290709 FINAL Tariff Order FY10 With Schedules

8/8/2019 290709 FINAL Tariff Order FY10 With Schedules

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MADHYA PRADESH ELECTRICITY REGULATORY

COMMISSION"4

th& 5

thFloor Metro Plaza, Bittan Market", Bhopal - 462 016

Petition Nos.

72/08 (West Discom),

73/08 (Central Discom)

76/08 (East Discom)

PRESENT:

Dr. J.L. Bose, Chairman

K. K. Garg, Member

C. S. Sharma, Member

IN THE MATTER OF:

Determination of Aggregate Revenue Requirement (ARR) and Retail

Tariff for FY 2009-10 based on the Tariff Applications made by the

Distribution Licensees namely Madhya Pradesh Poorv Kshetra Vidyut

Vitaran Company Limited (East Discom), Madhya Pradesh Paschim

Kshetra Vidyut Vitaran Company Limited (West Discom) and Madhya

Pradesh Madhya Kshetra Vidyut Vitaran Company Limited (Central

Discom).

RETAIL SUPPLY TARIFF ORDER

2009-10


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ARR AND RETAIL TARIFF DETERMINATION FOR FY 2009-10

Madhya Pradesh Electricity Regulatory Commission Page 1

INDEX

A1: ORDER ......................................................................................................................... 5

Gist of the petitions .................................................................................................................. 7

Uniform Retail Tariffs across Discoms .................................................................................. 8

State Advisory Committee .................................................................................................... 10

Public Hearing ........................................................................................................................ 10

Distribution Losses................................................................................................................. 10

Energy Accounting and Meterisation .................................................................................. 12

Annual Revenue Requirement of Discoms .......................................................................... 13

Implementation of the Order ................................................................................................ 15

A2: DETAILED REASONS AND GROUNDS ATTACHED WITH RETAIL

SUPPLY TARIFF ORDER ISSUED BY MPERC ON 29 JULY 2009 IN RESPECT OF

PETITION NUMBER 72/08, 73/08 AND 76/08 .................................................................. 16

A3: AGGREGATE REVENUE REQUIREMENT FOR FY 2009-10 OF MADHYAPRADESH POORVA, PASCHIM & MADHYA KSHETRA VIDYUT VITARAN

COMPANIES LIMITED (EAST, WEST & CENTRAL DISCOMS) .............................. 17

Summary of Sales Forecast as proposed by the Licensee .................................................. 17

Energy balance and power purchase as proposed by the Licensees ................................. 18

Assessment of Energy Availability by Discoms ............................................................... 19

Assessment of Power Purchase Cost (Fixed and Variable Cost) by the Discoms ........... 21

Assessment of Other Elements of Power Purchase Cost by the Discoms ........................ 23

Inter-State Transmission Charges ................................................................................... 23

Merit Order Dispatch ...................................................................................................... 27

Commissions analysis of sales and power purchase costs ................................................. 29

Sales forecast ................................................................................................................... 29Energy Balance and Power Purchase ............................................................................. 31

External (PGCIL) Losses ................................................................................................. 31

Power Purchase Costs ..................................................................................................... 42

Network Costs ........................................................................................................................ 48

Capital expenditure Plans and Capitalization of assets .................................................. 48

Commissions analysis of capital expenditure and capitalization ..................................... 52

Operations and Maintenance Costs ..................................................................................... 55Licensees submission ...................................................................................................... 55

Commissions analysis for O&M cost .................................................................................. 58

Depreciation............................................................................................................................ 60Licensees submission ...................................................................................................... 60

Commissions analysis of depreciation claims .................................................................... 64Interest and Finance Charges ............................................................................................... 66

Licensees Submission ..................................................................................................... 66

Commissions analysis of Interest and Finance Charges ................................................... 71

Interest on Working capital .................................................................................................. 74Licensees Submission ..................................................................................................... 74

Commissions analysis of Interest on Working Capital ..................................................... 75

Interest on Consumer Security Deposit ............................................................................... 77

Licensees Submission ..................................................................................................... 77


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Commissions analysis of CSD .............................................................................................. 77

Return on Equity (RoE) ........................................................................................................ 79

Licensees submission ...................................................................................................... 79

Commissions analysis of Return on Equity ........................................................................ 81

Other items of ARR ............................................................................................................... 82Bad and doubtful debts .................................................................................................... 82

Commissions analysis on Bad and Doubtful debts ............................................................ 83Other miscellaneous expenditure ......................................................................................... 84

Other Income ................................................................................................................... 84

Segregation of approved ARR between Wheeling and Retail Sale activities ................... 85

Annual Revenue Requirement (ARR) allowed by the Commission for FY 2009-10 ....... 86

Revenue from revised tariffs ................................................................................................. 87

Gap / surplus at new tariffs: ................................................................................................. 88

A4: PUBLIC OBJECTIONS & COMMENTS ON LICENSEES PETITIONS ........ 89

A5: RETAIL TARIFF DESIGN .................................................................................... 115

Legal Position ....................................................................................................................... 115

Commissions Approach to Tariff Determination ............................................................ 115

Uniform vs. Differential Retail Tariffs ........................................................................... 115Linkage to Average Cost of Supply ................................................................................ 115

Highlights of FY 2009-10 Retail Tariff Design .................................................................. 117

LT Consumers ................................................................................................................ 117

LV-1: Domestic Consumers ........................................................................................... 117LV- 2 Non-Domestic Category ....................................................................................... 118

LV-5: Agricultural and other than agricultural ............................................................. 118

Other highlights of LT tariff ........................................................................................... 119HT Consumers: .............................................................................................................. 119

HV-3: Industrial, Non-industrial and Shopping Malls: ................................................. 120 HV-5: Irrigation, Pubic Water Works and other than agricultural: ............................. 120

HV-7: Bulk Supply to exemptees:................................................................................... 120

Other highlights for HT and LT categories ................................................................... 120

A6: COMMISSIONS DIRECTIVES ........................................................................... 122

A7: ANNEXURES ........................................................................................................... 127

Annexure 1: List of Objectors ............................................................................................ 127

Annexure 2 : Tariff Schedules -LT.142

Annexure 3 : Tariff Schedules HT....167


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List of tables

Table 1: Snapshot of the petitions filed by the Discoms ....................................... .................................. 7

Table 2: Proposed Recovery of Revenue Gap ................................................. ....................................... 8

Table 3: Public hearing ......................................................................................................................... 10

Table 4: Annual Revneue Requirement of the Discoms as determined by the Commission (Rs. Crs.) 13

Table 5: True-up costs allowed (Rs. Crs.) ............................................................................................ 13Table 6: Gap/Surplus at new tariffs ...................................................................................................... 14

Table 7: Hours of supply as provided by the Discom ........................................... ................................ 14

Table 8: Projected Sales of the Discom for FY 2009-10 .................................................... .................. 17

Table 9: Energy balance for FY 2009-10 as proposed by Discoms ............................................ .......... 19

Table 10: Energy Availability for Discoms for FY 2009-10 ......................................................... ....... 20

Table 11: Fixed & Variable Cost for All Three Discoms for FY 2009-10 ........................................ ... 22

Table 12: Intra-state transmission charges (Rs. Crs.) ........................................................................... 24

Table 13: New Capacities (in MW) .................................. ........................................ ............................ 24

Table 14: PGCIL charges payable by MP Tradeco .............................................................................. 25

Table 15: Intra-state transmission charges as per Commissions order ...................................... .......... 25

Table 16: Intra-state transmission charges allowed in FY 2008-09 .................................... .................. 25

Table 17: Intra-state transmission charges filed by Discoms for FY 2008-09 and FY 2009-10 .......... 26

Table 18: Intra-state transmission charges payable by Tradeco for FY 2008-09 and FY 2009-10 ...... 26Table 19: Average cost of power as filed by Licensees in (Rs./kWh) ........................................ .......... 27

Table 20: ISP cost as filed by Licensees .......................................... ........................................... .......... 28

Table 21: Total Power Cost as filed .................................. ......................................... ........................... 28

Table 22: Approved sales forecast of the Discoms for FY 2009-10 ....................................... .............. 30

Table 23: Un-metered Sales in MUs ..................................... ........................................... ..................... 31

Table 24: Distribution Losses (%) as per GoMP Letter Dated 28th December 2006 ........................... 31

Table 25: Gross Energy Requirement for FY 2009-10 ......................................... ................................ 32

Table 26: Station wise capacity allocation (%) to Discoms ......................................... ......................... 33

Table 27: Station wise capacity allocation in MW to Discoms ............................................................ 35

Table 28: Station wise availability in MUs Discoms ......................................... ................................... 36

