Sri
Surinder Pal, Member
Sri
R.Radha Kishen, Member
Dated:
20-03-2007
1. The Chipurupalli
Rural Electric Co-operative Society Limited has been granted exemption 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 dated15-06-2004, 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 28th 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.683.00 lakhs under OCFA and Rs. 4.16 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 the projections for the ensuing
year submitted by the RESCO, the OCFA is arrived at Rs.643.39 lakhs, after
adjustment of consumer contributions and grants from other sources received by
the RESCO. The CWIP has been computed at Rs.35.77 lakhs (after capitalization
of works at Rs.45.00 lakhs for FY 2006-07 and Rs.68.61 lakhs for FY 2007-08
based on past performance of the RESCO) as against Rs.4.16 lakhs (after
capitalization of Rs.65.19 lakhs for FY 2006-07 and Rs.80.03 lakhs for FY
2007-08) proposed by the RESCO.
(ii) Working Capital consists of
(a) Average Cost
of Stores, and
(b)
Average Cash and Bank Balances
The
RESCO has projected Rs. 1.67 lakhs towards average cost of stores and Rs. 23.64
lakhs towards average cash and bank balance.
The Commission admits Rs.1.67 lakhs towards average cost of stores
representing one month’s average repairs and maintenance expenses and Rs.20.31
lakhs towards average cash and bank balance representing one month’s all other
expenses excluding the power purchase cost.
(iii) Accumulated
Depreciation:
The
figure projected by the RESCO (Rs. 638.00 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.38.93 lakhs)
have been accepted. The RESCO has
pre-closed its loans from REC and the Public Enterprises Department, Govt. of
A.P.
(v) Summary of Capital Base:
With
the above changes, the Net Capital Base of Rs. 35.54 lakhs projected by the
RESCO comes down to Rs. 23.87 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 |
683.00 |
643.39 |
|
2 |
Capital Works in Progress |
4.16 |
35.77 |
|
3 |
Working Capital |
1.67 |
1.33 |
|
|
a) Average Cost of Stores |
23.64 |
20.31 |
|
|
b) Avg Cash and Bank balance |
712.47 |
700.80 |
|
A |
Total of positive elements of Capital Base |
|
|
|
|
Negative
Elements |
638.00 |
638.00 |
|
1 |
Accumulated Depreciation |
0.00 |
0.00 |
|
2 |
Approved Loans |
38.93 |
38.93 |
|
3 |
Consumer Security Deposit |
0.00 |
0.00 |
|
B |
Total of negative elements of Capital Base |
676.93 |
676.93 |
|
|
Net Capital Base (A-B) |
35.54 |
23.87 |
(b) Expenditure Items:
(i) Wages and Salaries:
The
RESCO has projected Rs.213.50 lakhs under this head which has been revised to
Rs. 190.00 lakhs after discussion with the officials of the RESCO.
(ii)
Administration & General Expenses
The
RESCO has made a projection of Rs.14.00 lakhs under this head, which has been
pruned down to Rs.12.00 lakhs, based on the audited accounts for the year
2005-06 and approved ARR for FY. 2006-07.
(iii) Repairs & Maintenance:
The
RESCO has projected Rs. 20.00 lakhs towards repairs and maintenance, which has
been reduced to Rs. 16.00 lakhs 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. 4.00 lakhs towards Rent, Rates & Taxes which have
been changed to Rs. 2.50 lakhs based on the audited accounts for the year
2005-06 and approved ARR for FY.2006-07.
(iv)
Depreciation:
The
RESCO has projected Rs. 62.16 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 RESCO has not
projected any amount under Contributions to Contingencies Reserve for FY
2007-08. The RESCO has Contingencies
Reserve Rs. 42.25 lakhs as on 31.03.2006
out of which, the Commission notes that, Rs.24.53 lakhs are 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 invested 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.20.00 lakhs), and Interest
on Security Deposits (Rs.2.03 lakhs)
have been adjusted to the actual calculated figures of Rs.18.70 lakhs,
and Rs.2.34 lakhs respectively, based on prescribed norms. Legal charges (Rs.0.50 lakh) has been allowed
without any change and Auditors’ Fees (Rs.4.00 lakhs) has been reduced to
Rs.3.50 lakhs. Other expenses (Rs.5.60 lakhs) has been reduced to Rs.1.00 lakhs
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.308.70 lakhs as against the RESCO's projection of Rs.345.85
lakhs as detailed in the following Table:
Table – 2
Statement
of Expenditure
(Rs. in lakhs)
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
213.50 |
190.00 |
|
2 |
Admn & General Expenses |
14.00 |
12.00 |
|
3 |
Repairs and Maintenance |
20.00 |
16.00 |
|
4 |
Rent, Rates & Taxes |
4.00 |
2.50 |
|
5 |
Approved Loan Interest |
0.00 |
0.00 |
|
6 |
Depreciation |
62.16 |
62.16 |
|
7 |
Contbn. to Employee Funds |
20.00 |
18.70 |
|
8 |
Contbn. to Contingency Reserve |
0.00 |
0.00 |
|
9 |
Interest on Security Deposit |
2.09 |
2.34 |
|
10 |
Legal Charges |
0.50 |
0.50 |
|
11 |
Auditors' Fees |
4.00 |
3.50 |
|
12 |
Other Expenses |
5.60 |
1.00 |
|
13 |
Total Expenditure (excluding purchase of energy) |
345.85 |
308.70 |
(c) Reasonable Return:
The
RESCO has projected an amount of Rs. 86.55 lakhs (including customer charges)
under this head, which
has been changed to Rs. 90.00 lakhs based on the approved ARR for FY 2006-07.
