GUJARAT ELECTRICITY REGULATORY COMMISSION AHMEDABAD TARIFF ORDER. Case No.897/2006

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1 GUJARAT ELECTRICITY REGULATORY COMMISSION AHMEDABAD TARIFF ORDER Case No.897/2006 Gujarat Energy Transmission Corporation Limited (GETCO) 31 st March 2007 i

2 C O N T E N T S Chapter Title Pate No. 1 Introduction 1 2 Summary of GETCO Tariff Petition 5 3 Brief Outline of objections raised, response 7 of GETCO and Commission s comments 4 Compliance of Directives 23 5 Transmission System of GETCO and its 31 performance 6 Annual Transmission Charges 41 7 Directives 59 ii

3 List of Tables Table Title No. 1. Project Annual Transmission Charges 2. Net Annual Transmission Charges Projected by GETCO 3. Transmission System of GETCO Network Additions during the years & Existing capacity of GETCO Loading of Transmission System 7. Likely load addition during Likely loading of GETCO Transmission System Availability of GETCO Transmission System 10. Energy input and drawal and Transmission loss Projected Energy Transmission & Losses Proposed Capital Expenditure Funding of Capital Expenditure Final Opening Balance Sheet of GETCO 15. Manpower Cost 16. Projected Repair and Maintenance Expenses 17. Administrative and General Expenses O&M Charges 19. O&M Charges Approved by the Commission 20. Loans and Interest on Loans 21. Interest on loan approved by the Commission 22. Calculation of Depreciation FY Assets Capitalization and Depreciation approved by the Commission Calculation of Advance Against Depreciation by GETCO Interest on Working Capital 26. Interest on Working Capital Approved by the Commission Return on equity claimed by GETCO 28. Return on Equity Approved by the Commission 29. O&M charges for dedicated Transmission Lines 30. Details of Other Income 31. Annual Transmission Charges 32. Annual Transmission Charges iii

4 BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION AT AHMEDABAD Case No. 897/2006 Date of Order 31 st March 2007 Quorum Shri G. Subba Rao (Chairman) Dr. Man Mohan (Member) ORDER 1. INTRODUCTION 1.1 Back ground The Government of Gujarat unbundled and restructured the Gujarat Electricity Board with effect from The Generation, Transmission and Distribution businesses of the erstwhile Gujarat Electricity Board were transferred to seven successor companies. The seven successor companies are as follows: i) Gujarat State Electricity Corporation Limited (GSECL) A Generation Company. ii) Gujarat Energy Transmission Corporation Limited (GETCO) A Transmission Company Four Distribution companies iii) Dakshin Gujarat Vij Company Limited (DGVCL) iv) Madhya Gujarat Vij Company Limited (MGVCL) v) Uttar Gujarat Vij Company Limited (UGVCL) 1

5 vi) vii) Paschim Gujarat Vij Company Limited (PGVCL) and Gujarat Urja Vikas Nigam Limited (GUVNL) A Holding Company and it is also responsible for purchase of electricity from various sources and supply to Distribution Companies The Government of Gujarat vide notification dated 3 rd October 2006 notified the final opening balance sheets of the transferee companies as on 1 st April 2005, containing the value of assets and liabilities, which stand transferred from erstwhile Gujarat State Electricity Board to the transferee companies including Gujarat Energy Transmission Corporation Limited (GETCO). Assets and liabilities (Gross block, loans and equity) of Transmission facilities of GEB have been considered by the Commission based on the Financial Restructuring Plan (FRP) approved by Government of Gujarat. The last petition filed by GETCO was prepared considering on as available basis FRP data. The present petition (second petition) has incorporated the latest FRP data to arrive at the assets and liabilities of Transmission facilities. The company has started functioning w.e.f. 1 st April 2005 with an opening Balance Sheet as on 1 st April 2005 notified by the State Government on 3 rd October GETCO gave a presentation on its proposal to the Commission on 18 th January The Commission obtained further information and clarifications from GETCO. GETCO furnished supplementary information after the presentation and also further information / data as required by the Commission on a detailed study of the petition. 1.2 PUBLIC NOTICE AND PUBLIC PARTICIPATION PROCESS The Public Notice regarding Petition No.897/2006 was published by GETCO in the Indian Express (English daily) and Sandesh (Gujarathi daily). Through this notice, the public were invited to forward objections and suggestions on the petition. The public notice in the newspapers were published on January 3 rd, 2007 and time was given to the public up to February 3 rd, 2007 for forwarding their suggestions / objections. 2

6 1.2.2 The Commission has received six objections to the petition filed by the GETCO. The Commission considered these objections received and sent communication to the objectors inviting them to take part in the public hearing process by presenting their views in person before the Commission. Each objector was provided with a time slot on the days of public hearing from 19 th to 22 nd February 2007 for presenting their views on GETCO petition before the Commission at the Court Hall, Commission s office in Ahmedabad. The names of persons and organizations who filed these objections are as follows: 1. Laghu Udhyog Bharati Gujarat, Ahmedabad. 2. Indian Wind Energy Association, New Delhi. 3. Gujarat Alkalis and Chemicals, Vadodara. 4. Gujarat State Fertilizers and Chemicals Limited, Vadodara. 5. Torrent Power Limited, Ahmedabad. 6. Mr Raj Tillan. All the above persons presented their objections during public hearing also. The main issue which objector raised about this petition and GETCO s responses to these at the public hearing are briefly outlined in chapter Taking into account the following responses, the Commission condones the delay in filing the tariff petition by GETCO and other successor entities of GEB. Government of Gujarat has notified opening balance sheet of all companies on the basis of FRP in the month of October Hence Accounts for the year were finalized in the month of November / December 2006 and the petition for the year was to be prepared and submitted on the basis of finalized Accounts for the year

