ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
O.P. NO.510/2001
Date:
Present
: Shri.
G.P.Rao, Chairman
Shri. D.Lakshmi Narayana,
Member
Shri. A.V.Subba Rao,
Member
Transmission
Corporation of Andhra Pradesh Limited (APTRANSCO)
Eastern
Power Distribution Company of Andhra Pradesh Limited (APEPDCL)
Central
Power Distribution Company of Andhra Pradesh Limited (APCPDCL)
Northern
Power Distribution Company of Andhra Pradesh Limited (APNPDCL)
Southern
Power Distribution Company of Andhra Pradesh Limited (APSPDCL)
……………Applicants
Suppliers
of Electricity, the
end users of electricity ( including captive use) availing Power Wheeling
Service and others
……………Respondents
|
Sl No |
Names of the
Objector/Participants |
|
1 |
Andhra
Pradesh Gas Power Corporation Limited (APGPCL) |
|
2 |
The
Andhra Pradesh Paper Mills Limited |
|
3 |
Sriba Industries Limited |
|
4 |
NATL
Limited |
|
5 |
Ferro
Alloys Corporation Limited |
|
6 |
MIDHANI |
|
7 |
ITC
Bhadrachalam Paper Boards Limited |
|
8 |
Renewable
Energy Developers Association |
|
9 |
Cement
Corporation of India Limited |
|
10 |
Priyadarshini Cement Limited |
|
11 |
RVK
Energy Private Limited |
|
12 |
Rain
Calcining Limited |
|
13 |
Rastriya Raithu Seva Samithi, Chittoor |
|
14 |
M.
Venugopala Rao |
|
15 |
Peoples
Monitoring Group on Electricity
Regulation |
|
16 |
APSEB
Assistant Engineers Association |
|
17 |
APSEB
SC / ST Employees Welfare Association |
|
18 |
APSEB
Engineers Association |
|
19 |
PRB
Power Private Limited |
|
20 |
Jindal Strips Limited |
|
21 |
Andhra
Pradesh Spinning Mills Association |
|
22 |
The
India Cements Limited |
|
23 |
ESPAR
Pak Limited |
|
24 |
Small
Hydro Power Developers Association |
|
25 |
My
Home Cement Industries Limited |
|
26 |
Dhana Lakshmi
Rice and Cotton Mills (KG Chowdary) |
|
27 |
Precot Mills |
|
28 |
Jyothi Bio Energy |
|
29 |
Andhra
Sugars Limited |
|
30 |
Sree Rayalaseema
Green Energy Limited |
|
31 |
Weizmaan Limited |
|
32 |
Ind-Bharat Engineers Limited |
|
33 |
Gayathri Agro Industrial Power Limited |
|
34 |
Jana
Vignana Vedika, Khairatabad Branch |
|
35 |
B.
Rama |
|
36 |
Grindwell Norton Limited |
|
37 |
South
Central Railway |
|
38 |
Penna Cement Industries Limited |
|
39 |
Sudha Agro Oil & Chemical Industries
Ltd., |
|
40 |
Vathsasa Power Projects Ltd |
|
41 |
Gautami Solvent Oils Ltd |
|
42 |
JOCIL
Ltd |
|
43 |
Sudalgunta Sugars Ltd |
|
44 |
Bio-mass
Developers Association |
|
45 |
GMK
Products Pvt
Ltd |
[Heard on 20th
& 21st of December 2001]
***
The Andhra Pradesh Electricity
Regulatory Commission (hereinafter called 'the Commission')
having received an application dated 8th October 2001 from the above
applicants (as a follow up on their request for allowing Wheeling Charges in
Cash @ Re.1/kWh contained in their Filing of Proposed Tariffs (FPT) for 2001-2002, in respect of energy
wheeled by them, of electricity generators/suppliers hereinafter called
‘project developers’, for delivery to the end users (including captive use),
the Commission having invited objections from the public through press
notification and having held public hearings on 20-12-2001 and 21-12-2001,
having heard applicants, the respondents and the public and having considered
the documents available on record and all other matters relevant and incidental
thereto, passed the following order:-
PLEADINGS AND PROCEEDINGS AT THE TARIFF HEARING 2001- 02
1.1. The Applicant No. 1 Transmission Corporation of Andhra Pradesh (hereinafter referred to as `the APTRANSCO’) in its Annual Revenue Requirements/Expected Revenue from Charges (hereinafter referred to as `ARR/ERC) and Tariff filings for 2001 -02 stated that its activities as the Transmission & Bulk Supply Licencee consisted of two distinct components, viz., the transmission business and the bulk supply business. APTRANSCO stated that its customers can be broadly classified into two categories namely (a) Distribution Licencees who buy energy in bulk from APTRANSCO for effecting retail supply to their consumers and (b) others namely the project developers who use the Transmission & Distribution system for conveyance of energy from the place of generation to the place of consumption, which act in the electricity parlance is popularly known as Wheeling.
1.2 APTRANSCO in its filings for the year 2001-02 stated that the cost associated with serving the above two categories, viz., Distribution Licencees (bulk purchasers) and other users of the Transmission & Distribution system for wheeling energy are different. The Distribution Licencees are the principal users of the Transmission & Distribution System on a perpetual basis, whereas each of the other users of the Transmission & Distribution System (project developers), is an individual user of electricity who requires a specific but different service, since they require electricity at different time periods and in different quantities. The Transmission & Distribution of energy involves costs related to erection and maintenance of the system. In addition there is a cost on account of the losses in the transmission and distribution system in the process of wheeling the energy.
1.3 Regarding the methodology to be adopted for working out the costs associated with the two components,viz., Transmission business and Bulk Supply business, APTRANSCO stated that the marginal cost based pricing methods reflect the economic costs of servicing much more closely than embedded cost based pricing. APTRANSCO also stated that they had made attempts to develop marginal cost information for providing an appropriate basis for pricing the service. However, marginal cost studies require precise projections of future loads and load profiles, additional generation capacity to be contracted and additional transmission capacity to be installed. In addition to the incremental costs incurred in the short run for servicing the incremental load, there is need for adequate information on long term load growth, load flows and resource plans. APTRANSCO stated that these were not available with it on account of the inadequate measurement and forecasting infrastructure.
1.4 APTRANSCO further stated that for developing the embedded cost to some degree of accuracy, a proper operational information (historical) of the Discoms is necessary. Since the erstwhile Andhra Pradesh State Electricity Board (hereinafter the “APSEB”) was a vertically integrated entity, there was no need for determining the operational parameters on a district-wise (zone-wise) basis. APTRANSCO, after the formation of the Discoms, has established interface metering between the Discoms and APTRANSCO. Presently all these meters are not enabled with Demand measuring and adequate data storing features which are essential for obtaining a true picture of the load pattern and other parameters. The costs of transmission (wheeling) of energy are dependent on distance and voltage of transmission, in addition to seasonality and time of the day. Since these costs will vary for every customer, the cost data will vary for individual cases. Similarly the costs of bulk supply to the Discoms will also vary depending on the usage profile.
1.5 APTRANSCO also felt that for the present filing detailed data on usage profile was not available and hence, using a cost of service study at this juncture based on broad assumptions might be misleading.
1.6. APTRANSCO
in its filing proposed to introduce a wheeling charge of Re.1/- per Kwh for the project developers, doing away
with the system of receiving energy in kind for the wheeling service provided
by it. To quote from the filings for the
year 2001-02
“For the ensuing year, APTRANSCO
proposes to do away with the system of receiving energy in kind in lieu of
wheeling and proposes to introduce a wheeling charge of Re. 1 per kwh. While this will provide a surplus over costs
for APTRANSCO, APTRANSCO believes that such a surplus is justified. APTRANSCO's own
Industrial consumers bear the burden of cross-subsidy provided to subsidised categories.
By this Hon'ble Commission's own computations,
HT Industrial consumers of APTRANSCO pay more than twice the cost of service
applicable for them. This puts them in
an inequitable position as compared to the industries which have access to
wheeled energy either through group captives or through third party sales who
are currently paying even less than what it costs APTRANSCO to wheel the energy
for them. APTRANSCO believes that with
the proposed charges of Re.1/- per kwh,
the inequity will be partially addressed.
After deduction of its own costs, APTRANSCO expects the proposed charges
to provide additional revenue mobilisation which
APTRANSCO will pass on as a reduction in the Bulk Supply Tariffs to be charged
to the Discoms.
