BEFORE THE HONOURABLE JOINT ELECTRICITY REGULATORY COMMISSION FOR MANIPUR AND MIZORAM FILING NO CASE NO

Transcription

1 BEFORE THE HONOURABLE JONT ELECTRCTY REGULATORY COMMSSON FOR MANPUR AND MZORAM FLNG NO CASE NO N THE MATTER OF: Petition for Approval of Limited Provisional True up of FY and Tariff Determination for FY of Manipur State Power Distribution Company Limited under Sections 61, 62 and 64 of the Electricity Act AND N THE MATTER OF: THE PETTONER Manipur State Power Distribution Company Limited mphal...pettoner THE PETTONER, UNDER SECTONS 61, 62 AND 64 OF THE ELECTRCTY ACT, 2003 FLES FOR NTATON OF PROCEEDNGS BY THE HONORABLE COMMSSON FOR DECDNG ON THE MATTERS CONCERNNG THE APPROVAL OF LMTED PROVSONAL TRUE UP OF FY , AND TARFF DETERMNATON FOR FY OF MANPUR STATE POWER DSTRBUTON COMPANY LMTED (HERENAFTER REFERRED TO AS MSPDCL OR PETTONER ) THE MANPUR STATE POWER DSTRBUTON COMPANY LMTED RESPECTFULLY SUBMTS AS UNDER: 1. The Petitioner, Manipur State Power Distribution Company Limited (MSPDCL) is the sole Distribution Licensee in the State of Manipur, which has been formed after the restructuring of the erstwhile Electricity Department of Manipur. With effect from 1 February, 2014, the Electricity Department of Manipur has been restructured into two Companies, viz., the Manipur State Power Distribution Company Limited (MSPDCL) responsible for distribution and supply in the State 1

2 of Manipur, and the Manipur State Power Company Limited (MSPCL) responsible for generation and transmission functions in the State of Manipur. 2. As per JERC (Multi Year Tariff) Regulations, 2014, the ARR and tariff of transmission and distribution are to be determined separately. n the Tariff Order for FY , the Hon ble Commission has also issued a directive for filing separate Petitions for Transmission Business and Distribution and Retail Supply Business. The two restructured Companies had filed separate ARR Petitions for Distribution and Transmission for the first time at the time of tariff determination for FY , and the Hon ble Commission issued separate Orders for Transmission and Distribution. 3. The present Petition is for Limited Provisional True up of FY and Tariff Determination for FY based on the ARR approved by the Hon ble Commission for FY in the MYT Order for MSPDCL dated 12 March, 2018 in Petition (ARR & Tariff) No. 1 of n accordance with the Electricity Act, 2003, MSPDCL is required to submit its Annual Revenue Requirement (ARR) and Tariff Petition as per procedures outlined in Sections 61, 62 and 64 of the Electricity Act, 2003 and the governing Regulations thereof. 5. MSPDCL hereby submits its Petition for approval of Limited Provisional True up for FY and Tariff Determination for FY in accordance with the principles specified in the JERC (Multi Year Tariff) Regulations, 2014, notified by the Hon ble Commission. 6. MSPDCL prays to the Hon ble Commission to admit the enclosed Petition for Limited Provisional True up of FY and Tariff Determination for FY , and grant the specific reliefs prayed for. Manipur State Power Distribution Company Limited Petitioner Place: mphal Dated: 24 th December

3 Contents 1. Chapter 1: ntroduction Historical Background Power Profile of MSPDCL Background of Regulatory Setup Contents of this Petition Chapter 2: Overall Approach for Present Filing Approach for Filing Chapter 3: Limited Provisional true up of FY Energy Sales Distribution Loss Energy Requirement Energy Availability Power Purchase Cost Transmission Charges Operation and Maintenance Expenses Employee Expenses R&M Expenses A&G Expenses Capitalisation nterest on Working Capital Gross Fixed Assets and Depreciation nterest on Loan Return on Equity Write off of Bad Debts Non-Tariff ncome Aggregate Revenue Requirement Revenue from sale of power Revenue Gap Chapter 4: Tariff Determination for FY Aggregate Revenue Requirement Revenue at Existing Tariff Revenue Gap for FY at Existing Tariff Recovery of Revenue Gap for FY Tariff Proposal for FY

4 4.6 Modifications proposed to the Tariff Schedule Proposed Wheeling Charges for Open Access transactions for FY Tariff Schedule Chapter 6 : Compliance of Directives Compliance of Directives Annexure- 1 List of 11 KV feeders and their Status Report Annexure -2 Financial Status of RAPDRP and RGGVY Schemes Annexure 3 Summary of Security Deposit for FY Chapter 7: Prayers