(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.
222.52 lakhs as against Rs. 264.99 lakhs projected by the RESCO. This is after
taking into account the Reasonable Return of Rs.3.82 lakhs and Non-Tariff
income of Rs. 90.00 lakhs.
(f) Efficiency Gains
The
Commission desires that the RESCO should make better efforts to improve its
efficiency to reduce losses and collect arrears. The Commission is also of the view that the RESCO can achieve
efficiency gains of Rs. 16.00 lakhs, considering its total power demand of 37MU
and efficiency already 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.206.52 lakhs.
(g) Expected
Revenue from Charges (ERC)
The
RESCO has filed the ERC at Rs. 441.65 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 has been revised to Rs. 450.00 lakhs based on the 3 MU
increase in energy demanded over that of FY 2006-07. 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 |
12.52 |
240.96 |
12.52 |
240.96 |
|
2 |
LT
II - Non-Domestic |
1.63 |
90.56 |
1.63 |
90.56 |
|
3 |
LT
III – Industrial |
1.79 |
88.47 |
1.96 |
94.95 |
|
4 |
LT
IV - Cottage Industries |
0.02 |
0.52 |
0.02 |
0.52 |
|
5 |
LT
V - Irrigation and Agriculture |
14.27 |
3.41 |
13.96 |
3.41 |
|
6 |
LT
VI - Local Bodies, Street Lighting |
0.99 |
13.19 |
1.25 |
15.06 |
|
7 |
LT
VI B - PWS schemes |
|
|
|
|
|
8 |
LT
VII - General Purpose |
0.11 |
4.54 |
0.11 |
4.54 |
|
9 |
LT
VIII - Temporary Supply |
0.00 |
0.00 |
0.00 |
0.00 |
|
|
Total |
31.45 |
441.65 |
31.45 |
450.00 |
(h) Amount available with the RESCO for power
purchases
The amount
available with the RESCO for power purchase has been computed at Rs.
243.48 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 |
345.85 |
308.70 |
|
2 |
Reasonable Return |
5.69 |
3.82 |
|
3 |
Less: Non-Tariff
income |
86.55 |
90.00 |
|
4 |
Revenue Requirement (1+2-3) |
264.99 |
222.52 |
|
5 |
Less: Efficiency
Gains |
0.00 |
16.00 |
|
6 |
Net Revenue Requirement (4 - 5) |
264.99 |
206.52 |
|
7 |
Revenue from sale of Power |
441.65 |
450.00 |
|
8 |
Amount available for Power Purchase (7-6) |
176.66 |
243.48 |
|
|
|
|
|
|
|
Units to be purchased (in MU) |
37.00 |
37.00 |
|
|
Power purchase price : Re/Unit |
0.48 |
0.66 |
The RESCO has projected purchase of 37.00 MU (gross) during 2007-08.
The Commission accepts the volume of 37.00 MU (gross) as projected.
Based on the above-mentioned power purchases of 37 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 rate for excess drawals by APEPDCL or at the average
power purchase price 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 Commission’s Order in O.P.Nos.33 to 36 of
2006 dated: 20-3-2007 on Retail Supply
Tariffs for 2007-08, as applicable in the case of APEPDCL issued
separately. 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 APEPDCL
for power purchase at the rate fixed by the Commission, failing which the
APEPDCL shall stop power supply to the RESCO immediately.
(vi)
The RESCO shall limit agricultural consumption to 13.96 MU
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 % by the
end of FY 2007-08.
(ix)
The RESCO shall identify and disconnect multiple connections
(Domestic and Commercial) 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 20th March, 2007.
|
Sd/- |
Sd/- |
Sd/- |
|
(R.RADHA KISHEN) |
(SURINDER PAL) |
(K.SWAMINATHAN) |
|
MEMBER |
MEMBER |
CHAIRMAN |
CERTIFIED
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