Sri Surinder Pal, Member
Sri R.Radha Kishen, Member
Dated: 20-03-2007
O.P. No. 38 of 2006
The Co-operative
Electric Supply Society Limited …….
Applicant
1. The Co-operative Electric Supply Society
Limited, Siricilla, 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 30th 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.3991.00 lakhs under OCFA and Rs. 564.00 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, the OCFA is arrived at Rs.3965.11
lakhs, after adjustment of consumer contributions and grants from other sources
received by the RESCO. CWIP figure has been calculated and fixed at Rs.458.25 lakhs.
(ii) Working
Capital consists of:
(a)Average Cost of Stores, and
(b)Average Cash and Bank Balances
The RESCO has projected Rs. 15.00 lakhs towards average cost of stores
and Rs. 120.00 lakhs towards average cash and bank balance. The Commission admits Rs.4.17 lakhs towards
average cost of stores representing one month’s average repairs and maintenance
expenses and Rs.79.84 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. 3116.00 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 approved loans (Rs.179.00 lakhs)
and consumer security deposits
(Rs.302.00 lakhs) have been accepted .
(v) Summary
of Capital Base:
With the above changes, the Net Capital Base of Rs.1093.00 lakhs projected
by the RESCO comes down to Rs. 910.37 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 |
3991.00 |
3965.11 |
|
2 |
Capital Works in Progress |
564.00 |
458.25 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of Stores |
15.00 |
4.17 |
|
|
b) Avg Cash and Bank balance |
120.00 |
79.84 |
|
A |
Total of positive elements of Capital Base |
4690.00 |
4507.37 |
|
|
Negative
elements |
|
|
|
1 |
Accumulated Depreciation |
3116.00 |
3116.00 |
|
2 |
Approved Loans |
179.00 |
179.00 |
|
3 |
Consumer Security Deposit |
302.00 |
302.00 |
|
4 |
Interest on consumer security deposits |
0.00 |
0.00 |
|
B |
Total of negative elements of Capital Base |
3597.00 |
3597.00 |
|
|
Net Capital Base (A-B) |
1093.00 |
910.37 |
(b) Expenditure
Items:
(i)
Wages and Salaries:
The RESCO has projected Rs. 750.00 lakhs under this head which has been
accepted without change.
(ii)
Administration and
General Expenses and Repairs and Maintenance:
The RESCO made projections of Rs.50.00 lakhs and
Rs. 81.00 lakhs respectively under these two heads. Administration and General Expenses
has been accepted without change, whereas Repairs and Maintenance has been reduced to Rs. 50.00 lakhs based
on the 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 is Nil. The RESCO has a Contingencies Reserve of
Rs.863.80 lakhs as on 31.03.2006 out of which, the Commission notes that
Rs.590.89 lakhs are in the form of
Fixed Deposits in nationalized banks and Rs.127.39 lakhs in the form of Fixed
Deposits in co-operative banks.
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 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 Approved loan interest (Rs27.00
lakhs), Depreciation (Rs. 257.00 lakhs) and legal charges (Rs. 2.00 lakhs) have
been allowed without any change. Contribution to Employee funds (Rs.189.00
lakhs), Interest on Security Deposits (Rs. 20.00 lakhs) and other expenses
(Rs.60.00 lakhs) have been adjusted to the actual calculated figures of
Rs.103.13 lakhs, Rs.18.12 lakhs and Rs.5.00 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. 1262.25 lakhs as against the
RESCO's projection of Rs. 1436.00 lakhs as detailed in the following Table:
Table – 2
Statement of expenditure
(Rs. in
lakhs)
|
Sl.
No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
750.00 |
750.00 |
|
2 |
Admn & General Expenses |
50.00 |
50.00 |
|
3 |
Repairs and Maintenance |
81.00 |
50.00 |
|
4 |
Rent, Rates & Taxes |
0.00 |
0.00 |
|
5 |
Approved Loan Interest |
27.00 |
27.00 |
|
6 |
Depreciation |
257.00 |
257.00 |
|
7 |
Contbn. to Employee Funds |
189.00 |
103.13 |
|
8 |
Contbn. to Contingency Reserve |
0.00 |
0.00 |
|
9 |
Interest on Security Deposit |
20.00 |
18.12 |
|
10 |
Legal Charges |
2.00 |
2.00 |
|
11 |
Auditors' Fees |
0.00 |
0.00 |
|
12 |
Other Expenses |
60.00 |
5.00 |
|
13 |
Total Expenditure (excluding purchase of energy) |
1436.00 |
1262.25 |
(c)
Reasonable
Return:
Based on the above changes to the Capital Base, the
reasonable return woks out to Rs.146.55 lakhs as against
Rs.175.78 lakhs projected by it.