However APTRANSCO proposes to exclude the non-conventional energy
generators from the purview of the proposed tariffs for FY 2002 as a measure of
encouragement to these sources of energy.
The existing arrangements are proposed to be continued for these
generators".
1.7 In the comments / objections received in
response to the notification of APTRANSCO's proposed
tariffs for Financial Year 2001-02 and later, in the public hearings held by
the Commission between 26th February 2001 and 8th March,
2001 on the Revenue Calculations and Tariff Proposals given by APTRANSCO for
the above year,
references were made in
regard to the proposed introduction of wheeling charge of Re.1/- per Kwh by some objectors.
The contentions of the objectors in regard to the proposed transmission / wheeling charges sought
by APTRANSCO were:
a) APTRANSCO is
bound by the wheeling agreements signed by its predecessor Andhra Pradesh State
Electricity Board (APSEB). APTRANSCO
cannot unilaterally alter either the rate or the manner of adjustment of
wheeling charges in kind. These
agreements are valid for a specified period and APTRANSCO cannot resile from the terms of the agreements at this stage.
b) The wheeling
charges etc. were
settled by Government of Andhra Pradesh (GoAP) which
had issued necessary notifications.
APTRANSCO has no authority to ask for any deviation or change from what
the GoAP had decided and had set out in the
notifications.
c) The Commission
has also no power to deviate from the binding agreement reached between the
project developers and the APSEB in regard to the wheeling charges.
d) In any event,
APTRANSCO is claiming wheeling charges at Rupee 1/- per unit, which is totally
unjustified, exhorbitant and illegal. APTRANSCO has not given any justification
whatsoever for the wheeling charges to be levied at Rupee 1/- per unit.
e) The Project Developers are not required to
cross-subsidise or contribute any money towards cross
subsidization of certain classes of consumers, which the HT consumers provide
under the tariff orders for licencees issued by the
Commission.
1.8 As part of their presentation in the Public hearings, the Commission staff also submitted that APTRANSCO had not given proper justification for the proposed tariff of Re.1/-
1.9 In response to the objections APTRANSCO
stated that fixation of tariff including revision thereof is a legislative
function as held by
the Hon'ble Supreme Court of India in several
decisions and that the Commission is entitled to adjudicate on the Tariff for
Wheeling without being bound by any previous notification issued by the
Government of Andhra Pradesh (GoAP) or otherwise any
agreement signed between APSEB/APTRANSCO . APTRANSCO also submitted that the
principle of promissory estoppel would have no
application when the statute viz the Andhra Pradesh Electricity
Reforms Act 1998 (hereinafter `the
Reform Act’) has specifically empowered the Commission to fix tariff. APTRANSCO stated that only 3% of the end
users to whom the energy is wheeled (who are HT Consumers) were getting 34% of
energy by
THE
COMMISSION'S VIEW AS EXPRESSED IN ITS TARIFF ORDER OF
2.1 While deciding the ARR/ERC of the
applicants for the year 2001-02 the Commission decided to consider the issues
relating to the proposed tariff for wheeling in a separate proceeding as stated
in para 143 of the Commission's Tariff Order dated 24th
March 2001 as under:
“The issues relating to setting
appropriate transmission/distribution wheeling charges are complex in nature
and require proper consideration. These
include determination of losses in different parts of the system, viz.,
transmission losses (upto step down to 33 kV) and
distribution losses (33 kV and below) forming technical component and the other
various losses in metering, meter reading, billing etc., including theft
forming the non-technical component of the total losses. The Commission will consider the issues of
appropriate transmission/distribution wheeling charges in a separate
proceeding. At this stage, the
Commission will continue the existing arrangement on a provisional basis
without prejudice to the Commission's rights to consider the issues relating to
appropriate transmission/distribution wheeling charges at a later stage. The Commission is not expressing any opinion
on the rival contentions of the objectors and APTRANSCO/ Distribution Companies
at this stage”.
APPLICATIONS
MADE BY THE APPLICANTS IN THE PRESENT PROCEEDINGS
3.1 APTRANSCO made a filing on 8th Oct,2001 on its own behalf as well as the four Power Distribution Companies of Andhra Pradesh (viz APCPDCL, APNPDCL, APEPDCL and APSPDCL) (hereinafter collectively called `DISCOMS’) by way of a joint application for a decision on charges for wheeling of energy. The Applicants have stated that the present application has been filed to seek adjudication upon the outstanding issue of revision of wheeling charges and with a proposal to change over from the present practice of collecting wheeling charges in kind and to establish wheeling charge of Re.1/- per kWh of wheeled energy.
3.2
While in the Filing of Proposed Tariffs ( FPT) made earlier for the year 2001-02 there was a
proposal to exclude the Non Conventional energy sources, there is no propoasl
in this application filed on
3.3
APTRANSCO presented the following
calculations in support of the rate of Re.1/- per kWh proposed by it for the
year 2001-02.
(All figures in Rs. Crs)
|
S.No |
Particulars |
DISCOMS |
TRANSCO |
Total |
|
1 |
Wages and
Salaries |
407.70 |
32.79 |
440.49 |
|
2 |
Administration
and General Expenses |
66.56 |
1.36 |
67.92 |
|
3 |
Repairs and
Maintenance |
146.59 |
29.79 |
176.38 |
|
4 |
Rent, rates
and taxes |
2.35 |
2.04 |
4.39 |
|
5 |
Approved
Loan and Interest |
244.91 |
197.98 |
442.89 |
|
6 |
Interest on
consumer security deposit |
26.81 |
- |
26.81 |
|
7 |
Legal
charges |
0.33 |
0.50 |
0.83 |
|
8 |
Auditors
Fees |
0.08 |
0.02 |
0.10 |
|
9 |
Depreciation |
240.63 |
100.11 |
340.74 |
|
10 |
Other
Expenses |
29.89 |
4.83 |
34.72 |
|
11 |
Contribution
to Employees fund |
51.65 |
5.84 |
57.49 |
|
12 |
Special
appropriation permitted by the Commission |
0.00 |
90.29 |
90.29 |
|
13 |
Contribution
to contingency Reserve |
9.48 |
6.58 |
16.06 |
|
14 |
Total |
1226.98 |
472.13 |
1699.11 |
|
15 |
Reasonable
Return |
34.40 |
167.12 |
201.52 |
|
16 |
Total
network value addition |
1261.38 |
639.25 |
1900.63 |
The breakup of Re.1 per kWh proposed
by the Applicants for wheeling charges is as follows:
|
S.No |
Particulars |
Amount (Rs. Crs.) |
Rate
(Ps./kWh) |
|
1. |
Network Establishment
and Operation Cost |
1699.11 |
41.63 |
|
2. |
Cost of
Losses in the System |
1250.29 |
30.63 |
|
3. |
Reasonable
Return |
201.52 |
4.94 |
|
4. |
Transmission
& Wheeling Charges (External) |
144.56 |
3.54 |
|
5 |
Surplus
recovery proposed from wheeling |
|
19.26 |
|
|
Total |
|
100 |
The details
of the calculations made by the Applicants are as follows:
Item
-1: Network Establishment and Operation Cost
A. Total
Transmission & Distribution Expenses
for APTRANSCO & DISCOMS = Rs. 1699.11 crs
B. Total Power
Purchases by APTRANSCO = 40816 MU
C. T & D
Expenses per unit (A/B)
= 41.63 Ps.
Item-2: Cost of Losses in the System
D.
Transmission loss upto 33 KV
breaker = 8.5%
E.
Actual Losses upto 33 KV breaker
(40816*0.085) = 3469.36 MU
F.
Transmission & Distribution losses in 33 KV and 11 KV
network. =
11%
=(40816 -3469.36)*0.11 = 4108.13 MU
G.
Average cost of power purchase = Rs.1.65 per unit
H.
Total Cost of T&D losses upto
11KV level
=(3469.36+4108.13)*1.65
=Rs. 1250.29 Crs.
I.
Cost per unit (H/B) = 30.63 Ps.
Item
- 3: Reasonable Return:
J. Amount of Reasonable Return = Rs.201.52 Crs.
K. Cost per unit (J/B) = 4.94 Ps.
Item
- 4: Transmission and
L. Wheeling charges paid to PGCIL for
transmission = Rs.144.56 Crs of CGS power as per
APERC Tariff Order
M. Cost per unit (L/B)
= 3.54 Ps.
Item
-5: Surplus recovery proposed from
wheeling = 19.26 Ps
TOTAL
= 100 Ps.