Table 29: Month wise requirement and availability of Discoms ..................................... ..................... 37

Table 30: Merit Order ........................................................................................................................... 37

Table 31: Station wise availability after considering MOD .............................................. .................... 39Table 32: Month wise Discom wise availability after considering MOD ...................................... ....... 40

Table 33: Intra Discom trading in MUs ....................................... ........................................ ................. 40

Table 34: Monthly pooled cost for intra discom trading ....................................... ................................ 41

Table 35: Minimum purchase obligation ..................................... ........................................... .............. 43

Table 36: PGCIL charges allowed to Discoms .......................................... ........................................... 44

Table 37: MPPTCL charges allowed by the Commission for FY 2009-10 (Rs. Crs.) .......................... 44

Table 38: Allocation of fixed cost among Discoms (Rs. Crs.) ........................................... .................. 45

Table 39: Station wise allowed variable cost (Rs. Crs.) ....................................................................... 46

Table 40: Short term power requirement .............................................................................................. 47

Table 41: Total power purchase cost allowed (Rs. Crs.) ........................................................ .............. 47

Table 42: Investment plan filed by East Discom in Rs. Crs. ............................................... ................. 48

Table 43: Scheme wise financing plan submitted by East Discom ...................................................... 49

Table 44: Investment plan submitted by West Discom (Rs. Crs.) ............................................... ......... 50Table 45: Capitalization plan submitted by West Discom ........................................ ............................ 50

Table 46: Investment plan submitted by Central Discom (Rs. Crs.) .................................................... 50

Table 47: Financing plan submitted by Central Discom .................................... ................................... 51

Table 48: Licensees progress of capital works in FY 2008-09 .......................................... .................. 52

Table 49: O&M as filed by East Discom (Rs. Crs.).............................................................................. 55

Table 50: O&M as filed by West Discom (Rs. Crs.) ............................................................................ 56

Table 51: O&M as filed by Central Discom (Rs. Crs.) .................................. ....................................... 57

Table 52: Licensees progress of creation of network assets in FY 2008-09 .............. ......................... 58


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Table 53: O&M costs as approved by the Commission (Rs. Crs.) ....................................................... 59

Table 54: Depreciation as claimed by East Discom (Rs. Crs.) ............................................................. 60

Table 55: % of depreciable assets as filed by West Discom .................................. ............................... 61

Table 56: Depreciation as claimed by West Discom (Rs. Crs.) .......................................... .................. 62

Table 57: Depreciation as claimed by Central Discom (Rs. Crs.) ........................................................ 63

Table 58: Total Depreciation allowed by the Commission (Rs. Crs.) ............................................... ... 65

Table 59: Interest on loans as claimed by East Discom (Rs. Crs.) .................................. ..................... 66

Table 60: Funding proposed by West discom under JBIC Scheme ........................................ .............. 67

Table 61: Funding proposed by West discom under APDRP Scheme ................................................. 67

Table 62: Funding proposed by West discom under ADB and PFC Scheme ....................................... 67

Table 63: Funding proposed by West discom under PFC Scheme ......................................... .............. 67

Table 64: Funding proposed by West discom under ADB new Scheme ....................................... ....... 67

Table 65: Total interest and finance charges as filed by West Discom (Rs. Crs.) ................................ 68

Table 66: Total interest and finance charges as filed by Central Discom (Rs. Crs.) ............................ 70

Table 67: Calculations for IFC on FY 2007-08 asset base (Rs. Crs.) .................................. ................. 72

Table 68: Calculation of IFC for work done in FY 2008-09 (Rs. Crs.) ...................................... .......... 72

Table 69: Weighted average interest rate allowed ............................................................................. ... 73

Table 70: Total interest and finance allowed for FY 2009-10 (Rs. Crs.) .................................... .......... 73

Table 71: Interest on Working capital as filed by East Discom (Rs. Crs.) ........................................... 74

Table 72: Interest on Working capital as filed by West Discom (Rs. Crs.) .......................................... 74

Table 73: Interest on Working capital as filed by Central Discom (Rs. Crs.) ......... ............................. 75

Table 74: Assets considered for interest on working capital for retail sales (Rs. Crs.) ........................ 75

Table 75: Interest on Working capital allowed by the Commission (Rs. Crs.) ..................................... 76

Table 76: Consumer security deposit as filed by East Discom (Rs. Crs.) .......................................... ... 77

Table 77: Consumer security deposit as filed by Central Discom (Rs. Crs.) ..................................... ... 77

Table 78: Consumer security deposit allowed by the Commission (Rs. Crs.) ...................................... 78

Table 79: Return on Equity as filed by East Discom (Rs. Crs.) ................................... ......................... 79

Table 80: Return on Equity as filed by West Discom (Rs. Crs.) ..................................... ..................... 80

Table 81: Return on Equity as filed by Central Discom (Rs. Crs.) ...................................... ................. 80

Table 82: Return on Equity as allowed by the Commission (Rs. Crs.)....................................... .......... 81

Table 83: Bad and Doubtful debts as filed by East Discom (Rs. Crs.) ................................................. 82

Table 84: Bad and Doubtful debts as filed by West Discom (Rs. Crs.) ................................. ............... 82

Table 85: Bad and Doubtful debts as filed by Central Discom (Rs. Crs.) ......................................... ... 83Table 86: Bad and Doubtful debts as filed as approved by the Commission (Rs. Crs.) ....................... 83

Table 87: Other income filed and approved (Rs. Crs.) .................................................................. ....... 84

Table 88: Total Annual Revenue Requirement as approved by the Commission for FY 2009-10 (Rs.

Crs.) ...................................... .......................................... ............................................ .................. 86

Table 89: Revenue from revised tariffs in FY 2009-10 .................................... .................................... 87

Table 90: Final ARR and revenue from revised tariff .......................................................................... 88

Table 91: Comparison of tariff v/s average cost of supply ................................................................. 116


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A1: ORDER(Passed on this 29

thDay of July, 2009)

1.1 This Order relates to the petition numbers 72/08, 76/08 and 73/08 filed respectivelyby Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Limited, Madhya

Pradesh Poorv Kshetra Vidyut Vitaran Company Limited and Madhya PradeshMadhya Kshetra Vidyut Vitaran Company Limited (hereinafter individually referred

to as West Discom, East Discom and Central Discom respectively and collectively

referred to as Discoms or Licensees) before the Madhya Pradesh Electricity

Regulatory Commission (hereinafter referred to as MPERC or the Commission).

These petitions have been filed as per the requirements of the MPERC (Terms and

Conditions for determination of tariff for distribution and retail supply of electricity

and methods and principles for fixation of charges) Regulations, 2006 (hereinafter

referred to as Regulations).

1.2 In accordance with the Regulations, the Distribution Licensees of the State wererequired to file their respective Annual Revenue Requirements (ARR) and Tariff

Proposals for the financial year 2009-10 by October 31, 2008. The Central Discom

vide its letter of 30th

October 2008 and West Discom vide its letter of 31st

October

2008 requested the Commission to consider the time extension of 15 days for filing of

their petitions. The Commission accepted the request. The Central Discom and West

Discom filed their petitions for determination of ARRs on November 18 2008. The

Commission noted that the two Discoms had not filed their Tariff Proposals along

with the petitions. Hence vide its Order Sheet of 22/11/2008 the Commission directed

West and Central Discoms to file their Tariff Proposals at the earliest else their

petitions filed for determination of ARRs will not be construed as filed.

1.3 The East Discom had neither filed its petition for determination of ARR for the year2009-10 nor sent any communication in this regard to the Commission. TheCommission through its letter No. 2562 of November 28, 2008 directed the East

Discom to file its petition for determination of ARR and tariff proposal for FY 2009-

10 without further delay. As the Discom had not responded to the direction of the

Commission, the Commission vide its letter of December 06, 2008 expressed its

concern over delay in filing the petition and advised the Discom to file its petition for

determination of ARR and tariff proposal by December 15, 2008 failing which the

Commission might consider initiating Suo-Motu proceedings in the matter as per the

provisions under section 1.18 of Commissions Regulations namely MPERC (Terms

and Conditions for determination of tariff for Distribution and retail supply of

electricity and methods and principles for fixation of charges) Regulations, 2006 (RG

27(i) of 2006). In response, the East Discom filed its petition for determination of

ARR on December 14, 2008 along with the request to grant 7 days time for filing ofits tariff proposal. The Commission considered the request and vide its order sheet of

December 18, 2008, advised the Discom that its petition would be construed as filed

only when the tariff proposal was filed.


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1.4 The three Distribution Companies of the State viz. East, Central and West Discomsfiled their tariff proposal on 29/12/2008, 29/12/2008 and 01/01/2009 respectively.

