Submitted to. Maharashtra Electricity Regulatory Commission. Mumbai

Transcription

1 MSLDC Mid-Term Review Petition For Truing up of Budget Cost of Operation for FY & , Provisional truing-up for FY and ARR forecast and determination of Fees and Charges For FY to FY Submitted to Maharashtra Electricity Regulatory Commission Mumbai By Maharashtra State Load Despatch Centre (Maharashtra State Electricity Transmission Company Ltd.) Kalwa 2 nd January, 2018

2 Table of Contents 1 Background Approach for the filing True-up for FY Operating Cost Budget Capital Charge Budget Revenue True-up for FY Summary of True-Up for FY Operational performance of SLDC during the 3 rd Control Period True-up for FY Operation & Maintenance Interest on Working Capital RLDC Fees & WRPC Charges Capitalization Depreciation Interest & Financial Charges Return on Equity Reactive Energy Charges Paid / Income from Reactive Energy Charges Income Tax Non-Tariff Income Income from Open Access Charges Income from Monthly Operating Charges Summary of True-Up for FY Provisional True-Up for FY Operation & Maintenance Interest on Working Capital RLDC Fees & WRPC Charges Capital Expenditure Plan and Capitalization Depreciation Interest & Financial Charges Return on Equity Reactive Energy Charges Income Tax Non-Tariff Income Income from Open Access Charges & Monthly Operating Charges Income from Monthly Operating Charges Summary of True-Up for FY Revised ARR for FY to FY Operation & Maintenance MSLDC MTR Petition FY to FY Page 2

3 7.2 Interest on Working Capital RLDC Fees & WRPC Charges Capital Expenditure Plan and Capitalisation Depreciation Interest & Financial Charges Return on Equity Reactive Energy Charges paid / Income from Reactive Energy Charges Income Tax Non-Tariff Income Income from Open Access Charges Impact of truing up and provisional truing up Summary of ARR for Control Period from FY to FY Sharing of MSLDC Charges Fees to be charged by MSLDC Registration or Connection Fees Scheduling and Re-Scheduling Fees Short Term Open Access Application Processing Fees Renewable Energy Certificate Processing Fees Compliance to Directives Ring-fencing and Autonomy Manpower Development Technology and Operational Systems Upgradation Incentive Schemes Vacancies Project Planning Preparedness of SLDC in handling future challenges Reactive Energy Charges Prayers MSLDC MTR Petition FY to FY Page 3

4 List of Tables Table 1: Employee Expenses for FY Table 2: A&G Expense for FY Table 3: R&M Expense for FY Table 4: O&M Expenses for FY Table 5: Sharing of Gains and Loss on account of O&M Expenses for FY Table 6: Interest on Working Capital for FY Table 7: RLDC Fee & WRPC Charges for FY Table 8: Capitalization for FY Table 9: Depreciation for FY Table 10: Details of Existing Loans allocated to MSLDC by MSETCL Table 11: Interest on Loan Table 12: Return on Equity Table 13: Revenue Components for FY Table 14: Final True-Up for FY Table 15: ADMC for FY to FY Table 16: Breakup of Operation and Maintenance Expenses for FY Table 17: Operation and Maintenance Expenses for FY Table 18: Sharing of Gains and Loss on account of O&M Expenses for FY Table 19: Interest on Working Capital for FY Table 20: RLDC Fee & WRPC Charges for FY Table 21: Capitalization for FY Table 22: Depreciation for FY Table 23: Details of Existing Loans allocated to MSLDC by MSETCL Table 24: Interest on Loan Table 25: Return on Equity Table 26: Non-Tariff Income for FY Table 27: Income from Open Access charges for FY Table 28: Income from Monthly Operating Charges for FY Table 29: Final True-Up for FY Table 30: O&M Expenses for FY Table 31: Employee Expenses for FY Table 32: A&G Expenses for FY Table 33: R&M Expenses for FY Table 34: O&M Expenses for FY Table 35: Interest on Working Capital for FY Table 36: RLDC Fee & WRPC Charges for FY Table 37: Revised Capex and Capitalisation for FY Table 38: Revised Capex and Capitalisation for FY Table 39: Depreciation for FY Table 40: Details of Existing Loans allocated to MSLDC by MSETCL Table 41: Interest on Loan for FY Table 42: Return on Equity for FY Table 43: Non-Tariff Income for FY Table 44: Income from Open Access charges for FY Table 45: Income from Monthly Operating Charges for FY Table 46: Summary of Provisional True-up of FY Table 47: O&M Expenses for Control Period Table 48: Detailed O&M Expenses for Control Period Table 49: Interest on Working Capital for Control Period Table 50: RLDC Fee & WRPC Charges for Control Period Table 51: Projected Capitalization for FY Table 52: Projected Capitalization for Table 53: Depreciation Estimated for New Control Period MSLDC MTR Petition FY to FY Page 4

5 Table 54: Details of Existing Loans allocated to MSLDC by MSETCL Table 55: Interest on Loan for FY to FY Table 56: Return On Equity estimated for FY & FY Table 57: Non-Tariff Income estimated for FY & FY Table 58: Income from Open Access Charges for FY & FY Table 59: Impact of truing up Amortized over FY to FY Table 60: Summary of Annual Fixed Charges for FY to FY Table 61: List of TCRs sharing MSLDC Charges for FY Table 62: Base Transmission Capacity Rights for FY and sharing Table 63: Projected Base Transmission Capacity Rights for FY to FY Table 64: Sharing of MSLDC Charges for FY to FY Table 65: Proposed MSLDC Charges for FY to FY MSLDC MTR Petition FY to FY Page 5