5 List of Tables Table 1: Category-wise Energy Sales (MU) for FY Table 2: Actual Distribution Losses for FY Table 3: Approved Losses upto 33 kv level in other States Table 4: Distribution Losses and AT&C losses approved by Different SERCs Table 5: Energy Requirement for FY (MU) Table 6: Energy Drawal for FY (MU) Table 7: Actual Power Purchase Cost for FY Table 8: Transmission Charges for FY (Rs. Crore) Table 9: Employee Expenses for FY (Rs. Crore) Table 10: R&M Expenses for FY (Rs. Crore) Table 11: A&G Expenses for FY (Rs. Crore) Table 12: Actual O&M Expenses for FY (Rs. Crore) Table 13: Capitalisation for FY (Rs. Crore) Table 14: nterest on Working Capital for FY (Rs. Crore) Table 15: Depreciation for FY (Rs. Crore) Table 16: nterest on Loan for FY (Rs. Crore) Table 17: Return on Equity for FY (Rs. Crore) Table 18: Non-Tariff ncome for FY (Rs. Crore) Table 19: Aggregate Revenue Requirement for FY (Rs. Crore) Table 20: Revenue Gap for FY (Rs. Crore) Table 21: Combined ARR approved for FY (Rs. Crore) Table 22: Power Purchase Expenses as a proportion of the ARR in other States (Rs. Crore). 32 Table 23: Category-wise Revenue from Sale of Power in FY at Existing Tariff of FY (Rs. Crore) Table 24: Revenue Gap for FY at Existing Tariff (Rs. Crore) Table 25: Average Cost of Supply & Average Realisation Table 26: Comparative Average Cost of Supply & Average Billing Rate Approved by different SERC s for FY Table 27: Comparison of Domestic Tariff of selected States Table 28: ncrease in MSPCL approved ARR over last four years (Rs. Crore) Table 29: State Government Subsidy for MSPDCL over five years (Rs. Crore) Table 30: Average Tariff ncrease Required Table 31: Existing & Proposed Category-wise Tariffs for FY Table 32: ARR for Wires Business for FY Table 33: Proposed Wheeling Charges for FY

6 1. Chapter 1: ntroduction 1.1 Historical Background The commissioning of the two micro hydel sets having capacities of 100 kw and 56 kw at Leimakhong in 1930 by the then Manipur State HE Board marked the beginning of the use of electricity in Manipur. The Royal palace and main areas of mphal Town enjoyed electricity generated from this captive hydel station. During World War-, two more DG sets of 62 kw and 46 kw capacities were installed at the old mphal Power House by the Armed Forces for electrification of mphal town and its suburbs. The above installed capacity remained the same till the end of the first Five Year plan ( ) of the post-independence period. The second Five Year Plan ( ) however saw a significant change in the demand of power in the State. The demand grew rapidly, which necessitated further addition in the generation capacity that was accomplished with the installation of a few more DG sets of various capacities in and around mphal. To evacuate the power generated from the captive micro hydel power station ( ) kw at Leimakhong to specific load centres of Palace Compound and main bazar area of mphal, the 20 km long, 11 kv line between mphal and Leimakhong was constructed for the first time in Manipur in The State was then having 26 km of 11 kv lines and 45 km of domestic lines to serve very few consumers in 7 villages/leikais. The line and generating stations were owned by the then Manipur State HE Board, constituted under the ex-officio Chairmanship of the Political Agent. Subsequently, electricity was kept under the administrative control of the Public Works Department, Government of Manipur. t was separated from the State PWD and started functioning as an independent Department since February The peak load demand of Manipur in 1971 was 3.6 MW only, which was met from the State s own generating stations and power purchased from the neighbouring States/Electricity Boards at low voltage. The per capita consumption of energy was 4.84 kwh. The scenario abruptly changed after the purchase of bulk power from Assam with the commissioning of 132 kv inter-state transmission line from mphal to Dimapur and 6.3 MVA, 132/33 kv sub-station at Yurembam in December The situation improved further with the commissioning of Loktak Hydro Electric Project having a capacity of 3x35 MW on 4 August,

7 During the years from 1984 to 1996, a number of Central Sector Power Projects, mostly hydel projects, were commissioned in the North Eastern Region. Manipur State has a share of about 7-8% in every project. Because of the power availability from such projects, the peak demand of the State has increased gradually and in FY , it has increased to more than 200 MW. After the enactment of Electricity Act 2003, various reforms have been initiated in the power sector including restructuring of integrated State Electricity Boards into separate Companies. With effect from 1 February, 2014, the Electricity Department of Manipur (EDM) was restructured and separated into two different entities, viz., (1) Manipur State Power Distribution Company Limited (MSPDCL), and (2) Manipur State Power Company Limited (MSPCL). Accordingly, MSPDCL is submitting the tariff filing for Wheeling and Retail Supply Business to the Hon ble Commission. 1.2 Power Profile of MSPDCL Manipur, like other States of the North-Eastern Region, has been gifted with a fairly high hydro power potential. However, the major portion still remains untapped due to financial and environmental bottlenecks. Currently, the State is having one furnace oil based generating station at Leimakhong (6x6 MW) in standby mode, and a few diesel generating stations. Therefore, the State is dependent upon outside sources for meeting majority of its energy requirement. t is currently getting power from NHPC, NEEPCO, ONGC Tripura Power Corporation (OTPC) Unit and Unit, and Baramura Gas Turbine Power Project (BGTPP). The scheduled allocated firm share from the Central Sector generating stations of NEEPCO and NHPC, OTPC- and, BGTPP of Tripura State Electricity Corporation Limited (TSECL) and NTPC Bongaigaon Unit & is currently around MW. MSPDCL is currently receiving power from both Units of OTPC Palatana with share of MW. MSPDCL is already getting power from NTPC Bongaigaon Unit from the beginning of the first quarter of FY The total allocation from NTPC Bongaigaon Unit is MW. MSPDCL is also expecting power from NTPC Bongaigaon in the last quarter of FY FY , with a share of MW. 7

