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Transcript of Project 2004
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Index
Units Particulars Page
No.
UNIT-I Power sector scenario in orissa
UNIT-II Profile of CESCO
UNIT-III Area of study
UNIT-IV Tariff filling Procedure
UNIT-V Rationale of RTA 2003-04
UNIT-VI Tariff Hearing Procedure of OERC
UNIT-VII Determination of Tariff
UNIT-IX Achievement of CESCO from1999-2004
UNIT-X Conclusion
1
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
List of Abbreviations:
A& TC Aggregate Commercial & Technical
BST Bulk supply Tariff.
CESCO Central Electricity Supply Company of orissa Ltd.
CPP Captive Power Plant.
EHT Extra High Tension.
PPPAC Power Purchased Price Adjustment clause.
FY Financial Year
GRIDCO Grid Corporation of Orissa Ltd.
HT High Tension.
LT Low Tension.
KVA Kilo Volt Ampere.
KW Kilo watt.
KWH Kilo Watt Hour or Unit
MU Million Units
OERC, (Commission) Orissa Electricity Regulatory Commission.
SEB State Electricity Board.
SMD Simultaneous Maximum Demand.
Transfer Scheme Proceeding and Personnel of GRIDCO to Distribution
Companies Rules, 1998.
T & D Transmission and Distribution
MIS Management Information system.
-2-
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
UNIT-I
POWER SECTOR SCENARIO IN ORISSA
1.1 The Orissa State Electricity Board (OSEB) was established in 1961 under
the Electricity (Supply) Act of 1948. On its formation, the transmission
assets of the Government of Orissa were transferred to the Board which
also took over the distribution systems and small generating plants of the
various privately owned Electricity Companies in the state. The Electricity
Department of the State Govt. continued to execute major generation
projects with associated extra high tension (EHT) transmission lines and
substations, which on completion, were being transferred to the Board as
asset loans. A State owned Orissa Power Generation Corporation Ltd.
(OPGC) was created on 14th November 1994 to take up the construction
and operation of a thermal generating station using Ib valley coal. OSEB
played a major role in the growth of the State’s power sector. However, by
the early 1990s it became clear that several things were seriously wrong
with the Board. Inadequate investment in the sector, poor management,
dismal performance of OSEB’s own thermal station, mounting technical
and commercial losses, skewed tariff, poor customer care, increasing gap
between demand and availability of energy were all symptoms of the
deepening malaise in the Electricity Board.
1.2 A matter for serious concern was the growing transmission and
distribution (T&D) losses which had a crippling impact on the finances of
the Board. Statistics put out by the Board and even the Central Electricity
Authority/Planning Commission reported Orissa’s T&D losses in the region
of 23% over a number of years. But these figures did not take into
account the losses taking place owing to non-billing, non collection, and
theft of electricity. The under statement of T&D losses was not unique to
Orissa. The audited accounts of OSEB, however had been pointing out a
different set of figures depicted in the following table.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Year Generation/Purchase MU)
Sales (MU) as per revenue return
Loss %
1990-91 6444.018 3525.103 45.301991-92 7331.146 4047.539 44.801992-93 7100.414 3904.078 45.011993-94 7826.412 4573.428 41.571994-95 8493.397 4536.332 46.591995-96 9762.238 5178.894 46.94
The Planning Commission in its Power and Energy Division Annual
Report April 2000 on the Working of State Electricity Boards and Electricity
Departments reported that while the T&D losses for the country as a whole
varied between 19.80% in 1992-93 and 24.5% in 1996-97, in the case of
Orissa, the losses were as under:
Year T&D loss %age1992-93 23.51993-94 23.41994-95 23.81995-96 46.91996-97 50.4
A footnote to the report explains that the sudden jump is due to “the
realistic assessment of T&D losses in the power system after restructuring of
OSEB. Similar position can be observed in case of Haryana and Andhra
Pradesh who also opted for power sector reforms”.
1.3Another nagging problem was growing power shortages. These started
being from the mid-1980s and by the early 1990s, the shortages had
become acute; the power shortage shooting up from 24% in 1991-92 to
37% in 1993-94, exceeding the national average. Government of Orissa
had to issue statutory notifications regulating the supply of distribution
and consumption of electricity by consumer groups. Industries suffered
power cuts ranging from 25% to almost 70% of their requirement
depending upon vagaries of the monsoon. Rotational area load shedding
for consumers was irritatingly common. The worsening situation
compelled industries who could access funds, to go in for captive
generating plants, those who could not, suffered irreparable production
losses. It was only with addition of capacity at Orissa Power Generation
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Corporation (OPGC) from August, 1994 that restrictions ceased to be
imposed.
1.4The poor performance of OSEB’s only thermal power station at Talcher
(TTPS) was another distressing feature. The plant suffered from
mismanagement. It had a work force far in excess of requirement, high
auxiliary consumption and extremely poor plant load factor (PLF).
PLF%India Orissa
1990-91 53.90 33.901991-92 55.30 30.001992-93 57.10 34.501993-94 61.00 35.501994-95 60.00 29.00
1.5With generating projects being executed under the Government and
growing emphasis on village electrification, by far the major part of the
investment in the power sector went into those areas, starving the
transmission and sub-transmission segments. A review of investments in
the power sector disclosed that as much as 88% of the total investment
was being made in the generation and rural electrification segments
leaving a meager 12% for transmission and system improvement. Almost
all EHT lines and sub-stations were loaded fully without any standby
capacity. As a result, supply had to be curtailed or shut down even for
routine maintenance. Preventive maintenance had often to be deferred for
this reason. Technical losses, particularly in the HT and LT distribution
segments grew and reached the unacceptably high level of 23% by 1994-
95 as under:
1.6Government of India, in pursuance of the New Economic Policy of 1991
took a number of measures to encourage private sector participation in
electricity generation, supply and distribution as a means of
supplementing Government’s inadequate resources for development of
the power sector. The Central Government and the World Bank were also
making serious efforts to improve the working of State Electricity Boards.
The Bank formulated a new set of policies and announced in 1993 that it
would provide funds to only those utilities, which satisfied the Bank’s
guiding principles in the following matters.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
(i) Structural reforms involving dismantling of vertically integrated
monolith organizations like SEBs into separate entities dedicated
to generation, transmission and distribution and the
corporatisation of such entities.
(ii) Electricity pricing to be related to costs, with subsidies to any
particular group to be specifically targeted and provided for by
the Government in a clear and transparent manner.
(iii) Creation of independent and autonomous bodies to regulate the
electricity sector and to set tariffs so as to insulate the electricity
business from political pressures and provides a measure of
comfort to private investors.
(iv) Induct private sector management skills and encourage private
investment in the sector in the context of reduced availability of
funds from governmental sources.
These guiding principles, to a large extent, shaped the course of
electricity reforms in Orissa.
1.7In November, 1993 the State Government confirmed their commitment to
power sector reform and sought the Bank’s assistance in the
implementation of the proposed reforms. The World Bank suggested that
a multi disciplinary team of foreign and Indian consultants would be
necessary to assist the Government in pushing through a comprehensive
reform project like the one, which was under contemplation. Payment to
the consultants was to be met out of a Bank loan of US$10 million and a
grant of GBP35.5 million from UK Government’s Oversees Development
Administration (now the Department for International Development or
DFID). Following consultations with the Bank, the State Government
entered into an agreement, in September, 1994, with the following
consortium of international consultants led by KPMG to assist the State
Government in the reform project.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
1.8
Sl.No. Name of the firm Area1. KPMG Peat Marwick, London Management consultants2. National Economic Research
Associates Inc. (NERA), USAEconomic Management
3. McKenna and Co., London Legal Management.4. Monenco Agra Inc. Canada Engineering Management
Simultaneously with these developments, the State Government
notified a Steering Committee chaired by the Chief Secretary to give
policy direction to the power sector reforms and to make their
recommendations to the Government. A Reform Project Directorate
under a senior Chief Engineer supported by a small core support staff
was created to take charge of the day to day activities concerned with
the reform project. A Task Force chaired by the Energy Secretary
oversaw the working of the Reform Project Directorate and provided
guidance to the several Working Groups which were constituted to
study and make recommendations on different aspects of reforms.
These Working Groups consisted of international consultants, local
consultants (many of them retired Chief Engineers of OSEB) and
serving officers of OSEB/State Government.
1.9The first phase of the Reform Project work started in July 1994 when the
State Government notified nine Working Groups to study different aspects
of the power sector reforms, identify the basic strategies to be adopted
and make suitable recommendations. Many of these Working Groups were
required to deal in areas completely new to the State Government and
OSEB and had to draw heavily upon the expertise of foreign consultants
while other Working Groups drew largely upon the expertise of the officers
of the State Government and OSEB with assistance from the consultants.
The blue print of the reforms was drawn up in this process. Its important
components were the following:
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
- Unbundling of OSEB by structural separation and corporatisation
of generation, transmission and distribution.
- Progressive privatization
- Establishment of an independent authority for power sector
regulation
- Cost-related electricity tariff regime.
1.10 Implementation of the reforms started during the second phase
(March, 1995 to August 1996). During this phase, the original 9 Working
Groups were reconfigured into 7 groups which were then shifted from the
Reform Project Directorate to OSEB so that the blue prints prepared in the
first phase could be implemented smoothly. The Orissa Electricity Reform
Act was passed by the State Legislative Assembly in November, 1995 and
on receiving the assent of the President of India in January 1996, was
notified in January 1996. The Act came into force on 1st April, 1996. The
OSEB was split up into Grid Corporation of Orissa (GRIDCO) to look after
the transmission and distribution business and Orissa Hydro Power
Corporation (OHPC) taking over hydel power generation. The Orissa
Electricity Regulatory Commission was set up to discharge the functions of
the independent regulatory authority under the Reform Act.
1.11 Following intense discussion involving the World Bank, State
Government and Gridco, the mode of privatizing GRIDCO’s distribution
business, the terms and conditions under which the World Bank would be
willing to support GRIDCO and the State Government’s Power Policy
Statement (Annexure-4) were finalised during this period. Both GRIDCO
and the State Government were not in favour of privatization at one go.
GRIDCO’s distribution business had in the meanwhile been configured into
4 distribution Zones and it was decided that one of the Zones could first
be given under a management contract. The Central Zone was given on
management contract basis to BSES. As regards the other 3 Zones, it was
agreed that there may be advantage in privatizing them in the Joint Sector
Venture mode in a sequential manner so that errors made in the
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
privatization of the first Zone would not be repeated when the next Zone
was privatized.
1.12 The World Bank assessed the financing requirements of the power
sector at US$997 million, the details of which and the proposed sourcing
of the requisite funds are at Annexure-5. The Bank also laid down
preconditions as at Annexure-6 for disbursement of loans. These
conditions were accepted by Government of Orissa and an agreement to
this effect was signed in April, 1996.
1.13 During this period, a grant of GBP 12 million from ODA/DFID financed
two major consultancies, namely, the Reform Consultants and the
Institutional Strengthening Project (ISP) Consultants. The former were
responsible for the preparation of the reform legislation, regulatory
framework, the transfer scheme and the financial basis of the
disaggregated sector while the ISP Consultants were required to assist
with the formulation of organisation structure, personnel policy, work
practices and financial system of OSEB and the successor entities along
with staffing norms and labour surplus. DFID selected all the Consultants:
Price Waterhouse Coopers were engaged as the ISP Consultant, McKenna
(later on Cameron McKenna) provided legal inputs and the merchant
bankers BZW (later on CSFB) provided the merchant banking expertise
while Merz and McLellan provided the engineering expertise for the
Project Management Unit (PMU) which prepared the specifications for the
capital works, tendered them out and monitored their progress.