6 1 Background Maharashtra State Load Despatch Centre (MSLDC) is the apex body for integrated operation of electricity grid in the State of Maharashtra and constituted under Section 31 of the Electricity Act (EA), MSLDC operates from two centres i.e. at Kalwa and Ambazari (Nagpur) in Maharashtra and an additional sub-ldc Mumbai, which now shifted to MSLDC Control room and being operated through separate desk. In accordance with the first proviso to Section 31(2) of the EA 2003, the Maharashtra State Electricity Transmission Company Limited (MSETCL), which is the State Transmission Utility (STU) in the State of Maharashtra, operates the MSLDC. The Hon ble Commission notified the MERC (Multi Year Tariff) Regulations 2015(the MYT Regulations 2015) on 8 December, 2015 in exercise of the powers conferred by Section 181 (2) read with Sections 36, 39, 40, 41, 51, 61, 62, 64, 65 and Section 86 of the Electricity Act, These Regulations are applicable for Control Period from 1 April, 2016 to 31 March, In accordance with the provisions of the MYT Regulations, 2015, MSLDC is required to submit the Multi Year Tariff for Commission s approval. MSLDC filed a Petition on 29 January, 2016 for approval of truing up of Budget of Cost of Operations for FY , provisional truing-up for FY and ARR forecast and fees and charges for FY to FY ; with reference to Section 32 of the EA, 2003, previous Orders of the Commission on MSLDC s Operating and Capital Charges; applicable provisions of the MERC (Multi Year Tariff) Regulations 2011 (the MYT Regulations, 2011); the MERC (Multi Year Tariff) Regulations 2015 (the MYT Regulations 2015) and Regulation 18.9 of the MERC (Transmission Open Access) Regulations, 2014 (the Transmission OA Regulations). The Commission after due consideration had issued the Order in the matter of Truing up of Budget of Cost of operations for FY , Provisional Truing-Up for FY and ARR forecast and determination of Fees and Charges for FY to FY on 22 July 2016 herein referred to as MSLDC MYT Order (Case No. 20 of 2016). In accordance with the provisions of the MYT Regulations, 2015, MSLDC is required to submit the Mid-Term Review for Commission s approval. In accordance with Regulations 8.1 of the MYT Regulations, 2015, MSLDC is filing present Petition for: a) Approval of Truing-up of Budget Cost of MSLDC for FY b) Approval of Truing-up of Annual Fixed Cost of MSLDC for FY MSLDC MTR Petition FY to FY Page 6

7 c) Provisional Truing-up of Annual Fixed Cost of MSLDC for FY d) Approval of revised ARR forecast for FY to FY and Determination of Fees and Charges for FY to FY MSLDC is filing this detailed Mid-term Review Petition for 3 rd Control Period, before the Hon ble Commission and has made all efforts to provide the necessary data. 2 Approach for the filing The present filing for the truing-up for FY is based on applicable provisions of the MERC (Multi Year Tariff) Regulations, 2011 (The MYT Regulations, 2011). Filing for the truing-up for FY and for the provisional truing-up for FY is based on applicable provisions of the MERC (Multi Year Tariff) Regulations, 2015 (The MYT Regulations, 2015). Filing for each year of the Control Period is from FY andFY is based on applicable provisions of the MERC (Multi Year Tariff) Regulations, 2015 (the MYT Regulations, 2015) and other relevant Regulations. The detailed methodology adopted for the preparation of MSLDC Petition is discussed in the subsequent sections. MSLDC MTR Petition FY to FY Page 7

8 3 True-up for FY MSLDC humbly submit that Audited Accounts and Allocation Statement for FY have been finalized, has been attached to the Petition as Annexure- 2. MSLDC therefore seeks true- up of operating and capital cost budget and SLDC revenue components for FY as per the Audited Accounts/principles laid down in the previous Orders of the Commission on MSLDC s Operating Cost Budget and Capital Charge Budget, as applicable for various heads of expenditure/revenue. Further, all computations are also presented in spreadsheet data formats stipulated by the Commission for submission of MYT Petition, which are separately submitted in a computer readable file along with this Petition. The same has also been attached to the Petition as Annexure- 1. The copy of Auditor Certified Trial Balance for FY & FY has been enclosed as Annexure- 11 in the Petition. MSLDC has provided detailed rationale for truing up and key issues in the subsequent paragraphs. 3.1 Operating Cost Budget Operation & Maintenance Expenses Operations and Maintenance Expenses consist of following expenditure heads; a) Employee Expenses b) Administration and General Expenses c) Repairs and Maintenance Expenses The detailed expenses under the above mentioned heads and the rationale for the expenses have been discussed in detail as follows: a) Employee Expenses The Employee expense approved by the Hon ble Commission in Case No. 20 of 2016 and actual Employee expenses incurred by MSLDC is shown in table below: Table 1: Employee Expenses for FY Approved in Case No. 20 of 2016 Actual Employee Expenses MSLDC MTR Petition FY to FY Page 8