8 For the purpose of evacuating power from different sources in the North-Eastern Region, the inter-state transmission network owned and maintained by PGCL as well as the intra-state transmission network owned by the Manipur State Power Corporation Limited (MSPCL) is utilised. The existing intra-state transformation capacity of 132 kv Substations in Manipur is 417 MVA and the length of the 132 kv lines is km of single circuit lines and 87.9 km of double circuit lines. 1.3 Background of Regulatory Setup The State Governments of Manipur and Mizoram authorized the Government of ndia to constitute a Joint Commission as per Memorandum of Agreement dated 23rd July, 2004 among the Government of ndia and the States of Manipur and Mizoram to regulate the power sector in the States of Manipur and Mizoram. Accordingly, under provisions of Section 83(5) of the Electricity Act, 2003, a quasi-judicial independent body, i.e., the Joint Electricity Regulatory Commission for the States of Manipur & Mizoram (JERC) was constituted by the Central Government vide Govt. of ndia F. No. 23/3/2002-R&R dated 18 January, 2005 notified in the Gazette of ndia, Extraordinary dated 18 January, The functioning of the Commission started on January The Hon ble JERC issued its first Tariff Order for FY for the State of Manipur on 15 March, The second Tariff Order was issued by JERC for FY on 14 August EDM filed the Tariff Petition for FY before Hon ble JERC in April 2013 but the same was not admitted by the Hon ble Commission because of delay in filing of the Petition and since the Order had to be issued before the start of the year. The Petition for FY was kept by JERC for reference and record purposes. The Petition for FY was filed by EDM by November 2013 and the Order was issued in February The first Petition for approval for ARR and tariff for FY for MSPDCL was filed by November 2014 and the Order was issued on 27 February, The next Petition for Multi Year ARR approval for FY to FY and Tariff Petition for FY was filed by MSPDCL by November 2015 and the Order was issued on 29 February, The Petition for approval of Limited Provisional True up of FY and determination of ARR and Tariff for the second MYT Control Period from FY to FY was filed by MSPDCL in January 2018 and the Order was issued on 12 March,

9 JERC (Multi Year Tariff) Regulations, 2014 requires the Licensees to submit the Tariff Petition for the ensuing financial year before 30 th November of the previous year. To fulfil this statutory requirement, MSPDCL is filing the present Petition for approval of Limited Provisional True up of FY and determination of Tariff for FY before 31 st December 2018, in accordance with the JERC (MYT) Regulations, 2014, to enable the issue of the Tariff Order for FY , before the start of FY MSPDCL being a utility undertaking distribution and retail supply function, the cost and expenses of distribution and retail supply functions have been considered together as approved by the Hon ble Commission, and the Tariff Petition has been filed for seeking approval of the Wheeling Charges and Retail Supply Tariff after allocation of the total ARR of MSPDCL for FY into Wires ARR and Supply ARR based on the Allocation Matrix specified in the JERC (MYT) Regulations, n view of the above, MSPDCL hereby submits its Petition for Limited Provisional True up of FY , and determination of Tariff for FY Contents of this Petition This Petition covers the provisional figures for True up of FY , allocation of the approved ARR for FY into Wires ARR and Supply ARR, and determination of Tariff for FY

10 2. Chapter 2: Overall Approach for Present Filing MSPDCL is filing the petition for the Petition for Limited Provisional True up of FY , and determination of Tariff for FY Approach for Filing The present filing for the Limited Provisional True up of FY , and Tariff Determination for FY is based on the principles specified in the JERC (Multi Year Tariff) Regulations, 2014 notified on 9 June, The subsequent Chapters provide details of the true-up requirement for FY , the expected revenue projections with existing tariff for FY based on the tariff approved by the Hon ble Commission for FY for the area of supply of MSPDCL. Regulation 4.2 of the JERC (MYT) Regulations, 2014, specifies as under: 4.2 The Multi-Year Tariff framework shall be based on the following elements, for determination of Aggregate Revenue Requirement and expected revenue from tariff and charges for Generating Company, Transmission Licensee, Distribution Wires Business and Retail Supply Business: (iii) Truing up of previous year's expenses and revenue based on Audited Accounts vis-à-vis the approved forecast and categorisation of variation in performance as those caused by factors within the control of the applicant (controllable factors) and those caused by factors beyond the control of the applicant (uncontrollable factors), shall be undertaken by the Commission: (iv) The mechanism for pass-through of approved gains or losses on account of uncontrollable factors as specified by the Commission in these Regulations; (v) The mechanism for sharing of approved gains or losses on account of controllable factors as specified by the Commission in these Regulations; (vi) Annual determination of tariff for Generating Company, Transmission Licensee, Distribution Wires Business and Retail Supply Business, for each financial year within the Control Period, based on the approved forecast and results of the truing up exercise. (emphasis added) 10

