Sri Surinder Pal, Member
Sri R.Radha Kishen, Member
Dated:
20-03-2007
O.P. No. 01 of
2007
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 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 order, 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 December 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 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.2646.47 lakhs under OCFA and Rs. 263.46 lakhs under CWIP
in its ARR / ERC filings for 2007-08. Based on
the audited accounts for the year 2005-06 and the approved ARR for FY 2006-07
and projections for the ensuing year submitted by the RESCO, OCFA figure has been changed to Rs.2561.23
lakhs. CWIP has been calculated and
fixed at Rs.199.06 lakhs.
(ii)
Working Capital consists of :
(a) Average Cost of Stores, and
(b) Average Cash and Bank Balances
The
RESCO has projected Rs. 5.00 lakhs towards average cost of stores and Rs. 6.00
lakhs towards average cash and bank balance.
The Commission has examined these projections and admits Rs.2.92 lakhs
towards average cost of stores representing one month’s average repairs and
maintenance expenses and Rs.18.32 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. 2423.72 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
RESCO has projected Rs. 626.23 lakhs towards approved loans, and Rs.115.46
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. 248.90 lakhs projected by
the RESCO increases to (-) Rs. 388.31 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 |
2646.47 |
2561.23 |
|
2 |
Capital Works-in-progress |
263.46 |
199.06 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of Stores |
5.00 |
2.92 |
|
|
b) Avg Cash and Bank balance |
6.00 |
18.32 |
|
A |
Total of positive elements of Capital Base |
2920.93 |
2781.52 |
|
|
Negative
elements |
|
|
|
1 |
Accumulated Depreciation |
2423.72 |
2423.72 |
|
2 |
Approved Loans |
626.23 |
626.23 |
|
3 |
Consumer Security Deposit |
115.46 |
115.46 |
|
4 |
SD Interest to consumer |
4.42 |
4.42 |
|
B |
Total of negative elements of Capital Base |
3169.83 |
3169.83 |
|
|
Net Capital Base (A-B) |
-248.90 |
-388.31 |
(b) Expenditure Items:
(i) Wages and Salaries:
The
RESCO has projected Rs.170.00 lakhs under this head which has been revised to Rs.150.00 lakhs after discussion with the officials of
the RESCO.
(ii)
Administration & General
Expenses and Repairs & Maintenance:
The
RESCO made projections of Rs.15.00 lakhs and Rs.65.00 lakhs under these heads,
which are fixed at 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) 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 accepted. The
RESCO has a Contingencies Reserve of
Rs. 109.57 lakhs which together with interest accumulated to Rs.167.92 lakhs as
on 31.03.2006 which the Commission notes is invested in the form of Special
Reserve Fund.
The Commission
regrets that the RESCO has not invested 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 invest 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.
(iv) Other expenditure
items :
The
projections of the RESCO under Rent, rates and taxes (Rs.0.50 lakhs), Approved
loan interest (Rs.64.11 lakhs), Depreciation (Rs.295.92 lakhs), Legal charges
(Rs.0.30 lakh), and Auditors' Fees (Rs. 0.90 lakh) have been allowed without
any change. Contribution to Employee funds (Rs.18.00 lakhs), and Interest on
Security Deposits (Rs.4.42 lakhs) and other expenses (Rs.11.20 lakhs) have been
revised to the actual calculated figures of
Rs.15.40 lakhs, Rs.6.93 lakhs and Rs. 3.00 lakhs respectively based on
prescribed norms.
(v) Total expenditure:
Based
on the above changes, the total expenditure (exclusive of expenditure on power
purchase) works out to Rs. 587.06 lakhs as against the RESCO's projection of
Rs. 653.35 lakhs as detailed in the following Table:
Table – 2
Statement of Expenditure
(Rs. in lakhs)
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
170.00 |
150.00 |
|
2 |
Admn & General Expenses |
15.00 |
15.00 |
|
3 |
Repairs and Maintenance |
65.00 |
35.00 |
|
4 |
Rent, Rates & Taxes |
0.50 |
0.50 |
|
5 |
Approved Loan Interest |
64.11 |
64.11 |
|
6 |
Depreciation |
295.92 |
295.92 |
|
7 |
Contbn. to Employee Funds |
18.00 |
15.40 |
|
8 |
Contbn. to Contingency Reserve |
8.00 |
0.00 |
|
9 |
Interest on Security Deposit |
4.42 |
6.93 |
|
10 |
Legal Charges |
0.30 |
0.30 |
|
11 |
Auditors' Fees |
0.90 |
0.90 |
|
12 |
Other Expenses |
11.20 |
3.00 |
|
13 |
Total Expenditure |
653.35 |
587.06 |
|
|
(excluding purchase of energy) |
|
|
(c ) Reasonable Return:
Based
on the changes made to the Capital Base (accepted by the RESCO), the reasonable
return of Rs.3.13 lakhs projected by RESCO has been
accepted by the Commission.