9 The actual Employee Expenses for FY are Rs Lakh as per the Audited Accounts, which are marginally lower than Rs Lakh approved by the Hon ble Commission. The actual Employee Expenses includes Wage Arrears of Rs Lakhs for both Kalwa and Ambazari, the details of Wage Arrears for FY is annexed as Annexure 12. Further, there exists a variation in the Employee Expense claimed in the Petition against Audited Allocation Statement to the tune of Rs. 2.5 Lakhs. The same amount pertains to shifting of Training Expenses, which was categorised under Staff Welfare Expenses for the year and included under Employee Expenses considered for the Audited Allocation Statement. Owing to the nature of such expenses the same was included under A&G Expenses. MSLDC humbly requests the Hon ble Commission to approve the employee expenses as claimed in this Petition. The details of Employee Expenses provided in Form 2.2 of MTR Petition Formats, annexed as Annexure 1. b) Administrative and General Expenses The Administrative and General Expenses (A&G) includes the following major heads: Rent, Rates and Taxes; Insurance; Revenue Stamp Expenses, Telephone, Postage & Telegrams; Legal Charges; Technical Fees, Consultancy and Other Professional Charges; Conveyance and Travel; Electricity charges; Vehicle Running Expenses i.e., Petrol and Oil & Vehicle Hiring Expenses; Security/Service Charges Paid to Outside Agencies for safety & protection; IT and Communication related expenses Other Charges: o Fee and Subscriptions - Books and Periodicals o Printing and Stationery o Advertisement Expenses o Water Charges o Upkeep of Office Premises o Miscellaneous Expenses The actual A&G Expenses for FY as per audited accounts are Rs Lakh as against Rs Lakh approved by the Hon ble Commission. However, it is submitted that the actual A&G expenses for FY of Rs Lakh are marginally lower as MSLDC MTR Petition FY to FY Page 9

10 compared with expenses of A&G expenses approved in Case 20 of 2016 for FY of Rs Lakh. Accordingly, MSLDC requests the Hon ble Commission to approve A&G expenses for FY based on actuals. The A&G Expense approved by the Hon ble Commission in Case No. 20 of 2016 and actual A&G expenses incurred by MSLDC shown in Table below: Table 2: A&G Expense for FY Approved in Case No. 20 of 2016 Audited A&G Expenses As explained under Employee Expenses head, Training Expenses of Rs. 2.5 Lakhs was shifted from Employee Expenses to A&G Expenses. Thus, to this extent, A&G Expenses claimed under Petition are higher than that appearing in Audited Allocation Statement. The details of Administrative and General Expenses provided in Form F2.3 of MTR Petition Formats, annexed as Annexure 1. c) Repairs and Maintenance Expenditure The actual R&M Expenses for FY as per the Audited Accounts are Rs Lakh as against Rs Lakh approved in Case No. 20 of 2016 by the Hon ble Commission. The R&M Expense approved by the Hon ble Commission in Case No. 20 of 2016 and actual R&M expenses incurred by MSLDC shown in the following Table: Table 3: R&M Expense for FY Approved in Case No. 20 of 2016 Actual R&M Expenses The details of Repair and Maintenance Expenditure provided in Form F2.4of MTR Petition Formats. MSLDC MTR Petition FY to FY Page 10

11 The broad breakup of R&M expenditure incurred and as reported under the head of Plant & Machinery, attached separately in the Annexure- 3. The Commission is requested to allow the actual expenses for FY Operation and Maintenance (O&M) expenses The Operation and Maintenance (O&M) expenses approved by the Hon ble Commission for FY in Case No. 20 of 2016 and the actual expenses incurred by MSLDC as per Audited Accounts are summarized in Table as below: Table 4: O&M Expenses for FY Approved in Case No. 20 of 2016 Actual Employee Expenses A&G Expenses R&M Expenses Operation and Maintenance Expenses MSLDC humbly request the Hon ble Commission to approve Operation and Maintenance expenses as claimed in this Petition. The Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2015 under Regulation 8.4 (a) specifies as under: 8.4 (a) the approved aggregate gain or loss to the Generating Company or Licensee or MSLDC on account of controllable factors for the Years and and provisional Truing-up for the Year , and the amount of such gains or such losses that may be shared in accordance with Regulation 11; (Emphasis Added) Further, as per Regulation 12.2 of the MYT Regulations, 2011, variation in O&M expense corresponding to approved value are categorised as controllable expenses. Thus, impact of sharing of gains/loss has been considered on this account for FY and the same is presented in the following table. Table 5: Sharing of Gains and Loss on account of O&M Expenses for FY O&M Expenses Approved under Case No. 20 of Actual O&M expense MSLDC MTR Petition FY to FY Page 11

12 Total Gain/(Loss) on account of controllable factors Sharing proposed Interest on Working Capital The methodology specified in the MYT Regulations, 2011 has been considered for calculation of Interest on Working Capital(IoWC) for FY Further, in line with the Hon ble Commission s directive in Order dated 16 May, 2006 in Case No. 30 of 2005, the Operating Cost Budget alone has been considered for calculation of IoWC. The relevant extract of aforementioned Order is reproduced as below: Accordingly, receivables corresponding to operating cost budget only need to be accounted for. Therefore, MSLDC in this Petition has considered receivable only corresponding to the Operating Budget. It is respectfully submitted that the IoWC shall be payable on normative basis notwithstanding that MSLDC has not taken any working capital loan from any outside agency. For FY , the interest rate used by the Hon ble Commission for calculation of interest on Working Capital in the Order in Case No. 20 of 2016 has been considered. The Interest on Working Capital approved by the Hon ble Commission for FY in Case No. 20 of 2016 and normative interest on Working Capital is shown in Table below: Table 6: Interest on Working Capital for FY Approved in Case No. 20 of 2016 Actual Interest on Working Capital MSLDC submits that, there is no actual borrowings/loan taken for meeting its working capital requirements. The Hon ble Commission is requested to allow Interest on Working Capital for FY as above. The detailed computation of normative interest on working capital has been given in the Form 6 of MTR Petition Formats. MSLDC MTR Petition FY to FY Page 12