11 Thus, in accordance with the JERC (MYT) Regulations, 2014, MSPDCL is supposed to submit final true up petition for FY MSPDCL respectfully submits that due to unbundling of EDM in 2014, various structural, organizational, commercial, financial and administrative aspects have had to be segregated in separate books for the unbundled utilities. These processes were time consuming, which caused delay in preparation of the Balance Sheet of MSPDCL for FY This delay has also caused to postpone the finalization of the accounts for FY , FY , and FY and getting it audited by a statutory auditor. Thus, due to aforesaid reasons, the annual accounts for FY could not be finalized, hence, MSPDCL is unable to submit the True up Petition for FY in accordance with the JERC (MYT) Regulations, As and when the accounts of FY are audited, MSPDCL shall file its final true up petition. However, it is important to consider the actual data for past years because it forms the base for future projections. Hence, MSPDCL is submitting the actual sales and power purchase data for FY , as well as the actual O&M expenses and finance related costs for FY Based on the above, a limited provisional True up Petition has been prepared for FY As only limited provisional True up for FY is being claimed, MSPDCL has not requested for pass through of the provisional Revenue Gap of FY and consequent sharing of gains and losses for FY along with this Petition, and the same shall be claimed at the time of seeking final true-up for FY based on audited accounts. The JERC (MYT) Regulations, 2014 do not contain any provision for filing of Annual Performance Review (APR) for the ongoing year, i.e., FY Hence, MSPDCL is not filing any request for APR of FY along with this Petition. Regulation 4.2 (vi) of the JERC (MYT) Regulations, 2014 reproduced above, clearly specifies that the tariff for Distribution Wires Business and Retail Supply Business shall be determined annually, for each financial year within the Control Period, based on the approved forecast and results of the truing up exercise. As stated above, MSPDCL has not requested for pass through of the provisional Revenue Gap of FY and consequent sharing of gains and losses for FY along with this Petition, as only provisional true-up for FY has been claimed in this Petition. The Hon ble Commission has already approved the ARR for FY in the MYT 11

12 Order dated 12 March, 2018 in Petition (ARR & Tariff) No. 1 of Hence, in accordance with Regulation 4.2 (vi) of the JERC (MYT) Regulations, 2014, MSPDCL has filed this Petition for determination of Tariff for FY based on the ARR approved for FY in the above-referred MYT Order. However, it is clarified that the actual sales and power purchase expenses as well as other expenses like O&M expenses and capital related expenses in FY will be different from that approved by the Hon ble Commission in the above-referred MYT Order. MSPDCL will claim the difference between the approved and actual amounts in the true-up Petition for FY , at the appropriate time. 12

13 3. Chapter 3: Limited Provisional true up of FY MSPDCL is a Distribution Licensee, which fulfils the need for electricity of the consumers in the State of Manipur. As explained earlier, MSPDCL is required to submit the request for true-up for FY in this Petition, but since the audited financial accounts of FY are not ready at the time of filing this Petition, MSPDCL is unable to submit the final true up Petition. Hence, MSPDCL hereby submits a limited provisional true-up of FY based on the actual sales, power purchase quantum and costs, O&M expenses and capitalisation for FY As and when the accounts of FY are audited, MSPDCL shall file its final true up Petition. As only limited provisional True up for FY is being claimed, MSPDCL has not requested for pass through of the provisional Revenue Gap of FY and consequent sharing of gains and losses for FY along with this Petition, and the same shall be claimed at the time of seeking final true-up for FY based on audited accounts. The main objective of this limited provisional true-up Petition is to update the Commission regarding the Revenue Gap for FY based on the actual expenses and revenue and after considering the actual State Government Subsidy received for FY , as compared to the ARR and Revenue Gap approved by the Hon ble Commission in the Tariff Order dated 28 February, 2017 for FY in Petition (ARR & Tariff) No.2 of t may be noted that the true-up Petition is not based on the comparison of the actual expenses and revenue for FY with the expenses and revenue considered by the Hon ble Commission in the Annual Performance Review (APR) of FY in the MYT Order dated 12 March, 2018, as in this Order, the Hon ble Commission has not passed through the impact of the APR, and has merely captured the values as they are the base values for the MYT period. 3.1 Energy Sales MSPDCL caters to a diverse consumer mix comprising LT domestic, LT commercial, HT commercial, LT ndustry, HT ndustry and agriculture consumers. LT Domestic category is the largest consumer category and comprises around 60% of the total sales of MSPDCL. The number of consumers in this category has increased rapidly in the recent years on account of the rural electrification schemes such as RGGVY, Saubhagya, etc. The actual category-wise energy sales as compared to the energy sales approved by the Hon ble Commission for FY is given in the Table below: 13

14 Table 1: Category-wise Energy Sales (MU) for FY Sl. No. Category Approved Actual 1 Kutir Jyoti LT Domestic LT Commercial HT Commercial Public Lighting LT Public Water-works HT Public Water-works LT Agri & rrigation HT Agri & rrigation LT Small ndustry HT Bulk Temporary HT Medium ndustry HT Large ndustry TOTAL The actual energy sold by MSPDCL in FY was MU, which is slightly lower than the approved sales of 576 MU. MSPDCL requests the Hon ble Commission to approve the actual category-wise sales of MU, as shown in the Table above. 3.2 Distribution Loss The computation of actual Distribution losses for FY is shown in the Table below: Table 2: Actual Distribution Losses for FY Sl. No. Particulars Unit Approved Actuals 1 Total Power Purchase MU nter-state transmission loss in NER for FY MU

15 Sl. No. Particulars Unit Approved Actuals 3 Net Power Purchase (1-2) MU U Overdrawal MU U Underdrawal MU Sale of Surplus Power MU Net power available at State 7 periphery MU ntra-state Transmission Loss MU Net Energy requirement at DSCOM periphery for sale within State MU Energy Sales within the State MU Distribution loss MU Distribution Losses w.r.t. Energy nput at DSCOM periphery % 22.98% Distribution Losses w.r.t. Energy 13 nput at State periphery % 18.40% 20.68% The actual surplus energy available and sold by MSPDCL in the ndian Energy Exchange (EX) in FY was MU as compared to the surplus quantum of 297 MU approved by the Hon ble Commission in the Tariff Order for FY The actual Distribution Losses of 20.68% achieved by MSPDCL in FY is higher than the normative Distribution Losses of 18.40% approved by the Hon ble Commission in the Tariff Order for FY , as shown in the Table above. MSPDCL respectfully submits that the actual Distribution Losses are slightly higher than the approved figures, on account of Manipur having a hilly terrain and characterized by population spread throughout the State. The distribution system network in the State consists of long length of distribution and LT lines. n recent years, majority of the new connections through various schemes are in the LT category, which inherently incurs higher Distribution Losses. MSPDCL wishes to bring to the attention of the Hon ble Commission that in the above-said Order, the Distribution Losses have been calculated with reference to the 15

