Sri
K Sreerama Murthy, Member
Sri
Surinder Pal, Member
Dated:
O.P. No. 07 of 2005
1. The
Kuppam 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.2634.00 lakhs under OCFA and Rs.
313.00 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.2341.37 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. 3.00 lakhs towards average
cost of stores and Rs. 8.00 lakhs
towards average cash and bank balance.
The Commission admits Rs.2.50 lakhs towards
average cost of stores representing one month’s average repairs and maintenance
expenses and Rs.12.18 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. 1847.00 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 RESCO has projected
Rs.415.00 lakhs towards loans, Rs.89.00 lakhs for consumer security deposits and the Commission has
accepted the same.
(v) Summary of Capital Base:
With the above changes,
the Net Capital Base of Rs. 607.00 lakhs projected by the RESCO comes down to Rs. 318.05 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 |
2634.00 |
2341.37 |
|
2 |
Capital
Works-in-progress |
313.00 |
313.00 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of
Stores |
3.00 |
2.50 |
|
|
b) Avg
Cash and Bank balance |
8.00 |
12.18 |
|
A |
Total of positive
elements of Capital Base |
2958.00 |
2669.05 |
|
|
Negative elements |
|
|
|
1 |
Accumulated
Depreciation |
1847.00 |
1847.00 |
|
2 |
Approved Loans |
415.00 |
415.00 |
|
3 |
Consumer Security
Deposit |
89.00 |
89.00 |
|
B |
Total of negative
elements of Capital Base |
2351.00 |
2351.00 |
|
|
Net Capital Base (A-B) |
607.00 |
318.05 |
(b) EXPENDITURE ITEMS
(i) Wages and Salaries :
The RESCO made a
projection of Rs.90.80 Lakhs and the same has been
approved by the Commission under this Head.
(ii)
Administration & General Expenses and Repairs & Maintenance:
The RESCO made
projections of Rs.45.00 lakhs and Rs.
35.00 lakhs under these heads which are reduced to
Rs.17.20 lakhs and Rs.30.00 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 Approved loan interest (Rs.3.50 lakhs),
Depreciation (Rs.271.91 lakhs), Contribution
to Employee funds (Rs.1.50 lakhs), Legal charges
(Rs.1.00 lakh), Auditors' Fees (Rs.
0.70 lakh) and other expenses (Rs.3.00 lakhs) have been allowed without any change. Rent, rates and taxes (Rs.6.00 lakhs)
has been reduced to Rs.3.00 lakhs based on past
trend. Contribution to Contingencies
Reserve (Rs. 6.00 lakhs)
and Interest on Security Deposits (Rs. 1.50 lakhs) have been
adjusted to the actual calculated figures of Rs.5.85 lakhs
and Rs.5.34 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. 433.80 lakhs
as against the RESCO's projection of Rs. 465.91 lakhs as detailed
below:
Table – 2
Statement of Expenditure
Rs. in Lakhs
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
90.80 |
90.80 |
|
2 |
Admn & General
Expenses |
45.00 |
17.20 |
|
3 |
Repairs and
Maintenance |
35.00 |
30.00 |
|
4 |
Rent, Rates &
Taxes |
6.00 |
3.00 |
|
5 |
Approved Loan Interest |
3.50 |
3.50 |
|
6 |
Depreciation |
271.91 |
271.91 |
|
7 |
Contbn. to Employee
Funds |
1.50 |
1.50 |
|
8 |
Contbn. to
Contingency Reserve |
6.00 |
5.85 |
|
9 |
Interest on Security
Deposit |
1.50 |
5.34 |
|
10 |
Legal Charges |
1.00 |
1.00 |
|
11 |
Auditors' Fees |
0.70 |
0.70 |
|
12 |
Other Expenses |
3.00 |
3.00 |
|
13 |
Total Expenditure |
465.91 |
433.80 |
|
|
(excluding purchase of
energy) |
|
|
(c) Reasonable Return:
Based on the changes made to the
Capital Base (accepted by the RESCO), the reasonable return works out to Rs. 52.96 as against Rs. 80.99 lakhs projected by it.
The RESCO has projected an amount of
Rs. 110.00 lakhs under this
head and the Commission has accepted the same.
(e) Recovery of advance made to a Polytechnic:
As directed by the Commission, in
the earlier Orders for FY 2001-02, FY 2002-03, FY 2003-04 and FY 2004-05, the
RESCO has to recover Rs.110 lakhs advanced by it to a
Polytechnic in Kuppam. Hence, the RESCO shall continue to recover
the balance amount in regular installments with intimation to the Commission on the status of
recovery at the end of every quarter.
(f) The Revenue Requirement for
the FY 2005-06
(Excluding
power purchase cost)
The Aggregate Revenue Requirement
(excluding power purchase cost) works out to Rs. 376.77 lakhs as against Rs. 436.90 lakhs projected by the RESCO. This is after taking into
account the Reasonable Return of Rs.52.96 lakhs and
Non-Tariff income of Rs.110.00 lakhs.
