUND TPC-D has stated that it has filed for Truing up for FY based on actual and audited costs and revenue, vis-à-vis the amounts approved by the Commission in the MYT in Case No. 47 of 2016, as per Regulation 5 of the MYT Regulations, 2015 and the principles laid down according to various ATE Judgments. Further, Regulation 2.1(1) of the MYT Regulations, 2015 specifies that separate Accounting Statements shall be prepared and submitted to the Commission for each licenced business in accordance with the Licence conditions, and for each regulated Business from FY onwards. The Commission notes that TPC-D has submitted the separate Accounting Statement for Distribution Business for FY duly certified by Statutory Auditor and the same have been accepted by the Commission for proceeding with the Truing up for FY In this Section, the Commission has analysed all the elements of actual expenditure and revenue for FY and the deviations from the MYT, and has accordingly undertaken the truing-up of expenses and revenue after prudence check under the MYT Regulations, SALES TPC-D's Submission TPC-D submitted that it is supplying power to consumers either through its own network to Direct consumers and through the network of other Distribution Licensee to Changeover Consumers. TPC-D submitted that there has been an overall increase of 2% in the total number of consumers in FY compared to previous year. The Direct consumers have increased from 91,244 Nos. to 1,04,718 Nos. and change-over consumers have marginally reduced from 5,73,155 Nos. to 5,70,653 Nos. TPC-D submitted the actual category-wise sales for FY vis-à-vis energy sales approved in the MYT as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 131 of 387

132 Table 5-1: Category-wise Sales for FY as submitted by TPC-D (MU) MYT MTR Petition Consumer Categories Change Change Direct Total Direct over over Total LT Category LT I (A) - Residential (BPL) LT I (B)- Residential and above LT II - LT Commercial LT II(A) - Commercial up to 20 kw LT II(B) - Commercial 20 to 50 kw LT II(C) - Commercial > 50 kw LT III-LT Industrial LT III - Industrial up to 20 kw LT III (B) - Industrial > 20 kw LT IV- Public water Works LT V - Advertisement & Hoardings LT VI - Streetlights LT VII Temporary Supply LT VII(A) - Temporary Religious LT VII(B) - Temporary Others LT VIII - Crematoriums & Burial Grounds LT IX - Public Services LT IX(A) Public Services Govt. Hospitals and Edu. Institution LT IX(B) - Public Services -Others Sub-total HT Category HT I Industry HT II Commercial HT III - Group Housing Society HT IV - PWW & Sewage Treatment Plants HT V(A) - Railways /33 KV KV HT V(B) - Railways Metro & Monorail HT V - Railways/Metro/Monorail HT VI - Public Services HT VI(A) - Public Services Govt. Hospitals and Edu. Institution HT VI(B) - Public Services -Others HT VII - Temporary Supply Sub-total days adjustment (2.91) (0.88) Total TPC-D submitted that total Sales in FY were MU as compared to MU approved in the MYT. The main reason for lower sales in comparison with the MYT was on account of Indian Railways moving out as a Distribution Licensee and Page 132 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

133 migration of HT consumers on OA. The OA sale had increased from 196 MU in FY to 676 MU in FY Commission s Analysis and Ruling The Commission asked justification for adjusting 15-day energy sales every year, as the same must be getting automatically adjusted on account of the on-going nature of business. In reply, TPC-D submitted that 15 days adjustment in energy sales is for taking into consideration the cyclic billing of LT consumers. However, in case of HT category, most of the consumers are billed from 1 st to 30 th of the month. Hence, 15 days adjustment is not required for HT consumers. In case of LT consumers, Billing Cycle starts from 5 th of every month up to 28 th of month. Further, billing is done 2 days after the meter reading. TPC-D further stated that the billing is not for the first or last 15 days of the month, but it depends upon the date of Bill raised for a consumer. The provision for the previous months gets adjusted in the subsequent month. At the end of the year, 15 day adjustment for the month of March is left unadjusted, which will get cleared in the month of April. Hence, it is required to consider 15 days adjustment in energy sales for any financial year. Further, the Commission observed that there is difference between the energy sales for change-over consumers submitted by TPC vis-à-vis sales submitted by RInfra-D in their MTR Petition. This issue has been discussed in an earlier Section of this. In view of that, the Commission accepts the submission of TPC-D and approves the energy sales for change-over consumers as submitted by TPC-D. The Commission has approved the actual sales to Direct consumers and change-over consumers for FY , as submitted by TPC-D, as summarised in the Table below: Table 5-2: Category wise sales for FY as approved by the Commission (MU) Particulars MYT MTR Petition Approved in this Direct Sales 2, , , Change-over Sales 2, , , Total DISTRIBUTION LOSSES AND ENERGY BALANCE TPC-D's Submission TPC-D submitted the actual Distribution Loss of TPC-D s distribution network as 0.45% for FY by considering total input energy at T <> D interface and Direct sales. The computation of Distribution Loss is submitted in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 133 of 387

134 Table 5-3 : Distribution Loss for FY as submitted by TPC-D Particulars Notation MYT MTR Petition Direct Energy Sales (MU) A Bill Credit given to OA consumer (MU) B Total Sale on Distribution Wires (MU) C=A+B ABT Meter T<>D Interface D Distribution Loss (%) E=1-(C/D) 1.02% 0.45% Further, TPC-D has computed the Distribution Loss as 0.69% after excluding the sale at 110 kv level as against 1.02% approved by the Commission. The computation is shown in the following Table: Table 5-4 : Distribution Loss for FY excluding 110 kv Sale as submitted by TPC-D Particulars Notation MYT MTR Petition Input Energy at Distribution Level a 2, Energy Sales at 110 kv voltage b Net Input Energy at Distribution level excl. sales at 110 kv c=a-b 2, Energy Sales metered at Distribution level d 2, Billed Energy at 110 kv voltages e Net Energy Sales metered at Distribution level excluding energy sales at 110 kv f=d-e 2, level Distribution Loss (MU) (as per MERC method) g=c-f Distribution Loss as % of net energy input h=g/c 1.02% 0.69% Further, TPC-D submitted that Transmission Loss for FY has been considered as 3.62% based on Grid Transmission Loss statement issued by MSLDC. This Loss would be revised once FBSM Bills have been issued by MSLDC. TPC-D has considered Changeover Units as per FBSM settlement (up to month of February, 2017) which is used by MSLDC for Energy Balance. TPC-D has computed the requirement at InSTS excluding the credit given to OA Consumers. TPC-D submitted the Energy Balance for FY as shown in the following Table: Table 5-5: Energy Balance for FY as submitted by TPC-D (MU) Particulars MYT MTR Petition TPC-D Direct Sales with 15 days Adjustments Bill credit given to OA consumers Total Sales Page 134 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

135 Particulars MYT MTR Petition Distribution Losses 1.02% 0.45% ABT Meter reading at T<>D Interface OA wind credit at T<>D Interface Energy Requirement for TPC-D Direct consumers at T<>D interface 2, Sales to Change-over consumers Bill credit given to OA consumers 1.93 Sale to Change-over consumers after adjusting for OA wind credit Wheeling Loss R-Infra-D Network 0% 0% Energy Requirement for Changeover consumers Energy Sales at 110/132 kv level considered in the MYT Tariff Total Energy Requirement at T<>D Transmission Loss 3.92% 3.62% Total Energy Requirement at G<>T Surplus Sale/(Purchase) Total Energy Requirement at G<>T Interface Commission s Analysis and Ruling The Commission in MYT has approved the Distribution Loss for FY as 1.02%. Further, while approving the distribution loss trajectory, the Commission has excluded EHV sales (sales at 110 kv). The Commission notes that TPC-D submitted the distribution loss of 0.45% including EHV sales and 0.69% excluding EHV sales for FY For the purpose of truing up, the Commission approves Distribution loss excluding EHV sales as per methodology approved in MYT. For computation of Distribution loss for FY , the Commission has considered the actual Transmission Losses of 3.63% for FY based on inputs from MSLDC. The change-over sales have been considered as approved earlier in this Section. The Commission has considered the energy drawn by TPC-D at T<>D interface as MU (including sale at 110/132 kv level), based on State-wide DISCOM-wise energy drawal data provided by MSLDC, as per usual practice. The Commission has considered the actual OA sale for FY as approved earlier in this Section. Accordingly, the Distribution Losses and Energy Balance approved by the Commission after final true-up for FY are shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 135 of 387

136 Table 5-6: Energy Balance for FY as approved by the Commission (MU) Particulars MYT MTR Petition Approved in this TPC-D Direct Sales Bill credit given to OA consumers Total Sales Distribution Losses 1.02% 0.45% 0.34% ABT Meter reading at T<>D Interface OA wind credit at T<>D Interface Energy Requirement for TPC-D Direct consumers at T<>D interface 2, Sales to Change-over consumers Bill credit given to OA consumers Sale to Change-over consumers after adjusting for OA wind credit Energy Sales at 110/132 kv level Total Energy Requirement at T<>D interface Transmission Loss 3.92% 3.62% 3.63% Total Energy Requirement at G<>T interface The Distribution Loss computed by the Commission for FY , after final true-up, by considering the energy drawn by TPC-D at T<>D interface-based on the MSLDC data, works out to 0.34% as against the approved loss trajectory of 1.02%. Although TPC-D has computed the Distribution Losses for FY as 0.45 %, it has not sought sharing of Efficiency Gains on account of the lower than normative Distribution Losses. The Commission had approved the Distribution Loss trajectory of 1.02% for FY considering the projected increase in the LT distribution network by TPC-D and lower HT:LT ratio. However, network growth has not been happened as anticipated. At the same time, the total Distribution Losses of TPC-D, at 0.34%, are on the lower side. Hence, no sharing of Efficiency Losses has been considered on this count for FY POWER PURCHASE QUANTUM AND COST TPC-D submitted that it has met its total energy requirement for FY from different sources, viz., TPC-G, Renewable Energy (RE) sources, bilateral purchase and Imbalance Pool. Page 136 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

137 5.4.1 Procurement from TPC-G TPC-D's Submission TPC-D submitted that it has long-term contract with TPC-G and the share of TPC-D in the Generating Capacity of TPC-G for FY is given below: Table 5-7 :Share of TPC-D in TPC-G s Generation Capacity for FY Generation Unit Capacity MTR Petition MW % MW Unit % 244 Unit % 244 Unit % 88 Unit % 150 Total Thermal Capacity (A) Bhira % 146 Bhivpuri % 37 Khopoli % 35 Total Hydro Capacity (B) Total Generation Capacity (A+B) TPC-D submitted the breakup of fuel-wise power purchase quantum and cost from TPC-G for FY The Unit-wise details of power purchased during FY from TPC- G is submitted in the following Table: Table 5-8 : Unit wise Power Purchase from TPC-G for FY as submitted by TPC-D Unit Quantum (MU) Variable Charge (Rs./kWh) Variable Charge (Rs. Crore) Fixed Cost (Rs. Crore) Total Unit 4 (0.05) Unit Unit 6 (10.09) Unit Unit Bhira Bhivpuri Khopoli Incentive Revenue Adjustment Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 137 of 387

138 Commission s Analysis and Ruling For prudence check of actual power purchase, the Commission sought the LGBR for 15- minutes time interval for FY and also details of the Merit Despatch (MOD) followed for power purchase by TPC-D, including details of backing down of Units of TPC- G s Contracted Units in FY separately for each month, tariff considered for MOD, Technical Minimum level, etc. The Commission analysed the power purchased by TPC-D from each source and considered the actual quantum purchased by TPC-D from TPC-G as per LGBR. Further, the Commission sought the reconciliation of cost of purchase from TPC-G with cost of purchase submitted in Allocation Statement. After verification of the MTR Petition of TPC-D and TPC-G, the Commission observed that the actual cost of purchase submitted by TPC-D is the same as the actual revenue from sale of power submitted by TPC-G in its MTR Petition. Further, TPC-G has billed separately for Unit 6 generation under MSLDC directions and the same has been accepted by the Commission. In view of the above, the Commission approves the quantum and cost for power purchased from TPC-G as shown in the following Table: Table 5-9 : Power Purchase from TPC-G for FY as approved by the Commission Source Quantum (MU) MYT Cost (Rs. Crore) Rate (Rs./ kwh) Quantum (MU) MTR Petition Cost (Rs. Crore) Rate (Rs./ kwh) Quantu m (MU) Approved in this Cost (Rs. Crore) Rate (Rs./ kwh) TPC-G 3, , , , , Renewable Purchase Obligation TPC-D's Submission TPC-D submitted that, as per RPO Regulations, 2016, RPO requirement for FY is 11.00%, comprising 10% from non-solar RE Sources and 1% from Solar Generating Sources. It also includes 0.2% of the Non-Solar RPO, which is to be met from Mini/Micro Hydel sources. The Commission had issued an in Case No. 171 of 2016 dated June 16, 2017 on verification of compliance with RPO target for FY , in which it has stated as follows: 18. In its earlier in Case No 18 of 2016 dated 31 August, 2016 (on RPO compliance verification for FY ), the Commission had allowed TPC-D to compensate for the shortfall against its Mini/Micro Hydro RPO targets by purchase of Non-Solar RECs to that extent in FY to meet any shortfall still remaining for the period up to FY The Commission notes that TPC-D has made Page 138 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

139 efforts to procure energy from Mini/Micro Hydro Projects prior to and during FY by floating tenders three times, lastly in November, 2016, but has not received any response. By purchasing additional Non-Solar RECs equivalent to 2.92 MUs, it has fulfilled its stand-alone Mini/Micro Hydro RPO target for FY with a surplus of 1.90 MU. However, it still has a cumulative shortfall of 1.55 MU which can be met in FY (emphasis added) TPC-D has purchased Non-Solar and Solar Power from various sources as well as through the REC mechanism. The RE procured during FY is shown in the following Table: Table 5-10: Renewable Energy Requirement for FY as submitted by TPC-D (MU) Renewable Source % RPO for FY Requirem InSTS Obligatio n Previous year obligation s Preferent ial Tariff purchase Met through REC Total Shortfall/ (Surplus) =1 * = = RE Other than Mini Hydro and 9.98% (2.76) Solar Mini Hydro 0.02% Total Non- Solar 10.00% (2.76) Solar 1.00% (4.47) Total 11.00% (7.24) TPC-D submitted that it had purchased MU from Non-Solar RE Sources and MU through Non-Solar REC certificates. TPC-D submitted that it had taken significant efforts to procure energy from Mini / Micro Hydro projects prior to and during FY However, TPC-D has not received any positive response, for procurement of RE power from Mini/Micro Hydro power plants. A Mini/Micro Hydro Generator, M/s. Water Resource Technologies Pvt. Ltd., proposed to be commissioned in FY , was also approached. Despite all its efforts, TPC-D has not been able to achieve its RPO with respect to Mini/Micro Hydro power. Subsequently, TPC-D floated a tender on November 24, 2016 for procurement of Mini/Micro Hydro power, however, no response was received against such Tender. Based on the Commission s in Case No. 171 of 2016, TPC-D had purchased Non- Solar RECs during FY in-order to meet its cumulative shortfall till FY and thus met its Mini/Micro Hydro RPO target as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 139 of 387

140 FY FY FY FY FY FY FY Table 5-11 : RPO Status for Mini / Micro Hydro as submitted by TPC-D (MU) Particulars Opening Mini / Micro Hydro target Mini / Micro Hydro RPO Met Annual Shortfall/(Surplus) (1.89) (1.55) Shortfall As regards Solar RPO, TPC-D has procured MU through Solar Generation as against the requirement of MU. Thus, there is a surplus of 4.52 MU for FY This has been achieved through existing contracts of TPC-D including the long-term agreement with TPREL of 25 MW solar power plant at Palaswadi. The Commission, in its dated June 16, 2017 in Case No. 171 of 2016, has provided Distribution Licensees the option to obtain tradeable RECs against the excess renewable energy procured over the RPO target by applying to the Central Agency for issue of RECs provided certain conditions are met. In view of the above, TPC-D requested the Commission for issuance of a Certificate for surplus RE procurement in FY to the tune of 2.76 MU (Non-Solar) and 4.47 MU (Solar). Further, TPC-D through its letter CREG/MUM/MERC/2017/279 dated December 5, 2017 has submitted a detailed response to the Commission for verification of RPO for FY Further, TPC-D has added Wheeling Charges and losses for purchase from Visapur (4 MW) in the total power purchase cost of renewable energy. TPC-D submitted the details of cost of power purchased from RE sources for FY as shown in the following Table: Table 5-12 : Total Cost of RE Purchase for FY as submitted by TPC-D Particulars Quantum (MU) Rate (Rs./kWh) Cost (Rs. Crore) Non-Solar RE Purchase Solar RE Purchase Total RE Purchase Non-Solar REC Purchase Solar REC Purchase Total REC Commission s Analysis and Ruling The Commission asked TPC-D for source-wise actual quantum of RE purchase, landed cost and other details of RE purchase in FY The Commission has analysed the details Page 140 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

141 submitted by TPC-D regarding the purchase of RE power. As discussed in earlier Chapter of this, the Commission has allowed the Wheeling Charges and Wheeling losses for the purchase of Non-Solar RE power from Visapur (4 MW) over and above the preferential tariff approved by the Commission for that year. Further, TPC-D was also asked to submit the documentary evidence for purchase of Non- Solar RECs for FY , which was submitted by TPC-D, and have been verified by the Commission. The Commission approves purchase of Non-Solar REC for quantum of MU at rate of Rs. 1.50/kWh. The Commission notes that no Solar RECs were purchased by TPC-D during FY Further, the Commission vide dated July 31, 2018 in Case No. 209 of 2017 has undertaken the verification of compliance of RPO for FY for TPC-D. In the said, the Commission stated as under: 15. The Commission notes that TPC-D has i. Fulfilled its stand-alone Solar RPO target for FY , with a surplus of MUs, and a cumulative surplus of MUs ii. Fulfilled its stand-alone non-solar RPO target of FY with a surplus of MUs, and has a cumulative surplus of MUs. iii. Fulfilled its stand-alone Mini/Micro target of FY with a surplus of 1.55 MUs for FY and exactly meet out cumulative target till FY The Commission notes that TPC-D has purchased non-solar RECs in FY for fulfilling its standalone target of Mini/Micro Hydro for FY and cumulative shortfall of 1.55 MUs till end of earlier control period i.e. FY as per the dispensation provided by the Commission in its dated 16 June, 2017 in Case No.171 of Form the above, it is observed that TPC-D has fulfilled its Standalone RPO targets for FY and also cumulative targets. The Commission has approved the Solar and non- Solar RE purchase for FY , as shown in the Table below: Table 5-13: Power Purchase from Solar and Non-Solar sources for as approved by the Commission (MU) MYT MTR Petition Approved in this Particulars Quant Cost Rate Quantu Cost Rate Quantu Cost Rate um (Rs. (Rs./ m (Rs. (Rs./ m (Rs. (Rs./ (MU) crore) kwh) (MU) crore) kwh) (MU) crore) kwh) Solar RE Purchase Non-Solar RE purchase Solar REC Purchase Case No. 69 of 2018 Mid Term Review for TPC-D Page 141 of 387

142 Particulars Non-Solar REC Purchase Total RE procurement Quant um (MU) MYT MTR Petition Approved in this Cost (Rs. crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./ kwh) Power Purchase from Bilateral Sources and Imbalance Pool TPC-D's Submission TPC-D submitted that the main reason for bilateral power purchase was the availability of low cost power in the market. TPC-D purchased MU at Rs per kwh during FY In addition, TPC-D had also purchased MU at Rs per kwh from the Imbalance Pool, which is provisional. TPC-D submitted that it will consider the impact of the purchase from Imbalance Pool once the FBSM Bills are issued by MSLDC. TPC-D submitted the power purchased from Bilateral sources and Imbalance Pool for FY as shown in the following Table: Table 5-14: Power Purchase from External Sources for FY as submitted by TPC-D Particulars Quantum (MU) Rate (Rs./kWh) Cost (Rs. Crore) Bilateral Power purchase Power Purchase through Imbalance pool Total Commission s Analysis and Ruling The Commission asked TPC-D to clarify whether the power from Bilateral Sources was procured through competitive bidding and, if not, the reasons, and also to clarify whether it was purchased on RTC basis or for specific hours. In reply, TPC-D submitted that in FY , it purchased bilateral power through Competitive Bidding or through the MoP s DEEP Portal and though Power Exchange. The Commission also sought details of sourcewise month-wise short-term purchase from TPC-D. Further, TPC-D also submitted the copies of Agreements for the short-term power purchased. The Commission after prudence check, has accepted TPC-D s submission in this regard, and accordingly approved the quantum and cost of power purchase from bilateral sources. The Commission has approved the quantum and cost of power purchased from Imbalance Pool based on the provisional bills of FBSM. Further, as discussed in previous Section of Page 142 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

143 this, the purchase quantum under the Imbalance Pool has been corrected based on the input from MSLDC. The Commission in MYT has approved the ceiling rate for bilateral power purchase as Rs. 3.13/kWh for FY From the details of source-wise month-wise purchase, the Commission observes that TPC-D has purchased short-term power at rate of Rs. 2.62/kWh and power from Imbalance Pool at rate of Rs. 2.93/kWh, which are within the approved limits for power purchase from bilateral sources, and hence, separate approval from the Commission was not required. The Commission notes that the quantum of energy purchased through the Imbalance Pool is significantly high, at around 8% of the overall power purchase quantum and almost half the quantum of power purchased through the bilateral sources. The rate of power purchase through the Imbalance Pool is also higher than that of bilateral sources. The Imbalance Pool mechanism should not be treated as a source of procuring power and is only meant for settling the deviations in the real-time power interchange between various pool participants. Accordingly, TPC-D should plan its power procurement in a way that the purchases from the Imbalance Pool are minimised. The Commission has approved the power purchase from Bilateral Sources and Imbalance Pool for FY , as shown in the Table below: Table 5-15: Bilateral Power Purchase Quantum & Cost for FY as approved by the Source Bilateral Purchase Imbalance Pool Total Short-term Purchase Quantum (MU) Commission MYT MTR Petition Approved in this Cost Rate Quantu Cost Rate Quantu Cost (Rs. (Rs./ m (Rs. (Rs./ m (Rs. crore) kwh) (MU) crore) kwh) (MU) crore) Rate (Rs./ kwh) 1, , Sale Outside Licence Area TPC-D's Submission TPC-D submitted that it had entered into an Agreement dated February 2, 2016 with Indian Railways for supply of 80 MW power in FY The rate of supply between TPC-D and Indian Railways was Rs 4.45 per kwh, which was derived from the approved power Case No. 69 of 2018 Mid Term Review for TPC-D Page 143 of 387

144 purchase cost of TPC-G to TPC-D in its Tariff in Case No. 18 of TPC-D submitted that the total sale outside Licence Area for FY was MU at an average rate of Rs 4.45/kWh amounting to Rs Crore, which has been utilised to reduce the power purchase cost of TPC-D. The month-wise sale outside Licence Area for FY was as given below: Table 5-16 : Sale Outside Licence Area for FY as submitted by TPC-D Month Quantum (MU) Rate (Rs./kWh) Cost (Rs. Apr-2016 (41.95) 4.45 Crore) (18.67) May-2016 (48.79) 4.45 (21.71) Jun-2016 (47.22) 4.45 (21.01) Jul-2016 (48.79) 4.45 (21.71) Aug-2016 (48.89) 4.45 (21.75) Sep-2016 (49.70) 4.45 (22.12) Oct-2016 (51.22) 4.45 (22.80) Nov-2016 (49.39) 4.45 (21.98) Dec-2016 (51.06) 4.45 (22.72) Jan-2017 (50.89) 4.45 (22.65) Feb-2017 (46.05) 4.45 (20.50) Mar-2017 (51.06) 4.45 (22.72) Total (585.03) 4.45 (260.34) TPC-D submitted that while approving the power purchase cost in the MYT in Case No. 47 of 2016, the Commission has not considered the sale to Indian Railways and directed TPC-D to submit month-wise details of energy sold to Indian Railways under the Agreement. In this regards, TPC-D submitted the details of month-wise purchase and marginal cost of purchase for FY TPC-D submitted that the rate for Outside Licence Area Sale is much higher than the marginal cost of power purchase, and the benefit received from this sale is passed on to consumers. Commission s Analysis and Ruling The Commission notes that TPC-D entered into an Agreement with Indian Railways dated February 2, 2016 for supply of 80 MW power from February 2016 at the rate of Rs per kwh. As regards the Sale to Outside Licence Area, the Commission in MYT held as under: Sale outside Licence Area For the purpose of this, the Commission has not considered the Outside Licence Area sale for the 3rd Control Period. TPC-D is free to continue with this transaction as long as it able to justify its economic viability for its consumers keeping the above considerations in view. TPC-D shall furnish the month-wise Page 144 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

145 details of energy sold to the Railways under the Agreement, along with billing details, with its next MTR Petition. The sale to Railways may be considered at the time of MTR if TPC-D is able to justify, with full data and computations, that there is no negative impact on its consumers. (emphasis added) The Commission notes that TPC-D submitted the month-wise source wise details of power marginal cost of power sold to Indian Railways under this contractual arrangement. TPC- D has submitted the relevant details for sale of power to Indian Railways. The Commission notes that TPC-D has not identified the specific sources for sale of surplus power to Railways. However, it has tied up its surplus capacity to be sold at weighted average rate of TPC-G determined by the Commission. Further, it is understood that Railways was taking supply at 110 kv as a Distribution Licensee at various points, viz., Borivali, Malad, Dharavi and Mahalaxmi for Western Railways and at Salsette, Dharavi, Wadala, Mankhurd, Parel, and Chola (Kalyan) for Central Railways. Also, TPC-D has two (2) consumer accounts for Supply at 22 kv level, one each for Western Railways at Borivali, Versova, Dharavi and Mahalaxmi and; for Central Railways at Mankhurd, Parel, Carnac and Dharavi. It is noted that this transaction is pertaining to supply at 110 kv level only, however, the sale to Railways as consumer has continued at 22 kv and one 6.6 kv level, as per tariff determined by the Commission. The Commission observed that the Agreement stipulates that the total kwh consumed by the Railways in a month shall be equivalent to the current average monthly consumption of 44 MU. However, Clause 6.3 of PPA between Railways and TPC-D provides for compensation for default in scheduling/supply of power less than 80% of 44 MU, i.e., 35.2 MU. In reply to the clarifications, TPC-D submitted that it has neither received nor paid any compensation as per Clause 6.3 of PPA dated February 2, Further, the Commission notes that TPC-D has computed the marginal cost for sale of power to Indian Railways vis-à-vis actual sale. The marginal cost of purchase for power sold to Railways each month is shown in the following Table: Table 5-17 : Details of Marginal cost of purchase of TPC-D and Sale to Railways Sr. Marginal Cost of purchase of power Month No. MU Rs./kWh 1 February March April May Case No. 69 of 2018 Mid Term Review for TPC-D Page 145 of 387

146 Sr. Marginal Cost of purchase of power Month No. MU Rs./kWh 5 June July August September October November December January February March Grand Total From the above Table, it is noted that marginal cost for sale of power to Railways for the period from February 2016 to March 2017 is Rs. 3.18/kWh. However, TPC-D has sold power to Railways for the same period at average rate of Rs. 4.43/kWh. From this, it is concluded that the transaction was beneficial to TPC-D. Further, the source-wise details of power sold to Railways has been analysed and detailed in the following Table: Table 5-18 : Source-wise details of Energy sale to Railways Source Energy Sale to Railways as per Marginal cost FY FY Total TPC-G Unit 5 Oil TPC-G Unit 5 - RLNG TPC-G Unit Coal TPC-G Unit 8 Coal BPP Imbalance Pool Grand total Further, from the source-wise analysis of marginal cost of purchase, it has been observed that majority of power sold to Railways was from power purchased through Imbalance Pool. However, the intent of TPC-D was to sell the surplus power of TPC-G, and hence, the rate was also linked to the approved Tariff of TPC-G. In reality, the transaction was beneficial because of availability of low cost power from short-term sources. However, that would not be the case each time considering the past fluctuations of prices in short-term market. Page 146 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

147 In light of foregoing, the Commission is of the view that if TPC-D intends to sell surplus power available to any third party, it has to be sold at price higher than the marginal cost of power purchase of such 'surplus' power. TPC-D may sell surplus power to reduce burden on the consumers as long as it able to justify its economic viability for its consumers keeping the above considerations in view. In view of the above, the Commission approves sale to outside licence area for FY as shown in the following Table: Table 5-19: Sale to Outside Licence area for FY as approved by the Commission Source Sale to Outside Licence area Quantum (MU) MYT MTR Petition Approved in this Rate Cost Rate Cost Cost (Rs. Quantum Quantum (Rs./ (Rs. (Rs./ (Rs. crore) (MU) (MU) kwh) crore) kwh) crore) Rate (Rs./ kwh) (585.03) (260.34) 4.45 (585.03) (260.34) Transmission Charges and MSLDC Charges TPC-D's Submission TPC-D submitted that it has paid Transmission Charges as determined by the Commission. For first three (3) months of FY , TPC-D paid the Transmission Charges as per the in Case No. 57 of 2015 dated June 26, 2015 and for the remaining period, it has paid the Transmission Charges as per the in Case No. 47 of 2016 dated October 21, 2016 applicable from 1 July, The total Transmission Charges paid during FY are Rs Crore including prompt payment discount of Rs. 1.5 Crore. Further, TPC-D submitted that it has paid the actual MSLDC Charges of Rs Crore during FY Commission s Analysis and Ruling The Commission has approved the actual Transmission Charges and MSLDC Charges paid by TPC-D for the purpose of Truing up for FY as shown in the following Table: Table 5-20: Transmission Charges and MSLDC Charges for FY as approved by the Commission (Rs. Crore) Particulars MYT MTR Petition Approved in this Transmission Charges MSLDC Charges Case No. 69 of 2018 Mid Term Review for TPC-D Page 147 of 387

148 5.4.6 Stand-by Charges TPC-D's Submission TPC-D submitted that it has paid the actual Standby Charges of Rs Crore for FY Further, it has also paid the amount of Rs Crore for Standby energy purchased. Accordingly, the total Standby charges paid by TPC-D during FY are Rs Crore. Commission s Analysis and Ruling The Commission approves the actual Standby Charges paid by TPC-D as Rs Crore for FY for the purpose of Truing up. Page 148 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

149 5.4.7 Total Power Purchase Cost Based on the above, the summary of the approved and actual Power Purchase Cost of TPC-D for FY is provided in the Table below: Source Quantum (MU) Table 5-21:Total Power Purchase Cost for FY as approved by the Commission MYT MTR Petition Approved in this Cost Cost Cost (Rs. Rate Quantum Rate Quantum (Rs. (Rs. Crore) (Rs./kWh) (MU) (Rs./kWh) (MU) Crore) Crore) Rate (Rs./kWh) TPC-G 3, , , , , , RE Purchase REC Purchase Short Term 1, Purchase Outside Licence Area Sale (585.03) (260.34) 4.45 (585.03) (260.34) 4.45 Imbalance pool purchase Standby Charges Sub-total 5, , , , , , Transmission Charges MSLDC Charges Total Power Purchase cost 5, , , , , , Case No. 69 of 2018 Mid Term Review for TPC-D Page 149 of 387

150 5.5 OPERATION AND MAINTENANCE EXPENSES TPC-D's Submission TPC-D submitted the actual O&M expenses for FY as Rs Crore, which comprises expenses of Rs. 108 Crore towards Wires Business and Rs Crore towards Supply Business. The adjustment in actual O&M Expenses are discussed as under: Brand Equity Expenses TPC-D submitted that Brand Equity expenses, computed based on the Commission s methodology, have been allocated to Wires and Supply Business based on the actual Brand Equity expenses. The working of Brand Equity expenses is shown in the following Table: Table 5-22: Brand Equity Expenses for FY as submitted by TPC-D (Rs Crore) Particulars Revenue from Mumbai Licensed Area Businessbased on allocation statement for FY Add: Cash Discount pertaining to Mumbai Licensed Area Add: Income in respect of services rendered pertaining to Mumbai Licensed Area Notation MTR Petition a b c 0.17 Add: Delayed Payment Charges pertaining to Mumbai Licensed Area d 7.80 Total Revenue to be considered for Mumbai Licensed Area e=a+b+c+d Contribution to Tata Brand Equity f=0.25%*e 5.01 (Service Tax + Total contribution to Brand Equity including Service Tax Expenditure related to DSM g= (Service Tax + VAT) * f 0.93 h=f+g 5.93 The total DSM expenses for FY is Rs 2.66 Crore including staff cost against Rs 2.60 Crore considered in the MYT. However, the Commission in MYT has considered only the scheme cost while approving DSM expenses. Based on the same, TPC- D has considered DSM expenses of Rs Crore, which has been deducted from O&M Expenses for Supply Business. In view of the above, TPC-D submitted the actual O&M Expenses for FY as shown in the following Table: Page 150 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

151 Table 5-23 : Actual O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Supply Business Business Total Employee Expenses Administration & General Expenses Repairs and Maintenance Total Less: Brand equity considered in Accounts Less: DSM Expenses Add: Allocation of Brand Equity Expenses to TPC- D as per MERC methodology Net O&M Expenses Normative O&M expenses for FY : TPC-D submitted that the Commission, in the First Amendment to MYT Regulations, 2015 notified on November 29, 2017 revised the norms for O&M expenses for Distribution Licensees. Accordingly, TPC-D has computed the escalation factor based on last five years WPI and CPI indices, as shown in the following Table: CPI Table 5-24: Escalation Rate for FY as submitted by TPC-D Average Index Annual Inflation (%) FY % FY % FY % FY % FY % WPI Average Annual Index Inflation (%) FY % FY % FY % FY (2.49%) FY % 5 Yr Avg. Inflation (%) Weighta ge (%) 7.24% 70% 5 Yr Avg. Inflation (%) Weighta ge (%) 3.31% 30% Escalation Factor (%) Efficiency Factor (%) 6.06% 1% 5.06% Net Escalation Factor (%) Based on the above escalation factor, TPC-D submitted the Normative O&M expenses for Wires and Supply Business for FY as shown in the following Table: Table 5-25: Normative O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Particulars Notation Wire Business Supply Business Base O&M Expenses (Net Entitlement for FY ) a Escalation Factor b 5.06% 5.06% Normative O&M Expenses c=a*(1+b) Case No. 69 of 2018 Mid Term Review for TPC-D Page 151 of 387

152 Commission s Analysis and Ruling Regulation 72 of the MYT Regulations, 2015, as amended in 2017, specifies the allowance of O&M Expenses for the Wires Business. Regulation 81 specifies the allowance of O&M expenses for the Supply Business similarly. For the purpose of truing up, the Commission has approved the O&M expenses on normative basis as per the provisions of the MYT Regulations, Further, the Commission has considered the actual O&M Expenses for sharing of efficiency gains and losses as per Regulation 11 of MYT Regulations, The Commission has computed the normative O&M Expenses for FY as elaborated below. Base O&M Expenses The Commission has considered the O&M expenses after sharing of Efficiency Gains and Losses for FY as approved in this, i.e., Rs crore and Rs crore for the Wires Business and Supply Business, respectively, totalling to Rs crore for the combined Wires and Supply Business. Escalation Factor In accordance with Regulations 72.3and 81.3 of the MYT Regulations (First Amendment), 2017, the Escalation Factor for the O&M Expenses from FY is to be worked out considering 30% and 70% weightage for average yearly inflation derived based on the monthly WPI and CPI, respectively, in the previous five years, reduced by an efficiency factor of 1%. The Commission has analysed the WPI and CPI data for the previous five years. By applying 30% and 70% weightage to average yearly inflation derived based on the monthly WPI and CPI from FY to FY , the Escalation Factor works out to 6.06%. After applying the efficiency factor of 1%, the Escalation Factor to be considered for projecting O&M expenses from FY works out to 5.06%. Normative O&M Expenses Accordingly, the Commission has approved the normative O&M Expenses after true-up for FY , as shown in the following Table: Page 152 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

153 Table 5-26:Normative O&M Expenses for FY (stand-alone) as approved by the Commission (Rs. Crore) Particulars MYT MTR Petition Approved in this Wires Business Supply Business Total As the actual O&M Expenses are higher than the allowable O&M expenses, and since O&M expenses are controllable in nature, sharing of the Efficiency Losses has been done in accordance with the MYT Regulations, 2015, as elaborated subsequently. Actual O&M expenses for FY The Commission observed that there was a difference between the actual O&M expenses submitted in MTR Petition vis-à-vis expenses shown in Allocation Statement and Audited Accounts, and sought the reconciliation of the same from TPC-D. In its reply, TPC-D accepted the difference in expenses claimed, and submitted that the expenses as per Allocation Statement may be considered. Accordingly, the Commission has considered the actual O&M Expenses of Rs Crore, including Rs Crore of Employee Expenses, Rs Crore of A&G Expenses and Rs Crore of R&M Expenses as against total O&M expenses of Rs Crore submitted in the MTR Petition. As regards Brand Equity expenses, as discussed in earlier Chapter of this, the Commission has not considered the Brand Equity expenses from total O&M expenses. Similarly, DSM expenses for FY have been deducted from the actual O&M Expenses, excluding staff cost. Further, as discussed in earlier Chapter of this, the Commission has disallowed the amount of Rs Crore from actual A&G Expenses towards Centenary Celebrations. In view of the above, the Commission approves the actual O&M Expenses for TPC-D, for the purpose of truing up for FY , as shown in the following Table: Table 5-27: Actual O&M Expense for FY as approved by the Commission (Rs. Crore) MTR Petition Approved in this Particulars Wires Supply Wires Supply Total Business Business Business Business Total Employee Expenses Administration & General Expenses Case No. 69 of 2018 Mid Term Review for TPC-D Page 153 of 387

154 Particulars MTR Petition Wires Supply Business Business Total Approved in this Wires Supply Total Business Business Repairs and Maintenance Total Less: Brand equity considered in Accounts Less: DSM Expenses Less: Expenses towards Centenary Celebration Add: Allocation of Brand Equity Expenses to TPC-D as per Commission s methodology Net O&M Expenses CAPITALISATION AND MEANS OF FINANCE TPC-D's Submission TPC-D submitted actual capitalisation for FY for Wires Business and Supply Business as Rs Crore and Rs Crore, respectively, as against approved capitalisation of Rs Crore and Rs Crore, respectively. TPC-D submitted the details of Capitalisation as shown in the following Table: Table 5-28: Capitalisation for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars Capital Capital Capitalisation Expenditure Expenditure Capitalisation MYT Non-DPR Schemes DPR Cases Non-DPR/DPR Ratio 31.86% 14.54% 4.58% 5.21% MTR Petition Further, TPC-D submitted that the ratio of capitalisation of Non-DPR to DPR for combined Wires Business and Supply Business is 14.15%, which is lower than the limit of 20% as stipulated by the Commission. TPC-D requested the Commission to approve the actual Page 154 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

155 capitalisation of Rs Crore for Wires Business and Rs Crore for Supply Business. Further, TPC-D has considered the normative debt:equity ratio of 70:30 for financing capitalisation. Commission s Analysis and Ruling The Commission has undertaken the prudence check of the schemes submitted by TPC-D in accordance with the in Case No. 50 of 2015, which has been discussed in detail in earlier Chapter of this. As regards the financing of the capitalisation, the Commission observed that while calculating interest, depreciation and RoE, TPC-D has not reduced the amount of Consumer Contribution (CC) from the opening GFA and amount capitalised during the year. The Commission asked TPC-D to confirm the amount of CC towards creation of fixed assets. TPC-D submitted that it has computed the depreciation, ROE and interest without considering the CC. Accordingly, the Commission considers the financing of Capitalisation for FY as per normative debt:equity ratio of 70:30 after reducing the Consumer Contribution of Rs Crore. The Capitalisation and its financing approved by the Commission for the purpose of Truing up for FY is shown in the following Table: Table 5-29: Capitalisation for FY as approved by the Commission (Rs. Crore) Wires Business Supply Business Particulars Approved Approved MYT MTR MYT MTR in this in this Petition Petition Capitalisation Financing of Capitalisation Consumer Contribution Equity Debt Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 155 of 387