1.14 During the third phase covering the period 1996 to 2001, a
management contract awarded to BSES with effect from October, 1996 in
respect of the Central Zone comprising the Electrical Circles of
Bhubaneswar, Cuttack and Dhenkanal was terminated in April, 1997. It
was also decided that instead of privatising the 4 Distribution Zones in a
sequential manner, all 4 should be privatised at one shot through a
process of international competitive bidding. Several factors contributed
to this decision which was at variance with the earlier decision to go in for
a sequential privatisation.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
1.15 Accordingly, 51% of Gridco’s shareholding in all its 4 distribution
subsidiaries, namely, CESCO, NESCO, WESCO and SOUTHCO which had
meanwhile been incorporated as successor entities of the 4 distribution
Zones, were sold to private parties with effect from 1 April, 1999. When
one of the parties viz. The TEC-Viridian consortium backed out of their bid
for CESCO, negotiations were held with an AES led consortium and the
deal with them was concluded with effect from 1 September 199. In May,
1997, ODA, DFID agreed to finance the third phase covering the period
1996 to 2001 under a grant of GBP 75 million. Out of this, GBP 52.5 million
was towards working capital, stores material, staff rationalisation and a
Load Dispatch and Communication Project (LDCP). The remaining GBP
22.5 million was for technical assistance Consultancy. Assistance from
DFID and World Bank were planned to complement one another. While
World Bank assistance was in the form of loan chiefly for capital projects,
DFID assistance was a grant with a sizeable portion of it towards R&M
items and for staff rationalization being treated as State Government’s
equity participation in GRIDCO so as to earn a rate of return. The
expenditure incurred on consultation services on formulation and
implementation of reforms reported so far is Rs.306 crore (Annexure-7)
which was largely met out of DFID grant.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
UNIT-II
Profile of CESCO
As a policy measure of the Government of India the reform in the
power sector is going on throughout the country. The power sector reform to
be concluded by the end of 2005 in whole of India. Orissa is the first state in
our country in which the reform started at first. As a measure of reform the
erstwhile Orissa State Electricity Board (OSEB) was disbunddled on 1.4.96
and new companies like Orissa Hydro Power Corporation (OHPC), Grid
Corporation of Orissa Limited (GRIDCO), Orissa Power Generation Corporation
Limited (OPGC) were formed. During the regime of OSEB the generation
transmission and distribution of power was being made by OSEB itself. After
disbundling of OSEB from 1.4.96 the thermal generation plants along with its
assets, liabilities and personnel were transferred to OHPC and the
transmission and distribution business along with all assets, liabilities,
network and sub-station relating to the area of business were transferred to
GRIDCO. All the new companies started functioning separately as a separate
entity and became responsible only for their area of operation. The main
objective of power sector reform is to provide uninterrupted steady power to
the consumers on demand on reasonable price.
As a part of the power sector reform four distribution companies
namely Central Electricity Supply Company of Orissa Limited (CESCO),
Southern Electricity Supply Company of Orissa Limited (SOUTHCO), Northern
Electricity Supply Company of Orissa Limited (NESCO) and Western Electricity
Supply Company of Orissa Limited (WESCO) were incorporated on 19.11.97 to
separate the distribution business from GRIDCO. All the above four
companies were formed as wholly owned subsidiary companies of GRIDCO.
The distribution of electricity of the state were divided among the above four
distributed companies.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
As explained in the above Para CESCO was incorporated on 19.11.97
as a wholly owned subsidiary of GRIDCO. The company received certificate
for commencement for business on 30.12.97 but the company was not
functioning as a separate entity. The Government of Orissa issued a gazette
notification on 25.11.98 vesting the distribution assets like lines and sub-
station etc. The liabilities, the personnel on as is where is basis through
notification in the official gazette. CESCO started functioning with affiliation at
GRIDCO with effect from 26.11.98 for distribution of power to the consumers
in its area of operation. As per gazette notification the areas covered under
CESCO is the undivided Cuttack, Puri & Dhenaknal distribution since
electricity distribution business is a licensed business. CESCO obtained the
license for distribution of power in its area of operation from Orissa Electricity
Regulatory Commission (OERC) on 1.4.99 and started power distribution
independently with effect from said date.
CESCO enjoys the monopoly of power supply to the consumer in its
area of operation as there is no other competition exists in the area till date.
51% of the share of CESCO was dis-invested by GRIDCO to AES-Orissa
Distribution Private Limited which is a joint venture of AES Corporation USA,
Jyoti Structures Limited, Mumbai on 1.9.99 and 49% of the shares continued
to be with GRIDCO. A share holder agreement, share transfer agreement etc.
were signed on the date of transfer of shares between GRIDCO, CESCO and
AES. As per the shareholders agreement the management of the company
were transformed from the hands of GRIDCO to the hands of AES Corporation
in 1.9.99.
Structure of the Company:
CESCO is having authorised issued and paid up capital of
Rs.72,72,00,000 consisting of 72720000 number of equity shares at the rate
of Rs.10/- each. As per shareholding agreement one Director to be nominated
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
by the shareholding companies for every 10% of share held by them.
Accordingly AES nominates 5 Directors and GRIDCO 4 directors. The
Managing Director and all other functional director are appointed are
nominated by the majority shareholder (AES) and the Chairman of the Board
is nominated by the minority shareholder i.e. GRIDCO. The registered office is
at second floor, IDCO Towers, Bhubaneswar with five circles at Bhubaneswar,
Cuttack, Dhenkanal, Paradeep and 19 Distribution Divisions at Bhubaneswar,
Nimapara, Puri, Cuttack, Athagarh, dhenkanal, Anugul, Talcher, Khurda,
Balugaon, Nayagarh, Nuapara, Salepur, Jagatsinghpur, and Marshaghai. 61
sub-divisions and 259 sections spread throughout its area of operation. Power
and authority has been delegated suitably to different officers for speedy
disposal of the matter. The head quarter of the company consists of different
divisions headed by experienced professional like Finance, Rural
Electrification, Personnel, Planning, MIS, Commerce, Billing, etc.
Function:
The infrastructure available with CESCO as on 31.12.2003 are given
below:
No. of Circle : 5
No. of Divisions : 20
No. of Sub-division : 61
No. of Section : 245
Length of 33 KV lines in KM. : 2591.455
Length of 11 KV lines in KM : 14464.32
Length of LT lines in KM : 18569.98
No. of 33/11 KV Transformers : 346
No. of Distribution Transformers : 15790
No. of 33 KV Feeders : 125
No. of 11 KV Feeders : 536
The no. of consumers as on 31.12.2003 under CESCO was 811176 and
CESCO has purchased 2996 MU of power from GRIDCO during the period
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
1.4.2003 to 31.12.2003 and sold 1824 MU to the consumers. The main
function of CESCO is to purchase electricity from GRIDCO in bulk rate and
distribute the same to the consumers of different categories at the price as
decided by OERC in the tariff.
The consumers are broadly categorized as LT, HT, and EHT. Low
Tension (LT) Consumers are those who gets the supply at 240 Volt. High
Tension (HT) are those consumers who gets their supply at 11 KV line & Extra
High Tension (EHT) consumers are those who get their supply at 33 KV and
132 KV.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
UNIT-III
AREA OF STUDY
My area of study is confined to filling and analysis of Annual Revenue
Requirement (ARR) and Retail Tariff Application (RTA) of CESCO. The analysis
of Annual Revenue Requirement (ARR) and Retail Tariff Application (RTA) of
the licensee before the Orissa Electricity Regulatory Commission (OERC) for
revision of retail tariff. Since the distribution companies can’t fix increase or
decrease the tariff, they have to make an application before the Orissa
Electricity Regulatory Commission which is the competent authority to do the
same backed by sufficient evidence in the form of an application called
Annual Revenue Requirement (ARR) and Retail Tariff Application (RTA). The
Annual Revenue Requirement (ARR) and Retail Tariff Application is a
mandatory exercise of the distribution company which is also called as
licensee. Every year the distribution companies file their Annual Revenue
Requirement (ARR) and Retail Tariff Application (RTA) with in Orissa
Electricity Commission which ultimately fixes the tariff.
The Annual Revenue Requirement (ARR) and Retail Tariff Application
(RTA) is filed in specific formats provided by Orissa Electricity Regulatory
Commission (OERC) which ultimately fixes the tariff.
The Annual Revenue Requirement (ARR) and Retail Tariff Application
(RTA) formats provided by Orissa Electricity Regulatory Commission (OERC)
are broadly divided into three parts:
(i) Technical Format [Provides Billing information](ii) Finance Format (Provides Financial information])(iii) Performance Format (Provides technical& Engineering
information )
Data regarding technical, financial and performance related matters of
licensee is provided in the above formats for three years that is:
(i) Previous year(ii) Current year(iii) Ensuing year
The previous year & current year data are generally available and
gathered from concerned department and compile while the ensuing
year data is projected basing on the trends of past year.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
CONSUMER CATEGORY
Types of consumer category:
1) Low Tension (LT)
2) High Tension (HT)
3) Extra High Tension (EHT)
1] Low Tension (LT)
a) Domestic
i) Domestic urban
ii) Domestic rural
iii) Kutir Jyoti
b) Commercial
i) Commercial urban
ii) Commercial rural
iii) Commercial over 10 KW
c) Small industries
d) Medium industries
e) Irrigation
i) Irrigation – OLIC
ii) Private
f) Public lighting
g) Public water works below 100 KW.
h) Public institution below 110 KW.
2) High Tension (HT)
a) Large Industries below 132 KW
b) Mini steel plant
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
c) General purpose
d) Bulk supply – Domestic
e) Public Water works above 100 KW.
f) Public institutions above 100 KW.
3) Extra High Tension (EHT)
a) Heavy industries
b) Power Intensive Industry
c) Railway Traction
d) Large industries at 132 KV
CLASSIFICATION OF CONSUMER
Licensee may classify or reclassify the consumer into various
categories from time to time as may be approved by the Commission and fix
different tariffs and conditions supply for different class of consumers. The
present classification is as follow:
(a) Domestic
This category relates to supply of power to residential premises for
domestic purpose only and shall include consumers under Kutir Jyoti
Programme. This shall also include supply to occupants of flats in
multi-storied buildings or residential colonies receiving power at single
point for domestic purposes when connected load for non-domestic
load exceeds 10% of the total connected load. Incase the non domestic
load exceeds 10% of the total connected load, they shall be treated as
commercial or general purpose consumers as applicable. This shall not
cover residential colonies attached to industrial establishment where
power supply is drawn through the meter of the industrials
establishment.
(b) Commercial
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
This category relates to supply of power to premises which are used for
office, business, commercial or other purposes not covered under any
other category with a contract demand upto but excluding 110 KVA
and where the non-domestic load exceeds 10% of the total connected
load.
(c) Street Light
This category relates to supply of power to a local authority or public
body for providing street lights.
(d) Railway Traction
This category relates to supply of power for Railway Traction.
(e) Irrigation Pumping and Agriculture
This category relates to supply of power for pumping of water in lift
irrigation, flower irrigation and for lifting of water from wells, nallahs,
streams, rivulets, rivers, ponds, dug wells exclusively for agricultural
purposes.
(f) Public Water Works and Sewerage Pumping Installation
This category relates to supply of power for public water supply and
sewerage pumping installations owned and operated by the State
Government, local bodies or their agencies.
(g) General Purpose
This category relates to supply of power for all general purposes
comprising mixed load and with a contract demand of 110 KVA and
above where the non-domestic load exceeds 10% of the total
connected load.
(h) Public Institutions
This category relates to supply of power to educational institution
including hostels, government hospitals, government dispensaries,
primary health centers, charitable dispensaries, religious institutions,
dharmasalas, electric crematoriums and non-commercial sports
organisations.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
(i) Small Industries
This category relates to supply of power for industrial production
purpose with a contract demand below 22 KVA, where power is
generally utilised as motive force.
(j) Medium Industries
This category relates to supply of power for industrial production with a
contract demand of 22 KVA but below 110 KVA, where power is
generally utilised as motive force.
(k) Large Industries
This category relates to supply of power to industries with a contract
demand of 110 KVA but below 25000 KVA, where power is
substantially utilised as motive force for industrial production.
(l) Heavy Industries
This category relates to supply of power to industries with a contract
demand of 25000 KVA and above where power is substantially utilised
as a motive force.
(m) Mini Steel Plant
This category relates to supply of power to steel manufacturing units
licensed to operate as mini steel plants with contract demand of 4444
KVA and above where power is ordinarily utilised in induction or are
furnances.
(n) Power Intensive Industries
This category relates to supply of power to industries where power is
substantially utilised as raw material involving electro-chemical or
electro-metallurgical processes with a contract demand of and above
2000 KVA.
(o) Temporary Supply
This category relates to supply of power to meet temporary needs on
special occasions including marriage or other ceremonial functions,
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
fairs, festivals, religious functions or seasonal business provided that
such power supply does not exceed a period of six months.
(p) Industries Owning Generating Plants (Captive Power Plants)
Availing Emergency Supply Only.
This category relates to supply of power to industries with generating
plants or including Captive Power Plants only for start-up of the unit or
to meet their essential auxiliary and survival requirements in the event
of the failure of their generation capacity. Such emergency assistance
shall be limited to 25% of the rated capacity of the largest unit in the
Captive Power Plant or Generating Plant. In case any special provision
is made in a Power Purchase Agreement, approved or accepted by the
Commission, such provision shall apply in such cases, subject to the
provisions of this Code.
CONSUMERS UNDER SPECIAL AGREEMENT
The licensee may, having regard to the nature of supply and purpose
for which supply is required, fix special tariff and conditions of supply for the
consumers not covered by the classification enumerated in this Code. For
such purpose licensee may enter into special agreements with the approval
of the Commission with suitable modifications in the Standard Agreement
Form. The tariff in such cases shall be separately approved by the
Commission.
