ANDHRA
PRADESH ELECTRICITY REGULATORY COMMISSION
Sri. K.Sreerama Murthy, Member
Sri Surinder
Pal, Member
R. P. Nos. 1, 2, 3 and 4 of 2004
Between
1. M/s Northern Power Distribution Company Limited of
A.P. (R.P.No. 1/2004)
2. M/s Southern Power Distribution Company Limited of
A.P. (R.P.No. 2/2004)
3. M/s Central Power
Distribution Company Limited of
A.P. (R.P.No. 3/2004)
4. M/s Eastern Power
Distribution Company Limited of
A.P. (R.P.No. 4/2004)
… Petitioners
and
Nil .... Respondent
These petitions coming on for hearing finally on
08-08-2005 in the presence of Chairman and Managing Directors of the
petitioners and Sri C. N. Sundaram, Advisor, representing four
of the objectors, namely, M/s Shivam Smelters Private Limited, M/s All India Induction
Furnace Association, M/s Sarwottam Ispat Limited and
M/s MMG Steels Private Limited,
and having stood over for consideration till this day, the Commission
delivered the following common:
ORDER
All the four distribution licensees filed these four
separate petitions seeking, on identical grounds, amendment, under the
provisions of Clause 14 of the Andhra Pradesh Electricity Regulatory Commission
(Licensee’s duty for supply of electricity on request) Regulation, 2004 (hereinafter referred to as the “Regulation”
or “Regulation No.3 of 2004”) to the clauses of that Regulation, relating to
the recovery of expenditure (commonly known as the Service Line Charges and the
Development Charges) by the petitioner-licensees from those applying for supply
of electricity. These provisions,
namely, clauses 5 to 11 of the Regulation are as reproduced hereunder:
“5. Right
of the Distribution Licensee to recover expenditure
(1) The Distribution
Licensee shall, unless otherwise specified in this Regulation or otherwise by
an order of the Commission fulfill the obligation to supply electricity to the
premises, without claiming any payment or reimbursement by the applicant for
any expenditure, if such expenditure has been incurred or is to be incurred by
the Distribution Licensee in terms of or under any scheme approved by the
Commission or when such expenditure is otherwise allowed to be recovered by the
Distribution Licensee as a part of the revenue requirements of the Distribution
Licensee.
(2) Subject
to the provisions or Act and this Regulation and subject to such directions,
orders or guidelines the Commission may issue from time to time, every
Distribution Licensee is authorized to recover from an applicant, requiring
supply of electricity, any expenses that the Distribution Licensee shall be
required to reasonably incur in addition to those specified in sub-clause (I)
above to provide any electric line or electrical plant specifically for the
purpose of giving such supply to the applicant.
(3) Before
taking up the erection of electric line or electrical plant required for
extending supply to the applicant, the Distribution Licensee shall estimate the
charges for erecting such electric line or electrical plant and present the
same to the applicant.
(4) In
the event the electricity supply is required by two or more applicants in the
same area through extension of common Electric Line and Electric Plant and the expenditures
in respect thereof are not covered by sub-clause (1) above, the Distribution
Licensee shall apportion such expenditure amongst all such applicants.
(5) The Commission may from time to time and
by a general or special order specify the extent to which the Distribution
Licensee shall install, establish or extend the Distribution Main, the Electric
Line and Electric Plant as a part of a scheme to be implemented by the
Distribution Licensee or otherwise to be undertaken and the expenditure to be
covered as a part of the revenue requirements of the Distribution Licensee to
be recovered from the Tariffs to be determined by the Commission.
6. Specific Provision for Low Tension supply
The
following provisions shall apply for low-tension supply
(a) In case of applications
for Low Tension supply where such supply requires only laying the service line
from the existing distributing main to the consumer's premises, the
Distribution licensee shall estimate the cost of service line and the cost of terminal
and metering arrangements at the premises of the consumer, but not including
the cost of meter.
(b) In case of applications where there is a need to erect new electrical plant such as the distribution transformer (DTR) along with switch-gear etc., for extending supply to the applicant for Low Tension connection, the licensee shall estimate the cost of electrical plant as follows:
Rated capacity of DTR (KVA) =
Q
Cost per KVA (in Rupees)
= P/Q
Contracted load (HP) /Demand (KVA)
of the applicant
= K
Amount payable by applicant towards
electrical plant (in Rupees) = K*(P/Q)
Provided
that the Distribution licensee shall estimate the cost of electrical plant
based on the latest cost data as published by the Distribution licensee.