156 5.7 DEPRECIATION TPC-D's Submission TPC-D has computed Depreciation in accordance with the MYT Regulations, The Depreciation has been worked out as Rs Crore for FY for Wires Business at an average depreciation rate of 5.20%, and Rs Crore for the Supply Business at an average rate of 6.33%. TPC-D submitted the Depreciation for FY as shown in the following Table: Table 5-30: Depreciation for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening GFA for the year Addition of GFA during the year Retirement of GFA during the 0.00 (0.09) 0.00 (0.05) year Closing GFA for the year Depreciation % Depreciation on average of Opening and Closing GFA Commission s Analysis and Ruling 5.05% 5.20% 4.78% 6.33% The Commission has computed the Depreciation as per Regulation 27 of the MYT Regulations, The Commission has considered closing balance of GFA approved for FY in this as opening balance for FY The addition of GFA has been considered equal to the capitalisation approved in earlier Section of this, and the asset retirement has been considered as submitted by TPC-D. The Commission sought the reconciliation of GFA submitted in MTR Petition vis-à-vis audited account/allocation statement. TPC-D submitted the GFA details duly certified by Statutory Auditor for FY and the Commission has accepted the same. Based on the asset head-wise computation of depreciation submitted by TPC-D for FY , the Commission observed that average rate of depreciation for some asset-heads are higher than the scheduled depreciation rate specified in the MYT Regulations, In reply, TPC-D submitted the revised computation of depreciation for FY vide reply CREG/MUM/MERC/2018/248 dated August 30, Accordingly, the Commission has considered the weighted average rate of depreciation of 5.07% for Wire Business and 6.28% for Supply Business. Page 156 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

157 The Commission has approved the depreciation after truing up for FY as shown in the following Table: Table 5-31: Depreciation for FY as approved by the Commission (Rs. Crore) Particulars MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Opening GFA , Addition Retirement - (0.09) (0.05) 0.05 Closing GFA , Wt. Avg. Depreciation Rate (%) 5.05% 5.20% 5.07% 4.78% 6.33% 6.28% Depreciation INTEREST ON LONG-TERM LOAN TPC-D's Submission TPC, in the past, has taken various long-term loans to finance capital expenditure projects in line with Debt: Equity structure of 70:30. Accordingly, TPC as an entity, has availed fresh corporate loan facility from State Bank of India (SBI CAG Facility) during FY , with the sanctioned amount of Rs Crore for the purpose of funding the ongoing Capex for Mumbai Operations and Repayment / prepayment of high cost debt as may be required by the Company. TPC has also raised a loan for Rs Crore from SBI for funding its capital works on the following terms: SBI Loan Amount Rate of Interest Repayment Schedule Table 5-32: Details of New Loan as submitted by TPC-D Details Crore 9.5 % p.a. linked to Base Rate. 1 Year moratorium, Quarterly repayment of 6.5 % of Drawal amount per annum for the first 6 years, 12.5% in the 8th year and 25% each in the last 2 years. In addition to the above, the amounts withdrawn from the earlier approved tranche from IDFC and HDFC (Rs. 180 Crore each) have also been allocated to the TPC-G, TPC-T and TPC-D based on ratio of capitalisation of the respective business areas in FY along with the new loan availed. The balance loan if any, is assumed to be financed through Case No. 69 of 2018 Mid Term Review for TPC-D Page 157 of 387

158 normative loan. Based on this, the allocation of various loans during FY is shown in the following Table: Table 5-33: Allocation of Loan for FY as submitted by TPC-D (Rs. Crore) Particulars Basis U4 to 7 & Hydro U-8 Generation Transmission Distribution Total GTD Wires Supply Capitalisation a Debt b=0.7*a % c=b/b% 17% 2% 19% 34% 47% 100% 46% 1.83% IDFC-Rs. 250 Crore d=c*d HDFC- Rs. 250 Crore SBI CAG Normative Considering the actual loan drawals and applicable interest rates, TPC-D has considered the weighted average interest rate of 10.10% for Wires Business and 10.09% for Supply Business for FY TPC-D has computed the Interest on Loan Capital for Wires Business and Supply Business for FY as shown in Table below: Table 5-34: Interest on Loan Capital for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening Net Normative loan Addition of normative loan during the year Repayment of normative loan during the year Closing Net Normative loan Interest Rate (%) 10.83% 10.10% 10.58% 10.09% Interest on Loan Capital In addition to this, TPC-D has considered expenses of Rs Crore actually incurred during FY on account of Finance Charges, Commission and Brokerage Charges. Commission s Analysis and Ruling The Commission has computed Interest on loan Capital for FY as per Regulation 29 of the MYT Regulations, The closing balance of net normative loan for FY Page 158 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

159 16 as approved in this is considered as opening balance for FY For the assets capitalised in FY , the Commission has considered 70% of the additional assets value less Consumer Contribution as normative debt, in accordance with the MYT Regulations, The repayment of Loan has been considered equal to the Depreciation approved for FY As regards the rate of interest, Regulation 29.5 of MYT Regulations, 2015 specifies that at the time of truing up, the weighted average rate of interest computed on the basis of actual loan portfolio during the year shall be considered as interest rate. The Commission asked TPC-D to confirm whether the loan terms for HDFC loan and IDFC loan are identical in all aspects, which was confirmed by TPC-D. TPC-D has considered rate of interest of 10.10% for Wires Business and 10.09% for Supply Business and also provided the details of opening and closing balance of actual loan, actual interest paid during FY and computation of interest rate. The Commission notes that TPC-D has computed the Interest rate on opening balance of loan, instead of considering the weighted average rate of interest. Also, it is observed that the actual opening and closing loan balance and actual interest paid submitted in the formats are different than stipulated in Note 12 of Audited Accounts submitted by TPC-D. Hence, the Commission sought reconciliation of the same. TPC-D in its replies has submitted as under: In this regard we wish to submit that in the accounts loan is considered based on the CAPEX incurred during the year while in case of ARR the loan is considered at normative value of 70% of the capitalization (including the HoSS allocation) during the year. Further, in the ARR loan repayment is equal to Depreciation during the year while in the accounts repayment is equal to the actual loan terms. Hence, there is a difference between opening balance of loan and Actual Interest Paid. Since, the reconciliation of actual loan with the values considered by TPC-D is not available with the Commission, it is required to consider the actual loan balance and interest paid, as reported in Audited accounts for FY , for computing the weighted average rate of interest on actual loans for FY , as shown in the following Table: Table 5-35: Computation of Wt. Average rate of interest (Rs. Crore) Particulars Note 12 of Audited Accounts Opening balance of loan Closing Balance of Loan Actual Interest paid Rate of Interest (%) % Case No. 69 of 2018 Mid Term Review for TPC-D Page 159 of 387

160 The Commission has considered the rate of interest of 9.70% for the Wires Business and Supply Business for FY Accordingly, the Commission has approved the interest on long-term loans for FY for the Wires Business and Supply Business, as given in the following Table: Table 5-36: Interest Computation for Wires Business and Supply Business for FY as Particulars approved by the Commission by TPC-D (Rs. Crore) MYT MTR Petition Approved in this Wires Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.83% 10.10% 9.70% Interest on Loan Capital Supply Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.58% 10.09% 9.70% Interest on Loan Capital In addition to the above, the Commission has approved the other finance cost of Rs Crore for FY based on audited accounts. 5.9 RETURN ON EQUITY TPC-D's Submission TPC-D submitted that the closing regulated equity for FY has been considered as the opening regulated equity for FY RoE for FY has been computed as per the MYT Regulations, 2015, as shown in the following Table: Page 160 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

161 Sr. No. Table 5-37: Return on Equity for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Wires Business 1 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized 0.00 (0.03) 4 Regulatory Equity at the end of the year Rate of Return 15.50% 15.50% 6 Total Return on Equity Supply Business 7 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized 0.01 (0.01) 10 Regulatory Equity at the end of the year Rate of Return 17.50% 17.50% 12 Total Return on Equity Commission s Analysis and Ruling In accordance with Regulation 26 of the MYT Regulations, 2015, the Commission asked TPC-D to provide documentary evidence for the actual deployment of equity in FY and to explain the source of funds for such equity investments. TPC-D in its reply cited the audited accounts for actual equity invested. The Commission has computed RoE for FY in accordance with Regulation 28 of MYT Regulations, The Commission has considered the closing equity of FY as approved in the final true up in this, as the opening equity for FY Additional equity has been approved as 30% of the approved Capitalisation in FY , after deducting the Consumer Contribution. Further, 30% of the asset retirement during the year has been reduced to arrive at the amount of equity eligible for returns as per the Regulations. The rate of Return on Equity has been taken as 15.5% for the Wires Business and 17.5% for the Supply Business, in accordance with Regulation 28 of MYT Regulations, The RoE approved by the Commission for Wires Business and Supply Business for FY is as shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 161 of 387

162 Table 5-38:Return on Equity for Wires & Supply Business for FY as approved by the Sr. No. Particulars Commission (Rs. Crore) MYT MTR Petition Approved in this Wires Business 1 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized 0.00 (0.03) (0.03) 4 Regulatory Equity at the end of the year Rate of Return 15.50% 15.50% 15.50% 6 Total Return on Equity Supply Business 7 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized 0.01 (0.01) (0.01) 10 Regulatory Equity at the end of the year Rate of Return 17.50% 17.50% 17.50% 12 Total Return on Equity INTEREST ON WORKING CAPITAL TPC-D's Submission TPC-D submitted that it has computed IoWC based on the elements specified in the MYT Regulations, 2015 for Distribution Wires and Supply Business. TPC-D has considered Interest rate of 10.31% for computation of IoWC based on the weighted average rate of MCLR for FY Further, TPC-D has considered the total revenue including revenue recovered from OA consumers and reduced the power purchase cost of TPC-G and RE (except Visapur and Palaswadi) for computing Working Capital requirement. Accordingly, IoWC for FY is worked out as shown in Table below: Table 5-39: Interest on Working Capital for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Supply Business Business Total MYT O&M Expenses for one month Maintenance spares at 1% of opening GFA One and half months of the expected Revenue at prevailing Tariffs Less: Amount of Security Deposit Page 162 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

163 Particulars Wires Business Supply Business Total One Month Equivalent of Cost of Power (excluding cost of purchase from TPC-G) Total Working Capital requirement Rate of Interest (% p.a) 10.31% 10.31% 10.31% Interest on Working Capital Commission s Analysis and Ruling The Commission has approved the IoWC for FY in accordance with Regulations 31.3 and 31.4 of MYT Regulations, The Commission has considered the applicable rate of IoWC as 10.79%, which is the weighted average SBBR during FY plus 150 basis points. The Commission has considered the revised normative O&M Expenses approved in this for FY for computation of working capital requirement. The Commission has accepted the submission of TPC-D regarding the amount of CSD for Supply consumers. IoWC approved by the Commission for the Wires Business and Supply Business is shown in the Tables below: Table 5-40: Interest on Working Capital for FY as approved by the Commission (Rs. Wires Business Particulars Crore) MYT MTR Petition Approved in this O&M Expenses for one month Maintenance spares at 1% of opening GFA One and half months of the expected Revenue at prevailing Tariffs Total Working Capital Rate of Interest (%) 10.80% 10.31% 10.79% Interest on Working Capital Supply Business O&M Expenses for one month Maintenance spares at 1% of opening GFA One and half months of the expected Revenue at prevailing Tariffs Less: Amount of Security Deposit from supply consumers Less: One-month equivalent of cost of power purchased other than TPC-G Case No. 69 of 2018 Mid Term Review for TPC-D Page 163 of 387

164 Particulars MYT MTR Approved in Petition this Total Working Capital Rate of Interest (%) 10.80% 10.31% 10.79% Interest on Working Capital The MYT Regulations, 2015 specify as under regarding consideration of actual IoWC incurred by the Licensee: 31.6 For the purpose of Truing-up for each year, the variation between the normative interest on working capital computed at the time of Truing-up and the actual interest on working capital incurred by the Generating Company or Licensee or MSLDC, substantiated by documentary evidence, shall be considered as an efficiency gain or efficiency loss, as the case may be, on account of controllable factors, and shared between it and the respective Beneficiary or consumer as the case may be, in accordance with Regulation 11: (emphasis added) In accordance with the above Regulation, the Commission asked TPC-D to submit the details of actual Working Capital Interest incurred in FY , separately for Wires Business and Supply Business, along with the documentary evidence of the actual Working Capital Interest incurred. In its reply CREG/MUM/MERC/2018/148 dated June 19, 2018, TPC-D submitted that TPC has arranged the credit facility arrangement with HDFC for funding the working capital requirement of Mumbai Licensed business. TPC-D submitted the letter from HDFC indicating terms and conditions of arrangement of Rs. 500 Crore. Further, TPC-D submitted the interest rate details of 8.50% for the month of January 2018 for the same facility. However, the interest rates for FY have not been submitted. Further, in this regard, TPC-D made another different submission vide letter No. CREG/MUM/MERC/2018/231 dated August 2, TPC-D stated that it has utilized the facility of Commercial Papers for funding its Working Capital requirement during FY Further, these Commercial Papers were issued at the company level, i.e., for TPC as a whole and not separately issued for regulated business in Mumbai for Generation, Transmission and Distribution business. Accordingly, based on the audited financial statements, for TPC as a whole, as published in the Company s Annual Report for FY and FY , the effective rate of interest on Commercial Papers works out to 9.25 % for FY TPC-D submitted the computation of interest rate of 9.25%. Further, CA Certificate certifying the payment of Rs Crore in terms of Interest Cost towards Commercial Papers and relevant pages of the Annual Report for FY have also been Page 164 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

165 submitted. Further, TPC-D computed the Working capital requirement based on audited accounts (i.e., Current Assets minus Current liabilities) as Rs Crore for Wires Business and Rs Crore for Supply Business, which totals to Rs Crore. Accordingly, TPC-D submitted the actual IoWC as Rs Crore for Wires Business and Rs Crore for Supply Business, totalling to Rs Crore. The Commission is of the view that the provisions of the MYT Regulations, 2015 are very clear on this matter, and the Licensee has to submit documentary evidence of having incurred the IoWC. The Commission does not agree with computation of actual Interest of Working Capital submitted by TPC-D. Further, the Commercial Papers have been taken for the Company as a whole, and it cannot be proved that the same has been taken for the regulated business in Maharashtra, which defeats the whole purpose of obtaining documentary evidence of having incurred actual IoWC. Further, in the said computations, TPC-D has considered Current Assets as Rs Crore and Current Liabilities as Rs Crore. However, in the Balance Sheet, the same has been reported as Rs Crore and Rs Crore, respectively, which will amount to negative working capital requirement. TPC-D has submitted altogether different computations that do not reconcile with the accounting statements. In view of the above submission by TPC-D and in absence of documentary evidence, the Commission is of the view that the actual IoWC for FY incurred by TPC-D has to be considered as zero. Hence, the entire difference between Normative IoWC and zero has been shared in accordance with MYT Regulations 2015, as discussed subsequently in this Section INTEREST ON CONSUMER SECURITY DEPOSIT TPC-D's Submission The Interest on CSD from Retail/Commercial consumers is considered on the basis of actual interest paid to consumers during the year. The total Interest on CSD is considered as Rs Crore for FY as against Rs Crore approved in the MYT. Commission s Analysis and Ruling The Commission has approved the actual interest of Rs Crore on CSD paid by TPC- D to consumers as per Audited accounts, for the purpose of truing up for FY Case No. 69 of 2018 Mid Term Review for TPC-D Page 165 of 387

166 5.12 PROVISION FOR BAD AND DOUBTFUL DEBTS TPC-D's Submission TPC-D has considered a reversal of provision for Bad and doubtful debts of Rs Crore for Wires Business and provision of Rs 0.77 Crore for Supply Business for FY This amounts to Rs. (1.20) Crore for the entire Distribution Business. Commission s Analysis and Ruling Regulations 73 and 82 of the MYT Regulations, 2015 for Wires and Supply Business, respectively, specify the maximum provision for bad and doubtful debts for a year as 1.5% of the receivables of the respective businesses, provided that it is within 5% of the receivables. For applying these provisions, the Commission has allocated the total value of receivables in the ratio of the respective ARRs of the Wires Business and Supply Business, i.e., 14:86. The audited accounts of TPC-D for FY reflects the receivables as Rs Crore. The Commission asked TPC-D to explain the meaning of negative provisioning for bad and doubtful debts for Wires Business in FY TPC-D submitted that as per accounting policy, TPC-D is creating provision as a bad or doubtful debt, for the deposits not received beyond a period of 3 years. The same provision is reversed in the following year when the deposits are received. The Commission has approved the actual provision for bad and doubtful debts for FY as submitted by TPC-D for the Wires Business and the Supply Business, subject to the capping at 1.5% of the receivables of the respective businesses. It has also verified that the total provision for bad and doubtful debts for each of the two Businesses has not exceeded 5% of their respective receivables. Accordingly, the Commission has approved the provision for bad and doubtful debts for FY as shown in the following Table: Table 5-41: Provision for Bad & Doubtful Debts for FY as approved by the Particulars Provisions for Bad and Doubtful Debts MYT Commission (Rs. Crore) Wires Business MTR Petition Approved in this MYR Supply Business MTR Petition Approved in this 0.00 (1.97) (1.97) Page 166 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

167 5.13 CONTRIBUTION TO CONTINGENCY RESERVE TPC-D's Submission The Contribution to Contingency Reserves for Wires Business and Supply Business has been considered in accordance with Regulation 34.1 of MYT Regulations, 2015 for FY , as under: Table 5-42: Contribution to Contingency Reserve for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening GFA % of Contribution to Contingency Reserves 0.25% 0.25% Contribution to Contingency Reserves Commission s Analysis and Ruling Regulation 34 of the MYT Regulations, 2015 specifies that the provision for Contingency Reserves for a year shall be between 0.25% and 0.5% of the original cost of fixed assets. In the MYT, the Commission had considered a provision of 0.25%. The Commission sought details of actual investment made by TPC-D during FY and different rates for various securities accumulated under Contingency reserves. In reply to this, TPC-D submitted that it has made investment of Rs Crore during FY This includes the investment of Rs. 10 Crore on March 15, 2017 under Govt. of India bond 26/12/2019 at interest rate of 6.79% and Rs Crore on March 31, 2017 under Govt. of India bond 19/12/2022 at interest rate of 6.84%. Further, TPC-D also submitted the details of interest rates of various securities accumulated under Contingency reserves. Accordingly, the Commission has approved the Contribution to Contingency Reserves for Wires and Supply Business for FY at 0.25% of their respective Opening GFAs, as shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 167 of 387

168 Table 5-43: Contribution to Contingency Reserves for FY for Wires Business and Particulars Supply Business as approved by the Commission (Rs. Crore) MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Opening Balance of GFA , % Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Contribution to Contingency Reserve INCOME TAX TPC-D's Submission TPC-D has considered revenue from its consumers including revenue from Sale outside Licence Area for computing Income Tax. TPC-D has computed Income Tax for FY for Wires Business and Supply Business as shown in the following Table: Table 5-44: Income Tax for FY as submitted by TPC-D (Rs. Crore) MTR Petition Sr. Particulars Wires Supply No. Business Business 1 Total Revenue A Less: Incentive and efficiency gains B (4.76) (14.24) 3 Total Expenses C Profit Before Tax D = A - B - C (52.15) Tax Adjustment Add 6 Depreciation considered in Expenses E Other disallowance while computing IT F Total Tax Disallowances G = E + F Less 9 Tax Depreciation H Other expenses allowed for computing Income Tax I Deduction - U/s 80 IA J Total Tax Allowances K = H + I + J Total Taxable Income L = D + G - K (291.62) Carry forward losses of previous years M (333.25) (51.95) 15 Total taxable income after considering business loss of previous year N = L + M (624.86) Corporate Tax Rate O % % 17 Tax Payable at Normal rate (Corporate Tax Rate) P = N*O (216.21) MAT Computation 19 Profit Before Tax Q (52.15) Add: Disallowances under Income Tax (U/s 14A, Provision for doubtful debt) 21 Disallowance U/s 14A R Page 168 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

169 MTR Petition Sr. Particulars Wires Supply No. Business Business 22 Provision for doubtful debts T (1.97) Provision for diminution in share value U 24 Total Disallowances under Income Tax W = R + S + T + U (U/s 14 A, provision for doubtful debt) + V (1.97) 0.78 Less: Deduction under Income Tax 25 (Exempt Income, FBT, Wealth Tax, X Withdrawal from Income) 26 Book Profit Y = Q + W - X (54.12) MAT Rate Z 21.34% 21.34% 28 Tax payable under MAT AA = Y*Z Mat Credit Applicable Tax applicable AB = max(p,aa) Income Tax (MYT ) Commission s Analysis and Ruling The Commission has computed the Regulatory PBT and the Income Tax liability thereon on a stand-alone basis, in accordance with Regulation 34 of the MYT Regulations, The Commission has considered the Revenue heads and Expense heads as approved after true-up for FY , which are different from the actual revenue and expenses considered by TPC-D. The Commission sought copy of Income Tax Return Verification (ITRV) for FY , wherein it is observed that Tax payable by TPC as a whole for FY is Rs Crore. Further, TPC-D clarified that it has not received any refund of Income Tax paid, as assessment is yet to be completed. Further, the Commission sought the computation of benefits claimed under 80 IA for FY On perusal of the documents submitted by TPC-D, the Commission observes that TPC-D has claimed deduction u/s 80IA of Rs Crore for FY and the same has been considered by TPC-D in their computation of Income Tax. The Commission has considered the amount of Rs Crore as deduction u/s 80IA for computation of Income Tax. The Commission has computed Income Tax in accordance with Regulation 33.1 of MYT Regulations, 2015 and as specified in ATE Judgment dated 2 December 2013 in Appeal No. 138 and 139 of As specified in the Regulations and ATE Judgement, the Commission has arrived at Income Tax paid based on Regulatory Profit Before Tax (PBT) considering the normative cost allowed by the Commission. The ratio with regard to tax liability is calculated on the regulatory income and cost within the MYT regime considering the applicable tax depreciation for computation of the Income Tax. Accordingly, the calculation of Income Tax provides the tax payable for the Regulatory business whereby all the items of ARR and Revenue are considered on normative basis for tariff purposes. Case No. 69 of 2018 Mid Term Review for TPC-D Page 169 of 387

170 Also, in line with MYT Regulations, 2011, no efficiency gains and incentive earned are considered for computation of Tax on PBT basis. As discussed in earlier Section of this, for the purpose of truing up for FY , the Commission has computed the combined Income Tax for Wires Business and Supply Business and the same has been allocated based on revenue of the respective Business. Accordingly, the Commission has computed the Income Tax for FY as shown in the following Table: Table 5-45: Income Tax for FY as approved by the Commission (Rs. Crore) Particulars Notation Approved in this Total Revenue A Total Expenses B Profit Before Tax C = A B Tax Adjustment Add: Depreciation considered in Expenses D Other disallowance while computing IT E 3.66 Total Tax Disallowances F = D + E Less: Tax Depreciation G Other expenses allowed for computing Income Tax H 7.48 Deduction - U/s 80 IA I Total Tax Allowances J = G + H + I Total Taxable Income K = C + F J Carry forward losses of previous years L (471.43) Total taxable income after considering business loss of (157.51) M = K + L previous year Corporate Tax Rate N 34.61% Tax Payable at Normal rate (Corporate Tax Rate) O = M*N - MAT Computation Profit Before Tax P Add: Disallowances under Income Tax Disallowance U/s 14A Q - Interest under Income Tax Act R - Provision for doubtful debts S (1.19) Provision for diminution in share value T - Dividend from foreign subsidiary U - Total Disallowances under Income Tax (U/s 14 A, V = Q+ R + S + provision for doubtful debt) T + U (1.19) Less: Deduction under Income Tax (Exempt Income, W FBT, Wealth Tax, Withdrawal from Income) MAT Rate X 21.34% Tax payable under MAT Y = W*X Tax applicable for Wire and Supply Business AB = max (O, Y) Page 170 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

171 The above computed Income Tax has been allocated to Wires Business and Supply business in proportion to their revenue. Accordingly, the Commission approves the Income Tax of Rs Crore for Wires Business and Rs Crore for Supply Business NON-TARIFF INCOME TPC-D's Submission TPC-D submitted the Non-Tariff Income as Rs Crore for Wires and Supply Business for FY , comprising Rs Crore for recurring items and Rs Crore for nonrecurring items, as shown in the following Table: Table 5-46: Non-Tariff Income for FY as submitted by TPC-D (Rs. Crore) Sr. Wires Business Supply Business No. Particulars MYT MTR Petition MYT MTR Petition Recurring items Rent Income from services rendered Interest from Contingency Reserves Investment Non-Recurring items Sale of Scrap & Stores Sale of Fly Ash Delayed Payment Charges VAT Refund accrued Compensation Net Service Connection Charges Liquidated Damages Miscellaneous Revenue Interest on Delayed Payments Re: Eps Interest on Loans & Advances--Staff Interest Re: IT Refund Total Commission s Analysis and Ruling The Commission has accepted TPC-D s submission and accordingly approved the Non- Tariff Income for FY as shown in the Table below: Table 5-47:Non-Tariff Income for FY as approved by the Commission (Rs. crore) Wires Business Supply Business Particular MYT MTR Petition Approved in this MYT MTR Petition Approved in this Non-Tariff Income Case No. 69 of 2018 Mid Term Review for TPC-D Page 171 of 387

172 5.16 DEMAND SIDE MANAGEMENT EXPENSES TPC-D's Submission TPC-D submitted the DSM expenses of Rs Crore towards various DSM schemes for FY The detailed scheme wise break up is given in the Table below: Table 5-48: DSM Expenses for FY as submitted by TPC-D (Rs. Crore) DSM Programs FY Energy Audit 0.06 Ceiling Fan 0.15 Refrigerator 0.51 AC 0.2 LED TL 0.3 Standard Offer program 0.01 Total 1.23 Commission s Analysis and Ruling In line with the approach adopted in previous, the Commission has not considered the Staff cost under DSM expenses. The same shall be considered as part of total O&M expenses. DSM expenses approved by the Commission for FY is shown in the following Table: Table 5-49: DSM Expenses for FY as approved by the Commission (Rs. crore) Particulars MYT MTR Petition Approved in this DSM expenses CHARGES PAYABLE TO RINFRA-D TPC-D's Submission TPC-D submitted that it has paid the total amount of Rs Crore to RInfra-D in FY based on the rates approved by the Commission. This amount includes Rs Crore towards Wheeling Charges, Rs Crore towards CSS and Rs Crore towards Regulatory Asset Charge. For computation of ARR, the above charges have not been considered by TPC D, as these are collected and paid to RInfra-D. Commission s Analysis and Ruling The Commission has not considered charges payable to RInfra-D as part of ARR as well as revenue for TPC-D. Page 172 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

173 5.18 SHARING OF GAINS AND LOSSES IN FY TPC-D's Submission TPC-D submitted the sharing of efficiency gains and losses for O&M Expenses for FY as shown in the following Table: Table 5-50: Sharing of Efficiency Gains and Losses for O&M Expenses for FY as submitted by TPC-D (Rs. Crore) Particulars Units Wires Supply Business Business Total Normative O&M expenses a Actual O&M expenses b Uncontrollable expenditure c Actual O&M considered for Gain / (Loss) d=b-c Efficiency Gain / (Loss) e=a-d (8.76) (17.77) (26.53) Efficiency Gain / (Loss) to be passed on to the consumers f=e*1/3 (2.92) (5.92) (8.84) Further, Regulation 31.6 specifies that the variation between normative IoWC and actual IoWC shall be shared between the Licensee and beneficiaries. Based on the above, TPC-D has computed the sharing of efficiency Gain / (Loss) on account of IoWC as shown in the following Table: Table 5-51: Computation of Efficiency Gain / (Loss) for IoWC for FY as submitted by TPC-D (Rs. Crore) Sr. Wire Supply Particulars Units No. Business Business Total 1 Normative IoWC Actual IoWC Uncontrollable Expenditure IoWC for efficiency gain/(loss) 4= Efficiency gain/(loss) for IoWC 3= (3.59) (0.35) 6 Efficiency gain/(loss) for IoWC passed on to the consumers 4=3*1/ (1.20) (0.12) Commission s Analysis and Ruling The Commission has computed the Efficiency Gains/(Losses) and its sharing on account of O&M Expenses in accordance with Regulation 11 of the MYT Regulations, 2015, as shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 173 of 387

174 Table 5-52:Sharing of (Gains)/losses on account of O&M Expenses for FY as approved by Commission (Rs. Crore) Particulars Wires Supply Business Business Total Normative O&M Expenses Actual O&M Expenses Efficiency (Gain)/Loss (8.77) (16.03) (24.80) Efficiency (Gain)/Loss shared with Consumers (2.92) (5.34) (8.26) Net Entitlement As stated earlier in this Section, the Commission is of the view that the actual IoWC for FY incurred by TPC-D has to be considered as zero. Hence, the entire difference between Normative IoWC and zero has been shared in accordance with MYT Regulations 2015, as shown in the Table below: Table 5-53: Sharing of Efficiency Gain on account of lower than normative IoWC for FY , as approved by the Commission (Rs. Crore) Particulars Wires Supply Business Business Total Normative IoWC Actual IoWC Efficiency Gains/(Losses) Efficiency Gains/(losses) to be passed on to the consumers Net Entitlement of IoWC REVENUE FROM SALE OF ELECTRICITY FOR FY TPC-D's Submission The revenue recovered by TPC-D during FY for Wires Business through Wheeling Charges is shown in the following Table: Table 5-54 : Revenue from Wheeling Charges for FY as submitted by TPC-D (Rs. Crore) Particular Revenue from Wheeling Charges inclusive of Wheeling Charges from OA consumers Total The Revenue recovered by TPC-D during FY from Sale of Power is shown in the following Table: Page 174 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

175 Table 5-55 : Revenue from Sale of Power for FY as submitted by TPC-D (Rs. Crore) Sr. No. Particulars Revenue 1 Demand Charge Energy Charge Fixed Charges PF Surcharge PF Incentive (122.85) 6 15-day adjustment (8.39) 7 FAC Billed (105.15) 8 Cash Discount (32.26) 9 Load Factor Incentive (6.08) 10 Total-Retail Revenue TPC-D submitted that it has recovered the amount of Rs Crore from Wheeling Charges from Direct and OA consumers and Rs Crore from the Retail Consumers during FY Further, revenue of Rs Crore is recovered from Open Access Consumers towards Operating Charges and CSS. TPC-D has not considered the Transmission Charges revenue collected from OA consumers to the tune of Rs Crore. The total Revenue for FY is as given below: Table 5-56: Total Revenue for FY as submitted by TPC-D (Rs. Crore) Particulars Total Revenue from Wheeling Charges Revenue from sale of Power Revenue from Operating Charges & CSS from OA Consumers Total Revenue Note: TPC-D while computing the Gap/ (Surplus) considered revenue from OA consumers as reduction in the total ARR. Commission s Analysis and Ruling The Commission has reconciled the revenue for sale of power submitted in the Petition visà-vis revenue stated in Audited Accounts and Allocation Statement for FY The Commission has considered the revenue from Sale of power and revenue from Wheeling Charges as submitted by TPC-D. Further, Commission observes that TPC-D has reduced the cash discount from the total revenue. On clarification of the same, TPC-D submitted that this cash discount is as per the provision of Prompt Payment Discount approved in MYT. Further, it is observed that TPC-D is providing certain discounts to consumers for registering for E-bill, ECS payment, Case No. 69 of 2018 Mid Term Review for TPC-D Page 175 of 387

176 etc. In this regard, TPC-D clarified that in order to encourage digitization of payment, it has started giving discount for registering for e-bill (one-time discount of 1% of Billed energy Charges up to maximum of Rs. 50), ECS payment (One-time discount of Rs. 100), etc. from FY onwards. TPC-D further clarified that these discounts are accounted under A&G Expenses in books of accounts. TPC-D is also proposing above mentioned discounts in the revised Schedule of Charges, which is discussed in subsequent Sections of this. In light of this, the Commission directs TPC-D to submit the details of such discounts separately rather than considering it under A&G expenses, while submitting the Truing up Petition for the respective year, i.e., FY onwards. Further, as regards the revenue from OA Consumers, the Commission has not considered the revenue from Transmission Charges as part of the revenue, as these Charges have to be remitted by the Distribution Licensee to the STU and cannot be retained by the former, in accordance with the MERC DOA Regulations, TPC-D should remit these amounts to the STU. In view of the above, the total revenue from Wires Business and Supply Business for FY as approved by the Commission is shown in the following Table: Table 5-57 : Total Revenue for Distribution Wires and Supply Business for FY as approved by the Commission (Rs. Crore) Particulars MTR Petition Approved in this Revenue from Wheeling Charges Revenue from sale of Power Revenue from Operating Charges & CSS from OA Consumers Total Revenue Further, the Commission has considered the revenue from RAC of Rs Crore separately for accounting of RAC allowed vis-à-vis RAC recovered from tariff. Page 176 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

177 5.20 AGGREGATE REVENUE REQUIREMENT FOR FY The approved ARR for the Wires Business for FY is shown in the following Table: Table 5-58: ARR for Wires Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No. Petition this 1 Operation & Maintenance Expenses Depreciation Interest on Long-Term Loan Capital Interest on Working Capital Provision for bad and doubtful debts 0.00 (1.97) (1.97) 6 Contribution to contingency reserves Income Tax Sharing of Efficiency (Gains)/losses in O&M Expenses Sharing of Efficiency (Gains)/losses in Interest on Working Capital - - (4.18) 10 Total Revenue Expenditure Add: Return on Equity Capital Aggregate Revenue Requirement Less: Non-Tariff Income Add: Revenue Gap/(Surplus) of previous years (20.88) (20.88) (20.88) 15 Aggregate Revenue Requirement from Distribution Wires The main reasons for the difference between the Wires ARR claimed by TPC-D and that approved in this for FY are: 1. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY , FY and FY after due prudence check by the Commission. 2. O&M expenses approved in this are slightly lower than that claimed by TPC- D, after sharing of the efficiency losses in this regard. 3. Net IoWC allowed is slightly higher after sharing of the efficiency gains against claimed by TPC-D 4. Income Tax approved in this for FY is higher than that claimed by TPC-D, on account of computation of combined Income Tax for Wires and Supply Business and then allocated to Wires Business. The approved ARR for the Supply Business of TPC-D is shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 177 of 387

178 Table 5-59: ARR for Supply Business for FY as approved by the Commission (Rs. Sr. No. Particulars Crore) MYT MTR Petition Approved in this 1 Power Purchase Expenses including Standby Charges Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Interest on Consumer Security Deposit Provision for bad and doubtful debts Contribution to contingency reserves Intra-State Transmission Charges MSLDC Fees & Charges Income Tax DSM Expenses Other Finance Charges Share of Efficiency (Gains)/losses in O&M Expenses Sharing of Efficiency (Gains)/losses in Interest on Working Capital - - (7.58) 16 Total Revenue Expenditure , Add: Return on Equity Capital Aggregate Revenue Requirement , Less: Non-Tariff Income Less: Income from OA consumers Aggregate Revenue Requirement from Supply , The main reasons for the difference between the Supply ARR claimed by TPC-D and that approved in this for FY are: 1. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY , FY and FY after due prudence check by the Commission. 2. O&M expenses approved in this are slightly lower than that claimed by TPC- D, after sharing of the efficiency losses in this regard. 3. Net IoWC allowed is lower after sharing of the efficiency gains against claimed by TPC-D. Page 178 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

179 4. Income Tax approved in this for FY is lower than that claimed by TPC-D, on account of computation of combined Income Tax for Wires and Supply Business and then allocated to Wires Business. The combined ARR for the Wire and Supply Businesses for FY is given in the Table below: Table 5-60:ARR for Wires Business and Supply Business for FY as approved by the Sr. No. Particulars Commission (Rs. crore) MYT MTR Petition Approved in this 1, Power Purchase Expenses including Standby charges Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Interest on CSD Provision for bad and doubtful debts - (1.19) (1.19) 8 Contribution to contingency reserves Intra-State Transmission Charges MSLDC Fees & Charges Income Tax DSM Expenses Other Finance Charges Share of Efficiency (Gains)/losses in O&M Expenses Sharing of Efficiency (Gains)/losses in Interest on Working Capital - - (11.77) 14 Total Revenue Expenditure , Add: Return on Equity Capital Aggregate Revenue Requirement , Less: Non-Tariff Income Less: CSS recovered Past recoveries (20.88) (20.88) (20.88) 20 Aggregate Revenue Requirement , REVENUE GAP/(SURPLUS) FOR FY TPC-D's Submission Based on the above submissions, the Revenue (Gap) / Surplus of TPC-D for FY for the Distribution Wires and Supply Business is shown in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 179 of 387

180 Table 5-61: Revenue Gap/(Surplus) for Wires Business for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Difference Net ARR Revenue (56.12) Revenue Gap/(Surplus) Table 5-62: (Revenue Gap/(Surplus) for Supply Business for FY as submitted by TPC- D (Rs. Crore) Particulars MYT MTR Petition Difference Net ARR (182.61) Revenue (506.56) Revenue Gap/(Surplus) (439.22) (115.27) Table 5-63: Combined Revenue Gap/(Surplus) for Distribution Business for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Difference Net ARR (135.70) Revenue (562.69) Revenue Gap/(Surplus) (395.44) (31.54) TPC-D submitted that the total Revenue Gap worked out as Rs Crore in the Wires Business and Revenue Surplus of Rs Crore for Supply Business for FY Commission s Analysis and Ruling Considering the approved components of ARR and Revenue for FY , the Commission has approved the Revenue Gap/(Surplus) for FY as shown in the Tables below: Table 5-64: Revenue Gap/(Surplus) for Wires Business for FY as approved by the Commission (Rs. crore) Sr. MYT MTR Approved in Particulars No Petition this 1 Net Aggregate Revenue Requirement Revenue from Wheeling Charges Revenue Gap/ (Surplus) Page 180 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

181 Table 5-65: Revenue Gap/(Surplus) for Supply Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No Petition this 1 Net Aggregate Revenue Requirement Revenue from Sale of power Revenue Gap/(Surplus) (439.22) (115.27) (156.09) The combined Revenue Gap/(Surplus) for FY as approved by the Commission is shown in the Table below: Table 5-66: Combined Revenue Gap/(Surplus) for FY as approved by the Commission Sr. No Particulars (Rs Crore) MYT MTR Petition Approved in this 1 Total ARR for Wires Business and Supply Business Total Revenue Revenue Gap/ (Surplus) (395.44) (31.54) (18.83) Hence, the Commission has approved a Revenue Gap of Rs crore for the Wires Business and a Revenue Surplus of Rs crore for the Supply Business for FY , resulting in a total Revenue Surplus of Rs crore. The treatment of the above Revenue Gap/(Surplus) is discussed along with the treatment of Cumulative Revenue Gap/(Surplus), in Chapter 8 of this. Further, the accounting of RAC approved vis-à-vis RAC recovered through tariff has been done separately in Chapter 8 of this. Case No. 69 of 2018 Mid Term Review for TPC-D Page 181 of 387

182 6 PROVISIONAL TRUING-UP OF ARR FOR FY BACKGROUND TPC-D submitted that it has claimed the provisional truing-up of expenditure and revenue for FY , in accordance with Regulations 5.1 (b) and 8.1 of the MYT Regulations, TPC-D stated that since FY is over now, it has submitted the provisional actuals for the provisional true-up for FY vis-à-vis the amounts approved by the Commission in the MYT in Case No. 47 of 2016, and provided the justification for the deviations. The Commission has carried out the provisional truing up of expenses and revenue under each head and provisionally approved the total expenditure and revenue of TPC-D for FY , in accordance with the MYT Regulations, 2015, as discussed in the subsequent paragraphs. 6.2 SALES TPC-D's Submission TPC-D submitted the provisional actual sales for FY as given in the table below: Table 6-1: Provisional Actual Sales for FY as submitted by TPC-D (MU) Consumer Categories Direct MYT Change over Total Direct MTR Petition Change over LT Category LT I - Residential (BPL) LT I Residential , , , , and above LT II - Commercial LT II(A) - Commercial up to 20 kw LT II(B) - Commercial 20 to 50 kw LT II(C) - Commercial > 50 kw LT III - LT Industry LT III(A) - Industrial up to 20 kw LT III(B) - Industrial > 20 kw LT IV- PWW & Sewage Treatment Total Plants LT V - Advertisement & Hoardings LT VI - Streetlights LT VII Temporary Supply LT VII(A) - Temporary Supply Religious LT VII(B) - Temporary Supply Others LT VIII - Crematoriums & Burial Grounds LT IX - Public Services Page 182 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