7 1.2.4 State Advisory Committee Meeting A meeting of the State Advisory Committee (constituted under Section-87 of the EA, 2003) was convened on 9th February A presentation was made on the petitions of GSECL/GETCO and four Discoms. The Chairperson of GUVNL/GSECL/GETCO had made a presentation on the salient features of the ARR petitions. 4

8 2. Summary of GETCO Tariff Petition 2.0 Summary of GETCO Tariff Petition Gujarat Energy Transmission Corporation (GETCO) submitted the petition on 28 th December 2006 seeking approval for Annual Revenue Requirement and determination of Transmission charges for the year The transmission charges are to be recovered mostly from Gujarat Urja Vikas Nigam Limited (GUVNL). GUVNL purchases power from GSECL, Central Sector Generating Stations, IPPs and other sources and supplies to the Distribution Companies and licensees in Gujarat GUVNL has an agreement with GETCO for transmission of power from GSECL generating stations, IPPs, input points of Power Grid Corporation and other interconnecting points for supply to DISCOMs and licensees. The transmission charges are also recoverable from the other users of the Transmission network of GETCO. GETCO has projected a Revenue Requirement of Rs lakhs for the year as detailed in Table-1 below: Table-1 Sl.No. Details Project Annual Transmission Charges (Rs. lakhs) Cost (Rs.lakhs) 1. Employee Cost Repairs and Maintenance Administrative and General Expenses ULDC charges Depreciation Advance Against Depreciation Interest on loans Interest on Working Capital Return on Equity Total Fixed Costs Less Expenses Capitalized Total Transmission charges 100, Less other income Net Annual Transmission charges

9 The projected transmission charges per MW per day based on capacity to be handled would be as under Table-2 Net Annual Transmission Charges Projected by GETCO Sl.No. Particulars Unit Loading of Transmission System as TSA MW Capacity for calculation of transmission MW 9981 charges 3. Cost of Transmission Rs. lakhs Proposed Transmission Charges Rs./MW/day* 2705 Rs./MW/month Existing Transmission Charges Rs./MW/day Increase proposed (%) (-)04.47 * 366 days in The ARR indicated above is exclusive of income tax, incentives, any statutory taxes, levies, duties, cess, any other surcharges etc. GETCO sought Commission s approval for - (1) The Net Annual Transmission charges proposed at Rs lakhs. (2) Transmission per / MW/per day. (3) Operation and Maintenance Charges from users of dedicated transmission lines. (4) Capital Expenditure proposed. 6

10 3. Brief Outline of Objections raised, Response of GETCO and Commission s Comments 3.1 The summary of objections raised by various objectors, response of GETCO and the comments of Commission are briefly given below: I. Objector / Objectors: Laghu Udyog Bharati, Ahmedabad. The objections raised briefly are: 1. Fixing of transmission charges There is no need to make any change in the transmission charges. If ARR projections are made on realistic basis then there would be no gap. 2. O&M charges In the case of Transmission lines feeding dedicated consumers, all expenses are covered while computing ARR inclusive of O&M charges. This will be a case of double charging. The demand for O&M charges is not in accordance with the Electricity Act, 2003 and the GERC guidelines. As such it is required to be quashed. 3. Parallel operation charges As GETCO is not in a position to show what its system PF is and what the CPP s supply PF is the reason given for low PF of CPPs is imaginary. 4. Transmission losses GETCO has not been able to achieve 4.27% transmission losses approved by the Commission for Reduction of loses can be achieved by taking up Energy Audit. 5. Depreciation: 7

11 The presentation of GETCO for depreciation is incorrect. The Commission may look into this aspect, since many lines, transformers and substations have completed their useful life. 6. Energy Audit (i) (ii) Existing meters are not functioning properly. High accuracy meters need to be provided on all feeders to assess feeder wise losses. GETCO shall itself seek accreditation as certified energy auditors and establish its own energy audit wing of Bureau of Energy Efficiency (BEE) Certified Energy Auditors. All the steps of energy saving measures shall be taken under the guidance of its energy audit wing. 7. Reactive compensation (i) GETCO should provide adequate reactive compensation by installing static capacitors etc to meet the reactive power requirements of the system to improve the voltage levels and reduce transmission losses. (ii) GETCO has not submitted the PF of the system, feeder-wise, the details of auto control of reactive power and savings actually made. Response of GETCO: 1. The estimation of ARR has been submitted on the basis of established norms. The proposed transmission charges work out to be lower compared to the prevailing charges. 2. O&M charges are not included in the calculation of transmission charges. However, actual revenue realized will be considered under other income and the ARR will be adjusted to that extent in future. 3. The petition for approval for Parallel Operation Charges is before the Commission and hence, the impact of POC has not been considered in this petition. 4. The actual status of the Transmission losses is 4.35%, which is lower than in some other states - Uttar Pradesh (4.97%) and Andhra Pradesh (6.02%). Further reduction of losses is difficult despite sincere efforts being made to reduce the loss and hence the loss of 4.35% has been proposed. 8