13 3.1.3 RLDC Fees and Western Region Power Committee (WRPC) Charges The Hon ble Commission in its Order in Case 30 of 2005, dated 16 May, 2006 had directed that all costs, fees and charges pertaining to Regional Load Despatch Centre (RLDC) related activities should form part of MSLDC Budget and should be recovered under the head RLDC fees and charges as may be notified by the Commission from time to time. The relevant extract of the said Order is reproduced as following. 35. MSETCL has not claimed any charges towards RLDC fees and charges. The Commission is of the opinion that as per Section 32(2) of EA 2003, SLDC is required to exercise supervision and control of intra-state transmission system, co-ordinate with RLDC in the process and is also required to ensure compliance of the directions issued by RLDC as per Section 29 (3) of EA Hence, all costs, fees and charges pertaining to RLDC related activities should form part of SLDC Budget and should be recovered through RLDC fees and charges as may be notified by the Commission from time to time. Accordingly, for the purpose of SLDC Budget for FY , the Commission has estimated RLDC related fees and charges forming part of SLDC Budget as under. The charges towards RLDC Fees are being paid by MSEDCL against the invoices raised by RLDC to MSEDCL. After payment, MSEDCL claims that charges from MSLDC and the same are being paid by MSLDC to MSEDCL. The Central Electricity Regulatory Commission (CERC) has issued an Order in Case No. 241/TT/2015, dated 26 th December, 2016 approving Fees and Charges of WRLDC for the FY to FY RLDC Fees during FY is Rs Lakh as against Rs Lakh approved in Case No. 20 of 2016, MSEDCL has reimbursed this amount from MSLDC through three different transactions and informed MSLDC vide 1 st letter dated 3 February, 2016 for the month of April 2015 to October 2015, vide 2 nd letter dated8 March, 2016 for the month of November 2015 to December 2015 and vide 3 rd letter dated23 June, 2016 for January 2016 to March As the provision made by MSLDC, these RLDC Fees and Charges have exceeded by Rs Lakh, the same is requested to the Hon ble Commission to approve as per actuals. As regards WRPC Secretariat Charges, as per WRPC share of SLDC along with each constituent works out to be Rs Lakhs. The actual payment made on account of RLDC Fees and Charges during FY was as follows: MSLDC MTR Petition FY to FY Page 13

14 Table 7: RLDC Fee & WRPC Charges for FY Approved in Case No. 20 of 2016 Actual RLDC Fees WRPC Secretariat Charges 9.72 Total Accordingly, MSLDC requests the Hon ble Commission to approve RLDC Fees and WRPC Charges for FY on actual basis. The details of RLDC Fees and WPRC Charges are also provided in Form F7of MTR Petition Formats. 3.2 Capital Charge Budget Capital Expenditure and Capitalisation MSLDC in its ARR Petition in Case No. 20 of 2016, for approval of Budget Cost of Operations, projected a capitalisation of Rs Lakh for FY The Hon ble Commission had approved capitalisation amount of Rs Lakh for FY However, upon completion of the FY , the actual capitalisation was Rs Lakh. The breakup of actual capitalisation as DPR and Non-DPR schemes is as shown in the Table below: Table 8: Capitalization for FY Sr. No. 1 Project Title DPR Schemes Replacement of existing RTUs and commissioning of additional RTUs & DCs for Load Despatch Centre at Kalwa and Ambazari Actual Capitalization Hardware/Software for SCADA system Enhancement of real time data acquisition- Procurement of Hardware &Software licenses 3.83 Total DPR Non-DPR Schemes 4 Enhancement of real time data acquisition Infrastructure Development (Interior & Furnishing, Air Conditioning, Security Systems, Testing equipment& tools, Furniture, Auxiliary supplies, etc.) MSLDC MTR Petition FY to FY Page 14

15 Sr. No. Project Title Actual Capitalization Total Non-DPR Total Schemes Capitalization MSLDC submits that actual Capitalisation in FY is lower than the Capitalisation approved by the Hon ble Commission in Order in Case No. 20 of The decrease in capitalisation in FY is attributable to reduced/nil capitalisation towards few schemes that were proposed during FY , which however got capitalised in the subsequent years. Two DPR schemes which have been completed and capitalised fully during the year are a) Replacement of existing RTUs and commissioning of additional RTUs & DCs for Load Despatch Centre at Kalwa and Ambazari and b) Enhancement of real time data acquisition- Procurement of Hardware & software licenses. The requisite details of the said schemes are submitted in the CBA enclosed as Annexure-13. The details of time overrun/cost over-run, if any of the DPR schemes are enclosed as Annexure-14. As regards the scheme, Erection, Testing & Commissioning 22/0.44 kv Indoor Type S/S for New Building of SLDC at MSLDC Kalwa, capitalization was claimed during FY , based on the accounting/internal practice followed by MSLDC despite the fact that final commissioning of the scheme happened only during FY However, based on the provisions of the MYT Regulations, 2011 and MYT Regulations, 2015, the capitalization towards the entire scheme is now claimed only in FY , where the indoor substations were fully commissioned. To this extent, it may be noted that the capitalization/asset addition in the audited TB for FY and TB for FY would differ. MSLDC further would like to confirm that all other assets which have been considered to be capitalized in FY have been put to use as per the requirement under the Regulations. In addition to the above, various non-dpr schemes as shown in the table above also got capitalized during the year. MSLDC humbly requests the Hon ble Commission to allow the actual capitalisation of Rs Lakh for FY As regards capitalisation towards, non-dpr schemes MSLDC would like to humbly submit that the schemes capitalised within MSLDC are mostly of low value schemes (less than Rs. 100 Lakhs), and includes capitalisation of items procured on an intermittent basis such as Furniture for Office, Fire Alarm System, Battery Sets with Charger, Online STOA software/hardware, Office equipment including Servers, PCs, Printers, Laptop, Xerox machine, Firewalls, Routers, LAN Components, cables, switches, etc. Thus, considering the varied and intermittent nature of asset addition of lower value, it is difficult to club the same under DPR scheme. Besides, the capitalisation towards non-dpr schemes as shown in the MSLDC MTR Petition FY to FY Page 15