183 Consumer Categories Direct MYT Change over Total Direct MTR Petition Change over LT IX(A) - Public Services - Govt Hospitals & Educational Institution LT IX(B) - Public Services Others LT X -Agriculture LT X(A)- Pump sets LTX(B)- Others Sub-total , , , , HT Category - - HT I Industry HT II Commercial HT III - Group Housing Society HT IV-PWW & Sewage Treatment Total Plants HT V(A) Railways /33 kv kv HT V(B)- Railways, Metro & Monorail HT VI - Public Services HT VI(A) - Public Services - Govt. Hospitals & Educational Institutions HT VI(B) - Public Services Others HT VII - Temporary Supply Sub-total 1, , day adjustment (2.35) Total 2, , , TPC-D submitted that the provisional actual sales for FY is MU and the same has been considered for energy requirement. Commission s Analysis and Ruling For the purpose of the provisional truing up for FY , the Commission approves the provisional actual category-wise Direct sales and change-over sales as submitted by TPC- D. The Commission observed that there was a difference in the category-wise change-over sales reported by RInfra-D and that reported by TPC-D. The Commission sought reconciliation of the category-wise change-over sales from RInfra-D and TPC-D. As elaborated in the Section on true-up for FY , based on the explanation and reconciliation provided by RInfra-D and TPC-D, the Commission has approved the provisional actual sales to change-over sales for FY as submitted by TPC-D. The sales provisionally approved by the Commission for FY are summarised in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 183 of 387

184 Particulars Table 6-2: Energy Sales for FY as approved by the Commission (MU) MYT MTR Petition Approved in this Direct sales 2, Change-over sales 2, Grand Total 5, DISTRIBUTION LOSSES AND ENERGY BALANCE TPC-D's Submission TPC-D submitted the Distribution Losses of 0.72% for FY based on provisional actual data for FY TPC-D submitted that the transmission loss worked out for FY is 3.30%. The energy requirement for TPC-D for FY is shown in the following Table: Table 6-3: Energy Input Requirement for Retail Supply Business - FY as submitted by TPC-D (MU) Particulars MYT MTR Petition TPC-D Direct Sales Bill credit given to OA consumers Total Sales Distribution Losses 1.02% 0.72% ABT Meter reading at T<>D Interface OA wind credit at T<>D Interface Energy Requirement for TPC-D Direct consumers at T<>D interface Sales to Change-over consumers Bill credit given to OA consumers - - Sale to Change-over consumers after adjusting for OA wind credit Wheeling Loss R-Infra-D Network Energy Requirement for Changeover consumers Energy Sales at 110/132 kv level Total Energy Requirement at T<>D Transmission Loss 3.92% 3.30% Total Energy Requirement at G<>T Further, TPC-D submitted the Distribution losses by excluding the sales at 110/132kV level as shown in the following Table: Page 184 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

185 Table 6-4: Provisional Actual Distribution Loss for FY as submitted by TPC-D (MU) Particulars Notation MYT MTR Petition Input Energy at Distribution Level a Energy Sales at 110/132 kv level b Net Input Energy at Distribution level excl. sales at 110/132 kv level c=a-b Energy Sales metered at Distribution level d Billed Energy at 110 kv voltages e Net Energy Sales metered at Distribution level excluding energy sales at 110/132 f=d-e kv level Distribution Loss (MU) g=c-f Distribution Loss as % of net energy input h=g/c 1.17% 0.91% Commission s Analysis and Ruling As discussed in True-up section for FY , the Commission in MYT has approved the distribution loss and energy requirement after excluding the sales at 110/132 kv level. However, TPC-D has computed the distribution loss of 0.72% after considering the EHV sales for FY The Commission has continued with its approach adopted in MYT and provisionally approves Distribution Loss for FY after excluding sales at 110/132 kv level. The Commission has considered the actual Transmission Losses of 3.30% for FY based on inputs from MSLDC. The change-over sales have been considered as approved earlier in this Section. The Commission has considered the energy drawn by TPC-D at T<>D interface as MU (including EHV Sales), based on State-wide DISCOMwise energy drawal data provided by MSLDC, as per usual practice. Accordingly, the Distribution Losses and Energy Balance provisionally approved the Commission for FY are shown in the Tables below: Table 6-5: Energy Balance for FY as approved by the Commission (MU) Particulars MYT MTR Petition Approved in this TPC-D Direct Sales , Bill credit given to OA consumers Total Sales , Distribution Losses 1.02% 0.72% 0.75% ABT Meter reading at T<>D Interface Case No. 69 of 2018 Mid Term Review for TPC-D Page 185 of 387

186 Particulars Approved MYT MTR in this Petition OA wind credit at T<>D Interface Energy Requirement for TPC-D Direct consumers at T<>D interface Sales to Change-over consumers Bill credit given to OA consumers Sale to Change-over consumers after adjusting for OA wind credit Wheeling Loss R-Infra-D Network Energy Requirement for Changeover consumers Energy Sales at 110/132 kv level Total Energy Requirement at T<>D interface Transmission Loss 3.92% 3.30% 3.30% Total Energy Requirement at G<>T interface , POWER PURCHASE QUANTUM AND COST TPC-D submitted that its total power procurement in FY is based on the provisional actual energy input requirement, which is met from TPC-G, RE sources and short-term bilateral sources. The same has been discussed as under: Procurement from TPC-G TPC-D's Submission TPC-D submitted that it has long-term contracts with TPC-G and a major portion of the power purchase requirement is met through this arrangement and the allocation of capacity from various Generating Units is the same as in FY Accordingly, the total cost of power purchase from TPC-G submitted by TPC-D is as given below: Table 6-6 : Provisional Power Purchase from TPC-G for FY as submitted by TPC-D Unit Quantum (MU) Variable Charge (Rs./kWh) Variable Charge (Rs. Crore) Fixed Cost (Rs. Crore) Total Unit Unit 6 (9.80) Unit Unit Bhira Bhivpuri Khopoli Custom Duty Paid Page 186 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

187 Unit Quantum (MU) Variable Charge (Rs./kWh) Variable Charge (Rs. Crore) Fixed Cost (Rs. Crore) Total Total Revenue Adjustment Total Commission s Analysis and Ruling For prudence check of actual power purchase, the Commission sought Load Generation Balance Report (LGBR) for 15 minutes time interval for H1 for FY and also details of the Merit Despatch (MOD) followed for power purchase by TPC-D, including details of backing down of Units of TPC-G s Contracted Units in FY separately for each month, tariff considered for MOD, Technical Minimum level, etc. The Commission analysed the power purchased by TPC-D from each source and considered the actual quantum purchased by TPC-D from TPC-G as per LGBR. Further, as regards the operation of Unit 6 under MSLDC directions, TPC-G clarified that it has not purchased any power from Unit 6 during FY under SLDC directions. Further, the Commission observes that TPC-D has paid the amount of Rs Crore towards Custom duty to TPC-G. Regarding the details of the same, TPC-D clarified that TPC-G vide letter dated June 6, 2017 had requested TPC-D to reimburse payment of additional custom duty on coal shipment received during period from March 17, 2012 to February 27, The Commission notes that TPC-D has already made the payment to TPC-G in this regard and also submitted the documentary evidence to the Commission. For the purpose of provisional truing up, the Commission has not considered the cost of Rs Crore paid to TPC-G as the same has been disallowed in MTR of TPC-G dated 12 September, 2018 in Case No. 65 of However, the final view in this regard shall be taken by the Commission while carrying out the final truing up for FY for TPC- G. In view of the above, the Commission provisionally approves the quantum and cost for power purchased from TPC-G as shown in the following Table: Table 6-7: Power Purchase from TPC-G for FY as provisionally approved by the MYT Commission MTR Petition Approved in this Source Rate Rate Rate Quantum Cost (Rs. Quantum Cost (Rs. Quantu Cost (Rs. (Rs./ (Rs./ (Rs./ (MU) Crore) (MU) Crore) m (MU) Crore) kwh) kwh) kwh) TPC-G 3, , , , , , Case No. 69 of 2018 Mid Term Review for TPC-D Page 187 of 387

188 6.4.2 Renewable Purchase Obligation TPC-D's Submission TPC-D submitted that it has purchased the quantum of power that is required to meet its RPO including past obligations. The quantum of energy required to purchase based on the energy input requirement and the % Renewable purchase obligation is shown in the following Table: Table 6-8: Renewable Energy Requirement for FY as submitted by TPC-D (MU) Renewable Source % RPO for FY Requirem InSTS Obligation Previou s year obligati ons Preferent ial Tariff purchase Met through REC Total Shortfall/ (Surplus) =1 * = = RE Other than Mini Hydro and 10.48% (0.73) Solar Mini Hydro 0.02% Total Non- Solar 10.50% (0.73) Solar 2.00% Total 12.50% TPC-D submitted it has met its requirement of RE power through existing long-term tiedup sources and the balance through REC purchase. Solar REC Market was suspended since May, 2017 and it was not able to purchase the balance requirement through the REC Market. TPC-D filed a petition requesting to the Commission to allow the Solar shortfall of 20 MU for FY to be met cumulatively in FY vide its letter CREG/MUM/MERC/2018/69 dated 28 March, TPC-D requested the Commission to allow TPC-D to fulfil its Solar RPO targets for FY to meet cumulatively in FY TPC-D submitted that it has considered the cost of purchase from RE sources at the tariffs approved by the Commission in its various RE Tariff s and the quantum as submitted above for FY The summary of cost of power purchase from RE sources is given in the Table below: Table 6-9 : Provisional Actual RE Purchase for FY as submitted by TPC-D Particulars Quantum (MU) Rate (Rs./kWh) Cost (Rs. Crore) Non-Solar RE Purchase Solar RE Purchase Total RE Purchase Page 188 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

189 Particulars Quantum (MU) Rate (Rs./kWh) Cost (Rs. Crore) Non-Solar REC Purchase Solar REC Purchase Total REC Commission s Analysis and Ruling Since, FY is over now, the Commission sought details of actual source wise quantum of RE, landed cost and other details of RE purchase for FY TPC-D was also asked to submit the details and documentary support for actual Solar and Non-Solar REC purchase for FY TPC-D provided the requisite details. As regards the purchase of Solar RECs, TPC-D clarified that the actual Solar REC purchased during FY was at 1/kWh for 20 MU. The Commission has analysed the details submitted by TPC-D regarding the purchase of RE power. For the purpose of provisional truing up for FY , the Commission has provisionally approved the Solar and non-solar RE purchase for FY as submitted by TPC-D, as shown in the Table below: Table 6-10: RE Purchase for FY as provisionally approved by the Commission Particulars Quant um (MU) MYT MTR Petition Approved in this Cost (Rs. crore) Rate (Rs./k Wh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./k Wh) Quantu m (MU) Cost (Rs. crore) Rate (Rs./k Wh) Solar RE Purchase Non-Solar RE purchase Solar REC Purchase Non-Solar REC Purchase Total RE procurement Power Purchase from Bilateral Sources TPC-D's Submission TPC-D submitted that it has met balance power requirement through bilateral power purchase and purchase from Imbalance pool under FBSM mechanism. The total cost of the bilateral power purchase and Imbalance Pool purchase is as given in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 189 of 387

190 Table 6-11: Provisional Actual Bilateral Power Purchase Cost and Quantum for FY as submitted by TPC-D Particulars Quantum (MU) Rate (Rs/kWh) Cost (Rs Crore) Bilateral Power Purchase Purchase from Imbalance pool Total Commission s Analysis and Ruling In response to clarifications sought by the Commission regarding Bilateral power purchase, TPC-D submitted that in FY , it purchased bilateral power through MoP s DEEP Portal and through power exchange. The Commission also sought details of source-wise month-wise short-term purchase from TPC-D. TPC-D also submitted the copies of agreements for the short-term power purchased. The Commission after prudence check, has accepted TPC-D s submission in this regard, and accordingly approved the quantum and cost of power purchase from bilateral sources. The Commission approves the quantum and cost of power purchased from imbalance pool based on the provisional bills of FBSM. Further, as discussed in previous Section of this, the purchase quantum under the Imbalance Pool has been corrected based on the input from MSLDC. The Commission in MYT has approved the ceiling rate for bilateral power purchase as Rs. 3.13/kWh for FY From the details of source-wise month-wise purchase, the Commission observes that TPC-D has purchased short-term power at rate of Rs. 2.87/kWh and power from imbalance pool at rate of Rs. 3.00/kWh, which are within approved limits for power purchase from bilateral sources and hence separate approval from the Commission was not required. The Commission has approved the power purchase from Bilateral Sources and Imbalance Pool for FY , as shown in the Table below: Table 6-12: Bilateral Power Purchase and Quantum & Cost for FY provisionally Source Bilateral Purchase Imbalance Pool Total Short-term Purchase Quantum (MU) approved by the Commission MYT MTR Petition Approved in this Cost Rate Quantu Cost Rate Quantu Cost (Rs. (Rs./ m (Rs. (Rs./ m (Rs. crore) kwh) (MU) crore) kwh) (MU) crore) Rate (Rs./ kwh) 1, , Page 190 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

191 6.4.4 Sale outside Licence Area TPC-D's Submission TPC-D submitted that the revenue earned from sale to Outside licence area has been utilized to reduce the total cost of power purchase. TPC-D submitted that it has sold surplus energy of MU during FY The month wise Outside Licence Area sale for FY is given in the table below: Table 6-13: Provisional Actual Outside Licence Area Sale for FY as submitted by TPC- D Month Quantum (MU) Rate (Rs/kWh) Cost (Rs. Crore) Apr-2017 (43.57) 4.45 (19.39) May-2017 (44.90) 4.45 (19.98) Jun-2017 (47.68) 4.45 (21.22) Jul-2017 (53.56) 4.46 (23.90) Aug-2017 (30.11) 4.97 (14.95) Sep-2017 (27.67) 5.13 (14.20) Oct-2017 (9.88) 5.13 (5.07) Nov-2017 (11.56) 4.56 (5.27) Dec-2017 (10.43) 4.28 (4.46) Jan-2018 (8.93) 4.38 (3.91) Feb-2018 (22.10) 4.56 (10.08) Mar-2018 (32.15) 4.74 (15.23) Total (342.55) 4.60 (157.66) Commission s Analysis and Ruling As discussed in earlier Chapter of True-up for FY , the Commission has undertaken the prudence of sale to outside licence area for FY and approves the transaction undertaken for sale to outside licence area. In view of this, for the purpose of provisional truing up for FY , the Commission has provisionally considered the revenue earned from sale to outside licence area to reduce the power purchase cost of TPC-D. The Commission shall undertake prudence check of the same at time of final truing up. In view of the above, the Commission approves sale to outside licence area for FY as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 191 of 387

192 Table 6-14: Sale Outside Licence area for FY as provisionally approved by the Source Sale to Outside Licence area Quantum (MU) Commission MYT MTR Petition Approved in this Cost Rate Cost Rate Cost Quantum Quantum (Rs. (Rs./ (Rs. (Rs./ (Rs. (MU) (MU) crore) kwh) crore) kwh) crore) Rate (Rs./ kwh) (342.55) (157.66) 4.60 (342.55) (157.66) Transmission Charges and MSLDC Charges TPC-D's Submission TPC-D submitted that it has paid the Transmission Charges of Rs Crore (after considering the prompt payment discount) during FY as approved by the Commission in its InSTS in Case No 91 of TPC-D submitted that it has considered the MSLDC Charges to the tune of Rs 0.90 Crore as approved in the MSLDC dated July 22, 2016 in Case No. 20 of Commission s Analysis and Ruling The Commission has approved the actual Transmission Charges and MSLDC Charges paid by TPC-D for the purpose of provisional Truing up for FY as shown in the following Table: Table 6-15: Transmission Charges and MSLDC Charges for FY as provisionally approved by the Commission (Rs. Crore) Particulars MYT MTR Petition Approved in this Transmission Charges SLDC Charges Stand-by Charges TPC-D's Submission TPC-D submitted that it has paid the Standby Charges of Rs (Rs Crore Standby Charges & Rs 2 Crore towards actual energy drawl) during FY Commission s Analysis and Ruling For the purpose of the provisional truing up for FY , the Commission approves the actual Standby Charges paid by TPC-D. Accordingly, the Commission provisionally approves the Standby Charges of Rs Crore for FY Page 192 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

193 6.4.7 Total Power Purchase Cost Based on the above, the summary of the provisionally approved and actual Power Purchase Cost of TPC-D for FY is provided in the Table below: 6-16: Total Power Purchase Cost for FY as provisionally approved by the Commission MYT MTR Petition Approved in this Source Quantum (MU) Cost (Rs. Crore) Rate (Rs./kWh) Quantum (MU) Cost (Rs. Crore) Rate (Rs./kWh) Quantum (MU) Cost (Rs. Crore) Rate (Rs./kWh) TPC-G 3, , , , , , RE Purchase REC Purchase Short Term Purchase 1, Outside Licence Area Sale (342.55) (157.66) 4.60 (342.55) (157.66) 4.60 Imbalance pool purchase Standby Charges Sub-total 5, , , , , , Transmission Charges MSLDC Charges Total Power Purchase cost 5, , , , , , Case No. 69 of 2018 Mid Term Review for TPC-D Page 193 of 387

194 6.5 OPERATION AND MAINTENANCE EXPENSES TPC-D's Submission TPC-D submitted that it has considered the O & M expenses based on the MYT Regulations (First Amendment), Accordingly, TPC-D has computed the escalation factor based on last five years WPI & CPI index as shown in the following Table: CPI Table 6-17: Escalation Rate for FY as submitted by TPC-D Average Index Annual Inflation (%) FY % FY % FY % FY % FY % WPI Average Annual Index Inflation (%) FY % FY % FY % FY (2.49%) FY % 5 Yr Avg. Inflation (%) Weighta ge (%) 7.24% 70% 5 Yr Avg. Inflation (%) Weighta ge (%) 3.31% 30% Escalation Factor (%) Efficiency Factor (%) 6.06% 1% 5.06% Net Escalation Factor (%) Based on the above escalation factor, TPC-D submitted the Normative O&M expenses for Wires and Supply Business for FY as shown in the following Table: Table 6-18:Estimated O&M Expenses for Wires and Supply Business for FY as Particulars submitted by TPC-D (Rs. Crore) Notation Wire Business Supply Business Base O & M Expenses (Net Entitlement for FY ) Escalation Factor % 5.06% Normative O&M Expenses FY =1*(1+2) FY =3*(1+2) Commission s Analysis and Ruling For the provisional truing up of FY , the Commission has escalated the trued up Normative O&M Expenses for FY as approved in this, by the Escalation Factor of 5.06%, as per MYT Regulations, 2015, to arrive at the Normative O&M Expenses for FY Accordingly, the Commission has approved the O&M Expenses as shown in the Table below: Page 194 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

195 Table 6-19: O&M Expenses for FY as approved by the Commission (Rs. Crore) Particulars MYT MTR Petition Approved in this Wires Business Supply Business Total As only provisional true-up has been done, the sharing of efficiency gains and losses have not been computed and the same will be considered at the time of final true-up. 6.6 CAPITALISATION AND MEANS OF FINANCE TPC-D's Submission TPC-D submitted actual capitalisation for FY for Wires Business and Supply Business as Rs Crore and Rs Crore respectively as against approved capitalisation of Rs Crore and Rs Crore respectively. TPC-D submitted the details of Capitalisation as shown in the following Table: Table 6-20: Provisional Actual Capital Expenditure & Capitalisation for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars Capital Capital Capitalisation Expenditure Expenditure Capitalisation MYT Non-DPR Schemes DPR Cases Non-DPR/DPR Ratio 12.89% 4.58% Total Commission s Analysis and Ruling In earlier Chapter on Truing up for FY , the Commission has discussed prudence of capitalisation submitted by TPC-D. The Commission notes that TPC-D submitted the actual capitalisation of Crore for Wires Business and Rs Crore for Supply Business for FY The Commission has undertaken prudence check of the DPR schemes submitted against the actual capitalisation and approved the capitalisation of Rs Crore for Wires Business. Further, the Commission has considered the amount of Rs Crore towards Non-DPR schemes for Wires Business, which is well within the limit of 20%. For the Supply Business, the Commission has considered the capitalisation as submitted by TPC-D, after prudence check. Case No. 69 of 2018 Mid Term Review for TPC-D Page 195 of 387

196 Further, as regards the financing of capitalisation, the Commission has considered the normative debt:equity ratio of 70:30 as per MYT Regulations, The capitalisation and means of finance provisionally approved by the Commission for FY is shown in the following Table: Table 6-21: Capitalisation for FY as approved by the Commission (Rs. Crore) Wires Business Supply Business Particulars Approved Approved MYT MTR MYT MTR in this in this Petition Petition Capitalisation Financing of Capitalisation Consumer Contribution Equity Debt Total DEPRECIATION TPC-D's Submission TPC-D submitted that it has considered the Depreciation rate for FY same as Depreciation rate worked out for FY TPC-D has considered the opening GFA for FY same as closing GFA for FY TPC-D submitted the Depreciation for FY is as given in the Table below: Table 6-22: Estimated Depreciation for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening GFA for the year Addition of GFA during the year Retirement of GFA during the year Closing GFA for the year Depreciation % Depreciation on average of Opening and Closing GFA Commission s Analysis and Ruling 5.05% 5.20% 4.78% 6.33% The Commission has computed the Depreciation as per Regulation 27 of the MYT Regulations, The Commission has considered closing balance of GFA approved for Page 196 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

197 FY in this as opening balance for FY The addition of GFA has been considered equal to the capitalisation approved in earlier Section of this. Since, the actual asset head wise details of Gross Fixed Assets and Depreciation is not available now, the Commission has considered the average depreciation rate same as approved for truing up for FY The Commission has approved the depreciation after provisional truing up for FY as shown in the following Table: Table 6-23: Depreciation for FY as approved by the Commission (Rs. Crore) Wires Business Supply Business Approved in Approved Particulars MYT MTR MYT MTR this in this Petition Petition Opening GFA , Addition of GFA Retirement of GFA Closing GFA , Wt. Avg. Depreciation 5.05% 5.20% 5.07% 4.78% 6.33% 6.28% Rate (%) Depreciation INTEREST ON LONG TERM LOAN TPC-D's Submission TPC-D submitted that it has considered the closing balance of loan for FY as the opening balance of loan for FY The repayment during the year has been considered equal to Depreciation for FY TPC-D has considered the interest rate for FY at the same level as FY for the Wires Business and Supply Business, i.e., 10.10% and 10.09%, respectively, as per MYT Regulations The interest on long-term loans for the Wires and the Supply Business is shown in the Table below: Table 6-24: Interest on Long-Term Loan for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening Net Normative loan Addition of normative loan during the year Repayment of normative loan during the year Case No. 69 of 2018 Mid Term Review for TPC-D Page 197 of 387

198 Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Closing Net Normative loan Interest Rate (%) 10.83% 10.10% 10.58% 10.09% Interest on Loan Capital Commission s Analysis and Ruling The Commission has considered the closing balance of net normative loan approved for FY in this as the opening balance of net normative loan for FY For assets capitalised in FY , the Commission has considered 70% of the additional asset value as normative debt, in accordance with the MYT Regulations, The repayment of loan has been considered as equal to the Depreciation approved in this after provisional truing up. As sought by the Commission, TPC-D submitted the documentary evidence for the actual interest rate for all actual outstanding loans as on 1 April, Based on this, the Commission has accepted the submission for provisional truing up and considered the rate of interest for Wire Business and Supply Business as submitted by TPC-D. Accordingly, the Commission has approved interest on loan capital for FY as given in the following Table: Table 6-25: Interest on Loan Capital for FY as approved by the Commission (Rs. Particulars Wires Business Crore) MYT MTR Petition Approved in this Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.83% 10.10% 10.10% Interest on Loan Capital Supply Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Page 198 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

199 Particulars MYT MTR Petition Approved in this Interest Rate (%) 10.58% 10.09% 10.09% Interest on Loan Capital RETURN ON EQUITY TPC-D's Submission TPC-D submitted that it has computed RoE in accordance with the MYT Regulations, The closing regulated equity for FY as submitted for truing-up has been taken as the opening regulated equity for FY The rate of RoE is taken as 15.50% for the Wires Business and 17.50% for the Supply Business. The RoE for the Wires and the Supply Business for FY is shown in the Tables below: Sr. No. Table 6-26: ROE for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Wires Business 1 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized Regulatory Equity at the end of the year Rate of Return 15.50% 15.50% 6 Total Return on Equity Supply Business 7 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized Regulatory Equity at the end of the year Rate of Return 17.50% 17.50% 12 Total Return on Equity Commission s Analysis and Ruling The Commission has computed RoE for FY in accordance with Regulation 28 of MYT Regulations, The Commission has considered the closing equity of FY as approved in the final true up in this, as the opening equity for FY Additional equity has been approved as 30% of the approved Capitalisation in FY , after deducting the Consumer Contribution. The rate of Return on Equity has been taken as 15.50% for Wires Business and 17.50% for Supply Business, in accordance with Regulation Case No. 69 of 2018 Mid Term Review for TPC-D Page 199 of 387

200 26 of MYT Regulations, The RoE approved by the Commission for Wires Business and Supply Business for FY is as shown in the Tables below: Table 6-27: Return on Equity for Wires & Supply Business for FY as approved by the Sr. No. Particulars Commission (Rs. Crore) MYT MTR Petition Approved in this Wires Business 1 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized Regulatory Equity at the end of the year Rate of Return 15.50% 15.50% 15.50% 6 Total Return on Equity Supply Business 7 Regulatory Equity at the beginning of the year Addition of equity during the year Less: Equity Portion of the asset decapitalized Regulatory Equity at the end of the year Rate of Return 17.50% 17.50% 17.50% 12 Total Return on Equity INTEREST ON WORKING CAPITAL TPC-D's Submission TPC-D has computed Interest on Working Capital (IoWC) based on the elements specified in the MYT Regulations, 2015 for Distribution Wires and Supply Business. TPC-D has subtracted power purchase from TPC-G (including RE sources) to arrive at Normative Working Capital requirement. TPC-D further submitted that it has considered the rate of Interest on Working Capital equal to SBI MCLR rate which is 9.49% in accordance with MYT Regulations (First Amendment), The IoWC for FY for Wires Business and Supply Business is given in the Table below: Table 6-28: Interest on Working Capital for FY as submitted by TPC-D (Rs. Crore) Particulars Wires Supply Business Business Total MYT O&M Expenses for one month Maintenance spares at 1% of opening GFA Page 200 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

201 Particulars Wires Business Supply Business Total One and half months of the expected Revenue at prevailing Tariffs Less: Amount of Security Deposit One Month Equivalent of Cost of Power (excluding cost of purchase from TPC-G) Total Working Capital requirement Rate of Interest (% p.a) 9.49% 9.49% 9.49% Interest on Working capital Commission s Analysis and Ruling The Commission has approved the IoWC for FY in accordance with Regulations 31.3 and 31.4 of MYT Regulations, The Commission has considered the applicable rate of IoWC as 10.20%, which is the weighted average MCLR rate as declared by State Bank of India during FY plus 150 basis points. Accordingly, IoWC approved by the Commission is given in the Tables below: Table 6-29: Interest on Working Capital for FY as approved by the Commission (Rs. Particulars Crore) MYT MTR Petition Approved in this Wires Business O&M Expenses for one month Maintenance spares at 1% of opening GFA One and half months of the expected Revenue at prevailing Tariffs Total Working Capital Rate of Interest (%) 10.80% 9.49% 10.20% Interest on Working Capital Supply Business O&M Expenses for one month Maintenance spares at 1% of opening GFA One and half months of the expected Revenue at prevailing Tariffs Less: Amount of Security Deposit from supply consumers Less: One-month equivalent of cost of power purchased other than TPC-G Total Working Capital Case No. 69 of 2018 Mid Term Review for TPC-D Page 201 of 387

202 Particulars MYT MTR Approved in Petition this Rate of Interest (%) 10.80% 9.49% 10.20% Interest on Working Capital INTEREST ON CONSUMER SECURITY DEPOSIT TPC-D's Submission TPC-D submitted the Interest on Consumer Security deposit as Rs Crore, same as submitted for FY Commission s Analysis and Ruling The Commission has computed the Interest on CSD by applying the applicable rate of 10.20%, which is the weighted average MCLR rate as declared by State Bank of India during FY plus 150 basis points, on CSD amount. Accordingly, the Commission approves Interest on CSD as Rs Crore for FY for the purpose of provisional Truing up PROVISION FOR BAD AND DOUBTFUL DEBTS TPC-D's Submission TPC-D submitted that has not considered any provision towards Bad and Doubtful Debts for FY in accordance with the MYT. Commission s Analysis and Ruling For the purpose of provisional truing up, the Commission has not considered any provision for bad and doubtful debts for FY , as proposed by TPC-D CONTRIBUTION TO CONTINGENCY RESERVE TPC-D's Submission The Contribution to Contingency Reserves for Wires Business and Supply Business has been worked out considering as Regulation 34.1 of MYT Regulations, Accordingly, TPC-D submitted Contribution to Contingency Reserves for FY as under: Page 202 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

203 Table 6-30: Estimated Contribution to Contingency Reserve for Wires Business for FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Opening GFA % of Contribution to Contingency Reserves 0.25% 0.25% Contribution to Contingency Reserves Commission s Analysis and Ruling Regulation 34 of the MYT Regulations, 2015 specifies that the provision for Contingency Reserves for a year shall be between 0.25% and 0.5% of the original cost of fixed assets. In MYT, the Commission had considered a provision of 0.25%. For the purpose of provisional truing up for FY , the Commission has approved the Contribution to Contingency Reserves for Wires and Supply Business for FY at 0.25% of their respective Opening GFAs, as shown in the Table below: Table 6-31: Contribution to Contingency Reserves for FY for Wires Business and Particulars Supply Business as approved by the Commission (Rs. Crore) MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petitio n Approved in this Opening Balance of GFA , % Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Contribution to Contingency Reserve INCOME TAX TPC-D's Submission TPC-D submitted that the Commission in its data gap response raised the query regarding actual tax computation for FY TPC-D considering the actual data available (unaudited) has presented the estimated Income Tax for FY as given in the table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 203 of 387

204 Table 6-32:Estimated Income Tax for FY as submitted by TPC-D (Rs. Crore) MTR Petition Sr. Particulars Wires Supply No. Business Business 1 Total Revenue A Less: Incentive and efficiency gains B Total Expenses C Profit Before Tax D = A - B - C Tax Adjustment Add 6 Depreciation considered in Expenses E Other disallowance while computing IT F Total Tax Disallowances G = E + F Less 9 Tax Depreciation H Other expenses allowed for computing I Income Tax 5.50 (0.73) 11 Deduction - U/s 80 IA J Total Tax Allowances K = H + I + J (0.73) 13 Total Taxable Income L = D + G - K (8.72) Carry forward losses of previous years M (165.19) Total taxable income after considering N = L + M business loss of previous year (173.92) Corporate Tax Rate O 34.61% 34.61% 17 Tax Payable at Normal rate (Corporate P = N*O Tax Rate) (60.19) MAT Computation 19 Profit Before Tax Q Add: Disallowances under Income Tax (U/s 14A, Provision for doubtful debt) 21 Disallowance U/s 14A R 22 Provision for doubtful debts T Provision for diminution in share value U Total Disallowances under Income Tax (U/s 14 A, provision for doubtful debt) Less: Deduction under Income Tax (Exempt Income, FBT, Wealth Tax, Withdrawal from Income) Page 204 of 387 W = R + S + T + U + V Book Profit Y = Q + W - X MAT Rate Z 21.34% 21.34% 28 Tax payable under MAT AA = Y*Z Mat Credit Applicable MAT Normal 30 Tax applicable AB = max(p,aa) Income Tax (MYT ) TPC-D submitted that it has provisionally considered Income Tax equal to the actual Income Tax computed for the year FY in accordance to MYT Regulations, 2015, as shown in the Table below: Table 6-33: Income Tax for the Period FY as submitted by TPC-D Wires Business Supply Business Particulars MYT MTR Petition MYT MTR Petition Income Tax X Case No. 69 of 2018 Mid Term Review for TPC-D

205 Commission s Analysis and Ruling The Commission asked TPC-D to submit Copies of challan of actual advance income tax paid for FY till date, and the computations for the same, for the Company as a whole. TPC-D submitted that it has paid total advance tax of Rs 163 Crore in FY for which TPC-D has provided the details and documentary evidence. Regulation 33.1 of MYT Regulations, 2015 specifies as follows: 33.1 The Commission, in its MYT, shall provisionally approve Income Tax payable for each year of the Control Period based on the actual Income Tax paid by the Generating Company or Licensee or MSLDC, in case the Generating Company or Licensee or MSLDC has not engaged in any other regulated or unregulated Business or Other Business, as allowed by the Commission relating to the electricity Business regulated by the Commission, as per latest available Audited Accounts, subject to prudence check : Provided also that the Income Tax shall be computed for the Generating Company as a whole, and not Unit-wise/Station-wise. For FY , the Commission has considered the same Income Tax as approved for FY , in accordance with the MYT Regulations, Accordingly, the Commission has approved the Income Tax for FY as shown in the Table below: Table 6-34: Income Tax for FY as approved by the Commission (Rs. Crore) Particulars MYT Wires Business MTR Petition Approved in this MYT Supply Business MTR Petition Approved in this Income Tax NON-TARIFF INCOME TPC-D's Submission TPC-D has estimated the Non-Tariff Income for FY for Wires and Supply Business at the same level as approved in the MYT, i.e., Rs Crore for Wires Business and Rs Crore for Supply Business. Commission s Analysis and Ruling The Commission provisionally approves the Non-tariff Income for FY same as approved for FY after truing up, as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 205 of 387

206 Table 6-35: Non-Tariff Income for FY as approved by the Commission (Rs. Crore) Wires Business Supply Business Particular MYT MTR Petition Approved in this MYT MTR Petition Approved in this Non-Tariff Income DEMAND SIDE MANAGEMENT EXPENSES TPC-D's Submission TPC-D submitted the DSM Expenses of Rs Crore including the Staff Cost for FY However, the Commission in its MYT tariff in Case 47 of 2016 has considered DSM expenditure towards scheme value only. TPC-D has considered Scheme Cost of Rs 1.44 Crore towards DSM schemes for provisional truing up. Table 6-36: Estimated DSM Expenditure for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Total Scheme Cost Staff Cost DSM Expenses Commission s Analysis and Ruling The Commission has approved DSM expenses towards Schemes only and has not considered staff cost, in line with the approach adopted in the MYT, which is subjudice before ATE. Accordingly, DSM expenses provisionally approved by the Commission is shown in the following Table: Table 6-37: DSM Expenses for FY as approved by the Commission (Rs. crore) Particulars MYT MTR Petition Approved in this DSM expenses CHARGES PAYABLE TO RINFRA-D TPC-D's Submission TPC-D submitted that it is collecting and paying Wheeling Charges, RAC and CSS to RInfra-D as approved in the MYT. These have not been considered in the computation of ARR as they are only being collected by TPC-D from change-over consumers and paid to RInfra-D. Page 206 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

207 Commission s Analysis and Ruling The Commission has not considered charges payable to RInfra-D as part of ARR as well as revenue for TPC-D AGGREGATE REVENUE REQUIREMENT FOR FY The approved ARR for the Wires Business for FY is shown in the following Table: Table 6-38: ARR for Wires Business for FY as approved by the Commission (Rs. Crore) Sr. No. Particulars MYT MTR Approved in Petition this 1 Operation & Maintenance Expenses Depreciation Interest on Long-Term Loan Capital Interest on Working Capital Provision for bad and doubtful debts Contribution to contingency reserves Income Tax Total Revenue Expenditure Add: Return on Equity Capital Aggregate Revenue Requirement Less: Non-Tariff Income Add: Revenue Gap/(Surplus) of previous years (19) (19.10) 13 Aggregate Revenue Requirement from Distribution Wires The main reasons for the difference between the Wires ARR claimed by TPC-D and that approved in this for FY are: 1. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY , FY , FY and FY and after due prudence check by the Commission. 2. O&M expenses are approved based on revised base expenses and escalation factor as per first amendment of MYT Regulations, Higher Income Tax has been allowed, as the Income Tax has been computed on combined basis and allocated to Wires Business and Supply Business. 4. Non-Tariff Income has been considered lower, in line with the actual Non-Tariff Income of FY , whereas TPC-D has considered same levels as approved in the MYT. Case No. 69 of 2018 Mid Term Review for TPC-D Page 207 of 387

208 The approved ARR for the Supply Business for FY is shown in the following Table: Table 6-39: ARR for Supply Business for FY as approved by the Commission (Rs. Sr. No. Particulars Crore) MYT MTR Petition Approved in this 1 Power Purchase Expenses including Standby Charges , Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Interest on Consumer Security Deposit Provision for bad and doubtful debts Contribution to contingency reserves Intra-State Transmission Charges MSLDC Fees & Charges Income Tax DSM Expenses Total Revenue Expenditure , Add: Return on Equity Capital Aggregate Revenue Requirement , Less: Non-Tariff Income Less: Income from OA consumers Aggregate Revenue Requirement from Retail Supply , The main reasons for the difference between the Supply ARR claimed by TPC-D and that approved in this for FY are: 1. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY , FY , FY and FY , and after due prudence check by the Commission. 2. O&M expenses are approved based on revised base expenses and escalation factor as per first amendment of MYT Regulations, Lower Income Tax has been allowed, as the Income Tax has been computed on combined basis and allocated to Wires Business and Supply Business. 4. Non-Tariff Income has been considered lower, in line with the actual Non-Tariff Income of FY , whereas TPC-D has considered same levels as approved in the MYT. Page 208 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

209 The combined ARR for the Wires Business and Supply Businesses for FY is given in the Table below: Sr. No. Table 6-40: ARR for Wires and Supply Business for FY as approved by the Particulars Commission (Rs. Crore) MYT MTR Petition Approved in this 1 Power Purchase Expenses (including Standby Charges) , Operation & Maintenance Expenses Depreciation Interest on Long-term Loan Capital Interest on Working Capital Interest on Security Deposit Provisioning for Bad & Doubtful Debts DSM Expenses Income Tax Intra-State Transmission Charges MSLDC Fees & Charges Contribution to Contingency Reserves Total Revenue Expenditure , Add: Return on Equity Capital Aggregate Revenue Requirement , Less: Non-Tariff Income Less: Income from OA Consumers Add: Revenue Gap/(Surplus) of previous Years (19.10) (19.10) 17 Aggregate Revenue Requirement , REVENUE FOR FY TPC-D's Submission The actual revenue (Un-audited) for FY as submitted by TPC-D is shown in the Table below: Table 6-41: Total Revenue for FY as submitted by TPC-D (Rs. Crore) Particulars Total Revenue Supply Business Revenue Wheeling Charges from Direct and OA Consumers Revenue RAC Revenue from Open Access Consumers Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 209 of 387

210 TPC-D submitted that it has adjusted RAC recovery against the total past recovery allowed by the Commission in the MYT Tariff while the revenue recovered from OA consumers (without revenue recovered towards Transmission Charges to the tune of Rs Crore) is adjusted against supply ARR. Commission s Analysis and Ruling For the purpose of the provisional truing up, the Commission has approved the revenue of Rs Crore, as submitted by TPC-D REVENUE (GAP) / SURPLUS TPC-D's Submission Based on the above submissions, the Revenue (Gap) / Surplus of TPC-D for FY for the Wires Business and Supply Business is shown in the Tables below: Table 6-42: Revenue Gap/(Surplus) for Wires Business FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Difference Net ARR Revenue Revenue Gap/(Surplus) (177.61) Table 6-43: Revenue Gap/(Surplus) for Supply Business FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Difference Net ARR (547.78) Revenue (748.74) Revenue Gap/(Surplus) (20.64) Table 6-44: Revenue Gap/(Surplus) for Wire & Supply Business FY as submitted by TPC-D Particulars MYT MTR Petition Difference Net ARR (492.50) Revenue (515.85) Revenue Gap/(Surplus) TPC-D submitted that the Revenue Gap of Rs Crore for Wires Business and Rs Crore for Supply Business, which comes to combined Revenue Gap of Rs Crore for Distribution Business. Page 210 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