3.4 The Applicants also proposed that the
wheeling charges (calculated at Re.1/- per kWh on the power wheeled as proposed
by them) will be shared between APTRANSCO and DISCOMS in the ratio of 25:75 for all wheeling at 33 KV and 11 KV
while for the wheeling at 132 KV and above, the revenue would accrue fully
(100%) to APTRANSCO for the reasons stated by APTRANSCO as under:
·
For voltages at 132 kV and above, the entire wheeling
charges will be collected by APTRANSCO as the Transmission network at 132 kV
and above voltages pertains to APTRANSCO and the DISCOM networks are not
involved.
·
The Wheeling charges for voltage levels of 33 kV & 11 kV are proposed to be
shared between APTRANSCO and DISCOMs in the ratio 1:
3 keeping in view the proportional volume of transmission & distribution
networks involved.;
·
A share of 25% is considered for APTRANSCO in view of the
fact that in most of the cases, the scheduled consumers are not on the same 33
kV or 11 kV
feeder on which the developer is pumping energy. In such circumstances, the usage of APTRANSCO
transmission network is inevitable and hence a portion of the wheeling charges
(25%) is considered for APTRANSCO”.
3.5 APTRANSCO has given the following reasons
to justify the inclusion of 19.26 paise towards " surplus recovery" in its details for the
calculation of Re.1/- towards the wheeling charges proposed by it.
(a) The costs have been computed on " embedded
cost" method of pricing and not on "long run marginal costs"
(LRMC) and that embedded costs are generally less than LRMC. APTRANSCO have stated lack of ancillarynecessary data / information from its records as
the reasons for not working out LRMC and expressed their commitment to
improving information availability which would allow determination of a
reasonable estimate of LRMC in future.
(b) Cost to Serve wheeled
consumers is more than the cost to serve the Distribution Companies as the load
curves of the DISCOMs are flatter than those of the
individual wheeled users.
(c) There are
other ancillary services provided to wheeling consumers by APTRANSCO as well as
DISCOMs which are difficult to cost but have
significant costs associated. For example,
the following:
·
Reactive power
compensation
·
Facility of
banking energy
·
Emergency
power
·
Continuous
network access
(d) The provisions of cross-subsidy in the
tariff of similarly placed industrial consumers who are meeting their power requirement from the DISCOMs.
CHAPTER IV
PROCEEDINGS HELD BY THE COMMISSION
4.1 APTRANSCO was directed by the Commission to
notify the filing in two newspapers (one English & the other Telugu)
inviting objections from the public for the proposal. Objectors were also asked to indicate whether
they would like to participate personally in the public hearings to be held
later. A copy of the advertisement No. RO75/2001 which appeared in the Press on
4.2 Public hearings were held at Ravindra Bharati,
SUMMARY OF PUBLIC OBJECTIONS AND
APPLICANTS’ RESPONSE TO PUBLIC OBJECTIONS
Legal Issues
5.1 The following objections were raised by the objectors using the wheeling services, as preliminary legal issues.
A. Maintainability of Joint Applications
APTRANSCO and four DISCOMS are separate legal entities, each
holding a distinct licence issued by the Commission.
The joint application is not maintainable.
The common application made by APTRANSCO and DISCOMS for enhancement of
Wheeling Charges to Re 1/kWH is contrary to the provisions of law, the
conditions of licence and order of the Commission.
There is continuing malaise of undue interference by APTRANSCO in the operation
and management of DISCOMs. Hence , each licencee should file separate application with APERC for
fixation of wheeling charges in their respective portion of the network. The objections also stated that the aspect
related to DISCOMS should not be clubbed with the transmission and wheeling
charges, even on revenue shared basis.
The APTRANSCO denied that it was
interfering in the Distribution & Retail Supply activities of DISCOMs. Since, the transmission network of APTRANSCO and DISCOMs are interconnected from 220 KV to 11 KV level, the
utilities filed
Application jointly to determine the charges. For voltages at 132KV and above, the entire
wheeling charges will be collected by APTRANSCO as the Transmission network at
132 KV and above voltages pertains to APTRANSCO and the DISCOM networks are not
involved. The
B.
Application –
New Application or Continuation ? :
The objectors
stated that the application filed cannot be treated as in continuation of
earlier ARR/FPT 2001-02 but should be treated as a fresh application. The objectors felt that the application amounted
to seeking review of
the earlier order of
The applicants replied that the application is the
continuation of the earlier one with additional facts and figures to justify
the proposed wheeling charge of Re. 1/kwh for the Financial Year 2001-02.
C.
Prospective
or Retrospective
The objectors stated that the applicability of proposed wheeling charge should be on prospective and not retrospective basis. In this regard the objectors relied on Section 26 (6) of the Reform Act which provides that the Tariff will become effective only after seven days of the publication in the newspaper. It was also pointed out that it was an established rule that all laws/orders having financial implications should have prospective and not retrospective effect.
The Applicants stated that the Power to determine tariffs was vested with the Commission and that the Licencee will abide by the Commission‘s decision
D.
Authority
of the Commission to revise the wheeling charges or the nature of collection
Some of the Objectors contended that the
Commission has no authority for setting the tariff (
In reply to the above issue APTRANSCO submitted that fixation of Transmission/ Wheeling Tariff including revision thereof is a legislative function and the Commission is entitled to adjudicate on the Transmission/Wheeling Tariff without being bound by any previous notification issued by the Government or wheeling or other agreements signed between APSEB/APTRANSCO and the project developers. The principle of promissory estoppel would have no application when the statute, viz., the Reform Act has specifically empowered the Commission to fix tariff. Any contract or MOU between the parties concerned is subject to a review by the Regulatory Authority in performance of it's statutory obligations.
E. Objections from Non-Conventional Energy
Developers
Objectors belonging to the
Non-conventional Energy sources claimed that they took up their generation
ventures under the Government of India Schemes and the incentives provided
therein which should not be disturbed till the end of the incentive scheme in
2004. They also pointed out that the Power Purchase Agreements
(PPAs) with the APSEB/ APTRANSCO were in fact drafted by the
licencee and that it was unfair to repeatedly alter
them. Some of them also referred to the
proposal of APTRANSCO in its original ARR/ FPT not to seek a change in the rate
of Wheeling Charges in the case of Non-conventional Energy Sources, which does
not find a place in the Application dated
In response the Applicant
contended that the prayer of the Objectors was for continuance of the
incentives and that the Commission was entitled to adjudicate on the tariff
without being bound by any previous notifications issued by Government of
India. The Applicant maintained that
the Commission was entitled to adjudicate on the wheeling charge. The Applicant also stated that the case
pending in the Hon’ble High Court was not related to
Wheeling Charges and hence the Commission could revise
F.. Miscellaneous :
One of the persons appearing
in response to the public notice relied on the Commission’s Order No. 73/2000-01
in the case of Astha Power Corporation in O.P. No.
348 of 2000 passed on 4th July, 2000 in support of the plea that the Commission had power to regulate the
tariffs for supply of electricity by persons other than licencees
also. Reference was also made to the
observation of the Commission in its order No. 285/2001 Dt.
Contentions on issues on merits:
General
5.2 The project developers availing wheeling services objected that the rationale and reasoning set out by the applicants for proposed wheeling charge of Re. 1/- per kwh was illogical, irrational, unjustified and illegal. They also offered the following comments on the proposed rate.
(a) The wheeling charges proposed by the Applicant is exhorbitant, arbitrary and without any valid justification.
(b) The wheeled energy does not flow from place of generation to place
of utilization. It is only transmitted by displacement. Hence, the existing
wheeling charges in kind is more than enough compensation for loss and use of
network charges
(c ) The inefficiency of APTRANSCO and DISCOMS can
not be passed on to industries wheeling power in the form of hike in existing
wheeling charges.
(d) Uniform rate
of 100 paise/unit irrespective of voltage level is
not justifiable. South Central Railway
contended that the Power Grid Corporation of India Limited’s
(PGCIL) Wheeling Charge for Northern Railway was 11.50 ps/kwh and that
the rate for wheeling at 132 kV should be much less than that for wheeling at
33 kV and 11 kV.
(e) The pooling of
costs was not correct as the entire system was not being used by all the users
alike.
(f) There is no valid justification for the surplus recovery component
viz. 19.26 P/U.
(g) Payment in kind takes care of inflation and was covered in the
Agreements.