12 5. GETCO has not furnished the O&M charges, Supervision charges in respect of dedicated lines. 6. Depreciation shall be computed according to norms (terms and conditions of tariff) of CERC/GERC till 90% of the Historical cost of the asset. Depreciation has been estimated with the consideration of actual position of assets notified by the government in the opening balance sheet. 7. GETCO has not responded to the issue relating to energy audit. 8. In compliance to the directives, the installation of reactive compensation is being implemented Commission s Comments: GETCO has not responded to the issue relating to conduct of energy audit. It is necessary to conduct energy audit feeder-wise to arrive at realistic losses and take necessary steps for loss reduction. The Commission considered the other issues raised by the objector and the response of GETCO later in the order. II. Objector / Objectors: Indian Wind Energy Association, New Delhi. The objections raised are: 1. O&M charges from dedicated users of transmission system: There is no provision in GERC Regulations or orders to levy O&M charges from dedicated users of Transmission lines. (i) The Commission shall direct the GETCO to substantiate its proposal to levy such charge within the regulatory framework. (ii) If O&M charges are levied, it would amount to excess recovery (iii) Any charges or tariff shall reflect cost and have certain basis for recovery of underlying costs. (iv) The Commission may direct the GETCO to furnish cost data and revenue collected for and (v) It would not be appropriate to recover O&M charges for dedicated transmission lines based on O&M norms of GERC and they may be determined at 15% of O&M cost norm as proposed by the GETCO. 9

13 (vi) The wind energy developers would need to adequately compensate for O&M costs associated in the evacuation infrastructure. 2. Supervision charges (i) The Commission may direct the petitioner to furnish details of supervision charges during and as the connected transmission lines are old and depreciated. (ii) Supervision charges of 15% shall be levied only on labor component and not on capital equipment cost of the evacuation infrastructure with a ceiling limit that Labour component shall not exceed 5% of capital cost. (iii) The petitioner should furnish details of revenue earned by way of levy of supervision charges during and Response of GETCO: The Indian Wind Energy Association raised issue, which pertain to concessions etc to promote non-conventional energy (wind farms). These may be de-linked from the tariff hearing and considered separately. Commission s Comments: Regarding Supervision Charges, during the course of hearing, GUVNL representative mentioned that the issue of Supervision charges was taken up with the Government as the Indian Wind Energy Association (InWEA) had represented before the Government. In a High level meeting headed by the Chief Secretary, Government of Gujarat, it was decided that the Supervision Charges for Wind energy generators may be reduced to 7.5% from 15%. As such this issue is already been redressed, the Commission feels that there is no need to relook at this stage. The other points which the Indian Wind Energy Association raised are examined later in the order. III. Objector/Objectors: Gujarat State Fertilizers & chemicals Ltd. Vadodara. 10

14 The objections raised are: 1. Applicability of transmission charges: The proposed transmission charges cannot be made applicable to the intervener mutatis mutandis to an ordinary consumer as the intervening transmission lines are financed by intervener company. The cost contribution by the intervener company cannot be ignored. The Commission shall provide some relief to the intervener company for its contribution. Though a double circuit line is laid to the intervener s manufacturing unit, power supply is not being made on that line. Hence the rate of depreciation proposed is unreasonable and unjustified. 2. Methodology and calculation of ARR: a) Depreciation Rate of depreciation proposed is not correct, it is unreasonable and unjustified as the connected transmission lines are old and depreciated. b) Return on equity The return on equity cannot be considered for determining transmission charges in the case of intervener who has certain assets financed. c) O&M and other charges Except O&M charges, no other charges can be levied on the intervener. d) Income tax Income tax on surplus revenue generated cannot be and should not be under equity and law be passed on to the consumers / beneficiaries including intervener, from whom the revenue is generated. 3. Transmission losses 11

15 The proposed increase in transmission losses from 4.27% to 4.35% may not be allowed and the same may be fixed at 4.12% or such lower percentage. 4. Parallel operation charges The levy of parallel operation charges, in addition to existing contract demand charges, wheeling charges and transmission losses may not be permitted. 5. Supply of power The petitioner is supposed to supply of power to the intervener as per the MOU with GSFC. Response of GETCO: 1. The intervener might have invested for grid connectivity at the required point. It is well settled that the transmission assets established are the properties of the licensee concerned, notwithstanding that a part of the cost of establishing the same is contributed by any consumer. 2. The capital base of the petitioner is according to the transfer value and financials which the Government of Gujarat notified. And this is a statutory notification binding on all. Accordingly, for all purposes including for the determination of the amount on which depreciation is to be allowed, the above values have to be considered. The allegations to the contrary are wrong and are denied. 3. The equity as given by the government is considered at the beginning of FY to arrive at the return on equity. 4. The intervener is also utilizing the transmission network of petitioner by virtue of permitted allocations and therefore should be treated at par with other users of the transmission network and has to be charged at par with others. The actual position of assets as notified by the government in the opening balance sheet has been considered for the purpose of depreciation. 12