211 Commission s Analysis and Ruling Considering the approved components of ARR and Revenue for FY , the Commission has approved the Revenue Gap/(Surplus) for FY as shown in the Tables below: Table 6-45: Revenue Gap/(Surplus) for Wires Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No Petition this 1 Net Aggregate Revenue Requirement Revenue from Wheeling Charges Revenue Gap/ (Surplus) Table 6-46: Revenue Gap/(Surplus) for Supply Business for FY as approved by the Commission (Rs. Crore) Sr. MYT MTR Approved in Particulars No Petition this 1 Net Aggregate Revenue Requirement , Revenue from Wheeling Charges Revenue Gap/ (Surplus) (20.64) Table 6-47: Combined Revenue Gap/(Surplus) for FY as approved by the Commission Sr. No Particulars (Rs Crore) MYT MTR Petition Approved in this 1 Total ARR for Wires Business and , Supply Business 2 Total Revenue , Gap/ (Surplus) Hence, the Commission has approved a Revenue Gap of Rs crore for the Wires Business and a Revenue Gap of Rs crore for the Supply Business for FY , resulting in a total Revenue Gap of Rs crore. The treatment of the above Revenue Gap/(Surplus) is discussed along with the treatment of Cumulative Revenue Gap/(Surplus), in Chapter 8 of this. Further, the accounting of RAC approved vis-à-vis RAC recovered through tariff has been done separately in Chapter 8 of this. Case No. 69 of 2018 Mid Term Review for TPC-D Page 211 of 387

212 7 REVISED ARR FOR FY AND FY BACKGROUND In accordance with Regulation 8.2 of the MYT Regulations, 2015, TPC-D has submitted the revised estimated ARR, revenue from sale of power at existing Tariffs and charges, and the projected Revenue Gap/(Surplus) for FY and FY The Commission has discussed the various elements of the Revised ARR for FY and FY in the subsequent paragraphs. 7.2 SALES TPC-D's Submission The licence area of TPC-D spreads across MCGM area (except for a few Wards) and the Mira-Bhayander Municipal Corporation (MBMC) area, according to the Distribution Licence granted on August 14, TPC-D s sales comprises Direct Sales (on the wires of TPC-D) and Change-over Sales (on the wires of the other Distribution Licensee, RInfra- D). TPC-D submitted the methodology for projection of sales for FY and FY as under: Direct Sales Projection The Commission in MYT has considered different CAGR for different categories of consumers. However, TPC-D has observed reduction in energy sales compared to the approved sales for FY and FY , as shown in the following Table: Table 7-1: Variance of actual sales vis-à-vis approved sales as submitted by TPC-D (MU) Year MYT MTR Petition Direct Changeover Total Direct Changeover Total FY FY TPC-D has considered the CAGR based on past trends and latest data up to FY The reverse migration of consumers and OA sales have been factored in while estimating the sales of TPC-D for FY and FY : (a) TPC-D has experienced significant reduction in the sales, because of outflow of consumers on OA and Railways. Further, the Commission has introduced certain new categories and hence, the CAGR of particular category is changing drastically from 5.2 % to 2.8% for different years. TPC-D has estimated sales by considering CAGR of 2% for HT categories. Page 212 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

213 (b) OA sales: TPC-D has considered that OA sales will reduce by 25% in comparison with the current levels. Accordingly, 25% OA sales has been added in the HT category while arriving at the HT sales. (c) HT Group Housing Society: TPC-D has observed steep increase in sale of HT Group Housing Society and an additional sale of 2 MU have been considered in this category. (d) HT Railways: TPC-D has assumed that there will not be any significant change in Railways consumption. Hence, Railways consumption is estimated equal to 70 MU for FY and FY TPC-D has assumed that sale for Metro and Mono Rail will be 9 MU for FY and 10 MU for FY (e) HT Temporary Supply: TPC-D has considered 62 MU sales for FY and 76 MU for FY under Temporary Supply Category. (f) LT Residential Sale: TPC-D submitted that CAGR for this category is in the range of 18% to 20% for various years from FY to FY TPC- D expects higher growth in this category based on the upcoming projects in this category. Hence, TPC- D has considered a higher CAGR of 24% for the future period. (g) LT Commercial Sale: TPC-D estimated the sales from LT II (a) and LT II (b) categories, by considering a CAGR of 14.9% and 16.1%, respectively, derived based on the sales from FY to FY Further, a CAGR of 7.3% has been considered for LT II (c) category based on sales from FY to FY TPC-D estimated that there will be an additional requirement of about 20 MU during FY (h) LT Industrial and Public Category: TPC-D has considered the CAGR of 5% for LT Industrial and LT Public Service categories. This CAGR has been computed after combining the sales under sub-categories of Industrial and Public Service for FY to FY Also, TPC-D has considered the addition of 12 MU and 23 MU in sales for LT Industrial (above >20 KW) category. (i) LT Temporary Supply and LT Advertisement & Hoardings, incl. floodlights & neon signs: TPC-D has estimated sales for these categories based on the present consumption of these categories. Change-over Sales Projection TPC-D has adopted the following methodology for arriving at the projected sales for change-over consumers as under: (a) As regards HT categories, TPC-D estimated that change-over Sales will remain approximately the same, with no new HT change-over consumers being added. Hence, TPC-D has not considered any significant increase in change-over sales for HT categories. Case No. 69 of 2018 Mid Term Review for TPC-D Page 213 of 387

214 (b) Further, TPC-D observed very less growth in the change-over sales for Residential category (YoY growth <1%), because of reverse change-over of high end residential consumers back to RInfra-D. Hence, TPC-D has not considered any significant change for LT Residential category. (c) TPC-D submitted that there is significant decrease in change-over sales for Commercial and Industrial category because of reverse change-over to R-Infra-D from FY Hence, TPC-D has considered negative CAGR for these categories based on the sales data from FY to FY Open Access Sales projection TPC-D has considered 75% of OA sales as of FY to be continued in the future period as shown in the Table below: Table 7-2: OA Sale for FY to FY as submitted by TPC-D (MU) Sr. No. Consumer Category FY FY HT I- Industry HT II- Commercial HT III -Group Housing HT VI (B)- Public Services Others Total TPC-D has projected Direct Sales and Change-over Sales for FY and FY as shown in the following Table: Page 214 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

215 Table 7-3 : Projected Sales for FY and FY as submitted by TPC-D (MU) Consumer Category Direct Change-over Total FY FY FY FY FY FY LT Category LT I - Residential (BPL) LT I - Residential and above LT II - LT Commercial LT II(A) - Commercial up to 20 kw LT II(B) - Commercial 20 to 50 kw LT II(C) - Commercial > 50 kw LT III - LT Industry LT III - Industrial up to 20 kw LT IV - Industrial > 20 kw LT IV: Public Water Works and sewage Treatment Plants LT V - Advertisement & Hoardings LT VI - Streetlights LT VII Temporary Supply LT VII(A) - Temporary Religious LT VII(B) - Temporary Others LT VIII - Crematoriums & Burial Grounds LT IX Public Services LT IX(A) Public Service Govt. Hospitals & Educational Institution LT IX(B) - Public Services- Others LT X Agriculture LT X (A): Agriculture -Pump sets Case No. 69 of 2018 Mid Term Review for TPC-D Page 215 of 387

216 Consumer Category Direct Change-over Total FY FY FY FY FY FY LT X (B): Agriculture-Others Sub-total HT Category HT I Industry HT II Commercial HT III - Group Housing Society HT IV - PWW & Sewage Treatment Plants HT V - Railways, Metro & Monorail /33 KV KV HT V(B) - Railways Metro & Monorail HT VI Public Services HT VI(A) Public Service - Govt Hospital & Edu. Inst HT VI(B) - Public Services Others HT VII - Temporary Supply Sub-total Total Page 216 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

217 Commission s Analysis and Ruling For projecting the energy sales for the Control Period in the MYT, the Commission had adopted a holistic approach as it is difficult to establish any trend in the growth rates for specific consumer categories due to migration and reverse migration of consumers in some categories from RInfra-D to TPC-D and back to RInfra-D over past 2-3 years. The Commission projected total consolidated category-wise sales as the summation of the sales of TPC-D, sales of RInfra-D, the change-over sales and OA consumption. Before projecting the energy sales for FY and FY , it is important to review the actual sales with respect to projections for the first two years of the Control Period. The Commission had projected energy sales for Direct consumers of TPC-D as MU for FY and MU for FY As against this, the actual sales were MU for FY and MU for FY The variation of actual sales from the approved sales is 7% and 9% for the first two years, respectively, which is within 10%. Further, during the first two years of the Control Period, the OA sales have increased from MU in FY to the level of MU in FY for both RInfra-D and TPC-D. This increase is mainly in Industrial, Commercial and Public Service category. For TPC-D, OA sales have increased from 195 MU in FY to 826 MU in FY The major increase has been observed in HT Industry Category from 133 MU in FY to 585 MU in FY Such higher shift to OA consumption was not envisaged at the time of MYT. The methodology adopted by the Commission for sales projections is appropriate given the difficulties in assessing the category-wise trend of sales of RInfra-D and TPC-D on standalone basis. In view of the above, for FY and FY , the Commission has continued with the holistic approach and projected the energy sales accordingly, as elaborated in the following paragraphs: (a) The Commission has analysed the growth trend of the category-wise total energy sales for past period. The Commission has analysed the growth trend of past sales in various segments as RInfra-D Own sales, Changeover Sales, TPC-D Direct sales in RInfra-D s area of supply, TPC-D Direct sales in BEST s area of supply, TPC-D Direct sales because of new Direct consumers in BEST area, TPC-D Direct sales because of new Direct Consumers in RInfra-D s area, Open Access sales on TPC-D s network, and OA sales on RInfra-D s network. (b) The overall trend of growth in consolidated sales gives a realistic picture of categorywise trends, which have been used to project the overall category-wise sales for TPC-D and RInfra-D combined for the area of supply overlapping with RInfra-D. Case No. 69 of 2018 Mid Term Review for TPC-D Page 217 of 387

218 (c) Since, the actual energy sales for FY are available now, the Commission has considered the past sales up to FY for growth trend analysis. The energy sales for FY has been considered as base value for projecting the energy sales for FY and FY (d) CAGR of actual consolidated sales for different periods in the past five years, i.e., FY to FY , has been analysed and an appropriate CAGR has been considered. (e) Direct sales of TPC-D were projected based on past trends as these are not affected by migration or reverse migration and are sales on TPC-D s own distribution network. Further, TPC-D s overall sales have been projected based on past growth trends in different segments, viz., sales in RInfra-D s area of supply, sales in BEST s area of supply, sales because of new Direct consumers in BEST area, sales because of new Direct Consumers in RInfra-D s area and OA sales on TPC-D s network. (f) Different CAGRs have been considered for TPC-D for the areas overlapping with RInfra-D and BEST areas. (g) The sales growth projected by RInfra-D and TPC-D for HT Railways, Metro/Monorail category have been accepted. (h) OA consumption was much higher for FY For the purpose of projection of energy sales, the Commission has considered no change in OA sales during FY and FY Accordingly, growth trend for HT Industry, HT Commercial and HT Public Service Categories have been considered. (i) As regards Temporary category, the Commission has considered the sales based on the past trends, and not accepted the more than 3 times increase proposed by TPC-D. (j) For LT Public Water Works and HT Public Water Works categories, the Commission has considered the CAGR of Commercial category, as the Public Water Works categories were carved out of the respective Commercial categories in the MYT. (k) Comparison of the revised tariffs approved by the Commission shows that there is a benefit to RInfra-D consumers in the units slab in case they change-over to TPC- D. However, the Commission has not considered any additional change-over sales on account of change-over of residential category consumers in the units slab since it is difficult to anticipate the extent of consumers shifting considering the difference in tariffs. The impact, if any, on this account shall be addressed at the time of truing up. (l) The category-wise CAGR considered for projecting the revised energy sales for FY and FY , is shown in the following Table: Page 218 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

219 Table 7-4: Category-wise CAGR considered for projection of Energy Sales Consumer Category CAGR Considered for Consolidated Sales TPC-D Direct Sales CAGR in RInfra-D area TPC-D Direct Sales CAGR in BEST area LT I- Below Poverty Line 0.00% 0.00% 0.00% LT-I Residential 3.22% 17.80% 19.33% LT II (A) kw 3.32% 17.67% 7.79% LT II (B) - >20-50 kw 3.72% 17.03% 6.48% LT II (C) - above 50 kw 1.18% 4.94% 14.08% LT III (a)- LT Industry up to 20 kw 0.99% 0.00% 0.19% LT III (b) - LT Industry above 20 kw 0.62% 6.07% 9.44% LT IV Public Water Works 2.76% 0.00% 0.00% LT-V- LT- Advertisements and Hoardings 2.78% 15.74% 0.00% LT VI- LT -Street Lights 0.94% 7.26% 0.00% LT-VII (A)- LT -Temporary Supply Religious 3.60% 19.52% 0.00% LT-VII (B)- LT -Temporary Supply Others 0.00% 10.61% 41.37% LT VIII- LT - Crematorium and Burial Grounds 5.55% 0.00% 0.00% LT X- (A) LT -Public Service -Govt. Hospitals and Edu. Inst. 8.77% 12.26% 0.00% LT X- (B) LT -Public Service -Others 25.78% 12.26% 4.77% HT I-HT-Industry 4.02% 0.00% 0.00% HT II - HT- Commercial 0.00% 0.00% 0.00% HT III- HT-Group Housing Society 2.42% 0.00% 0.00% HT IV- HT Public Water Works 0.00% 0.00% 0.00% HT VI - Public Service (A) -Govt % 10.51% 0.00% Hospitals and Edu. Inst. HT VI - Public Service (B) -Others 5.29% 10.51% % HT VII Temporary Supply 9.37% 46.00% 46.97% (m) For estimating the energy sales for TPC-D because of new Direct consumers in BEST (n) (o) (p) area and RInfra-D area, the Commission has considered the average growth of 1% considering the approval of TPC-D s network rollout plan. The change-over sales have been projected, considering the past trend and only for the Residential category, at the CAGR of 1.58% assumed for consolidated energy sales. For grossing up change-over sales, the revised HT and LT Wheeling Losses approved for RInfra-D in this have been considered. The energy sales for RInfra-D have been derived after deducting the TPC-D sales, Changeover Sales and Open Access Sales from the projected consolidated energy sales for FY and FY In view of the above, the category-wise energy sales projected for TPC-D for FY and FY are shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 219 of 387

220 Table 7-5 : Projected Sales for FY & FY as approved by the Commission (MU) Consumer Category FY FY MTR Petition Approved in this MTR Petition Approved in this Direct Changeover Direct Changeover Direct Changeover Direct Changeover LT Category LT I - Residential (BPL) LT I - Residential , , and above LT II - LT Commercial LT II(A) - Commercial up to 20 kw LT II(B) - Commercial 20 to 50 kw LT II(C) - Commercial > 50 kw LT III - Industrial up to 20 kw LT IV - Industrial > 20 kw LT IV: Public Water Works and sewage Treatment Plants LT V - Advertisement & Hoardings LT VI - Streetlights LT VII Temporary Supply LT VII(A) - Temporary Religious LT VII(B) - Temporary Others LT VIII - Crematoriums & Burial Grounds LT IX Public Services LT IX(A) Public Service Govt. Hospitals & Educational Institution LT IX(B) - Public Services- Others LT X Agriculture LT X (A): Agriculture -Pump sets LT X (B): Agriculture-Others Sub-total HT Category HT I Industry , Page 220 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

221 Consumer Category FY FY MTR Petition Approved in this MTR Petition Approved in this Direct Changeover Direct Changeover Direct Changeover Direct Changeover HT II Commercial HT III - Group Housing Society HT IV - PWW & Sewage Treatment Plants HT V (A) Railways, Metro & Monorail 22/33 KV KV HT V(B) - Railways Metro & Monorail HT VI Public Services - 0 HT VI(A) Public Service - Govt Hospital & Edu. Inst HT VI(B) - Public Services Others HT VII - Temporary Supply Sub-total , Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 221 of 387

222 7.3 DISTRIBUTION LOSSES AND ENERGY BALANCE TPC-D's Submission TPC-D has considered the trajectory of distribution losses approved in the MYT for FY and FY , as shown in the Table below: Table 7-6: Distribution Loss for FY and FY as submitted by TPC-D Particulars FY FY Distribution Loss 1.02% 1.02% TPC-D has considered the Transmission Loss as 3.92% as per the InSTS Tariff dated July 22, 2016 in Case No. 91 of TPC-D submitted that energy requirement is after considering the impact of DSM activities and associated initiatives towards reducing the load from the consumer s end. TPC-D has estimated the energy requirement as shown in the following Table: Table 7-7: Energy Input requirement for FY and FY as submitted by TPC-D Particulars FY FY MTR MYT Petition MYT MTR Petition Direct Sales (excluding sales at 110/132 kv level) (MU) 2, , Distribution Loss (%) 1.02% 1.02% 1.02% 1.02% Energy requirement for TPC-D Direct consumers at T<>D interface (MU) 2, , Energy requirement for Change-over consumers (MU) Energy Sales at 110/132 kv level Total Energy requirement at T<>D (MU) 5, , Transmission Loss (%) 3.92% 3.92% 3.92% 3.92% Total Energy requirement at G<>T(MU) 5, , Commission s Analysis and Ruling TPC-D has considered the same level of distribution losses as approved by the Commission in the MYT for FY and FY The Commission notes that the actual Distribution Loss for FY and FY is much lower than approved Distribution Loss. The higher Distribution loss was approved for TPC-D keeping in view the projected addition of LT network during the Control Period. However, the same has not been achieved as envisaged by the Commission. The network rollout plan has now been approved by the Page 222 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

223 Commission and it envisages sufficient LT network development for TPC-D. Hence, the Commission has decided to retain the approved Distribution Loss trajectory during the Control Period. Further, as regards impact of the Commission s in Case No. 182 of 2014 regarding approval of network rollout plan for TPC-D, the Commission will take a considered view at the time of true up of FY and FY Accordingly, the Commission has approved Distribution Loss trajectory for FY and FY as shown in the following Table: Table 7-8:Distribution Loss for FY and FY as approved by the Commission FY FY Particulars MYT MTR Petition Approved in this MYT MTR Petition Approved in this Distribution Loss 1.02% 1.02% 1.02% 1.02% 1.02% 1.02% Further, for computing the energy requirement at G<> T interface, the Commission has considered intra-state Transmission Loss of 3.30%, as approved in the InSTS MTR dated 12 September, 2018 in Case No. 265 of The Energy Balance approved by the Commission for FY and FY is shown in the following Table: Table 7-9: Energy Input requirement for FY and FY as approved by the Particulars MYT Commission FY FY Approve MTR MYT MTR d in this Petition Petition Approve d in this Direct Sales (excluding sales at 110/132 kv level) (MU) 2, , Distribution Loss (%) 1.02% 1.02% 1.02% 1.02% 1.02% 1.02% Energy requirement for TPC-D Direct consumers at T<>D interface (MU) 2, , Energy requirement for Changeover consumers (MU) Energy Sales at 110/132 kv level Total Energy requirement at T<>D (MU) 5, , Transmission Loss (%) 3.92% 3.92% 3.30% 3.92% 3.92% 3.30% Total Energy requirement at G<>T(MU) 5, , Case No. 69 of 2018 Mid Term Review for TPC-D Page 223 of 387

224 7.4 POWER PURCHASE QUANTUM AND COST TPC-D's Submission Procurement from TPC-G TPC-D submitted that its existing contract with TPC-G expired on 31 March, The Commission vide dated March 27, 2018 in Case No. 39 of 2017 approved an interim Power Purchase Arrangement between TPC-G and TPC-D for procurement of 672 MW during FY The allocation from TPC-G for FY is as given in the Table below: Table 7-10: Approved Power Purchase Arrangement with TPC-G for FY as submitted by TPC-D Unit Capacity (MW) MTR Petition Percentage Unit % Unit % Unit % Bhira % Bhivpuri % Khopoli % Total The Commission has directed TPC-D to submit the revised Power Procurement Plan for the future period from FY to FY by November 30, The relevant extract of the is given below: The Commission directs TPC-D to submit the revised Power Purchase Arrangement for the period from FY to FY by 30 November, 2018 considering the following aspects for approval of the Commission: Revised Demand Projections based on actual sales and demand till FY and during first half of FY Outcome of competitive bidding by BEST for procurement of 750 MW power through medium-term competitive bidding Year-wise Transmission Capacity available from FY onwards considering the revised status of various transmission schemes. TPC-D submitted that it will submit the revised Power Purchase Plan for the future period from FY to FY under Section 62 of the Act. TPC-D has estimated demand for FY as 850 MW (inclusive of demand of partial OA consumers), which includes around 90 MW of RE power to meet RPO obligations. However, because of uncertainty of tie-up with BEST and transmission constraints, TPC-G has not currently offered Unit 5 to Page 224 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

225 TPC-D till tie-up of BEST is finalised and transmission constraints issues are resolved or settled by STU, MSLDC and the Commission. Based on the proposal received from TPC-G, TPC-D, in the present Petition, proposed to tie up with Units 7, Unit 8 and Hydro units of Bhivpuri and Khopoli. The proposed PPA position is as shown in following Table, with a caveat that TPC-D should have the first right of refusal of any power available with TPC-G for tie up under Section 62, which would be improving the reliability and would make the blended power purchase rate cheaper in future. Table 7-11: Power Purchase Arrangement with TPC-G for FY as submitted by TPC-D Unit Capacity (MW) TPC-D Petition Percentage Unit 5 500* % Unit % Unit % Bhira % Bhivpuri % Khopoli % Total 1377 Note: *constraint and competitiveness of overall blended tariff 577 Further, TPC-D submitted that it will have a shortfall of around MW towards meeting its demand considering seasonal variations and OA demand. TPC-D submitted that it would explore tying up of around 100 MW of balance power requirement from external sources or from Unit 5 of TPC-G, which may be offered under Section 62 of the Act. TPC-D has considered the weighted average rate of Rs 4.32/kWh for balance load requirement of FY Considering the proposed tie up and MTR submission of TPC-G, the estimated Capacity Charges, Net Generation and Variable Charge is as shown in the following Table: Table 7-12: Estimated Capacity Charge of TPC-G for FY and FY as submitted by TPC-D (Rs. Crore) Unit FY FY Total Allocated to TPC-D Total Allocated to TPC-D Unit Unit Unit Bhira Bhivpuri Khopoli Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 225 of 387

226 Table 7-13 : Estimated Energy Charge from TPC-G for FY and FY as submitted Unit Fuel Quantum (MU) by TPC-D FY FY Cost Rate Quantum Rate (Rs. (Rs/kWh) (MU) (Rs./kWh) Crore) Cost (Rs. Crore) Unit 5 Coal Unit 5 Oil Unit 5 Gas Unit 7 APM Unit 8 Coal Bhira Bhivpuri Khopoli Total Table 7-14 : Total Cost of Power Purchase from TPC-G for FY and FY as submitted by TPC-D (Rs. Crore) FY FY Particulars MYT MTR Petition MYT MTR Petition Variable Charges Fixed Charges Total Cost Net Generation (MU) Average rate of Purchase (Rs. /kwh Commission s Analysis and Ruling The Commission notes that TPC-D in its Petition has considered the procurement from TPC- G in the following manner: (a) For FY as per the existing PPA with TPC-G in view of the Commission s dated March 27, 2018 in Case No. 39 of 2017 for extension of existing PPA, with some modifications, till March 31, (b) For FY as per 100% capacity offered by TPC-G from Unit 7, Unit 8, Bhira Hydro Project and Khopoli Hydro Project. Since, the Commission has already extended existing PPA till March 31, 2019, the procurement of TPC-G for FY has been considered accordingly. For approval of power purchase cost for procurement from TPC-G, the Commission has considered the Page 226 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

227 Generation Tariff determined for TPC-G in its MTR dated 12 September, 2018 in Case No. 65 of Further, the Commission notes that TPC-D vide its letter dated CREG/MUM/MERC/2018/190 dated 23 July, 2018 made additional submissions, wherein it has revised the allocated capacity from TPC-G for FY In the said submission, TPC- D submitted as under: (a) In the MTR Petition, the power purchase cost has been considered based on proposal from TPC-G in anticipation that BEST will purchase power under Case 1 Bidding. (b) However, BEST in its MTR Petition in Case No. 203 of 2017 has considered to continue the existing tie-up with TPC-G for FY and FY BEST has considered the same allocation from TPC-G for FY based on the PPA extension for FY as approved by the Commission in Case No. 25 of BEST has considered the Unit-wise Variable and Fixed Charges as approved in the MYT of TPC-G (Case No. 32 of 2016). (c) In view of the above, TPC-D also proposed to continue the existing tie up of FY for FY considering the same proportion of tie-up of all Units of TPC-G as approved by the Commission in Case No. 39 of 2017, i.e., Thermal Generation Units: 5, 7, & 8 and Hydro Units: Bhira, Bhivpuri and Khopoli at 48.83% capacity allocation from each Unit as approved by the Commission for FY (d) Considering the fact that TPC-G has not proposed the tariff determination for some of its Units in FY , TPC-D proposed to consider the same tariff as proposed by TPC-G for its various tied up Units for FY to be continued for FY for the purpose of MTR in order to maintain uniformity in approach with BEST. Based on the above submission, TPC-D submitted the revised power purchase cost for FY as shown in the following Table: Table 7-15 : Revised Power Purchase Cost from TPC-G for FY as submitted by TPC-D Unit Share for TPC-D (%) Proposed Generati on Share for TPC-D in Net Generation Share of TPC-D in proposed AFC Rs. Crore Variable Charge Energy Charge s Total Power Purchase Cost Rs. Rs. % MU MU Rs/kWh Crore Crore Unit % Unit % Unit % Bhira 48.83% Bhivpuri 48.83% Case No. 69 of 2018 Mid Term Review for TPC-D Page 227 of 387

228 Unit Share for TPC-D (%) Proposed Generati on Share for TPC-D in Net Generation Share of TPC-D in proposed AFC Rs. Crore Variable Charge Energy Charge s Total Power Purchase Cost % MU MU Rs/kWh Rs. Rs. Crore Crore Khopoli 48.83% Total The Commission has taken note of the additional submission made by TPC-D regarding the revised capacity allocation from TPC-G. The Commission, while approving the power procurement plan for TPC-D in its dated March 27, 2018, directed TPC-D to submit the revised Power Purchase Arrangement for FY to FY by November 30, Hence, as regards FY , at present there is no arrangement/ppa with TPC-G or any other generator. Hence, for the purpose of tariff determination for FY , the Commission has considered the capacity tie-up with TPC-G as 672 MW, as approved for FY in the dated March 27, 2018 in Case No. 39 of However, this shall in no way be construed as amounting to implicit approval of the PPA with TPC-G beyond 31 March, For determination of Unit-wise cost, the Commission has considered the tariff determined for TPC-G in its MTR dated 12 September, 2018 in Case No. 65 of The Commission notes that TPC-G in their MTR Petition has made the submission in line with the capacity allocation submitted by TPC-D in its MTR Petition. However, TPC-D has revised the capacity allocation in its subsequent submission, but the same has not been changed in TPC-G Petition. Hence, Generation Tariff has not been approved for Unit 5 and Bhira Hydro project. Hence, for Unit 5 and Bhira Hydro, the tariff approved for FY has been considered for FY also. The share of Annual Fixed Cost has been worked out for FY and FY as shown in the following Table: Page 228 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

229 Table 7-16: Annual Fixed Charges for FY and FY as approved by the Unit Commission (Rs. crore) Share for TPC-D (%) Annual Fixed Cost (Rs. Crore) Annual Fixed Cost Share of TPC-D (Rs. Crore) % FY FY FY FY Unit % Unit % Unit % Bhira 48.83% Bhivpuri 48.83% Khopoli 48.83% Total 1, , The estimated share of Unit-wise Net generation for FY and FY based on allocated capacity for Units of TPC-D is shown in the following Table: Table 7-17: Net Generation from TPC-G for FY and FY as approved by the Commission (Rs. crore) Unit Share for TPC-D (%) Net generation (MU) Net Generation Share of TPC-D (MU) FY FY FY FY Unit % Unit % Unit % Bhira 48.83% Bhivpuri 48.83% Khopoli 48.83% Total 7, , , , The estimated variable cost of purchase from TPC-G approved by the Commission is shown in the Table below: Table 7-18: Estimated Variable Cost of Purchase from TPC-G for FY and FY as approved by the Commission (Rs. crore) Particulars FY FY Net Generation (MU) Rate of Purchase (Rs./kWh) Variable Cost (Rs. crore) Case No. 69 of 2018 Mid Term Review for TPC-D Page 229 of 387

230 The total cost of power purchase from TPC-G approved by the Commission is shown in the following Table: Table 7-19: Total Cost of Power Purchase from TPC-G for FY and FY as Particulars MYT approved by the Commission (Rs. crore) FY FY Approved Approved MTR MYT MTR in this in this Petition Petition Variable Cost Fixed Cost Total Cost Net Generation (MU) Per Unit cost (Rs./kWh) Renewable Purchase Obligation TPC-D's Submission TPC-D has considered the RPO obligations as specified in RPO Regulations, TPC-D submitted the total RE quantum to be purchased in FY and FY as shown in the following Table: Table 7-20: Renewable Energy Requirement for FY and FY as submitted by TPC-D Particulars Notation FY FY InSTS Requirement MU Non-Solar requirement % 10.98% 11.48% Mini/Micro Hydro % 0.02% 0.02% Solar Requirement % 2.75% 3.50% Total 13.75% 15.00% Non-Solar Requirement including Mini/ MU Micro Hydro Solar Requirement MU Total MU TPC-D proposed to meet the above requirement of Non-Solar RE through its own generating sources and by additional tie-ups, with the balance being met through REC purchase. Nonsolar generation availability from existing tie-ups is shown in the following Table: Page 230 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

231 Table 7-21 : Non-Solar Generation availability for FY and FY as submitted by TPC-D Particulars MW FY FY Quantum Rate Rate (MU) (Rs/kWh) (Rs./kWh) Bramanvel Khandke Sadawaghapur Visapur 6 MW Visapur 4 MW Visapur (GSW) 24 MW-5-12, Visapur (GSW) 8 MW-13,18,19, Agaswadi Total TPC-D has assumed that around 80% of its RPO would be met through long-term RE sources and the balance through RECs. Further, based on the current market prices available for the new RE sources, TPC-D has assumed that additional RE will be available at around Rs. 4/kWh as shown in the following Table: Table 7-22: Non -Solar Purchase for FY and FY as submitted by TPC-D (MU) Particulars Unit FY FY Existing Capacity MU REC Purchase MU Additional Purchase MU Total RE Non-Solar MU Existing Capacity Rs./kWh REC Purchase Rs./kWh Additional Purchase Rs./kWh RE Purchase Rs. Crore Weighted Average Rate for Non-solar Rs./kWh TPC-D submitted the estimated generation from own Solar generating stations as shown in the following Table: Table 7-23: Solar Generation for FY and FY as submitted by TPC-D Particulars Capacity (MW) Quantum (MU) Rate (Rs./kWh) Mulshi Solar Solar Rooftop Palaswadi Solar Total Case No. 69 of 2018 Mid Term Review for TPC-D Page 231 of 387

232 Further, TPC-D submitted that Solar RE requirement increases considerably by the end of the 3 rd Control Period compared to the tied-up capacity. TPC-D has proposed to tie-up additional capacities during the Control Period through long-term PPAs, and meet the deficit in Solar RPO by purchase of REC, which is considered as 20% of the total requirement. Further, based on the current market prices available for the new RE sources, it is assumed that additional RE will be available at around Rs. 4/kWh. TPC-D submitted that in order to take advantage of low cost availability of REC in the market, it has purchased 95 MU at Rs 1.12 per kwh in April 2018 to meet its RPO obligation for FY and shortfall for FY Hence, the same has been considered for computing the power purchase cost for FY The estimated quantum and rate of Solar purchase is given in the following Table: Table 7-24: Total Solar Procurement for FY and FY as submitted by TPC-D Solar Requirement Quantum Unit FY FY Existing Capacity MU REC Purchase MU Additional Generation MU Total RE Solar MU Existing Capacity Rs./kWh REC Purchase Rs./kWh Additional Generation Rs./kWh RE Purchase Rs. Crore Weighted Average for Solar Rs./kWh Further, TPC-D submitted that it has been making efforts to procure power from Mini/ Micro Hydro Generating Stations in the State. For the purpose of tariff determination, TPC-D has considered such purchase as shown in the Table below: Table 7-25: Requirement of Mini / Micro Hydro for FY 19 and FY 20 as submitted by TPC-D REC Purchase Unit FY FY Mini/Micro Hydro MU The summary of cost of power purchase from RE sources as submitted by TPC-D is given in the Table below: Page 232 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

233 Table 7-26: Source wise Cost of power purchase from RE for FY and FY as submitted by TPC-D FY FY MYT MTR Petition MYT MTR Petition Particulars Rs./kW Rs. Rs./kW Rs. Rs./kW Rs. Rs./kW MU MU MU MU Rs. Crore h Crore h Crore h Crore h Non-Solar Purchase Brahmanvel Khandke Sadawaghapur Visapur 6 MW Visapur 4 MW Visapur (GSW) 24 MW Visapur (GSW) 8 MW Agaswadi Total Solar Purchase Mulshi Solar Solar Rooftop Palaswadi Solar Total REC Purchase Non-Solar REC Solar REC Total Total Additional Generation (D) Non-Solar Solar Total Total(RE Power Purchase) Case No. 69 of 2018 Mid Term Review for TPC-D Page 233 of 387

234 Commission s Analysis and Ruling The Commission has considered the Solar and Non-Solar RPO requirements for the 3 rd Control Period as specified in the RPO Regulations, The Commission has considered the purchase from the existing tied-up long-term Solar and Non-Solar RE sources at the preferential tariff applicable to such sources. It has considered the balance requirement of Solar and Non-Solar RPO target to be met from procurement of RE purchase at preferential tariff. The actual cost incurred on future tie-ups for meeting the incremental increase in RPO requirements shall be considered at the time of MTR subject to prudence check. Further, the Commission has considered the rate of purchase for additional Solar RE power procurement as Rs. 3.73/kWh for FY and Rs. 2.72/kWh for FY Further, rate of purchase for additional Non-Solar RE procurement has been considered as Rs. 3.05/kWh for FY and Rs. 2.87/kWh for FY Accordingly, the Commission has approved the cost of purchase from Solar and Non-Solar sources for FY and FY as shown in the Table below: Page 234 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

235 Table 7-27: Source wise Cost of power purchase from RE for FY FY MYT MTR Petition Approved in this Particulars Rs. MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore MU Rs./kWh Crore Non-Solar Purchase Brahmanvel Khandke Sadawaghapur Visapur 6 MW Visapur 4 MW Visapur (GSW) 24 MW Visapur (GSW) 8 MW Agaswadi Total Solar Purchase Mulshi Solar Solar Rooftop Palaswadi Solar Total REC Purchase Non-Solar REC Solar REC Total Additional RE Procurement Non-Solar Solar Mini/Micro Hydro Purchase Total (RE Power Purchase) Case No. 69 of 2018 Mid Term Review for TPC-D Page 235 of 387

236 Table 7-28: Source wise Cost of power purchase from RE for FY FY Particulars MYT MTR Petition Approved in this MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore Non-Solar Purchase Brahmanvel Khandke Sadawaghapur Visapur 6 MW Visapur 4 MW Visapur (GSW) 24 MW Visapur (GSW) 8 MW Agaswadi Total Solar Purchase Mulshi Solar Solar Rooftop Palaswadi Solar Total REC Purchase Non-Solar REC Solar REC Total Additional RE procurement Non-Solar Solar Mini/Micro Hydro Purchase Total (RE Power Purchase) Page 236 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

237 7.4.2 Power Purchase from Bilateral Sources TPC-D's Submission After considering the generation availability from TPC-G and RE sources, TPC-D proposed to meet the balance requirement from bilateral sources, as shown in the following Table: Table 7-29: Bilateral Power Purchase Rate for FY and FY as submitted by TPC- D Month Rs./kWh Weighted Average Rate April 2017 to December POC Charges 0.35 Bilateral Rate for FY and FY TPC-D has considered the rate of bilateral power purchase as Rs. 3.50/kWh for FY , based on the existing weighted average rate of power available in the Market for last 6 months and added POC charges of Rs 0.35/kWh. As mentioned above, the tie up currently proposed by TPC-G for FY to FY is not able to meet the entire demand of TPC-D. Hence, TPC-D would explore tie up of balance MW power from external sources or from Unit 5 of TPC-G, if it is offered by TPC-G. TPC-D submitted that recently another Distribution Licensee in the Mumbai area having a similar demand pattern of TPC-D has undertaken a Case 1 competitive Bidding process. The bids were sought for both peak and base RTC load requirement for five years from FY to FY The weighted average rate of price discovered through the bidding process was around Rs 4.32/kWh. Hence, it is observed that the price is varying between Rs 4.22 to Rs 4.32 /kwh. TPC-D proposed to consider the same weighted average rate of Rs /kwh for balance power procurement for FY Commission s Analysis and Ruling The Commission has considered the power purchase requirement of TPC-D from TPC-G and RE sources as detailed in the earlier paragraphs, and the remaining requirement has been considered from short-term sources. The Commission has taken procurement from short-term sources at Rs. 2.87/kWh, as approved in the provisional truing-up of FY Vide Resolution dated 30 March, 2016, the MoP has issued Guidelines for short-term power procurement (beyond the stipulated minimum period) by Distribution Licensees through tariff-based bidding under Section 63 of the Act. In accordance with the Guidelines, TPC-D should procure all future short-term power only through the e-bidding portal. In accordance with the Guidelines, if the power procured and the tariff determined are within the above Case No. 69 of 2018 Mid Term Review for TPC-D Page 237 of 387

238 blanket approval given by the Commission in the ARR of the respective years, it will be considered to have been adopted by the Commission. In all other cases, TPC-D shall submit a Petition to the Commission for adoption of tariff as required under the Guidelines. The summary of estimated quantum and cost of purchase from short-term sources as approved by the Commission is given in the Table below: Table 7-30: Bilateral Power Purchase for FY as approved by the Commission Source Bilateral Purchase Quantum (MU) MYT MTR Petition Approved in this Cost Rate Cost Rate Cost Quantum Quantum (Rs. (Rs./ (Rs. (Rs./ (Rs. (MU) (MU) crore) kwh) crore) kwh) crore) Rate (Rs./ kwh) , Table 7-31: Bilateral Power Purchase for FY as approved by the Commission Source Bilateral Purchase Quantum (MU) MYT MTR Petition Approved in this Cost Rate Cost Rate Cost Quantum Quantum (Rs. (Rs./ (Rs. (Rs./ (Rs. (MU) (MU) crore) kwh) crore) kwh) crore) Rate (Rs./ kwh) 1, , Transmission Charges TPC-D's Submission TPC-D submitted that its share of intra-state Transmission Charges for FY to FY , as per the latest InSTS Tariff in Case No. 91 of 2016, has been computed based on the average of coincident and non-coincident peak demand (CPD, NCPD) of FY Its demand in FY included the demand of Railways, which was the major contributor to its sales. Since, Railways has been granted the status of deemed Distribution Licensee, TPC-D had filed a Review Petition in Case No. 142 of 2016 and the on the same is awaited. TPC-D has computed its future demand based on the methodology given in MYT regulations, Accordingly, the demand for FY is considered based on the actual demand of FY and escalation is computed considering the past and future trend. TPC-D has computed Transmission charges based on the average of coincident and non - coincident peak demand (CPD, NCPD) of FY and Charges for FY & FY computed considering the escalation based on past and future demand. The Transmission Charges estimated by TPC-D for FY and FY are shown in the following Table: Page 238 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

239 Table 7-32: Transmission Charges for FY & FY as submitted by TPC-D (MW) Particulars Actual demand of TPC-D Considered in InSTS order Projected Demand in the MYT Petition Average Rate of CAGR for past period and future Period FY FY FY CAGR MW (13.5%) FY FY FY MW % FY FY Projected Demand in the InSTS a MW Demand as per MYT b MW Transmission Charges c Rs Crore Revised Transmission Rs d=a*c/b Charges Crore (2.7%) TPC-D submitted that the transmission charges for FY & FY as Rs Crore and Rs Crore respectively. Commission s Analysis and Ruling The Commission has considered the Transmission Charges for TPC-D as approved in the InSTS MTR Tariff dated 12 September, 2018 in Case No. 265 of 2017, as shown in the following Table: Table 7-33: Transmission Charges for FY and FY as approved by the Particulars Transmission Charges MYT Commission (Rs. Crore) FY FY Approved MTR MYT MTR in this Petition Petition Approved in this Case No. 69 of 2018 Mid Term Review for TPC-D Page 239 of 387