Pursuant to the provisions under section 64(2) of the Electricity Act, 2003 and clause

1.8 of the Regulations, the Commission, vide Order Sheet of January 01, 2009,

directed the petitioners to submit a draft of the gist of their ARR and tariff proposals

to be published in newspapers, for approval of the Commission. The petitioners East

and West Discoms filed the gist on January 16, 2009 while the Central Discom filedon 19/01/2009. The Commission, after having made certain modifications to the draft

public notices, vide its Order Sheet of February 03, 2009 directed the Discoms to

publish the gist of their applications and tariff proposals in the newspapers in English

and Hindi versions at the earliest in their area of jurisdiction for inviting comments

from the stakeholders.

1.5 Meanwhile, the Central Discom, vide its letter number CMD/CZ/TRAC/120 ofJanuary 19, 2009 submitted on affidavit, an amendment to the petition in respect of

calculation mistakes / typographical errors in its petition. The Commission in its

Order Sheet of February 03, 2009 also directed the Central Discom to incorporate all

the corrections in its original petition and file a revised petition .However, based on

their subsequent request and clarifications, their earlier submissions of 19 th January,2009 were accepted as final.

1.6 The gist of the tariff applications and tariff proposals were published by the Central,East and West Discoms in the newspapers on 12/02/2009. The stakeholders were

requested to submit their comments / suggestions / objections by 04/03/2009.

1.7 Meanwhile, the Election Commission of India had announced the time table of LokSabha elections and consequently the Model Code of Conduct was enforced for the

Lok Sabha elections on March 03, 2009. Since the last date for filing of the comments

/ objections / suggestions by the stakeholders on the petitions filed by the Discoms

was 04

th

March 2009 and the public hearings and other activities related with the tariffdetermination exercise were to be carried out after the last date of submission of the

objections i.e. 04/03/2009, the Commission considered it appropriate to refer the

matter for holding the public hearings to the Chief Election Officer, Madhya Pradesh.

Election Commission. In response, the Joint Chief Election Officer, Madhya Pradesh,

vide his letter of March 27, 2009 informed that the provisions of Model Code of

Conduct apply to all organisations/committees, corporations/commissions etc. funded

wholly or partially by Central Govt. or any State Govt. including Electricity

Regulatory Commissions among others. It was also suggested that the existing Tariff

Order of 29th

March 2008 be continued beyond 31st

March 2009.

1.8 In the light of the above, the Commission had to defer the exercise for determinationof tariff for FY 2009-10 till lifting of Model Code of Conduct after the Lok Sabhaelections. The Commission had further decided that the retail tariffs and charges

which were allowed to be recovered by the petitioners in their licensed area of supply

vide Commissions Tariff Order dated 29th

March 2008 shall continue to apply and be

in force till tariff order is issued by the Commission for FY 2009-10. The Order in

this regard was issued on March 30, 2009.


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1.9 In view of the above, during the year 2009-10, the existing tariffs are applicable asdetermined by the Commission in its Tariff Order of 29

thMarch 2008 till this tariff

order comes into effect. The new tariff shall be applicable from 6th

August 2009. The

Commission has determined the Revenue Requirement for the FY 2009-10 in the

present order. The projected revenue receipts have been considered in such a way that

the total revenue requirement for 2009-10 would be recovered for the first four

months of FY 2009-10 based on the existing tariff and for the remaining 8 monthsperiod i.e. up to 31

stMarch 2010 based on tariff as per this order. Differnce between

revenue requirement and revenue receipt, if any, shall be taken care of while truing up

this order.

Gist of the petitions

1.10 The gist of the petitions submitted by the Licensees is given below:Table 1: Snapshot of the petitions filed by the Discoms

1.11 The petitions submitted for Aggregate Revenue Requirement by the Licensees werefound incomplete, in terms of not containing key information, for example, network

statistics for the previous year and that at the time of filing the petitions so as to make

projections of network for future years and consequently work out O&M expenses.

The Licensees also did not submit any analytical study report for estimation of un-

metered sale on the basis of Distribution Transformer Metering (DTR metering).

1.12 The Discoms in their petitions have projected a total revenue gap of Rs. 1103 Crorefor Central Discom, Rs. 1481 Crore for West Discom and Rs. 1468 Crore for East

Discom for FY 2009-10. This revenue gap consists of the projected revenue gap ofFY 2009- 10 based on

(i) projected expenditure and revenue forecast based on current (FY2008- 09) tariffs and

(ii) the amortisation amounts in respect of claimed revenue gap for 2006-07 and 2007-08 for all the three Discoms and also the power purchase

cost for FY 2005-06 for Central and East Discoms.

Discom Financial

year

Revenue

incomefrom

sale of

power

(Rs.

Cr.)

Non

tariffincome

(Rs.

Cr.)

Aggregate

revenuerequirement

(Rs. Cr)

Revenue

gap onincome and

expenditure

for FY

2009-10

(Rs. Cr.)

Revenue

gap filedfor FY

2005-06

to be

amortised

in FY

2009-10

(Rs. Cr)

Revenue

gap filedfor FY

2006-07

to be

amortised

in FY

2009-10

(Rs. Cr)

Revenue

gap filedfor FY

2007-08

to be

amortised

in FY

2009-10

(Rs. Cr)

Total

Revenuegap filed

(Rs. Cr.)

Central FY 2009-10 2,836 43 3,368 -532 -148 -301 -165 -1,103

West FY 2009-10 3,619 38 4,190 -571 - -246 -702 -1,481

East FY 2009-10 2,582 39 3,597 -1,015 -124 -132 -236 -1,468

State FY 2009-10 9,037 121 11,155 -2,119 -272 -679 -1,103 -4,052


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1.13 The West Discom has proposed a tariff hike which translates to additional revenue ofRs. 1094 Crore over the projected revenue of 3618.93 Crore at existing tariffs. The

un-met gap of Rs.387 Crore has been proposed to be kept as Regulatory Assets to be

amortised over a period of five years from FY 2010-11.

1.14 The Central Discom has proposed a tariff hike which translates to additional revenueof Rs. 824 Crore over the projected revenue of 2836 Crore at existing tariffs. The un-met gap of Rs.279 Crore has been proposed to be kept as Regulatory Assets to be


1.15 The East Discom has proposed a tariff hike which translates to additional revenue ofRs. 660 Crore over the projected revenue of 2581.84 Crore at existing tariffs. The un-

met gap of Rs.808 Crore has been proposed to be kept as Regulatory Assets to be


Table 2: Proposed Recovery of Revenue Gap

1.16 Based on arguments submitted and after a detailed scrutiny of the ARR petitions ofthe Discoms and analysis of all additional information submitted by the Discoms

during the process of this scrutiny, the Commission has approved the ARR for FY

2009- 10 for the three Distribution Licensees with appropriate modifications.

Uniform Retail Tariffs across Discoms

1.17 The Government of Madhya Pradesh vide its letter No. 1/79/13/08 dated 20/02/2008had advised the Commission that the entire tariff for various consumer categories in

the State must remain similar, so that interest of all the consumers and Utilities in the

State are protected and no consumer is put at a disadvantage due to geographical

location of the electricity connection. The excerpts of this letter no. 1/ 79/13/08 dated

20.02 2008, addressed to the Commission, are reproduced hereunder:

As a cardinal principle in determination of these tariffs, the Government of MPwould like to ensure that the interest of all the consumers and the utilities in the State

is protected and no consumer is put at a disadvantage because of the geographical

location of his electricity connection. For this purpose, the Government of MP intends

to ensure that:

At least in the foreseeable future, the tariffs for same category of consumers in theState must remain similar;

Discom Total RevenueGap (Rs. Crore)

Revenue increase due to tariffrevision proposed by the

Licensee (Rs. Crore)

Regulatory Asset(Rs. Crore)

East 1468 660 808

West 1481 1094 387

Central 1103 824 279

State 4052 2578 1474


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At the same time, it also believes that no major differences should arise amongthe Discoms in terms of revenue gaps or surpluses, excepting for increase due to

improved efficiency of operations;

The Government intends to provide subsidy or any other form of financialassistance only to identified category (ies) of consumers as per Governments

policy;

While ensuring the aforesaid, it would in no way like the financial interest of anyof the Discom(s) to be jeopardized; and

However, there should also be adequate incentives available to the Discoms forefficiency enhancement.