(g) 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 160.79 MU and efficiency already
achieved during the last five years. Thus, the net aggregate revenue
requirement works out to Rs.356.77 lakhs.
(h) Expected revenue from charges:
The RESCO has filed the Expected
Revenue from Charges at Rs.1128.80 lakhs based on
current Tariff Rates effective from 01-04-2004 which has been reduced to
Rs.701.36 lakhs to give effect to the changes for the
agricultural category, where the revenue has been revised 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 |
13.01 |
352.97 |
13.01 |
352.97 |
|
2 |
LT II - Non-Domestic |
2.22 |
133.84 |
2.22 |
133.84 |
|
3 |
LT III - Industrial |
1.97 |
99.10 |
1.97 |
99.10 |
|
4 |
LT IV - Cottage Industries |
0.00 |
0.00 |
0.00 |
0.00 |
|
5 |
LT V - Irrigation and Agriculture |
119.76 |
488.64 |
112.00 |
61.16 |
|
6 |
LT VI - Local Bodies, Street Lighting |
5.87 |
42.53 |
5.87 |
42.53 |
|
7 |
LT VI B - PWS schemes |
|
|
|
|
|
8 |
LT VII - General Purpose |
0.22 |
9.11 |
0.22 |
9.11 |
|
9 |
LT VIII - Temporary Supply |
0.04 |
2.66 |
0.04 |
2.66 |
|
|
Total |
143.10 |
1128.84 |
135.34 |
701.36 |
(i) Amount available with the RESCO for power
purchases
The amount available with the RESCO
for power purchases has been computed at
Rs. 344.59 lakhs as
against Rs.691.91 lakhs computed by the RESCO. The details of calculation are given in the
following table:
Table – 4
Amount available with
RESCO for power purchase
Rs. in Lakhs
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Expenditure |
465.91 |
433.80 |
|
2 |
Reasonable Return |
80.99 |
52.96 |
|
3 |
Less: Non-Tariff income |
110.00 |
110.00 |
|
4 |
Revenue Requirement
(1+2-3) |
436.90 |
376.77 |
|
5 |
Less: Efficiency Gains |
0.00 |
20.00 |
|
6 |
Net Revenue
Requirement (4 - 5) |
436.90 |
356.77 |
|
7 |
Revenue from sale of
Power |
1128.80 |
701.36 |
|
8 |
Amount available for
Power Purchase (7-6) |
691.91 |
344.59 |
|
|
|
|
|
|
|
Units to be purchased
(in MU) |
170.00 |
160.79 |
|
|
Power purchase price :
Re/Unit |
0.41 |
0.21 |
The
RESCO projected purchase of 170.00 MU (gross) during FY 2005–06. The Commission
reduced the projections of the RESCO (170.00 MU) to 160.79 MU based on
agricultural growth rates adopted for SPDCL for FY 2005-06.
Based
on the above (160.79 MU purchases), the power purchase price for the RESCO
works out to 21 paise per unit of energy supplied by
the APSPDCL 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 APSPDCL or at the
Bulk Supply Tariff (BST) applicable to APSPDCL 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, FY 2003-04 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 SPDCL for power purchase at
the rate fixed by the Commission, failing which the SPDCL shall stop power
supply to the RESCO immediately.
(vi)
The
RESCO shall limit agricultural consumption to 112.00 MU in FY2005-06.
(vii)
The
prevailing loss level for calculation of power purchase has been taken at
15.83%. 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 12 % 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 APSPDCL 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. |
To be adjusted against
energy bills. |
|
3 |
Agricultural Consumption to be regulated and limited to the approved
105 MU for the FY 2004-05 |
Agricultural Consumption 51.39 MU upto
September 2004 may not exceed the limit of 105 MU for FY 2004-05.
|
|
4 |
The RESCO shall bring
down losses to 14 % by the end of March 2005. |
Losses are currently at 19.70 % as against the directed 14%. The RESCO has requested for upward revision
of loss target to 15.83 % in FY 2005-06. |
|
5 |
Transformer failure
should be contained within 14 % during the year
2004-05. |
Transformer failure is
5.51 % up to
September 2004 as against the directed 14 %. |
|
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. 2112.80 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. |
DSM campaign taken
up. No further information submitted. |
|
10 |
The RESCO shall file
with the Commission the status of closure of work orders every month by 8th
of the succeeding month. |
372 Nos work orders costing Rs. 68.61 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 RESCO has pending payment amounting to Rs.206.40 lakhs as at |
|
12 |
Disconnection of
unauthorized services |
Unauthorized services are being attended |
|
13 |
Metering of
agricultural services |
Agricultural services are being metered |
|
14 |
Audit of receivables |
Under progress |
|
15 |
Information on new
investment |
Complied |
|
16 |
Sales Data Base |
Complied |
|
17 |
Addition of new
consumers |
No. of consumers increased from 66898 as at |
|
18 |
Collection as a
percentage of current billing |
55.47 % as at |
|
19 |
Purchase of energy and
rate at which paid |
84.58 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 |
|
21 |
Auditing of accounts
and submission of Audit Reports |
Audit report for FY 2003-04 submitted. |