240 7.4.4 MSLDC Charges and Standby Charges TPC-D's Submission Based on the revised projected Demand, TPC-D has computed the revised share of Standby & MSLDC Charges for FY and FY as shown in the following Table: Table 7-34: Share of Standby Charges & MSLDC Charges as submitted by TPC-D Particulars MYT MTR Petition FY FY FY FY Standby Charges MSLDC Charges TPC-D submitted that Standby Charges as Rs Crore for FY & Rs Crore for FY and; MSLDC charges as Rs Crore for FY & Rs Crore for FY Commission s Analysis and Ruling The Commission has approved the MSLDC Charges for TPC-D for FY and FY as approved in the MSLDC MTR dated 12 September, 2018 in Case No. 171 of Further, the Commission has approved the Standby Charges for TPC-D for FY and FY as approved in MSEDCL s MTR dated 12 September, 2018 in Case No. 195 of 2017, as shown in the following Table: Table 6-28: MSLDC Charges and Standby Charges for FY and FY as approved Particulars MYT by the Commission (Rs. Crore) FY FY Approved MTR MYT MTR in this Petition Petition Approved in this MSLDC Charges Standby Charges Total Power Purchase Cost The summary of power purchase quantum and cost for FY & FY is shown in the Table below: Page 240 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

241 Table 7-35: Power Purchase Cost of TPC-D for FY as approved by the Commission Source of Power FY MYT MTR Petition Approved in this MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore TPC-G Non-Solar RE Purchase Solar RE Purchase REC Purchase Bilateral Power Purchase 1, SLDC Charges Standby Charges Transmission Charges Total 5, , Table 7-36: Power Purchase Cost of TPC-D for FY as approved by the Commission Source of Power FY MYT MTR Petition Approved in this MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore MU Rs./kWh Rs. Crore TPC-G Non-Solar RE Purchase Solar RE Purchase REC Purchase Bilateral Power Purchase 1, SLDC Charges Standby Charges Transmission Charges Total 5, , Case No. 69 of 2018 Mid Term Review for TPC-D Page 241 of 387

242 7.5 OPERATION AND MAINTENANCE EXPENSES TPC-D's Submission TPC-D computed the normative O&M expenses for FY & FY , computed based on the 1 st Amendment in MYT Regulations, 2015, as shown in the following Table: Table 7-37: O & M Expenditure for Wire Business and Supply Business for FY & FY as submitted by TPC-D Particulars Notation Unit Wire Supply Business Business Base O&M Expenses FY Rs. Crore Escalation factor 2 % 5.06% 5.06% Normative O&M Expenses FY =1*(1+2) Rs. Crore FY =3*(1+2) Rs. Crore FY =4*(1+2) Rs. Crore FY =5*(1+2) Rs. Crore Commission s Analysis and Ruling The Commission has computed the O&M Expenses for FY and FY by escalating the O&M Expenses approved for FY in this, as per MYT (First Amendment) Regulations, As per the Regulations, the Commission has considered the escalation factor of 5.06% based on five-year CPI and WPI in the ratio of 70:30 and considering 1% efficiency factor. Accordingly, the Commission has approved the O&M Expenses for FY and FY as shown in the Table below: Table 7-38: Normative O&M Expenses for FY & FY as approved by the Particulars MYT Commission FY FY Approved Approved MTR MYT MTR in this in this Petition Petition O&M Expenses for Wires Business O&M Expenses for Supply Business Total Page 242 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

243 7.6 CAPITALISATION AND MEANS OF FINANCE TPC-D's Submission The Commission in Case of 47 of 2016 had considered capitalization of Rs Crore for Wires Business for FY and Rs Crore for Wires Business for FY as Network Roll-out Plan in Case No. 182 of 2014 and capitalisation of on-going schemes in Case No. 50 of 2015 were pending for approval. TPC-D has considered the same amount of total capitalization for Wires Business as provisionally approved by the Commission for FY and FY For Supply Business, TPC-D has proposed higher capitalisation for FY and FY as compared to the capitalisation approved in the MYT. The Capitalisation for FY and FY as submitted by TPC-D is shown in the following Table: Table 7-39: Capitalisation for FY and FY as submitted by TPC-D (Rs. Crore) Particulars Opening GFA DPR MYT Wires Business Supply Business FY FY FY FY MTR MYT MTR MYT MTR MYT Petition Petition Petition MTR Petition Non-DPR Closing GFA Total Commission s Analysis and Ruling The Commission in MYT has approved Capitalisation for FY and FY in view of pending approval of Network rollout plan for TPC-D in Case No. 182 of 2014 and capitalisation of on-going schemes in Case No. 50 of Now, the Commission has finalised both the cases and accordingly revised capitalisation has been approved in the present from FY , as discussed in earlier Section of this. Further, Commission notes that TPC-D has projected the capitalisation for Wires Business same as approved in MYT and capitalisation for supply business based on the revised submission of DPR schemes. For projecting the capitalisation for FY and FY , the Commission has considered the capitalisation towards the approved DPR schemes. The Commission notes that TPC-D has considered the capitalisation of Rs Crore for FY and Rs Crore for FY for Wires Business towards DPR schemes. As against this, the Commission has approved capitalisation of Rs Crore for FY and Rs. Case No. 69 of 2018 Mid Term Review for TPC-D Page 243 of 387

244 70.15 Crore for FY for Wires Business based on in-principle approval of DPR schemes. Further, as regards the capitalisation towards Non-DPR schemes, the Commission notes that the capitalisation proposed by TPC-D is within limit of 20% of DPR capitalisation. Hence, Non-DPR capitalisation has been approved as Rs Crore for FY and Rs Crore for FY for Wires Business, as submitted by TPC-D. As per MYT Regulations, 20% of the approved yearly DPR capitalization may be allowed towards the above planned / unplanned capital expenditure for FY and FY Accordingly, the Commission has considered the additional capitalisation towards planned/unplanned expenditure. As regards means of finance, the Commission has considered normative debt:equity ratio of 70:30 as per MYT Regulations, The capitalisation and means of finance approved by the Commission for FY and FY is shown in the following Table: Table 7-40: Capitalisation for FY and FY as approved by the Commission (Rs. Particulars MYT Crore) FY FY Approved Approved MTR MYT MTR in this in this Petition Petition Wires Business Capitalisation Means of Finance Equity Debt Total Supply Business Capitalisation Means of Finance Equity Debt Total DEPRECIATION TPC-D's Submission TPC-D has considered the depreciation rate same as the actual depreciation rate for FY Based on the same and considering the opening GFA for FY equivalent Page 244 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

245 to closing GFA for FY , the Depreciation for FY and FY as shown in the following Table: Table 7-41: Depreciation for Wire Business for FY 19 and FY 20 as submitted by TPC-D (Rs. Crore) Wire Business Particulars FY FY MYT MTR MYT MTR Petition Petition Opening GFA Addition of GFA during the year Retirement of GFA during the year Closing GFA Depreciation % Depreciation on average of opening and Closing GFA 5.05% 5.20% 5.05% 5.20% Table 7-42: Depreciation for Supply Business for FY 19 & FY 20 as submitted by TPC-D (Rs. Crore) Supply Business Particulars FY FY MYT MTR MYT MTR Petition Petition Opening GFA Addition of GFA during the year Retirement of GFA during the year Closing GFA Depreciation % Depreciation on average of opening and Closing GFA 4.78% 6.33% 4.78% 6.33% Commission s Analysis and Ruling The Commission has computed the Depreciation as per Regulation 27 of the MYT Regulations, The Commission has considered closing balance of GFA approved for FY in this as opening balance for FY The addition of GFA has been considered equal to the proposed capitalisation approved in earlier Section of this. Since, the actual asset head wise details of Gross Fixed Assets and Depreciation is not available now, the Commission has considered the average depreciation rate same as approved for truing up for FY The Commission has approved the depreciation for FY and FY as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 245 of 387

246 Table 7-43: Depreciation for Wire Business for FY and FY as approved by the Particulars Wires Business MYT Commission (Rs. Crore) FY FY Approve Approved MTR MYT MTR d in this in this Petition Petition Opening GFA Addition of GFA during the year Retirement of GFA during the year Closing GFA Depreciation % Depreciation on average of opening and Closing 5.05% 5.20% 5.07% 5.05% 5.20% 5.07% GFA Supply Business Opening GFA Addition of GFA during the year Retirement of GFA during the year Closing GFA Depreciation % Depreciation on average of opening and Closing GFA 4.78% 6.33% 6.28% 4.78% 6.33% 6.28% 7.8 INTEREST ON LONG-TERM LOAN TPC-D's Submission TPC-D submitted that it has computed the interest on loan capital as per MYT Regulations, TPC-D has considered the closing balance of loan for FY as the opening balance of loan for FY The loan addition has been considered as 70 percent of the proposed capitalisation for the year. The repayment during the year has been considered as equal to the Depreciation for the year. TPC-D has considered the interest rate equal to the weighted average interest rate computed based on the actual loan portfolio at the beginning for FY TPC-D has projected the Interest on Long-Term Loan for the Wires Business and Supply Business for FY and FY as shown in the Tables below: Page 246 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

247 Table 7-44 : Interest on Long Term Loan for Wire Business for FY & FY as submitted by TPC-D (Rs. Crore) Wire Business Particulars FY FY MYT MTR MYT MTR Petition Petition Opening Balance Addition of loan during the year Repayment during the year Closing balance Rate of Interest (%) 10.83% 10.10% 10.83% 10.10% Interest on Loan Capital Table 7-45 : Interest on Long Term Loan for Supply Business for FY and FY as submitted by TPC-D (Rs. Crore) Supply Business Particulars FY FY MYT MTR MYT MTR Petition Petition Opening Balance Addition of loan during the year Repayment during the year Closing balance Rate of Interest (%) 10.58% 10.09% 10.58% 10.09% Interest on Loan Capital Commission s Analysis and Ruling The Commission has considered the closing balance of net normative loan approved for FY in this as the opening balance of net normative loan for FY For assets to be capitalised in FY and FY , the Commission has considered 70% of the additional asset value as normative debt, in accordance with the MYT Regulations, The repayment of loan has been considered as equal to the Depreciation approved in this. As sought by the Commission, TPC-D submitted the documentary evidence for the actual interest rate for all actual outstanding loans as on 1 April, Based on this, the Commission has accepted the submission and considered the same rate of interest for Wire Business and Supply Business as submitted by TPC-D for FY and FY Accordingly, the Commission has approved interest on loan capital for FY as given in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 247 of 387

248 Table 7-46: Interest on Loan Capital for FY and FY as approved by the Particulars Commission (Rs. Crore) MYT FY FY MTR Petition Approved in this MYT MTR Petition Approved in this Wires Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.83% 10.10% 10.10% 10.83% 10.10% 10.10% Interest on Loan Capital Supply Business Opening Normative loan for the year Addition of normative loan during the year Repayment of normative loan during the year Closing Normative loan during the year Interest Rate (%) 10.58% 10.09% 10.09% 10.58% 10.09% 10.09% Interest on Loan Capital RETURN ON EQUITY TPC-D's Submission TPC-D has projected Return on Equity (RoE) as per the MYT Regulations, TPC-D has considered 30 percent equity contribution for the capitalisation proposed for FY and FY The rate of RoE is taken as 15.50% for Wires Business and 17.50% for Supply Business. The RoE has been computed on the opening equity of each year and 50% of the equity contribution for the capitalisation proposed during each the year. The RoE projected for Wires Business and Supply Business is shown in the Tables below: Table 7-47: RoE for Wire Business for FY 19 and FY 20 as submitted by TPC-D (Rs. Crore) Page 248 of 387 Particulars Regulatory Equity at the beginning of the year Wires Business FY FY MTR MYT Petition MYT MTR Petition Case No. 69 of 2018 Mid Term Review for TPC-D

249 Wires Business Particulars FY FY MYT MTR MYT MTR Petition Petition Addition of equity during the year Regulatory Equity at the end of the year Rate of RoE 15.50% 15.50% 15.50% 15.50% Total Return on Equity Table 7-48: RoE for Supply Business for FY 19 and FY 20 as submitted by TPC-D (Rs. Crore) Particulars Supply Business FY FY MTR MYT Petition MYT MTR Petition Regulatory Equity at the beginning of the year Addition of equity during the year Regulatory Equity at the end of the year Rate of RoE 17.50% 17.50% 17.50% 17.50% Total Return on Equity Commission s Analysis and Ruling The Commission has computed RoE in accordance with Regulation 28 of MYT Regulations, The Commission has considered the closing equity of FY as approved in the final true up in this, as the opening equity for FY Additional equity has been approved as 30% of the approved Capitalisation in FY and FY , after deducting the Consumer Contribution. The rate of Return on Equity has been taken as 15.50% for Wires Business and 17.50% for Supply Business, in accordance with Regulation 26 of MYT Regulations, The RoE approved by the Commission for Wires Business and Supply Business for FY and FY is as shown in the Tables below: Table 7-49: Return on Equity for FY and FY as approved by the Commission Particulars Wires Business Regulatory Equity at the beginning of the year Addition of equity during the year MYT (Rs. Crore) FY FY MTR Petition Approved in this MYT MTR Petition Approved in this Case No. 69 of 2018 Mid Term Review for TPC-D Page 249 of 387

250 Particulars MYT FY FY MTR Petition Approved in this MYT MTR Petition Approved in this Regulatory Equity at the end of the year Rate of RoE 15.50% 15.50% 15.50% 15.50% 15.50% 15.50% Total Return on Equity Supply Business Regulatory Equity at the beginning of the year Addition of equity during the year Regulatory Equity at the end of the year Rate of RoE 17.50% 17.50% 17.50% 17.50% 17.50% 17.50% Total Return on Equity INTEREST ON WORKING CAPITAL TPC-D's Submission TPC-D submitted that the working capital requirement has been computed in accordance with the MYT Regulations, The power purchase from TPC-G has been subtracted to arrive at the normative working capital requirement. Further, the security deposit is derived based on the average percentage of security deposit for past six years. The rate of IoWC is considered equal to MCLR Rate on the filing of Petition plus 150 basis points. The estimated IoWC for Wire Business and Supply Business is given in the Table below: Table 7-50: IoWC for Wires Business for FY & FY as submitted by TPC-D (Rs. Crore) Wires Business Particulars FY FY MYT MTR MYT MTR Petition Petition O&M Expenses for one month Maintenance Spares at 1% of Opening GFA One and half month s equivalent of the expected revenue from sale of Electricity at prevailing tariff Less: Amount held as Security Deposit from Distribution System Users Total Working Capital Requirement Rate of Interest (% p.a) 10.80% 9.49% 10.80% 9.49% Interest on Working Capital Page 250 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

251 Table 7-51: IoWC for Supply Business for FY & FY as submitted by TPC-D (Rs. Crore) Supply Business Particulars FY FY MYT MTR MYT MTR Petition Petition O&M Expenses for one month Maintenance Spares at 1% of Opening GFA One and half months equivalent of the expected revenue from sale of electricity at the prevailing tariff Less: Amount held as security deposit Less: One-month equivalent of cost of power purchase Total Working Capital Requirement Rate of Interest (% p.a) 10.80% 9.49% 10.80% 9.49% Interest on Working Capital Commission s Analysis and Ruling The Commission has approved the IoWC in accordance with Regulations 31.3 and 31.4 of MYT Regulations, The Commission notes that TPC-D has projected the CSD for FY and FY , which is lower than actual CSD for FY The decrease in CSD is not justified with increase in sales and number of consumers. In view of this, the Commission has projected CSD amount for FY and FY by considering the actual addition of CSD in FY for next each year. Accordingly, the Commission has projected CSD amount of Rs Crore for FY and Rs Crore for FY The Commission has considered the applicable rate of IoWC as 9.45%, which is the weighted average MCLR rate as declared by State Bank of India during FY plus 150 basis points. Accordingly, IoWC approved by the Commission is given in the Tables below: Table 7-52: IoWC for FY and FY as approved by the Commission (Rs. Crore) Particulars Wires Business MYT FY FY MTR Petition Approved in this MYT MTR Petition Approved in this O&M Expenses for one month Maintenance Spares at 1% of Opening GFA Case No. 69 of 2018 Mid Term Review for TPC-D Page 251 of 387

252 Particulars One and half month s equivalent of the expected revenue from sale of Electricity at prevailing tariff Total Working Capital Requirement MYT FY FY MTR Petition Approved in this MYT MTR Petition Approved in this Rate of Interest (% p.a) 10.80% 9.49% 9.45% 10.80% 9.49% 9.45% Interest on Working Capital Supply Business O&M Expenses for one month Maintenance Spares at 1% of Opening GFA One and half months equivalent of the expected revenue from sale of electricity at the prevailing tariff Less: Amount held as security deposit Less: One-month equivalent of cost of power purchase Total Working Capital Requirement Rate of Interest (% p.a) 10.80% 9.49% 9.45% 10.80% 9.49% 9.45% Interest on Working Capital INTEREST ON CONSUMERS SECURITY DEPOSIT TPC-D's Submission TPC-D has estimated the CSD for FY and FY based on the average % of CSD to Revenue for FY to FY The actual CSD and revenue for FY to FY is shown in the Table below: Table 7-53: Security Deposit for FY to FY as submitted by TPC-D Year Revenue Security Deposit % FY % FY % FY % FY % FY % FY % Total % Page 252 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

253 The average CSD amount is around 4.79% of total Revenue. TPC-D has considered the same for computing security deposit for future period. TPC-D submitted that projected interest on CSD is worked out as Rs Crore for FY and Rs Crore for FY Commission s Analysis and Ruling The Commission has considered the rate of interest of 9.45% (Base Rate plus 150 basis points) as specified in the MYT (First Amendment) Regulations, It has computed the interest on CSD on the average of opening and closing balance of the year. Accordingly, interest on CSD approved by the Commission is as shown in the Table below: Table 7-54: Interest on CSD for Supply Business for FY and FY as approved by the Commission (Rs. Crore) FY FY Particulars Approved Approved MYT MTR MYT MTR in this in this Petition Petition Interest on CSD PROVISION FOR BAD AND DOUBTFUL DEBT TPC-D's Submission TPC-D has considered Nil provision towards Bad and Doubtful Debts for FY and FY Commission s Analysis and Ruling The Commission has not considered any provision for bad and doubtful debt for FY and FY The same shall be allowed at time of truing up for respective years, subject to prudence check CONTRIBUTION TO CONTINGENCY RESERVE TPC-D's Submission TPC-D has computed the Contribution to Contingency Reserves at 0.25% of the opening GFA for FY and FY and; is within the prescribed limits specified in the MYT Regulations, The Contribution to Contingency Reserves submitted for FY and FY is shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 253 of 387

254 Table 7-55: Contribution to Contingency Reserves for Wire Business and Supply Business for Particulars FY & FY as submitted by TPC-D (Rs. Crore) Wires Business Supply Business FY FY FY FY MTR MYT MTR MYT MTR MYT Petition Petition Petition MYT MTR Petition Opening GFA % Contingency Reserve Contribution to Contingency Reserves 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Commission s Analysis and Ruling The Commission has taken the contribution to Contingency Reserves for the Wires Business and Supply Business at 0.25% of Opening GFA for each year. It has verified that the amount of Contingency Reserve does not exceed 5% of the Opening GFA. The Contribution to Contingency Reserves approved by the Commission is as shown in the Table below: Table 7-56: Contribution to Contingency Reserve for FY and FY as approved Particulars by Commission (Rs. Crore) MYT FY FY Approved MTR MYT MTR in this Petition Petition Approved in this Wires Business Supply Business INCOME TAX TPC-D's Submission TPC-D has considered the Income Tax for FY and FY based on the Income Tax computed for FY as shown below: Page 254 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

255 Table 7-57: Income Tax for FY & FY as submitted by TPC-D (Rs. Particulars Income Tax MYT Crore) Wires Business Supply Business FY FY FY FY MTR MYT MTR MYT MTR MYT Petition Petition Petition MTR Petition Commission s Analysis and Ruling The Income Tax for FY and FY has been provisionally allowed based on Income Tax on Regulatory PBT as allowed for FY in this. Any difference between Income Tax actually paid and that approved in this shall be reviewed at the time of true up for FY and FY , in accordance with Regulation 33. The Income Tax approved by the Commission is shown in the Table below: Table 7-58: Income Tax for FY and FY as approved by Commission (Rs. Particulars MYT MTR Petition Crore) FY FY Approved in MYT MTR this Petition Approved in this Income Tax - Wires Income Tax - Supply Total NON-TARIFF INCOME TPC-D's Submission TPC-D has projected the Non-Tariff Income for FY and FY same as approved in MYT. TPC-D submitted Non-Tariff Income of Rs Crore for Wires Business for FY and FY and; Rs Crore for FY and Rs Crore for FY for Supply Business. Commission s Analysis and Ruling The Commission approves the Non-tariff Income FY and FY same as approved for FY after truing up, as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 255 of 387

256 Table 7-59: Non-tariff Income for FY and FY as approved by Commission (Rs. Crore) Particular NTI Wires Business NTI -Supply Business MYT FY FY MTR Approved in MYT MTR Approved in Petition this Petition this DEMAND SIDE MANAGEMENT EXPENSES TPC-D's Submission TPC-D submitted the DSM Expenses of Rs Crore for FY and Rs Crore for FY as approved in MYT. Commission s Analysis and Ruling The Commission has approved the DSM Expenses on the basis of prudence of Schemes proposed by TPC-D. Accordingly, the Commission approves DSM expenses of Rs Crore for FY and Rs Crore for FY AGGREGATE REVENUE REQUIREMENT The approved ARR for the Wires and Supply Business for FY and FY are shown in the following Tables: Page 256 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

257 Table 7-60 : Estimated ARR for Wire Business for FY and FY as approved by the Commission (Rs. Crore) Particulars MYT FY FY Approved MTR MTR in this MYT Petition Petition Approved in this Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Provision for bad and doubtful debts Contribution to contingency reserves Income Tax Total Revenue Expenditure Add: Return on Equity Capital Aggregate Revenue Requirement Less: Non-Tariff Income Add: Revenue Gap/(Surplus) of previous years (17.33) (17.33) (17.33) Aggregate Revenue Requirement from Distribution Wires The main reasons for the difference between the Wires ARR claimed by TPC-D and that approved in this for FY and FY are: 1. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY , FY , FY , FY and FY after due prudence check by the Commission. 2. O&M expenses are approved based on revised base expenses and escalation factor as per first amendment of MYT Regulations, Case No. 69 of 2018 Mid Term Review for TPC-D Page 257 of 387

258 Table 7-61: Estimated ARR for Supply Business for FY and FY as approved by the Commission (Rs. Crore) FY FY Particulars MYT MTR Petition Approved in this MYT MTR Petition Approved in this Power Purchase Expenses Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Interest on Consumer Security Deposit Provision for bad and doubtful debts Contribution to contingency reserves Intra-State Transmission Charges MSLDC Fees & Charges Income Tax DSM Expenses Total Revenue Expenditure , Add: Return on Equity Capital Aggregate Revenue Requirement , Less: Non-Tariff Income Aggregate Revenue Requirement from Retail Supply The main reasons for the difference between the Supply ARR claimed by TPC-D and that approved in this are: 1. Lower Depreciation, Interest on Loan Capital and Return on Equity has been allowed, after approving the capitalisation for FY , FY , FY , FY , FY and FY after due prudence check by the Commission. 2. O&M expenses are approved based on revised base expenses and escalation factor as per first amendment of MYT Regulations, The combined ARR for the Wire and Supply Businesses for FY and FY is given in the Table below: Page 258 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

259 Table 7-62: Combined ARR for FY & FY as approved by the Commission (Rs. Crore) Particulars MYT FY FY Approved MTR MYT MTR in this Petition Petition Approved in this Power Purchase Expenses , , Operation & Maintenance Expenses Depreciation Interest on Loan Capital Interest on Working Capital Interest on Consumer Security Deposit Provision for bad and doubtful debts Contribution to contingency reserves Intra-State Transmission Charges MSLDC Fees & Charges Income Tax DSM Expenses Total Revenue Expenditure 3, , , , , , Add: Return on Equity Capital Total Annual Revenue Requirement , , Less: Non-Tariff Income Add: Gap/(Surplus) for previous years (17.33) (17.33) (17.33) Net Aggregate Revenue Requirement Case No. 69 of 2018 Mid Term Review for TPC-D Page 259 of 387

260 8 CUMULATIVE REVENUE GAP & REVISED CATEGORY-WISE TARIFFS FOR FY AND FY CUMULATIVE REVENUE GAP The computation of cumulative Revenue Gap/(Surplus) to be recovered from Tariff has been discussed as under: Balance Recovery of Regulatory Assets approved in MYT TPC-D's Submission TPC-D submitted that the Commission had approved a recovery of Rs Crore pertaining to the past period until FY in the MYT in Case No. 47 of 2016 dated 21 October, The Commission in case of Supply Business allowed the past recovery of Rs Crore as a separate Regulatory Asset Charge (RAC) of Rs. 415 Crore over three years from FY to FY , whereas in case of Wires Business, past surplus of Rs Crore has been added as a part of ARR. The Commission, in the MYT of RInfra-D in Case of 34 of 2016 dated October 21, 2016 has elaborated a methodology of computing principal amount recovery. The extract of the same is as given below: The Commission agrees with RInfra-D that it is necessary to determine the principal RA amount remaining to be recovered at the close of FY , out of the opening balance of Rs crore approved in the MYT, and for which principles and the plan for recovery was approved then. As the RA amount recovered contains both principal as well as interest amounts, in order to determine the principal RA amount remaining to be recovered at the close of FY , the RA amount recovered in each year from FY to FY has to be segregated between principal and interest. However, RInfra-D's computation of the break-up of principal and interest showing that, in FY , no principal amount has been recovered and that, even after adjusting the entire RA recovery against carrying cost, there is an under-recovery of carrying cost, is not in accordance with the approach adopted by the Commission for computation of carrying cost and smoothening the recovery of RA. RInfra-D's Page 260 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

261 approach results in under-estimating the recovery of principal and over-estimating the recovery of carrying cost. For instance, out of the total annual RA recovery of Rs crore allowed by the Commission, the recovery of the principal amount has been approved as Rs crore, as shown in the Table 7-15 above, thus the carrying cost has been approved as Rs crore, i.e., a ratio of 70:30 towards principal and carrying cost. However, in RInfra-D's computations, the recovery of principal amount works out to 0% in FY , 37% in FY , and 41% in FY RInfra-D's method of computation results in a larger amount of RA being shown as under-recovered, and thereby increases the carrying cost and overall recovery to be allowed in the 3rd Control Period. The Commission is of the view that the most appropriate method of determining the break-up of recovery of principal amount and carrying cost out of the total RA recovery is to consider proportionate recovery of principal amount and carrying cost. Accordingly, the break-up of principal RA recovered and carrying cost recovered i n e a c h year from FY to FY , as considered by the Commission. Based on the same methodology, TPC-D has computed the recovery of principal and interest amount for RAC during FY and FY as shown in the following Table: Table 8-1: Recovery of Principal and Interest for FY and FY as submitted by TPC-D (Rs. Crore) Sr. No. Particulars FY FY Total 1 Recovery allowed during the year Recovery including the carrying cost Ratio of principal & Carrying cost approved in the MYT 73% 82% 4 RA Recovered Principal Amount Carrying Cost Recovered Table 8-2: Balance Recovery of Principal Amount as submitted by TPC-D Sr. No. Particulars Rs. Crore 1 Principal RA Recovery approved in the MYT Tariff Principal RA recovery till FY Balance RA to be recovered in the future period Case No. 69 of 2018 Mid Term Review for TPC-D Page 261 of 387

262 Thus, TPC-D estimated the unrecovered RAC amount at the end of FY as Rs Crore. Commission s Analysis and Ruling As regards the RAC, the Commission in MYT in Case No. 47 of 2016 as stated as under: g) TPC-D has taken the RA amount of Rs crore as separately recoverable in equal instalments of Rs crore in the first three years of the 3rd Control Period, in accordance with the MTR. As stated in the earlier paragraphs, the amount of Rs crore was not a fixed and final amount, and has been restated in this based on the final true-up for FY and provisional true-up for FY , to determine the cumulative Revenue Gap/(Surplus) at the end of FY The recovery of this amount has been spread over the first three years of the 3rd Control Period in such a manner that the tariff trajectory is smooth rather than alternating between increases and decreases in subsequent years. For presenting the actual effective tariff hike sought by TPC-D, the Commission has retained TPC-D's approach for representing the numbers. However, while approving the Revenue Gap/(Surplus) and tariff increase, the Commission has not considered the RA recovery as a separate line entry over and above the tariff increase, for reasons stated earlier. The Commission in the MYT, has restated the RAC amount of Rs Crore, determined in earlier MTR, based on the final truing-up for FY and provisional truing up for FY The Commission in MYT has determined the cumulative Revenue Gap/(Surplus) at the end of FY as shown in the following Table: Table 8-3: Cumulative Revenue Gap/(Surplus) at end of FY as approved by the Page 262 of 387 Commission in MYT (Rs. Crore) Particulars Wire Business Supply Business Total Past Gap/(Surplus) inadvertently considered twice in MYT for period prior to MYT period - (214.16) (214.16) Incremental Revenue Gap/(Surplus) FY Carrying Cost on Gap/(Surplus) of FY (15.39) Incremental Revenue Gap/(Surplus) of FY (56.81) Cumulative Revenue Gap/(Surplus) till FY (49.32) Balance RA recovery Total (49.32) Case No. 69 of 2018 Mid Term Review for TPC-D

263 In the above Revenue Gap, the Commission has adjusted the Revenue Surplus of Rs crore of the Wires Business in the ARR for FY itself. However, the Regulatory Asset of Rs Crore had been created and amortised over the period of three years, i.e., FY , FY and FY , including the carrying cost. The Commission has allowed the recovery of Rs Crore in FY , Rs Crore in FY and Rs Crore in FY The Commission, in the present, has decided not to restate the Regulatory Asset computed in MYT on account of final truing up for FY , as the Regulatory Asset has been crystallised in the MYT and amortised over the period of three years. No further change is required in the original amount of Regulatory Asset approved in MYT. The under-recovery of the Regulatory Asset is required to be computed, since part of Regulatory Asset has been recovered through RAC in FY and FY However, this recovered amount includes the principal amount as well as interest amount. Further, the Commission in MYT for RInfra-D in Case of 34 of 2016 dated October 21, 2016 has elaborated the methodology of computing principal amount recovery. Accordingly, the Commission has determined the break-up of recovery of principal amount and carrying cost out of the total Regulatory Asset recovery. The Commission has computed the balance amount of Regulatory Asset till the end of FY as shown in the following Table: Table 8-4: Balance amount of Regulatory Asset as computed by the Commission (Rs. Sr. No. Particulars Crore) FY FY FY Total 1 RAC Allowed to be recovered in MYT , Principal Amount , Carrying Cost/Interest amount Actual RAC Recovered Principal Amount Carrying Cost/Interest amount RAC Gap/(Surplus) - Principal amount (53.06) Case No. 69 of 2018 Mid Term Review for TPC-D Page 263 of 387

264 Accordingly, the Commission has considered the balance principal amount of Regulatory Asset of Rs Crore for recovery through RAC, as discussed in the subsequent Section of this Chapter Impact of Non-consideration of Capitalisation during FY TPC-D's Submission TPC-D has considered the impact of non-consideration of capitalization during FY to the tune of Rs Crore for computing the Revenue Gap/(Surplus) for the future period as computed in the earlier Section of this. Commission s Analysis and Ruling In the earlier Chapter of this, the Commission has determined the impact of additional capitalisation. The Commission has computed the carrying cost for the period from FY till FY The Commission has computed the cumulative Revenue Gap on account of additional capitalisation till the end of FY , after considering the carrying cost. as shown in the following Table: Table 8-5: Cumulative Revenue Gap for Additional Capitalisation as computed by the Sr. No. Particulars Commission (Rs. Crore) Rate of Interest (%) Approved in this 1 Revenue Gap on account of impact of additional capitalisation for FY Carrying cost for FY (half year) 14.75% Carrying cost for FY (full year) 14.75% Carrying cost for FY (full year) 10.79% Carrying cost for FY (full year) 10.20% Grand total Incremental Revenue Gap for FY TPC-D's Submission For computation of carrying cost, TPC-D has considered only incremental Revenue Gap for FY TPC-D submitted the incremental Revenue Gap of Rs Crore for Wires Business and Rs Crore for Supply Business, as shown in the Table below: Page 264 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

265 Table 8-6: Incremental Revenue Gap for FY as submitted by TPC-D (Rs. Crore) Particulars MYT MTR Petition Difference Wires Business Net ARR Revenue (1.50) Revenue Gap/(Surplus) (56.81) (28.44) Supply Business Net ARR Revenue (25.00) Revenue Gap/(Surplus) 1, , TPC-D submitted the cumulative Revenue Gap/(Surplus) for FY till the end of FY for Wires Business and Supply Business as shown in the following Table: Table 8-7: Cumulative Revenue Gap for FY as submitted by TPC-D (Rs. Crore) Sr. Interest Wires Supply Particulars No. Rate Business Business Total 1 Incremental ARR for FY Carrying Cost for FY % Carrying Cost for FY % Carrying Cost for FY % Cumulative Gap including Carrying Cost for FY Commission s Analysis and Ruling The Commission, in earlier Chapter, has determined the Revenue Gap arising after truing up for FY While restating the Regulatory Asset in the MYT, the incremental Revenue Gap of FY for Supply Business has already been taken as part of Regulatory Asset. Also, the balance Regulatory Asset of Rs Crore, as considered in MYT also includes Revenue Gap for FY Since, the carrying cost and recovery of Regulatory Asset is being considered separately, the Commission has considered only incremental Revenue Gap and carrying cost for FY , for Supply Business. In case of Wires Business, the Commission has considered the incremental Revenue Surplus of Rs Crore arising after provisional truing up for FY , equally in three years from FY i.e., (56.81/3=18.93). Hence, while computing the carrying cost, the Commission has considered the refund of Revenue Surplus Rs Crore in FY and FY , since it has been already passed on to consumers through tariff. Case No. 69 of 2018 Mid Term Review for TPC-D Page 265 of 387

266 The cumulative Revenue Gap/(Surplus) for Truing up for FY till the end of FY for Wires Business and Supply Business is shown in the following Table: Table 8-8: Cumulative Revenue Gap after True-up for FY as approved by the Commission (Rs. Crore) Approved in this Sr. Particulars No. Wire Supply Total Business Business 1 Revenue Gap for FY after True-up (20.47) Less: Revenue Gap considered as part of Regulatory Asset in MYT Less: Incremental Revenue gap considered in MYT (56.81) Net Incremental Revenue Gap Carrying cost for FY 14.75% (1.51) Carrying cost for FY @ 10.79% (1.19) Carrying cost for FY 10.20% Grand total Revenue Gap for FY and FY TPC-D's Submission TPC-D has considered the standalone Revenue Gap/(Surplus) for FY and FY to be recovered in future period as shown in the following Table: Table 8-9: Revenue Gap for FY & FY for Distribution Business (Rs. Crore) FY FY Particulars Wire Supply Wire Supply Total Business Business Business Business Total Net ARR Revenue Revenue Gap/(Surplus) (115.27) TPC-D submitted the cumulative Revenue Gap/(Surplus) for FY as shown in the following Table: Page 266 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

267 Sr. No. Table 8-10: Cumulative Revenue Gap for FY as submitted by TPC-D (Rs. Particulars Crore) ROI Wires Business Supply Business Total 1 Revenue Gap/(Surplus) for FY (115.27) Carrying Cost for FY % 7.57 (5.94) Carrying Cost for FY % (10.94) Cumulative Revenue Gap/(Surplus) for FY Commission s Analysis and Ruling (132.15) The Commission in earlier Chapter has determined the Revenue Gap/(Surplus) arising after truing up for FY for the Wires Business and Supply Business separately. The Commission has computed the cumulative Revenue Gap/(Surplus) for FY including carrying cost as shown in the following Table: Table 8-11: Cumulative Revenue Gap/(Surplus) for True-up for FY as approved by the Commission (Rs. Crore) Approved in this Sr. Particulars No. Wires Supply Total Business Business 1 Revenue Gap for FY after True-up (156.09) (18.83) 2 Carrying cost for FY @ 10.79% 7.41 (8.42) (1.02) 3 Carrying cost for FY 10.20% (15.92) (1.92) 4 Grand total (180.43) (21.77) As regards the Revenue Gap/(Surplus) for FY , in line with the approach adopted in the MYT, the Commission has not considering any carrying cost, being provisional truing up. The Commission in earlier Chapter of this has computed the Revenue Gap/(Surplus) for FY for Wires Business and Supply Business, which has been considered without carrying cost Past recovery of TPC-G TPC-D's Submission TPC-D submitted that TPC-G in its MTR petition has presented Revenue Gap up to FY to be recovered from TPC-D as Rs Crore. TPC-D has considered total Revenue Gap of Rs Crore, including the carrying cost of Rs 0.65 Crore. Case No. 69 of 2018 Mid Term Review for TPC-D Page 267 of 387

268 Commission s Analysis and Ruling The Commission, in MTR of TPC-G dated 12 September 2018 in Case No. 65 of 2018, has approved the Revenue Surplus of Rs Crore to be refunded to TPC-D. Accordingly, the Commission has considered the same amount for determining the cumulative Revenue Gap for recovery through tariff Revenue Gap/(Surplus) for recovery through tariff TPC-D's Submission Considering the above, the TPC-D submitted the cumulative Revenue Gap/(Surplus) to be recovered through Tariff as shown in the following Table: Table 8-12: Cumulative Revenue Gap/(Surplus) as submitted by TPC-D (Rs. Crore) Sr. No. Particulars Wire Business MTR Petition Supply Business Total 1 Incremental Revenue Gap/(Surplus) for FY Carrying cost Sub-total (A) Revenue Gap/(Surplus) for FY (115.27) Carrying cost (16.88) Sub-total (B) (132.15) Revenue Gap/(Surplus) for FY (C) Impact of Additional Capitalisation Carrying cost Sub-total (D) Revenue gap/(surplus) for TPC-G (E) Balance RA to be recovered (F) Cumulative Revenue Gap/(Surplus) to be recovered through tariff (A+B+C+D+E+F) , , Commission s Analysis and Ruling The Commission in earlier Section of this has determined the cumulative Revenue Gap/(Surplus) till the end of FY , after Truing up for FY , Truing up for FY and provisional Truing up for FY , for recovery through tariff as shown in the following Table: Page 268 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

269 Table 8-13: Cumulative Revenue Gap/(surplus) as approved by the Commission (Rs. Sr. No. Particulars Crore) Approved in this Wires Supply Total Business Business 1 Incremental Revenue Gap/(Surplus) for FY Carrying Cost (1.89) Sub-total (A) Revenue Gap/(Surplus) for FY (156.09) (18.83) 5 Carrying cost (24.34) (2.94) 6 Sub-total (B) (180.43) (21.77) 7 Revenue Gap/(Surplus) for FY (C) Impact of Additional Capitalisation Carrying cost Sub-total (D) Revenue gap/(surplus) for TPC-G (E) - (105.82) (105.82) 12 Balance RA to be recovered (F) Cumulative Revenue Gap/(Surplus) to be recovered through tariff (A+B+C+D+E+F) APPROACH FOR RECOVERY OF PAST REVENUE GAP TPC-D's Submission As regards the Supply Business, TPC-D submitted that the Commission in MYT has allowed the recovery of past Gap through RAC till FY The amount to be recovered in FY was Rs. 415 Crore. TPC-D proposed to recover the revised RAC of Rs. 494 Crore in FY in such a way that Average Cost of Supply (ACOS) remains the same. The balance amount of past recovery will be recovered through Supply ARR in FY , which will help in smoothen the tariff trajectory. As regards the past gaps for Wires Business, TPC-D submitted that the Commission in MYT had considered only 50 % of capitalization for FY TPC-D in present Petition has considered the entire capitalisation and its impact, which has resulted in the opening Gap of Rs Crore in FY As a set principle, the cumulative Revenue Gap should be recovered in the minimum number of years to minimise the burden of carrying cost, while at the same time ensuring that there is no tariff shock to consumers and that the tariff trajectory is smooth. Further, there is a significant reduction of TPC-D direct sale after Railways has become deemed Distribution Licensee to the tune of around 900 Case No. 69 of 2018 Mid Term Review for TPC-D Page 269 of 387