16 table above is actually capitalised and based on Audited Accounts of FY In this context the MSLDC humbly submit to the Hon ble Commission to allow the capitalisation for FY at actual. The details of the actual Capital Expenditure and Capitalisation for FY are provided in Form F 3.3of the MTR Petition Formats, submitted along with this filing Financial Restructuring Plan (FRP) of MSEB Companies and Tariff Impact As per the provisions of the Electricity Act, 2003, the restructuring of erstwhile MSEB was approved in the Cabinet meeting held on and notified vide GR No. Reform/1002/pr/kra/9061/Urja-a5 (hereinafter referred as the Transfer Scheme) dated The first amendment to the Transfer scheme was notified on 31 March, In this context, Government of Maharashtra (GoM) issued following directions on FRP. Some of the directives are reproduced as under. a) The GoM directed that with effect from 4 th June 2005 all property, interest in property, rights and liabilities which immediately before the said date vested in the MSEB, shall be vested with the State Government and the State Government shall transfer the said properties to the successor companies viz. Maharashtra State Electricity Distribution Company Limited (MSEDCL), Maharashtra State Electricity Transmission Company Limited (MSETCL), Maharashtra State Power Generation Company Limited (MSPGCL and Maharashtra State Electricity Board Holding Co. Ltd (MSEBHCL) with effect from 6 th June, b) The assets of MSEB to be revalued and revaluation to be done in such a manner that the tariff is not adversely affected. Based on the above, a revaluation exercise has been undertaken and has been completed. Accordingly, the asset of MSEBHCL, MSPGCL, MSETCL and MSEDCL has been carried out. As part of asset revaluation of MSETCL, the assets of MSLDC has also been revalued. Regulation 27.9 of the MERC MYT Regulations, 2011 as well as Regulation of the MERC MYT Regulations, 2015 permits revaluation of assets. However, such revaluation is permitted subject to the condition that it doesn t result in any tariff increase. The relevant extract of the said Regulations, is reproduced as under. MERC MYT Regulations, Revaluation of assets shall be permitted during the Control Period provided it does not affect tariff adversely. MERC MYT Regulations, 2015 MSLDC MTR Petition FY to FY Page 16

17 23.10 The impact of revaluation of assets shall be permitted provided it does not resulting in increase in Tariff of the Generating Company or Licensee: In order to avoid any adverse impact of tariff/msldc charges, no claim is made on additional RoE on increased equity arising out of increased value of assets as part of revaluation. Secondly, on the same lines, additional depreciation owing to FRP has not been considered while working out the Tariff/MSLDC charges in the present Petition. The same in bought to the kind notice of the Hon ble Commission Depreciation MSLDC submits that depreciation for FY has been computed considering the depreciation rates in accordance with the MERC MYT Regulations, 2011 in the books of accounts of MSETCL and the same has been considered for the assets of MSLDC. The assets related to MSLDC have been identified along with the depreciation on the same. MSLDC in its Petition under Case No. 20 of 2016 has claimed a depreciation of Rs Lakh against which the Hon ble Commission approved depreciation of Rs Lakh in the said Order. MLSDC submits that the actual depreciation for FY for truing up is Rs Lakh. It is humbly submitted that the actual depreciation for FY considers the impact of the asset Computer Software/IT equipment which was recognized by the Hon ble Commission as an IT Equipment and had approved the depreciation at 15% in accordance with the MYT Regulation, MSLDC further submits that the same has been considered under the IT Equipment and MSLDC has accounted depreciation at the same depreciation rate of 15% as approved by the Hon ble Commission in Case No. 20 of Besides, the actual depreciation reported for FY in the audited allocation statement considers impact of capitalisation of the DPR scheme indoor substation in respective years. However, based on the provisions of the MYT Regulations, 2011, the capitalisation towards the entire scheme is now claimed in the FY , where the indoor substations were fully commissioned. In this context, it may be noted that the depreciation in the audited TB for FY and the present claim for truing up would differ. Further, as highlighted in the above paragraph, MSLDC has not claimed any additional depreciation on account of FRP scheme. MSLDC MTR Petition FY to FY Page 17

18 Table 9: Depreciation for FY (Rs. Lakhs) Approved in Case No. 20 of 2016 Actual Depreciation The details of the Fixed Assets and depreciation for FY have been provided in Form F4of MTR Petition Formats Interest and Finance charges The interest on the existing actual loan for MSLDC has been apportioned as Rs Lakh for FY from MSETCL s Books of Accounts as in Case No. 20 of For the purpose of estimation of Interest Cost corresponding to new loans for new Capital Expenditure Schemes, the Hon ble Commission in its Order dated 16 May, 2006 under the Clause 29 had suggested to consider Interest Costs based on normative debt-equity of 70:30 in line with MERC (Multi Year Tariff) Regulations, The same approach has been considered to calculate the addition to the normative loan amount for FY Further, MSLDC has considered the weighted average interest rate of the actual loan portfolio of MSLDC for computing the interest expenses for FY as per MERC MYT Regulations, Further, in accordance with the approach adopted by the Hon ble Commission, the repayment of the normative loan has been considered as 10 years, with repayment being started from the second year of loan admitted. The details of existing loans allocated to MSLDC by MSETCL are as under: Table 10: Details of Existing Loans allocated to MSLDC by MSETCL Sr. No. PFC Loan No FY Opening Balance Repayment during the Year Closing Balance Rate of Interest 12.25% 5 Interest Chargeable during the Year 7.29 The interest on Loan for FY is shown in Table as below: MSLDC MTR Petition FY to FY Page 18