(c) In case of applications
where there is a need to erect or extend the 11 KV line in order to erect a
distribution transformer and extend supply to the applicant, the Distribution
licensee shall estimate the cost of such section of 11 KV line on a per
kilometer basis based on the latest cost data as published by the Distribution
licensee.
7. Specific Provision for High Tension supply
The
following provisions shall apply for high-tension supply
(a) In case of applications
for new connections, where such supply requires only extension of High Tension
line from the existing distributing main to the consumer's premises, the
Distribution licensee shall estimate the cost of service line and the cost of
terminal and metering arrangements at the premises of the consumer, but not
including the cost of meter and Current Transformer and/or Potential
Transformer used for metering; The Distribution Licensee shall estimate the
cost of service line on per kilometer basis and the cost of metering
arrangements based on the latest cost data as published by the Distribution
Licensee.
(b) In case of applications
where there is a need to erect a new power transformer or augment the capacity
of existing power transformer with or without bay extension at a 33/11 KV
substation for extending supply to the applicant, the Distribution Licensee
shall estimate the cost of the works involved in the same way as indicated in
sub-clause 6(b) above.
(c) In case of applications
where there is a need to erect a new 33/11 KV substation in order to extend
supply to an individual applicant, the Distribution Licensee shall estimate the
cost of such substation as per the latest cost data published by the
Distribution Licensee.
8. Specific provision for Extra High
Tension Supply
The
following provisions shall apply for extra high tension supply
(a) In case of applications
for new connections, where such supply requires only extension of Extra High
Tension line from the existing transmission substation to the consumer's
premises, the distribution licensee shall estimate the cost of such line and
the cost of terminal and metering arrangements at the premises of the consumer,
but not including the cost of meter and Current Transformer and/or Potential
Transformer used for metering. The distribution licensee shall estimate the
cost of line on per kilometer basis and the cost of metering arrangements based
on the latest cost data as published by the transmission licensee.
(b) In case of applications
where it is required to erect a new power transformer or augment the capacity
of existing Power transformer with or without bay extension at a transmission
substation, for extending supply to the applicant, the licensee shall estimate
the cost of the works involved in the same way as indicated in sub-clause 6(b)
above.
9. Standard
cost data
(1) The
Distribution licensee shall on an annual basis publish a cost data book by 1st April
of the year, which shall be the basis of making the initial estimate for
erection of electric line or electrical plant in order to extend supply to the
applicant.
(2) The
Distribution licensee shall make available the copies of the cost data book to
the general public on demand at a reasonable charge.
10.
Security for providing electric line or electrical plant
The
Distribution licensee is authorized to demand security from the applicants for
the purpose of erecting electric line or electrical plant for extending supply,
as per the Regulation prescribed under section 47 of the Act.
11. Manner of accounting and adjustments
(1) The Distribution
licensee shall maintain records of all expenditure actually incurred by him in
extending supply to the applicant and shall carry out the adjustments for
security, recovery of excess expenditure or refunds thereof, in accordance with
the Regulation prescribed under section 47 of the Act.
(2) The Distribution
licensee shall account, under appropriate account heads, all charges recovered
by him for erection of electric line for extending supply to the applicant
seeking new connection. The amounts so recovered shall be deducted from the
Gross Fixed Assets to arrive at the value of Net Fixed Assets.
(3) The Distribution
licensee shall complete the finalisation of expenses
and adjustment for differences and present the detailed statement of expenses
to the consumer within a period of one month from the date of release of
supply. “
2. The following are the
common grounds made in the petitions:
(a) Differential
treatment of similarly placed consumers:
The provisions of the Regulation as it stands now
provide for differential treatment of two consumers similarly placed, one seeking a
connection for supply of electricity when erection of new electric line and/or
electrical plant is required and is therefore required to pay charges therefor, and another who can be provided with a connection
without the necessity of erection of new electric line and/or electrical plant
and is therefore, not required to pay such charges. This will also act as dis-incentive
for the distribution licensees like the petitioners, against planning the
system for adequate load growth by incurring expenditure, in anticipation of
new consumers. Therefore, in order to
avoid the discrimination and to encourage the licensees to provide spare capacity
in the system for adequate load growth, the development charges or charges for
supply should be collected from every consumer seeking supply of electricity irrespective of whether
the capacity is available or a new electric line and/or electrical plant is
required to create new capacity.
(b) Difficulty
in maintaining separate records for each of the distribution transformers or
lines:
The
existing data on assets and the existing recording system makes it difficult
for the licensees to maintain separate records for each of the plants,
transformers or lines. Further, a
provision for case-to-case determination of costs creates potential for misuse.