16 energy injected at the State Periphery, as the Distribution Losses for FY have been considered as equal to the arithmetical difference between T&D Losses and Transmission Losses of 3.6% approved by the Hon ble Commission (i.e., 22% - 3.6% = 18.40%). Hence, for the purposes of Limited True-up for FY , MSPDCL has also calculated the Distribution Loss with reference to the energy injected at State periphery, which works out to 20.68%. The corresponding Distribution Loss with reference to the energy injected into the distribution system works out to 22.98%. The inter-state Transmission loss has been considered as 2.62%, based on the nterstate transmission loss in North-Eastern Region for FY , and has been deducted from the total Power Purchase quantum. Further MSPDCL has added the U Overdrawal and subtracted U Underdrawal and Surplus sales from the Net Power Purchase to compute the Net Power available at State Periphery for sale within the State of Manipur. MSPDCL has considered the intra-state Transmission (MSPCL) loss of 10% for computing the power available at the DSCOM periphery. The Hon ble Commission has been allowing intra-state Transmission losses of only 3.6%. MSPDCL respectfully submits that in other States, 33 kv system is part of the distribution network, whereas, in Manipur, the 33 kv system is part of MSPCL network, and the distribution network is from 11 kv and below voltages. Thus, when other SERCs have approved intra-state Transmission Losses of around 3 to 4%, the 33 kv losses have also been separately approved as around 5-6%, which works out to total losses of around 10% upto 33 kv level. The relevant data from some selected States, based on data available in the public domain, is given in the Table below: Table 3: Approved Losses upto 33 kv level in other States State ntra-state Transmission Losses 33 kv Losses Total Maharashtra (MSEDCL) 3.92% 6% 9.92% Bihar 3.92% 5% 8.72% Source: Tariff Orders of respective SERCs Hence, the intra-state Transmission (MSPCL) loss of 10% considered by MSPDCL for computing the Energy Balance is appropriate and needs to be allowed. 16

17 Further, MSPDCL respectfully submits that the Distribution Losses approved by the other SERCs are generally higher than the Distribution Losses approved by the Hon ble Commission, as shown in the Table below: Table 4: Distribution Losses and AT&C losses approved by Different SERCs State Particulars Utility/ Approved by Order Reference Department Commission Arunachal AT&C Losses Department of Petition No. TP 01 44% Pradesh for FY Power, Government of of 2018, dated 31 May, 2018 Arunachal Pradesh Meghalaya Distribution Meghalaya Power Case No. 1/2018, 21% Losses for FY Distribution dated Corporation September, 2018 Bihar Distribution Losses for FY NBPDCL Case No. 40 of % Source: Latest Tariff Orders of respective SERCs t is further submitted that MSPDCL has been incorporated in recent years and it has taken significant steps over the years to reduce the Distribution Losses. Hence, in view of all the above, MSPDCL requests the Hon ble Commission to approve the actual Distribution Losses of 20.68% for FY Energy Requirement The actual energy requirement for FY as compared to the energy requirement approved by the Hon ble Commission in the Tariff Order for FY , is shown in the Table below: Table 5: Energy Requirement for FY (MU) Sl. No. Particulars Approved Actuals 1 Energy Sales

18 Sl. No. Particulars Approved Actuals 2 Distribution Loss 18.40% 20.68% 3 Distribution loss Quantum Energy Requirement at Distribution Periphery for sale within the State MSPDCL respectfully submits that the actual energy requirement was MU, which is slightly higher than the MU approved by the Hon ble Commission in its Order dated 28 February, The higher energy requirement is attributable to the higher actual Distribution Losses. As elaborated earlier, the Distribution Losses approved by the Hon ble Commission are lower and the actual Distribution Losses are required to be allowed. Accordingly, MSPDCL requests the Hon ble Commission to approve the actual Energy nput in the Limited True-up for FY Energy Availability MSPDCL has been allocated power from various Central Generating Stations in North Eastern Region, viz., NEEPCO, NHPC, Tripura-Baramura and OTPC-Palatana, and NTPC Bongaigaon for power purchase under long term PPAs. The actual power purchase quantum and energy availability as compared to quantum approved for FY in the Tariff Order for FY , are as detailed in the Table below: Table 6: Energy Drawal for FY (MU) Sl. No. Source of Power Approved Actuals A Own Generation 1 Leimakhong - Micro Hydel 2 Various Diesel Generating plants B CGS NEEPCO 1 Kopili - HEP Kopili- HEP Khandong HEP Ranganadi HEP Doyang HEP Assam GBPP AGTPP