19 Table 11: Interest on Loan FY MERC Order ( Case No. 20 of 2016) Actual Interest on Loan MSLDC submits that the rate of Interest considered in the Petition is as per the interest rate of the actual loan borrowed from PFC by MSETCL and which was further allocated to MSLDC. MSLDC has enclosed the proof of actual loan allocated to MSLDC in its Revised Petition which is annexed as Annexure 15 MSLDC humbly requests the Hon ble Commission to approve above expenses towards Interest on Loan. The details of the interest of loan for FY have been provided in Form F5 of MTR Petition Formats Return on Equity MSLDC has worked out the Return on Equity (RoE) for FY in accordance with the Regulation 32 of the MYT Regulations, Further, 30% of the capitalization during a year has been considered for addition in equity during a year. MSLDC would like to submit to Hon ble Commission that the Return on Equity for the FY have been calculated as per the capitalisation during the year. Further, in accordance with the MYT Regulations, 2011, rate of 15.5% have been considered for computing RoE. Hence, the Return on Equity would amount to Rs Lakh for FY The Return on Equity for FY is shown in Table as below: Table 12: Return on Equity FY MERC Order Actual ( Case No. 20 of 2016) Return on Equity MSLDC submits that RoE for FY is higher than approved RoE in Case No. 20 of 2016 because of difference of GFA, owing to disallowance in the past as compared to the approved capitalisation by the Hon ble Commission in Case No. 20 of MSLDC humbly requests the Hon ble Commission to approve above expenses towards Return on Equity. The details of the Return on Equity for FY have been provided in Form F10of MTR Petition Formats. MSLDC MTR Petition FY to FY Page 19

20 Further, as highlighted in the above paragraph, MSLDC has not claimed any additional RoE on account of FRP scheme. 3.3 Revenue True-up for FY For FY , the Hon ble Commission in Case No. 20 of 2016 had provisionally approved revenue of MSLDC on account of Income from Annual SLDC Fees of Rs Lakh and on account of Income from Monthly SLDC Operating Charges of Rs Lakh. During FY , MSLDC has recovered the Fees and Charges partly (for the period Apr-Spt. 15) as per the Order issued by Hon ble Commission on 7 March, 2014 in Case No. 178 of 2013 and partly (for the period Oct 15 to Mar 16) as per the revenue approved under Order issued by Hon ble Commission on 20 th October, 2015 in Case No. 218 of 2014.MSLDC thus in actual earned Income from Annual SLDC Fees of Rs Lakh and Income from Monthly SLDC Operating Charges of Rs Lakh, for FY Further, MSLDC has earned revenue of Rs from Scheduling Charges and Rs Lakh from Rescheduling charges in FY As regards income from other receipts, MSLDC has received major earning from interest on investment made in context of the BR No. 97/12 dated 2nd February 2015, where it was proposed that MSLDC should invest fund in flexi deposit in Bank and earn interest on such deposits. Because of such investments made by MSLDC in the past years, MSDLC earned an interest income of Rs Lakh in FY Table 13: Revenue Components for FY Approved in Case No. 20 of 2016 Petitioned SLDC Revenue Components Income from Annual SLDC Fees Income from Monthly SLDC Operating Charges SLDC Scheduling Charges Rescheduling Charges Other receipts Total Revenue The details of the income earned from various sources (including other receipts) for FY is provided in Form F12 of MTR Petition Formats. MSLDC MTR Petition FY to FY Page 20

21 3.4 Summary of True-Up for FY In the Order in Case No.20 of 2016 dated 22 July, 2016 the provisional true-up approved for FY was surplus of Rs Lakh. Based on the above discussion, the head wise actual expenditure against actual receipts and surplus/ shortfall shown is summarized in the table below: Table 14: Final True-Up for FY Sr. No. 1 Operating Cost Budget Approved in Case No. 20 of 2016 FY April-March (Audited ) True-Up requirement (a) (b) (c ) = (b) - (a) 2 Operation & Maintenance Expenses 2, , (79.27) 3 Interest on Working Capital (1.81) 4 RLDC Fees and WRPC Charges Sub-total (Operating Cost Budget) 2, , (49.74) 6 Capital Cost Budget 7 Depreciation Expenses Interest on Loan Capital Return on Equity Capital Sub-total (Capital Cost Budget) Add: Impact of Sharing of G&L Total Expenses 3, , SLDC Revenue Components 13 Income from Annual SLDC Fees Income from Monthly SLDC Operating Charges 1, , SLDC Scheduling Charges 1, , Rescheduling Charges Other receipts MSLDC MTR Petition FY to FY Page 21