(c ) The
petitioners have also submitted a detailed Note on the conceptual issue of cost
recovery through “deep” or “shallow” charges and opting for a partial cost “Shallowish” pricing based on average cost.
3. Pending consideration, each of the four
petitioners filed an interlocutory petition seeking grant of interim orders
allowing them to continue to recover Service Line Charges and Development
Charges as per the rates prevalent prior to the notification of Regulation No.
3 of 2004.
4. After hearing the petitioners and after
due consideration, the Commission by its Order dated 19-02-2005 suspended operation
of clauses 5 to 11 of the Regulation with immediate effect subject to final
result of the main review petitions to avoid any possible discrimination in
implementation of the said provisions,
entitling the petitioners to collect charges during the period of
suspension of the said provisions, which they were collecting prior to the
coming into force of the Regulation No. 3 of 2004.
5. Later, the Commission finding the
necessity to ascertain views of the consumers at large, issued on 28.04.2005,
notices along with copies of main petitions of all the four
petitioner-licensees, to the representative industrial and commercial
organizations, NGOs and Consumer groups, requesting to file their objections /
suggestions. The Commission received
comments / objections from 7 respondents.
The names of the organisations, etc., to whom
the notices were addressed and of the respondents who have submitted their
comments / objections are listed in Annexure-I to this Order. The objectors have stated that permitting the
proposed amendments to allow the petitioner-licensees to collect development
charges from all applicants for supply of power is detrimental to the
industrial growth in the State. The
Regulation No.3 of 2004 was notified by the Commission after public participation
and after taking into consideration the views of all the stakeholders
concerned, including the petitioners herein and as such the amendments sought
by petitioners are unwarranted. The
petitioners are expected to create their own infrastructure and to take steps
to deliver electricity at the doorstep of the consumers. Private generating companies are charging
such consumers only as per the Tariff Order and collecting one month’s
Consumption charges (as Security Deposit) by way of either post-dated cheque or bank guarantee.
In the last 50 years, the industrial consumers have paid the line
charges and now there exists a large capacity with no necessity to continue to
levy these charges any further. It
will be a heavy burden on power-intensive consumers who have to deposit huge
amounts, nearly as much as the cost of capital equipment, causing severe
financial burden on industry. Such huge
demand may compel consumers to leave the licensees, seeking supply from private
developers.
6. In response to those objections, all
the four petitioner-licensees have filed their counter comments and stated that
the amendments sought are to avoid discrimination among same class of
consumers. It is difficult for petitioners
to continuously add new loads without investment and expansion of infrastructure to
ensure reliable supply. The objectors
are attempting to mislead the Commission by exaggerating the cost. The cost involved for a power-intensive
consumer requiring supply of power even at 132 kV voltage
will require only half of what was estimated by the objectors. The development charges cannot be compared
with the capital cost. Amendments will
obviate practical difficulties in implementation of the Regulation. In response to the objection that licensees
are collecting the development charges whereas the power generating companies
are selling power to the consumers after obtaining just one month’s current
consumption charges with post-dated cheque or bank
guarantee, it is stated that power generating companies are not developing the
Transmission and
Distribution Systems and are using the existing Transmission
and Distribution Systems of the
petitioner-licensees.
7. In these circumstances, the point that arises for
consideration is
“whether any of the
provisions of Regulation No.3 of 2004 are required to be reviewed and amended.”
8. In order to appreciate the respective
contentions of the licensees and the objectors, it is necessary to go back and
look at the procedure in vogue prior to the issue of the Regulation.
9.
The erstwhile Andhra Pradesh State
Electricity Board (hereinafter, “the Board”),
the predecessor entity to the petitioner-licensees, was collecting
service line charges and Development charges in terms of clauses 7 and 8
respectively, of the Terms and Conditions of Supply notified by it in 1975,
and as amended from time to time. As per these provisions, the charges payable
by consumers for new and / or additional loads under LT and HT shall be at the
rates notified by the Board from time to time.
These charges were to be paid in advance, failing which the works for
extension of supply would not be taken up.
The last notification specifying the rates of service line charges and
development charges was issued by the Board in April 1997 vide B.P.Ms.No.8
dated 28.04.1997, before its restructuring effective from 01.02.1999 under the
A.P. Electricity Reform Act, 1998. The
APTRANSCO (Transmission Corporation of Andhra Pradesh Limited) and the petitioner-licensees,
the successor entities of the erstwhile Board, followed the same terms and conditions as per condition
12 of the provisional licence granted to APTRANSCO by
Government of Andhra Pradesh vide G.O.Ms.No.11 dated 30.01.1999, and also as
per licences granted by the Commission. Subsequently, in letter dated 28.05.2001, the
Chairman-cum-Managing Director, APTRANSCO (who was also the Chairman of the
petitioner-licensees) informed the Commission that revised service line charges
had been notified in T.O.O. (Comml.) No.49 dated
26.05.2001 and that the development charges notified earlier by the erstwhile
Board in B.P.Ms.No.8 dated 28.04.1997, will remain un-changed.