270 MU. This has resulted in the increase of per unit wheeling charges. TPC-D proposed to recover the past recovery of Wires Business in three years, i.e., from FY to FY Further, the recovery has been spread out in three years in such manner that the consequential impact on the Wheeling Charges is smoothened and uniform Wheeling Charge is maintained along the three years. Table 8-14: Recovery of Past Revenue Gap for Wire Business as submitted by TPC-D (Rs. Crore) Sr. Recovery for Wires Business Particulars No. FY FY FY Opening Balance Recovery/(refund) of previous Gap/(Surplus) Closing Balance Average Balance Interest Rate % 9.49% 9.49% 9.49% 6 Carrying/(holding) Cost Total recovery/(refund) in future period Based on the above proposed recovery for Wires Business and Supply Business for past period and total ARR for FY and FY , the ACOS is worked out as shown in the Table below: Page 270 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

271 Sr. No. Table 8-15: Average Cost of Supply for FY and FY as submitted by TPC-D (Rs. Crore) Particular Supply Business Wire Business Total ARR for Distribution FY FY FY FY FY FY Opening Balance Recovery/(refund) of previous Gap/(Surplus) Closing Balance Average Balance Interest Rate % 9.49% 9.49% 9.49% 9.49% 9.49% 9.49% 6 Carrying/(holding Cost) Total recovery/(refund) in future period Stand-alone ARR Expected Recovery from OA consumers based on the Tariff Proposed by TPC-D Total ARR including Past Recovery Sales (MU) Average Cost of Supply -Rs/kWh Table 8-16: Comparison of Proposed Vs Approved Average Cost of Supply as submitted by TPC-D (Rs. /kwh) Particulars MYT MTR Petition % Increase FY FY FY FY FY FY Average Cost of Supply % 7% Case No. 69 of 2018 Mid Term Review for TPC-D Page 271 of 387

272 Commission s Analysis and Ruling The Commission has computed the cumulative Revenue Gap for recovery through tariff in FY and FY in earlier Section of this. This cumulative Gap includes the balance amount of Regulatory Asset, Revenue Gap for Wires Business and Revenue Gap for Supply Business. The Commission notes that while computing the cumulative Gap for tariff recovery, TPC- D has considered the balance amount of Regulatory Asset after considering the RA billed till FY , as part of cumulative Revenue Gap for Supply Business. Further, TPC-D proposed to recovery the amount of Rs. 494 Crore during FY through revised proposed RAC, keeping the ACOS same for FY , i.e., without increase in tariff. TPC-D proposed to recover the balance amount through gap of Supply Business in FY The Commission notes that TPC-D has proposed the recovery of part of balance recoverable RA amount through RAC in FY and remaining balance amount through Energy Charge in FY In earlier years, TPC-D has insisted on creation of RAC for recovery of past gaps, whereas now, TPC-D has proposed to recover part of the RAC in FY through Energy Charge. TPC-D has thus adopted a mix and match approach for recovery of Regulatory Asset. The Commission in the past has decided the amount of RA and its amortisation through separate RAC. In the present, for deciding the approach for recovery of RA as well as Revenue Gaps for the Wires Business and Supply Business, the Commission is inclined to adopt uniform approach for TPC-D and RInfra-D, as TPC-D is operating in a competitive environment with RInfra-D as the licence area of both Licensees overlap. At the same time, the consumer mix, consumption mix, cost structure, cumulative Revenue Gap, and balance RAC to be recovered for both Licensees is significantly different. Hence, the Commission also has to ensure that at least the recovery of past Gaps and RAC is done in a similar manner for both the Licensees, so that neither Licensee is allowed an advantage in terms of lower tariffs merely because of the period of recovery is different. The cumulative Revenue Gap after true-up for previous years approved for RInfra-D and the balance RAC recovery is detailed in the MTR dated 12 September, 2018 in Case No. 200 of 2017 for RInfra- D. It should be noted that while both TPC-D and RInfra-D have requested the Commission to not consider any recovery of the past gaps in FY and defer the same to FY and beyond, TPC-D has combined the under-recovery of RAC with the cumulative Gap and sought recovery from FY onwards, whereas RInfra-D has requested to allow the recovery of the entire balance RAC amount in FY itself. Page 272 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

273 The Commission, in the MYT, had envisaged to complete the recovery of RA in FY However, there is balance recoverable amount of Rs Crore. In view of this, the Commission has decided to extend the period of recovery of Regulatory Asset by the end of this Control Period for both licensees, TPC-D and RInfra-D. Any adjustment in over-recovery/under-recovery of Regulatory Asset shall be undertaken at time of MYT for the next Control Period. Any balance arising out of over-recovery/under-recovery of Regulatory Asset may be adjusted through the Revenue Gap/(Surplus) of Supply Business. The amount of recovery for Regulatory Assets for FY and FY along with carrying cost is computed in the Table given below: Table 8-17: Regulatory Assets recoverable in FY and FY as approved by the Commission ((Rs. Crore) Sr. No. Particulars FY FY Opening Balance Recovery/(refund) during the year Closing Balance Interest Rate % 9.45% 9.45% 5 Carrying/(holding) Cost Total amount for recovery/(refund) Further, the Commission has decided to allow recovery of the cumulative Revenue Gap in FY and FY itself, without any deferment to the next Control Period, for both RInfra-D and TPC-D, though the proportion of recovery in FY and FY is different for RInfra-D and TPC-D. The proportion of recovery in FY and FY has been decided with the view to have a smooth tariff increase trajectory, rather than an increase/decrease in FY , followed by a reduction/increase in FY over the increase/decrease in FY The treatment of the Revenue Gap of RInfra-D is detailed in the MTR dated 12 September, 2018 in Case No. 200 of 2017 for RInfra-D. Further, the Commission has considered the recovery of Revenue Gap for the Wires Business and Supply Business in two years. The Commission has passed through 30% of the cumulative Revenue Gap in FY , and 70% of the cumulative Revenue Gap in Case No. 69 of 2018 Mid Term Review for TPC-D Page 273 of 387

274 FY , with due Carrying Cost. The Revenue Gaps are adjusted in such way that there is smooth increase in tariff over two years. The Revenue Gap/(Surplus) to be recovered in FY and FY including carrying cost is computed in the Table given below: Table 8-18: Past Revenue Gaps recoverable in FY and FY as approved by the Commission ((Rs. Crore) Wires Business Supply Business Sr. Particulars No. FY FY FY FY Opening Balance Recovery/(Refund) during the year Closing Balance Interest Rate % 9.45% 9.45% 9.45% 9.45% 6 Carrying/(Holding) Cost Total amount for recovery/(refund) As regards the determination of ACOS, the Commission notes that TPC-D vide letter CREG/MUM/MERC/2018/190 dated 23 July, 2018 made an additional submission, wherein it has revised the cumulative Revenue Gap/(Surplus) to be recovered on account of revised power purchase cost for FY , additional Transmission Charges revenue from OA consumers, revised Income Tax computation, allocation of Standby Charges, and prompt payment discount on payment of Standby Charges. Based on this, TPC-D revised the ARR for recovery through tariff of Supply Business including past recovery, as Rs Crore for FY and Rs Crore for FY for Supply Business. TPC- D proposed the ACOS of Rs. 7.12/kWh for FY with no tariff hike and Rs. 7.29/kWh for FY with 2% tariff hike. The Commission notes that this revised proposal of TPC-D was not in public domain. However, the Commission has dealt with the submission of TPC-D in respective Sections of earlier Chapters in this. The Commission has computed the total ARR for recovery through tariff including past revenue gaps vis-à-vis existing tariff. For computation of revenue at existing tariff, the Commission has considered the tariff for FY and FY as approved in the MYT. Accordingly, the Commission has computed the Revenue Gap at existing tariff including past gaps and recovery of Regulatory Assets, as shown in the following Table: Page 274 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

275 Table 8-19: Total ARR for recovery for FY and FY as approved by the Particular Commission (Rs. Crore) Wire Business FY FY Supply Business Total Wire Business Supply Business Total Standalone ARR , , , , Recovery of past revenue gap/(surplus) Less: Expected revenue from OA consumers from proposed Tariff Total ARR for recovery , , , , Add: recovery of Recovery Asset Total ARR for recovery including Regulatory Assets , , , , Revenue at existing tariff , , , , Revenue gap/(surplus) including past gaps (5.41) Sales including OA Sales (MU) 3, , , , , , Average Cost of Supply (Rs./kWh) The Commission has proposed to recover the revenue gap at existing tariff, including past gaps through tariff hike in FY and FY Accordingly, the Commission approves the ACOS for FY and FY as shown in the following Table: Table 8-20: Average Cost of Supply and Tariff Increase approved by the Commission ((Rs. Sr. No. Particulars Crore) FY (existing tariff) FY FY Total ARR for recovery Average Cost of Supply (Rs./kWh) Tariff increase w.r.t. tariff of previous year/existing tariff % 1.71% 8.3 WHEELING CHARGES TPC-D's Submission TPC-D submitted that it has kept the HT:LT GFA ratio as 77:23 for FY , which is same as approved in the MYT Tariff. However, with focus on increasing LT Network in the subsequent years in order to utilize the existing backbone network, it is assumed that the GFA ratio will be reduced to 75:25 by FY Based on the same, Wheeling Charges are computed as given in the Table below: Case No. 69 of 2018 Mid Term Review for TPC-D Page 275 of 387

276 Table 8-21: Wheeling Charges for FY and FY as submitted by TPC-D FY FY Particulars MYT MTR Petition MYT MTR Petition HT Sale with 15 days adjustment Open Access (MU) LT Sale with 15 days adjustment (MU) Total Sale (MU) Direct Sale % HT Sale 72% 70% 70% 67% LT Sale 28% 30% 30% 33% GFA% HT GFA 77% 77% 77% 75% LT GFA 23% 23% 23% 25% Wires ARR (Rs. Crore) Network Cost-HT Network Cost-LT Wheeling Cost HT Wheeling Cost LT HT Wheeling Charge-Rs/kWh LT Wheeling Charge-Rs/kWh TPC-D proposed the Wheeling Charges to be recovered for FY and FY as Rs 1.08/kWh and Rs 1.09/kWh for HT Supply and Rs 2.16 /kwh and Rs 2.18/kWh for LT Supply, respectively. Commission s Analysis and Ruling The Commission has approved the ARR for the Wires Business for FY and FY as elaborated in Chapter 7 of this, and the recovery of the cumulative Revenue Gap of the Wires Business has been set out in the preceding paragraphs. As regards the Wheeling Charges, TPC-D vide letter CREG/MUM/MERC/2018/211 dated 1 August, 2018 has made the following submissions: (a) The Commission, in the MYT, has specifically not excluded EHV sale from applicability of HT Wheeling Charges for the current MYT Control Period in order to avoid tariff shock to other HT and LT consumers on account of higher Wheeling Charges. (b) If any major change in Wheeling Charge tariff setting principles, e.g., determination of Voltage level wise Wheeling Charges separately for LT, 11 kv, 22 kv, 33 kv and 110 kv voltages is undertaken at this stage, there could be massive tariff shock Page 276 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

277 to consumers as the Wheeling Charges would go up by additional 25-30% for LT consumers. (c) This would be contrary to the MYT tariff setting and would disturb the tariff balancing totally which, in a competitive environment would lead to mass scale consumer migration through Change-over, Switch-over and OA routes and challenge the viability of TPC-D as a business entity. (d) It is well settled principle affirmed by ATE in various Judgments that during truing up stage, which is carried out during Mid Term Review, the basic tariff setting principles and methodology adopted by a State Commission cannot be drastically amended. (e) At present, TPC-D does not maintain the voltage-wise asset and expenditure segregation, which is essential for the computation of the voltage level wise segregated Wheeling Charges. If the Commission wishes to determine the voltage wise wheeling charges, TPC-D proposed spread of the past gap over a period of seven years till FY The Commission has noted the submission of TPC-D regarding the computation of voltagewise wheeling charges. However, the Commission in the present has continued with the approach for determining the Wheeling Charges for HT level and LT level. Further, as regards the determination of Wheeling Charges, the Commission in MYT has not excluded the EHT sales in line with the past practice with which no issue has been taken. However, subsequently, the Commission in dated 21 March 2018 in Case No. 45 of 2017 held as under: 9.. Thus, although the supply of power to change-over consumers is akin to Open Access, it is not in strictly of the nature envisaged in the DOA Regulations. It is a special dispensation available to consumers of RInfra-D and TPC-D in the peculiar circumstances of parallel licensing in parts of Mumbai. This dispensation discussed in the APTEL Judgment and the analogy of applicability of RAC to change-over consumers is not relevant to the case of HPCL, which is a direct consumer of TPC- D connected on EHV level and has a Contract Demand of more than 1 MW and is, hence, eligible and is sourcing power from its selected Generator through Open Access in the ordinary course under the Open Access Regulations. 10. Had a separate RAC not been determined, it would have been subsumed in the Distribution Licensee s ARR and appropriately apportioned between the supply and wheeling-related costs underlying the determination of the Tariff, including the Demand and Energy Charges, and the Wheeling Charges, respectively. This Case No. 69 of 2018 Mid Term Review for TPC-D Page 277 of 387

278 subsumed amount, if not carved out for recovery separately as RAC, would be reflected in higher CSS and/or Wheeling Charges payable by Open Access consumers. However, since a separate RAC has in fact been carved out in the case of TPC-D, the extent of increase in CSS and/or Wheeling Charges had it been subsumed in the Tariff has not been determined. 11. In the present Case, HPCL is a partial Open Access consumer sourcing power from SWPGL through a Group Captive arrangement. (The Commission notes that, in its recent in Case No. 159 of 2016, the Commission has recognised the CGP status of SWPGL s Units 3 and 4 in FY ). That being the case, HPCL is admittedly not liable to pay CSS. Moreover, since HPCL is a consumer connected to the EHV Transmission Network, it is not liable to pay Wheeling Charges to TPC- D. Thus, even if RAC had not been carved out separately and a part of it had been reflected in the Wheeling Charges, it would not have been payable to TPC-D by HPCL. 12. In view of the foregoing, HPCL is not liable to pay RAC for the power sourced from SWPGL through Open Access. TPC-D shall refund the RAC, with applicable interest, to HPCL separately within one month or through its electricity bill for the ensuing billing cycle. (emphasis added) In the above said, the Commission ruled that HPCL, being a consumer connected to EHV Transmission network, it is not liable to pay Wheeling Charges to TPC-D. Aggrieved by this decision of the Commission, TPC-D filed an appeal before ATE in Appeal No. 84 of However, no stay has been granted by ATE on this. Further, TPC-T filed a Petition before the Commission in Case No. 137 of 2016 for amendment of Transmission Licence No. 1 of In the said Petition, TPC-T submitted that 110 kv Trombay-HPCL Feeders 1 & 2 were never part of TPC-T s asset and were assets of TPC-D. The Commission rejected the prayer of the Petitioner vide its dated 1 August, 2018 citing decision taken by the Commission in dated 12 March, 2018 in Case No. 58 of The relevant extract of is as under: 28 The Commission has scrutinized the objection raised by HPCL and the reply submitted by TPC-T. In this context, the Commission notes that the issue of status of 110kV HPCL feeder has been dealt with by it in its dated 12 March, 2018 in Case No. 58 of The relevant extract is given below: 11.6 TPC-D has not satisfactorily shown why the 110 kv Lines should be considered as its distribution assets more than 2 years after their inclusion in TPC-T s Licence Page 278 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

279 and in the face of the practice in many States, including Maharashtra, of treating the EHV network of 66 kv and above as part of the Transmission Network The Commission notes that, in its revised Network Roll-out Plan in Case No. 182 of 2014, TPC-D had stated that its existing Distribution Network is only up to 33 kv, meaning thereby that the network of voltages above 33 kv is not a part of its Distribution Network Moreover, the supply voltage of a consumer is determined on the basis of its load requirement. If a consumer is given supply at a voltage level of 66 kv and above, that does not by itself imply that such network is a distribution asset. This is an established principle and practice in the power sector in India, barring a few exceptions. Strictly speaking, a Transmission Line of voltage of 66 kv and above may be transmitting power to a consumer of the Distribution Licensee and could be termed as a Distribution Line as a matter of convenience, but it has to be understood in the proper perspective. In fact, this is the argument of TPC-D. For example, if a consumer with a demand which technically entitles it to draw power on a 400 kv Transmission Line and that Line is included in the Distribution Business, then the Distribution Licensee will not only have to maintain that 400 kv Line and associated Switchgear, EHV testing equipment, etc., but also have to maintain the inventories required in case of breakdowns and shutdowns and the required expertise in the field of EHV TPC-D has cited the APTEL Judgment in Appeal No. 30 of 2012, para. 41 of which concludes that a Line between the Transmission System and the consumer s premises is a part of the Distribution System. In the Commission s view, the purport of this ruling is that, under Section 42 read with Section 43 of the EA, 2003, a Distribution Licensee cannot escape from its USO of providing supply to a consumer requiring a higher voltage of 66/ 110/220/400/765 kv only on the ground that it deals with voltages up to 33 kv (wherever applicable). The Distribution Licensee is required to supply all consumers requiring power irrespective of their voltage level. A literal and restricted interpretation of this ruling independently of this context would imply merging all EHV Lines feeding EHV consumers independently, into the Distribution Business. The Commission is of the view that this is not the import or intention of the APTEL ruling. The EHV Feeders emanating from the Trombay Generating Station s EHV substation is connected through 110 kv Lines to the EHV sub-station of HPCL. Thus, these Lines fall squarely within the definition of transmission lines in Section 2 (72) of the EA, Thus, the CEA Regulations demarcate distribution and transmission boundaries on the basis of voltage levels. Voltage levels from kv to 33 kv are included under the distribution head, and 66 kv to 765 kv AC and 500 kv DC voltage levels in transmission. Thus, in the CEA Manual for Transmission Planning Criteria, voltages from 66 kv to 765 kv are considered under the transmission head. Case No. 69 of 2018 Mid Term Review for TPC-D Page 279 of 387

280 11.16 Considering the foregoing, the Commission concludes that TPC D is not entitled to levy Wheeling Charges for the power supplied by it to HPCL, or Wheeling Charges and Wheeling Losses on the power sourced from SWPGL through Open Access. Accordingly, TPC-D shall refund the amounts collected from HPCL on this count, along with applicable interest, within one month if directly, or by adjustment in HPCL s energy bill for the ensuing billing cycle. In light of foregoing, the Commission is of the view that, although in MYT, the EHT sales were considered for computation of Wheeling Charges, the Commission in subsequent s has already decided on applicability of Wheeling Charges to EHV consumers. Further, the Commission in present has been undertaking Mid-Term Review of third Control Period and has determined the tariff for FY and FY , after taking into account the developments that have happened in the first two years of the Control Period. Further, TPC-D s reference to the ATE Judgment to the effect that the basic tariff setting principles and methodology adopted by the Commission cannot be drastically amended at the truing up stage, is inappropriate, as the Commission has not amended the principles for the true-up period. In view of the above, the Commission in the present has not considered the EHV sales for computation of Wheeling Charges. Accordingly, the Commission has reduced the sales at 110/132 kv level of MU for FY and MU for FY towards Direct consumers. Also, energy sales of MU towards OA sales at 110/132kV level has not been considered for FY and FY The Commission sought details of ratio for HT GFA and LT GFA for FY to FY TPC-D submitted the actual HT:LT ratio of GFA as 77:23 for FY The Commission has considered the same ratio for computation of Wheeling Charges for FY and FY Accordingly, the Commission has approved the Wheeling Charges as shown in the Table below: Page 280 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

281 Table 8-22: Wheeling Charges for FY and FY as approved by the Commission Particulars Direct Sale (MU) MYT FY FY MTR Petition Approved in this MYT MTR Petition Approved in this HT Sale 2, , , , , , LT Sale , , , , Direct Sale % HT Sale 72% 70% 63% 70% 67% 60% LT Sale 28% 30% 37% 30% 33% 40% GFA % HT GFA 77% 77% 77% 77% 75% 77% LT GFA 23% 23% 23% 23% 25% 23% Wires ARR (Rs Crores) Network Cost- HT Network Cost- LT Wheeling Cost HT Wheeling Cost LT HT wheeling Charge -Rs/kWh LT wheeling Charge -Rs/kWh Revenue from Open Access Consumer The above said determined Wheeling Charges are not applicable for consumers connected at EHV level i.e., 110/132 kv. 8.4 CROSS-SUBSIDY STRUCTURE TPC-D's Submission TPC-D submitted that it has considered the following imperatives while designing the cross-subsidy structure for FY and FY : (a) TPC-D submitted that there is a need for rebalancing of the tariffs for subsidized categories LT I-A Residential first and second slabs (S1 and S2), such that although the tariffs would be kept lower than the other Distribution Licensees in the common Licence area, the direct tariffs would be brought at par with the change-over tariff, which would enable rationalization of the cross-subsidy borne by the subsidizing consumers, while at the same time creating a predictable and level playing field. This Case No. 69 of 2018 Mid Term Review for TPC-D Page 281 of 387

282 re-balancing would result in slight increase in the tariff of S1 and S2 categories during FY , which would be neutralized with a reduction in tariff during FY (b) The cross-subsidy structure should be revisited for subsidizing customers such that the necessary critical base of such consumers is created to break the vicious circle of eroding sales. (c) There is a need for alignment of the philosophy used by the Commission across all Distribution Licensees where by the tariff for Temporary Supply - Others (TSO) is converted to Commercial category tariff on completion of one year of supply. This would ensure similar tariff structure across all Licensees experienced by the consumers. TPC-D has computed the cross-subsidy structure on the above principles, by considering the sales and revenue from both direct and change-over consumers. Further, TPC-D has considered the future demand and has proposed a new category for Electric Vehicle (EV) charging instead of clubbing under a different category and the Energy Charges for the same have been kept lower than the charges for Industrial/Commercial category. Table 8-23: Category-wise Cross Subsidy Structure for FY and FY as Consumer Category proposed by TPC-D Existing CSS FY Proposed CSS FY Proposed CSS Average % Change in Tariff with FY Existing Average % Change in Tariff with FY Proposed LT Category LT I - Residential (BPL) 30% LT I - Residential 66% 72% 72% 9% 0% LT II - LT Commercial LT II(A) - Commercial up to % 120% 128% 7% 7% kw LT II(B) - Commercial 20 to 50 kw 114% 123% 123% 8% 8% LT II(C) - Commercial > 50 kw 127% 134% 129% 6% (4%) LT III - LT Industry LT III - Industrial up to 20 kw 101% 110% 112% 9% 2% LT IV - Industrial > 20 kw 116% 127% 121% 10% (5%) LT V - Advertisement & 169% 168% 160% 0% (5%) Hoardings LT VI - Streetlights 105% 116% 109% 10% (6%) LT VII Temporary Supply LT VII(A) - Temporary Religious 84% 84% 79% 0% (7%) LT VII(B) - Temporary Others 129% 130% 122% 1% (7%) LT VIII - Crematoriums & Burial Grounds LT IX Public Services 62% 57% 67% (7%) 0% Page 282 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

283 Consumer Category Existing CSS FY Proposed CSS FY Proposed CSS Average % Change in Tariff with FY Existing Average % Change in Tariff with FY Proposed LT IX(A) Public Service - Govt Hospitals and Edu. Institutions 107% 80% 88% (25%) 9% LT IX(B) - Public Services- Others 129% 99% 121% (23%) 18% HT Category HT I Industry 123% 126% 119% 3% (6%) HT II Commercial 137% 126% 119% (8%) (6%) HT III - Group Housing Society 93% 109% 105% 17% (3%) HT IV - PWW & Sewage 110% 120% 105% 9% (15%) Treatment Plants HT V - Railways, Metro & Monorail 22/33 kv 114% 112% 104% (2%) (7%) HT V(B) - Railways Metro & Monorail HT VI Public Services HT VI(A) - Public Service - Govt Hospitals and Edu. Institutions 114% 111% 104% (3%) (6%) 111% 119% 111% 8% (8%) HT VI(B) - Public Services- Others 130% 124% 117% (5%) (6%) HT VII - Temporary Supply Further, TPC-D submitted that the cross subsidy for most of the category is in the range of +20% of the ACoS and the cross-subsidies have been reduced in FY Commission's Analysis and Ruling The Commission has considered the ACoS and cross-subsidy for the combined Wires and Supply Business rather than separately for each, as this is a tried and tested approach that is consistently adopted across Distribution Licensees. In line with the approach adopted in MYT, the Commission has determined the cross-subsidy by considering the sales and revenue from both direct and change-over consumers. The Commission has continued to determine the tariffs with an in-built incentive to consumers to reduce their consumption. Accordingly, the PF incentives/penalty, load factor incentive, etc. has been considered. The billing impact is designed to increase as the consumption increases on account of the higher telescopic tariffs applicable to higher consumption slabs, while at the same time ensuring that even consumers in the higher consumption slabs are charged at a lower rate to the extent of their consumption corresponding to lower slabs. Case No. 69 of 2018 Mid Term Review for TPC-D Page 283 of 387

284 The Commission has significantly reduced the tariff applicable for Temporary category (HT & LT) and LT Advertisements & Hoardings categories, since a very steep tariff may lead to use of polluting Diesel Generator sets. The revised ABR and the category-wise tariff increase/(reduction) approved by the Commission for the Control Period are given in the Table below: Page 284 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

285 Table 8-24: Category-wise Cross Subsidy Structure for FY & FY as approved by the Commission Average Billing Rate (Rs./kWh) Cross Subsidy (%) Tariff Increase Consumer Categories Existing Approved Existing Approved Approved FY FY FY FY FY FY FY FY HT CATEGORIES HT I - Industry % 127% 126% 3% 1% HT II - Commercial % 134% 133% 2% 1% HT III - Group Housing Society (Residential) % 120% 120% -2% 2% HT IV - PWW % 105% 105% 7% 2% HT V(A) - Railways % 100% 101% 2% 3% HT V(B) - Metro & Monorail % 102% 103% 2% 3% HT VI - Public Services (A) % 118% 119% -2% 2% HT VI - Public Services (B) % 128% 128% 1% 2% HT VII - Temporary Supply % 128% 126% -3% 0% LT CATEGORIES LT I (B) - Residential % 68% 69% 8% 3% LT II - Commercial (A) - Upto 20 kw % 110% 117% -1% 9% LT II - Commercial (B) - > 20 kw & < 50kW % 115% 117% 3% 3% LT II - Commercial (C) - > 50kW % 137% 136% 7% 1% LT III (A) - Industry < 20 kw % 109% 112% 3% 5% LT III (B) - Industry > 20kW % 111% 111% -3% 1% LT V - Advertisement & Hoardings, incl.floodlights & neon signs % 138% 135% 3% -1% Case No. 69 of 2018 Mid Term Review for TPC-D Page 285 of 387

286 Average Billing Rate (Rs./kWh) Cross Subsidy (%) Tariff Increase Consumer Categories Existing Approved Existing Approved Approved FY FY FY FY FY FY FY FY LT VI Streetlights % 119% 118% 7% 1% LT VII (A) Temporary Supply -Religious % 82% 84% 2% 5% LT VII (B) Temporary Supply -Others % 131% 129% 3% 0% LT VIII Crematoriums and Burial Grounds % 60% 59% 2% 0% LT IX - Public Services (A) Govt. Edu. Inst. & Hospitals % 91% 96% -2% 7% LT IX - Public Services (B) Others % 119% 117% 1% 0% Page 286 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

287 8.5 SUPPLY BUSINESS CHARGES TPC-D's Submission The Supply Business ABRs for each category have been computed based on the crosssubsidy structure proposed as above. The Supply Business ABR for each category has been further segregated into the following components of charges: 1) Fixed/Demand Charges 2) Energy Charges 3) Incentives Power Factor/Load Factor/ToD Fixed Charges and Demand Charges TPC-D's Submission The Commission in the MYT in Case No. 47 of 2016 with respect to Fixed/Demand Charges has stated as follows: The Fixed/Demand Charges are intended to recover a significant part of the overall fixed costs, and not only fixed cost of power purchase, as contended by TPC- D. The fixed costs of the Supply Business of a Distribution Licensee are all expenses, except the variable cost of power purchase, IoWC and provision for bad and doubtful debts. Although Transmission Charges and MSLDC Charges might also be classified as Fixed Charges, for the purpose of analysis the Commission has considered them as Variable Charges as their incidence is linked to the share of CPD and NCPD, which are linked to sales which are variable in nature. Of the total ARR of the Supply Business, around 31% is fixed in nature, while 69% is variable. However, the recovery of the fixed cost through Fixed/Demand Charges is only 34%. Moreover, the Fixed/Demand Charges have remained constant over the 2nd Control Period although the fixed cost has been increasing. Hence, the Commission has decided to gradually increase the Fixed/Demand Charges for all consumer categories by around 10-12% over the Control Period. The higher revenue from this increase has been used to cushion the Energy Charges. The category-wise Fixed/Demand Charges approved for each year of the 3rd Control Period are summarised subsequently in this Section, along with other Charges. TPC-D has proposed certain increase in Fixed / Demand Charges in line with the above, such that the total recovery from these Charges remain in the range of 31% to 33%. The proposed Charges are summarised subsequently in this Section, along with other Charges. Case No. 69 of 2018 Mid Term Review for TPC-D Page 287 of 387

288 Commission's Analysis and Ruling The Fixed/Demand Charges are intended to recover a significant part of the Fixed Costs. The Fixed Costs of the Supply Business of a Distribution Licensee are all expenses, except the variable cost of power purchase, IoWC and provision for bad and doubtful debts. Of the total ARR of the Supply Business of TPC-D, around 46% is fixed in nature, while 54% is variable. However, the recovery of the fixed cost through Fixed/Demand Charges is only 19%, which is comparatively low. The Commission had initiated the process of increasing the recovery of fixed costs through Fixed/Demand Charges in the MYT, and has decided to continue the same approach. Hence, the Commission has decided to increase the Fixed/Demand Charges for all consumer categories by around 10% in FY and FY The recovery of the fixed cost through Fixed/Demand Charges is thus, estimated to increase to 20% and 24% in FY and FY , respectively. The higher revenue from this increase has been used to cushion the Energy Charges paid by different consumer categories. The category-wise Fixed/Demand Charges approved for FY and FY are summarised subsequently in this Section, along with other Charges Energy Charge TPC-D's Submission As suggested in the Tariff Policy, TPC-D has proposed the category-wise Energy Charges such that the cross- subsidies with respect to ACoS are reduced from the present levels, and the tariff of most categories is within +20% of the ACoS. TPC-D proposed to introduce kvah billing instead of kwh billing from FY onwards, for which the proposed methodology is as follows: Introduction of kvah Billing The Commission introduced the Power Factor (PF) incentive system with an aim to get support from consumers to improve system conditions and at the same time, for the consumer to recover the cost of PF correction equipment through incentives. TPC-D submitted that in the present scenario, it is not necessary to get reactive energy support from the consumer on a continued basis throughout the day, and PF incentive provided to such consumers on a continued basis for the improved system conditions is actually burdening the other low-end consumers. TPC-D proposed that the consumers who contribute for improving the PF of the system should have inbuilt mechanism for incentivising their efforts. TPC-D further submitted that to ensure the automatic monetary discipline with regard to maintaining PF and to make PF incentive/penalty redundant, kwh based billing Page 288 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

289 should be replaced by kvah billing. TPC-D proposed that the base PF for conversion of kwh to kvah should be considered as 0.95, which is currently the base for deciding PF incentive. TPC-D submitted that in Case No. 110 of 2017 filed by HPCL regarding applicability of PF incentive to OA consumers, the Commission has issued the on the same in which it has stated as under: With reference to Regulation 21 of the DOA Regulations, 2016, TPC-D has raised the issue of levying a Reactive Energy Charge on Open Access consumers. As present, in the MYT s in respect of TPC-D and other Distribution Licensees, the Commission has not determined any Reactive Energy Charge. In its forthcoming Mid-Term Review Petition, TPC-D is at liberty to propose such determination. TPC-D proposed that in the first phase, the kvah billing is to be made applicable to all the consumers, who are currently under the purview of PF incentive / Penalty scheme and have existing electronic meters suitable for KVAh recording. The kwh billing will continue for others till their meters are replaced with suitable meter for KVAh recording. Commission's Analysis and Ruling The Commission has determined the category-wise Energy Charges in such a manner that the cross-subsidies with respect to the ACOS are reduced from the present levels, and the tariff of most categories is within +20% of the ACOS as suggested by the Tariff Policy. The Commission has also reduced the intra-category cross-subsidy within the Residential category by increasing the tariffs of the lower consumption slabs and increasing the ABR of the higher consumption slabs. The Commission also notes that two Distribution Licensees in the State, i.e., Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) and TPC in their respective MTR Petitions have proposed to implement kvah based billing as an alternative to present PF Incentive / Penalty mechanism. The Commission is of the opinion that after implementing PF incentive / penalty mechanism for several decades, one needs to move towards kvah billing, which holds the consumer using the system responsible for maintaining its own PF. However, such shift needs to be gradual so that all stakeholders including consumers and the Distribution Licensee get sufficient time to transition into the new billing system. As a first step towards the implementation of kvah billing system, the Commission has changed the PF Incentive/Penalty mechanism, which has been discussed in subsequent Section of this Chapter. Case No. 69 of 2018 Mid Term Review for TPC-D Page 289 of 387

290 The Commission intends to implement kvah billing for all HT consumer and LT consumers having load above 20 kw from 1 April, All Distribution Licensees in the State are required to take necessary steps such as meter replacement, if required, preparedness of billing software, increasing consumer awareness, etc. Also, wherever possible, the Distribution Licensee shall start collecting category-wise energy consumption details in kvah terms and submit it during the next Tariff determination process Load Factor Incentive TPC-D's Submission TPC-D proposed the same Load Factor Incentive as approved by the Commission in MYT. Commission's Analysis and Ruling Load Factor Incentive (up to 15% of energy charge) had been introduced by the Commission for incentivising bulk consumers in the State to maintain steady demand on the system. However, Load Factor Incentive is not applicable in a month when Billing Demand exceeds the Contract Demand. As definition of Billing Demand excludes the demand recorded during the off-peak hours of 22:00 hours to 06:00 hours, and also considering rebate in ToD tariff applicable at off-peak hours, the consumers tend to exceed their Contract Demand during this period while paying a small amount towards Contract Demand penalty while availing Load Factor Incentive. In order to avoid such misuse of the provision, the Commission, in its Tariff, has stipulated that if a consumer exceeds its Contract Demand on more than three occasions in a Calendar Year, the Distribution Licensee may take corrective action of restating Contract Demand as per Supply Code Regulations, However, as per provision of Supply Code Regulation, 2005, Contract Demand can be restated only on receiving an application from the consumer in this respect. The Commission has come across cases wherein consumers have refused to cooperate with the Distribution Licensee for restating their Contract Demand. In order to ensure secure operation of electricity grid, it is critical that every constituent of the system acts within its assigned boundaries. Intentional violation of Contract Demand limit by individual consumer for its own financial gain may lead to a system failure, which may affect other consumers. Hence, the Commission is constrained to restrict the Load Page 290 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

291 Factor Incentive to only those consumers who do not exceed their Contract Demand during the month. Accordingly, the Commission rules that Load Factor Incentive shall not be applicable for the month if the consumer exceeds its Contract Demand in that month. Further, the Consumers exceeding Contract demand during the off-peak hours (22:00 hrs to 06:00 hrs) would also not be eligible for Load factor Incentive for that month Time of Day Tariff TPC-D's Submission The purpose of TOD tariff is to shift the load from peak to off-peak hours and avoid spikes in the demand pattern. The Commission, in the MYT has directed as under: However, the Commission is of the view that, in the absence of a substantive study setting out the likely outcome of a revised TOD tariff structure and taking into account the impact of this shift in the load curve, it would not be prudent and might not even be beneficial to change the ToD tariff structure. Further, a load curve weighted towards the afternoon hours might well be helpful for the Distribution Licensees in optimising their power purchase costs, as power available at that time in the markets will be cheaper as the Figure above indicates that the all-india system still has an evening peak load. TPC-D submitted that it is analysing the load pattern of its demand and it will submit the details shortly. TPC-D proposed the same TOD charges as approved by the Commission in the MYT. Commission's Analysis and Ruling As this issue has to be seen in totality across all Licensees, the Commission will take a view on proposals to modify the ToD time-slots and/or ToD slot-wise tariffs in the next Control Period Power Factor Penalty and Incentive TPC-D's Submission TPC-D proposed that the PF Incentive/Penalty should be discontinued with the introduction of kvah billing. Case No. 69 of 2018 Mid Term Review for TPC-D Page 291 of 387

292 Commission's Analysis and Ruling Since the first Tariff issued in year 2000, Power Factor (PF) incentive/penalty is included in retail tariff for incentivising the consumers to take corrective measures for improving their PF. As per current Tariff, maximum 7% rebate in monthly electricity bill amount is provided for achieving unity PF. Over the period, consumers in Maharashtra have taken appropriate measures to maintain their PF near Unity. This helps the consumers and the Distribution Licensee as the consumers get rebate in their monthly electricity bill while the Licensee observes improvement in system PF. Though PF Incentive mechanism encourages the consumer to improve its lagging PF and maintain it to unity, there are cases of over-compensation causing leading PF. There is no clarity about leading PF in the existing Tariff. As is the case with lagging PF, higher magnitude of leading PF is also not desirable. Therefore, the Commission introduces penalty for leading PF beyond 0.9. This penalty will be applicable from prospective effect. As discussed in earlier Section of this Chapter, as a first step towards the implementation of kvah billing system, which is devoid of any separate incentive / penalty for power factor, the Commission has decided to reduce the existing PF Incentive / Penalty by 50%. Accordingly, maximum PF Incentive, which is 7% at Unity PF has been reduced to 3.5%. Similar reduction has been made in the Penalty for lower PF. Details of PF Incentive / Penalty is given in the corresponding Tariff Schedule Regulatory Asset Charge TPC-D s Submission TPC-D proposed to continue the approach adopted by the Commission in MYT to levy RAC up to FY only. The total RA amount is spread across different consumer categories, in proportion to the ratio of Energy Charges of the respective categories to the overall weighted average Energy Charge of TPC-D for FY , considering sales to direct consumers. TPC-D submitted that the average RAC for FY is Rs 1.37 per kwh which will be applicable to Direct and OA consumers. TPC-D submitted the per Unit RAC Charge for FY as given in the Table below: Page 292 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

293 Table 8-25: Average RAC for FY as proposed by TPC-D Sr. No Particular Unit FY Proposed RAC Charges Rs. Crore Direct plus OA Sales MU Per Unit RAC Charge Rs./kWh 1.37 Commission's Analysis and Ruling As discussed in earlier Section of this, the Commission has considered the recovery of Regulatory Asset in FY and FY In line with the approach adopted by in MYT, the Commission has considered the recovery of the total RA amount across different consumer categories, in proportion to the ratio of Energy Charges of the respective categories to the overall weighted average Energy Charge of TPC-D for a particular year, considering sales to both direct and OA consumers. The category-wise RAC approved by the Commission for FY and FY is summarised subsequently in this Section, along with other Charges. The Commission clarifies that RAC is not applicable for consumers connected at EHV level i.e., 110/132 kv. 8.6 CHARGES APPLICABLE TO OPEN ACCESS CONSUMERS The Charges applicable to OA consumers to ensure prudent recovery of costs are as follows: i. Wheeling Charge ii. Regulatory Asset Charges iii. Additional Surcharge iv. Cross Subsidy Surcharge (CSS) not applicable to Captive/Group Captive consumers Cross-Subsidy Surcharge TPC-D's Submission TPC-D has computed the Cross-Subsidy Surcharge (CSS) based on the formula stipulated in the Tariff Policy, 2016 and approved by the Commission in its MYT. The CSS formula prescribed in the Tariff Policy, 2016 is: S= T [C/ (1-L/100) + D + R] Where, S is the surcharge Case No. 69 of 2018 Mid Term Review for TPC-D Page 293 of 387