(h) There is no
additional cost involved in wheeling the power from the developer to the end
users as the end users are already consumers of licencees
and as the network is already existing.
(i) Only a small portion of the network establishment and operation expenses are relatable to the transmission/wheeling function. Only a rateable proportion of the expenditure in such part of the network are relevant for the purposes of determining a wheeling charge at 11KV and higher voltage and should be taken.
(j) ITC Bhadrachalam contended that the EHV Line connecting them to the Grid was laid way back in 1988 and all development charges have been paid by them and that the line does not need any maintenance. Hence they need not pay Network charges.
5.3 In reply to the above the applicants stated that
(a) the proposed wheeling charges of Re.1/ kwh is arrived based on the figures approved by the Commission in the tariff order dated. 24. 03.2001. Using those figures and considering the following facts, the applicants calculated the embedded cost of wheeling services.
(b) The existing wheeling charges in kind result in inadequate
compensation for the costs incurred and services provided by APTRANSCO and DISCOMs in wheeling of the energy through Transmission
& Distribution network;
(c) The project developers stand to make abnormal profits on account of
the present arrangements due to the large differences between the costs incurred
by the suppliers of electricity and the rates paid by the beneficiary
industries; and
(d) the Discoms are
compelled to provide cross-subsidies to a large body of consumers who do not
have the capacity to pay cost reflective tariffs.
(e) Comparison
with wheeling charges of PGCIL was not correct as the State
Transmission & Distribution system was much more extensive, wider and
complex compared to PGCIL’s 400 kV / 220 kV system supplying a few
consumers.
(f) The Transmission & Distribution lines are not laid for wheeling purpose alone but principally for carrying out the distribution and supply of electricity to the public at large serviced by the Licencee. In response to ITC plea, APTRANSCO clarified that the Network charges were for the entire network and for the total units handled. The contention that the Development Charges paid are more than compensation for the establishment and operation cost was erroneous.
5.4 Organisations like APSEB A.Es Association, APSEB SC/ST Employees Welfare Association, APSEB Engineers Association, Jana Vignana Vedika, Peoples Monitoring Group on Electricity Regulation etc., generally supported the applicant. The People’s Monitoring Group suggested charging for Reactive power wheeling also. APSEB AE’s Association and APSEB SC/ST Employees Welfare Association felt the Wheeling Charges may be fixed at 159.2 ps/kWH taking into account 59.2 ps/kWH for other auxiliary services provided by the licencees.
5.5
APSEB Engineer’s Association expressed the view that the
special service costs could be taken as 10% of the average power purchase cost
of APTRANSCO ie., 16.50 ps. They stressed on equal treatment of HT
Consumers of Licencee or of the Developers .They
offered the following comments on the proposed hike in wheeling charges.
(i) The rate proposed is too low to cover
Transmission & Distribution losses and to compensate for use of the
Transmission & Distribution System
(ii) By selling at not less than applicable HT
tariff, the private developers make higher profit.
5.6 In contrast to the objection of private power developers that the proposed wheeling charge of Re.1/kWh is very much on the higher side, some public bodies like Jana Vignana Vedika suggest alternative calculation of wheeling charge to cover various components of service offered by the Applicants. Among the alternative calculations based largely on the cross-subsidy element in the HT tariff suggested by these public bodies, the minimum wheeling charge was 155 paise per unit.
5.7 The Ferro Alloy Units represented that they were already paying PGCIL for external charges
Objections/Comments on Transmission & Distribution
Losses to be taken into account:
5.8 The project developers and end users offered
the following comments on the Transmission & Distribution loss adopted for
the calculation of Wheeling Charges.
(i)
The wheeling charges are claimed based on the transmission
loss figure of 8.5% proposed by the APTRANSCO . Losses at EHT of 8.5% is very high and not acceptable.
(ii)
It is not correct to take into account the loss of 11% for
33KV and 11KV networks.
(iii)
Distribution losses cannot be loaded onto wheeling charges
for private developers using only the transmission system.
(iv) Losses occurring
out-side AP Grid i.e. in PGCIL lines have no relevance to wheeling charges.
(v) The licencees cannot take long time
to determine the actual Transmission & Distribution losses.
(vi) The estimated Transmission & Distribution losses for
2000-01 was taken at 35.4% comprising 4.5% transmission losses, 17.9% technical
distribution losses and 13% non-technical distribution losses. The overall
Transmission & Distribution losses for 2001-02 is
projected at 32.3% which was adopted by the Commission for the purpose of
determination of tariff. Now, the applicant claims transmission loss at 8.5%
and losses at 33KV and 11KV network are taken at 11%. It is therefore unbelievable that the
distribution loss in the entire low voltage network is a mere 12.8%. If the
non-technical loss in LT would be 9.9%, the balance 2.9% is technical loss in
the entire LT distribution system. The calculation advanced by the applicant is
therefore absurd.
5.9 Some
objectors representing general public have expressed the view that Transmission
& Distribution losses are even higher than the highest percentage of compensation
existing for payment in kind at the rate of 25%.
5.10 In reply to the above, the applicants stated that the transmission loss of 8.5% is based on actual meter readings. The loss figure of 11% for 33KV and 11KV network are based on losses considered by the Commission in Tariff Order dated. 24-03-2001. The contention of the Objectors that the losses external to AP.Grid has no relevance is not valid since APTRANSCO is purchasing power from Central Generating Units and other states through transmission network external to AP. Grid.
Objections/ Comments on Surplus recovery &
Cross-subsidy :
5.11 The project developers presently availing wheeling services made the following submissions on charging cross-subsidy as part of wheeling charges.
(a) Any additional charges for cross subsidy are not acceptable as there
is no justification for charging this on industries wheeling energy.
(b) Cross-subsidy or related surcharge should be applied to those
drawing power at lower voltage.
(c) The new Electricity Bill, 2001 does not provide for charging Cross
Subsidy from Captive Power Units or end users of electricity produced in these Units .
(d) State Government should provide subsidy for electricity consumers
having no paying capacity.
Some representatives of general public vehemently supported
that the burden of cross subsidy should be borne by those who use the Network
irrespective of voltage level.
5.12 In reply to the above contention of objectors, the applicants stated that the Discoms are compelled to provide cross-subsidies to a large body of consumers who do not have the capacity to pay cost reflective tariffs. The burden of cross-subsidy should be shared by all those who use the network.
6.1 The staff of the Commission, in their
presentation dealt generally with the conceptual framework for the formulation
of a wheeling tariff in the context of the transition towards commercialisation of the transmission business. They referred in brief to the concept of Open Access Vs Limited access, the methodologies for calculating the charges and
limitations on their applicability due to inherent data constraints. It was
also clarified that the position presently prevalent in the state is Limited Access where according to the licence granted, the Licencee can
wheel electricity as per the terms of the Licence
granted to him by the Commission or otherwise only with the approval of the
Commission.
6.2 The Staff stated that typically the
charges for the wheeling
service comprise of:
·
connection charges (to pay for the use of the assets,
usually by way of a fixed charge sometimes differentiated for voltage levels),
·
use-of-system charges (to reflect network characteristics
like congestion, time of day etc),
·
ancillary service
charges (to recover costs of ancillary services such as system stability,
reactive power compensation, reserve power etc)
·
variable charges
(representing largely losses incidental
to wheeling)
6.3 The different methods in vogue of
charging for wheeling of electricity such as the Postage Stamp method, the
Megawatt-Mile Method and the Nodal Pricing Method were referred to by the Staff . The Staff
drew attention to clause 20 in part -IV of the Licence
of APTRANSCO in regard to the basis for determining wheeling charges.
6.4 On the question of Commission's jurisdiction
to determine wheeling charges in respect
of existing bilateral agreements for
wheeling services between power producers and the erstwhile APSEB or the
successor APTRANSCO, the Staff stated that wheeling charges, being in the
nature of tariff, the Commission should be considered to have full powers to revise them under
section 26 of the AP Electricity Reform Act and that the provisions in the
existing agreements regarding charges for wheeling do not constrain the
Commission from revising the wheeling tariff
in view of the superceding legislation.
6.5 . The Staff further stated that the
calculation of the wheeling charge should duly take into account the principle
that the entire network as it exists with all its features such as stability,
spinning reserves as well as losses is made available for the service of
wheeling and that wheeling charges in the prevailing context of "Limited
Access" should reflect primarily use-of-network services provided to
wheeling customers and loss in the Network.
