Sri Surinder Pal, Member
Sri R. Radha Kishen, Member
Dated:
20-03-2007
O.P. No. 31 of 2006
1. The Anakapalli Rural Electric Co-operative Society Limited
has been exempted from the requirement of obtaining a Distribution and Retail
Supply Licence for the supply area specified in the Licence granted to it
earlier under AP Electricity Reform Act, 1998 for one year, from 10-06-2004 to
09-06-2005 as per the orders of the Commission dated 15-06-2004, which has been
extended further up to 31.03.2008. As
per terms and conditions contained in the said exemption orders, the RESCO is
required to file its ARR / ERC for the ensuing year by 30th November
of each year.
2. The RESCO filed its ARR/ERC
for the year 2007-08 on 22nd November, 2006. The ARR/ERC filings by the RESCO were found
to be deficient in certain aspects and therefore, clarifications were sought
from it. The Staff of the Commission
were asked to discuss certain issues related to the ARR/ERC computations with
the officials of RESCO on 08-02-2007. The Staff placed before the Commission the clarifications made
available and further details furnished by the RESCO, along with their own
comments /findings.
3. The Commission analyzed the
RESCO’s filings for 2007-08, and considered the additional information
submitted and clarifications provided by the RESCO. The Commission’s decisions
thereon are detailed herein below:
4. REVENUE
REQUIREMENT
(a) CAPITAL BASE
(i) Original Cost of Fixed Assets (OCFA) and
Capital Works – in - Progress (CWIP):
The RESCO has projected Rs.3,674.93 lakhs under
OCFA and Rs. 127.48 lakhs under CWIP in its ARR / ERC filings for 2007-08.
Based on the audited accounts for the year 2005-06, the approved ARR for FY
2006-07 and projections for the ensuing year submitted by the RESCO, the OCFA
is arrived at Rs.3,442.91 lakhs, after adjustment of consumer contributions and
grants from other sources received by the RESCO. CWIP figure has been
calculated and fixed at Rs.156.93 lakhs.
(ii) Working
Capital consists of
(a) Average Cost of Store, and
(b) Average Cash and Bank Balances
The RESCO has projected Rs. 3.00 lakhs towards
average cost of stores and Rs. 36.00 lakhs towards average cash and bank
balance. The Commission admits Rs. 2.92
lakhs towards average cost of stores representing one month’s average repairs
and maintenance expenses and Rs.37.83 lakhs towards average cash and bank
balance representing one month’s all other expenses excluding the power
purchase cost.
(iii) Accumulated Depreciation:
The amount projected by the RESCO (Rs. 1662.80
lakhs) in the filing has been accepted without change, based on the latest
audited accounts for the year 2005-06 and the projections for the current year
and the ensuing year.
(iv) Other items:
The projections by the RESCO towards Consumer
Security Deposits (Rs.94.00 lakhs) and Interest on consumer security deposits
(Rs. 28.04 lakhs) have been accepted without change. The RESCO has not paid the
interest on consumer security deposits to consumers. Hence, the Commission has
reckoned the fully unpaid amount till FY 2006-07 under the negative elements of
Capital Base. Development / Tariff & Dividend Reserve (Rs. 85.60 lakhs) has
been allowed as per the filings. The
RESCO has pre-closed its loans from REC and the Public Enterprises Department,
Government. of A.P.
(v) Summary
of Capital Base:
With the above changes, the Net Capital Base of Rs.
1,970.97 lakhs projected by the RESCO comes down to Rs. 1,770.15 lakhs as per
the details given in the following table:
Table- 1
Statement of Capital
Base
(Rs. in lakhs)
|
Sl. No. |
Positive elements |
RESCO |
APERC |
|
1 |
Original Cost of Fixed Assets |
3674.93 |
3442.91 |
|
2 |
Capital Works in Progress |
127.48 |
156.93 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of Stores |
3.00 |
2.92 |
|
|
b) Avg Cash and Bank balance |
36.00 |
37.83 |
|
A |
Total of positive elements of
Capital Base |
3841.41 |
3640.59 |
|
|
Negative Elements |
|
|
|
1 |
Accumulated Depreciation |
1662.80 |
1662.80 |
|
2 |
Approved Loans |
0.00 |
0.00 |
|
3 |
Consumer Security Deposit |
94.00 |
94.00 |
|
4 |
Interest on consumer security deposits |
28.04 |
28.04 |
|
5 |
Development/Tariff & Dividend Reserve |
85.60 |
85.60 |
|
B |
Total of negative elements of
Capital Base |
1870.44 |
1870.44 |
|
|
Net Capital Base (A-B) |
1970.97 |
1770.15 |
(c)
Expenditure
Items:
(i) Wages
and Salaries:
The RESCO made a projection of Rs.370.00 lakhs
under this head which has been revised
to Rs.350.00 lakhs after discussion with the officials of the RESCO.