16 5. The weighted average rate for depreciation for FY works out to be 3.37%. 6. Income tax recovery has been proposed as in the GERC (Terms and Conditions of tariff) Regulations, The actual status of the Transmission losses is low compared to other states for instance Uttar Pradesh (4.97%) and Andhra Pradesh (6.02%). Further reduction of losses is difficult despite sincere efforts being made and hence the loss of 4.35% has been proposed. 8. A petition is pending for the approval of Parallel Operation Charges is before the Commission and the impact of same has not been considered. 9. Under Open Access Regulations, 2005, there cannot be discrimination among the beneficiaries. Commission s Comments: The issues raised by the Intervener / Objector regarding depreciation and return on equity on consumer contribution will be examined with reference to the Regulations. As a separate petition has been filed by the GSFC in some of the above matters, it will be decided after hearing the parties. IV. Objector/Objectors: Gujarat Alkalies & Chemicals Ltd. Vadodara. The objections raised are: 1. Applicability of transmission charges: The proposed transmission charges cannot be made applicable to the intervener mutatis mutandis to an ordinary consumer as certain transmission lines supplying power to their Vadodara Complex are financed by intervener company. 2. Methodology and calculation of ARR: a) Depreciation Rate of depreciation proposed is unreasonable and unjustified as the transmission line feeding the load is more than 30 years old. b) Return on equity: 13

17 The return on equity cannot be considered for determining transmission charges in the case of intervener company as certain assets have been financed by them. c) O&M and other charges Except O&M charges, no other charges can be levied on the intervener. d) Income tax Income tax on surplus revenue generated cannot be and should not be under equity and law be passed on to the consumers / beneficiaries including intervener, from whom the revenue is generated. 3. Transmission losses The proposed increase in transmission losses from 4.27% to 4.35% may not be allowed and the same may be fixed at 4.12% or such lower percentage. 4. Parallel operation charges The levy of parallel operation charges, in addition to existing contract demand charges, wheeling charges and transmission losses may not be permitted. 8. Supply of power The petitioner is supposed to supply of power to the intervener in accordance with the MOU entered between the erstwhile GEB and GPPCL and participating industries. Response of GETCO: 1. The intervener might have invested for the grid connectivity at required point. It is well settled that the transmission assets established are the properties of the 14

18 licensee concerned, notwithstanding that any part of the cost of establishing the same is contributed by any consumer. 2. The capital base of the petitioner is according to the transfer value and financials notified by the Government of Gujarat, which is a statutory notification binding on all. Accordingly to all intents and purposes including for the determination of the amount on which depreciation is to be allowed, above value has to be used. The allegations to the contrary are wrong and are denied. 3. The equity as given by the government is considered at the beginning of FY to arrive at the return on equity. 4. The intervener is also utilizing the transmission network of petitioner by virtue of permitted allocations and therefore should be treated at par with other users of the transmission network and has to be charged at par with others. The actual position of assets as notified by the government in the opening balance sheet has been considered for the purpose of depreciation. The weighted average rate for depreciation for FY works out to be 3.37%. 5. Income tax recovery has been proposed as in the GERC (Terms and Conditions of tariff) Regulations, The actual status of the Transmission losses is low compared to some other states for example, Uttar Pradesh (4.97%) and Andhra Pradesh (6.02%). Further reduction of losses is difficult despite sincere efforts being made and hence the loss of 4.35% has been proposed. 7. A petition for the approval of Parallel Operation charges is pending before the Commission and the impact of same has not been considered. 8. Under Open Access Regulations, 2005, there cannot be discrimination among the beneficiaries. Commission s Comments: The issues raised by the intervener / objector regarding depreciation and return on equity on consumer contribution will be examined with reference to the Regulations. As a separate petition has been filed by the GACL in some of the above matters, it will be decided after hearing the parties. V. Objector/Objectors: Torrent Power Ltd. Ahmedabad The objections raised in brief are: 15

19 1. Energy balance The energy sent out to Ahmedabad and Surat as also the energy accounted by DISCOMs are not tallying with actuals. The Commission should therefore direct the petitioner to provide reconciliation of energy balance to arrive at a correct figure of transmission losses. 2. Transmission losses: (i) The Commission may approve transmission losses for after arriving at current level of transmission losses, after reconciling the actual figurers for and estimated figures for and (ii) The Commission may direct the petitioner to clarify whether transmission losses calculated are upto 66 kv only or include the losses of 11 kv feeders supply for power to DISCOMs. (iii) The Commission may direct the petitioner to provide the details of voltage level wise transmission losses. 3. Transmission charges (i) The Commission may determine recovery of transmission charges on voltage level basis also. (ii) The Commission may consider the revenue from O&M charges and parallel operation charges while determining the transmission charges. 4. Transmission tariff: The Commission may consider the reasonableness of expenditure while determining the transmission charges so as not to burden the consumers. GETCO Response: 1. According to the accounting method of SLDC, the energy purchased by AEC and SEC during April to November was being accounted under the heads of UGVCL and DGVCL respectively. However, the energy purchased by AEC and SEC during December to March was accounted under the heads of GUVNL. 16