19 Sl. No. Source of Power Approved Actuals C CGS NHPC 1 Loktak HEP Free Power D Others 1 Baramura GBPP Unit V and V OTPC Palatana NTPC Bongaigaon Thermal PP Kameng HEP Stage EX 8.97 Total As can be seen from the above Table, the actual power purchase quantum in FY was MU, which is slightly lower than the approved quantum of MU. The reason for this deviation may be attributed to lower purchase of power from NTPC Bongaigaon and Baramura GBPP Unit V and V, and non-availability of power from the projected new source of Kameng HEP. MSPDCL requests the Hon ble Commission to approve the actual power purchase quantum of MU in the Limited provisional truing up for FY Power Purchase Cost The actual Power Purchase cost as against the power purchase cost approved in the Tariff Order for FY is shown in the Table below: Table 7: Actual Power Purchase Cost for FY Approved Actual Sl. Total Average Total Average Plant No Cost (Rs Rate Cost (Rs Rate Crore) (Rs/kWh) Crore) (Rs/kWh) A Own Generation 1 Leimakhong - Micro Hydel 2 Various Diesel Generating plants 1.19 B CGS NEEPCO 1 Kopili - HE

20 Approved Actual Sl. Total Average Total Average Plant No Cost (Rs Rate Cost (Rs Rate Crore) (Rs/kWh) Crore) (Rs/kWh) 2 Kopili- HE Khandong HE Ranganadi HE Project Doyang HE Project Assam GBPP AGTPP C CGS NHPC 1 Loktak HE (Purchased) Free Power D Others 1 Baramura GBPP Unit V and V OTPC Pallatana NTPC Bongaigaon Thermal PP * 4 Kameng HEP Stage Renewable Solar Non-Solar EX Total 1 U Overdrawal U Underdrawal NERLDC Charges Arrears/Supplementary Bills Reimbursement Total Power Purchase Excluding Transmission Charges Note: * MSPDCL has surrendered part of the power entitlement of NTPC Bongaigaon, as the Energy Charges were on the higher side and MSPDCL was unable to earn that much amount through sale of surplus power on the Exchange. However, Fixed Charges are still payable, unless NTPC is able to find a buyer for the surrendered power. The actual average Energy Charges of NTPC Bongaigaon in FY was Rs /kWh, while the Fixed Charges paid to NTPC Bongaigaon were Rs crore in FY

21 The total actual power purchase cost including U over-drawal and under-drawal, NERLDC Charges, and arrears /supplementary bills in FY was thus, Rs Crore as compared to the approved figure at Rs Crore. These power purchase costs are payable by MSPDCL as they are determined by CERC and MSPDCL has no control over the same. MSPDCL requests the Hon ble Commission to approve the actual power purchase costs for FY , as shown above. 3.6 Transmission Charges Actual PGCL charges for FY were Rs Crore while the SLDC charges were Rs Crore. Besides the PGCL and SLDC charges, MSPDCL has also paid Transmission Charges of Rs crore for intra-state transmission to MSPCL, based on the ARR approved for MSPCL by the Hon ble Commission for FY in the Tariff Order for FY dated 28 February, Accordingly, the actual Transmission Charges of MSPDCL for FY are as detailed in the Table below: Table 8: Transmission Charges for FY (Rs. Crore) Sl. Particulars Approved Actual No. 1 PGCL Charges MSPCL Charges SLDC Charges Total MSPDCL requests the Hon ble Commission to approve the actual Transmission Charges for FY , as shown in the Table above. 3.7 Operation and Maintenance Expenses The Operation and Maintenance (O&M) expenses comprises: a. Employee Expenses, which includes the Basic Pay, Dearness Pay, Dearness allowances, house rent allowances, and other allowances, new pension scheme paid to the staff; b. Repair and Maintenance (R&M) Expenses, which includes all expenditure incurred on the maintenance and upkeep of distribution assets; and 21

22 c. Administrative and General (A&G) Expenses, which includes all expenditure incurred in operating a business such as office and T expenses, consultancy and regulatory fee, etc. For the purpose of Limited provisional true-up for FY , MSPDCL has claimed the employee expenses, R&M Expenses, and A&G Expenses have been claimed at actuals incurred by MSPDCL for FY Employee Expenses The actual employee expenses incurred by MSPDCL in FY and the comparison with the employee expenses approved in the Tariff Order for FY is shown in the Table below: Table 9: Employee Expenses for FY (Rs. Crore) Sl. No Employee Category Approved Actuals 1 Regular Neple/Pls Contractual Total Employee Expenses The actual employee expenses are lower than the employee expenses approved by the Hon ble Commission for FY MSPDCL requests the Hon ble Commission to approve the actual Employee Expenses of Rs Crore for FY R&M Expenses R&M expenses comprise expenses on repairs and maintenance of Plant and Machinery, Transformers, Lines, cable network, Vehicles, Office equipment, etc. The Hon ble Commission approved R&M Expenses of Rs Crore in the Tariff Order for FY MSPDCL respectfully submits that R&M Expenses are essential for MSPDCL in order to maintain and strengthen the system and quality of supply. MSPDCL has incurred actual R&M Expenses of Rs Crore in FY , as shown in the Table below: Table 10: R&M Expenses for FY (Rs. Crore) Particulars Approved Actuals R&M Expenses

23 MSPDCL requests the Hon ble Commission to approve the actual R&M expenses of Rs Crore for FY A&G Expenses A&G expenses comprise various sub-heads including the following: Travel and conveyance expenses Consultancy and regulatory fees T services and outsourcing cost Office Expenses Publication Expenses Other administration Expenses The Commission approved A&G Expenses of Rs Crore in the Tariff Order for FY MSPDCL has actually incurred A&G expenses of Rs Crore in FY , as shown in the Table below: Table 11: A&G Expenses for FY (Rs. Crore) Sl. No Particulars Approved Actual 1 Advertisement Auditors remuneration Bank Charges Consultancy Ex-Gratia nterest & Penalty JERC Fees Legal Fees Mass Regularisation Office Expenses O&M Printing & Stationary ROC Filings Telephone Travelling Expenses Vehicle Hiring Charges