22 Sr. No. Approved in Case No. 20 of 2016 FY April-March (Audited ) True-Up requirement (a) (b) (c ) = (b) - (a) 18 Total Revenue 4, , Revenue Gap/(Surplus) (673.90) (1,173.00) (499.10) 20 Holding Cost on Revenue Surplus of FY (105.04) (105.04) 21 Total Revenue Gap/(Surplus) (778.94) ( ) (499.10) (499.10) Thus, on final truing up for FY , there is surplus of Rs Lakh, treatment of which has been discussed in Section 7.12 of this Petition. 4 Operational performance of SLDC during the 3 rd Control Period MSLDC has been undertaking system operation for the past five decades in the State of Maharashtra. Over time, MSLDC has proven its technical competency in managing the system operation in the State and have strived to achieve performance excellence through, technology adoption, man-power development along with putting in place support system and procedures for its effective operation. SLDC is continuously working towards effectively coping up with the fast changing operational dynamics of the power system and in overcoming upcoming challenges. While the subsequent chapters of this Petition presents an overview of the financial performance of the MSLDC, under this section, MSLDC would like to specifically present its operational performance and its efficacy of systems operation capabilities of MSLDC in the recent past. The table below compares the operational performance of the MSLDC during the entire period of FY and during the first six monthly period of FY , for kind appreciation of the Hon ble Commission. Key result Area and Sr. No. Corresponding Key Performance Indicator Achievement during April-March 2017 Achievement during April-September EFFICIENT GRID OPERATION AND CONTROL A Demand & energy catered Max. peak demand MW on & Total energy catered Mus. (Max Mus on Max. peak demand MW on & Total energy catered Mus. (Max Mus on MSLDC MTR Petition FY to FY Page 22

23 ) ) B C D E F G Less than -250 MW blocks Less than -250 MW blocks To follow DSM 12% %. discipline and maintain -250 to +250 MW blocks -250 to +250 MW blocks deviation in 71% (allowed as per IEGC) % (allowed as per IEGC) permissible limit (250 Greater than 250 MW 489 blocks Greater than 250 MW 2927 blocks MW w.e.f ). 17 % % Less than Hz Less than Hz % of time % of time Improvement in Grid Between Hz 69.86% Between Hz % Parameters (f) of time of time Above Hz Above Hz % of time % of time Scheduling of power Daily scheduling as per MOD carried Daily scheduling as per MOD carried as per contracts. out. out. Development of Tendering process completed and Work order for development of Scheduling Software as work order will be issued for scheduling software placed on M/s per new DSM developing Scheduling software PRDC Bangalore on date Mechanism. ( Work in progress) The Daily System Report (DSR) is Daily Reporting & Quarterly feedback report to STU for Transmission constraints, congestion, GCC etc. Coordination with WRLDC/ GENCO/ DISCOM/ TSU/OA upgraded from time to time as per modifications in power system Daily reporting is done to all higher network. Modifications like, addition authorities. Quarterly feedback report of Coal & oil stock position of to STU is submitted for first quarter of MSPGCL units & IPPs, Changes in FY Central sector drawl points, additions of new generators or substations etc., incorporated Coordinated with Coordinated with WRLDC/GENCO/DISCOM/TSU/OA WRLDC/GENCO/DISCOM/TSU/OA as & when required. OCC/TCC- as & when required. OCC/TCC- WRPC meetings participated actively. WRPC meetings participated actively. 2 OUTAGE MGMT. AND CONTINGENCY PLANNING Sr. Key result Area and Achievement during Achievement during No. Corresponding Key April-March 2016 April-September-2017 MSLDC MTR Petition FY to FY Page 23

24 Performance Indicator 400 KV and above A system elements in coordination with Total 990 No. of 400kv and above, system elements outages provided Total 554 No. of 400kv and above, system elements outages provided WRLDC/WRPC. B 220 KV level system elements outages. Total 3542 No. of 220kV level system elements outages provided. Total 1112 No. of 220kV level system elements outages provided. 2 ENERGY ACCOUNTING /OA/ REGULATORY and MSPC Key result Area and Sr. No. Corresponding Key Performance Indicator Achievement during April-March 2016 Achievement during April-September-2017 FBSM billing process is lagging A behind due to inherent problem in Weekly FBSM Bills up to January 2016 billing software. first weeks issued. (Total 10 weekly bill Timely issuance of Final settlement completed till Feb issued) FBSM weekly bills. 13. Further final settlement is held L&T being looped in for AMC of FBSM up for want of finalization of software regional DSM bills by WRPC. The matter is perused with WRPC. B Computation of Computation of losses for each Computation of losses for each months Transmission Loss for months and placed on web-site from and placed on web-site the intra-state system. September 2016 Development of Budgetary offers are being called SRS for Meter Data Acquisition system C comprehensive software for estimation & administrative & FBSM Billing completed and for FBSM approval for the new software scheduling is under process. D Tendering process completed and Development of new work order is issued for developing STOA Software prepared by M/s RE web based software for Web based STOA software on 11 th Connect and is under testing. STOA. May 2017 Upon analysing the various parameters/performance indicators in the above table, one can observe that year-on-year, SLDC is able to improve various system operational parameters through its operational effectiveness, thereby benefitting the State of Maharashtra and its Power Utilities at large. The following graph and table shows how the commercial burden on MSLDC MTR Petition FY to FY Page 24