It may be recalled that vide Govt. letter no.1469/13/06 dated 7th

March2006

and letter no. 8059/13/2006 dated 12th

December2006 similar communications were

sent to the Commission for balancing the aforesaid objectives while determining the

retail tariff for FY 2006-07 & FY 2007-08 respectively. The Commission hadconsidered the view taken by the Government and tried its best to meet these

objectives. The Govt. of M.P. on the similar lines, further advises the Commission to

assist the Government in achieving the objectives outlined above for the current

multi-year tariff determination also (for the control period 1st

April 2008 to 31st

March2010). The Commission may provide recommendations to the Government

under section 86 (2) (iv) of the Electricity Act if it considers that the Government

should take any further action for achieving the said objectives.

1.18 In the light of above, for the year 2009-10 the views of Government of MadhyaPradesh were sought vide Commissions letter of March 04, 2009. The State

Government vide its letter of May 20, 2009 advised to take similar action for FY2009-10 as was taken by the Commission in this regard for FY 2008-09.

1.19 It may be recalled that based on similar intent of the GoMP during the previous tariffsetting process (for FY 2008-09), the Commission had, after consultation with the

Secretary (Energy), GoMP, worked out a method of reallocation of generating

capacities among the Discoms and Tradeco and intimated the State Govt. accordingly.

This reallocation resulted in balancing the final revenue gap / surplus across the

Discoms by creating a differential in the input power purchase cost of the Discoms.

Through this method, it was possible to achieve uniform retail tariffs in MP in FY

2008-09.


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1.20 Similarly, in order to balance the revenue gaps and surpluses across the threeDistribution Licensees in FY 2009- 10, while also achieving the State Govt.s intent

of maintaining uniform retail tariffs across the State, the Commission, after

consultation with the Secretary (Energy), Government of MP, again advised the State

Govt. for re-allocation of existing and new generating capacities among the Discoms

and MP Tradeco. This was communicated to the GoMP vide Commissions letter No.

MPERC/D(RE)/2009/1218 dated 11th

June 2009. The State Government vide itsnotification No 3513-F-3-24-2009 dated 16

thJune 2009 revised its earlier notification

of March 19, 2008. The Commission, however, would like to mention that the

allocation now made is for the year 2009-10 only. It may have to be changed in future

years depending upon the possible changes in consumer mix and load growth of the

Discoms, if the State Government wishes to maintain uniform retail tariffs in future

also.

State Advisory Committee

1.21 The Commission has convened a meeting with the Members of the State AdvisoryCommittee (SAC) on 03/06/2009 for the purpose of discussing these petitions and the

suggestions/comments received from the public. A presentation on the main featuresof the tariff petitions covering major items of expenditure and revenue has been made

before the Members of the Committee. The Members have provided several valuable

suggestions which have been considered by the Commission in this Order at

appropriate places.

Public Hearing

1.22 The public hearings on the tariff petitions filed by the Discoms were held by theCommission at the Head Quarters of the Discoms and at Commissions Office for

Non-Government Organisation (NGOs). These hearings were conducted on the

following dates:

Table 3: Public hearing

S. No. Name of Discom Date of public hearing

1. East Discom, Jabalpur 20.05.2009

2. West Discom, Indore 18.05.2009

3. Central Discom, Bhopal 21.05.2009

4. For NGOs only at Bhopal 22.05.2009

1.23 The Commission invited several NGOs to take part in the process of tariffdetermination and represent interests of the consumers. The

comments/objections/suggestions received during the hearings have been duly

considered while finalising this Order.

Distribution Losses

1.24 The loss reduction trajectory notified by the Government of M.P. specifies thefollowing distribution loss levels for the three Discoms for the year 2009-10:-


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East Discom Central Discom West Discom

26.50% 34.00% 25.50%

1.25 As against the above targets, the Discoms have filed their ARRs based on thefollowing loss levels

East Discom Central Discom West Discom

31.86% 32.48% 27.40%

1.26 It is seen that the actual distribution losses of the three distribution licensees in thepast have generally been much higher than those specified by the State Government.

Incidentally, the loss reduction trajectory notified by GoMP is quite liberal compared

to what was prescribed by this Commission earlier. Although based on reports filed

by the Discoms, there has been some reduction in distribution losses over the years,

the rate of reduction is very slow and actual distribution losses still continue to be

much higher when viewed in the context of prevailing losses in most of the

neighbouring States as also in comparison to the Governments loss reduction targets.

1.27 Many States have done commendable work in this area and have been able todrastically reduce their distribution losses thereby giving relief not only to theelectricity consumers by way of increased power availability and low tariff levels but

also to the distribution licensees by way of improved financial health as well as to the

Governments of those States as progressively financial support needed from the State

Governments by the distribution licensees has reduced. It is a matter of great concern

to the Commission that the losses in the State of Madhya Pradesh continue to be at

unacceptably high levels. It is regretfully noted that now there are only 2-3 States in

the Country where the losses are higher than those in the State of Madhya Pradesh.

1.28 It has to be borne in mind that presently about 75% of total revenue requirement ofthe licensees is towards cost of power purchase. It is a matter of fact that while

working out the revenue requirement of the distribution licensees, the Commission

does not recognize the cost of power purchase at higher level of actual losses. TheCommission determines the revenue requirement on the basis of targeted loss level,

which is generally much lower than the actual loss level. Thus, by adopting this

approach, while the Commission ensures that the consumers do not suffer on account

of higher losses, substantial additional costs have to be absorbed by the distribution

licensees.

1.29 These distribution licensees are Government owned companies. Thus, eventually thisadditional burden over and above the subsidy provided to some consumer categories,

devolves on the State exchequer by way of bail out or increased subvention to keep

the distribution companies financially afloat. Over the years, losses incurred due to

this extra burden have not only wiped out the entire equity capital of the licensees buthave also forced them to default against payments due from them. In short, these

licensees are fast becoming financially sick. It has become imperative and is crucial

for well being of the Sector that a time bound concerted drive is launched by the

distribution licensees, with the State Government rendering administrative support

and also by involving public at large to reduce the losses so as to take the State to the

first five States in terms of lower losses and financially vibrant licensees from the

present level of bottom five in the next 2-3 years period.


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Energy Accounting and Meterisation

1.30 Proper Energy Accounting and Energy Audit at various levels such as sub-stations,distribution feeders, distribution transformers and at consumer end provides reliable

data about the actual level of distribution losses technical and others. This data is

used to prepare appropriate loss reduction strategies and schemes.

1.31 Energy Accounting can be achieved only if energy meters are installed and made useof at all metering locations.

1.32 The Electricity Act 2003 mandates compulsory meterisation of all consumers withintwo (2) years from the appointed date of the Act. However, meterisation is another

area which has not been given due attention and importance by the Distribution

Companies.

1.33 The Commission, through its various tariff orders and orders in other related cases,has been repeatedly emphasizing this aspect and had also been setting achievable

targets in consultation with the distribution licensees. The Commission believes that

no business can run successfully if the goods sold are not measured and billing is

done on estimation basis. Any supply made in this way is a sure recipe for failure,

which is quite evident from the way the distribution licensees had been performing so

far. Unmetered supply also encourages avoidable wastages, as only a fixed quantum

of charges is levied irrespective of the actual consumption. Thus, there is absolutely

no incentive to save and no penalty for excessive consumption. With the overall

availability of power being less than the demand, the distribution licensees have to

frequently resort to load shedding thereby hurting the interests of consumers receiving

supply through metered connections.

1.34 The Commission understands that there are issues connected with 100% meterizationespecially in the area of individual meterisation of a very large number of agricultureconsumers. Discoms have contended that in several cases meters installed are

prevented from recording actual consumption as they are bypassed. In the past, the

West Discom had to resort to recalling a very large number of meters from such

consumers and bill them on the basis of normative consumption prescribed by the

Commission. This, however, does not address the real problem and also is inequitable

to consumers as well as to the licensees. The Commission had time and again

expressed its willingness to consider any alternate viable solution proposed by the

distribution companies. Unfortunately, no specific proposal has been put up to the

Commission so far. The Commission is of the view that billing to agriculture

consumers on the basis of energy recorded at distribution transformer could be a

better option till more advancement and affordability in technology takes place

enabling billing of an individual consumer on the basis of his actual recordedconsumption. The Commission has repeatedly instructed all Discoms, especially West

Discom which though has largest agriculture consumers but lowest metered

agricultural consumers, to step up meterisation of distribution transformers. The

Commission has noted with concern that not only the progress of DTR meterisation is

poor, in cases what has been done is flawed. The Commission would now be initiating

appropriate actions to achieve tangible results in this vital area.


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Annual Revenue Requirement of Discoms

1.35 The Commission has revised the retail supply tariffs for various categories which areannexed to this Order. The Commission has estimated the overall revenue

requirement and the revenues accruing from the revised tariffs for FY 2009-10 for the

three Discoms. These are contained in the detailed Order given Discom-wise.