RECLASSIFICATION OF CONSUMER
It is found that a consumer has been classified in a particular category
erroneously or the purpose of supply as mentioned in the agreement has
changed or the consumption of power has exceeded the limit of that category
or any order of reduction or enhancement of contract demand has been
obtained,
the engineer may reclassify him under appropriate category after issuing
notice to him to execute a fresh agreement on the basis of the altered
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
classification or modified contract demand. If the consumer does not take
steps within the time indicated in the notice to execute the fresh agreement,
the engineer may, after issuing a clear seven days show cause notice and
after considering his explanation, if any, may disconnect the supply of power.
UNIT-IV
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Tariff Filling Procedure:
Subject to the provisions of the Electricity Act, 2003 and the Orissa Electricity
Reform Act, 1995, each year, by 30th November or by such other time as may
be directed by the Commission, each Transmission and Distribution Licensee
shall file with the Commission, in the format as may be laid down by the
Commission, statements containing calculation of the expected aggregate
revenue from charges under its currently approved tariff and he expected
cost of providing services for the ensuing financial year.
CESCO, which was initially incorporated as a wholly-owned subsidiary
company of GRIDCO, obtained licence from Orissa Electricity Regulatory
Commission for distribution and retail supply of electricity in Bhubaneswar,
Cuttack and Dhenkanal Electrical Circles with effect from April 1, 1999. With
the sale of 51% of equity holding to a strategic investor i.e. a consortium of
AES and Jyoti Structures, CESCO became a joint sector company with effect
form 01.09.99. Subsequent to this restructuring and operating as a licenced
utility, CESCO is filling its calculation of aggregate revenue along with a
proposal for increase in tariff to meet the shortfall between the revenue
requirement and the expected costs.
For the purpose of filling of ARR (Annual Revenue Requirement) and
RTA (Retail Tariff Application), data relating to
Previous YearCurrent Year &Ensuing Year (Next Year)
Need to be submitted in a specific format as prescribed by OERC.
The ARR (Annual Revenue Requirement) and RTA (Retail Tariff
Application) broadly contain the following details:
(a) The licensee’s demand forecast by customer or consumer category for
the ensuing financial year and the basis of the forecast.
(b) A calculation of expected aggregate revenue that would result from
the above demand during the same period under the currently
approved tariff by customer or consumer category.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
(c) A calculation of the licensee’s estimated costs of providing the service
required by the level of demand indicated in clause (a) above for each
category of consumers during the stated period calculated in
accordance with the financial principles and their application contained
in the Sixth Schedule to the Electricity (Supply) Act, 1948 as was in
force before the repeal of the said Act by Electricity Act, 2003 or such
other principles the Commission may direct from time to time.
(d) In case the Licensee carries on any business or services other than
those licensed, the Licensee shall give separate revenue and expense
statements together with such details as the Commission may require
in respect of such business or services and,
Such other information as the Commission may direct.
After filling of ARR & RTA with the OERC the following activities took place
1. The commission examines the application and asks for clarification to
the licensee to fill-up deficiencies if any in the application.
2. The commission orders the licensee to make available the tariff
application tot he general public for sale.
3. The public is requested to file objections on the proposed tariff of the
licensee with the commission by a specific date.
4. A date is fixed for hearing of the case between the licensee and
objectors at the commissions hearing hall. Both parties are given
chance to present their case before the commission on that date.
5. After hearing both parties and taking into consideration all other
material facts the commission decides and fixes the tariff.
UNIT-V
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
1 RATIONALE FOR RETAIL TARIFF APPLICATION-2003-2004
CESCO is reeling under a severe financial burden. The gap between
revenue from sale of power to the actual expenditure incurred by it is
increasing with every passing day. Under these trying circumstances
the licensee is finding it difficult to fulfill its obligations as a licensee.
The continued financial constraints are threatening to jeopardize the
very existence of the organization. The realities on the ground are
vastly different from the benchmarks that are considered for in the
Tariff Setting process and are seriously affecting the extent of cost
coverage. Accordingly the licensee requests the Commission to relax
its benchmarks and revise the existing tariff rates as early as possible
keeping in view the financial stress under which it is operating.
The revenue requirement of CESCO in FY 04 is Rs 211600 lakhs. At
present tariff rates, the revenue generated is Rs 75971 lakhs. Hence
the shortfall in revenue requirement is Rs 135629 lakhs.
Table 1 Uncovered deficit
Rs. Lakhs Revenue
Revenue Requirement for FY04 211600Revenue Generation for FY04 based on existing tariff
75971
Revenue Gap 135629Revenue Generation for FY04 based on proposed tariff in the application applied for full year
90190
Revenue Deferred (Proposed) if proposed tariff in the application applied for full year
121410
To avoid a rate shock the licensee humbly prays to the Commission
that Rs. 121410 lakhs may be treated as a regulatory asset and be
allowed to recover it over the next three years (i.e. FY 05,FY 06 and FY
07) and the interest cost on account of the regulatory asset be allowed
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
to be recovered as a pass-through. The rate of interest for carrying this
asset may be set as applicable after each year.
Apart from the First Tariff Order of the Commission, which came into
effect from 1-4-97 and was applicable for a full year, all subsequent
tariff revision orders have been enforced in the last few months of the
financial year. The existing tariff for FY 01 came into effect from 1-2-
2001 and the tariff previous to this, for FY 00 were effective from 1-2-
2000 – a delay of 10 months in each year. On account of this cost
recovery in a financial year has been limited and CESCO has had to
bear the losses arising out of the difference between the actual
expenditure and the normative criteria of the Commission. The
financial losses suffered in FY 00 and FY 01 are enormous and CESCO
presently stands on the brink of liquidation with its net worth of
Rs.7272 lakhs eroded several times over. Further there was no tariff
revision during FY03.
Hence it is of vital importance that this application is accepted and
tariff rates are suitably revised so as to ensure the survival of the
organisation.
CESCO is probably one of the few utilities in the world that have borne
the brunt of nature’s fury in such quick succession. The devastating
super cyclone followed a sudden storm in Cuttack and Bhubaneswar
that affected power supply to major parts in the City of Cuttack and
Bhubaneswar . It is to the credit of the licensee that it has not only
restored the power supply in a very short time but has also initiated
steps to stem the tide of increasing overall losses, the worsening sales
mix notwithstanding
Further to this the initial adoption of the 35 % as the maximum T & D
loss allowable in Tariff Order 97 and the subsequent lowering to 34 %
vide Tariff Order 01 and 35.94% vide Tariff Order 02 does not bode
well for the licensee. The ground realities are totally different and the
licensee humbly requests the Commission to adopt a benchmark that
is within the achievable limits.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
2. ENERGY SALE ESTIMATION
The actual energy consumption for a period of three years starting
from FY 01 to FY 03 has been considered to estimate the energy
consumption during FY 04. The actual sales figures have been obtained
from the monthly MIS reports prepared by CESCO.
2.1 ENERGY SALE IN FY00, FY 01 & FY 02
In FY 02, total energy sale decreased by 3.42 % over FY 01 with a
significant increase in sales to LT category. Energy purchased in FY 02
as compared to FY 01 increased by 4 %. In FY 02, sales to EHT
category decreased by 34.66 %. Due to a limited consumer base in
EHT category a decline in consumption of a single unit causes wide
fluctuations in the total EHT consumption pattern on a year on year
basis.
Table 2 Energy Sale
SegmentFY 00 Billing
MU
FY 01 Billing
MU
FY 02 Billing
MU
Change FY01 over FY00
Change FY02 over
FY00
LT category 1332 1380 1425 4%7%
HT category 338 385 422 14% 25%
EHT category 320 453 296 41% -8%
Total Sales 1990 2219 2143 11% 8%Energy purchase
3608 4025 4186 12% 16%
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Table 3 Energy Sale in HT category
No of consumers
Billed (MU)
No of Consumer
s
Billed (MU)
No of consumers
Billed (MU)
% Change in MU
02-00Consumer category FY00 FY00 FY01 FY01 FY02 FY02
Large Industries Below 132kv
145 193 145 213152 209 8%
Mini Steel Plant 1 9 1 18 1 20 125%
General Purpose 140 91 149 101157 138 51%
Bulk Supply – Domestic
35 9 38 1145 15
64%
Public Water Works Above 100kw
16 25 16 3018 27
9%
Public Institution Above 100kw
28 11 28 1279 13
22%
HT TOTAL 365 338 377 385 452 422 25%
The EHT category predominantly consists of nine consumers. A new
consumer (Oswal Chemical & Fertiliser –Paradeep) was added in FY00.
Another new consumer Railway Traction was added in FY02 The
individual consumer analysis indicates lower energy offtake by three
consumers’ i.e. FCI, PPL, OSWAL and Heavy Water Project. Lower
energy off take by large consumers is a serious concern to CESCO.
Table 4 Energy Sale in EHT category
Consumer (Billed MU)
FY00 FY01 FY02% Change (02-
00)Large industries At 132 kV
82 174115
40%
Railway Traction 0 0 2 0
Heavy industries 141 137 148 5%Power Intensive Industries
98 14130
-69%
Total 321 452 296 -8%
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
2.2 ENERGY SALE MIX BETWEEN LT, HT AND EHT CONSUMERS
Lower energy sale in EHT category in the previous year as compared to FY00 and corresponding increase in LT share of energy sale is a matter of concern for CESCO. As per the demand projection (provided in the subsequent section) it may be noted that the share of EHT sale has fallen further. The licensee humbly prays to the Commission to allow the category wise loss benchmarks so that the varying sale mix does not affect the licensee, which is beyond the control of the licensee.
Table 5 Sale mix variation
Segment CESCO FY 00 CESCO FY01 CESCO FY 02Billed (MU)
% of Total
Billed (MU)
% of Total
Billed (MU)
% of Total
LT category
1332 67%1379 62%
1425 67%
HT category
338 17%387 17%
422 20%
EHT category
320 16%453 20%
296 14%
Total 1990 100% 2219 100% 2143 100%
The change in mix impacts the loss levels perceptibly. Though the EHT
demand has reduces by 6% , the LT demand has increase by 5%. This
change in consumer mix has increase the loss level.
2.3 BASIS FOR ENERGY SALE ESTIMATION FOR FY 04
To prepare a realistic energy sale estimate, we have:
carefully evaluated past billing information (CESCO MIS Reports) for each category i.e. changes in number of consumers, specific consumption etc;
studied the effect of loss reduction initiatives and their impact on billed units;
analysed energy offtake by individual consumers in EHT category including additional information on likely offtakes; and,
used realistic assumptions, operating realities and current economic situation.
2.3.1. LT & HT category – Projections basis by consumer sub-categories
The following steps have been taken to estimate demand for FY 04:
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
For all categories the actual consumption as recorded in CESCO monthly MIS reports for FY 02(Apr01 – Mar 02), and reports for FY03(April-02 –Sept-02)
Additional billing due to the addition of new consumers.
Change in billing due to change in specific consumption.
2.3.2 EHT Category – Consumer-wise Projection Basis
To determine the expected energy sale for EHT consumers in FY 04,
actual consumption for all consumers in FY 02 have been analysed and
any intimation for change in contract demand or energy offtake by
these consumers was considered after consulting field officers.
Navchrome – An EHT consumer belonging to Power Intensive Industry
category is an important EHT consumer of CESCO. As compared to the
corresponding period in FY 02 there has been a sharp increase in
consumption in FY 03. The table below depicts the increase in drawl
which was possible by allowing a special rate to the above consumer
Table 6 Navchrome Consumption Details (All figures in MU)
April May June July Total ( Apr-June)
FY 02 0.05 0.05 0.05 0.04 0.19
FY 03 8.365 11.533 13.957 15.283 49.138
Oswal Chemicals – The consumer has reduced consumption and is also
using its own generation to meet a part of its energy requirement. It is
imperative that it is not in the interest of CESCO and the subsidised
categories of consumers for an EHT consumer to move out of the grid.
The recent trend in consumption has only indicated the above.
Table 7 Oswal Chemicals - Consumption Details (All figures in MU)
April May June July Total ( Apr-June)
FY 02 .92 6.27 4.89 6.67 18.75
FY 04 0.076 6.131 6.180 3.391 15.778
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Energy sale estimates for FY 04 for all voltage-wise consumer
sub-classes are given in RT-1. The projected sale in LT, HT and
EHT categories for FY 04 is summarized below.
Table 8 Energy sale forecast summary for FY 04
Voltage category
FY 02 (MU)
FY 03 (MU)
FY 04 ( MU)
% increase
LT 1425 1496 1680 12%
HT 422 384 431 12%
EHT 296 486 423 -13%
Total 2143 2366 2534 7%
3. ENERGY LOSSES
The licensee has targeted a distribution loss reduction of 8% in LT and
HT categories. Due to change in the sales mix the overall distribution
loss will reduce from 49% in FY02 to 42% in FY03. The licensee humbly
prays to the honourable Commission to approve category wise
distribution loss benchmark of 40% for combined LT and HT category
and 0% for EHT category.