10. Meanwhile,
the Electricity Act, 2003,
came into force on 10.06.2003.
Section 46 of the said Act provides that “The State Commission may,
by regulations, authorise a distribution licensee to
charge from a person requiring a supply of electricity in pursuance of section
43 any expenses reasonably incurred in providing any electric line or
electrical plant used for the purpose of giving that supply.” The Commission having considered it necessary
to specify the procedure for recovery of the above expenses, formulated a draft
Regulation and published the same in A.P.Gazette
dated 02.01.2004 seeking comments / suggestions from interested persons. The final Regulation, namely, the
aforementioned Regulation No.3 of 2004, was notified, after considering all the
suggestions received, on 05.03.2004 and came into force from 05.06.2004.
11. The
Regulation enabled the Licensee to recover
(i)
the estimated
cost of the service line to be laid (excluding cost of meter) for extending
supply to an applicant; and
(ii)
the proportionate cost of new electric plant to be
erected for extending supply to the applicant, with reference to the load requisitioned
and capacity of the Distribution Transformer.
12. The Regulation prohibits licensees from collecting any charges other than those permitted in the Regulation.
13. The
grievance of the petitioner-licensees pertains mainly to the provision in
respect of the development charges (as the charges were called earlier) and
they have no grievance insofar as the charges towards erection of line (earlier
called as Service Line charges). Thus,
the issue for consideration of the Commission is limited only to the collection
of (development) charges towards providing the electric plant, normally
understood as transformation capacity with necessary switchgear, etc., for
providing supply to an applicant, wherever such works are
necessary. The important point raised by
the petitioners is about the discrimination among the same class of applicants
in two different circumstances and the difficulties arising in handling with
such situations. The Commission
recognizes the difficulty expressed by the petitioner-licensees in tracking the
available capacities at various transformation points and the problems
associated with demanding the charges on such basis. From the point of view of the difficulties in
keeping track of the available capacities and also the discrimination between
the same class of consumers, the Commission is of the view that a common charge
which is uniformly applicable to all the applicants irrespective of the
availability or otherwise of capacity, would be more rational and would
eliminate the vice of discrimination.
Regarding justification for such collection, the fact remains that the licensee have incurred the expenditure in upstream network
right up to the distribution mains from which service line and / or further
transformation facility as may be required is provided to enable extension of
supply to the applicants. The
petitioner-distribution companies have confirmed that the contributions so made
by the applicants are accounted for in the assets and these are deducted from
the capital base for the purpose of charging interest on loans as well as the
return on equity. Thus the collection of the expenditure incurred in the
upstream network up to the distribution mains on a uniform basis from all the
consumers is considered reasonable. Further,
there is no double compensation provided to the licensees because of the
contributions by the consumers.
Regarding the rates of charges and the basis for determining the rates
proposed by the petitioner-licensees, the Commission is of the view that this
matter needs to be considered separately with the petitioner-licensees
providing the Commission with necessary data.
The Commission, however, takes note of proposal of petitioner-licensees
to reduce the development charges in respect of applicants seeking to avail
supply at 33 kV and above. As regards
the objectors’ contention about the quantum and mode of Security Deposit, it
has no relevance to the present petitions and is therefore not considered now.
14. Therefore, for all these reasons, the
Commission is of the view that clauses 5 to 11 of Regulation No.3 of 2004 are
required to be deleted permanently and are accordingly deleted with effect from
the date the Regulation No.3 of 2004 came into force entitling the petitioners
to collect Service Line Charges and Development Charges which they were
collecting prior to coming into force of this Regulation. Further, taking note of the
petitioner-licensees’ offer to reduce the development charges in respect of
those seeking supply at 33 kV and above, without any change for supply at less
than 33 kV, as detailed in Annexure-II,
these rates, being lower, shall apply with effect from the aforementioned date
of deletion of clauses 5 to 11 of the Regulation No.3 of 2004 and shall remain
applicable till a separate Regulation
under Section 46 of the Electricity Act, 2003 is issued by the Commission. To facilitate this, the petitioner-licensees
are directed to file all relevant data with the Commission within 60 days of
the issue of this Order.