1.36 The Annual Revenue Requirement for the year 2009-10 as determined by theCommission in the present order in respect of the three Distribution Licensees of theState is given below:

Table 4: Annual Revneue Requirement of the Discoms as determined by the

Commission (Rs. Crs.)

Particulars East West Central Total

(A)Power Purchase Cost (Incl. Tr. Charges) 2,107.53 3,309.40 2,144.48 7,561.41

(B) ARR for Wheeling Activity 652.33 707.84 594.05 1,954.22

(C) ARR for Retail Activity -0.12 23.39 11.31 34.58

Total ARR for FY 2009-10 2,759.74 4,040.63 2,749.84 9,550.21

1.37 The Commission has determined the ARR and the tariffs for FY 2009-10 for the threeDistribution Licensees of the State on the basis of the normative loss levels as

prescribed by the State Government. Had it been done on the loss levels as given in

the Commissions tariff order for FY 2008-09 or even on the basis of the loss levels as

filed by the Discoms, power purchase cost would be of the order of Rs. 7843 Crore

and Rs. 7758 Crore respectively. In the present order the Commission has considered

the normative loss levels and therefore, the power purchase expenses have been

limited to Rs. 7561 Crore. This benefit of Rs. 282 Crore has been passed on to the

consumers in the present tariff order.

1.38 The MP Power Generating Company Limited had filed a petition for truing up of itsGeneration tariff Order for FY 2006-07. The East and Central Discoms had also filedthe review petitions for truing up of the Retail Supply Tariff Orders for FY 2005-06

for power purchase cost. The three Discoms had also filed the petitions for truing up

of retail supply tariff order for FY 2006-07. The Commission had already passed the

detailed orders in respect of these petitions. The effect of these true-ups is to be

considered in the present order. Accordingly, the following costs have been allowed

to be added to the ARRs of the three Discoms:

Table 5: True-up costs allowed (Rs. Crs.)

Sl.

No.

Name of the Company Amount of True-up Allowed (Rs. Crore)

East West Central Total

1 True-up of MP Genco Order for FY 2006-07 11.97 18.80 12.18 42.95

2 True-up of Power Purchase of FY 2005-06* 6.39 --- 7.83 14.22

3 True-up of Retail Supply Tariff Order of 2006-07 (-)128.86 (-)341.00 115.40 (-)354.46

4 Total (-)110.50 (-)322.20 135.41 (-)297.29

* These are the additional true-up costs emerging out of the review petitions filed by East Discom and Central Discom

(Petition No. 29/2008 and Petition No.32/2008 respectively) in respect of the Commissions order on true-up of ARRs of2005-06.


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1.39 Taking into consideration the effects of the True-ups as indicated above, theCommission has approved the ARR for the determination of tariff. The table below

indicates the approved ARR, revenue and revenue gap at current tariff and revenue

from the current tariff:

Table 6: Gap/Surplus at new tariffs

Particulars East West Central Total

Total ARR for FY 2009-10 (Rs. Crs.) 2759.74 4040.63 2749.84 9550.21

Power Purchase cost for FY2005-06 (Rs. Crs.) 6.39 0.00 7.83 14.22

True-up for FY2006-07 (Discom) (Rs. Crs.) -128.86 -341.00 115.40 -354.46

True-up for FY2006-07 (Genco) (Rs. Crs.) 11.97 18.80 12.18 42.95

Total FY 2009-10 ARR as approved (Rs. Crs.) 2649.24 3718.43 2885.25 9252.92

Revenue at Current Tariffs (Rs. Crs.) 2568.37 3581.57 2780.49 8930.43

Gap at Current Tariffs (Rs. Crs.) -80.87 -136.86 -104.76 -322.49

Revenue at New Tariffs (Rs. Crs.) 2649.21 3718.92 2884.56 9252.69

Final Gap/Surplus (Rs. Crs.) -0.03 0.49 -0.69 -0.23

1.40 The Commission directs that the Distribution Licensees must regularly andperiodically (preferably on a quarterly basis) review the status of sales and estimates

of revenue and in case any serious imbalance arises, they must approach the

Commission for further appropriate directions.

1.41 The Commission had, vide letter No.1065 of May 27, 2009, asked the DistributionLicensees of the State to indicate the minimum assured supply hours for the following

different categories:

(a) Commissionary Headquarters(b) District Head Quarters(c) Tehsil Headquarters(d) Rural Three Phase(e) Rural Single Phase

1.42 The Discoms had responded as given below:Table 7: Hours of supply as provided by the Discom

Sl.

No.

Particulars Central Discom West Discom East Discom

Reply Reference CMD/CZ/TRAC/202Dated 29/05/2009 CMD/WZ/TRAC/8058Dated 29/05/2009 EZ/TRAC/ARR-FY10/736Dated 02/06/2009

1. Commissionary

Headquarters

22 Hours 22.5 Hours 22 Hours

2 District

Headquarters

20 Hours 22 Hours 19 Hours

3 Tehsil

Headquarters

15 Hours 14 Hours 16 Hours

4 Rural Three Phase 08 Hours 06 Hours 07 Hours

5 Rural Single Phase 04 Hours 06 Hours 04 Hours


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1.43 The Commission, by taking into cognizance the information as submitted by theDiscoms directs to maintain the minimum supply hours. The Commission may

consider reduction in the fixed charges proportionately if the minimum supply hours

as specified below are not maintained by the Discoms:

(a) Commissionary Headquarters - 22 Hours(b) District Head Quarters - 19 Hours(c) Tehsil Headquarters - 14 Hours(d) Rural Areas - 12 Hours

Out of which Minimum for 06 (Six) Hours Three Phase supply is to be

maintained.

Implementation of the Order

1.44 The Distribution Licensees must take immediate steps to implement the Order aftergiving seven (7) days public notice in the newspapers, in accordance with clause 1.30

of MPERC (Details to be furnished and fee payable by licensee or generating

company for determination of tariff and manner of making application) Regulations,

2004. The tariff determined by this Order shall be applicable from 6th

August 2009 to

31st March 2010, unless amended or modified by an Order of this Commission. The

previous Tariff Order dated 29th

March 2008 shall remain valid till the beginning of

implementation of this Order.

1.45 The Commission has thus accepted the petitions of the Distribution Licensees of theState with modifications and conditions, and has determined the retail tariffs and

charges recoverable by the Licensees in their licensed area of supply during the FY

2009-10. The Commission directs that this Order be implemented along withdirections given and conditions mentioned in the detailed Order and schedules

attached to this order. It is further ordered that the Licensees are permitted to issue

bills to consumers only in accordance with the provisions of this Tariff Order.

Ordered as above, read with attached detailed reasons, grounds and conditions.

(C. S. Sharma) (K.K.Garg) (Dr. J.L. Bose)

Member (Economics) Member (Engineering) Chairman

Dated: 29 July 2009

Place: Bhopal


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A2: DETAILED REASONS AND GROUNDS ATTACHED WITHRETAIL SUPPLY TARIFF ORDER ISSUED BY MPERC ON 29

JULY 2009 IN RESPECT OF PETITION NUMBER 72/08, 73/08

AND 76/08

Shri R.K.Dubey Chief Engineer and Shri Praveen Jain Executive Engineer represented theEast Discom.

Shri R. C. Somani (Addl. SE, Retd.) and Shri S. C. Saini (Addl. SE) represented the West

Discom.

Shri A.R. Verma (Addl. S.E) and Shri P.K. Kamthan (J.D., Accounts) represented the Central

Discom

Following is the detailed Order with grounds and reasons determining the tariff and charges

recoverable during FY 2009-10 by the three Distribution Licensees. The detailed Order

discusses about the functional and financial performance of the three Distribution Licensees

and includes a section dealing with the status report on the compliance of Commissions

Directives as well as the response of the Licensees and Commissions observations on the

suggestions and comments received from the stakeholders on the ARR and the tariff

proposals.


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A3: AGGREGATE REVENUE REQUIREMENT FOR FY 2009-10 OFMADHYA PRADESH POORVA, PASCHIM & MADHYA

KSHETRA VIDYUT VITARAN COMPANIES LIMITED (EAST,

WEST & CENTRAL DISCOMS)

Summary of Sales Forecast as proposed by the Licensee

3.1 The total sale of the Discoms as projected during FY 2009-10 is 24940 MUs viz. EastDiscom 6916 MUs, West Discom 10384 MUs & Central Discom 7640 MUs.

East Discom

3.2 Category wise CAGR of past 3 years sales, connected loads and number of consumerswere taken and based on historical trends the sales have been projected in different

categories. East Discoms sales in LT category are projected as 3998 MUs (or 57.81

% of total sales) and in HT category as 2918 MUs (or 42.19 % of total sales).