20 Thus, the energy balance has been checked and there is no discrepancy in computation of overall transmission loss as the total energy balance remained unchanged. 2. Based on the actual figures of transmission for the year , energy balance is as follows: Energy received MUs. Energy sent MUs. Transmission losses 2224 MUs. Percentage losses 4.35% Transmission losses are worked out up to L.V. side of power transformers only. The transmission losses are not being computed and accounted on voltage level basis. 3. Parallel operation charges are yet to be determined by the Commission and hence that impact has not been considered. However, revenue realized from this shall be taken under the income and the ARR would reduce to that extent in the future. 4. The voltage level losses are not available. But the transmission charges have to be kept uniform independent of voltage. Commission s Comments The issues raised by the objector have been examined and appropriate decisions are taken while determining the transmission charges. Suitable directions will also be issued to the petitioner to conduct proper energy audit to arrive at voltage-wise losses. VI. Objector/Objectors: Raj Tillan The objector has raised a number if issues, some are related to the present tariff petition and some for seeking additional information/clarifications in general from GETCO. The objections related to the present petition are briefly summarized below: 17

21 1. It is not disclosed in the tariff petition whether GUVNL is a trading licensee. If under the restructuring scheme of the Government of Gujarat, GUVNL gets the status of a sole holding company of the unbundled entities and a deemed trading licensee, the same is not tenable in terms of section 131 of the Electricity Act Diluting the concentration of conflicting function (Regulatory and Commercial) is one of the main aims of Electricity Act Segregation of licensee and utility should have been done since 1 st June 2004 when the Government of Gujarat declared GETCO as the State Transmission Utility. 3. The revenue requirement for FY is Rs. 10,058 million whereas the same was Rs million in the previous year. This translates to a growth of 19.2% not in line with a modest load growth of 4%. 4. The details of revenue break up from core and non-core business is not given. Further it would be helpful to know the accounting of inadvertent flow of energy from CPPs or wind generation and if this goes in reducing the transmission losses or otherwise. 5. The details of O&M charges from dedicated transmission users is missing 6. The Commission may direct the petitioner to make a full and unshielded disclosure that they are not charging parallel operation charges. 7. Considering month wise availability, the months with the highest and the months with the lowest line availability may be shown. Whether availability calculation includes planned shutdown or otherwise. 8. The load growth is too low. It is essential to justify the low load growth. 9. The wheeled units stated are 1538 MU. It is not clear if these units are from CPP or purchased units from CPP or inadvertent flow or sum of all. 10. Most of the transmission lines have bi-directional flow. This means double counting of transmission capacity. How is transmission capacity defined? 18

22 11. The transmission losses are shown to be lower than that of Uttar Pradesh or Andhra Pradesh. This does not give a true picture as the calculation of the same depends on many factors like degree of loading vis-à-vis capacity, configuration of network, relative location of generating stations and load etc. 12. O&M cost being critical, comparison must be made with equally well-managed utilities from neighboring states. 13. The renovation and modernization expenditure should be disallowed, as the asset value does not justify this expenditure. 14. For exercise on energy balance, energy audit looks a good idea but high cost meters may be deployed only when low losses are being reduced further. 15. Performance of metering under the operating condition does not measure up to the required accuracy as the burden on CT and PT are quite high. 16. The petitioner should furnish cost data for reactive power before allowing for charging the same. In addition certain suggestions are also made by the objector. Response of GETCO: Some of the objections listed above are also raised by other objectors for which GETCO has responded as narrated earlier. The response of GETCO to the objectors are given here briefly. 1. As the Intervention Petition is vexatious, GETCO is dealing with certain specific issues which are related to GETCO. In this affidavit not venturing into other aspects of the Intervention Petition which have no relevance to the petition filed by GETCO. However, specifically deny all the allegations, imputations and insinuations contained in the Intervention Petition. 2. The Annual Revenue Requirements and consequently the tariff for GETCO are to be decided according to the provisions of the Electricity Act, 2003, to the extent applicable the provisions of the Gujarat Electricity Industry Reorganization and Reforms Act, 2003 (the State Act), the Rules and Regulations framed therein and taking into account the National Electricity Policy and the Traffic Policy notified by the Central Government under section 3 of the 19