3.1 DETERMINANTS OF LOSS
The type of sales mix in a utility determines the extent of losses in a
system to a large extent. It is common knowledge that the incidence of
losses are the highest at the LT level and the least at the EHT level,
thus any shift from EHT to LT is bound to affect the overall losses in a
system. In the absence of a proper metering of the feeders at all
levels, we have for the purpose of computation taken two broad
categories - EHT and (LT & HT) taken together. It is presumed that
there are no losses at the EHT level and all losses are at the LT & HT
level taken together.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Table 9 Actual Billing for FY ’02
Category EHT LT & HT TOTALReceived into the system
4186 3891 4186
% loss in the system 0.00% 53% 49%Less : Loss in the system
0 2043 2043
Transmitted through the system
3891 1847 3891
Sale at system voltage 296 1847 2143
Table 10 Effect on losses due to shift in 10% billing away from EHT
Category EHT LT & HT TOTALReceived into the system
4186 3920 4186
% loss in the system 0.00% 53% 50%Less : Loss in the system
0 2078 2078
Transmitted through the system
3920 1842 3920
Sale at system voltage 266 1842 2108
In the above tables the total losses in the system is 49%. If there was a
change in pattern of consumption with 10 % of the overall load shifting
from the EHT category to the non EHT category then the overall loss
will increase by 1 % assuming that the loss in the non EHT category
remains constant at 53 %. This implies that for same quantum of sales
a change in mix affects the loss levels and also imposes additional
financial constraints on the licensee. The licensee therefore appeals for
the approval of category wise loss by the Honourable Commission.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Table 11 Projected Billing for FY04
Category EHT LT&HT Total
Received into the system 3960 3537 3960
% loss in the system 0.00% 40% 36%
Less : Loss in the system 0 1426 1426Transmitted through the system
3537 2111 3537
Sale at system voltage 423 2111 2534
From the above tables it is amply clear that there is a major decline in
the EHT off take as compared to that of FY03. Slow-down of the
economy and setting up of CPP has contributed to the reduction in the
off take of EHT Consumers. The decline in energy consumption in the
EHT category is a serious concern for CESCO. However in spite of the
adverse sales mix the licensee has targeted a loss reduction of 6%.
The onerous nature of such task can be stated from the simple fact
that entire loss reduction initiatives will be targeted on the LT and HT
side of the business. It may be noted that the licensee is actually
targeting a loss reduction of 8% in LT & HT Category.
Considering the current loss levels a target of 35.94% distribution loss
is unachievable. The licensee humbly draws the attention of the
Honourable Commission about the loss levels quoted in Gridco
administrative reports. The report has quoted a loss level of 41.56% in
FY95 and 46.94% in FY96. On the other hand the accounts statement
of Gridco reported a lower loss figure. It is well within the knowledge of
the Honourable Commission that underreporting of the T & D losses is
not in the interest of the licensee. In light of this the licensee humbly
requests the Commission to reaffix the baseline distribution loss levels
as existing and agrees to undertake an aggressive loss reduction
programme.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
The licensee hereby draws the attention of the Honourable
Commission that unless loss levels are reaffixed and losses are
specified as per voltage the financial viability of CESCO is threatened
which in turn affects its ability to seek funds from Banks and FIs.
3.2 LOSS REDUCTION PROGRAMME FOR FY 04
The licensee is fully committed to reduction of losses and is providing
full managerial expertise and has set ambitious targets. These targets
have been computed on the basis of sound assumptions and action
plan (discussed below). Detailed calculations on these targets are built
in the demand projection model.
Focus on implementation of commercial procedures and implementation of the billing calendar- accurate meter reading, timely bill preparation, proper bill distribution, effective complaint redressal and credit control activities across all divisions.
Streamline the bill preparation process , introduction of spot billing etc. and working in close coordination with the billing agents in the division they are assisting in the generation of the bills.
Providing meters to all un -metered consumers and consumers having defective meters and installation quality in industries through MRT department to prevent meter tampering;
Emphasize on rural areas by the formation of village committees and thus involving the general consumers
Continuation of de hooking squads.
Set and monitor loss reduction targets at the division level
Introduce meter reading cards and check meter readings frequently on a sample basis
Strengthen MIS including software and systems for monitoring and detection of illegal abstraction
Steps are being taken to arrange finances to introduce a VRS that would lower the average age of CESCO and will also assist in reducing the establishment expenses of the company.
3.3 LOSSES FOR FY ‘03
The voltage wise Loss stipulation for CESCO is in the following Table
and this needs to be allowed for Revenue Requirement computations.
In the absence of feeder meters it is difficult to determine the losses at
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
various voltage levels and for purposes of computation, energy
consumption in EHT category has been taken separately and LT and HT
energy consumption has been clubbed together .The projected loss
levels is as shown below
Table 12 Projected Loss
Category EHT LT&HT Total
Received into the system 3960 3537 3960
% loss in the system 0.00% 40% 36%
Less : Loss in the system 0 1426 1426Transmitted through the system
3537 2111 3537
Sale at system voltage 423 2111 2534
4. Expenditure of CESCO
4.1 COST OF POWER PURCHASE
The Power Purchase cost incurred in the Current Year (i.e., from
April-’02 to December’02), based on actual BST Bills is Rs. 40482 lakhs
for purchase of 3090 MU. The Cost of Power Purchase (CoPP) for the
Ensuing Financial Year (i.e., from April-’03 to March ’04) has been
maintained at an average rate of Rs 1.31/unit. The energy to be
purchased for FY 04 is 3960 MU and therefore the Power Purchase cost
proposed is Rs. 51876 lakhs.
CESCO has fully understood the apprehensions of the Commission “in
allowing tariff without scrutiny of The Commission” (Section 8.19 of
Tariff Order of December 1999), however it has no control over the BST
rates and it requests the Commission to factor any upward revisions of
the BST rates. CESCO has no intention of profiting or bearing losses on
the BST variation but desires that the exact change in BST should be
reflected in the Retail tariff. The Power purchase cost projected for
FY04 is Rs. 51876 lakhs. This may be approved. If this is not approved
the Purchase Power Price adjustment clause as in Section 7 of this
Application may be approved.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Table 13 Cost of power purchased
Rs. Lakhs
Retail Tariff Application for FY-2004 53448
Power Costs for FY-'02 (Actual as per BST Bills) 57481
Power Costs for FY 01 ( Actual as per BST Bills ) 51088
4.2 EMPLOYEE COST
The Employee expenses projected for FY04 is Rs. lakhs. The
comparative figures of the three consecutive years is shown below:
Table 14 Employee cost
Rs. Lakhs
Retail Tariff Application for FY-2004 10918
Provisional for FY-'03 9547
Provisional for FY-'02 9539
The enhancement of employee costs in the tune of 14 % has been
made as compared to the current year. The Commission may take a
view on this and pass this as a pass-through in the present tariff
application.
4.3 ADMINISTRATION & GENERAL EXPENSES
The Administration & General Expense costs projected are Rs.
1861.95 lakhs.
Table 15 A&G costs
Rs. Lakhs
Retail Tariff Application for FY-2004 (Projected for FY-'04) 1861.95
Provisional for FY 03 1774.52
Provisional for FY 02 1138.75
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
CESCO needs to undertake vigorous field activities to achieve its
targeted loss levels. The field activities invite additional costs that the
licensee humbly prays to the Honourable Commission to approve.
4.4 REPAIRS AND MAINTENANCE EXPENSES
The R&M expenses proposed is Rs. 3184 lakhs for FY04. The details of
the three consecutive years of R&M expenses are furnished in Table 16
below:
Table 16 R&M costs
Rs. Lakhs
Retail Tariff Application for FY 04 3184 Provisional FY 03 2949 Provisional for FY 02 2601
The projected R&M costs for the Ensuing year (FY 2004) is Rs.3184
lakhs. The expenditure incurred for FY 03 is Rs 2949 lakhs. The
increase in projected R&M costs is 8% as compared to the costs
incurred in FY 03.The rationale behind such costs is to ensure proper
maintenance of CESCO’s “aged” assets and to ensure that they are in
optimal working condition. This is vital for ensuring quality and trouble
free power supply to our consumers. This is in line with earlier OERC
observations vide Tariff Order dated 21st November 1998 about the
need for asset upgradation.
4.5 PROVISION FOR BAD AND DOUBTFUL DEBTS
The provision for Bad debts for FY04 has been pegged at Rs.
1650 lakhs. The bad debt provision has been made @15% on
incremental debtors.
Table 17 Provisions for bad debts
Rs. Lakhs
Retail Tariff Application for FY 04 1650
Provisional for FY 03 2475
Provisional for FY 02 4066
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
4.6 DEPRECIATION
Depreciation for the year FY04 is projected at Rs 6290 lakhs. The
computation of Depreciation is based on Ministry of Power notifications
issued from time to time as applicable to Distribution Assets.
Table 18 Depreciation
Rs. Lakhs
Retail Tariff Application for FY-2004 ) 6290
Provisional for FY 03 4790
Provisional for FY 02 4230
4.7 INTEREST
4.7.1 Interest Chargeable to Revenue
For the Ensuing Year FY 04 the interest proposed to be charged to
Revenue in the Ensuing Year (FY 04) is Rs. 5509 lakhs. Interest
charged to Revenue for the Current and Ensuing Years is given in the
following table:
Table 19 Interest Charged to Revenue (A):
Rs. Lakhs
Projected for FY 04 5509
Provisional for FY 03 4839
Provisional for FY 02 4251
Interest on various loans availed from individual lending agencies
is in the following Table:
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Table 20 Interest Charged to Revenue (B):
(Rs. Lakhs)Lender/Source FY 03 FY 04
Loan Agreement with GRIDCO 4839 5509
IBRD Loan for System Improvement 2256 2766
Other Charges
Total 7095 8275
Less Interest Capitalized 2256 2766
Total 4839 5509
4.7.2 Interest Chargeable to Capital Works as IDC for the Ensuing Year (FY 04)
The interest proposed to be charged to Capital Works, as Interest
During Construction (IDC) for the Ensuing Year is Rs. 2766lakhs.
Interest charged to Capital Works for the Current Year (FY-’03) and the
Ensuing Year (FY-’04) is given in the table below:
Table 21 Interest Charged to Capital Works:
Rs. Lakhs
Projections for FY 04 2766
Provisional for FY 03 2256
Provisional for FY 02 1672
Table 22 Interest during Construction capitalised on Various Loans
(Rs. lakhs)Lender/Source FY 03 FY 04
Loan Agreement with GRIDCO 0 0
IBRD Loan 2256 2766
Total 2256 2766
5. CAPITAL BASE
The Capital Base projected for FY04 is projected to be Rs38218lakhs.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
5.1 ORIGINAL COST OF FIXED ASSETS
The Original Cost of Fixed Assets is projected at Rs. 48025 lakhs. The
Closing GFA (Gross Fixed Assets) for the previous years in as detailed
in the table below:
Table 23 Fixed assets
Rs. lakhs
Projection for FY 04 48025
Provisional FY 03 48025
Provisional for FY 02 48025
5.2 ACCUMULATED DEPRECIATION
The Accumulated Depreciation projected for the Ensuing Year FY 04 is
Rs 20439 lakhs.
Table 24 Depreciation
Rs. Lakhs
Projection for FY 04 6290
Provisional FY 03 4790
Provisional for FY 02 4230
5.3 ORIGINAL COST OF WORK IN PROGRESS
The Original Cost of Work in Progress projected for the Ensuing
Year FY 04 is Rs 30000 lakhs All Capital works being undertaken
by CESCO are mainly for system improvement. The expenses
under CWP are to be capitalised.
Table 25 Work in progress
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Rs. Lakhs
Projection for FY 04 30000
Provisional FY 03 19030
Provisional for FY 02 13486
CESCO is making a substantial investment in order to spruce up its
distribution system in order to supply quality power to its consumers
and is in the process of carrying out major System Improvement works
funded by the World Bank.
5.4 COMPULSORY INVESTMENT UNDER SCHEDULE VI
The amount of Compulsory Investments is Rs. 120 lakhs calculated at
0.25% of Gross Fixed Assets.
Table 26 Compulsory investment at the end of FY04
Rs. Lakhs
Projection for FY 04 120
Provisional FY 03 120
Projected for FY 02 120
5.5 RECEIPTS AGAINST CONSUMER CONTRIBUTION
The aggregated receipts against Consumer Contribution are projected
at Rs.29649 lakhs at year-end FY04.