6.6 The staff stated that the losses
occurring in the system being an inseparable component of any wheeling service,
such losses are to be borne without discrimination by all end users, the
consumers of the Licencee as well as
suppliers/end-users of the wheeled electricity.
The cost can be recovered either in cash by its inclusion in the
wheeling charge or in kind by way of delivering energy net of losses to the
recipient consumers. The Staff stated
that in terms of Clause 20 of the Licence which
specified ---“to deliver such electricity, adjusted for losses of electricity
to a designated exit point “----, losses will have to be paid for in kind
which means, on wheeling, the
energy to be delivered at the designated exit point shall be net of losses.
6.7 Given data constraints as exist at
present, the Staff preferred
the postage stamp method of charging as a viable option pending
detailed studies. A single part tariff
(per Kwh) based on total energy flows (including
wheeled energy) in the network is feasible. Over time and with improvement in
data availability, the charge would have to be refined to provide for the costs
inherent in the mismatch between the time of generation (i.e. input into the
system); and time of consumption of energy (i.e. offtake
from the grid) by the end users of the wheeling service giving rise to balancing costs for
the service provider. It was suggested
by the Staff that system stability charge & unscheduled interchange (UI)
charge could be introduced once the ABT (Availability Based Tariff of the
Central Units) regime comes into vogue.
6.8 Adverting to the calculations presented
by APTRANSCO in support of the wheeling charges of Re.1/- per Kwh proposed, the staff stated that the denominator
employed to calculate the rate per Kwh should include
wheeled energy also. The APTRANSCO's figure of 40,816
MU did not include wheeled energy. Further, the rate of Rs.1.65 per Kwh employed for calculating the cost of losses included
the external wheeling and transmission costs incurred and that its inclusion
again in the computation (as done by
APTRANSCO) resulted in double counting. Hence, the staff felt that the external
Transmission & Wheeling Charges should be excluded. In the Network costs reckoned in the
computation for Re.1/- (which, APTRANSCO claims, is as per the Commission's
Tariff Order of 24th March, 2001), credit had not been taken by
APTRANSCO for non-tariff income in abatement of expenses as done in the Tariff
Order to arrive at the Revenue Requirement.
6.9 The Staff stated that the figure of 19.26 ps. / unit
(surplus recovery) was not justified as no quantification was done for services
like reactive power compensation. The
Staff also felt that since suppliers of electricity were consumers of Licencee
only to the extent of network usage, they were not liable for a charge to
account for Cross Subsidy. They also
felt Cross subsidy should arise only at the retail consumer level.
6.10. Regarding the
arrangement proposed for sharing of
revenue from wheeling services between APTRANSCO and DISCOMs,
the staff expressed reservations about the ratio ( of 25 : 75) proposed as, according to the
Staff, it was not supported by any data
as well as the legal implications in view of
APTRANSCO and the DISCOMs being distinct legal
entities.
6.11. On the issue
whether the consumers of wheeled energy should be the "consumers" of
APTRANSCO or DISCOMS, the Staff stated that there is need to examine the matter
from a legal perspective.
6.12 In conclusion, the staff stated that the
wheeling charges would have to be notified by the Commission every year as part
of the Tariff Notification and that the revised Wheeling Charges should come
into force from the Tariff Year 2002-03 as the revenue requirement of APTRANSCO and
the four DISCOMs for 2001-02 has already been met by
the Commission. Further, if as a matter of policy, the GoAP
desired that any class or category of energy wheelers were to be charged a
lower tariff for wheeling, the difference would have to be met by GoAP as subsidy.
7.1 In it's response, APTRANSCO
agreed with the Staff’s observation that
A Cost of Service (Ps /unit) 80.74
B X APTRANSCO Units (MUs) 40,816
C Cost of service (AXB) (Rs. Crores) 3,295.48
Less
D Non Tariff Income (Rs. Crores) 333.43
F Net cost of service to be recovered (C-D-E) 2817.49
G Wheeled Units (Mus) 2200
H Total units (B+G) (MUs) 43,016
I Cost of service/unit (F/H) (Ps/Unit) 65.50
J HT 1 Price (K+L) (Ps/Unit) 444
K Subsidy component (Ps/Unit) 229
L Cost of service (Ps/Unit) 215
M % Subsidy component (K/L*100) 107%
N Comparable subsidy (IxM) (Ps/Unit) 69.76
O
cross subsidy (I+N) (Ps/Unit) 135.26
7.2 The
applicants stated that need for “in-kind" settlement appears to follow from interpretation
of licence language on adjustment. Adjustment can be
made in two ways (i) by estimating the value of losses and included in price;
or, (ii) by reducing the estimate of delivered energy to reflect losses.
APTRANSCO in the interest of transparency chose to include value of losses in
the price of wheeling electricity.
7.3 APTRANSCO
stated that Licencees filed FPT on
CHAPTER VIII
8.1
The Commission recognises the need
for a consistent methodology for fixing of wheeling charges for power developers and their scheduled
consumers ( end Users)keeping in mind the ground realities in A.P.
8.2 In the light of the contentions and submissions of the Applicants, Objectors and others, the following issues arise for consideration in the present proceedings.
(i) Whether the Commission has the authority to determine Wheeling Charges? Whether the Commission is bound by the notifications issued by the GoAP or the terms of the Wheeling Agreement signed with the APSEB prior to the Reform Act coming into force ?
(ii) Whether the application for determination of Wheeling Charges filed jointly by APTRANSCO and DISCOMS is valid and maintainable?
(iii) Whether the project developers who avail the wheeling service, either for captive consumption or for third party sales/purchases, should be treated as the customers of the APTRANSCO or of the concerned Discom in whose area of supply the wheeled energy is consumed?
(iv) If the project developers who avail the wheeling service are treated as the customers of Discom in the area of supply, what should be the arrangement between the Discom and APTRANSCO for the use of transmission system and what should be the arrangement between the said Discom and other Discoms if the distribution systems of such other Discoms are also used for the Wheeling of electricity?.
(v) What should be the method of Calculation of wheeling charges and the components to be included therein? Whether it should be related to the voltage level at which the supply is effected? Whether the technical and/or non-technical losses in the System below the level of the voltage at which the service is availed should be included in the wheeling charges?
(vi) Whether the project developers availing wheeling services through the Transmission & Distribution System in the State can be asked to contribute towards cross subsidisation in the tariff that is applicable to the corresponding class of consumers of the Licencee?
(vii) Whether the Wheeling Charges should be determined for APTRANSCO and DISCOMS in a consolidated manner and thereafter allowed to be shared in the proportion suggested by the Applicants or whether such charges should be separately determined?
(viii) Whether the Wheeling Charges should be collected in cash or adjusted in kind or partly in cash and partly in kind?
(ix) Whether the wheeling charges determined by the Commission can be given retrospective effect from 1st April 2001 or in the alternative the wheeling charges can be annualised and included in the balance period of the year 2001-02?
ISSUE NO. 1: Authority of the Commission to levy wheeling charges:
8.3 The act of wheeling is a service provided by the Licencee(s) to a customer of conveying electricity from the place where the electricity is injected into the system to the place where it is offloaded for consumption. Such conveyance is done through the transmission system and/or the distribution system belonging to the Licencees concerned namely APTRANSCO and DISCOMS. The charges for such services is a tariff within the meaning of Section 26 of the Reform Act, 1998. Section 26 of the Reform Act, inter alia, reads as under:
"26
(1). The
holder of each licence granted under this Act shall
observe the methodologies and procedures specified by the Commission from time
to time in calculating the expected revenue from charges which it is permitted
to recover pursuant to the terms of its licence and
in designing tariffs to collect those revenues."
The subsequent sub-sections in section 26 deal with details and other aspects concerning the fixation of Tariffs of Licencees. The APTRANSCO and the DISCOMS are Licencees under the Reform Act; APTRANSCO having been issued the Transmission & Bulk Supply licence No.1/2000 dated. Jan 31, 2000 valid for 30 years and the four Discoms having been issued the Distribution & Retail Supply Licences Nos. 12 to 15 dated 29th Dec, 2000 valid for 30 years.