West Discom

3.3 Category wise CAGR of past 5 years & 2 years sales were taken into account. Basedon historical trends the sales have been projected in different categories. West

Discoms sales in LT category are projected as 6,939 MUs (or 66.82% of total sales)

and in HT category as 3,445 MUs (or 33.18 % of total sales).

Central Discom

3.4 Category wise CAGR of past 5 years & 2 years sales were taken into account. Basedon historical trends the sales have been projected in different categories. Central

Discoms sales in LT category are projected as 5,210 MUs (or 68.19% of total sales)and in HT category as 2,430 MUs (or 31.81 % of total sales).

Table 8: Projected Sales of the Discom for FY 2009-10

Consumer Category Sales in MU

East West Central

LT

CONSUMERS LV 1 Domestic Light, Fan and Power 1665 1961 2346

LV 2 Non-Domestic Light, Fan and Power 325 504 542

LV3 Water Works and Street Lights 185 155 138

LV 4 LT Industrial 209 451 181

LV 5 Agricultural Consumers 1614 3868 2003TOTAL (LT) 3998 6939 5210

HT

CONSUMERS HV 1 Railway Traction 400 319 764

HV 2 Coal Mines 508 0 38

HV 3.1 Industrial 1184* 2647* 1096

HV 3.2 Non Industrial - - 249


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Consumer Category Sales in MU

East West Central

HV 4 Seasonal 5 10 2

HV 5.1 Public Water Works - - -

HV 5.2 HT Irrigation 71** 230** 102**

HV 6 Township and Residential Colony 329 0 179

HV 7 Bulk Supply to Exemptees 421 239 0

TOTAL (HT) 2918 3445 2430

TOTAL LT + HT 6916 10384 7640

* Industrial & Non industrial taken together

** HT Irrigation & Public Water Works taken together

Energy balance and power purchase as proposed by the Licensees

3.5 The Licensees have submitted that the information provided by them is based oninteractions with Madhya Pradesh Power Generating Co. Ltd (MPPGCL), MP PowerTransmission Company Limited (MPPTCL) and MP Power Trading Company Ltd.

(MP Tradeco). In this regard, the Licensees have also claimed that they have taken

guidance from Section 18 of the MPERC (Power Purchase and Procurement)

Regulations 2004 Revision 1, 2006 (RG-19(I) of 2006) which states that

The Distribution Licensee shall make long-term demand and supply availability

assessments in consultation with any or all concerned including state sector

Generating Companies, Discoms, private Distribution Licensees, central sector

Generating Companies and Transmission Companies / Regional Electricity Board,

National / Regional Load Dispatch Centers, Central Electricity Authority.

3.6 The Distribution Licensees claim that they have considered available informationfrom the key sector participants for computation of power purchase cost for the

purpose of arriving at revenue requirement. The Distribution Licensees requested the

Commission to take due cognizance of this fact while computing allowable power

purchase cost of the Licensees. The Commission has been further requested to give

opportunity to the Licensees to submit updated information, if such information

becomes available to the Distribution Licensees from MP Genco, MP Transco or

MPTradeco.

3.7 The Licensees have considered the percentage allocation of capacity (weightedaverage of 30.76 % East Discom, 36.49% West Discom and 32.74% Central Discom)

as per the Governments notification dated 19th March 2008 for the year 2008-09 asthe basis of capacity allocation for the year 2009-10 also. The East, West & Central

Discoms have calculated the details related to the following items as per the above

allocation:

Monthly energy available from all sources Annual fixed charge and energy charge payable to generators


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Estimated payment to generators on account of incentives, income tax, duties,etc.; and

Estimated inter-state transmission charges to be paid.3.8 The total requirement of energy for total sale of 24940 MUs as filed by the three

Discoms 38507 MUs the Discom-wise break-up is shown in table below:

Table 9: Energy balance for FY 2009-10 as proposed by Discoms

Particulars East

Discom

West

Discom

Central

Discom

1 Total Energy Sales (MU) 6,916 10,384 7,641

2 Distribution Loss (%) 31.86% 27.4% 32.48%

3 At T-D Interface (MU) 10,398 12,986 11,614

4 Transmission Loss of MPPTCL (%) 4.9% 4.9% 4.9%

5 At MP Periphery 10,934 14,657 12,202

6 External Losses (MU) 249 267 1997 Gross Energy Requirement (MU) 11,182 14,924 12,401

Assessment of Energy Availability by Discoms

3.9 The Licensees have claimed that assessment of availability of energy from varioussources is based on discussions with Tradeco. Availability of energy from MP Genco

is based on monthly forecast of generation by MP Genco for FY 2009-10. Projections

of generation during FY 2008-09 and FY 2009-10 are based on the 2008-09

projections adjusted for increased availability (full year operation) from the new

stations to be commissioned in FY 2008-09. The Licensees have claimed that

information on projected availability for FY 2009-10 from Central Generating

Stations (NTPC, NPC) was not available at the time of preparation of this petition.

Actual generation for the previous two years and first four months of the year 2008-

09 have been used as basis for estimating availability.

3.10 Licensees have claimed that they have also considered availability from new stationsexpected to be commissioned in FY 2009-10. The Licensees further stated that as per

GoMPs notification dated 19th

March 2008 and the Commissions Retail

Supply Tariff Order dated 29th

March 2008 in the context of new stations,

availability from such stations has been projected based on normative PLF of 80%

and 68% and an Auxiliary Consumption of 8.5% and 3% for Coal and Gas (if any)

based Stations respectively. Also availability from RSEB (Chambal, Satpura) &MSEB (Pench) is projected based on the average of last three years of actual

dispatched energy to Madhya Pradesh. Availability for FY 2009-10 from CPP &

Wind Generator is based on FY 2007-08 actual generation.

3.11 The following table provides the annual availability from each of the sources whilethe monthly availability for FY 2009-10 has been provided by the licensees in Format

F1-a of the filings.


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Table 10: Energy Availability for Discoms for FY 2009-10

Sr.

No.

Station FY 2009-10 In MU

MP State MP Poorv

KVVCL

MP Paschim

KVVCL

MP Madhya

KVVCL

1 NTPC-Korba 3,319 796 1,327 1,195

2 NTPC-Vindyachal I 3,028 787 1,151 1,090

3 NTPC-Vindyachal II 2,294 872 895 528

4 NTPC-Vindyachal III 1,635 785 523 327

5 NTPC-Kawas 682 330 225 127

6 NTPC-Gandhar 672 328 221 122

7 KAPP 473 227 151 95

8 TAPS 477 229 153 95

9 NTPC Farakka 90 44 29 17

10 NTPC Talcher 79 37 26 17

11 NTPC Kahalgaon 106 51 34 20

12 NHDC - Indira Sagar 2,621 996 943 681

13 Sardar Sarovar 1,864 382 578 90414 Omkareshwar HPS 1,049 504 315 231

15 Lanco Amarkantak - - - -

16 ATPS - Chachai-PH 1&2 706 157 327 221

17 STPS - Sarani-PH 1, 2 & 3 6,517 1,481 3,037 1,999

18 SGTPS - Bir'pur - PH 1 & 2 5,224 1,149 1,933 2,142

19 CHPS-Gandhi Sagar 345 97 131 117

20 CHPS-RP Sagar & Jawahar Sagar - - - -

21 Pench THPS 315 69 120 126

22 Bansagar Tons HPS-Tons 960 192 307 461

23 Bansagar Tons HPS-Silpara 68 14 22 33

24 Bansagar Tons HPS-Devlone 77 15 25 37

25 Bansagar Tons HPS-Bansagar IV 60 29 18 13

26 Birsingpur HPS 45 10 14 21

27 Bargi HPS 508 107 163 239

28 Rajghat HPS 90 27 35 28

29 Marhi Khera HPS 74 36 22 16

30 Mini-Micro HPS - - - -

31 RSEB (Chambal,Satpura) 338 107 127 104

32 UPPCL (Rihand,Matatila,Rajghat) - - - -

33 MSEB(Pench) 0.17 0.05 0.06 0.06

34 GridCo (Hirakud) - - - -

35 Others 1 (Wind & CPP) 66 21 25 20

36 MPTradeco 3,987 843 1,882 1,262Grand Total Dispatch (MU) 37,768 10,720 14,759 12,290

3.12 Above Discom wise dispatch schedule is based on: Western Region Power Committees (WRPC) Letter on Capacity Allocation of

Central Generating Stations to the State of Madhya Pradesh dated 15th Oct 2008

effective from 17 Oct 2008


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Minutes of the 392nd OCC Meeting of WRPC dated 21st Oct 2008 Schedule of New Stations coming up during FY 2008-09 and FY 2009-10 as provided

by MPTradeco

Capacity Allocation of individual station to the three Discoms of Madhya Pradeshbased on the GoMP gazette notification dated 19

thMarch 2008

Month-wise estimated Energy Requirement of the individual DiscomAssessment of Power Purchase Cost (Fixed and Variable Cost) by the Discoms

3.13 The Fixed Costs of MP Gencos stations for FY 2009-10 have been kept at the samelevel as that of FY 2008-09 and as approved by the Commission in its Multi Year

Tariff Order dated 7th March 2006 and Order dated 18th March 2008. Central Sector

Stations for which capacity allocation percentage to each individual Discom has been

defined by GoMP in its 19th March 2008 notification, Fixed Costs as approved by

Central Electricity Regulatory Commission Orders for each individual station for FY

2008-09 have been adopted for FY 2009-10 also. The reason for adopting FY 2008-09

Fixed Costs of MP Gencos Stations and Central Generating Stations, for FY 2009-10

is because Tariff Orders for the period FY 2009-10 are not available at the time of thisfiling.