Table 27 Receipts against consumer contribution
Rs. Lakhs
Projection for FY 04 29649
5.6 STORES
The licensee has taken stringent measures to reduce inventory. The
Commission in the Tariff Order of January 19, 2001 has stipulated 3
months of average stock. The stock is maintained at one-month
consumption. The Procurement-Stores-CWIP-Capitalisation process as
such is being short circuited recognising that Inventory is for Capital
Works. Stores for FY 04 is projected at Rs. 8010 lakhs.
Table 28 Stores
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Rs. Lakhs
Projection for FY 04 8010
Provisional FY 03 8379
Provisional for FY 02 9441
5.7 CASH AND BANK BALANCE
The Cash and Bank Balance projected for FY 04 is Rs. 6196lakhs.
Table 29 Cash and bank balance
Rs. Lakhs
Projection for FY 04 6196
5.8 LOANS AND BONDS
Loans and Bonds projected for FY04 is Rs 16274 lakhs. The non asset
creating loans has been excluded for the purpose of Capital base
amounting to Rs 5508 lakhs .The details are given in F3.
5.9 REASONABLE RETURNS
The Reasonable Return projected for FY 04 is Rs 6115 lakhs, the break-
up of which is given in the table below.
Table 30 Reasonable returns
Rs. Lakhs
Capital Base FY 04 38218
16% on Capital Base 6115
Reasonable Return 6115
5.10 REVENUE REQUIREMENTS
Based on the above analysis, the revenue requirement for CESCO for
the Ensuing Year, FY 04 is projected at Rs 211600 lakhs. To avoid a
sudden rate shock CESCO plans to defer collection of Rs.121410 Lakhs
with interest over the next three years and plans to recover 90190 lakhs
n the ensuing financial year.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
6. TARIFF PROPOSAL
As stated in the rationale for this Application has the following
objectives:
The Revenue generation from the tariff effective from 1st April
2004 will be Rs. 90190 lakhs and will fall short of the Revenue
Requirement of FY-‘04 by Rs. 121410 lakhs.
In the Tariff Order of December 1999 the Commission had taken
steps towards “a uniform rate for all consumer categories using
electricity on the same voltage of supply”. This rationale has been
carried forward and used for Fixed Costs recovery as well.
1.1 FIXED COSTS RECOVERED FROM FIXED CHARGES
The Revenue requirement as derived in this application is Rs. 211600
lakhs. The Fixed costs component of this Revenue requirement is Rs.
40221 Lakhs computed in the Table below.
Table 31 Fixed Costs and their Recovery as Fixed charges in lakhs
Item Rs Lakhs
Demand Charge due to Gridco
15600
Employee 10918
A & G 3183
R & M 1862
Bad Debt 1650
Depreciation 1500
Interest 5508
Total Fixed Costs 40221
Recoverable as Fixed Charge 9331FC recovered as % of Total FC
23.19%
Going by the Tariff Order of November 1998 that “ 67% of the fixed
cost can be recovered through energy charges. Thus, 33% of fixed cost
is to be recovered through demand charge.” This Fixed Costs recovery
is from Demand Charge and Monthly Minimum Fixed Charges. The
Commission has recognised in the Tariff Order of December 1999 that
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
“ monthly minimum fixed charge is thus a combination of the demand
charge and customer charge payable by the consumers with contract
demand of less than 110 KVA”.
Clearly Demand charge is leviable as Monthly Minimum Fixed charge
or as Demand charge itself and whether consumers with connected
load of 110 KVA have meters to record maximum demand charge or
not, at least 33% of Fixed costs have to be recovered from Fixed
charges.
However as stated in the rationale for this application, the endeavour
is to propose a tariff that is “just and reasonable” and the same
philosophy has been adopted for proposing the Fixed charges also. The
Fixed charges proposed is only about 23% of the Total revenue
generation proposed and at Rs. 9331 Lakhs is Rs. 13267 Lakhs less
than the 33% of Fixed Costs that should be recovered as Fixed
Charges. A minimum of Rs. 9331 Lakhs therefore needs to be allowed
as Fixed Charges.
1.1.1 Demand Charges
The principle of “rationalisation of tariff” has been incorporated for
Fixed Charges also. The Demand charges proposed for all consumers
are Rs. 200 per KVA except for the following categories.
All Domestic
Commercial
Small Industry
Medium Industry
Irrigation
Street Lighting
Public Institution
Public Water Works<100KW
The Bulk Supply Domestic tariff is linked to the LT Domestic Tariff. The
HT Domestic consumers need to avail a lower Demand charge or
minimum fixed charge than the average LT Domestic tariff so that they
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have an incentive to avail of Domestic tariff at HT. Since the LT
Domestic tariff cannot be rationalised in one go, the Bulk Supply
Domestic Demand charge consequently is pegged at Rs. 10 per KW.
Demand charge for HT Irrigation is proposed at the existing level of Rs.
30 per KVA since that is “just and reasonable” level for Irrigation. Also
the Minimum Fixed charge proposed for LT Irrigation is Rs. 20 for the
first kW and Rs 10 for the rest and Demand charge for HT Irrigation has
to be lower than this for consumers to have an incentive to avail power
at the higher voltage.
Consumers not having the facility to be billed on Maximum Demand
charge need to be billed at the Contract Demand only. Also for these
consumers the method of determining the Contract Demand as such is
a function of their connected load. Therefore logically the Fixed charge
for these consumers needs to be lower than the consumers those who
have the facility of a Demand charge payment linked to the Maximum
Demand. In keeping with this logic, the Minimum Fixed Charge of the
following categories is proposed to continue at the existing rate.
Street Lighting
Small Industry
Public Water Works < 100 kW
Public Institution
Medium Industry
1.1.2 Customer Service Charge
The tariff philosophy of rationalisation across voltage categories has
been adhered to for Customer Service charge. As stated in the Tariff
Order of December 1999, Customer Service charge is for the following
activities:
Cost of meter reading
Preparation of bills
Delivery of bills
Collection of revenue
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Maintenance of customer accounts
Customer charge has been proposed at the existing rate for all
categories.
1.2 ENERGY CHARGES
As stated in the rationale to this application, the Commission’s
objective of “ bringing about a uniform rate for all consumer categories
using electricity on the same voltage of supply” can be adhered to till a
point when it does not drive industries like PIIs, whose major raw
material is power, to set up CPPs or alternatively not to set up
industries in the licensees area of supply. Therefore the tariff
rationalisation philosophy has been adhered to in principle though it
stops short of being counter productive. The rate difference between
the voltage of supply as The Commission has decided in the Tariff
order of December 1999 has also been adhered to. This is in
consonance with The Commission’s philosophy in the Tariff Paper that
states that “Efficiency criterion requires that tariff should be cost
based and without any cross-subsidisation”. In alignment with this
philosophy, efforts have been taken to reduce cross-subsidy in this
tariff proposal.
By this logic the tariff for different EHT consumers except for Power
Intensive Industries, Colony consumption and Emergency Supply to
CPPs is as follows.
GP- 300 paise per kWh
Large and Heavy Industries- 295 paise per kwh .
Railway Traction, PII and Mini Steel Plant- 290 paise per kwh . Colony
Consumption- 260 paise per kwh
No increase in demand charge, customer service charge, monthly
minimum fixed charges. Consumption between 50% to 60% of the load
factor by EHT and HT consumers shall be payable @ 220 paise per kwh
and 240 paise per kwh respectively and consumption in excess of 60%
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by EHT and HT consumers shall be payable @ 190 paise per kwh and
210 paise/kwh.
Colony consumption is related to the Domestic tariff and has been
proposed at the average of Domestic tariff for the LT category, that is
350 paise per kWh at HT that is the average of the Domestic tariff at
HT and 10 paise less for EHT supply that is 340 paise.
Commercial tariff for consumption less than 100 units is proposed at
450 paise per Kwh.. The proposed tariff is 580 paise for all units
consumed more than 100 to 200 units and 600 paise per unit above
300 units.
Domestic tariff for consumption <=100 units is proposed at 200 paise
and 320 paise for consumption between 100 and up to 200 units.
Consumption above 200 units is proposed at 450 paise per unit. As is
apparent these slabs are subsidised already by the other categories
and a conscious attempt has been made to decrease the subsidy by
other categories to these Domestic slabs.
The licensee has experienced some problems in recovering arrears due
from previous periods. The licensee feels that by allowing incentive on
current payments the importance of liquidating arrears has taken a
back seat. In light of this the licensee places before the Commission a
proposal for allowing rebate on current amount only when the entire
bill (including arrears and current charges are paid in full).
The licensee has initiated several positive steps for redressal of
consumer grievances. All offices have been instructed to observe all
days as grievance redressal day between 10 a.m. to 2 p.m. Complaint
redressal is also done at the HQ on all days except Sunday. However
on many cases consumers are seen avoiding payments on frivolous
charges of wrong bills, which on subsequent verification is found to be
correct. As a result of this the licensee is constantly facing problems in
cash flows. Hence the licensee draws the attention of the Commission
towards the Provisions under Point 92 (2) of Chapter 9 0f the OERC-
Distribution 9 Conditions of Supply) Code 1998 wherein any bills
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deferred for delayed payment (on account of disputes) attract a DPS of
2 % per month. The licensee humbly prays to the Commission to
approve a DPS of 2% per month for all consumers.
The licensee requests the Commission to allow it to incorporate the
disconnection notice in the Bill served on consumers for recovery of
Energy Charges. The bills will include the arrears and current charges
whereas the disconnection notice will be issued on past arrears. This
will compress the time cycles of separate Bill and Disconnection notice
distribution programmes and reduce overheads. A similar practice is
being followed by Department of Telephones, which serves a bill cum
disconnection notice and the licensee requests the Commission to
allow it to adopt the same practice.
The philosophy that should govern tariff setting is enshrined in the OER
Act and the Tariff order of December 1999 that is “bringing about a
uniform rate for all consumer categories using electricity on the same
voltage of supply which is a good measure of the cost of supply.”
Similarly for recovery of Fixed Costs from Fixed Charges the
Commission’s Tariff Order of November 1998 needs to be adhered to
rather than “comparable charges in other States”.
1.3 ENERGY CHARGE TO POWER INTENSIVE INDUSTRIES
The energy charge for a PII Unit consuming power at EHT is a major
factor for its competitiveness at the international market. Continuance
of such consumers, availing power from the grid, is not only essential
for the financial health of CESCO, they are equally important for the
subsidised categories of consumers like domestic, irrigation etc who
are being supplied power at a price lesser than the cost of supply.
Therefore in the overall interest of CESCO and the consumers it is
proposed to lower the tariff to 205 paise per unit for consumption till
40% of the load factor and 180 paise per unit for consumption above
40% load factor.
1.4 REBATE
Cesco proposes the continuance of the present rebate structure.
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1.5 REVISION OF OTHER CHARGES
1.5.1 Increase in Reconnection Charges
Tariff should be used as a tool to achieve the objective of rewarding
the good consumers. Disconnection drives against non-paying
consumers are proposed so that these consumers do not burden the
paying consumer. To deter the consumers from non-payment and
hence disconnection the reconnection charge is proposed to be
increased as in the following Table.
Table 32 Proposed re-connection charges for FY 04
Connection Type ChargesSingle Phase Domestic Consumer
Rs. 60
Single Phase Other Consumer Rs. 100
3 Phase Line Rs. 200
HT & EHT Line Rs. 1000
1.5.2 Power Factor Penalty
Low power factor places the network under tremendous strain and may
result in higher R & M Costs. The Commission is requested to
reintroduce the PF penalty for Medium Industries and Bulk GP
consumers. This will encourage adherence to stipulated power factor
loads during operation thereby minimising the strain on the network. It
is, therefore, proposed to re-introduce power factor penalty for Medium
Industries the rates of, which should be the same as that existing in
the current Large Industry tariff.
7. PURCHASED POWER PRICE ADJUSTMENT CLAUSE FOR CESCO
7.1 BACKGROUND
The Conceptual Issues of Electricity Tariff in Orissa, envisages the
creation of a Fuel and Purchased Power Adjustment Clause (FPPAC). It
requires that an estimated base amount of fuel and purchase power
cost be included in the calculation of the utility’s tariffs. Any actual
costs above or below the base amount (that in CESCO’s case is the
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
amount of power purchase included in the calculation of its tariff) shall
be collected from or refunded to customers by means of a per kWh
charge. The philosophy for this type of clause as mentioned in the
Conceptual Issues is to insulate the utility from the risk of possible
changes in a type of cost over which the licensee has little control.
The letter and spirit of these statements of The Commission has been
adhered to while proposing the purchased power price adjustment
formula since the licensee bears the responsibility for initiating a
proposal as required by The Commission. There is little doubt that
purchased power in the case of CESCO is Bulk Supply power purchased
from GRIDCO. As mentioned above the objective is to “insulate the
utility from a type of cost over which licensee has little control”. Power
cost clearly is the product of the units of power purchased and the Bulk
Supply Tariff. The formula proposed does just that, insulates the utility
against variation of bulk supply tariff at the power purchase volume
approved by The Commission.