8.4 The explanation (b) under section 26 of the Reform Act defines the term “Tariff” as under:
“Tariff”
means a schedule of standard prices or charges for specified services which are
applicable to all such specified services provided to the type or types of
customers specified in the Tariff notification”
8.5 Wheeling is a service provided by the Licencees and the schedule of charges for such wheeling services is a tariff within the meaning of the section 26 of the Reform Act. Further, Section 11(1) (e) of the Reform Act reads as under:
”11 (1) (e). to regulate the purchase, distribution, supply and utilisation of electricity, the quality of service, the tariff and charges payable keeping in view both and interest of the consumer as well as the consideration that the supply and distribution cannot be maintained unless the charges for the electricity supplied are adequately levied and duly collected; "
8.6. The Reform Act has been enacted with the purpose of vesting in the Commission all regulatory powers concerning the electricity industry in the State including the powers to adjudicate on tariffs and related issues. This is stated specifically in the Statement of Objects and reasons of the Reform Act. The Preamble to the Reform Act states as under:
“An Act to provide for the constitution of an Electricity Regulatory
Commission, restructuring of the Electricity Industry, rationalisation of the generation, transmission, distribution and supply of electricity avenues for participation of
private sector in the Electricity Industry and
generally for taking measures conducive to the development and management of
the Electricity Industry in an efficient, economic and competitive manner and
for matters connected therewith or incidental thereto.”
8.7 It has
been held that the power to regulate is wide and includes the powers to
determine rates and charges. In V.S.Rice and Oil Mills v. State of Andhra Pradesh AIR
1964 SC 1781, the Hon’ble Supreme Court held as
under:
Page
1787 Para 20 “…………The word “regulate” is wide enough to confer power on the
respondent to regulate either by increasing the rate or decreasing the rate,
the test being what is it that is necessary or expedient to be done to
maintain, increase, or secure supply of the essential articles in question and
to arrange for its equitable distribution and its availability at fair
prices. The concept of fair prices which
S.3(1) expressly refers does not mean that the price once fixed must either
remain stationary, or must be reduced in order to attract the power to
regulate. The power to regulate can be exercised for ensuring the payment of a fair
price, and the fixation of a fair price would inevitably depend upon a
consideration of all relevant and economic factors, which contribute to the
determination of such a fair price. If the fair price indicated on a
dispassionate consideration of all relevant factors turns out to be higher than
the price fixed and prevailing, then the power to regulate the price must
necessarily include the power to increase so as to make it fair. ………………..”
In Deepak Theatre, Dhuri v. State of Punjab 1992 Supp
(1) SCC 684 at Page 687 Û AIR 1992 SC 1519. The Hon’ble Supreme Court held as under
Page 687 Para 3 - “It is settled law that the rules validly
made under the Act, for all intents and purposes, be deemed to be part of the
statute. The conditions of the licence issued under the rules form an integral
part of the statute. The question emerges whether the word regulation would
encompass the power to fix rates of admission and classification of the seats.
The power to regulate may include the power to licence or to refuse or to requiring
taking out a licence and may also
include the power to tax or exempt from taxation, but not the power to impose a
tax for the revenue in rule making power unless there is valid legislation in
that behalf. Therefore, the power to
regulate a particular business or calling implies the power to prescribe and
enforce all such proper and reasonable rules and regulations as may be deemed necessary to
conduct the business in a proper and orderly manner. It also includes the
authority to prescribe the reasonable rules, regulations or conditions subject to which the business may be
conducted…………………”[emphasis supplied]
In Harishankar v. U.P. State Electricity Board AIR 1974 All 70 at para 5, the Allahabad High Court held as under:
Para 5 "….Thus the terms "tariff" includes within its ambit not only the fixation of rates but also rules and regulations relating to it. When the electrical supply is being made on the footing that the consumer will pay the minimum guaranteed charges, this charge is one of the terms of conditions for the supply. By it the supplier ensures the receipts of a minimum amount for the supply of electricity. In a sense the fixation of this charge would be included in the fixation of rates for the supply of electricity. The word "tariff" in Section 49 (1) appears to us to include the power to fix minimum guaranteed charges".
8.8 In terms of section 26 of the Reform Act read with the regulatory powers under section 11 of the Reform Act, the Commission has full power and authority to determine the wheeling charges. The Commission therefore holds that the Commission has the authority under the Reform Act to determine and decide on the Tariff and terms and conditions for the provision of wheeling services by the Licencees.
8.9 As held in V.S. Rice Mills case, (supra) the Commission as the regulator and further being vested with the statutory functions under the Reform Act has the authority to deviate from the charges and also the terms and conditions contained in the Wheeling Agreements earlier signed by APSEB and, for the same reasons from the earlier notifications issued by the GoAP. It is the Commission’s duty to ensure that the charges for wheeling are levied in a fair and just manner and are equitable and economical.
8.10 The present application has been filed by AP TRANSCO and DISCOMS jointly. In the present application the Commission is determining the principles on which wheeling charges are to be calculated and applied. For reasons stated hereunder, the Commission is not inclined to determine the wheeling charges for the year 2001-02 as the Commission is of the opinion that in the facts and circumstances of the present case, there should be no retrospective operation of the Wheeling Charges determined. The wheeling charges for the year 2002-03 shall be determined along with tariff order for the said year. For reasons explained in this order and based on the methodology adopted for calculation of Wheeling Charges more fully explained later, the Commission is not inclined to allow apportionment of the wheeling charges between APTRANSCO and DISCOMS in a consolidated manner as suggested by the applicants.
8.11 The objection to the maintainability of the joint petition by APTRANSCO and DISCOMS needs to be considered in the light of the above. There can be no legal objection as such to the maintainability of the joint petition so long the Commission proceeds to determine the issues taking into account the fact that APTRANSCO and DISCOMS are independent entities. The Commission will proceed on the basis that though DISCOMS are wholly owned subsidiaries of APTRANSCO at this point of time, APTRANSCO and DISCOMS are to be treated as separate entities and determine the wheeling charges accordingly.
8.12 It is also relevant to note that the determination of wheeling charges with which we are concerned at this stage relate to an integrated Transmission & Distribution system in the State. The system was entirely owned and controlled by Andhra Pradesh State Electricity Board(APSEB) initially and after the Reform Act it has come into the control of APTRANSCO till 31.3.2001. The present application is the first of its kind to determine the applicable wheeling charges fro the transmission & distribution system.
8.13 In the circumstances, the objection as to the basic maintainability of a joint petition by APTRANSCO and DISCOMS cannot be sustained. In any event such an objection is technical in nature and allowing the joint petition to be maintained will have no adverse effect so long in substance as the Commission proceeds to determine the issues treating APTRANSCO and DISCOMS as independent units and the determined tariff is fair to the consumers availing wheeling service..
ISSUE No 3. Whose customers?
8.14 The transmission & distribution of electricity is technically an integrated activity as far as the end user is concerned . The Wheeling of electricity from the place where it is injected into the system to the place where it is consumed is to be considered as one indivisible activity. This cannot be divided and looked as if an identifiable part of the activity is carried by one licencee and the remaining identifiable part is carried by another licencee. This is so as energy is supplied on displacement basis and it cannot be said that the very energy pumped into the system at one place is delivered at another place. The energy from the generating units, whether it is for sale and supply to APTRANSCO and then to Distribution Licencees and then to the Consumers of the Distribution Licencees or directly sold to the consumers wheeled through Transmission and/or the Distribution System, gets mixed in the system and loses the relationship to the source. The energy eventually supplied to the customer cannot be identified as having passed through only an identified part of the transmission and/or distribution system or at an identified voltage level. In Wheeling, what really happens is that the licencee supplies the wheeled consumer, energy in compensation for the energy received into the system from the generator availing the wheeling service.
8.15
In view of the above it is not proper to provide for
multiple contracts or multi-party agreements in regard to the wheeling of
energy. The wheeling agreement should necessarily be between the project developer and one identified licencee
in the system
8.16
Invariably the person who consumes the
electricity wheeled has a parallel arrangement with the Discom in the area of supply for the supply of electricity by the Licencee. There do not exist two
systems comprising of power lines and equipment, namely one for the normal Licencee’s supply and the other for the wheeled energy. It
is an integrated system and it is not possible to identify the energy actually
consumed as the one sold and supplied by the Licencee
and the other supplied by another and wheeled by the Licencees.
8.17
The allocation of recorded demand and energy
between Licencee’s supply and wheeled energy is done
by a method agreed between the parties to the agreement. Such recording is done
by the Discom of the area of supply, even where the supply is
effected directly from the transmission system. For the electricity sold and
supplied by the Licencee the person supplied will be
the consumer of Discom and not of the Transmission
Company notwithstanding that the supplies are made from the
Transmission System directly.