(ii) Administration
and General Expenses and Repairs and Maintenance:
The RESCO made projections of Rs.45.00 lakhs and
Rs. 40.00 lakhs under these heads, which have been pruned down to Rs.15.00
lakhs and Rs.35.00 lakhs respectively based on the audited accounts for the
year 2005-06 and approved ARR for FY 2006-07.
(iii) Rent, Rates & Taxes:
The RESCO has projected Rs.2.50 lakhs towards Rent,
Rates & Taxes, which has been accepted without any change, based on the
audited accounts for the year 2005-06 and approved ARR for FY 2006-07.
(iv) Depreciation:
The RESCO has projected Rs. 212.65 lakhs towards
depreciation, which has been accepted without any change, based on the audited
accounts for the year 2005-06 and approved ARR for FY 2006-07.
(v) Contributions to Contingencies Reserve:
Since
the RESCO has already accumulated more than 5% of Original Cost of Fixed Assets
(OCFA) as the Contingencies Reserve, the maximum admissible as per the
provisions of the Sixth Schedule to the Electricity (Supply) Act, 1948, the
projection of the RESCO under Contributions to Contingencies Reserve (Rs.8.00
lakhs) has not been considered. The RESCO has a Development / Tariff &
Dividend Reserve of Rs.85.60 lakhs and Contingencies Reserve of Rs. 93.13 lakhs
as on 31.03.2006 which works out to Rs.178.73 lakhs out of which, the
Commission notes that, Rs.93.13 lakhs are in the RESCO in the form of Fixed
Deposits in Bank.
The Commission regrets that the RESCO has not
invested all the sums appropriated to the Contingencies Reserve in
securities authorized under the Indian Trusts Act, 1882. Accordingly, therefore,
The Commission directs that the RESCO shall deposit the sums appropriated to the Contingencies Reserve in securities authorized under the Indian Trusts Act,1882, and such investment shall be made within a period of 6 months of the close of the year of accounts in which such appropriation is made. The sums already deposited otherwise shall be deposited in such securities immediately after the expiry of the maturity periods of the present deposits/securities.
(vi) Other
expenditure items:
The
projections of the RESCO under Contribution to Employee Funds (Rs. 45.00
lakhs), and Interest on Security Deposits (Rs 0.00 lakh ) have been adjusted to the actual calculated
figures of Rs. 45.50 lakhs, and Rs. 5.64 lakhs respectively, based on
prescribed norms. Legal charges (Rs. 1.50 lakhs) has been reduced to Rs. 1.00
lakh. Auditors’ Fees (Rs.7.00 lakhs)
has been reduced to Rs. 6.00 lakhs. Other expenses (Rs. 32.00 lakhs) has not
been considered based on the audited accounts for the year 2005-06.
(vii) Total expenditure:
Based on the above changes, the total expenditure
(exclusive of expenditure on power purchase) works out to Rs. 673.29 lakhs as
against the RESCO's projection of Rs. 763.65 lakhs as detailed in the following
Table:
Table – 2
Statement of Expenditure
(Rs. in lakhs)
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
370.00 |
350.00 |
|
2 |
Admn & General Expenses |
45.00 |
15.00 |
|
3 |
Repairs and Maintenance |
40.00 |
35.00 |
|
4 |
Rent, Rates & Taxes |
2.50 |
2.50 |
|
5 |
Approved Loan Interest |
0.00 |
0.00 |
|
6 |
Depreciation |
212.65 |
212.65 |
|
7 |
Contbn. to Employee Funds |
45.00 |
45.50 |
|
8 |
Contbn. to Contingency Reserve |
8.00 |
0.00 |
|
9 |
Interest on Security Deposit |
0.00 |
5.64 |
|
10 |
Legal Charges |
1.50 |
1.00 |
|
11 |
Auditors' Fees |
7.00 |
6.00 |
|
12 |
Other Expenses |
32.00 |
0.00 |
|
13 |
Total Expenditure (excluding purchase of energy) |
763.65 |
673.29 |
(c) Reasonable Return:
Based on the above changes to the Capital Base
(accepted by the RESCO), the reasonable return woks out to Rs. 283.22 lakhs as
against Rs. 315.78 lakhs projected by it.