The RESCO has projected an amount of Rs. 590.00 lakhs under this head
which has been changed to Rs. 600.00 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. 808.80 lakhs as against Rs. 1021.78 lakhs projected by the RESCO.
This is after taking into account the Reasonable Return of Rs. 146.55 lakhs and
Non-Tariff income of Rs. 600.00 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. 23.00 lakhs, considering 406.46 MU allowed as against its total power
demand of 417.50 MU 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. 785.80 lakhs.
(g) Expected
revenue from charges(ERC)
The RESCO has filed the ERC at
Rs.2430.00 lakhs based on current tariff rates effective from 01-04-2006
except for 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. No. |
CATEGORY |
RESCO |
APERC |
||
|
Sales |
Revenue |
Sales |
Revenue |
||
|
|
|
(MU) |
(Rs. lakhs) |
(MU) |
(Rs. lakhs) |
|
1 |
LT I - Domestic |
46.80 |
1013.00 |
46.80 |
1013.00 |
|
2 |
LT II - Non-Domestic |
7.20 |
393.00 |
7.20 |
393.00 |
|
3 |
LT III - Industrial |
6.80 |
248.00 |
6.80 |
248.00 |
|
4 |
LT IV - Cottage Industries |
39.20 |
630.00 |
39.20 |
630.00 |
|
5 |
LT V - Irrigation and Agriculture |
237.40 |
0 |
237.40 |
0 |
|
6 |
LT VIA - Local Bodies, Street Lighting |
17.00 |
130.00 |
17.00 |
130.00 |
|
7 |
LT VI B - PWS schemes |
|
|
|
|
|
8 |
LT VII - General Purpose |
0.50 |
16.00 |
0.50 |
16.00 |
|
9 |
LT VIII - Temporary Supply |
|
|
|
|
|
|
Total |
354.90 |
2430.00 |
354.90 |
2430.00 |
(h)
Amount available with the
RESCO for power purchases:
The
amount available with the RESCO for power purchases has been computed at Rs.
1644.20 lakhs as per the details given below:
Table –4
Amount
available with RESCO for power purchases
(Rs. in lakhs)
|
Sl.
No. |
Particulars |
SIRICILLA RESCO |
APERC |
|
1 |
Expenditure |
1436.00 |
1262.25 |
|
2 |
Reasonable Return |
175.38 |
146.55 |
|
3 |
Less:
Non-Tariff income |
590.00 |
600.00 |
|
4 |
Revenue Requirement (1+2-3) |
1021.78 |
808.80 |
|
5 |
Less:
Efficiency Gains |
0.00 |
23.00 |
|
6 |
Net Revenue Requirement (4 - 5) |
1021.78 |
785.80 |
|
7 |
Revenue from sale of Power |
2430.00 |
2430.00 |
|
8 |
Amount available for Power Purchase (7-6) |
1408.23 |
1644.20 |
|
|
|
|
|
|
|
Units to be purchased (in MU) |
417.50 |
406.46 |
|
|
Power purchase price : Re/Unit |
0.34 |
0.40 |
The RESCO has projected power purchase of 417.50MU
(gross) for FY 2007-08, which the Commission has revised to 406.46 MU based on
the projection of DISCOM (APNPDCL).
6.
Power purchase
price
Based on the above-mentioned power purchases
of 406.46 MU, the power purchase price
for the RESCO works out to 40 paise per unit of energy supplied by the APNPDCL
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 APNPDCL or at the average power purchase price applicable
to APNPDCL 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 APNPDCL. 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 APNPDCL for power purchase at the rate fixed by the Commission, failing
which the APNPDCL shall stop power supply to the RESCO immediately.
(vi)
The RESCO shall limit agricultural consumption
237.40 MU in FY 2007-08.
(vii)
The prevailing loss level for calculation of power
purchase has been taken at 15.00% by the RESCO. 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.
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 APNPDCL 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