With the unbundling of the power sector it is but natural that different
companies will have a different tariff calendar. Therefore say if the
Bulk Supply Tariff comes into effect later than the Retail tariff for a
Distco then the Retail tariff should reflect the changed BST. Clearly the
existing formula is “fuel cost based” only and the Distco needs to be
insulated against BST as implied in the Conceptual Issues.
The proposed formula is not an automatic pass through. The
change in Retail Tariff would need The Commission’s approval.
Therefore a simple interest @ 16% per annum is applicable to
the delay between the new BST coming into effect and the
Adjustment (A) coming into force.
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7.2 CESCO’S PROPOSED FORMULA
Therefore as argued above, the proposed formula only provides for a
change in BST that is obviously beyond the purview of the Distribution
company, to be transparently passed through to retail tariff after The
Commission’s approval.
The key features of this formula are:
There is no tinkering with the Losses approved by The Commission since the Power purchase base (E1) used for the computation is what is approved by The Commission in the tariff. The energy sale (Qs) is also as approved by The Commission in the tariff.
The SMD (D1) in KVA is as approved by The Commission in the tariff. Therefore any risk of a higher SMD is borne by the utility.
The pass through formula is secular in that the same increase (A) per unit applies to all category of consumers
In any case The Commission will approve every time there is a need to apply this feature on an application by the licensee. In case a normative period of 15 days is stipulated for the approval, then the interest component (1+r%Xm/12) can be done away with. This component (1+r%Xm/12) is only applicable for m>1 month.
There is no logic whatsoever for the pass through to operate within any band. Any increase in BST needs to be reflected in the Retail tariff and logically an interest is chargeable on any delay.
Adjustment rate per unit (A) becomes applicable from the day the new BST or fuel surcharge adjustment becomes applicable.
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UNIT-VI
Grievance handling of OERC in connection with ARR & RTA.
Soon after the tariff application is filed, the licensee has to reply to
certain queries made by the commission on the RTA .Then the licensee
is ordered by the honorable commission is keep the application ready
for sale to the general public. The general public after going through
the application is requested to file their observations with the
commission by a specified date. The commission then scrutinizes the
observations/complains and selects the relevant observations for
hearings. A hearing date is finalized and communicated through press
release by the commission. The hearing took place at the
commission’s hearing hall. For the ARR-RTA filed for the year 2003-
2004 by CESCO the following parties filed their observations/complains
which are taken for hearing by the commission.
In response to the above notices, objections were received from
different quarters. The Commission received as many as 29 objections
out of which the following 25 objections were admitted for personal
hearing.
(1) Orissa Consumer’s Association, Biswanath Lane, Cuttack; (2) Mr.
R.C. Padhi, MIG, A/24, Brit Colony, Nayapally, Bhubaneswar; (3) National
Aluminium Company Ltd., (NALCO), Nayapally, Bhubaneswar; (4) Aditya
Aluminium Project, Sahid Nagar, Bhubaneswar; (5) South Eastern Railways,
Garden Reach, Kolkata; (6) Purvi Bharat Steels Ltd., Tangi, Cuttack; (7)
Shreeji Ispat Limited, Jagatpur Industrial Estate, Cuttack; (8) Bajarangbali
Alloys Private Limited, Choudewar, Cuttack; (9) Orissa Small Scale Industries
Association (OSSIA), Ajoy-Binoy Bhawan, Industrial Estate, Cuttack; (10)
Aditya Alloys Limited, Telengapentha, Cuttack; (11) Aditya Steel Industries
Limited, Telengapentha, Cuttack; (12) Coastal Orissa Steel Manufacturers’
Association (COSMA), Chauliaganj, Cuttack; (13) Magnum Fibres Pvt. Ltd.,
Mancheswar Industrial Estate, Bhubaneswar; (14) Confederation of India
Industry (CII), Forest Park, Bhubaneswar; (15) Association of Industrial
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Entrepreneurs of Bhubaneswar (AIEBA), Mancheswar, Bhubaneswar; (16)
District Small Scale Industries Association, Industrial Estate, Cuttack; (17)
Satyam Castings Pvt. Ltd., Industrial Estate, Choudewar; 918) Federation of
Consumer Organisation, Orissa & Bhubaneswar Consumers’ Association,
Buddha Nagar, Bhubaneswar; (19) cuttack Municipal Corporation (CMC),
Cuttack (20) Tata Iron & Steel Company Ltd., (TISCO), Forest Park,
Bhubaneswar (21) D. Mangaraj, Nirakarpur, Dist. Khurda (22) Utkal Chamber
of Commerce & Industry (UCCI), Nayapally, Bhubaneswar (23) Orissa Young
Entreprenuers’ Association (OYEA), Industrial Estate, Cuttack (24) Chief
Engineer, Public Health Care (Urban) Bhubaneswar; (25) Mahanadi Coal Fields
Ltd, Burla, Sambalpur.
All the above objections were scrutinised, found valid and
admitted for hearing.
The intending objectors had exercised their right to inspect/peruse the
licensee’s application and to obtain the salient features of the
applications/full set of applications on payment of the prescribed fees from
the specified offices of the licensee.
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UNIT-VII
DETERMINATION OF TARIFF
After hearing the objectors and CESCO and after considering all material facts
in the tariff application the commission has decided and finalized the
following order.
8.1 No changes in the existing tariff structure both in terms of rates and
stipulations have been envisaged by the Commission in the tariff order
2003-04 except the followings, mentioned in the paragraphs 8.2 to
8.20. The rates application to the various categories of consumer have
been detailed in the Annex-C.
8.2 Kutir Jyoti Consumers
8.2.1 Some objectors protested that a significant number of consumers
masquerading themselves as Kutir Jyoti consumers have got service
connection with load far in excess of the single point supply for lighting
envisaged under Kutir Jyoti programme. They also submitted that the
State Govt. should extend subsidy to compensate for the loss
sustained by the distribution company on account of supply of power
at a rate cheaper than the average cost of supply to this category of
consumers. As no subsidy has been made available by the state Govt.
despite protracted correspondence with Govt., the Commission,
therefore, directs that all Kutir Jyoti consumers should be invariably
metered. The tariff applicable in this case will be upto consumption of
30 units per month fixed at Rs.30.00. In case consumption exceeds 30
units per month, the entire consumption will be charged at the
prevailing domestic tariff.
8.2.2 Load factor billing
8.2.3 Some objectors took serious exception to the bills being continued for
months together on load factor basis in case of defective meters. Thus,
the authenticity of the past bills in such cases could hardly be
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vouchsafed. It is, however, the statutory obligation on the part of the
licensee to replace meters. As stated in the previous orders, load factor
billing has been prescribed for a limited purpose/period, as and when
the meter remains defective/or the consumer goes without meter to
serve as a means to have the meter installed by consumers. Further
CESCO in its reply to queries raised by the Commission relating to tariff
for 2003-04 has committed to complete all feeder metering and LV
side of Transformers metering by 31.3.2004 and consumer end
metering by 31.12.2004. In view of the aggressive metering activities
undertaken by CESCO, the Commission considers that billing on the
basis of load factor will be dispensed with from 1st April, 2004. Many
objectors pleaded that billing based on load factor should not be
allowed. The Commission is also wary of load factor billing to
consumers for months together. It is licensee’s obligation to ensure
that each consumer gets supply only though correct meters. Load
factor billing was allowed under para 60 of OERC Distribution (Conduct
of Supply) Code, 1998 for a limited purpose/time but the licensee has
systematically abused the regulation on some pretext or other.
8.2.4 The commission, therefore, directs that the load factor billing should
continue as per the provision in the existing tariff for the year 2003-04
and be withdrawn from 1st April, 2004, subject to amendment of the
OERC Distribution (Condition of Supply) code, 1998, to that extent. All
billing will be based on actual meter reading showing actual
consumption of consumers. In case of defective meters the provisions
of Indian Electricity Act, 1910, Section 26 and Regulation 58, 59, and
60 of OERC Distribution (Condition of Supply) Code, 1998 will apply.
Further, the licensee is directed to complete 100% consumer metering
by 31st March, 2004 and feeder metering by 31st October, 2003.
8.3 Incentive for maintaining high power factor
8.3.1 For the first time, the Commission in its tariff order dtd.30.12.99
introduced an incentive to encourage improvement in power factor
above 90%. Subsequently, the limit was raised to 97% in the RST order
dtd.19.01.2001. CESCO estimates that the rebate alone on this
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account to HT/EHT consumers will be of the order of rs.3.84 crore
during the FY 2003-04 with the existing tariff.
8.3.2 Some of the objectors pleaded for restoring incentive for improvement
in power factor from 90% and above and penalty at the same rate for
low power factor.
8.3.3 Some objectors opined that for the health of electrical machinery, it is
risky to maintain power factor between 97% because there is every
chance of spurt in voltage when all on a sudden some load gets thrown
off from the circuit.
8.3.4 It should be kept in view that the industries for better protection of
their installation should follow prudent operational practice installing
protective devices, so as to isolate the equipment during abnormal
transient condition arising out of sudden load throw off or tripping of
feeders.
8.3.5 Further, the KVA demand of the industry decreases as the power factor
(PF) improves, thereby benefiting the consumer on account on demand
charge.
8.3.6 Similar provision of power factor incentive/rebate has been
recommended by other State Regulatory Commission such as Gujurat
Electricity Regulatory Commission, U.P. Electricity Regulatory
Commission, Mahararashtra Electricity Regulatory commission where
incentive is allowed for maintaining PF above 95%. Hence, the
Commission does not consider it necessary to make change in the
existing provision with regard to power factor incentive and penalty.
8.4 Incentive for prompt payment
8.4.1 Some of the objectors pointed out that 48 hours of rebate period is
very short and consumers may not be able to avail the rebate due to
paucity of time. They suggested that the rebate period should be
extended to 15 days. It is expected that to avail such heavy amount of
rebate, consumers should put extra efforts and make payment of bills
in time.
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8.4.2 As per earlier order of the Commission, certain categories of
consumers are entitled to a rebate of 1% of the amount of the monthly
bill (excluding arrears and electricity duty) if payment is made within
48 hours of the presentation of the bill. Considering the difficulties of
the consumers, the Commission feels that three days time for availing
rebate is reasonable and allows that the consumers are entitled to get
rebate of 1% if the bills are paid within 3 days from the date of
presentation of the bill. The Commission decides that as a measure of
incentive for prompt payment there will be a rebate @1% for payments
made within 3 days from the date of presentation of the bill. This
incentive will be application to all the categories of consumers
excepting Domestic, Commercial, Irrigation and Small Industry, for
whom, a rebate of 10 paise/unit shall be allowed on energy charges fi
the payment of the bill (excluding arrears and electricity duty) is made
by the due date indicated on the bill or within a period of 7 (seven)
days from the date of receiving the bill.
8.4.3 Shir R.C. Padhi suggested that a DPS may also be levied on domestic
and commercial consumer. The Commission appreciates the
suggestion and orders that a DPS of 2% will also be levied on domestic,
commercial, irrigation and small industries categories of consumer if
payment is not made within the due date.
8.5 Industrial Colony Consumption
8.5.1 The Commission in its tariff order dated 19.01.2001 directed that the
units consumed for the industrial colony should be separately metered
and the total consumption should be deducted from the main meter
reading and billed for supply of HT and EHT. The energy consumed in
industrial colony in excess of 10% of the total consumption shall be
billed at the rate of Energy Charge applicable to the appropriate class
of industry. Some objectors like MCL pleaded that the consumer whose
load factor is less than 50% would only enjoy the benefit and the
consumer whose load factor is more than 50% would lose heavily. As
such, the consumer would have been benefited more under the
incentive scheme for higher consumption had there been no separate
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tariff for colony consumption. Since the purpose of incentive scheme is
to encourage for higher consumption by the EHT & HT consumers, the
Commission after reviewing the scheme directs that for the purpose of
determining the incentive amount, the energy consumed in Industrial
colony limiting to maximum of 10% should be included in the first slab
of 50% and billed for supply at HT and EHT. The energy consumed in
industrial colony in excess of 10% of the total consumption shall be
billed at the rate of Energy Charge applicable to the appropriate class
of industry.
8.6 Railway Traction Tariff
8.6.1 The question of providing a reasonable tariff for Railway Traction
raised by the S.E. Railway was also considered by OERC. The
Commission would like to clarify that the railway traction tariff in Orissa
is at par with that of HT or EHT consumers depending upon the voltage
of supply as the tariff structure has been totally linked tot he voltage of
supply. Railway traction tariff is lower in Orissa. Therefore, railways
should have no grouse on this account.