8.18
It is therefore natural, just and proper that the project developer
who avails the wheeling service is also treated as the customer of Discom of the area where the electricity is consumed even
when the agreement is signed with the Generating Unit and irrespective of the
voltage level at which the supply is effected.
8.19
The above scheme is simple and implementable. In
the scheme, there will be an identified Discom which
is already serving the person who will consume the electricity wheeled. The Discom of the area of supply can in turn have arrangement with APTRANSCO and other Discoms for the use of their system. There is no need to
have tripartite or multiple agreements with APTransco
or Discoms for each of the wheeled consumers.
8.20
Accordingly the project developer who desires to wheel power will have
agreement only with the Discom of the area where the
wheeled energy is consumed, irrespective of whether the wheeling would involve
the use of Transmission System of APTRANSCO or the use of the Distribution
System of other Discoms.
ISSUE NO 4: Nature of Arrangement between APTRANSCO
and Discoms
and between Discoms:
8.21 The erstwhile Andhra Pradesh State Electricity Board (APSEB) had built the transmission & distribution system and network essentially for the purpose of the distribution of electricity in the state in discharge of the duties and functions under section 18 of the Electricity (Supply) Act, 1948. This is a public utility service. Over the years investment has been made in the system with the use of money contributed by public at large who are the consumers of the APSEB and the GoAP. The activities of distribution and supply of electricity by the Licencee-Discoms (which have succeeded to the above function of the APSEB.) therefore, have the principal claim over the Transmission & Distribution Capacity and network which now vest in APTRANSCO/ Discoms.
8.22 The distribution system is owned by the Discoms. The
Transmission System vests in APTRANSCO under the reorganisation
of APSEB effected pursuant to the provisions contained in the Reform Act. It is necessary to recognise this
salient aspect and provide for the use of the transmission system of APTRANSCO
by the Licencee-Discoms. An exception to be made is
to the extent that the transmission capacity is used for inter
state transmission. Under the Electricity Laws as existing today namely the
provisions of the 1910 Act, 1948 Act and the ERC Act (Central Act) and the
Reform Act, the Inter State Transmission falls within the jurisdiction and
control of the Central Electricity Regulatory Commission .
8.23 In
accordance with the above,
APTRANSCO should enter into an agreement with each of the Discoms for the use of transmission system by the Discoms. Since the Discoms are
independent companies, it is important that an appropriate arrangement for the
use of the transmission system and payment of transmission charges are
finalised and filed with the Commission.
8.24
The
Charges payable by Discoms to APTRANSCO shall be part
of the consolidated charge to be determined by the Commission while deciding on
the Annual Revenue Requirements of APTRANSCO.
8.25
Once
the Discom has paid for the Transmission system for
Arrangement between Discom
8.26 In addition to the utilisation of the
transmission system of
APTRANSCO, in a special case, a Discom
may also require the utilisation of the distribution system of another Discom to provide the wheeling service required by its
customers. In such an event, the Discom should pay an appropriate charge to the other Discom as may be approved
by the commission from time to time and such charges shall be a pass
through in the wheeling charges of the Discom to its
customers for whom such services are availed from other Discoms.
ISSUE NO 5 Calculation of wheeling charges.
8.27 The wheeling charges should be calculated
for wheeling the contracted energy namely, the number of units. The project
developers availing the wheeling service should pay realistic cost of such
services.
8.28
The
contention that the system losses only upto the
voltage level at which the electricity is supplied to the end user should alone
be taken for determining the wheeling charges is apparently an attractive
argument but an over simplification of the matter in issue. In an integrated
system where electricity is supplied on displacement basis rather than direct conveyance of
the particular electricity generated, the technical losses upto
the voltage level at which the electricity is delivered alone cannot be considered. The technical losses of the total system need
to be taken into account as it is impossible to determine electricity from which source is being
supplied to which particular customer.
The electricity from all sources gets combined in the system and loses its
identity
8.29
Similarly,
non-technical losses in the system are also to be taken into account as these
are also an integral part of the system.
Although, apparently, the delivery of electricity at say, 132 KV to the customer
should cover the loss upto 132 KV only but a
realistic approach should be that losses in transmission & distribution
system as a whole ( which as mentioned above is an integrated system) should be
taken into account while calculating the amount of energy to be supplied to the
customer. If the entire system losses are not taken into account for
determining the charges for wheeling, it will be discriminatory between
similarly placed persons who are getting electricity by the use of the same
Transmission & Distribution system and are bearing the cost of losses in
Transmission & Distribution System. It will not be just and proper for the Licencee’s consumers to pay for all such losses in the system
and for the project developers availing the wheeled services to pay for the use
of the system only without sharing such
losses in the system. The use of the system cannot be isolated from the losses
in the system as they form an integral part of the system. The system losses, whether technical or non technical, should be
borne by all persons using the system. Incidentally, the terms of licences
issued to APTRANSCO and DISCOMS specifically refer ( para 20 of the T&BS licence and para 18.5 of the D
& RS licence ) to “ deliver such electricity, adjusted for losses of
electricity, to a designated exit point.” ( emphasis
supplied ).
ISSUE No 6:
Adjustment for cross subsidy
8.30
The
technical and non technical losses in the system have a nexus to the use of the
transmission &
distribution system by the project developers who seeks to avail the wheeling
services and therefore are to be taken into account in determining the charges
for wheeling services. The element of
cross subsidisation has no nexus to the Transmission & Distribution System
as such and arises out of
subsidisation of one class of consumers by another class which is
really an economic issue. The element of cross subsidisation cannot therefore
be taken into account while determining the Tariff or charges for wheeling.
ISSUE No. 7: System of Sharing of
8.31
As mentioned under issue No 4, the project developer who wishes to avail the wheeling
services will contract with the Discom in whose area
of supply the energy to be wheeled is consumed and pay the charges to such Discom. There will be no arrangement between such project
developers and APTRANSCO or other Discom. It will be for Discoms
and APTRANSCO to have arrangement between themselves in regard to the use of
the system. There will therefore be no apportionment of wheeling charges as such between
APTRANSCO and Discom as suggested by the applicants.
ISSUE No. 8:
8.32
While some of the Objectors opined that payment
in kind was apt as it took care of inflation, the licencees
felt the payment in kind was not compensating their costs and that there was
need to changeover from an in-kind regime to an in-cash regime.. The Commission feels that while there could
be no objection for compensation of losses in kind, there would be no rationale
for continuing with payment in kind in respect of other costs etc.
8.33
It will be appropriate to adjust the losses in
the system in kind rather than in cash. This will also be in line with the
terms of the licences ( paras
20 and 18.5 of the T & BS and D & RS licences respectively) which lay
down that the licencee shall “deliver such
electricity, adjusted for losses of electricity, to a designated exit
point”. The losses in the system are
determined by the Commission on an annual basis and the quantum of wheeled
electricity to be supplied can be reduced by the extent of the losses
determined by the Commission which will be applicable to Tariff for both the licencee’s consumers and the consumers of the wheeled
energy. This will also avoid incremental
cost on account of purchases to be made by DISCOM. If the losses are adjusted in cash, it would
mean that the DISCOM is required to supply the full quantum of electricity
collected by it from the supplier, to the wheeled consumer. The DISCOMS will have to acquire equivalent
power from high cost generating companies to cover the shortage in supply of power
against the losses.
8.34
The
remaining part of the charges for wheeling (namely the cost of network and other
charges) should be paid in cash.
8.35
In
accordance with the above there will be two types of charges for
ISSUE No 9: Retrospective
Effect:
8.36 The Applicants could have filed details in support of the wheeling charges sought by them immediately after notification of the tariff for the year 2001-02. The Applicants filed the affidavit instead only in October and that too without adequate particulars. It will not therefore be appropriate to give retrospective effect to wheeling charges at this stage.Further wheeling charges have already been collected in accordance with the earlier tariff order and the Annual Revenue Requirement of the licencees also has been met. .
MISCELLANEOUS
8.37 Wheeling Charges should be applied to all persons who avail the service of wheeling without discrimination. The Non Conventiional Energy Developer should also pay the wheeling charges like others.
Chapter- IX
.
9.1 Para 20 Of the Bulk Supply Licence and
9.2
Further under Section 26 of the Reform Act and as per the
terms of the licences, the Commission has to fix
tariffs which include wheeling charges in accordance with the accepted
financial principles and in line with its tariff philosophy. The methodology
for fixing wheeling charges will therefore be guided by Sec 26 and Sec 11. (1)
(e) of the Reform Act.