24 Sl. No Particulars Approved Actual 17 Vehicle Running and Maintenance CCC Outsourced manpower Medical reimbursement Total The actual A&G expenses in FY are significantly lower than the actual A&G expenses in FY (Rs crore), as approved by the Hon ble Commission in the Limited Provisional true-up for FY MSPDCL requests the Hon ble Commission to approve the actual A&G expenses of Rs Crore for FY The total O&M expenses incurred in FY are shown in the Table below: Table 12: Actual O&M Expenses for FY (Rs. Crore) Sl. No. Particulars Approved Actual 1 Employee Expenses R&M Expense A&G Expense Total The actual O&M expenses are thus, lower than the O&M expenses approved by the Hon ble Commission in the Tariff Order for FY MSPDCL requests the Hon ble Commission to approve the actual O&M expenses of Rs Crore for FY Capitalisation MSPDCL undertakes capital expenditure to meet the growing demand for electricity in the State and for system augmentation and strengthening. MSPDCL receives significant grant from the State Government for creation of capital asset, as well as consumer contribution for capital works, with the balance funding sourced from loans. The details of actual capitalization achieved in FY vis-à-vis the capitalisation approved by the Hon ble Commission in the Tariff Order for FY , is shown in the Table below: 24

25 Table 13: Capitalisation for FY (Rs. Crore) Sl. No Name of the Scheme Approved Actuals 1 State Specific Scheme (State Plan) R&E- State Plan Source R&E- nternal Source 5.01 Total MSPDCL requests the Hon ble Commission to kindly approve the actual capitalization of Rs Crore for FY nterest on Working Capital n accordance with the JERC (MYT) Regulations, 2014, the nterest on Working capital for Distribution Wires Business and Retail Supply Business shall be determined as under: 29.3 Distribution Wires Business i. The Distribution Licensee shall be allowed interest on the estimated level of working capital for the Distribution Wires Business for the financial year, computed as follows: a) Operation and maintenance expenses for one month; plus b) Maintenance spares at one (1) per cent of the historical cost escalated at 6% from the date of commercial operation; plus c) Receivables equivalent to one (1) month of the expected revenue from charges for use of Distribution Wires at the prevailing tariffs; minus d) Amount, if any, held as security deposits under clause (b) of sub- section (1) of Section 47 of the Act from Distribution System Users except the security deposits held in the form of Bank Guarantees. ii. nterest shall be allowed at a rate equal to the State Bank Advance Rate (SBAR) as on 1 st April of the financial year in which the Petition is filed Retail Supply of Electricity (i) The Distribution Licensee shall be allowed interest on the estimated level of working capital for the financial year, computed as follows: (a) Operation and maintenance expenses for one month; plus (b) Maintenance spares at one (1) per cent of the historical cost escalated at 6% from the date of commercial operation; plus (c) Receivables equivalent to one (1) month of the expected revenue from sale of electricity at the prevailing tariffs; minus 25

26 (d) Amount held as security deposits under clause (a) and clause (b) of sub-section (1) of Section 47 of the Act from consumers except the security deposits held in the form of Bank Guarantees; (ii) nterest shall be allowed at a rate equal to the State Bank Advance Rate (SBAR) as on 1 st April of the financial year in which the Petition is filed. The computation of normative nterest on Working Capital (owc) for MSPDCL for FY , in accordance with the above-reproduced Regulations, is shown in the Table below: Table 14: nterest on Working Capital for FY (Rs. Crore) Sl. No. Particulars Approved Actuals 1 O&M expenses for 1 month Maintenance 1% of GFA Receivables equivalent to one month of expected revenue at prevailing tariffs 4 Total SBAR as on % 14.05% 6 nterest on Working Capital MSPDCL requests the Hon ble Commission to approve the owc of Rs 4.89 Crore for FY Gross Fixed Assets and Depreciation The closing balance of Gross Fixed Asset (GFA) for FY has been considered as the opening balance of GFA for FY The depreciation has been computed under straight-line Method, at the rates specified in the JERC (MYT) Regulations, 2014, on the GFA in use at the beginning of the year and addition in assets during FY The Depreciation expenses for FY is shown in the Table below: Table 15: Depreciation for FY (Rs. Crore) Sl. No. Particulars Approved Actual 1 Opening GFA Addition during the Year

27 Sl. No. Particulars Approved Actual 3 Retirement 4 Closing GFA Average GFA Average Rate of Depreciation 2.60% 2.60% 7 Depreciation % of Gross Depreciation MSPDCL respectfully submits that since 10% of the capital cost of every scheme is financed by MSPDCL, either through loan or equity, depreciation has been claimed equal to 10% of Gross Depreciation, as depreciation cannot be claimed on assets funded by Government Grants and Consumer Contribution. MSPDCL requests the Hon ble Commission to approve the Depreciation of Rs Crore, as sought by MSPDCL nterest on Loan The major part of capital expenditure undertaken by MSPDCL is funded by the State Government s grants and consumer contribution. However, in addition to these sources of funds, MSPDCL has also taken a significant amount of loan from REC for RAPDRP-B Project and RGGVY project, and a Vehicle loan from SB. The Hon ble Commission had approved nterest expenses of Rs crore in the Tariff Order for FY , including interest on Consumer Security Deposit of Rs crore. The repayment of loans during the year has been considered equal to the depreciation claimed for the year, in accordance with the JERC (MYT) Regulations, 2014, and the repayment has been considered proportionately based on the opening loan balance. The details of loans with the computation of nterest on loan is shown in the Table below: Table 16: nterest on Loan for FY (Rs. Crore) Sl. Particulars REC 1 REC 2 Vehicle New Total No. Loan from SB Loan 1 Opening Loan Addition during the year