8.6.2 The railways had also raised the issue of a single part tariff which is
today applicable only to very large industries with a guaranteed off-
take to which category the railways does not belong.
8.6.3 The South Eastern Railway’s further concern about recording and
charging of maximum demand for individual supply points as per the
existing system turned out to be totally unrealistic as the railways were
moving loads for all substations along the track. It may be mentioned
that the railway traction supply is from the EHT network of the GRIDCO
and the billing is done by the various supply companies to the railways
in their area of license. The Commission in its tariff order dated
19.4.2002 opined that the issue should be mutually discussed by the
railways with the four distribution companies and their views in the
matter may be placed before the Commission for taking a holistic view.
In this connection S.E. Railway had discussion with the Distribution
Companies but no meaningful agreement emerged out of the
discussion. The Commission observes that since separate agreements
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are executed for individual traction loads, it will not be possible to
adopt SMD for billing on the basis of simultaneous maximum demand
recorded in continguous substations.
8.6.4 The railways also pleaded that the integration period of 30 minutes for
measurement of maximum demand in respect of railway traction has
been changed to 15 minutes. The railways requested that the OERC
should consider restoration of integration period 30 minutes as per the
earlier method which is also in conformity with the Clause No. 2(8) of
Electricity Supply Act, 1948.
8.6.5 The Commission deliberated on this issue and observed that 30
minutes integration period for all categories has been provided in the
Regulation of ASEB, Ahmedabad Electricity Company, MPSEB, HSEB,
DVP, Gujurat, Maharashtra, TamilNadu, Fifteen minute integration
period has been provided by UPERC, APERC for loads more than 4000
KVA, and for railway traction by WBSEB. Some SEBs have introduced
one hour integration period.
8.6.6 Further, with implementation of ABT in Eastern Region with effect from
1st April,2003 which calls for recording of Maximum Demand with
fifteen minutes integration period it will not be possible to change over
to integration period of thirty minutes for Railways. The Commission
further decides to adopt fifteen minutes integration period in near
future for all the categories of industrial consumers. This will require
amendment of the supply regulation OERC Distribution (Condition of
Supply) Code, 1998 and installation of appropriate metering system in
consumers’ premises. Till such time, the present arrangement shall
continue.
8.7 Construction Power
8.7.1 Objection was raised by M/s. Aditya Aluminium that the
industries under construction may be classified separately and no
demand charge should be levied on construction power. There seems
to have no logic behind the objection as the licensee is to
arrange/book, the quantum of power as per the contract demand and
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pay fixed charge against the said quantum of power which it has to
recover from the consumer.
8.8 Penalty for over drawal of power above the contract demand
8.8.1 The Commission emphasises that with the implementation of ABT in
the Eastern Region the problem of Over Drawal has automatically been
addressed, as the principal aim of ABT is to enforce grid discipline with
an objection for consistence in frequency and efficient use of available
energy resources.
8.8.2 The special feature of the above commercial mechanism is UI Charge.
Under this scheme, any deviation of drawal from the scheduled shall
be liable to UI charges Payable/ Receivable to the utility concerned.
This UI is to be worked out for each 15 minutes blocks period and thre
shall be 96 Blocks period in each day of operation. The charges for
unscheduled drawal shall be based on average frequency of the
relevant block period. The UI rate varies with maximum 420 paise/KWH
at 49.0HZ and minimum of 0 paise/KWH at 50.5HZ. The UI Charge at
different frequency is linear in the step size of 0.02 HZ. During under
frequency condition overdrawal beyond schedule will attract
disincentive in the form of a higher charge which can go up to 420 p/u
at a 49 HZ and incentive for underdrawal will be available during low
frequency condition. Vice versa is applicable during high frequency
condition. This being the principle during ABT REGIME, NO SEPARATE
CHARGE NEEDS TO BE SPECIFIED FOR OVERDRAWAL OR
UNDERDRAWAL. During ABT operation, a DISTCOs overdrawing during
under frequency condition will be liable to pay UI charges as per rule.
There may be a situation when one DISTCOs is overdrawing and
another is underdrawing so that net effect of GRIDCO drawal is
nullified. In that case cost recovery f UI charges for overdrawing
DISTCOs will not be appropriated by GRIDCO and will be kept in a
separate account. Such cases need to be referred to Commission for
direction on appropriation of the funds. The DISTCOs in turn need to
bring to the notice of the consumers particularly industrial one of EHT
and HT category about the impact of the overdrawl during under
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frequency condition and have a back to back arrangement for passing
on the extra burden due to UI charges. The meters in the consumer
premises should be capable to record the 15 minutes interval load
drawal with memory retention of at least 60 days.
8.8.3 ABT is a new concept with three elements of charges. In initial yeas
they might be some problems. The utilities need to remain alert to
avoid financial burden arising out of overdrawl during under frequency
regime.
8.8.4 The UI Charge is payable when the utility does not support the system
and receivable when the Utility support the system to maintain the
prescribed frequency. In other words the UI Charge payble/receivable
depending upon who has deviated from the schedule and also subject
to the Grid condition at that point of time. This element, which is
expected to bring discipline in the system takes care of the over
drawal by licensees.
8.8.5 In view of implementation of ABT in Eastern Region, the Commission
decides that there would be penalty on overdrawl as stipulated in the
para above.
8.9 Observation on incentive for higher consumption
8.9.1 Some objectors pleaded that load factor as per standard nomenclature
should be based on Maximum Demand without having any relation
with Contract Demand.
8.9.2 The said issue has been clearly dealt in the OERC retail Supply Tariff
order dtd.19.04.2002 and the reason for adopting the term
“consumption ratio” in place of “ load factor” and “higher of contract
demand or maximum demand” has been explained in the following
paragraphs.
8.9.3 For the purpose of calculation of incentive energy, instead of load
factor the term consumption ratio i.e. the total number of units
consumed during a given period to the total number of units that
would have been consumed had the contract demand or the maximum
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
demand, whichever is higher was maintained throughout the same
period has been used.
8.9.4 It may be noted that the incentive tariff for HT/EHT category of
consumers was introduced in the OERC RST order dtd.30.12.99 where
incentive energy was considered above the load factor of 50% f contrct
demand. Further, as mentioned in the OERC RST order dtd.19.01.2001
“Some objectors objected to recording of load factor during FY 1999-00
in excess of 100% in the filing made by the licensee on the ground that
it had an element of absurdity. As prescribed in OERC Condition of
Supply Regulation, 1998 load factor of a consumer under no
circumstances can exceed 100%”. Therefore, consumption ratio was
adopted in place of load factor for determination of incentive energy.
8.9.5 Some objectors pleaded that for the purpose of calculation of incentive
slab, energy slab calculation should be considered on Peak hour
maximum demand only and not on the off-peak maximum demand. As
directed by the Commission in its tariff order dtd.19.4.2002, for the
purpose of calculation of maximum demand, there should not be any
differentiation between peak and off peak hours. As such, the
Commission is not inclined to bring about any charge in the existing
provision excepting deletion of the clause – “Incentive shall be
available to those consumers who will not reduce their contract
demand during the next three financial years”.
8.10 Meter Rent
8.10.1Some objectors submitted that meter rent and the cost of
metering/lease should be maintained separately from the general
revenue and expenses of the licensee. The Commission examined the
issue of rent chargeable for the meters supplied by the licensee.
Section 26 of the Indian Electricity Act, 1910 reads as follows:
8.10.2“In the absence of an agreement to the contrary, the amount of energy
supplied to a consumer or the electricity quantity contains in the
supply shall be ascertained by means of correct meters and the
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
licensee shall if required by the consumer cause the consumer to be
supplied with such meter.
8.10.3Provided that the licensee may require the consumer to give him
security for the price of the meter and enter into an agreement for the
hire thereof unless the consumer elect to purchase the meter.”
8.10.4Hence, the consumer has to be allowed to exercise first option to
purchase an appropriate meter. If the consumer wants to take the
meter on hire, the licensee can charge meter rent. The licence is
directed to allow the consumer to own the meter by paying its
legitimate cost if he/she do desires, in one installment or can pay
meter rent till the landed cost is recovered. In such a case, if the meter
becomes defective or lost, the case should be dealt with in accordance
with provisions under OERC Condition of Supply Regulation.
8.10.5In regard to calculation of meter rent, the Commission examined the
estimates submitted by the licensee. The cost of the Electro-magnetic
meters including TP box and installation charges comes to around
rs.1050/-. The life of the meter has been estimated as 10 years with a
discount rate of 12% per annum. The amount recoverable on account
of Landed Cost of meter including interest will come to rs.15.00
approximately per month. The Commission is convinced that the meter
rent charged by the licensee is reasonable. Any consumer who does
not want to pay the meter rent cane exercise his/her first option to
purchase the appropriate meter.
8.11 Rural Electrification
8.11.1The Commission is aware of the fact that the State Government is
planning to take up Rural Electrification work in a massive scale in
consonance with the national agenda to achieve 100% Rural
Electrification by 2007 and providing electricity to all households by
2012. While extending power facilities to every nook and corner of the
State necessary precautionary measures have to be taken to avoid
further loss to the power system. In fact, extension of liens would
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
mean additional technical loss apart from commercial loss which can
be prevented by taking the following measures as detailed below:-
8.11.2Off grid supply/distributed generation should be encouraged in remote
villages situated away from GRID.
8.11.3In case the electrification is done by extending the grid supply then the
extension should be on High Voltage Distribution System (HVDS) by
extending the HT lines up to the load centre of the village. Then LT
distribution can be done by installing small capacity transforemrs like
10 KVA, 16 KVA, 25 KVA to cater to the needs of the villagers. Service
connections can be extended directly from the LV side of the
transformers to the consumer’s premises. If deemed necessary, Aerial
Bunched Conductors (ABC) c an be used for extending LT supply to
distant points which cannot be reached through normal service
connection wires.
8.11.4Village Committee may be set up to look after load development, load
management, billing and collection in the village.
8.11.5On the LV side of the transformer, a meter is to be installed which will
record the total energy supplied by the transformer. The village
committee can be billed based on this meter reading on a suitable
tariff to be approved by OERC depending on the mix of load in the
village.
8.11.6The extension of lines in the village should be done only after firm
commitment from the consumers by way of giving advance security
deposit/paying for the cost of extension etc.
8.11.7The Commission is of the view that aforesaid precautionary measures
will reduce commercial loss substantially. The Commission, therefore,
directs DISTCOs to adopt measures mentioned above while taking up
rural electrification.
8.11.8The capital investment required for rural electrification will be fully
funded by the State Govt. through various schemes such as APDRP,
PMGY, MPLAD, MLALAD etc. as 100% capital subsidy to DISTCOs.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
8.12 Tariff for Emergency Supply to CPP at HT
8.12.1In the existing Tariff Schedule there is no provision for separate tariff in
respect of Emergency Supply to CPP at HT category. NESCO in its tariff
proposal has indicated consumption of 2.84 MU against Emergency
Supply to CPP at HT and as such, there are some consumers who avail
power supply as Emergency Supply to CPP at HT.
8.12.2In view of the above the Commission decides a tariff at a rate of 400
paise/unit as energy charge and Rs.250 per month as Customer
Service Charge for Emergency Supply to CPP at HT.
8.13 Emergency power supply to CPPs/Generating stations
8.13.1Some of the industries having captive power plants requested the
Commission to raise the present level of emergency power (25% of the
highest unit) to 75% to 100% of the capacity of power plant. The
Commission examined their request and in principle, agreed to raise
the above level to 100% of the largest unit in the CPP or Generating
Stations, subject to amendment of the provisions under OERC
Distribution (Condition of Supply) Code, 1998, with the following
stipulations.
8.13.2“Such industries owning CPP/Generating Stations have to enter into an
agreement with DISTCOs subject to technical feasibility and availability
of required quantity of power/energy in the system. For them, a flat
rate of 420 paise/kwh at EHT and 440 paise/kwh at HT would apply
while for others who draw only 25% of capacity of highest unit would
pay @ 380 paise/kwh and 400 paise/kwh at EHT and HT respectively.
In case of over drawl beyond 25% of the rated capacity they will have
to pay @ 420 paise/kwh and 440 paise/kwh at EHT and HT respectively
for the period of over drawl.”
8.14 Tariff for Ferro Alloys Industries
8.14.1The Ferro Alloys Industries of the State filed a petition before the
Commission jointly and also severally for a composite tariff for their
industries at a rate of 182 P/KWH against an off take guarantee of 70%
of their contract demand. They have also pleaded that their plant
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
would operate at very high load factor resulting in additional annual
consumption thereby ensuring higher level of cross subsidy and easing
the burden of surplus power of that state. They have further pleaded
that they have a substantial presence in the industrial scene of Orissa,
they are power intensive and export oriented, that the high cost of
production is making them un-competitive in the international market
and that a special, concesional rate of tariff would make the industries
viable, increase their production and thereby enhance the revenue
flow to distribution companies. They have further stated that the
APERC has allowed a concesional tariff for the Ferro Alloys units
considering their problem of viability.