23 Electricity Act, The Intervenor cannot raise issues on various policies or as to the structure of re-organization adopted in the State of Gujarat under the provisions of the Electricity Act, Reference to the policy adopted in the United States of America or otherwise in other countries are totally irrelevant and outside the scope of the jurisdiction of this Hon ble Commission in the present petition. 3. In accordance with the provisions of the Electricity Act, 2003, GETCO is entitled to claim tariff and charges, namely, the transmission charges, parallel operation / grid support charges, re-active energy charges and any other charges related to the utilization of the services of GETCO or for the benefit derived by any person by use of the transmission system and the facilities of GETCO. If the contention of the Intervenor is that some of the services rendered by GETCO do not fall within the purview of the Electricity Act, 2003, the implication would be that GETCO is free to refuse to give such services and GETCO cannot be compelled to provide such services by any Order passed by this Hon ble Commission. In that event, such services would be covered by section 41 of the Electricity Act, 2003, namely, other businesses of GETCO and, therefore, GETCO is free to charge the beneficiaries of such services any amount as GETCO may consider appropriate. It is, therefore, not correct on the part of the Intervenor to contend that GETCO is obliged to provide certain services as the Transmission Utility but at the same time GETCO is not entitled to either claim tariff from the Hon ble Commission for such services or otherwise is not entitled to claim charges from the beneficiaries of such services under the Bilateral Agreement. The arguments to the contrary raised by the Intervenor are selfdefeating and have no merits. 4. GUVNL and DISCOMs are licensees and are entitled to approach this Hon ble Commission for their respective tariff and charges. The present petition is confined to the tariff and charges payable for the services rendered by GETCO. 5. In the present petition before this Hon ble Commission, GETCO has impleaded GUVNL as Respondent in view of the fact that the transmission services pertaining to transmission and conveyance of electricity to the distribution system and network is undertaken by GETCO and such services are not 20

24 provided by GUVNL. It is wrong and denied that there is any collusion between GETCO and GUVNL as alleged. 6. GETCO is not trading in electricity. GETCO performs only transmission services for which it is entitled to claim tariff and charges. The allegations to the contrary are specifically denied. 7. The present petition has been filed for determination of Annual Revenue Requirements of GETCO. Based thereon, the applicable tariff needs to be determined to meet the Annual Revenue Requirements. 8. GETCO is the State Transmission Utility and is the main transmission company in the State of Gujarat. The status of GETCO is recognized under section 39 of the Electricity Act, GETCO is also undertaking the statutory functions of the State Load Despatch Centre in terms of Section 33 of the Electricity Act, In terms of section 14 of the Electricity Act, the State Transmission Utility is deemed to be the transmission licensee. There is no need as at present for segregation of the functions of the licensee and the transmission utility. GETCO has been notified by the Government of Gujarat as the State Transmission Utility. It is for the Government of Gujarat to consider as to whether any other entity should be notified as such as either the State Transmission Utility or to operate the State Load Despatch Centre. The issue raised by the Intervenor in this regard in the present petition is wholly outside the purview of the present proceedings. 9. GETCO has filed the revenue requirements in the format prescribed by the Hon ble Commission. GETCO has given all the requisite details. It is wrong and denied that GETCO has concealed any particulars. The allegations in this regard made by the Intervenor are specifically denied. 10. The transmission lines of GETCO are being used for the purpose of transmission of electricity of GUVNL and are also available to open access consumers in accordance with the regulations framed by the Hon ble Commission. In any event these issues sought to be raised by the Intervenor are totally outside the 21

25 purview of the present proceedings. GETCO is acting in accordance with the regulations framed by the Hon ble Commission. 11. The issues sought to be raised by the Intervenor on the various provisions of the Transfer Scheme and arrangements made are again outside the purview of the present proceedings. Commission s Comments: Various issues raised by the objector and the response of the GETCO are examined and appropriate decisions taken by the Commission while determining the transmission charges. 22

26 3.2 Other Objections / Issues The Union Territory of Dadra & Nagar Haveli, Silvassa and Union Territory of Daman & Diu GETCO raised the issue of non receipt of transmission charges from the Union Territory of Dadra & Nagar Haveli and also from Union Territory of Daman & Diu for the use of GETCO transmission system for transmission of Central Sector Power to them. GETCO has also made the Union Territory of Dadra & Nagar Haveli and the Union Territory of Daman & Diu as respondents to this petition. During the course of hearing representative of abovementioned Union Territories asked for time to submit objection in the above matter. The Commission gave time up to 15 th March However, for the above matter, the Union Territories filed separate petitions (No /2007); the Commission will address this issue separately. Pro-rata Charges: Some of the objectors stated during the hearing that recently GETCO has issued a Commercial Circular No. 1 wherein they have proposed to recover pro-rata Charges depending upon the voltage level. The Objectors further mentioned that the LT, HT and EHT consumers are the consumers of Distribution Licensee and not of the GETCO. Therefore GETCO has no authority to recover such Pro-rata Charges. They also stated that earlier erstwhile GEB was charging a Development Charge of Rs. 900/KVA which is now discontinued. With this new circular it appears that the earlier Development charge is now reintroduced and these charges are comparatively high. The GETCO has replied to this objection stating that they are investing in the Transmission System and if don t get such charges than development of Transmission System would have adversely affected. They have also mentioned about the relevant provision of the Regulation No. 9 of Commission s View: 23

27 As this issue required detailed analysis, the Commission is of the view that this can be looked into separately at the later stage. However, GETCO was requested to reconsider this issue on its own. Now it has been informed to the Commission that the Pro-rata Charges have been reduced from around Rs to around at Rs per KVA. 24