294 T is the tariff payable by the relevant category of consumers, excluding the category-wise RAC; C is the per unit weighted average cost of power purchase by the Licensee, including meeting the Renewable Purchase Obligation*but excluding Transmission charges, Standby Charges, and MSLDC charges; D is the aggregate of transmission, distribution and wheeling charge applicable to the relevant voltage level; L is the aggregate of transmission, distribution and commercial losses, expressed as a percentage applicable to the relevant voltage level; R is the per unit cost of carrying regulatory assets. TPC-D has considered the Transmission Loss equal to 3.92% as approved in the MYT. TPC-D proposed the following Distribution Loss for HT and LT level for computation of CSS: Table 8-26: Distribution Loss for HT & LT as proposed by TPC-D Particulars FY FY HT Loss 1.22% 1.22% LT Loss 1.00% 1.00% D is the aggregate of Transmission and Wheeling Charges applicable to the relevant voltage level. TPC-D submitted that the Transmission Charges deducted for computing the CSS are as approved in the InSTS Tariff by the Commission. The Transmission Charge and Wheeling Charge considered by TPC-D for FY and FY are as shown in the Table below: Table 8-27: Aggregate Transmission & Wheeling Charges for HT & LT for FY and FY as submitted by TPC-D Particulars FY FY HT Wheeling Charge Transmission Charge Total LT Wheeling Charge Transmission Charge Total R is the per unit carrying cost. The per unit carrying cost for each year shown in the Table below is computed by separating the past Revenue Gap being recovered each year into principal and interest components. Page 294 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

295 Table 8-28: Per Unit Carrying Cost as submitted by TPC-D (Rs. /kwh) Particulars FY Per unit Carrying Cost 0.06 The category-wise CSS computed for FY and FY is as given in the Table below: FY FY Consumer Category Existing Proposed Proposed LT Category LT I - Residential (BPL) - - LT I - Residential and above LT II - LT Commercial LT II(A) - Commercial up to 20 kw LT II(B) - Commercial 20 to 50 kw LT II(C) - Commercial > 50 kw LT III - LT Industry LT III (A) - Industrial up to 20 kw LT III(B) - Industrial > 20 kw LT IV- Public Water Works LT V - Advertisement & Hoardings LT VI - Streetlights LT VII Temporary Supply LT VII(A) - Temporary Supply- Religious LT VII(B) - Temporary Supply Others LT VIII - Crematoriums & Burial Grounds LT IX Public Services LT IX(A) - Public Service Govt. Hospitals and Edu. Institutions LT IX(B) - Public Services Others HT Category HT I Industry HT II Commercial HT III - Group Housing Society (Residential) HT IV - Public Water Works HT V - Railways, Metro & Monorail /33 KV KV HT V(B) - Railways Metro & Monorail HT VI Public Services Case No. 69 of 2018 Mid Term Review for TPC-D Page 295 of 387

296 FY FY Consumer Category Existing Proposed Proposed HT VI(A) Public Service Govt. Hospitals and Edu. Institutions HT VI(B) - Public Services -Others HT VII - Temporary Supply Commission's Analysis and Ruling The Commission has adopted the Formula prescribed under the new Tariff Policy notified on 28 January, 2016 for determining the CSS. The different components of the CSS formula considered by the Commission for FY and FY are discussed below: T is the revised ABR of the respective consumer categories, excluding the category-wise RAC approved subsequently in this, as per the approach adopted by the Commission in the past, and which has been upheld by the ATE. C is the weighted average cost of power purchase for each year, including RPO but excluding Transmission Charges, Stand-by Charges, and MSLDC Charges. L is the aggregate of Transmission and Distribution Losses, expressed as a percentage applicable to the relevant voltage level. The Commission has considered the HT Loss and LT loss as approved in MYT for computation of CSS. The Commission has not considered the Commercial Losses, in line with its past approach as well as the DOA Regulations, which specify that only Technical Losses shall be levied on OA transactions. 8-29: Distribution Loss for HT (33 kv and 11 kv) and LT level for FY and FY as approved by the Commission Particulars FY FY HT Loss 0.90% 0.90% LT Loss 1.23% 1.22% The Transmission Loss considered by the Commission for both HT and LT levels is 3.30%. D is the aggregate of Transmission and Wheeling Charges applicable to the relevant voltage level. The Transmission Charge and Wheeling Charge approved by the Commission for FY and FY is shown in the Table below: Page 296 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

297 Table 8-30: Aggregate Transmission and Wheeling Charges for HT & LT for FY and FY as approved by Commission (Rs./kWh) Particulars FY FY HT Wheeling Charge Transmission Charge Total LT Wheeling Charge Transmission Charge Total R is the per unit carrying cost. The per unit carrying cost for FY and FY as shown in the Table below is computed by separating the past Revenue Gap being recovered each year into principal and interest components. This does not include carrying cost on RAC, as RAC is a separate element and is not included in the Tariff T : The Commission has computed per unit carrying cost as Rs. 0.09/kWh for FY and Rs. 0.04/kWh for FY The Commission has determined the CSS for the Residential category as a whole rather than determining CSS for each consumption slab of the Residential category, as the ABR of the slab is not representative of the actual ABR for consumers consuming upto that level, on account of the benefit of the telescopic tariffs. The category-wise CSS approved for FY and FY is as shown in the Table below: Table 8-31: Cross-subsidy Surcharge for FY and FY as approved by Commission (Rs./kWh) Consumer Categories FY FY HT CATEGORIES HT I - Industry HT II - Commercial HT III - Group Housing Society (Residential) HT IV - PWW HT V(A) - Railways HT V(B) - Metro & Monorail HT VI - Public Services (A) HT VI - Public Services (B) Case No. 69 of 2018 Mid Term Review for TPC-D Page 297 of 387

298 Consumer Categories FY FY HT VII - Temporary Supply LT CATEGORIES LT I (A) - Residential (BPL) - - LT I (B) - Residential - - LT II - Commercial (A) - Upto 20 kw LT II - Commercial (B) - > 20 kw & < 50kW LT II - Commercial (C) - > 50kW LT III (A) - Industry < 20 kw - - LT III (B) - Industry > 20kW LT IV - PWW - - LT V - Advertisement & Hoardings, incl. floodlights & neon signs LT VI Streetlights LT VII (A) Temporary Supply -Religious - - LT VII (B) Temporary Supply -Others LT VIII Crematoriums and Burial Grounds - - LT IX - Public Services (A) Govt. Edu. Inst. & Hospitals - - LT IX - Public Services (B) Others Additional Surcharge TPC-D's Submission TPC-D through its Petition in Case No. 79 of 2017 submitted its power purchase plan for FY to FY to the Commission. The long-term tie up capacity proposed by TPC-D is based on its current demand. TPC-D has not proposed any Additional Surcharge. Commission's Analysis and Ruling In the present, the Commission has not approved any Additional Surcharge for TPC- D for FY and FY RATIONALISATION OF TARIFF CATEGORIES The Commission has undertaken the following rationalisation of the Tariff Schedule and harmonisation of the definitions and applicability of each tariff category across the Distribution Licensees in Maharashtra, including TPC-D: Page 298 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

299 (a) The Commission has created a new category for HT Railways, Metro and Monorail operations, under the HT V category, for operations at EHV voltage (110 kv). It is clarified that the Wheeling Charges shall not be applicable for such EHV category, as the Distribution Licensee s wires infrastructure is not being used for supplying electricity to such consumers. (b) The newly created LT category and HT category for EVs have been numbered as LT X and HT VIII, respectively. (c) Telecommunications Towers shall be covered under the Commercial category, unless specifically included in the IT & ITES Policy of the Government of Maharashtra for coverage under the Industrial category. (d) Start-up power requirement for Power Plants may be taken from the Distribution Licensee where the Power Plant is located, either through a separate connection or through the existing evacuation infrastructure. In case a separate connection is taken, all the terms and conditions applicable to any consumer shall be applicable. In case a separate connection is not taken, the Power Plant shall have to enter into an agreement with the Distribution Licensee for contracting the demand for such start-up power. In either case, the Demand Charge shall be at the rate of 25% of the rates approved for HT Industry category to the extent of the start-up demand contracted by the Power Plant for Black Start, or start-up after Forced or Planned Outage of the Power Plant. However, this dispensation shall not be applicable to Power Plants having PPAs with the Distribution Licensees under Section 62 of the EA, 2003, which provide for netting off the energy drawn by the Generator with the energy injected into the grid. (e) The Load Factor incentive has been made applicable only on the Energy Charges, and exclude the Wheeling Charges and RAC, as Wheeling Charges are designed to recover the Wires ARR and higher Load Factor will not reduce the Wheeling Charges. Similarly, the RAC is designed to recover certain unrecovered past dues, and higher Load Factor will not reduce the RAC. Wheeling Charges and RAC have no nexus with Load Factor. It may also be noted that all previous clarifications given by the Commission through its various s continue to be applicable, unless they are specifically contrary to anything that has been stated in this, in which case the clarifications given in this shall prevail. Levy of Commercial Category Tariff to Circus Troupes instead of Temporary Tariff Temporary Supply - Others was applicable to the Circus Troupes in the past on account of its temporary nature of power requirement. However, the Commission notes that the Circus Industry is facing difficult times due to various reasons and it is a dying art, which needs to Case No. 69 of 2018 Mid Term Review for TPC-D Page 299 of 387

300 be encouraged to ensure its survival. Considering the above facts, the Commission has decided to apply tariff of Temporary Supply Religious to Circus troupes. Tariff category for Waste Management MCGM has submitted that as per the provisions of 61 of MMC Act, 1881 it is the obligatory duty of MCGM for scavenging and removal and disposal of garbage, which is created in the city by the residential societies and commercial organizations, and also disposal of excrementitious and other filthy matters, and of all ashes, refuse and rubbish. For the said purpose, various rules have been enacted by MCGM. Further, under the Swatcha Bharat Mission and as per the SWM Rules 2016 the list of duties are enlisted for generator of waste as well as those of Urban Local Bodies for better management of Solid Waste. MCGM submitted that the Waste processing Facility machines such as bio-methanation plants, etc., generally run on 415 volts three-phase electric supply and are required to run for at least hours of the day. The Distribution Licensees provide electricity to such equipment/machines at the Ccommercial Tariff, which are 2-3 times the residential tariff. In view of the above, MCGM requested that residential category Tariff should be charged for consumption of electricity by waste processing facilities such as organic waste converters, bio-methanation plants and vermi-composting units, etc. instead of tariff applicable to commercial / industrial consumers. The Commission has examined the submissions of MCGM and notes that in case the waste processing / disposal facility is present in a premise, exclusively for processing the waste generated within the premise, the tariff applicable to such premise / consumer is applicable to the waste disposal facility as well. However, considering the nature of services provided, as far as the waste disposal facilities operated by local self-government bodies are concerned, they may be categorised under LT IV or HT IV (Public Water Works and Sewage Treatment Plants) and the waste disposal facilities operated by private operators may be categories under the LT IX or HT VI (B) Public Services Others. Separate Tariff Category for Electric Vehicle Charging Station In this context, suggestions have also been received for creating new Tariff Category for EV Charging Stations and levying promotional tariff. The Commission is aware about initiatives taken by the Government at the State and Central level to encourage use of EVs. One of the key challenges identified in this regard is lack of EV charging infrastructure. To address this challenge, number of steps are being taken up Page 300 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

301 by the Central Government including plan for setting up charging stations for EVs. The GoM has also recently notified the Maharashtra Electric Vehicle Policy, 2018 with an objective to promote sustainable transport system along with other policy objectives. One of the strategic drivers for the Policy is promotion of creation of dedicated infrastructure for charging of EVs through subsidization of investment. Accordingly, in order to promote Electric Vehicles, the Commission has decided to create a separate tariff category for EV Charging Stations, at HT and LT voltages. As a promotional measure, the Commission has considered lower Demand Charges for this category and ensured that resultant Tariff is near the ACoS. The Energy Charges, Wheeling Charges, and RAC have been adjusted in such a manner that the total Variable Charges are Rs. 6/kWh. Details of applicability of this category is given in the Tariff Schedule. It is further clarified that consumers are allowed to charge their own EV at their premises at the tariff applicable to such premises. Discount against digital payment The Government of India has been encouraging digitization across various areas including monetary transactions. To support the initiatives of the Government, a discount of 0.25% of the monthly bill (excluding taxes and duties), subject to a cap of Rs. 500/-, shall be provided to LT category consumers for payment of electricity bills through various modes of digital payment such as credit cards, debit cards, UPI, BHIM, internet banking, mobile banking, mobile wallets, etc. Mode for communication The Commission notes that the Hon ble High Court of Judicature at Mumbai in its in the matter of Notice No of 2015 in Execution Application No of 2015 dated 11 June, 2018 has taken on record the Whatsapp message sent to serve notice on the Respondent and ruled that the same is sufficient for the purposes of service of Notice. The relevant portion of the is reproduced below: 2. The Claimants have also learnt that the Respondent resides at Nalasopara in a place which he seems to have taken on rent. The Claimant will furnish the particulars of address so that a warrant, if necessary can be issued against him. 3. In the meantime, the present Notice is made absolute. 4. A print-out of the WhatApp message is taken on record and marked N for identification with today s date. The second print out is of the WhatsApp contact number of the Respondent. This shows his contact number. This is also taken on record and marked N2 for identification with today s date. This is sufficient for the purposes of service of Notice under XXI Rule 22. Case No. 69 of 2018 Mid Term Review for TPC-D Page 301 of 387

302 5. By way of abandon caution and so that it remains a part of the record a scan of the print outs is attached to this order as well. The Commission notes that serving of Notices to the consumers through digital medium such as Whatsapp message, , SMS etc. will not only be environment friendly and save administrative cost but also free the human resources for other consumer service related works. Hence, the Commission allows the Distribution Licensee to issue notice under Section 56 of the Electricity Act, 2003 through digital mode such as Whatsapp message, , SMS etc. The Licensee can also use the digital medium of communication for issuing other information to the consumers including information regarding billing, outstanding payment, outage details, etc. There is also a need to create awareness regarding this provision and accordingly, the consumer needs to be made aware of this by informing him through various means of communication including messages on bills, and other means of publicity. Considering the foregoing discussion, the revised tariffs approved by the Commission are set out below. 8.8 REVISED TARIFFS EFFECTIVE FROM 1 SEPTEMBER, 2018 (FY ) Sl. No Consumer Category & Consumption Slab Fixed/ Demand Charge per month Energy Charge (Rs/kWh) Wheeling Charges (Rs / kwh) Regulatory Asset Charge (Rs/kWh) LT Category 1 LT I (A)- Below Poverty Line Rs LT -I (B) Residential Rs. 60 $$ Rs. 90 $$ and above Rs. 120 $$ LT II - LT Commercial (A) 20 kw load Rs > 20 kw and 50 kw (B) Rs. 275 per load kva (C) > 50 kw load LT III - LT Industry (A) Upto 20 kw load Rs (B) Above 20 kw Rs. 275 per kva Page 302 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

303 Sl. No 4 5 Consumer Category & Consumption Slab LT IV Public Water Works LT V - Advertisement & Hoardings 6 LT VI Streetlights Fixed/ Demand Charge per month Rs. 275 per kva Rs. 530 per connection Rs. 275 per kva # Energy Charge (Rs/kWh) Wheeling Charges (Rs / kwh) Regulatory Asset Charge (Rs/kWh) LT VII Temporary Supply (A) TSR Temporary Supply - Religious Rs (B) TSO Temporary Supply - Others Rs 530 $$$ LT VIII Crematoriums and Rs Burial Grounds 9 LT IX Public Services (A) Government Hospitals & Educational Institutions Rs (B) Others Rs LT X - Agriculture (A) Pumpsets Rs 30 per HP (B) Others LT XI: Electric Vehicle Charging Stations (New Category) Rs. 80 per kw Rs. 70 per kva TOD Tariffs (in addition to above base tariffs) compulsory for LT II (B) and (C), LT III (B), LT IV, LT IX (A) and (B), and LT XI categories, and optional for LT II (A) and LT III (A) categories 0600 hours to 0900 hours hours to 1200 hours hours to 1800 hours hours to 2200 hours hours to 0600 hours /132 kv Category HT V (A) - HT Railways, Metro & Monorail 33 kv Category Rs. 275 per kva Case No. 69 of 2018 Mid Term Review for TPC-D Page 303 of 387

304 Sl. No 13 Consumer Category & Consumption Slab HT V (B) - HT Railways, Metro & Monorail 11 kv Category 14 HT I: HT-Industry 15 HT II: HT- Commercial Notes: Fixed/ Demand Charge per month Rs. 275 per kva Rs. 275 per kva Rs. 275 per kva Rs. 275 per kva Rs. 275 per kva Energy Charge (Rs/kWh) Wheeling Charges (Rs / kwh) Regulatory Asset Charge (Rs/kWh) HT III: HT-Group Housing Society HT IV: HT -Public Water Works HT VI (A): Public Service - Government Rs. 275 per Hospitals & Educational kva Institutions HT VI (B): Public Rs. 275 per Service - Others kva HT VII: Temporary Rs. 530 per Supply connection HT VIII: Electric Vehicle Rs. 70 per Charging Stations (New kva Category) TOD Tariffs (in addition to above base tariffs) for HT I, HT II, HT IV, HT VI (A) and (B), and HT VIII categories 0600 hours to 0900 hours hours to 1200 hours hours to 1800 hours hours to 2200 hours hours to 0600 hours Fuel Adjustment Cost will be applicable to all consumers and will be charged over the above tariffs, on the basis of the FAC formula specified by the Commission, and computed on a monthly basis. 2. $$: Fixed Charge of Rs. 120 per month will be levied on residential consumers availing 3 phase supply. Additional Fixed Charge of Rs. 120 per 10 kw load or part thereof above 10 kw load shall be payable. Page 304 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

305 3. $$$: Additional Fixed Charge of Rs. 250 per 10 kw load or part thereof above 10 kw load shall also be payable. 4. #: Street lighting having 'automatic timers' for switching 'on/off' would be levied Demand Charges on the lower of the following: a) 50% of the Contract Demand b) Actual Recorded Demand The detailed computation of category-wise revenue with revised tariffs for FY is set out at Annexure I of this. The approved Tariff Schedule for FY is given at Annexure III of this. 8.9 REVISED TARIFFS EFFECTIVE FROM 1 APRIL, 2019 (FY ) Sr. No. Consumer Category & Consumption Slab LT Category LT I (A)- Below Poverty 1 Line 2 LT -I (B) Residential Fixed/ Demand Charge per month Energy Charge (Rs/kWh) Wheeling Charges (Rs / kwh) Regulatory Asset Charge (Rs/kWh) Rs Rs. 65 $$ Rs. 105 $$ and above Rs. 130 $$ LT II - LT Commercial (A) 20 kw load Rs (B) > 20 kw and 50 kw load Rs (C) > 50 kw load per kva LT III - LT Industry (A) Upto 20 kw load Rs (B) Above 20 kw Rs. 305 per kva LT IV Public Water Rs. 305 Works per kva LT V - Advertisement & Hoardings Rs LT VI Streetlights Rs. 305 per kva # Case No. 69 of 2018 Mid Term Review for TPC-D Page 305 of 387

306 Sr. No. Consumer Category & Consumption Slab Fixed/ Demand Charge per month Energy Charge (Rs/kWh) Wheeling Charges (Rs / kwh) Regulatory Asset Charge (Rs/kWh) 7 LT VII Temporary Supply (A) TSR Temporary Supply - Religious Rs (B) TSO Temporary Supply - Others Rs 585 $$$ LT VIII Crematoriums and Burial Grounds Rs LT IX Public Services (A) Government Hospitals & Educational Institutions Rs (B) Others Rs LT X - Agriculture (A) Pumpsets Rs 30 per HP (B) Others Rs. 90 per kw LT XI: Electric Vehicle Charging Stations (New Category) Rs. 70 per kva TOD Tariffs (in addition to above base tariffs) compulsory for LT II (B) and (C), LT III (B), LT IV and LT IX (A) and (B) and LT XI categories, and optional for LT II (A) and LT III (A) categories 0600 hours to 0900 hours hours to 1200 hours hours to 1800 hours hours to 2200 hours hours to 0600 hours /132 kv Category HT V (A) - HT Railways, Metro & Monorail 33 kv Category HT V (B) - HT Railways, Metro & Monorail 11 kv Category Rs. 305 per kva Rs. 305 per kva Page 306 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

307 Sr. No. Consumer Category & Consumption Slab 14 HT I: HT-Industry 15 HT II: HT- Commercial HT III: HT-Group Housing Society HT IV: HT -Public Water Works HT VI (A): Public Service - Government Hospitals & Educational Institutions HT VI (B): Public Service - Others 20 HT VII: Temporary Supply 21 Notes: HT VIII: Electric Vehicle Charging Stations (New Category) Fixed/ Demand Charge per month Rs. 305 per kva Rs. 305 per kva Rs. 305 per kva Rs. 305 per kva Rs. 305 per kva Rs. 305 per kva Rs. 585 per connection Rs. 70 per kva Energy Charge (Rs/kWh) Wheeling Charges (Rs / kwh) Regulatory Asset Charge (Rs/kWh) TOD Tariffs (in addition to above base tariffs) for HT I, HT II, HT IV, HT VI (A) and (B) and HT VIII categories 0600 hours to 0900 hours hours to 1200 hours hours to 1800 hours hours to 2200 hours hours to 0600 hours Fuel Adjustment Cost will be applicable to all consumers and will be charged over the above tariffs, on the basis of the FAC formula specified by the Commission, and computed on a monthly basis. 2. $$: Fixed Charge of Rs. 130 per month will be levied on residential consumers availing 3 phase supply. Additional Fixed Charge of Rs. 130 per 10 kw load or part thereof above 10 kw load shall be payable. 3. $$$: Additional Fixed Charge of Rs. 280 per 10 kw load or part thereof above 10 kw load shall also be payable. Case No. 69 of 2018 Mid Term Review for TPC-D Page 307 of 387

308 4. #: Street lighting having 'automatic timers' for switching 'on/off' would be levied Demand Charges on the lower of the following: a) 50% of the Contract Demand b) Actual Recorded Demand The detailed computation of category-wise revenue with revised tariffs for FY is set out at Annexure II of this. The approved Tariff Schedule for FY is given at Annexure IV of this. Page 308 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

309 9 SCHEDULE OF CHARGES 9.1 BACKGROUND In line with the MERC (Electricity Supply Code and Other Conditions of Supply) Regulations, 2005, TPC-D has sought approval for revision of certain components of Schedule of Charges (SoC) for the various services provided to the consumers. In the past, the approval of Schedule of Charges for TPC-D has been summarised as under: (a) dated 28 December 2012 in Case No. 47 of 2012 (b) dated 25 July, 2014 in Case No. 83 of Actual cost involved for shifting of Service at the request of the consumer (c) dated 26 June 2015 in Case No. 18 of MTR for 2 nd MYT Control Period Revision of Service Connection Charges for three-phase LT Supply with motive power upto 27 HP, or other loads upto 20 kw, to Rs per consumer (d) dated 9 February, 2018 in Case No. 82 of 2017 Revision in Service connection Charges. Further, the Commission, vide letter MERC/Tech/Tariff/4688 dated 15 November, 2017 directed all Distribution Licensees to submit their proposal for revision in the Schedule of Charges, if any, along with MTR Petition. Accordingly, TPC-D submitted its proposal for revision in certain existing charges approved in previous s and certain additional charges to be included in Schedule of Charges. This Chapter details the proposal of TPC-D for revision of Schedule of Charges and Commission s Analysis and ruling in this regard. 9.2 REVISION IN EXISTING SCHEDULE OF CHARGES Charges for Testing of Meters TPC-D s Submission TPC-D has proposed the revision in Charges for Testing of Meters as shown in the following Table: Case No. 69 of 2018 Mid Term Review for TPC-D Page 309 of 387

310 Table 9-1: Charges for Testing of Meters as proposed by TPC-D (Rs.) Type of Meter Testing Meter testing at TPC-D Laboratory Meter testing at site on Consumer request Appr oved Single Phase Cost Incurred MT R Petit ion Appr oved Three Phase Cost Incurred MTR Petition 200 ~ ~ TPC-D submitted that the meter testing requests are normally during change of season, i.e., when the consumption increases on account of on-set of summer (during May, June). Only around 3% of total requests received for meter testing have some issue with the meter. Further, TPC-D submitted the actual cost incurred for meter testing at laboratory and at site, as shown in the following Table: Sr. No. Table 9-2: Actual cost of Meter testing as proposed by TPC-D (Rs.) Description No. of Hours required Single Phase Meter Manpow er Cost per hour Total Cost per meter No. of Hours required Three Phase Meter Manpow er Cost per hour Total Cost per meter Hours Rs. Rs. Hours Rs. Rs. 1 Site testing engineer cost Site testing technician cost Transportation & other charges Total TPC-D submitted that it had made a request for similar charges for meter testing in its MYT Petition. However, the Commission in its MYT approved lower charges, stating as under: While approving the following Charges, the Commission has also kept in mind that in testing charges should be commensurate with the cost of the meter, and should not create any hindrance to consumers exercising the option of meter testing, especially when the entire testing facility established by the Distribution Licensee is for servicing its own consumers. In this regard, TPC-D submitted that though the meter testing facility has been created for the consumers, there are a number of activities carried out apart from meter testing requests Page 310 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

311 from the consumer, for which the consumer is not separately charged. Further, the intent of proposing increase in charges is not to create hindrance, but to ensure that only consumers with a genuine issue approach for meter testing. This will result in cost saving for the consumer base as a whole. Commission s Analysis and Ruling The Commission, in its dated 28 December, 2012 in Case No. 47 of 2012 has approved the Schedule of Charges for testing of meters in such way that consumers can easily exercise such option of meter testing, especially when the entire facility is established by Distribution Licensee for servicing its own consumers. The Commission notes that it has been six years after revision of such charges, and the cost associated with such activities have increased. TPC-D has proposed meter testing charges, which are twice the existing charges. However, though TPC-D has submitted the details of actual cost incurred, no details have been provided for verification of the actual cost incurred. Also, such high increase in meter testing charges would create hindrance for consumers. Hence, for the purpose of revising the meter testing charges, the Commission has considered the past 6 years average of CPI and WPI indices and accordingly escalated existing charges to the present level. In view of this, meter testing charges approved by the Commission are as under: Table 9-3: Charges for Testing of Meters as approved by the Commission (Rs.) Type of Meter Testing Single Phase Three Phase Meter testing at TPC-D Laboratory Meter testing at site on Consumer request Exis ting MTR Petition Approved in this Exis ting MTR Petition Approved in this Charges for Open Access TPC-D s Submission TPC-D submitted that number of OA consumers has increased significantly over the years. The majority of OA consumers are short-term OA consumers. As per Regulation 8 of the DOA Regulations, 2016, the Distribution Licensee is the Nodal Agency for processing OA applications for the consumers connected to the Distribution Licensee and the role of Licensee has significantly increased as per previous Regulations. Case No. 69 of 2018 Mid Term Review for TPC-D Page 311 of 387

312 Processing fees per application TPC-D submitted the activities to be undertaken for processing the OA application as under: Table 9-4: Activities for processing Application for Open Access submitted by TPC-D (Rs.) Sr. Estimated Cost in Particulars No. time (Mins) Rs. 1 Scrutiny of all documents & application Sending acknowledgement with check list for remaining documents Tracking completion of documentation Scrutinizing the completed application Sending scan applications & documents to MSLDC and MSEDCL Follow-up with MSLDC and MSEDCL for concurrence If document found incomplete by MSLDC/MSEDCL communicate to applicant Tracking & ensuring complete documentation from applicant Resending complete documents to MSLDC/MSEDCL Data Entry Preparation of No Objection Certificate (NoC) QC of NoC from signing authority Scanning & Sending NoC to consumer Follow-up with applicant for payment of MSLDC charges Sending payment to MSLDC Visiting STU & MSEDCL for LTOA & MTOA applications Miscellaneous cost- for printing & stationery, courier 17 services, scanning and uploading of the applications and expenditure towards transport Approximate OA Application processing charges In view of the above, TPC-D proposed Processing Fee of Rs. 7000/- per application. TPC- D submitted that entire expenditure should be recovered as the consumers, who are opting for OA, are subsidizing consumers. TPC-D further proposed an annual increase of these charges linked to the CPI. Operating charges per month TPC-D submitted that billing of the consumers, who procure power through OA, is undertaken by TPC-D. The billing procedures include the credit energy sourced on OA, which requires additional activities as compared to the normal billing of Distribution Licensee s consumers. TPC-D enlisted the following additional activities: a) Monthly downloading meter data on 15-minute basis. Page 312 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

313 b) Consolidating 15-minute day ahead schedule submitted by the consumer during the month. c) Tracking revision of schedule d) Comparison of every 15-minute drawl with schedule to compute energy charges based on energy drawn under contract/overdrawal/underdrawal. e) Billing the consumers for the units taken on OA and units consumed from TPC-D f) Resolving the queries of the consumers. TPC-D submitted that since there is an increase in the number of OA consumers and there are lot of complexities involved in processing the monthly OA bills. TPC-D further submitted that, in the case of MSEDCL, the Commission has already approved Rs. 10,000/ per month as operating charges. TPC-D proposed same operating charges as Rs. 10,000/- per month for OA consumers. Commission s Analysis and Ruling The Commission notes that it has approved the OA application processing fee as Rs. 2,500/- per application and operating charges as Rs. 2,500/- per month in its dated 28 December, 2012 in Case No. 47 of The charges were kept low at that time keeping in view lower quantum of OA. However, over the years, number of applications have increased, which requires additional manpower for licensee. Hence, it is required to increase the OA charges from the previous approved level. Further, the Commission observes that TPC-D has sought more than three time increase in OA charges, which is not justified. The costs proposed by TPC-D for each activity are not verified and it is just apportioning of cost. For increase in charges, the Commission has considered the 6 years average of CPI indices. Accordingly, the Commission has approved OA Charges as shown in the following Table: Table 9-5: Open Access Charges as approved by the Commission (Rs.) Sr. Approved in Particulars MTR Petition No. this 1 Open access processing fee per application 7,000 3,000 2 Open access operating charges per month 10,000 3,000 Case No. 69 of 2018 Mid Term Review for TPC-D Page 313 of 387

314 9.3 NEW SCHEDULE OF CHARGES Operative and Administrative Charges for connectivity for Net Metering TPC-D s Submission TPC-D submitted that as per MERC (Net Metering for Roof-top Solar Photo Voltaic Systems) Regulations, 2015, the Distribution Licensee shall allow net metering to eligible consumers, who have installed or intend to install a renewable system connected to the network of the Licensee. The number of consumers opting for Net metering have increased to 94 in FY TPC-D requested the Commission to approve one-time Net Metering Application Processing Charges of Rs. 7,000/-per application, considering that dedicated manpower is required for processing the applications. TPC-D submitted the details of manpower cost as shown in the following Table: Table 9-6: Cost of processing Net metering Application as submitted by TPC-D (Rs.) Sr. Manpower Total Cost per Net Description No. Cost per day Meter Application 1 Engineer Man Days 2 6,000 2 Technician man days 2 3,000 3 Application Verification and processing comprising of activities listed above 6,000 Total 15,000 Commission s Analysis and Ruling The Commission notes that existing approved Schedule of Charges does not include the charges for processing Net metering application. The Commission finds that there are additional activities are required for processing the net metering application. However, the manpower cost proposed by TPC-D against these activities is high, considering the scope of work. Further, the Commission notes that Regulation 8.1 of MERC (Net Metering for Roof-top Solar Photo Voltaic Systems) Regulations, 2015 specifies the Registration and Application Fee of Rs. 500/- and Rs. 1,000/- for consumers with sanctioned load or contract demand upto and above 5 kw respectively. The Commission is of view that it has enabled the net metering through Regulations for promotion of rooftop solar and other distributed Renewable Energy applications. The Commission has already approved the Application and Registration fee, hence, there is no need for separate charges for processing of application. In view of this, the Commission rejects the prayer of TPC-D for approval of charges for net metering application processing. Page 314 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

315 9.3.2 Meter and Panel Cost for Net Metering TPC-D s Submission TPC-D submitted that once a consumer applies for net metering, the Distribution Licensee is required to change the meter compatible for Net Metering as per the Net Metering Regulations. The meter and related accessories charges involves cost of net meter, other accessories like box, fuse, etc., based on site and consumer requirement, and changes in the AMR modem, if required. TPC-D submitted that as per DOA Regulations, 2016, the cost of ABT meter is borne by the consumers. In case of Net Metering, the cost is to be borne by the Distribution Licensee as per the Net Metering Regulations. TPC-D, in line with the DOA Regulations, 2016, proposed that the Net metering Applicant may opt to purchase a meter either from Distribution Licensee or from any supplier with specifications made in compliance with CEA, at its own cost instead of meters provided by Distribution Licensee. Commission s Analysis and Ruling The Commission notes that TPC-D s contentions are based on DOA Regulations. However, the provisions related to net metering are governed by MERC (Net Metering for Roof-top Solar Photo Voltaic Systems) Regulations, The Commission notes that Regulations 7.5 and 7.6 of MERC (Net Metering for Roof-top Solar Photo Voltaic Systems) Regulations, 2015 specifies as under: 7.5. The Eligible Consumer shall install, at his own cost, a Solar Generation Meter conforming to the applicable CEA Regulations at an appropriate location to measure the energy generated from the Roof-top Solar PV system, if he is an Obligated Entity and desires that such energy be counted towards meeting its RPO The Distribution Licensee shall install, at its own cost and with the consent of the Eligible Consumer, a Solar Generation Meter conforming to the applicable CEA Regulations at an appropriate location to measure the energy generated from the Roof-top Solar PV System if it desires that such energy be counted towards meeting its RPO The Solar Generation Meter shall be maintained by the Distribution Licensee at its cost. (emphasis added) Case No. 69 of 2018 Mid Term Review for TPC-D Page 315 of 387

316 Further, the Commission has issued practice directions for connectivity for change over consumers, wherein it has stated as under: The Consumer may opt for provision of the Net Meter by either the Supply or the Wires Licensee, or may opt to purchase it himself. The Net Meter shall be maintained by the Supply Licensee except where it has been provided by the Wires Licensee, in which case it shall be maintained by the latter. The above said Regulations clearly specifies that Distribution Licensee shall install the meter at his own cost. Also, the consumer has an option to opt for his own meter, at his own cost. Hence, the Commission is of the view that there is no need for approval of separate charges for meter and panel for net metering. In view of this, the Commission rejects the prayer of TPC-D regarding the approval of meter and panel cost for net metering Charges for Address Change or Address Correction TPC-D s Submission TPC-D submitted that the approved charges do not include Application Registration and Processing Charges for Change in address or Correction in address. It further submitted that activities involved for processing application are acknowledgement of application, checking the application and confirming with the documents submitted along with the application, processing in the system, and filing the application. TPC-D requested the Commission to approve Application Registration and Processing Charges for Change in Address or Correction in Address at the same rates approved for Application Registration and Processing Charges for Change of Name as shown in the Table below: Table 9-7: Proposed Charges for processing Address Change / Address Correction Applications as submitted by TPC-D Sr. No. Address Change / Address Correction Rs./Application A Single Phase 50 B Three Phase 50 C HT Supply 100 Page 316 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

317 Commission s Analysis and Ruling TPC-D has sought Application Registration and Processing charges for Change in Address or Correction in Address. The address of consumer is related to consumer premise to which electricity is supplied. The address of consumers is fixed as the premises to which supply provided is fixed. Further, it is unable to apprehend requirement of separate charges for Change in Address or Correction in Address. Hence, the Commission rejects TPC-D s prayer for approval of Application Registration and Processing charges for Change in Address or Correction in Address Charges of Disconnection of Consumer on consumer s request TPC-D s Submission TPC-D proposed the charges for Disconnection of consumer on consumer s request as shown in the following Table: Table 9-8: Charges of Disconnection of Consumer on consumer s request as submitted by TPC- D Consumers 1 phase 3 Phase HT Meter / CT Direct Consumers Changeover Consumers TPC-D submitted that at present there are no Schedule of Charges applicable for Disconnection of consumers on request made by consumers. TPC-D stated that since TPC- D is operating in a parallel licensee scenario, the number of disconnections on consumers request are significantly large, at 128 Nos. for Direct consumers and 657 Nos. for changeover consumers for FY TPC-D submitted the different activities involved in disconnection such as application processing for disconnection of meter, meter management group disconnects the meter and bring it back to the store, network department disconnects the other elements of the network like SFU, cable, panel board, etc., and system entry for moved out consumer. Further, TPC- D submitted that the activities involved in disconnection of direct consumers of TPC-D and change-over consumers is quite different. TPC-D submitted the cost involved in disconnection of meter as Rs. 890/- for single phase meter, Rs. 1290/- for three phase meter, and Rs. 2190/- for CT meter, for Direct consumers. Also, the cost of Rs. 490/- has been submitted for disconnection of change-over consumers. Case No. 69 of 2018 Mid Term Review for TPC-D Page 317 of 387

318 Commission s Analysis and Ruling The existing Schedule of Charges does not include separate charges for disconnection on consumer s request. However, the re-connection charges have been approved separately. The Commission notes that nomenclature of re-connection and disconnection may be different, but activities carried out in the field are more or less the same in nature. In order to remove the ambiguities, the Commission in dated 28 December, 2012 in Case No. 47 of 2012 has rationalised the activities to be charged. In case of change-over consumer, consumer would pay re-connection charges /other applicable charges to Distribution Licensee, whose supply is being opted for. Hence, the Commission is of the view that all charges are to be levied only at the time of reconnection, irrespective of whether disconnection has been necessitated on the request of the consumer or on account of nonpayment of dues by the consumer. 9.4 APPLICABILITY OF REVISED TARIFFS The revised tariffs approved in this will be applicable from 1 September, Where there is a billing cycle difference for a consumer with respect to the date of applicability of the revised tariff, the revised tariff should be applied to the consumption on a pro-rata basis. The bills for the respective periods as per the existing and revised tariffs shall be computed based on the pro-rata consumption (units consumed during the respective periods, arrived at on the basis of average unit consumption per day multiplied by the number of days in the respective periods falling under the billing cycle). The Petition of M/s. The Tata Power Company Ltd. Distribution in Case No. 69 of 2018 stands disposed of accordingly. Sd/- (Mukesh Khullar) Member Sd/- (I.M. Bohari) Member Sd/- (Anand B. Kulkarni) Chairperson Page 318 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

319 10 ANNEXURE I: REVENUE FROM REVISED TARIFF FOR FY Consumer Categories No. of consumers Components of tariff Contract Demand Sales Full year revenue excluding Government subsidy (Rs. Crore) PF Penalty/ Wheeling Revenue from Revenue from Revenue from ToD Revenue from PF Penalty/ LFI Incentive LFI Incentive Revenue from Direct CO Total Fixed Charges Demand Charges Energy Charges RAC Direct CO Total Direct CO Total Rebate Charge Fixed Charges Demand Charges Charges Energy Charges Rebate RAC (Rs.Crore) Nos Nos Nos Rs/Connection /mont Rs/KVA/Month RS/kWH Rs/kWH Rs/kWH MVA MVA MVA MU MU MU Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Revenue from Wheeling charge (Direct) Full year revenue (including subsidy) (Rs. Crore) Average Billing Rate (Rs/kWh) HT CUSTOMERS HT I - Industry (0.12) (23.62) 0.06 (7.55) HT II - Commercial (16.45) (0.45) (0.10) (0.00) HT III - Group Housing Society (Resident HT IV - PWW (2.07) HT V(A) - Railways /33 kv (1.37) kV HT V(B) - Metro & Monorail (0.20) HT VI - Public Services a) Govt. Edu. Inst. & Hospitals (0.09) b) Others (3.05) HT VII - Temporary Supply (0.06) HT VIII - EV Charging Stations LT CUSTOMERS LT I (A) - Residential (BPL) LT I (B) - Residential , , S1 (0-100 units) 49,045 1,00,961 1,50, S2 ( units) 50,756 3,53,308 4,04, S3 (> Units) 17,244 67,115 84, S4 (Above 500 units (balance units) 10,883 28,041 38, LT II - Commercial (A) - Upto 20 kw 15,191 11,792 26, (B) - > 20 kw & < 50kW 2, , (0.42) (0.18) (C ) - > 50kW 1, , (4.72) (0.84) LT III (A) - Industry < 20 kw 1,203 1,003 2, (0.00) (0.00) LT III (B) - Industry > 20kW (4.42) (0.10) LT IV - PWW LT V - Advertisement & Hoardings, incl.floodlights & 7 neon signs LT VI Streetlights LT VII Temporary Supply TSR Temporary Supply Religious TSO Temporary Supply Others LT VIII Crematoriums and Burial Grounds LT IX - Public Services a) Govt. Edu. Inst. & Hospitals (0.37) (0.03) b) Others (0.03) (0.02) LT X - EV Charging Stations Total 1,50,109 5,63,256 7,13, , , , , (56.64) (1.48) (7.65) (0.00) , Case No. 69 of 2018 Mid Term Review for TPC-D Page 319 of 387