8.14.2The Government of Orissa in their letter No.1585 dtd.14.2.2003 has
recommended the proposal of these industries for considering of the
Commission. However, the govt. has also clarified that this
endorsement is not a policy directive under section 12(3) of OER Act,
1995 which means Govt. would not be able to provide subsidy as
required under the above section.
8.14.3CESCO has opposed the composite tariff of 182 paise/kwh proposed by
the Ferro Alloys Industries and has prayed that the State Govt. should
provide necessary subsidy to make good the loss on account of the
cheaper tariff.
8.14.4During public hearing of Tariff proceedings, vehement opposition came
from some of the objectors against the proposal of a concessional tariff
for Ferro Alloys Industries. They apprehended that since Government
of Orissa is not forthcoming with any subsidy, a concessional tariff for
these industries is likely to adversely affect the subsidized category of
consumers & lifeline rate. It is understood that, Orissa Consumers'’
Association have challenged the proposed special tariff to 182 p/u in
the Hon'ble High Court of Orissa.
8.14.5The Commission has given a careful consideration to this proposal
because of its wider ramifications in terms of collection level & cross
subsidy level of DISTCOs which need to be reviewed for its impact and
views as under:-
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
8.14.5.1 All the Ferro Alloys Industries are now under Power Intensive
category and a graded tariff is available to all the categories of
consumers under OERC schedule based on load factor under which
they operate. Further, the DISTCOs have entered into special
agreement with the Ferro Alloys Industries and extended a
concessional tariff.
8.14.5.2 The AP case cited by the Ferro Alloys Units is not comparable to this
case because a rate of 212 P/KWH for the Ferro Alloys Units
approved by APERC was recommended tot he Commission by AP
Transco. Secondly, the Govt. of A.P. for the year 2003-04 provided a
subsidy of rs.1513.49 cs. To be made available to the distribution
companies to make good loss of revenue from the subsidies
category like LT doemstic, agriculture etc. The Govt. of Andhra
Pradesh has furhter assued the Commission that this amount would
be available to DISTCOs in 12 equal monthly installments.
8.14.5.3 Further an exercise by Commission staff reveals that collection
level & cross subsidy level DISTCOs would be adversely affected in
case consumption as envisaged in their proposal do not materalise.
8.14.6. In view of the facts stated above, Commission feels it
appropriate to advise DISTCOs concerned to review this proposal
once again and enter into mutually acceptable agreement, if
deemed necessary and put up the same before the Commission
for consideration, in accordance with Regulation 81 of OERC
Distribution Code, 1998.
8.15. Re-connection Charge
8.15.1The ate of reconnection charge should be as below:
Single Phase Domestic Consumer - Rs. 50/-
Single Phase other consumer - Rs.100/-
3-phase line - Rs.200/-
HT &EHT line - Rs.1000/-
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
8.16 The Commission is aware of the gaps in the overall computation of
the realization from tariffs and the consequent Clear Profit
computations among the four distribution licensees. The
Commission expects to use the plans of the four distribution
licensees as well as GRICO, to rationalize these differences in its
next tariff judgment for FY 2004-05. In this manner, the Commission
hereby deviates from the provisions of the Sixth Schedule of the ES
Act, 1948.
8.17 Finally, the Commission orders as follows with reference to the
prayers f the applicant. The Commission does not approve the
Revenue Requirement for the FY 2003-04.Retail supply as proposed
by CESCO for 2003-04 and rejects the Tariff revision proposal.
8.18. No change in the existing tariff structure both in terms of rates
and stipulation have been envisaged by the Commission in the
tariff order 2003-04 except those mentioned in the paragraph
8.2. to 8.20. Th rates applicable to the various categories of
consumer have been detailed in the Annex-C.
8.19. The Commission has approved GRIDCO’s revenue requirement
for 2003-04 at Rs.2045.00 crore (applying correctives) which
GRIDCO is allowed to recover at an approved tariff in
accordance with Deptt. of Energy, Govt. of Orissa Notification
No.1068/E, dtd.29.01.2003 and Parekh Committee
recommendations duly accepted by Govt. of India. In case Govt.
of Orissa does not accept the Pareksh Committee
recommendation as advised by the Commission, the revenue
requirement of GRIDCO for FY 2003-04 would increase by
Rs.94.10 crs. and thereby BST would rise by 7.81 p/u over a
period of 12 months, with an all Orissa average RST rise of 11.45
p/u, as per the tariff schedule given in Annex (1) w.e.f.
1.11.2003. It is made clear that the tariff hereby made effective
from 1.11.2003 shall not be construed as an amendment of this
tariff order and there shall be no fresh proceeding u/s 26 (6) of
the OERC Act. However, in the event of such non-acceptance by
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
the State Govt. on or before 22.10.2003, tariff as per (Annex C-
1) shall be published for giving effect there to after 7 days from
the date of publications. The amount left un-recovered due to
shorter tenure of recovery or partial acceptance of the Pareksh
Committee recommendation would be carried forward to 2004-
05 for adjustment.
In line with the Commission order on its LTTS, the Commission expects
the utilities to file their aggregate revenue requirements for the period
from 1st April, 2004 to 31st March, 2007 i.e. for the Financial Year 2004-
05, FY 2005-06 and FY 2006-07 by December, 2003 in order to enable
the first control period is from 1st April, 2003 to 31st March, 2007
covering four financial year (FY 2003-04, 2004-05, 2005-06 & 2006-
07), the Commission decides that the first year (i.e. FY 2003-04) will be
treated as the transaction period, during which LTTS will be introduced.
The Commission directs the licensee to implement the retail supply
tariff as determined by the commission in this order to become
effective after expiry of seven days of the publication under section
2(5) of the OER Act, 1995.Pursuant to order dtd.14.3.2003 of the
Hon’ble High Court of Orissa, passed in Misc. Case No. 414/2003 and
580/2003 arising out of OJC No.6751 of 2004, the order is not being
notified to CESCO in terms of section 26(6) but is submitted to the
Hon’’ble High Court of Orissa in sealed cover. The same shall not be
given effect to without leave of the Hon’ble High Court of Orissa.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
UNIT-IX
CESCO AT A GLANCE FROM 1999-2004.
Particulars 1999-00 2000-01 2001-02 2002-03 2003-04
INPUT (MU) 3,594.68
4,028.20
4,186.82
4,055.79
3,899.57
BILLING (MU) 1,990.24
2,218.53
2,143.00
2,311.00
2,348.00
BILLING % 55% 55% 51% 57% 60%
T& D LOSS % 45% 45% 49% 43% 40%
AT &C Loss 62% 59% 57% 55% 51%
BST Bill (RS Crore) 453.63
506.91
574.81
531.17
518.92
BILLING (RSCrore) 493.36
584.38
638.15
666.92
691.63
Billing % to BST Bill 109% 115% 111% 126% 133%
COLLECTION (Rs Crore) 335.85
437.89
453.32
526.29
561.44
COLECTION% to Billing 68% 75% 71% 79% 81%
LT Billing (Rs Crore) 277.30
358.58
358.58
371.46
392.40
LT Collection (RS Crore)
128.44
203.79
203.80
237.63
284.18
LT Collection % to Billing 46% 57% 57% 64% 72%
HT Billing (Rs Crore) 120.39
161.82
161.80
144.39
150.16
HT Collection (RS Crore)
111.07
141.92
141.92
136.72
137.74
HT Collection % to Billing 92% 88% 88% 95% 92%
EHT Billing (Rs Crore)
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
95.66 117.75 117.74 151.06 149.07 EHT Collection (RS Crore)
96.35
107.62
107.61
151.95
139.53
EHT Collection % to Billing 101% 91% 91% 101% 94%Payment of GRIDCO Dues 376.21 372.62 440.9
441.28
UNIT-X
CONCLUSION
Though the exercise of filling ARR & RTA is a mandatory exercise
aimed at increasing tariff, it often end-up with just as an annual
exercise. Intervention of Judiciary has stalled the main objective of
tariff application. Of course there are many pros and cons of this
system. Basically in a poor state like Orissa it becomes increasingly
difficult on part of the general public to burden the charge of electricity
dues. People’s consciousness towards their duties of paying and lack of
willingness to pay electricity dues add to the woe. At the same time
with the increase in cost of operation and poor collection levels, the
already ailing distribution utilities find it impossible to survive despite
all effort. In this critical juncture it is the need of the hour to find out a
way that will at least address the basic problem of survival, both for
the company and the consumers. Privatization is not certainly the only
solution. But it is certainly a step foreword in the direction of bringing
professionalism to the system which is dominated by illiterate and
semi qualified employees.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
RETAIL TARIFF HIKE OVER THE YEARS
1991 Base
Year
1996 17.00% 2003 NIL
1992 29.42% 1997 10.66% 2004 NIL
1993 28.58% 1998 9.3%
1994 15.73% 2000 4.00%
1995 17.47% 2001 10.20%
SALIENT POINTS OF ELECTRICITY TARRIFF 2003-04.
Retail Supply Tariff- (RST)-FOR CESCO.
Principle of Long Term Tariff Strategy has been adopted with initial
control period of 4 years i.e. from FY 2003-04 to FY 2006-07, treating
FY 2003-04 as the transition period. This means that for the said
control period, principles of tariff- setting shall remain unaltered. But
tariff-setting can be done as per S. 26 of OER Act. A separate order in
this behalf has been passed by the Commission on 18.06.2003 and
filed with the tariff orders before the Hon’ble Court.
Aggregate Technical and Commercial (AT&C) loss has been prescribed
as the performance parameter combining distribution loss and
commercial efficiency. This is a concept introduced for the first time in
Orissa for the reason that true measure of the loss should comprehend
technical and all forms of commercial losses due to want of billing
efficiency, collection efficiency, theft etc. This concept stresses cash
flow and liquidity of the licensees.
Uniform RST has been adopted for all consumers throughout the State.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
No change in Retail Supply Tariff, which has remained constant
since 1st February 2001. In other words, there has been decrease in
tariff in real terms, if inflation is factored into the calculation. The Retail
Supply Tariff remains constant subject to State Govt’s acceptance of
Correctives applied by OERC, based on Parekh Committee
recommendations, otherwise the all Orissa average Retail
Supply Tariff will rise by 11.45 p/u which will be reflected only
in 1st two slabs of Domestic Tariff as shown in Annex (C-1).
The 2003-04 Tariff Order for RST envisages some changes as detailed below:-
All Kutir Jyoti consumers to be provided with metered supply of
electricity.
In case the consumption in respect of Kutir Jyoti consumers exceeds 30
units per month, the entire consumption shall be charged at the
prevailing domestic tariff.
Load factor billing to be withdrawn from 1st April 2004 subject to
amendment of the OERC Distribution Code, thereby permitting
billing based on actual reading through metered supply.
Distribution licensees have been directed to complete 100% consumer
metering by 31st March 2004 and feeder metering by 31st October
2003.
Rebate @1% allowed to all the categories of consumer excepting
Domestic, Commercial, Irrigation and Small Scale Industry for
payment made within 3 days from the date of presentation of the
bill. For such excepted categories (i.e. Domestic etc.) a rebate @ 10
paise per unit shall be allowed if payment is made by the due date
or within 7 days from receipt pf the bill.
Project- CESCO ‘s Retail Tariff Determination & MIS -An overview
Detailed payment Surcharge (DPS) @ 2% will be levied on domestic,
commercial, irrigation and small industries categories of
consumers, if payment is not made within the due date.
The rate applicable to energy consumed in industrial colony is to be
limited to 10% out of the first slab of 50%, with the result that
industrial consumer gets the benefit of a lower tariff towards colony
consumption.
Penalty/Incentive on overdraw will be applicable in accordance with the
stipulation in ABT. The technical requirement is that during high
frequency, the load (consumption) should be increased and vice
versa in order to keep the system stable.
Consumer can own the meter by paying its legitimate cost, if he/she so
desires, in one installment or can pay meter rent till the landed cost
is recovered.
Introducing tariff for emergency supply to CPPs at HT @400 paise/unit
as energy charges without any demand charge, in case they restrict
their drawal to 25% of the unit having the highest rates capacity.
Introducing tariff for emergency supply to CPPs/Generating Stations –
Flat rate tariff for industries owning CPP/Generating Stations, @ 420
paise/unit at EHT and 440 paise/unit at HT.
Reconnection charges Rs. 50, Rs. 100, Rs. 200 and Rs. 1000 for single
phase domestic consumers, single phase consumers, 3 phase line
and EHT line respectively.