28 4. Compliance of Directives 4.1 Compliance of Directions issued by the Commission. The Directives issued by the Commission in its Tariff Order dated 6 th May, 2006 and their compliance by GETCO are detailed below: Directive 1: Transmission Plan GETCO shall prepare transmission plan for XI Plan Period and submit for approval of the Commission. The plan shall cover (i) the transmission lines required for evacuation of power from new generating stations coming up in the State and input points of PGCIL to transmit the power to various load centers in the State (ii) System augmentation required to improve the reliability of the system, reduce the loss, and improve the voltage levels etc. The transmission plan shall be supported by cost benefits analysis. Compliance / Action Taken : Transmission plan for XI th plan period is under preparation and the same shall be submitted to the commission on its finalization GETCO shall keep in mind the specific points mentioned in the directives. Comments of the Commission: The Transmission plan may be submitted early. Directive-2: Energy Audit GETCO is managing transmission system covering 400, 220, 132 and 66 kv voltages. High accuracy meters shall be provided on all the feeders to assess feeder-wise loss, transformation loss at each sub-station. This will help in identifying high loss feeders / areas to take corrective action to reduce the loss. The energy audit will also bring up whether the meters provided for EHV consumers (66 kv and above) are functioning properly. The status of providing meters on all the feeders, the analysis of the data obtained based on meter readings, voltage-wise and feeder-wise losses and feeders which have high level of losses and action initiated to reduce the loss shall be submitted to the Commission by 30th September Compliance / Action Taken: The installation of high precision static meters on the feeders at all sub stations is in final stage of completion. The common polling software for automatic polling of the meter data into substations PC is also under installation at the sub satiations. The 25

29 performance of pilot common polling software for automatic polling the data is under observation. Feeder wise loss and transformer loss at each substation is presently being monitored at Sub station / division level and immediate corrective actions are being taken in consultation with the next higher authority for controlling the same within range of 3%. Further the losses are being consolidated circle wise and overall losses are analyzed. Based on this analysis, lapses are identified and the same are attended immediately. The status of providing such meters is as under: Out of nos. of high accuracy static meters received till date, nos. of meters are installed and Order for 1700nos. of meters and its accessories is already placed. Procurement of balance computers with UPS,Printers etc is also under process. Comments of the Commission: Action taken in providing high accuracy meters is noted. Based on the metering provided, feeder-wise and voltage-wise losses may be arrive at. Directive 3: R&M of Transmission System It would be necessary to refurbish the transmission system including replacement of conductors on certain transmission lines, upgrading of transmission lines, replacement of aged, obsolete switch gear etc. Action Plan for the R&M of transmission system shall be submitted to the Commission by September Compliance / Action Taken: R & M of the transmission has already been taken up. Brief details of the activities that have been initiated for R & M work are as under: 1. One to one replacement: Orders have been placed for the equipments for one to one replacement for Phase I and Phase II The expenditure for Phase I for is Rs Crores. Out of 8 (Lots) orders M /s ABB (Lots III) have already started supply of 66 kv breakers and their installation. So far inspection of 67 Nos. of breakers is carried out. The installation work is under progress. 2. Strengthening of 132 KV bus at 220 KV Ranasan s/s The estimated amount for this work is Rs crore. Civil work has already been started. The drawings for bus structure are under process of approval. The tenders are invited. The procurement of equipment is under progress. 3. Providing of 66KV breakers, CTs at various substations: At some of the substations 66 KV breakers & CTs are not provided in the initial stage. Hence Rs. 4 crore is allocated in the budget for providing 66 Kv breakers 26

30 and CTs during the year Some of the breakers and CTs have been allotted from available stock in construction store. For balance requirement, procurement is under process. 4. Replacement of equipments against old equipment, augmentation of substation capacity, strengthening of EHV line by replacement of conductor, earth wire, insulator etc. The work of strengthening of 132KV line is completed and the work of balance 66 KV line will be completed by November 2006 for R&M work. The augmentation of substations will be carried out based on availability of transformers. Also the old equipment considered for replacement will also be replaced during the year on availability of equipment. Specific budget provision made for this work is Rs crores. 5. Purchase of equipment for condition monitoring of s/s, Hotline maintenance, safety purpose: The safety articles viz hand gloves, helmets, earthening rods, safety bolts etc are inspected and DI is issued. Balance quantity is expected for inspection shortly. The work orders for testing equipments are already placed and materials for the same will be available. For balance testing equipments, tenders are to be invited. Comments of the Commission: Action taken on R&M of transmission system is noted. Directive 4: Modernization of State Load Dispatch Centre With the unbundling of GEB, providing open access on transmission system, and proposed introduction of intra-state ABT, the role of State Load Dispatch Centre will be critical in managing the system. Action shall be taken for modernization / augmentation of the Load Dispatch Centre if any required to meet the requirements. Compliance / Action Taken: Unbundling of GEB has resulted in the creation of various companies in addition to the two licensees (TPAECo., SECo.). Providing open access on transmission system and introduction of intra state ABT is being implemented according to GERC order. A state of the art SLDC and ALDC have been set up consisting of the following: 3 nos. ALDCs are set up at Jambuva, Gandhinagar & Jetpur under ULDC scheme for effective control and supervision of intra-state transmission system. So each ALDC will exercise the control and supervision of transmission system of their respective jurisdiction. ALDCs will also exercise the monitoring of drawl of power by DISCOM under the intra state ABT regime. Necessary infrastructure which includes setting up of SCADA system, Computer system etc. has been created. 27