The RESCO has projected an amount of Rs. 217.00
lakhs (including customer charges) under this head and the Commission has
accepted the same.
(e) The Revenue Requirement for
the FY 2007-08
(Excluding power purchase cost)
The Aggregate Revenue Requirement (excluding power
purchase cost) works out to Rs. 739.51
lakhs as against Rs. 862.43 lakhs projected by the RESCO. This is after taking
into account the Reasonable Return of
Rs. 283.22 lakhs and Non-Tariff income of Rs. 217.00 lakhs.
f) Efficiency
Gains:
The Commission desires that the RESCO should make better efforts to
improve its efficiency and collect arrears. The Commission is also of the view
that the RESCO can achieve efficiency gains of Rs.23.00 lakhs, considering its
total power demand of 115 MU and efficiency achieved during the last seven
years. The same level of efficiency
gains has been adopted by the Commission to arrive at a Net Revenue Requirement
of Rs. 716.51 lakhs.
(g) Expected
revenue from charges (ERC)
The RESCO has filed the ERC at Rs.1469.95 lakhs
(excluding customer charges) based on current tariff rates effective from
01-04-2006 except for Agricultural category, where the revenue has been revised
by the RESCO as per new modified Agricultural policy of Government of Andhra
Pradesh. This is adopted for the
calculation of amount available with the RESCO for power purchases. Category-wise sales and revenue projected by
the RESCO and as approved by the Commission are given in the table below:
Table – 3
Category -wise Sales and Revenue
|
Sl. No. |
CATEGORY |
RESCO |
APERC |
||
|
Sales |
Revenue |
Sales |
Revenue |
||
|
|
|
(MU) |
(Rs. lakhs) |
(MU) |
(Rs. lakhs) |
|
1 |
LT I – Domestic |
37.47 |
701.30 |
37.47 |
701.30 |
|
2 |
LT II - Non-Domestic |
4.12 |
225.55 |
4.12 |
225.55 |
|
3 |
LT III - Industrial |
10.30 |
451.21 |
10.30 |
451.20 |
|
4 |
LT IV - Cottage Industries |
0.01 |
1.98 |
0.01 |
1.98 |
|
5 |
LT V - Irrigation and Agriculture |
40.18 |
21.09 |
40.18 |
21.09 |
|
6 |
LT VI - Local Bodies, Street Lighting |
2.34 |
39.55 |
2.34 |
39.55 |
|
7 |
LT VI B - PWS schemes |
2.79 |
6.94 |
2.79 |
6.94 |
|
8 |
LT VII - General Purpose |
0.52 |
20.72 |
0.52 |
20.72 |
|
9 |
LT VIII - Temporary Supply |
0.03 |
1.61 |
0.03 |
1.61 |
|
|
Total |
97.75 |
1469.95 |
97.75 |
1469.95 |
(h) Amount
available with the RESCO for power purchases
The amount available with the RESCO for power purchase has been computed
at Rs. 753.44 lakhs as per details given below:
Table – 4
Amount
available with RESCO for power purchases
(Rs. in lakhs)
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Expenditure |
763.65 |
673.29 |
|
2 |
Reasonable
Return |
315.78 |
283.22 |
|
3 |
Less:
Non-Tariff income |
217.00 |
217.00 |
|
4 |
Revenue Requirement (1+2-3) |
862.43 |
739.51 |
|
5 |
Less:
Efficiency Gains |
0.00 |
23.00 |
|
6 |
Net Revenue Requirement (4 - 5) |
862.43 |
716.51 |
|
7 |
Revenue from sale of Power |
1469.95 |
1469.95 |
|
8 |
Amount available for Power Purchase (7-6) |
607.52 |
753.44 |
|
|
|
|
|
|
|
Units to be purchased (in MU) |
115.00 |
115.00 |
|
|
Power purchase price : Re/Unit |
0.53 |
0.66 |
The RESCO has projected purchase of 115.00 MU
(gross) during 2007-08. The Commission accepts the volume of 115.00 MU
(gross) as projected.