320 11 ANNEXURE II: REVENUE FROM REVISED TARIFF FOR FY Consumer Categories No. of consumers Components of tariff Contract Demand Sales Full year revenue excluding Government subsidy (Rs. Crore) Full year revenue Revenue Revenue Revenue Revenue PF PF LFI LFI Revenue from (including Demand Wheeling Energy EHV-Direct from Revenue Direct CO Total Fixed Charges RAC Direct CO Total Direct CO Total from Fixed from ToD from Energy Penalty/ Penalty/ Incentive Incentive Wheeling charge subsidy) (Rs. Charges Charge Charges Sales Demand from RAC Charges Charges Charges Rebate Rebate (Direct) Crore) Charges Nos Nos Nos Connection /mors/kva/month Rs./kWh Rs./kWh Rs./kWh MVA MVA MVA MU MU MU MU Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Rs Crore Average Billing Rate (Rs/kWh) HT CUSTOMERS HT I - Industry (0.12) (23.62) 0.06 (7.55) HT II - Commercial (16.45) (0.45) (0.10) (0.00) HT III - Group Housing Society (Residential HT IV - PWW (2.07) HT V(A) - Railways /33 kv (1.37) kV HT V(B) - Metro & Monorail (0.20) HT VI - Public Services a) Govt. Edu. Inst. & Hospitals (0.09) b) Others (3.05) HT VII - Temporary Supply (0.06) HT VIII - EV Charging Stations LT CUSTOMERS LT I (A) - Residential (BPL) LT I (B) - Residential , , S1 (0-100 units) 60,816 1,01,420 1,62, S2 ( units) 62,937 3,54,916 4,17, S3 (> Units) 21,382 67,422 88, S4 (Above 500 units (balance units) 13,494 28,168 41, LT II - Commercial (A) - Upto 20 kw 21,679 9,120 30, (B) - > 20 kw & < 50kW 3, , (0.42) (0.18) (C ) - > 50kW 1, , (4.72) (0.84) LT III (A) - Industry < 20 kw 1, , (0.00) (0.00) LT III (B) - Industry > 20kW (4.42) (0.10) LT IV - PWW LT V - Advertisement & Hoardings, incl.floodlights & neon 5 signs LT VI Streetlights LT VII Temporary Supply TSR Temporary Supply Religious TSO Temporary Supply Others LT VIII Crematoriums and Burial Grounds LT IX - Public Services a) Govt. Edu. Inst. & Hospitals (0.37) (0.03) b) Others (0.03) (0.02) EV Charging Stations Total 1,88,893 5,62,587 7,51, , , , , (56.64) (1.48) (7.65) (0.00) , Page 320 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

321 12 ANNEXURE III: TARIFF SCHEDULE FOR FY THE TATA POWER COMPANY LIMITED SCHEDULE OF ELECTRICITY TARIFFS (With effect from 1 September, 2018) The Maharashtra Electricity Regulatory Commission, in exercise of the powers vested in it under Sections 61 and 62 of the Electricity Act, 2003 and all other powers enabling it in this behalf, has determined, by its Mid-Term Review Tariff dated 12 September, 2018 in Case No. 69 of 2018, the Tariff for supply of electricity by the Distribution Licensee, the Tata Power Company Limited- Distribution Business (TPC-D) to various classes of consumers as applicable from 1 September, General 1. These Tariffs supersede all Tariffs so far in force. 2. The Tariffs are subject to revision and/or surcharge that may be levied by the Distribution Licensee from time to time as per the directives of the Commission. 3. The Tariffs are exclusive of the separate Electricity Duty, Tax on Sale of Electricity and other levies by the Government or other competent authorities, which will be payable by consumers over and above the Tariffs. 4. The Tariffs are applicable for supply at one point only. 5. The Distribution Licensee may measure the Maximum Demand for any period shorter than 30 minutes of maximum use, subject to conformity with the Commission s Electricity Supply Code Regulations, where it considers that there are considerable load fluctuations in operation. 6. The Tariffs are subject to the provisions of the applicable Regulations and any directions that may be issued by the Commission from time to time. 7. Unless specifically stated to the contrary, the figures of Energy Charge and Wheeling Charge are denominated in Rupees per unit (kwh) for the energy consumed during the month. Case No. 69 of 2018 Mid Term Review for TPC-D Page 321 of 387

322 8. Fuel Adjustment Charge (FAC) as may be approved by the Commission from time to time shall be applicable to all categories of consumers and be in addition to the base Tariffs, on the basis of the FAC formula specified by the Commission and computed on a monthly basis. LOW TENSION (LT) TARIFF LT I (A): LT Residential (BPL) Applicability: This Below Poverty Line (BPL) Tariff category is applicable to Residential consumers who have a Sanctioned Load upto 0.25 kw and who have consumed upto 360 units per annum in the previous financial year. The eligibility of such consumers will be reassessed at the end of each financial year. If more than 360 units have been consumed in the previous financial year, the LT I (B) - Residential Tariff shall thereafter be applicable, and such consumer cannot revert thereafter to the BPL category irrespective of his future consumption level. The categorisation of BPL consumers will be reassessed at the end of the financial year on a pro rata basis if there has been consumption for only a part of the year. The categorisation of BPL consumers who have been added during the previous year would be assessed on a pro rata basis, i.e., 30 units per month. This BPL category will also be applicable to all new consumers subsequently added in any month with a Sanctioned Load of upto 0.25 kw and consumption between 1 to 30 units (on pro rata basis of 1 unit/day) in the first billing month. The BPL Tariff is applicable only to individuals and not to institutions. Consumption Energy Wheeling Regulatory Fixed Charge Slab Charge Charge Asset Charge (Rs./month) (kwh) (Rs./kWh) (Rs/kWh) (Rs/kWh) BPL Category Page 322 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

323 LT I (B): LT Residential This Tariff category is applicable for electricity used at Low/Medium Voltage for operating various appliances used for purposes such as lighting, heating, cooling, cooking, washing/cleaning, entertainment/leisure, water pumping in the following premises: a) Private residential premises, Government/semi-Government residential quarters; b) Premises used exclusively for worship, such as temples, gurudwaras, churches, mosques, etc.; provided that halls, gardens or any other part of such premises that may be let out for a consideration or used for commercial activities would be charged at the applicable LT-II Tariff; c) All Students Hostels affiliated to Educational Institutions; d) All other Students or Working Men/Women s Hostels; e) Other types of Homes/Hostels, such as (i) Homes/Hostels for Destitutes, Disabled Persons (physically or mentally handicapped persons, etc.) and mentally ill persons (ii) Remand Homes (iii) Dharamshalas, (iv) Rescue Homes, (v) Orphanages - subject to verification and confirmation by the Distribution Licensee s concerned Zonal Chief Engineer or equivalent; f) Government / Private / Co-operative Housing Colonies/complexes (where electricity is used exclusively for domestic purposes) only for common facilities such as Water Pumping / Street and other common area Lighting / Lifts /Parking Lots/ Fire-fighting Pumps and other equipment, etc.; g) Sports Clubs or facilities / Health Clubs or facilities / Gymnasium / Swimming Pool / Community Hall of Government / Private / Co-operative Housing Colonies/complexes - provided that they are situated in the same premises, and are for the exclusive use of the members and employees of such Housing Colonies/complexes; h) Telephone booths owned/operated by Persons with Disabilities/Handicapped persons; i) Residential premises used by professionals like Lawyers, Doctors, Engineers, Chartered Accountants, etc., in furtherance of their professional activities, but not including Nursing Homes and Surgical Wards or Hospitals; j) Single-phase household Flour Mills (Ghar-ghanti) used only for captive purposes; k) A residential LT consumer with consumption upto 500 units per month (current month of supply) who undertakes construction or renovation activity in his existing premises: such consumer shall not require a separate temporary connection, and would be billed at this Residential Tariff rate; Note: This Tariff category shall also be applicable to consumers who are supplied power at High Voltage for any of the purposes (a) to (k) above. Case No. 69 of 2018 Mid Term Review for TPC-D Page 323 of 387

324 l) Consumers undertaking business or commercial / industrial / non-residential activities from a part of their residence, whose monthly consumption is upto 300 units a month and annual consumption in the previous financial year was upto 3600 units. The applicability of this Tariff to such consumers will be assessed at the end of each financial year. In case consumption has exceeded 3600 units in the previous financial year, the consumer will thereafter not be eligible for the Tariff under this category but be charged at the Tariff otherwise applicable for such consumption, with prior intimation to him. m) Entities supplied electricity at a single point at Low/Medium Voltage for residential purposes, in accordance with the Electricity (Removal of Difficulties) Eighth, 2005, in the following cases: (i) a Co-operative Group Housing Society which owns the premises, for making electricity available to the members of such Society residing in the same premises for residential purposes; and (ii) a person, for making electricity available to its employees residing in the same premises for residential purposes. Consumption Slab (kwh) Fixed/Demand Charge Energy Charge (Rs./kWh) Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) units Rs. 60 per month $$ units Rs. 95 per month $$ units Above 500 units (balance units) Note: Rs. 120 per month $$ a) $$ : The above Fixed Charges are for single-phase connections. A Fixed Charge of Rs. 120 per month will be levied on Residential consumers availing 3-phase supply. An Additional Fixed Charge of Rs.120 per 10 kw load or part thereof above 10 kw load shall also be payable. b) Professionals like Lawyers, Doctors, Professional Engineers, Chartered Accountants, etc., occupying premises exclusively for conducting their profession, shall not be eligible for this Tariff, and will be charged at the Tariff applicable to the respective categories. Page 324 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

325 LT II: LT Non-Residential or Commercial Applicability: This Tariff category is applicable for electricity used at Low/Medium voltage in nonresidential, non-industrial and/or commercial premises for commercial consumption meant for operating various appliances used for purposes such as lighting, heating, cooling, cooking, washing/cleaning, entertainment/ leisure and water pumping in, but not limited to, the following premises: a) Non-Residential, Commercial and Business premises, including Shopping Malls and Showrooms; b) Combined lighting and power supply for facilities relating to Entertainment, including film studios, cinemas and theatres (including multiplexes), Hospitality, Leisure, Meeting/Town Halls, and places of Recreation and Public Entertainment; c) Offices, including Commercial Establishments; d) Marriage Halls, Hotels / Restaurants, Ice-cream parlours, Coffee Shops, Guest Houses, Internet / Cyber Cafes, Telephone Booths not covered under the LT I category, and Fax / Photocopy shops; e) Automobile and all other types of repairs, servicing and maintenance centres (unless specifically covered under another Tariff category); Retail Gas Filling Stations, Petrol Pumps and Service Stations, including Garages; f) Tailoring Shops, Computer Training Institutes, Typing Institutes, Photo Laboratories, Laundries, Beauty Parlours and Saloons; g) Banks and ATM centres, Telephone Exchanges, TV Stations, Microwave Stations, Radio Stations, Telecommunications Towers; h) Common facilities, like Water Pumping / Lifts / Fire-Fighting Pumps and other equipment / Street and other common area Lighting, etc., in Commercial Complexes; i) Sports Clubs/facilities, Health Clubs/facilities, Gymnasiums, Swimming Pools not covered under any other category; j) External illumination of monuments/ historical/ heritage buildings approved by Maharashtra Tourism Development Corporation (MTDC) or the concerned Local Authority; k) Construction of all types of structures/ infrastructure such as buildings, bridges, flyovers, dams, Power Stations, roads, Aerodromes, tunnels for laying of pipelines for all purposes, and which is not covered under the Temporary Tariff category; Note: Residential LT consumers with consumption above 500 units per month (current month of supply) and who undertake construction or renovation activity in their existing premises shall not require a separate Temporary category connection, and shall be billed at the LT-II Commercial Tariff rate; Case No. 69 of 2018 Mid Term Review for TPC-D Page 325 of 387

326 l) Milk Collection Centres; m) Sewage Treatment Plants/ Common Effluent Treatment Plants for Commercial Complexes not covered under the LT Public Water Works or LT Industry categories; n) Stand-alone Research and Development units not covered under any other category; Regulatory Fixed/ Energy Wheeling Consumption Slab Asset Demand Charge Charge (kwh) Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) (A) 0-20 kw Rs. 330 per month (B) > 20 kw and 50 kw Rs. 275 per kva per (C) > 50 kw month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Note: The ToD Tariff is applicable to the LT-II (B) and (C) categories, and optionally available to LT- II (A) category consumers having ToD meter installed. LT III: LT- Industry: LT III (A): LT - Industry upto 20 kw load LT III (B): LT - Industry, above 20 kw load Applicability: This Tariff category is applicable for electricity for Industrial use, at Low/Medium Voltage, for purposes of manufacturing and processing, including electricity used within such premises for general lighting, heating/cooling, etc. It is also applicable for use of electricity / power supply for Administrative Offices / Canteens, Recreation Hall / Sports Club or facilities / Health Club or facilities/ Gymnasium Page 326 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

327 / Swimming Pool exclusively meant for employees of the industry; lifts, water pumps, firefighting pumps and equipment, street and common area lighting; Research and Development units, laundry & ironing services, etc. - Provided that all such facilities are situated within the same industrial premises and supplied power from the same point of supply; This Tariff category shall also be applicable for use of electricity / power supply by an Information Technology (IT) or IT-enabled Services (ITeS) Unit as defined in the applicable IT/ITeS Policy of Government of Maharashtra. Where such Unit does not hold the relevant permanent registration Certificate, the Tariff shall be as per the LT II category, and the LT III Tariff shall apply to it after receipt of such permanent registration Certificate and till it is valid. It shall also be applicable for use of electricity / power supply for (but not limited to) the following purposes: a) Flour Mill, Dal Mill, Rice Mill, Poha Mill, Masala Mill, Saw Mill; b) Ice Factory, Ice-cream manufacturing units, Milk Processing / Chilling Plants (Dairy); c) Engineering Workshops, Engineering Goods Manufacturing units; Printing Presses; Transformer Repair Workshops; Tyre Retreading units; and Vulcanizing units; d) Mining, Quarrying and Stone Crushing units; e) Garment Manufacturing units; f) LPG/CNG bottling plants, etc.; g) Sewage Treatment Plant/ Common Effluent Treatment Plant for industries, and not covered under the LT Public Water Works category; h) Start-up power for Generating Plants, i.e. the power required for trial run of a Power Plant during commissioning of the Unit and its Auxiliaries, and for its start-up after planned or forced outage (but not for construction); i) Brick Kiln (Bhatti); j) Biotechnology Industries covered under the Biotechnology Policy of Government of Maharashtra; k) Cold Storages not covered under LT X (B) Agriculture (Others); l) Food (including seafood) Processing units. Case No. 69 of 2018 Mid Term Review for TPC-D Page 327 of 387

328 Regulatory Energy Wheeling Consumption Slab Fixed/Demand Asset Charge Charge (kwh) Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) LT III (A): 0-20 kw Rs. 330 per month LT III (B): Above 20 Rs. 275 per kw kva per month TOD Tariffs (Optional in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Note: The ToD Tariff is compulsorily applicable to LT III (B) (i.e., above 20 kw), and optionally available to LT- III (A) (i.e., up to 20 kw) having ToD meter installed. LT IV: LT-Public Water Works (PWW) and Sewage Treatment Plants Applicability: This Tariff category is applicable for electricity / power supply at Low / Medium Voltage for pumping of water, purification of water and allied activities relating to Public Water Supply Schemes, Sewage Treatment Plants and Waste Processing Units, provided they are owned or operated or managed by Local Self-Government Bodies (Gram Panchayats, Panchayat Samitis, Zilla Parishads, Municipal Councils and Corporations, etc.), or by Maharashtra Jeevan Pradhikaran (MJP), Maharashtra Industries Development Corporation (MIDC), Cantonment Boards and Housing Societies/complexes. All other Public Water Supply Schemes and Sewage Treatment Plants (including allied activities) shall be billed under the LT II or LT III category Tariff, as the case may be. Page 328 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

329 Regulatory Energy Wheeling Consumption Slab Fixed/ Demand Asset Charge Charge (kwh) Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 275 per kva per month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Note: The ToD Tariff is compulsorily applicable to the LT IV category with Contract Demand/Sanctioned Load above 20 kw; and optionally available to the LT IV category with Contract Demand/Sanctioned Load up to 20 kw having ToD meter installed. LT V: LT - Advertisements and Hoardings Applicability This Tariff category is applicable for use of electricity at Low/ Medium Voltage for advertisements, hoardings (including hoardings fixed on lamp posts/installed along roadsides), and other commercial illumination such as external flood-lights, displays, neon signs at departmental stores, malls, multiplexes, theatres, clubs, hotels and other such establishments; Consumption Slab ( kwh) Fixed / Demand Charge Energy Charge (Rs./kWh) Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) All Units Note: Rs. 530 per month a) Consumers availing power supply at High Voltage for any of the above purposes shall be billed as per the Tariff of this LT category. b) This category is not applicable to use of electricity specifically covered under the LT-II category; or to electricity used for the external illumination of monuments and Case No. 69 of 2018 Mid Term Review for TPC-D Page 329 of 387

330 historical/heritage buildings approved by MTDC or the concerned Local Authority, which shall be covered under the LT-II category depending upon the Sanctioned Load. c) The electricity used for indicating/ displaying the name and other details of the premises shall be covered under the category of such premises, and not under this Tariff category. LT VI: LT- Street Lights Applicability This Tariff category is applicable for the electricity used for lighting of public streets/ thoroughfares which are open for use by the general public, at Low / Medium Voltage, and also at High Voltage. Street lights in residential complexes, commercial complexes, industrial premises, etc. will be billed at the Tariff of the respective applicable categories. This category is also applicable for use of electricity / power supply at Low / Medium Voltage or at High Voltage for (but not limited to) the following purposes, irrespective of who owns, operates or maintains these facilities: a) Lighting in Public Gardens (i.e. which are open to the general public free of charge); b) Traffic Signals and Traffic Islands; c) Public Sanitary Conveniences; d) Public Water Fountains; and e) Such other public places open to the general public free of charge. Consumption Slab ( kwh) All Units Note: Fixed / Demand Charge Rs. 275 per kva per month # Energy Charge (Rs./kWh) Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) #: The above street and other lighting facilities having Automatic Timers for switching On/Off would be levied Demand Charges on the lower of the following i) 50 percent of Contract Demand or ii) Actual Recorded Demand. Page 330 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

331 LT VII: LT - Temporary Supply LT VII (A): LT - Temporary Supply - Religious (TSR) Applicability: This Tariff category is applicable for electricity supply at Low/Medium voltage for temporary purposes for public religious functions like Ganesh Utsav, Navaratri, Eid, Moharrum, Ram Lila, Diwali, Christmas, Guru Nanak Jayanti, etc., and for areas where community prayers are held; and for functions to commemorate anniversaries of personalities and National or State events for which Public Holidays have been declared, such as Gandhi Jayanti, Ambedkar Jayanti, Chhatrapati Shivaji Jayanti, Republic Day, Independence Day, etc. This tariff will also be applicable to Circus Troupes. LT VII (B): LT - Temporary Supply - Others (TSO) Applicability: This Tariff category is applicable for electricity used at Low/Medium voltage for Temporary use for a period not exceeding one year, other than for the religious or commemorative purposes covered under LT VII (A), for: a) Construction of all types of structures/ infrastructure such as buildings, bridges, flyovers, dams, Power Stations, roads, Aerodromes, tunnels for laying of pipelines; b) Any construction or renovation activity in existing premises; c) Decorative lighting for exhibitions, circuses, film shootings, marriages, etc., d) Any other activity not covered under LT VII (A). Consumption Slab (kwh) LT VII (A) All Units LT VII (B) All Units Fixed/Demand Charge Rs. 275 per connection per month Rs. 530 per connection month $$$ Regulatory Energy Wheeling Asset Charge Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) Note: Case No. 69 of 2018 Mid Term Review for TPC-D Page 331 of 387

332 a) $$$: For LT VII (B), Additional Fixed Charges of Rs. 275 per 10 kw load or part thereof above 10 kw load shall be payable. b) Electricity used at Low / Medium Voltage for operating Fire-Fighting pumps and equipment in residential or other premises shall be charged as per the Tariff category applicable to such premises. LT VIII: LT- Crematoriums and Burial Grounds Applicability: This Tariff category is applicable for electricity used at Low/Medium Voltage in Crematoriums and Burial Grounds for all purposes, including lighting. However, it will be applicable only to the portion of the premises catering to such activities. In case a part of the area is being used for other purposes, a separate meter will have to be provided for such purposes and the consumption charged at the applicable Tariff. Consumption Slab (kwh) All Units Fixed/Demand Charge Rs. 275 per connection per month Regulatory Energy Wheeling Asset Charge Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) LT IX: Public Services LT IX (A): LT - Government Educational Institutions and Hospitals Applicability: This Tariff category is applicable for electricity supply at Low/Medium Voltage for Educational Institutions, such as Schools and Colleges; Health Care facilities, such as Hospitals, Dispensaries, Clinics, Primary Health Care Centres, Diagnostic Centres and Pathology Laboratories; Libraries and public reading rooms - of the State or Central Government or Local Self-Government bodies such as Municipalities, Zilla Parishads, Panchayat Samitis, Gram Panchayats, etc.; It shall also be applicable for electricity used for Sports Clubs and facilities / Health Clubs and facilities / Gymnasium / Swimming Pools attached to such Educational Institutions / Page 332 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

333 Hospitals, provided that they are situated in the same premises and are meant primarily for their students / faculty/ employees/ patients. Regulatory Fixed/ Demand Energy Wheeling Consumption Slab Asset Charge Charge Charge (kwh) Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 330 per month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Note: The ToD Tariff is compulsorily applicable to the LT IX (A) category with Contract Demand/Sanctioned Load above 20 kw; and optionally available to the LT IX (A) category with Contract Demand/Sanctioned Load up to 20 kw having ToD meter installed. LT IX (B): LT - Public Services - Others Applicability: This Tariff category is applicable for electricity supply at Low/Medium Voltage for: a) Educational Institutions, such as Schools and Colleges; Health Care facilities, such as Hospitals, Dispensaries, Clinics, Primary Health Care Centres, Diagnostic Centres and Pathology Laboratories; Libraries and public reading rooms - other than those of the State or Central Government or Local Self-Government bodies such as Municipalities, Zilla Parishads, Panchayat Samitis, Gram Panchayats, etc. Sports Clubs and facilities / Health Clubs and facilities / Gymnasium / Swimming Pools attached to such Educational Institutions /Health Care facilities, provided that they are situated in the same premises and are meant primarily for their students / faculty/ employees/ patients; b) All offices of Government and Municipal/ Local Authorities/ Local Self- Government bodies, such as Municipalities, Zilla Parishads, Panchayat Samitis, Gram Panchayats; Police Stations and Police Chowkies; Post Offices; Armed Forces/Defence and Para-Military establishments; Case No. 69 of 2018 Mid Term Review for TPC-D Page 333 of 387

334 c) Service-oriented Spiritual Organisations; d) State or Municipal/Local Authority Transport establishments, including their Workshops; e) Fire Service Stations; Jails, Prisons; Courts; f) Airports; g) Ports and Jetties; h) Railway/Metro/Monorail Stations, including Shops, Workshops, Yards, etc., if the supply is at Low/ Medium Voltage. i) Waste processing units not covered under LT IV category. Fixed/ Demand Energy Wheeling Regulatory Consumption Slab Charge Charge Charge Asset Charge (kwh) (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 330 per month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Note: The ToD Tariff is compulsorily applicable to the LT IX (B) category with Contract Demand/Sanctioned Load above 20 kw; and optionally available to the LT IX (B) category with Contract Demand/Sanctioned Load up to 20 kw having ToD meter installed. LT X (A): LT - Agriculture - Pumpsets Applicability: This Tariff category is applicable for motive power supplied for agricultural metered pumping loads, and for one lamp of wattage up to 40 to be connected to the motive power circuit for use in pump-houses at Low/Medium Voltage. It is also applicable for power supply for cane crushers and/or fodder cutters for self-use for agricultural processing operations, but not for operating a flour mill, oil mill or expeller in the same premises, either operated by a separate motor or a change of belt drive. Page 334 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

335 Consumption Slab (kwh) All Units Fixed/ Demand Charge Rs. 30 per HP per month Wheeling Regulatory Energy Charge Charge Asset Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) Note: Consumers who avail power supply at High Voltage for the above purposes shall also be billed as per this Tariff category. LT X (B): LT Agriculture Others Applicability: This Tariff category is applicable for use of electricity / power supply at Low / Medium Voltage for: a) Pre-cooling plants and cold storage units for Agricultural Products processed or otherwise; b) Poultries exclusively undertaking layer and broiler activities, including Hatcheries; c) High-Technology Agriculture (i.e. Tissue Culture, Green House, Mushroom cultivation activities), provided the power supply is exclusively utilized for purposes directly concerned with the crop cultivation process, and not for any engineering or industrial process; d) Floriculture, Horticulture, Nurseries, Plantations, Aquaculture, Sericulture, Cattle Breeding Farms, etc. Consumption Slab (kwh) All Units Fixed/ Demand Charge Rs. 80 per kw per month Wheeling Regulatory Energy Charge Charge Asset Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) Note: Consumers who avail power supply at High Voltage for the above purposes shall also be billed as per this Tariff category. Case No. 69 of 2018 Mid Term Review for TPC-D Page 335 of 387

336 LT XI: LT Electric Vehicle (EV) Charging Stations Applicability: This Tariff category is applicable for Electric Vehicle Charging Station. In case the consumer uses the electricity supply for charging his own electric vehicle at his premises, the tariff applicable shall be as per the category of such premises. Electricity consumption for other facilities at Charging Station such as restaurant, rest rooms, convenience stores, etc., shall be charged at tariff applicable to Commercial Category. Regulatory Fixed/ Demand Energy Wheeling Consumption Slab Asset Charge Charge Charge (kwh) Charge (Rs./kVA/Month) (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 70 per kva per month TOD Tariffs (in addition to above base tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Page 336 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

337 HIGH TENSION (HT) TARIFF HT I: HT Industry Applicability: This Tariff category is applicable for electricity for Industrial use at High Voltage for purposes of manufacturing and processing, including electricity used within such premises for general lighting, heating/cooling, etc. It is also applicable for use of electricity / power supply for Administrative Offices / Canteen, Recreation Hall / Sports Club or facilities / Health Club or facilities/ Gymnasium / Swimming Pool exclusively meant for employees of the industry; lifts, water pumps, firefighting pumps and equipment, street and common area lighting; Research and Development units, etc. - Provided that all such facilities are situated within the same industrial premises and supplied power from the same point of supply. This Tariff category shall be applicable for use of electricity / power supply by an Information Technology (IT) or IT-enabled Services (ITeS) Unit as defined in the applicable IT/ITes Policy of Government of Maharashtra. Where such Unit does not hold the relevant permanent registration Certificate, the Tariff shall be as per the HT II category, and the HT I Tariff shall apply to it after receipt of such permanent registration Certificate and till it is valid. It shall also be applicable for use of electricity / power supply for (but not limited to) the following purposes: a) Flour Mills, Dal Mills, Rice Mills, Poha Mills, Masala Mills, Saw Mills; b) Ice Factories, Ice-cream manufacturing units, Milk Processing / Chilling Plants (Dairy); c) Engineering Workshops, Engineering Goods manufacturing units; Printing Presses; Transformer Repair Workshops; Tyre Retreading units, and Vulcanizing units; d) Mining, Quarrying and Stone Crushing units; e) Garment Manufacturing units; f) LPG/CNG bottling plants, etc.; g) Sewage Treatment Plant/ Common Effluent Treatment Plant for industries, and not covered under the HT PWW category; h) Start-up power for Generating Plants, i.e., the power required for trial run of a Power Plant during commissioning of the Unit and its Auxiliaries, and for its start-up after planned or forced outage (but not for construction); Case No. 69 of 2018 Mid Term Review for TPC-D Page 337 of 387

338 i) Brick Kiln (Bhatti); j) Biotechnology Industries covered under the Biotechnology Policy of Government of Maharashtra; k) Cold Storages not covered under LT X (B) Agriculture (Others); l) Food (including Seafood) Processing units. Regulatory Consumption Fixed/ Demand Energy Wheeling Asset Slab Charge Charge Charge Charge (kwh) (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 275 per kva per month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Note: Demand Charge shall be applicable at the rate of 25% of the above rates on the start-up demand contracted by the Power Plant (as referred to at (h) above) with the Distribution Licensee. HT II: HT- Commercial Applicability: This Tariff category is applicable for electricity used at High Voltage in non-residential, non-industrial and/or commercial premises for commercial consumption meant for operating various appliances used for purposes such as lighting, heating, cooling, cooking, washing/cleaning, entertainment/ leisure and water pumping in, but not limited to, the following premises: a) Non-Residential, Commercial and Business premises, including Shopping Malls and Showrooms; Page 338 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

339 b) Combined lighting and power services for facilities relating to Entertainment, including film studios, cinemas and theatres (including multiplexes), Hospitality, Leisure, Meeting/Town Halls, and places of Recreation and Public Entertainment; c) Offices, including Commercial Establishments; d) Marriage Halls, Hotels / Restaurants, Ice-cream parlours, Coffee Shops, Guest Houses, Internet / Cyber Cafes, Telephone Booths and Fax / Photocopy shops; e) Automobile and all other types of repairs, servicing and maintenance centres (unless specifically covered under another Tariff category); Retail Gas Filling Stations, Petrol Pumps & Service Stations, including Garages; f) Tailoring Shops, Computer Training Institutes, Typing Institutes, Photo Laboratories, Laundries, Beauty Parlours and Saloons; g) Banks and ATM centres, Telephone Exchanges, TV Stations, Micro Wave Stations, Radio Stations, Telecommunications Tower; h) Common facilities, like Water Pumping / Lifts / Fire-Fighting Pumps and other equipment / Street and other common area Lighting, etc., in Commercial Complexes; i) Sports Clubs/facilities, Health Clubs/facilities, Gymnasiums, Swimming Pools not covered under any other category; j) External illumination of monuments/ historical/heritage buildings approved by Maharashtra Tourism Development Corporation (MTDC) or the concerned Local Authority; k) Construction of all types of structures/ infrastructure such as buildings, bridges, flyovers, dams, Power Stations, roads, Aerodromes, tunnels for laying of pipelines for all purposes, and which is not covered under the HT - Temporary category; Note: Residential LT consumers with consumption above 500 units per month (current month of supply) and who undertake construction or renovation activity in their existing premises shall not require a separate Temporary category connection but be billed at the LT-II Commercial Tariff; l) Milk Collection Centres; m) Sewage Treatment Plant/ Common Effluent Treatment Plant for Commercial Complexes, not covered under the HT PWW category or HT I Industry; n) Stand-alone Research and Development units not covered under any other category; Consumption Slab All Units (kwh) Fixed/ Demand Charge Rs. 275 per kva per month Regulatory Energy Wheeling Asset Charge Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) Case No. 69 of 2018 Mid Term Review for TPC-D Page 339 of 387

340 Consumption Slab Fixed/ Demand Energy (kwh) Charge Charge (Rs./kWh) TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) Note: A consumer in the HT II category requiring single-point supply for the purpose of downstream consumption by separately identifiable entities shall have to operate as a Franchisee authorised as such by the Distribution Licensee; or such downstream entities shall be required to take separate individual connections and be charged under the Tariff category applicable to them. HT III: HT - Group Housing Society (Residential) Applicability: Entities supplied electricity at a single point at High Voltage for residential purposes in accordance with the Electricity (Removal of Difficulties) Eighth, 2005, in the following cases: a) a Co-operative Group Housing Society which owns the premises, for making electricity available to the members of such Society residing in the same premises for residential purposes; and b) a person, for making electricity available to its employees residing in the same premises for residential purposes. Consumption Slab (kwh) All Units Fixed/ Demand Charge Rs. 275 per kva per month Regulatory Energy Wheeling Asset Charge Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) Page 340 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

341 HT IV: HT - Public Water Works (PWW) and Sewage Treatment Plants Applicability: This Tariff category is applicable for electricity / power supply at High Voltage for pumping of water, purification of water and allied activities relating to Public Water Supply Schemes, Sewage Treatment Plants and waste processing units, provided they are owned or operated or managed by Local Self-Government Bodies (Gram Panchayats, Panchayat Samitis, Zilla Parishads, Municipal Councils and Corporations, etc.), or by Maharashtra Jeevan Pradhikaran (MJP), Maharashtra Industries Development Corporation (MIDC), Cantonment Boards and Housing Societies / complexes. All other Public Water Supply Schemes and Sewage Treatment Plants (including allied activities) shall not be eligible under this Tariff category, but be billed at the Tariff applicable to the HT I or HT II categories, as the case may be. Consumption Slab (kwh) Fixed/ Demand Charge Energy Charge (Rs./kWh) Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) All Units Rs. 275 per kva per month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours HT V- Railways/Metro/Monorail This Tariff category is applicable to power supply at High Voltage for Railways, Metro and Monorail, including Stations and Shops, Workshops, Yards, etc. Case No. 69 of 2018 Mid Term Review for TPC-D Page 341 of 387

342 Consumption Slab (kwh) (A) 110/132 kv (B) 33 kv Fixed /Demand Charge Rs. 275 per kva per month Rs. 275 per kva per month Energy Charge (Rs/kWh) Wheeling Charge (Rs./kWh) Regulatory Asset Charge (Rs/kWh) HT VI - Public Services HT VI (A): HT - Government Educational Institutions and Hospitals Applicability: This Tariff category is applicable for electricity supply at High Voltage for Educational Institutions, such as Schools and Colleges; Health Care facilities, such as Hospitals, Dispensaries, Clinics, Primary Health Care Centres, Diagnostic Centres and Pathology Laboratories; Libraries and public reading rooms - of the State or Central Government, Local Self-Government bodies such as Municipalities, Zilla Parishads, Panchayat Samitis, Gram Panchayats, etc.; It shall also be applicable for electricity used for Sports Clubs and facilities / Health Clubs and facilities / Gymnasium / Swimming Pools attached to such Educational Institutions / Health Care facilities, provided that they are situated in the same premises and are meant primarily for the students / faculty/ employees/ patients of such Educational Institutions and Hospitals. Regulatory Consumption Energy Wheeling Fixed/ Demand Asset Slab Charge Charge Charge Charge (kwh) (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 275 per kva per month TOD Tariffs (in addition to above base Tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours 0.00 Page 342 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

343 Consumption Energy Fixed/ Demand Slab Charge Charge (kwh) (Rs./kWh) 1800 to 2200 hours to 0600 hours Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) HT VI - (B): Public Service - Others This Tariff category is applicable for electricity supply at High Voltage for: a) Educational Institutions, such as Schools and Colleges; Health Care facilities, such as Hospitals, Dispensaries, Clinics, Primary Health Care Centres, Diagnostic Centres and Pathology Laboratories; Libraries and public reading rooms - other than those of the State or Central Government, Local Self-Government bodies such as Municipalities, Zilla Parishads, Panchayat Samities, Gram Panchayats, etc. Sports Clubs and facilities / Health Clubs and facilities / Gymnasium / Swimming Pools attached to such Educational Institutions / Health Care facilities, provided that they are situated in the same premises and are meant primarily for their students / faculty/ employees/ patients; b) All offices of Government and Municipal/ Local Authorities/ Local Self- Government bodies, such as Municipalities, Zilla Parishads, Panchayat Samitis, Gram Panchayats; Police Stations and Police Chowkies; Post Offices; Armed Forces/Defence and Para-Military establishments; c) Service-oriented Spiritual Organisations; d) State or Municipal/Local Authority Transport establishments, including their Workshops; e) Fire Service Stations; Jails, Prisons; Courts; f) Airports; g) Ports and Jetties. h) Waste processing units not covered under HT IV category. Consumption Slab All Units (kwh) Fixed/ Demand Charge Rs. 275 per kva per month Energy Charge TOD Tariffs (in addition to above base Tariffs) (Rs./kWh) Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) Case No. 69 of 2018 Mid Term Review for TPC-D Page 343 of 387

344 Energy Consumption Slab Fixed/ Demand Charge (kwh) Charge (Rs./kWh) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours Wheeling Charge (Rs/kWh) Regulatory Asset Charge (Rs/kWh) HT VII- HT - Temporary Supply Applicability: This Tariff category is applicable for electricity supply at High Voltage, for temporary use for a period not exceeding one year, for public religious functions like Ganesh Utsav, Navaratri, Eid, Moharrum, Ram Lila, Diwali, Christmas, Guru Nanak Jayanti, etc. or for areas where community prayers are held; and for functions to commemorate anniversaries of personalities and National or State events for which Public Holidays have been declared, such as Gandhi Jayanti, Ambedkar Jayanti, Chhatrapati Shivaji Jayanti, Republic Day, Independence Day, etc. This Tariff category is also applicable for electricity supplied at High Voltage for Temporary use for a period not exceeding one year for: a) Construction of all types of structures/ infrastructure such as buildings, bridges, flyovers, dams, Power Stations, roads, Aerodromes, tunnels for laying of pipelines for all purposes; b) Any construction or renovation activity in existing premises; c) Decorative lighting for exhibitions, circuses, film shootings, marriages, etc. Consumption Slab (kwh) All Units Note: Fixed/ Demand Charge Rs. 530 per connection per month Regulatory Energy Wheeling Asset Charge Charge Charge (Rs./kWh) (Rs/kWh) (Rs/kWh) Page 344 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D

345 Additional Fixed Charges of Rs. 275 per 10 kw load or part thereof above 10 kw load shall be payable. HT VIII: HT Electric Vehicle (EV) Charging Stations Applicability: This Tariff category is applicable for Electric Vehicle Charging Station. In case the consumer uses the electricity supply for charging his own electric vehicle at his premises, the tariff applicable shall be as per the category of such premises. Electricity consumption for other facilities at Charging Station such as restaurant, rest rooms, convenience stores, etc., shall be charged at tariff applicable to Commercial Category. Regulatory Fixed/ Demand Energy Wheeling Consumption Slab Asset Charge Charge Charge (kwh) Charge (Rs./kVA/Month) (Rs./kWh) (Rs/kWh) (Rs/kWh) All Units Rs. 70 per kva per month TOD Tariffs (in addition to above base tariffs) 0600 to 0900 hours to 1200 hours to 1800 hours to 2200 hours to 0600 hours MISCELLANEOUS AND GENERAL CHARGES Fuel Adjustment Charge (FAC) Component of Z-factor Charge The Fuel Adjustment Charge (FAC) component of the Z-factor Charge will be determined in accordance with the formula specified in the relevant Multi Year Tariff Regulations and any directions that may be given by the Commission from time to time, and will be applicable to all consumer categories for their entire consumption. Case No. 69 of 2018 Mid Term Review for TPC-D Page 345 of 387

346 In case of any variation in the fuel prices and power purchase prices, the Distribution Licensee shall pass on the adjustments through the FAC component of the Z-factor Charge accordingly. The details of the applicable ZFAC for each month shall be available on the Distribution Licensee s website Electricity Duty and Tax on Sale of Electricity Electricity Duty and Tax on Sale of Electricity shall be levied in addition to the Tariffs approved by the Commission, and in accordance with the Government of Maharashtra stipulations from time to time. The rate and the reference number of the Government Resolution/ under which the Electricity Duty and Tax on Sale of Electricity are applied shall be stated in the consumers energy bills. A copy of such Resolution / shall be provided on the Distribution Licensee s website Power Factor Computation Where the average Power Factor measurement is not possible through the installed meter, the following formula for calculating the average Power Factor during the billing period shall be applied: Power Factor Incentive Applicable for HT-I -Industry, HT II - Commercial, HT-IV : PWW, HT V- Railways, Metro & Monorail, HT-VI: Public Services [HT VI (A) and HT VI (B)], HT VII - Temporary Supply, HT VIII-Electric Vehicle Charging Stations, LT II: Non- Residential/Commercial [LT II (B), LT II (C)] (for Contract Demand/Sanctioned Load above 20 kw), LT III (B): Industry above 20 kw, LT IV- PWW, LT VII (B) Temporary Supply (Others), and LT IX : Public Service [LT IX (A) and LT IX (B)] having contract demand/sanctioned load above 20 kw and LT XI- Electric Vehicle Charging Stations. Page 346 of 387 Case No. 69 of 2018 Mid Term Review for TPC-D