25 Wk-1 Wk-5 Wk-9 Wk-13 Wk-17 Wk-21 Wk-25 Wk-29 Wk-33 Wk-37 Wk-41 Wk-45 Wk-49 Wk-53 Wk-57 Wk-61 Wk-65 Wk-69 Wk-73 Wk-77 Wk-81 Wk-85 Wk-89 Wk-93 Wk-97 Wk-101 Wk-105 Wk-109 Wk-113 Wk-117 Wk-121 Wk-125 Wk-129 Wk-133 Wk-137 Wk-141 Wk-145 Wk-149 Wk-153 ADeviation Amount (INR Lakh) Deviation Units (MU) the State has reduced over the past years w.r.t its unscheduled interchange (UI) transactions with respect to the regional/national grid. 2,500 Weekly Deviation Units and Charges (Maharashtra) - Apr14 to Mar , , , (500) (20) (1,000) (1,500) (40) (2,000) (60) Deviation Charges Capping Additional DMC Deviation units Table 15: ADMC for FY to FY FY FY FY Annual Additional Deviation Management Charges payable by the State Besides the improvement in the system operation effectiveness, SLDC is also poised to meet the upcoming challenges and therefore has planned various schemes, which are either at the planning stage or are under execution. Sr. No. Projects New Projects Planned/Under execution Status MSLDC MTR Petition FY to FY Page 25

26 A 5 RTU data intégration- CTU- STU interface points 80 RTUs data integration for B 220 KV sub-stations RE Pooling station C RTU under PSDF 75 RTU of 132 KV sub-station D PSDF proposal REMC establishment in E coordination with PGCIL F Establishment of Sub-SLDC Scheme completed for CTU-STU interface data at Maharashtra periphery In progress. Detailed orders placed by CE(PAC). Order for integration in existing SCADA at SLDC is placed on M/s Siemens on rate contract basis for RTUs within next 3 years. 20 DCs scheme: submitted for acceptance of Tender by the Competent Authority. 30 DCs Scheme: PSDF approval obtained. Tender specifications are ready. The scheme is approved by PSDF but kept on hold in view of other works for SCADA visibility. Price Bids are opened by PGCIL and PGCIL is in process of reverse bidding. Civil infrastructure being set up by MSETCL. Initial activities for set up of Sub-LDCs at Nashik and Pune to be undertaken in FY Considering the above, the MSLDC in the present MTR Petition has proposed certain revisions and addition in the capex plan submitted as part of its earlier MYT Petition. Further, in order to take up upcoming challenges, HR planning and HR development is crucial. Thus in line with the HR development plan submitted along with the MYT Petition and continuing with the implementation of the same, additional manpower required and corresponding review in the projection of O&M expenses have been made in the present MTR Petition. The next chapter presents actual performance of FY followed by the chapter of provisional projections of FY and in the subsequent chapter revised projection for FY and FY has been presented. MSLDC MTR Petition FY to FY Page 26

27 5 True-up for FY MSLDC humbly submit that Audited Accounts and Allocation Statement for FY that have been finalized & attached to the Petition as Annexure- 2. MSLDC therefore seeks true up of all components for FY as per the Audited Accounts/principles laid down in the Multi Year Tariff Regulation, 2015 of the Commission on MSLDC s Budget, as applicable for various heads of expenditure/revenue. Further, all computations are also presented in spreadsheet data formats stipulated by the Commission for submission of MYT Petition, which are separately submitted in a computer readable file along with this Petition. The same has also been attached to the Petition as Annexure- 1. MSLDC has provided detailed rationale for truing up and key issues in the subsequent paragraphs. 5.1 Operation & Maintenance In accordance with the MYT Regulations, 2015 the actual Operations and Maintenance Expenses based on the Audited Accounts is Rs Lakh for FY The actual Operations and Maintenance is marginally on the higher side as against Rs approved by the Hon ble Commission in Case No. 20 of MSLDC also submits that as explained in 3.1.1(a), the Training Expenses of Rs Lakh is now included in the A&G Expenses for FY To this extent, variation exists in claimed and Audited figures of Employee expenses as well as A&G expenses. The breakup of the actual Operation and Maintenance expenses incurred by MSLDC is as shown in the Table below: Table 16: Breakup of Operation and Maintenance Expenses for FY Sr. No. Actual 1 Employee Expenses Administration and General Expenses Repairs and Maintenance Expenses Total Operation and Maintenance Expenses Rs. Lakh The Operation and Maintenance (O&M) expenses approved by the Hon ble Commission for FY in Case No. 20 of 2016 and the actual expenses incurred by MSLDC as per Audited Accounts are summarized in Table as below: MSLDC MTR Petition FY to FY Page 27

28 Table 17: Operation and Maintenance Expenses for FY Operation and Maintenance Expenses Approved in Case No. 20 of 2016 Actual True-Up Requirement MSLDC humbly request the Hon ble Commission to approve Operation and Maintenance expenses as claimed in this Petition. The Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2015 under Regulation 8.4 (a) specifies as under: 8.4 (a) the approved aggregate gain or loss to the Generating Company or Licensee or MSLDC on account of controllable factors for the Years and and provisional Truing-up for the Year , and the amount of such gains or such losses that may be shared in accordance with Regulation 11; Further, as per Regulation 9.2 of the MYT Regulations, 2015, variation in O&M expense corresponding to approved value are categorised as controllable expenses. Thus impact of sharing of gains/loss has been considered on this account for FY and the same is presented in the following table. Table 18: Sharing of Gains and Loss on account of O&M Expenses for FY O&M Expenses Approved under Case No. 20 of Actual O&M expense Total Gain/(Loss) on account of controllable factors (30.95) Sharing proposed (20.63) 5.2 Interest on Working Capital The Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2015 under Regulation 31 specifies as under: 31.5 MSLDC (a) The working capital requirement of the MSLDC shall cover: (i) Operation and maintenance expenses for one month; MSLDC MTR Petition FY to FY Page 28