The
RESCO has projected an amount of Rs. 130.00 lakhs under this head which has
been accepted based on the approved ARR for 2006-07.
(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, FY 2004-05, FY 2005-06 and FY 2006-07, 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 intimations to the Commission
on the status of recovery at the end of every quarter.
(f) Revenue
Requirement for FY 2007-08:
(Excluding power purchase cost)
The
Aggregate Revenue Requirement (excluding power purchase cost) works out to Rs.
460.19 lakhs as against Rs. 526.48 lakhs projected by the RESCO. This is
after taking into account the Reasonable Return of Rs.3.13 lakhs and Non-Tariff
income of Rs.130.00 lakhs.
(g) Efficiency Gains
The
Commission desires that the RESCO should make better efforts to improve its efficiency to reduce losses and
collect arrears. Considering the HVDS
scheme with investment of more than Rs. 500.00 lakhs by the RESCO, its total
power demand of 195.30 MU and the efficiency already achieved by it during the
last seven years, the Commission is of the view that it can achieve efficiency
gains of Rs. 40.00 lakhs. The
efficiency gains to this extent have been adopted by the Commission to arrive
at the net aggregate revenue requirement of Rs.420.19 lakhs.
(h) Expected revenue from charges (ERC):
The
RESCO has filed the ERC at Rs. 803.58 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 revised to Rs.821.00 lakhs and
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 |
14.20 |
413.53 |
14.20 |
413.53 |
|
2 |
LT II - Non-Domestic |
2.70 |
162.16 |
3.27 |
179.58 |
|
3 |
LT III – Industrial |
2.33 |
114.04 |
2.33 |
114.04 |
|
4 |
LT IV - Cottage
Industries |
|
|
|
|
|
5 |
LT V - Irrigation and
Agriculture |
152.52 |
55.88 |
139.47 |
55.88 |
|
6 |
LT VI - Local Bodies,
Street Lighting |
6.45 |
44.50 |
6.45 |
44.50 |
|
7 |
LT VI B - PWS schemes |
|
|
|
|
|
8 |
LT VII - General Purpose |
0.27 |
12.21 |
0.27 |
12.21 |
|
9 |
LT VIII - Temporary
Supply |
0.02 |
1.27 |
0.02 |
1.27 |
|
|
Total |
178.50 |
803.58 |
166.01 |
821.00 |
(i) Amount available with the RESCO for power purchases
The amount
available with the RESCO for power purchases has been computed at Rs. 400.81 lakhs as per details given below:
Table – 4
Amount available with RESCO for power purchase
(Rs. in lakhs)
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Expenditure |
653.35 |
587.00 |
|
2 |
Reasonable Return |
3.13 |
3.13 |
|
3 |
Less: Non-Tariff
income |
130.00 |
130.00 |
|
4 |
Revenue Requirement (1+2-3) |
526.48 |
460.19 |
|
5 |
Less: Efficiency
Gains |
20.00 |
40.00 |
|
6 |
Net Revenue Requirement (4 - 5) |
506.48 |
420.19 |
|
7 |
Revenue from sale of Power |
803.58 |
821.00 |
|
8 |
Amount available for Power Purchase (7-6) |
297.10 |
400.81 |
|
|
|
|
|
|
|
Units to be purchased (in MU) |
208.00 |
195.30 |
|
|
Power purchase price : Re/Unit |
0.14 |
0.21 |
The RESCO has projected purchase of 208.00 MU (gross) during
FY 2007-08 which the Commission has reduced to 195.30 MU based on the
projection of the DISCOM (APSPDCL).
Based on the above - mentioned power purchases of 195.30 MU,
the power purchase price for the RESCO works out to 21 paise per unit of energy
supplied by the APSPDCL for FY 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 APSPDCL or at the average
power purchase price 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 Commission’s Order in O.P.Nos. 33 to 36
of 2006 dated: 20-3-2007 on Retail Supply Tariffs for 2007-08, issued
separately as applicable in the case of APSPDCL. 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 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 139.47 MU in
FY2007-08.
(vii) 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 9.00% 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.
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
20th March, 2007.
|
Sd/- |
Sd/- |
Sd/- |
|
(R.RADHA KISHEN) |
(SURINDER PAL) |
(K.SWAMINATHAN) |
|
MEMBER |
MEMBER |
CHAIRMAN |
CERTIFIED COPY