28 Sl. Particulars REC 1 REC 2 Vehicle New Total No. Loan from SB Loan 3 Repayment during the year Closing Loan Average Loan Rate of nterest 11.70% 11.70% 8.13% 11.70% 11.40% 7 nterest & Finance Charges nterest on CSD Total nterest MSPDCL requests the Hon ble Commission to kindly approve the actual interest on loan of Rs Crore for FY Return on Equity MSPDCL has considered the same Return on Equity (RoE) for FY as approved by the Hon ble Commission in its Tariff Order for FY The RoE for FY is shown in the Table below: Table 17: Return on Equity for FY (Rs. Crore) Sl. No. Particulars Approved Actual 1 Return on Equity MSPDCL requests the Hon ble Commission to approve the Return on Equity of Rs Crore for FY Write off of Bad Debts MSPDCL has considered Nil Write-off of Bad Debts for FY , and requests the Hon ble Commission to approve the same Non-Tariff ncome The Hon ble Commission approved Non-Tariff ncome of Rs Crore in the Tariff Order for FY The actual Non-Tariff ncome earned by MSPDCL in FY was Rs Crore, as shown in the Table below: 28

29 Table 18: Non-Tariff ncome for FY (Rs. Crore) Sl. No Particulars Approved Actuals 1 nterest from Bank % Agency Charge Miscellaneous Receipt Fees from Tender forms 0.05 Total MSPDCL requests the Hon ble Commission to approve the actual Non-Tariff ncome of Rs Crore for FY Aggregate Revenue Requirement Based on the above component-wise expenses, the Aggregate Revenue Requirement computed for FY by MSPDCL against the figures approved by the Commission in the Tariff Order for FY , is given in the Table below: Table 19: Aggregate Revenue Requirement for FY (Rs. Crore) Sl. No Particulars Approved Actuals 1 Fuel Cost Power Purchase Cost nter-state Transmission Charges ntra-state Transmission Charges SLDC Charges Employee Cost R&M Expenses Administration and General Expenses Depreciation nterest and Finance Charges nterest on Working Capital Write off of bad debts Return on Equity Add: ncome Tax Less: Non-Tariff ncome

30 Sl. No Particulars Approved Actuals 15 (Surplus)/Deficit on true up for FY (10.89) (10.89) 16 Net ARR The ARR for FY is Rs Crore, which is very close to the ARR of Rs Crore approved by the Hon ble Commission for FY in its Tariff Order dated 28 February, MSPDCL requests the Hon ble Commission to approve the same Revenue from sale of power The actual revenue from sale of power to consumers in FY was Rs crore, while the revenue from sale of surplus power of MU in FY was Rs crore, at an average rate of Rs. 2.65/kWh. Thus, the total revenue earned by MSPDCL in FY was Rs crore, as compared to the revenue of Rs crore projected by the Hon ble Commission in the Tariff Order for FY MSPDCL requests the Hon ble Commission to approve the same Revenue Gap The Revenue Gap of MSPDCL for FY as against the Revenue Gap approved by the Hon ble Commission in the Tariff Order for FY is shown in the Table below: Table 20: Revenue Gap for FY (Rs. Crore) Sl. No Particulars Approved Actuals 1 Net ARR Total Revenue State Government Revenue Subsidy Unmet Revenue Gap As can be seen from the above Table, the Unmet Revenue Gap for FY is Rs Crore, largely because the State Government has provided revenue subsidy of Rs Crore. The actual revenue gap can only be finalized during the actual Truing up process for FY , and MSPDCL shall seek pass through of such amounts with associated carrying cost and sharing of efficiency gains and losses at that time. 30

31 4. Chapter 4: Tariff Determination for FY Aggregate Revenue Requirement The combined ARR for FY for the Wires Business and Supply Business approved by the Hon ble Commission in the MYT Order dated 12 March, 2018 in Petition (ARR & Tariff) No. 1 of 2018 is shown in the Table below: Table 21: Combined ARR approved for FY (Rs. Crore) Sl. Particulars Amount % of Total A Expenditure 1 Cost of power purchase % 2 nter-state Transmission charges % 3 ntra-state Transmission charges 86.57* 11.68% 4 NERLDC Charges % 5 O&M Expenses % Employee Expenses % Repair & Maintenance Expenses % Administrative & General Expenses % 6 Depreciation % 7 nterest on Loan % 8 nterest on Working Capital % 9 Provision for bad debts % Total Cost % B Add: Return on Equity % Add: ncome Tax % B: Total % C Total ARR: A+B % D Less (Non-Tariff ncome) % Sub-total (D) % Net Aggregate Revenue Requirement (C-D) % Note: * - Hon ble Commission had approved Rs crore in the MYT Order of MSPDCL for FY The same has been modified to Rs crore based on MSPCL s Petition for determination of Transmission Tariff for FY , and the total ARR has also changed correspondingly As can be seen from the above Table, power purchase cost including Transmission inter-state and intra-state Charges contribute 81% of the approved ARR of MSPDCL. MSPDCL has no control over these costs, as these are levied by Central Sector entities 31