9.3
Data availability
constrains the design of the wheeling charges.
Part of the reason for this perhaps is that for too long the Power
Sector had functioned under a vertically integrated structure which lacked
modularity. The Licencees
have to get over this fixation, if the complexities of wheeling tariffs are to
be unravelled..The
Commission notes that there are a number of methods of pricing wheeling charges in vogue all over the
world like Flat Fee, Postage Stamp, Proforma Tarriffs, Megawatt-Mile, Contract Path, Rated System Path, Locationally based Marginal costing, etc. The Commission also recognises that even with extensive data available (as in
the case of advanced countries), transmission pricing is still based on
a number of assumptions . For these reasons, there have been divergent views on
the rationale (or otherwise) behind each of the transmission pricing
methodologies in vogue all over the world some of which are mentioned by the
staff in their presentation. There is a constant search
for a universally acceptable wheeling tariff design.
9.4
In a the contract
path or a Megawatt mile approach, the determination of a notional pathway
between the Wheeling Generator and end-user of Wheeled Power and the
delineation and identification of entry points and delivery points at different
voltages and in respect of different Licencees
existing enroute is necessary. Development of such a notional pathway
for developing Megawatt Mile charges for each of the parties using the wheeling
service is currently not feasible, particularly as the end users are not fixed
and are changed often. Also the network that was built for an integrated public
utility has yet to develop the contours of unbundled business entities in terms
of asset demarcation in physical and financial terms.
9.5 Since, in an integrated transmission network, power flows unpredictably and is for convenience generally reckoned to follow the principle of displacement, to draw up hypothetical transmission lines between each developer and each of its many customers is difficult. Sophisticated data and load flow studies, strengthening of Transmission & Distribution lines, interface metering with better (0.2 accuracy class) meters needs to be in place before attempting to develop complex wheeling tarriffs suited to each project developer, its consumer and the wires businesses. Such complex computations may not be feasible at present particularly when there are many retail end users of the Wheeled Power. So, while the Commission has paid attention to presentations which have highlighted the multifarious methods such as nodal prices generally adopted in sophisticated transmission networks, it feels there is much to be said in favour of fixing network charges for the present on simple principles which enable laying the foundations for elaborate determination of Wheeling Tariffs later taking into view the complexities of power sector business in A.P.
9.6 For the above reasons the Commission intends to take the simple model proposed by the licencees with appropriate changes as the basis for finalising the wheeling tariff. As already indicated above the wheeling charges to be fixed will not be given retrospective effect as claimed by APTRANCO but will be implemented only from the year 2002-2003 onwards. Subsequent wheeling tariff proposals will build on the principles applied herein but will seek to evolve into modular tariffs reflecting the interests of the various stakeholders more explicitly. Similarly the issue of Capacity charges will be considered in future. At this stage the Commission will proceed on the basis of energy contracted to be wheeled.
9.7
The Commission staff and several Objectors felt that the
network and other charges should have been allocated not just over the energy
purchases of APTRANSCO, but over the entire
energy handled by the system.
Managing Director, APCPDCL, in his submission on
Surplus Recovery
9.8
The Applicants have sought to charge a surplus of 19.26 ps/kWH for the year 2001-2002 as an adjustment for the
differences in embedded costs and Long Range Marginal Costs. APTRANSCO also pointed out that the cost to
serve wheeled consumers was higher than that to serve the native loads. The Licencees also
sought the surplus recovery to cover other costs like reactive power
compensation etc., besides cross subsidy.
The Commission staff felt that the surplus recovery was not justified
for want of quantification.
9.9
In view of the
methodology adopted by the Commission namely determining the wheeling charges
accounting for all system losses and not accepting the loading of the cross
subsidy element and in the absence of detailed calculations surplus recovery of 19.26 ps/kWH is not allowed by the Commission.
9.10
However it is noticed that ,the
Power Trading Corporation maintains a margin for the balancing services
rendered by it. In any T & D system, frequency
and voltage stability requires matching between consumption of energy (both
active and reactive ) and generation of energy by the system operators Besides
ensuring this energy balancing, the Licencees render
various other valuable services like reactive compensation, emergency power, continuous network access,
metering & billing and other consumer services etc., to the wheeled
consumers and their project developers.. In this context the Commission prefers
to introduce an appropriate charge as Balancing and ancillary service charge
(as sought for by some objectors representing general public and the staff )in
the case of this and the future tariff determinations. Keeping all these unrecovered
costs and various services not included in other charges mentioned above (and
not cross subsidy) in view and for reasons mentioned hereinabove for the
present the commission allows a
charge of 10ps per kWh on the wheeled energy as
Balancing and ancillary charges.
9.11
The Network charges together with the system losses are
determined in the Tariff Order for the year 2002-2003. Now that it has been
decided not to give retrospective effect to the wheeling charges determined
herein, it is proposed to fix the wheeling charges based on the network charges
and losses finalised in the tariff order for 2002-03.
Accordingly the network charges and system losses as finalised
by the Commission in the Tariff Order for 2002-2003 are taken into account for
fixing wheeling charges for the year 2002-2003
9.12
The wheeling charge leviable from
a) In cash :
|
|
|
|
|
|
|
|
|
|
|
|
Particulars of Expenditure |
Amt. Rs. Crs |
|
|
|
|
|
|
|
|
Wages
and Salaries |
490.65 |
|
|
|
|
|
|
|
|
Administration
and General expenses |
105.20 |
|
|
|
|
|
|
|
|
Repairs
and Maintenance |
185.66 |
|
|
|
|
|
|
|
|
Rent
Rates & Taxes |
5.13 |
|
|
|
|
|
|
|
|
Approved
Loan Interest |
560.31 |
|
|
|
|
|
|
|
|
Security
deposit interest |
31.37 |
|
|
|
|
|
|
|
|
Legal
Charges |
0.97 |
|
|
|
|
|
|
|
|
Audit
and other Fees |
2.23 |
|
|
|
|
|
|
|
|
Depreciation |
508.59 |
|
|
|
|
|
|
|
|
Other
Expenses |
39.30 |
|
|
|
|
|
|
|
|
Contribution
to staff pension and gratuity |
64.95 |
|
|
|
|
|
|
|
|
Contribution
to Contingency Reserve |
21.45 |
|
|
|
|
|
|
|
|
Sub Total of Expenditure |
2015.81 |
|
|
|
|
|
|
|
|
Reasonable
Return |
82.37 |
|
|
|
|
|
|
|
|
Total Gross Revenue Required |
2098.18 |
|
|
|
|
|
|
|
|
Less
Non Tariff Income |
529.86 |
|
|
|
|
|
|
|
|
NET REVENUE REQUIREMENT |
1568.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million Units ( Gross) |
41954 |
(Discoms 39259 +
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate in Paise |
|
|
|
|
|
|
|
Network Charges including reasonable
return |
37ps/kwh |
(1568.32 Crs.
/ 41954 MU) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
3ps/kwh |
(Based on Information) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Balancing and ancillary Charges |
10ps/kwh |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Total |
50ps/kwh |
( Total of above three charges) |
|
|
||||
.
b)
In kind:
In addition, wheeling charges in kind of 28.4% of
energy input by the project developer into the Licencee’s
grid being the system loss are leviable.
9.13
The application for Wheeling Charges will be made annually
with the filings of Annual Revenue Requirements
by the Licencees and the charges will be adjusted in relation to the approved network & other costs and losses projected in the filings and as
accepted by the Commission.
9.14
Wheeling charges are
applicable uniformly to all project developers. The network and balancing &
ancillary charges will be recovered in cash and the losses in kind.
9.15
In case the GOAPdesires to allow
wheeling of power to any person/s at lesser rates than prescribed by the
Commission, they can do so only if they agree to compensate the respective licencees for the loss of revenue.
9.16
The licencees are required to submit the tariff filings
based on embedded costs as well as marginal costs as per the guidelines issued
by the Commission, in regard to the future filings for wheeling tariffs.
9.17
This order will apply
uniformly to all classes of users of wheeling service including Non-conventional Energy Sources and
irrespective of voltage level of
connection of developer or his end user..
This Order is signed by the Andhra Pradesh Electricity Regulatory Commission
on 24 March, 2002.These charges will be effective from the 1st of April 2002
Annexures: A to D
(A.V.SUBBARAO) (D.LAKSHMI NARAYANA)
(G.P.RAO)