31 The ABT meter data processing for the purpose of energy accounting will be routed through ALDC. Necessary computer hardware / software in this regard is installed and are under testing at ALDC. For effective system operation and control of the respective jurisdiction, SCADA system is installed at each ALDC, which provides on line real time data and facilitate network analysis. ALDCs will also exercise the monitoring of Drawl of power by DISCOM under the intra state ABT regime with the help of SCADA system. The staff setup has been strengthened at SLDC/ALDC to address open access & ABT issues effectively. The existing setup of SLDC is evaluated regularly to plan & to meet the requirements in respect of efficient operation, address regulatory requirements, WRLDC requirements etc. The infrastructure for the implementation of Intra-state ABT is setup at SLDC level for the purpose of Scheduling,Energy Accounting and providing open access & storage of relevant data which includes setting up of server based computer system. It would be noteworthy to mention here that upgrading of SLDC will be a continuous process rather than one time set up in new era. Comments of the Commission: Action taken is noted. It is stated that three ALDCs are being established for 4 (four) DISCOMs. It is presumed that Jambua ALDC would serve DGVCL and MGVCL. Ultimately the control of ALDCs shall be handed over to the respective DISCOMs. Directive 5: Data Management With the providing of open access on transmission system, the users of transmission system may require on line data on the capacity margin available on the transmission system periodically. Such data shall be made available on line to the users of transmission system. It is understood that there is a proposal to allocate the power purchase agreements (PPA) to various DISCOMs and GUVNL and also introduction of intra-state ABT requires enormous data made available to all stakeholders. GETCO / SLDC shall compile all the data required and make it available to all stakeholders for smooth operations of system. Action taken shall be reported to the Commission. 28

32 Compliance / Action Taken: Providing open access on transmission system to various users and introduction of intra state ABT require enormous data to be handled and processed in order to make available in desired format to various stakeholders and open access users. It includes on line data of the capacity margin available on transmission system, various schedules like Declaration, Entitlement, Drawl, etc. It has to cover larger time horizon while handling this data. To make this available to all stakeholders, including open access users for smooth operation, designing of independent website for SLDC, which will be maintained and updated by SLDC, is under progress. The following actions have been taken: 1. Domain has been registered as and web space is acquired. 2. Details of the information to be posted is under preparation and information flow is being finalized for ease of all users of the system. 3. Extensive help of IT department is taken for design and development of the website and to handle and process large amount of data. Comments of the Commission: Action taken is noted. The data should be kept continuously updated. Directive 6: Audited Accounts GETCO shall submit the Audited Accounts for the year while filing the tariff petition in future. Compliance / Action Taken: Finally audited accounts shall be submitted on finalizing the same by statutory auditor and CAG. As of now, GETCO has submitted this petition on the basis of provisional annual accounts for FY Comments of the Commission: Action taken is noted. The accounts may be got audited by CAG early. 29

33 Directive 7: Metering GETCO shall install 0.2 class meters suitable for ABT at the interface points for accounting the energy supplied to the DISCOMs since DISCOMs handle 11 kv and below. It would be fairly large number of interface points (supply points) between GETCO and DISCOMs and it would be necessary to provide metering at all the inter-face points. GETCO and DISCOMs may jointly identify the metering points and provide required number of meters. The details of interface metering points and status of metering shall be provided to the Commission. Action Taken / Compliance: The Installation of 610 nos. of 0.2 S class ABT Compliant meters at identified interface points on the basis of boundary metering concept has been completed. Discom / Licensee wise details are as under: Sr. No. Licensee Meters 1 DGVCL MGVCL UGVCL 96 4 PGVCL Torrent AEC 5 6 Torrent SEC 18 TOTAL 610 Comments of the Commission: Action taken is noted. Balance metering if any may be completed early. Directive 8: Reactive Compensation GETCO shall provide adequate Reactive Compensation by installing static capacitors etc. to meet the reactive Power requirements of the system to improve the voltage levels and reduce Transmission Losses. Action taken/ Compliance: Following actions have been performed in compliance with above directive: 1. At present GETCO have installed following reactive compensation instruments in the system as on Shunt Capacitor MVAr Bus Reactor 350 MVAr Line Reactor 200 MVAr 2. The procurement action for providing 4x25 MVAr bus reactor is already initiated, which are to be installed at 220KV bus as Pannandhro, Nakhtrana, Nani Khakhar and Anjar. 30

34 3. The system study for installation of reactive compensation in western region is carried out by WRPC. A meeting of study committee was held on to discuss the HT Shunt capacitor requirement in Western Region. As an out come of the study report, it is informed by WRPC that requirement of capacitor bank for GETCO system during is NIL. Comments of the Commission: GETCO made a provision of Rs.463 lakhs for providing shunt capacitors during The requirement of reactive compensation may be reviewed in the context of observation of WRPC that such requirement during is NIL and action taken to provide required compensation during