Sri K Sreerama Murthy, Member
Sri Surinder Pal, Member
Dated:
O.P.
No. 05 of 2005
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
2. The
RESCO filed its ARR/ERC for the year 2005-06 on
3. The
Commission analyzed the RESCO’s filings and the
representations made to the Commission in the filings, and considered the
additional information submitted and clarifications provided by the RESCO. The
Commission’s decisions thereon are detailed herein.
4.
REVENUE REQUIREMENT
(a) CAPITAL BASE
(i)
Original Cost of Fixed Assets (OCFA)
and Capital Works – in - progress (CWIP):
The
RESCO has projected Rs.2,825.49 lakhs under OCFA
and Rs.
214.78 lakhs under CWIP in the ARR / ERC filings for
the year 2005-06. Based on the audited accounts for the year 2003-04 and the
approved ARR for FY 2004-05 and projections for the ensuing year submitted by
the RESCO, the OCFA is arrived at Rs.2,750.49 lakhs,
after adjustment of consumer
contributions and grants from other sources received by the RESCO.
(ii) Working Capital:
(a) Average Cost of
Stores
(b) Average Cash and
Bank Balances
The
RESCO has projected Rs. 2.50 lakhs
towards average cost of stores and Rs. 32.00 lakhs towards average cash and bank balance. The Commission admits Rs.2.67 lakhs towards average cost of stores representing one
month’s average repairs and maintenance expenses and Rs.32.86 lakhs towards average cash and bank balance representing
one month’s all other expenses excluding power purchase cost.
(iii) Accumulated Depreciation:
The
figure projected by the RESCO (Rs. 1,234.82 lakhs) in the filing has been accepted without change,
based on the latest audited accounts for the year 2003-04 and the projections
for the current year and the ensuing year.
(iv) Other items:
The
projections by the RESCO towards Consumer Security Deposits (Rs.75.35 lakhs) and Development / Tariff & Dividend Reserve (Rs.85.60
lakhs) have been allowed as per its filing. Interest on consumer security deposits
(Rs.18.41 lakhs) has not, however, been considered on
the negative side of capital base. The
RESCO has pre-closed its loans from REC and loans from Public Enterprises
Department, Govt. of A.P.
(v) Summary of Capital Base:
With
the above changes, the Net Capital Base of Rs.
1,660.59 lakhs projected by the RESCO comes down to Rs. 1605.03 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 |
2825.49 |
2750.49 |
|
2 |
Capital Works in Progress |
214.78 |
214.78 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of Stores |
2.50 |
2.67 |
|
|
b) Avg Cash and Bank balance |
32.00 |
32.86 |
|
A |
Total of positive
elements of Capital Base |
3074.77 |
3000.80 |
|
|
Negative Elements |
|
|
|
1 |
Accumulated Depreciation |
1234.82 |
1234.82 |
|
2 |
Approved Loans |
0.00 |
0.00 |
|
3 |
Consumer Security Deposit |
75.35 |
75.35 |
|
4 |
Interest on consumer security deposits |
18.41 |
0.00 |
|
5 |
Development/Tariff & Dividend Reserve |
85.60 |
85.60 |
|
B |
Total of negative
elements of Capital Base |
1414.18 |
1395.77 |
|
|
Net Capital Base (A-B) |
1660.59 |
1605.03 |
(b) Expenditure Items
(i) Wages
and Salaries:
The
RESCO made a projection of Rs.265.00 lakhs. Based on
the additional information furnished, an amount of Rs.262.00 lakhs is approved by the Commission under this Head.
(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 are reduced to Rs.38.00 lakhs and Rs.32.00 lakhs respectively based on the audited accounts for the
year 2003-04 and approved ARR for FY 2004-05.
(iii)
Other expenditure items :
The
projections of the RESCO under Rent, Rates & Taxes (Rs.
2.50 lakhs), legal charges (Rs.
1.00 lakh) and Auditors' Fees (Rs.
4.50 lakhs) have been allowed without any change
based on past trend. Depreciation (Rs.154.00 lakhs),
Contribution to Employee funds (Rs.40.00 lakhs),
Contribution to Contingencies Reserve (Rs. 5.00 lakhs), Interest on Security Deposits (Rs. 2.10 lakhs) and other expenses (Rs.30.00 lakhs)
have been adjusted to the actual calculated figures of Rs.154.38 lakhs, Rs.36.00 lakhs, Rs.6.88 lakhs, Rs.4.52 lakhs and Rs.19.30
lakhs respectively based on prescribed norms.