15. In the result, the petitions are allowed accordingly.
This order is corrected and signed
on this 24th day of August, 2005.
|
Sd/- |
Sd/- |
Sd/- |
|
Surinder Pal |
K. Sreerama Murthy |
K. Swaminathan |
|
Member |
Member |
Chairman |
CERTIFIED COPY
ANNEXURE-I
|
A - List of Organizations to whom notices were issued. |
|||
|
1 |
The Federation of Andhra Pradesh
Chambers of Commerce & Industry (FAPCCI) 11-6-841, Red Hills, |
2 |
Confederation of Indian
Industry, A.P.State, H.No. 544, Arora Colony, Road No. 3, Banjara
Hills, |
|
3 |
Rashtriya Raithu Seva Samithi, P.Kothakota, Via Pakala, Chittoor
District |
4 |
People’s Monitoring Group on
Electricity Regulation, C/o Centre for Environment Concerns, 3-4-142/6, Barkatpura, Hyderabad-13 |
|
5 |
Jana Vignana
Vedika, 6-3-634, Green Channel House, Khairatabad, |
6 |
Human Rights Forum, 3-12-117/A2/1, P.S.Colony, Ramanthapur, |
|
7 |
Loksatta, 401-408, Dwarakapuri Colony,
Punjagutta, |
8 |
All State Executive Committee of
Andhra Pradesh, 1-9-295/11/4, Masjid Road, Vidyanagar, |
|
9 |
A.P.Rytu Sangham, 1-1-9/10, Jawaharnagar, RTC X Roads, Musheerabad, |
10 |
A.P.Electricity
Consumers Forum, 33-10-14, Seetharamapuram,
|
|
B – List
of Organisations and others who submitted
objections / suggestions |
|
|
1 |
Rashtriya Raithu Seva Samithi,
P.Kothakota, Via Pakala, Chittoor District. |
|
2 |
A.P.Electricity
Consumers Forum, 33-10-14, Seetharamapuram, |
|
3 |
People’s Monitoring Group on
Electricity Regulation, C/o Centre for Environment Concerns, 3-4-142/6, Barkatpura, Hyderabad-13 |
|
4 |
M/s Shivam
Smelters Pvt. Ltd. Survey No. 358 / 1, Gajuwel, Medak. |
|
5 |
M/s All |
|
6 |
M/s Sarwottam
Ispat Limited, Flat No. 5,7,8
& 9; I.E Medchal. |
|
7 |
M/s MMG Steels Pvt. Ltd., Plot
No. 14, IDA, Bollaram, Medak. |
Annexure – II
Schedule of development charges as proposed by petitioners
|
Tariff
Category |
Category
of Service |
Existing
Development Charges |
Proposed
Development Charges |
|
HT |
HT
Services |
Rs 1,500 per kVA or part thereof, of the
Contracted Demand |
11kV --- Rs 1,500 per kVA or part
thereof, of the Contracted Demand |
|
LT I |
Domestic
Services |
A) For
SC/ ST --- Rs 100/- B) For
Others --- Rs 300/- Rs 1,000 per Service Rs. 1,000 + Rs. 1,000 per kW or part thereof
of Contracted Load |
A) For
SC/ ST --- Rs 100/- B) For
Others --- Rs 300/- Rs 1,000 per Service Rs. 1,000 + Rs. 1,000 per kW or part thereof
of Contracted Load |
|
LT-II |
Non-Domestic
Commercial Services |
Rs. 2,000 per kW or part thereof of Contracted load |
Rs. 2,000 per kW or part thereof of Contracted load |
|
LT-III |
Industrial
Services |
Rs. 1,500 per HP or part thereof of Contracted Load |
Rs. 1,500 per HP or part thereof of Contracted Load |
|
LT-IV |
Cottage
Industries |
Rs. 1,500 per HP or part thereof of Contracted Load |
Rs. 1,500 per HP or part thereof of Contracted Load |
|
LT-VI |
LOCAL
BODIES |
|
|
|
|
A) Public
Lighting |
Rs. 1,000 per HP or part thereof of Contracted Load |
Rs. 1,000 per HP or part thereof of Contracted Load |
|
|
B) PWS
Schemes II) Municiplaities and Corporations |
|
|
|
LT-VII |
General
Purposes |
Rs. 2,000 per HP or part thereof of Contracted Load |
Rs. 2,000 per HP or part thereof of Contracted Load |
|
|
Multistoried
Domestic & Commercial complexes, New Housing Colonies of Urban
Development Authorities |
Rs. 1,000 per kW or part thereof of Contracted Load for Domestic Complex |
Rs. 1,000 per kW or part thereof of Contracted Load for Domestic Complex Rs. 2,000 per kW or part thereof of Contracted Load for Commercial
Complex |