Based on the above-mentioned power purchases of
115.00 MU, the power purchase price for the RESCO works out to 66 paise per
unit of energy to be supplied by the APEPDCL during 2007-08. However, for any
additional purchase over and above the limit specified in paragraph 5 above,
the RESCO has to pay at the power purchase price for excess drawals by APEPDCL
or at the average power purchase price applicable to APEPDCL when the
additional purchase by the RESCO does not result in excess drawal by the
DISCOM, as the case may be. The RESCO
shall follow all the guidelines / regulations applicable to Licensees for power
purchases.
7. Tariffs
The RESCO shall charge Tariffs as per the
Commission’s Order in O.P.Nos. 33 to 36 of 2006 dated 20-03-2007 on Retail
Supply Tariffs for 2007-08, issued separately, as applicable in the case of
APEPDCL. The RESCO shall also comply with all Directives contained in that
Order insofar as those are applicable to it.
8. Commission’s Directives for FY 2007-08:
The Commission
directs that the RESCO shall comply with all ongoing directives and further
directs that RESCO should devise a special action plan and make concerted
efforts on the important issues cited below and file reports on status of compliance
thereto at the end of every quarter during FY 2007-08:
(i)
The RESCO shall fix meters to all
services including new agricultural consumers by the end of FY 2007-08
(directed in part vide paragraph 7 of list of Commission’s directives in ARR
orders for FY 2000-01 and FY 2001-02) and file quarterly status reports on
metering. RESCO shall also file a
metering plan to fix meters to all agricultural consumers by June, 2007.
(ii)
The RESCO shall build the sales
database for the entire RESCO as directed in paragraph 4.7.1 of the
Commission’s Order on the RESCO’s ARR/ERC filings for FY 2002-03.
(iii)
In continuation to Commission’s
directives on collection of arrears in the Commission’s Order on the RESCO’s
ARR/ERC filings for FY 2000-01 and FY 2001-02, the Commission directs that the
RESCO shall collect 100% of outstanding dues, as at 31-03-2007, from
consumers.
(iv)
The RESCO shall collect 100% current
consumption charges and effect immediate disconnection for consumers with
pending dues (including arrears) of more than two months’ current billing
amount.
(v)
The RESCO shall regularly pay the
full amount due to EPDCL for power purchase at the rate fixed by the
Commission, failing which the EPDCL shall stop power supply to the RESCO
immediately.
(vi)
The RESCO shall limit agricultural
consumption to 40.18MU in FY 2007-08.
(vii)
The prevailing loss level for
calculation of power purchase has been taken at 15.00%. The RESCO shall put in its best efforts to
bring down the losses to 14.50% by the end of FY 2007-08.
(viii)
The RESCO shall bring down
Transformer failure to 8 % per annum by the end of FY 2007-08.
(ix)
The RESCO shall identify and
disconnect multiple connections (in Domestic and Commercial categories) to the
same premises (meant for the same family / organization).
(x)
The RESCO shall conduct energy audit
in all Mandal headquarters in its licensed area and file quarterly reports,
also indicating therein the progress made month-wise.
(xi)
The Commission also takes serious
note of the RESCO not paying interest on security deposits, and directs that it
should pay all arrears on this account by 31st July, 2007, and
henceforth pay it on regular basis.
9. The
Commission does not consider the RESCO’s expenditure / revenue calculations as
filed to be in accordance with the requirement. The Commission has instead proposed alternative calculations for
the ARR / ERC and the rates for power purchases from APEPDCL which the RESCO
shall accept and implement as contained in this order.
This
order is signed on this 20th March, 2007.
|
Sd/- |
Sd/- |
Sd/- |
|
(R.RADHA KISHEN) |
(SURINDER PAL) |
(K.SWAMINATHAN) |
|
MEMBER |
MEMBER |
CHAIRMAN |
CERTIFIED
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