(iv) Total expenditure:
Based
on the above changes, the total expenditure (exclusive of expenditure on power
purchase) works out to Rs. 561.08 lakhs
as against the RESCO's projection of Rs. 589.10 lakhs as detailed
below:
Table – 2
Statement of
Expenditure
Rs.
in Lakhs
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
265.00 |
262.00 |
|
2 |
Admn & General Expenses |
45.00 |
38.00 |
|
3 |
Repairs and Maintenance |
40.00 |
32.00 |
|
4 |
Rent, Rates & Taxes |
2.50 |
2.50 |
|
5 |
Approved Loan Interest |
0.00 |
0.00 |
|
6 |
Depreciation |
154.00 |
154.38 |
|
7 |
Contbn. to Employee Funds |
40.00 |
36.00 |
|
8 |
Contbn. to Contingency Reserve |
5.00 |
6.88 |
|
9 |
Interest on Security Deposit |
2.10 |
4.52 |
|
10 |
Legal Charges |
1.00 |
1.00 |
|
11 |
Auditors' Fees |
4.50 |
4.50 |
|
12 |
Other Expenses |
30.00 |
19.30 |
|
13 |
Total Expenditure (excluding purchase of energy) |
589.10 |
561.08 |
(c) Reasonable Return:
Based on the
above changes to the Capital Base (accepted by the RESCO), the reasonable return
woks out to Rs.256.80 lakhs as against Rs.266.12 lakhs projected by it.
The RESCO has
projected an amount of Rs. 201.20 lakhs
(including customer charges) under this head and the Commission has accepted
the same.
(e) The Revenue Requirement for the FY 2005-06
(Excluding power purchase cost)
The Aggregate
Revenue Requirement (excluding power purchase cost) works out to Rs. 616.68 lakhs as against Rs. 654.02 lakhs projected by the RESCO. This is after taking into
account the Reasonable Return of Rs. 256.80 lakhs and Non-Tariff income of Rs.201.20 lakhs.
(f) Efficiency Gains:
The RESCO has not projected any
efficiency gains for FY 2005-06. The
Commission desires that the RESCO should improve its efficiency to reduce losses
and collect all the outstanding arrears towards sale of energy. The Commission has fixed Rs.20.00 lakhs towards the efficiency gains, considering its total
power demand of 90 MU and efficiency already achieved during the last five
years. Thus, the net aggregate revenue requirement works out to Rs.596.68 lakhs.
(g) Expected revenue from charges:
The RESCO has
filed the Expected Revenue from Charges at Rs.1187.21 lakhs
(excluding customer charges) based on current Tariff Rates effective from
01-04-2004 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. |
|
RESCO |
APERC |
||
|
No. |
CATEGORY |
Sales |
Revenue |
Sales |
Revenue |
|
|
|
MU |
Rs. Lakhs |
MU |
Rs. Lakhs |
|
1 |
LT I - Domestic |
32.33 |
595.66 |
32.33 |
595.66 |
|
2 |
LT II - Non-Domestic |
3.36 |
180.82 |
3.36 |
180.82 |
|
3 |
LT III - Industrial |
7.30 |
338.68 |
7.30 |
338.68 |
|
4 |
LT IV - Cottage Industries |
0.03 |
0.61 |
0.03 |
0.61 |
|
5 |
LT V - Irrigation and Agriculture |
28.75 |
8.86 |
28.75 |
8.86 |
|
6 |
LT VI - Local Bodies, Street Lighting |
2.14 |
36.14 |
2.14 |
36.14 |
|
7 |
LT VI B - PWS schemes |
1.57 |
5.30 |
1.57 |
5.30 |
|
8 |
LT VII - General Purpose |
0.43 |
17.17 |
0.43 |
17.17 |
|
9 |
LT VIII - Temporary Supply |
0.06 |
3.97 |
0.06 |
3.97 |
|
|
Total |
75.97 |
1187.21 |
75.97 |
1187.21 |
(h) Amount available with the
RESCO for power purchases
The amount available
with the RESCO for power purchases has been computed at Rs.
590.53 lakhs as against Rs.533.19 lakhs
computed by the RESCO. The details of
calculation are given in the following table :
Table – 4
Amount available with RESCO
for power purchases
Rs. in Lakhs
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Expenditure |
589.10 |
561.08 |
|
2 |
Reasonable
Return |
266.12 |
256.80 |
|
3 |
Less: Non-Tariff income |
201.20 |
201.20 |
|
4 |
Revenue Requirement (1+2-3) |
654.02 |
616.68 |
|
5 |
Less: Efficiency Gains |
0.00 |
20.00 |
|
6 |
Net Revenue Requirement (4 - 5) |
654.02 |
596.68 |
|
7 |
Revenue from sale of Power |
1187.21 |
1187.21 |
|
8 |
Amount available for Power Purchase (7-6) |
533.19 |
590.53 |
|
|
|
|
|
|
|
Units to be purchased (in MU) |
90.00 |
90.00 |
|
|
Power purchase price : Re/Unit |
0.59 |
0.66 |
The RESCO projected purchase of 90 MU (gross) during 2005-06. The Commission
accepts the projection made by the RESCO.
Based on the above (90.00 MU purchases), the power purchase price for
the RESCO works out to 66 paise per unit of energy
supplied by the APEPDCL for FY
2005-06. However,
for any additional purchase over and above the limit specified in paragraph 5
above, the RESCO has to pay at the power purchase rate for excess drawals by APEPDCL or at the Bulk Supply Tariff (BST)
applicable to APEPDCL if 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 Tariff Order for 2005-2006, dated:
8.