3.14 Variable costs (including FPA) for MPGenco & Central Generating Stations havebeen adopted as per the August 2008 bill and have been annually escalated at the rate

specified by the CERC in its notification dated 6th

Oct 2008.

3.15 For the new stations of the Central & State Sector Stations, the followingmethodology has been adopted:

For Kahalgoan Phase II, fixed and variable cost as approved by CERC till 2008-09 inits Provisional Tariff Order dated 18

thDec 2007 has been adopted. Also the variable

cost has been escalated at the rate of 6.77% as per the 6th Oct 2008 notification on

escalation rates approved by CERC.

For Sipat-I and Sipat II, Fixed and Variable Cost as indicated in the Retail SupplyTariff Order dated 29

thMarch 2008 has been adopted. Also, the variable cost has been

escalated at the rate of 6.77% as per the 6th

Oct 2008 notification on escalation rates

approved by CERC.

For NTPC Barh Phase I single part tariff as provided in the Power PurchaseAgreement has been adopted for FY 2009-10.

For DVC Mejia single part provisional tariff as approved by the CERC in its orderdated 22nd Aug 2008 has been adopted. For DVC Chandrapur, single part tariff of

DVC Mejia has been adopted since there were no means to assume this cost for thisparticular station.

For MP Genco rate for Birisinghpur Extension and Amarkantak Phase III, fixed andvariable cost is taken as indicated in the Retail Supply Tariff Order dated 29

thMarch

2008. Also, the variable cost has been escalated at the rate of 6.77% as per the 6th

Oct

2008 notification on escalation rates approved by CERC


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3.16 The following table provides a summary of fixed and variable costs of each of thestations that have been considered for determining the power purchase cost with the

following assumptions:

East, West and Central Discoms share of fixed cost has been considered for its ARRpurpose.

Fuel Price Adjustment (FPA) has been projected in the same manner as that ofvariable cost per unit and is included in the variable component of the generation cost.

The fixed and the variable costs of the new stations have been pooled together to getan average bulk supply rate

1at which MP Tradeco will supply power to each

individual Discom.

Table 11: Fixed & Variable Cost for All Three Discoms for FY 2009-10

Sr.

No.

Station Variable

Charge

(Rs. /

kWh)

Fixed

Cost - of

MP State

(Rs.

Crore.)

Fixed

Cost

East

Discom

(Rs.

Crore.)

Fixed

Cost

West

Discom

(Rs.

Crore.)

Fixed

Cost

Central

Discom

(Rs.

Crore.)

1 NTPC-Korba 0.67 85 20 34 30

2 NTPC-Vindyachal I 1.15 97 25 37 35

3 NTPC-Vindyachal II 1.11 117 44 45 27

4 NTPC-Vindyachal III 1.12 133 64 43 27

5 NTPC-Kawas 5.51 56 27 18 11

6 NTPC-Gandhar 2.25 72 35 23 14

7 KAPP 2.04 - - - -

8 TAPS 2.65 - - - -

9 NTPC Farakka 1.42 5 2 2 1

10 NTPC Talcher 0.78 4 2 1 1

11 NTPC Kahalgaon 1.54 3 1 1 1

12 NHDC - Indira Sagar - 478 182 172 124

13 Sardar Sarovar - 157 32 49 76

14 Omkareshwar HPS - 263 126 79 58

15 Lanco Amarkantak 2.25 - - - -

16 ATPS - Chachai-PH 1&2 1.25 51 11 24 16

17 STPS - Sarani-PH 1, 2 & 3 1.40 191 40 92 59

18 SGTPS - Bir'pur - PH 1 & 2 1.07 301 66 111 123

19 CHPS-Gandhi Sagar - 6 2 2 2

20 CHPS-RP Sagar & Jawahar

Sagar

- - - - -

21 Pench THPS - 8 2 3 3

1Bulk Supply Rate includes fixed & variable Generation Cost and also cost of the associated Transmission

Capacities of both PGCIL & MP Transco.


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Sr.

No.

Station Variable

Charge

(Rs. /

kWh)

Fixed

Cost - of

MP State

(Rs.

Crore.)

Fixed

Cost

East

Discom

(Rs.

Crore.)

Fixed

Cost

West

Discom

(Rs.

Crore.)

Fixed

Cost

Central

Discom

(Rs.

Crore.)

22 Bansagar Tons HPS-Tons - 92 18 30 44

23 Bansagar Tons HPS-Silpara - - - - -

24 Bansagar Tons HPS-Devloned - - - - -

25 Bansagar Tons HPS-Bansagar IV - 16 8 5 4

26 Birsingpur HPS - 4 1 1 2

27 Bargi HPS - 10 2 3 5

28 Rajghat HPS - 4 1 2 1

29 Marhi Khera HPS - 24 12 7 5

30 Mini-Micro HPS - - - - -

31 RSEB (Chambal,Satpura) 2.21 - - - -

32 UPPCL

(Rihand,Matatila,Rajghat)

- - - - -

33 MSEB(Pench) 2.77 - - - -

34 GridCo (Hirakud) - - - - -

35 Others 1 (Wind & CPP) 2.27 - - - -

36 MPTradeco 2.60 -

Grand Total 2,176 723 783 669

Assessment of Other Elements of Power Purchase Cost by the Discoms

Inter-State Transmission Charges

3.17 The Licensees have split the Inter State Transmission Charges into two componentsfor the projection period FY 2009-10.

(a) Inter State Transmission Cost associated with existing capacities as allocatedto each Discom and

(b) Inter State Transmission Cost associated with new and upcoming capacities allocated to MP Tradeco

3.18 The reason furnished by the Licensees for such spilt is to allocate the cost of newcapacities to MP Tradeco, since the MP Tradeco will supply power to the Discoms on

a bulk supply rate to the extent of the unmet demand of the Discom after their existing

allocations are exhausted. Thus, to avoid paying up for the entire transmission

capacity which may or may not be used by the Licensee during the projection period,

such bifurcation is required. As per MPERC regulation, the transmission charge is to

be allocated on the basis of the ownership of the generating capacities. The same

principle has been used.


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Inter State Transmission Charges associated with existing capacities:

3.19 The Licensees have considered PGCIL charges same as had been applicable duringprevious year for the projection period, since there has been no information on

additional capitalisation (if any) for existing transmission and new transmission

network for transmitting power from existing stations to the MP State periphery.

3.20 The Licensees have also allocated the total PGCIL cost based on the allocationpercentage which has been derived based on the weighted average capacity and

allocation percentage of each Discom from Eastern Region and Western Region

Stations and Sardar Sarovar Project which is also connected to PGCIL network. The

Licensees have claimed the following projected PGCIL costs for FY 2009-10

Table 12: Intra-state transmission charges (Rs. Crs.)

Allocation % Discom FY 2008-09 FY 2009-10

33.57% MP Madhya KVVCL 60 61

34.55% MP Paschim KVVCL 62 6231.88% MP Poorv KVVCL 57 58

Total 180 181

Inter State Transmission Charges associated with new and upcoming capacities:

3.21 Transmission Charges for the new and upcoming capacities are projected on theestimated basis. Benchmark of Rs. Crore. / MW has been derived based on actual data

of the FY 2008-09. The benchmark is net of LDC Charges. Following are the

expected capacity additions in the central sector:

Table 13: New Capacities (in MW)

Station FY 2008-09 FY 2009-10

NTPC Sipat - Stage I 94 189

NTPC Sipat - Stage II 162 162

NTPC Kahalgoan Stage II 71 107

NTPC Barh I 0 75

DVC (Mejia TPS Extn.) 200 200

DVC (Chandrapur TPS Extn.) 0 100

Total Capacity (MW) 527 833

3.22 Based on the capacity additions in the central sector and the derived benchmark,PGCIL Charges payable by MP Tradeco are as follows, which has been included in

the bulk supply rate at which MP Tradeco will sell power to Discoms if required by

the Discoms.