Compliance with Commission’s Directives
The Commission
reviewed the status of compliance to its directives issued to the RESCO in its
orders on ARR / ERC for the FY 2000-01, FY 2001-02, FY 2002-03 and FY
2004-05. Annexure - A shows a summary of
the status of compliance to the directives as reported by the RESCO. As can be seen therefrom,
many of the directives are ongoing in nature, and it was observed that the
RESCO is generally seeking to comply with the directives.
The Commission directs that the
RESCO shall continue to comply with such ongoing directives issued to the RESCO
in the ARR orders of the Commission for FY 2000-01, FY 2001-02 and FY 2002-03
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
2005-06:
(i)
The RESCO shall fix meters to all services
including new agricultural consumers by the end of FY 2005-06 (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
(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 31-03-2005, 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
28.75 MU inFY 2005-06.
(vii)
The prevailing loss level for calculation of power
purchase has been taken at 15.59%. The
RESCO shall put in its best efforts to
bring down the losses to 15.00% by the end of FY 2005-06.
(viii) The RESCO shall
bring down Transformer failure to 7 % per annum by the end of FY 2005-06.
(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.
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
|
Sd/- SURINDER PAL MEMBER |
Sd/- K. SREERAMA MURTHY MEMBER |
Sd/- K. SWAMINATHAN CHAIRMAN |
CERTIFIED COPY
ANNEXURE – A
COMPLIANCE TO DIRECTIVES ISSUED IN APERC ORDERS ON
ARR / ERC FILED BY THE RESCO FOR FY 2001-02,
2002-03 & 2003-04
|
Sl. No |
APERC DIRECTIVE |
ACHIEVEMENT
REPORTED BY RESCO FY 2004-05 |
|
1 |
The RESCO shall report to the Commission all Schemes in Compliance to paras 10.2 and 10.3 of the Licence
irrespective of whether the cost is less than Rs. 5
Lakh or more. i)For FY 2004-05 : By end of September 2004 ii)For FY 2005-06 : By end of June 2005 |
Submitted Not submitted |
|
2 |
Interest on Consumer Security Deposit to be passed on to the Consumer. |
Calculated but not yet paid. |
|
3 |
Agricultural Consumption to be regulated and
limited to the approved 27 MU for the
FY 2004-05 |
Agricultural Consumption 14 MU upto September’04 may exceed the limit of 27 MU for FY 2004-05. |
|
4 |
The RESCO shall bring down losses to 14 % by the end of March 2005. |
Losses are currently at 16% as against the directed
14%. The RESCO has requested for
upward revision of loss target to 15.59% in
FY 2005-06 due to LT operation only. |
|
5 |
Transformer failure should be contained within 7 % during the year 2004-05. |
Transformer failure is 3.48 % up to September’04
as against the directed 7 %. |
|
6 |
The RESCO is to redouble its efforts for collection of arrears
from consumers. Current Demand to be accounted separately. |
Amount pending for collection : Rs. 215.68 lakhs as on
30.09.2004 |
|
7 |
The RESCO shall release all fresh connections with meters to all categories
of consumers. |
No services existing without meter except agricultural consumers. |
|
8 |
If not already done, the RESCO shall fix 10 sample meters to
agricultural consumers in each Mandal and send
monthly readings by 8th of the succeeding month. |
Meters already installed. |
|
9 |
The RESCO should explain to the Agricultural consumers about the
advantage of metered billing and undertaking DSM measures. |
No information available for FY 2004-05. |
|
10 |
The RESCO shall file with the Commission the status of closure of work
orders every month by 8th of the succeeding month. |
554 Nos. work orders closed costing Rs.211.48 lakhs as at |
|
11 |
The position of pending payments to APTRANSCO / DISCOMS towards power
purchased by the RESCO during 2004-05 shall be reported to the Commission by |
The disputed amount is pending for payment to
DISCOM as on |
|
12 |
Disconnection of unauthorized services |
There are no unauthorized services |
|
13 |
Metering of agricultural services |
2310 agricultural services metered by Dec’03 |
|
14 |
Audit of receivables |
Submitted |
|
15 |
Information on new investment |
Complied |
|
16 |
Sales Data Base |
Complied |
|
17 |
Addition of new consumers |
No. of consumers increased from 87,820 as at |
|
18 |
Collection as a percentage of current billing |
88.12 % as at |
|
19 |
Purchase of energy and rate at which paid |
42.23 MU as at |
|
20 |
Status of loan repayment to REC and others as at |
Principal dues not paid : Nil No of instalments
due :
Nil Interest
dues not paid : Nil No of instalments
due :
Nil The RESCO has pre-closed the loan from REC and
Government of Andhra Pradesh. |
|
21 |
Auditing of accounts and submission of Audit Reports |
Audit for FY 2004 completed. Audit Report submitted. |