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Table 14: PGCIL charges payable by MP Tradeco

PGCIL Charges payable by MP Tradeco FY 2008-09 FY 2009-10

PGCIL Charges for new & upcoming central sector stations (Rs. Crore.) 27 59

Intra - State Transmission Charges

3.23 The Commission had notified the annual transmission charges payable by eachDiscom to MPPTCL vide its Transmission Tariff Order for FY 2006-07 to FY 2008-

09 as under.

Table 15: Intra-state transmission charges as per Commissions order

Annual MPPTCL Charges (Rs. Crore.) FY 2006-07 FY 2007-08 FY 2008-09

MPPoorvKVVCL 177.62 191.58 199.24

MPMadhyaKVVCL 195.05 210.39 218.75

MPPaschimKVVCL 225.03 242.74 252.41

SEZ 1.00 2.24 2.06

Total 598.70 646.95 672.46

3.24 Also, as per Commissions Order dated 19th March 2008, MP Transco was asked tocollect its True Charges of FY 2006-07 from its Long Term Customers along with the

approved Annual Transmission Charges to be paid by such customers. Thus, the

Annual MPTransco Charges were revised for FY 2008-09 and are now as shown

below:

Table 16: Intra-state transmission charges allowed in FY 2008-09

Annual MPPTCL Charges (Rs. Crore.) FY 2008-09

MP Poorv KVVCL 220.70

MP Madhya KVVCL 242.45

MP Paschim KVVCL 282.68

SEZ 1.10

Total 746.93


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3.25 For estimating MPPTCL Charges during the projection period, the licensees haveadopted the same methodology as used for projecting PGCIL Charges. In addition to

the charges, the licensees have also adjusted the Incentive2

and Income Tax (IT) &

Fringe Benefit Tax (FBT)3

component in the annual transmission charges for the

projection period.

3.26 As the Commission is still to notify the Annual Transmission Charges of MP Transcofor the period FY 2009-10 and the Control period for the first Multi Year Tariff is

over by 31st march 2009, the Licensees have worked out the Cost of Annual

Transmission Charges per MW and derived the Annual Transmission Charges for FY

2009-10 based on the capacity allocated to the Licensees during the same period as

per the GoMP notification dated 19th March 2008.

3.27 MPPTCL Charges associated with existing generation capacities and payable by eachDiscoms are as follows:

Table 17: Intra-state transmission charges filed by Discoms for FY 2008-09 and FY

2009-10

Annual MPPTCL Charges as payable by the Discoms (Rs. Crore.) FY 2008-09 FY 2009-10

MP Poorv KVVCL 224.69 202.68

MP Madhya KVVCL 239.90 215.73

MP Paschim KVVCL 268.61 240.43

Total 733.20 658.84

3.28 MPPTCL Charges associated with new and upcoming generation capacities and aspayable by MP Tradeco are as follows, which have been included in the bulk supply

rate at which MP Tradeco will sell power to Discoms if required by the Discoms.

Table 18: Intra-state transmission charges payable by Tradeco for FY 2008-09 and FY

2009-10

MPPTCL Charges payable by MP Tradeco FY 2008-09 FY 2009-10

Annual MPPTCL Charges payable by MP Tradeco (Rs. Crore.) 89.09 133.70

2 As per MPPTCL Bill dated 30th July 2007 for FY 2006-073

As per MPPTCL Bill dated 1st

October 2007 for the period Apr 07 to Sept 07


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Merit Order Dispatch

3.29 The Licensees have claimed that they have adopted a merit order simulation onmonthly basis by matching monthly energy requirement with monthly availability

based on the variable costs of power from various sources. The licensees have

submitted that while a monthly determination of cost provides an improved estimate

over an annual determination of cost, the actual cost will still differ based on the dailyload curve and variations of actual from projections. The licensees have further

submitted that the cost of such deviations as per different rates be passed on a regular

monthly basis through the FCA formulae proposed which is also in-line with the

provision of the Tariff Policy which specifies (Clause 5.3 (h) (4) and Clause 8.2.1

(1)):

"Uncontrollable costs should be recovered speedily to ensure that future consumers

are not burdened with past costs. Uncontrollable costs would include (but not limited

to) fuel costs, costs on account of inflation, taxes and cess, variations in power

purchase unit costs including on account of hydro-thermal mix in case of adverse

natural events. "

and

"All power purchase costs need to be considered legitimate unless it is established

that the merit order principle has been violated or power has been purchased at

unreasonable rates. "

3.30 In light of this the Licensees have submitted that only the Commission has a visibilityto the final energy requirement planned by each Discom and the filings of the

licensees do not represent commitment from any other company regarding their

energy requirement.

Average Cost of Power excluding MP Transco Charges

3.31 The Licensees have further submitted that the total power purchase cost (Rs. Per unit)has been estimated based on the principles stated in their petitions for the FY 09-10

and is as under

Table 19: Average cost of power as filed by Licensees in (Rs./kWh)

Discom FY 2009-10

MPPoorvKVVCL 2.00

MPMadhyaKVVCL 1.73MPPaschimKVVCL 1.87


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True Charges of Indira Sagar

3.32 With regard to the true charges of power from Indira Sagar Project the Commission inits Retail Supply Tariff Order had allowed the charges for the period FY 2005-06

based on the CERC Order dated 6th Feb 2007. However, the Commission had not

considered the True up Amount due to Indira Sagar Station for the FY 2006-07 in the

Retail Supply Tariff Order for FY 2008-09. The total amount which has not beenpassed on in the ARR of the Licensees is Rs. 176.34 Crore and the Discoms will bear

the same in the ratio as that of the previous year. The following amount works out

payable by the Discoms:

Table 20: ISP cost as filed by Licensees

Allocation to Discoms East West Central Total

ISP Cost Revision (Rs. Crore.) 73.48 60.97 41.90 176.35

Total Power Purchase Cost as filed

3.33 The total power purchase cost as filed by the Licensees is given in the table below:Table 21: Total Power Cost as filed

East West Central State

Fixed Cost (Rs. Crs.) 723.5 782.8 669.3 2175.6

Variable Cost (Rs. Crs.) 1062.4 1341.7 1013.3 3417.4

Cost of Short term power from Tradeco (Rs. Crs.) 174.0 480.6 322.9 977.5

Short term power purchases (Rs. Crs.) 214.0 122.0 81.3 417.3

True-up Cost of ISP (Rs. Crs.) 73.5 61.0 41.9 176.4

Transmission Charges (Inter + Intra State) (Rs. Crs.) 260.3 302.8 276.4 839.5

Total 2507.7 3090.9 2405.1 8003.7


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Commissions analysis of sales and power purchase costs

Sales forecast

Metered Sales

3.34 The Commission reviewed the sales forecast of all metered consumers and comparedthe same with the past trends. It has also taken note of Licensees supporting

submissions with regard to sales projections of various categories and considers the

assumptions as reasonable. Based on existing generation and planned capacity

addition, it has been noted that the quantum of energy available to the State of MP in

2009-10 is more than required to meet the sales projections of the Licensees. The

quantum of energy available, after accounting for the T&D losses as per the

milestones laid down vide GoMPs notification of 28th December 2006 is enough to

meet the forecasted requirements of the consumers. The Commission thus approves

the sales forecast of all metered consumers as filed by the Licensee.

Un-metered Sales

3.35 With regard to un-metered consumption in domestic category, the Licensees hadsubmitted to the Commission that all the un-metered domestic connections in urban

areas would be provided with the meters by the end of the financial year 2008-09. The

Commission had reviewed the situation in the meeting with the CMDs of the Discoms

on 5th

March 2009. During the course of the meeting the Discoms requested the

Commission to grant them additional time upto 30th

June 2009 to install the meters to

all un-metered connections in the urban area of the State for which the Commission

agreed. Accordingly, it is expected that there would be no un-metered connections in

the domestic segment of urban areas after 30th

June 2009. Since, as per the status of

metering to un-metered consumers filed with the Commission by the Licensees in the

aforementioned meeting, there are still a considerable number of un-metered domesticconsumers in the urban & rural segments of the Licensees supply area; therefore, the

Commission prescribes a tariff rate for these consumers as well in this Tariff Order.

This is expected to provide the opportunity to the Licensees to estimate the

290709 FINAL Tariff Order FY10 With Schedules

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