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5.0
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GRIDCO’s RESPONSE TO OBJECTIONS
GRIDCO has submitted the first rejoinder to objections on 08.12.2000, followed by
clarifications on 23.12.2000 and 08.01.2001 to queries of Director (Tariff) and objections
of objectors raised on 15.12.2000.
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5.1
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Demand Estimation
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5.1.1
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Energy Requirement
GRIDCO has objected to the methodology of calculating the energy sale to DISTCOs based on
projected sale of DISTCOs and an assumed T&D loss level as it does not reflect the
actual power drawals by the DISTCOs. Projections of energy requirement of DISTCOs made by
GRIDCO were realistic and needs to be accepted.
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5.1.2
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Simultaneous Maximum Demand
GRIDCO has submitted that the simultaneous maximum demand has been based on actual demand
of distribution companies for five months and projected demand for seven months based on
demand furnished by distribution companies. Projections were realistic and hence should be
accepted.
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5.1.3
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Contract demand and billing demand
It has not yet been able to conclude any agreement with DISTCOs on contract demand and has
requested the Commission to direct DISTCOs to conclude the BSA amendment.
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5.1.4
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Supply to EOUs
On the issue of billing for EOU raised by NESCO, GRIDCO has said that according to OERC
Case No.1/2000 EOUs continue to be beneficiaries of NTPC power exclusively from the
unallocated quota even after 31.03.99. Further, while calculating the pool cost of power
for Bulk Supply Tariff for 1999-2000, OERC had not taken into account the requirement of
EOUs. Billing cannot be changed until the requirement of EOUs is included in the pool
cost. In the present calculation, GRIDCO has treated energy consumed by the EOUs as part
of its bulk supply to DISTCOs. On 23.12.2000 they further clarified that there was no
existing agreement of GRIDCO with EOUs. GOO had written to Govt. of India not to allocate
power for EOUs. In spite of the letter CEA has reallocated power of NTPC to EOUs during
March, 2000.
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5.2
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Transmission losses
GRIDCO has stated that it has adopted the gross method. They have said that energy
transaction of March, 2000 have been used to explain the losses which shows that 4%
projected by GRIDCO was realistic.
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5.3
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Power Procurement-least cost drawal
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5.3.1
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GRIDCO has submitted that energy drawal for the DISTCOs was realistic. The
Hydro procurement plan was based on the hydro levels at the reservoirs and on Agenda Note
for 59th Hirakud Coordination Committee Meeting. They have said that Commission
in Dec’99 tariff order had taken hydro procurement based on that year’s
reservoir levels. Therefore, the objectors view that design availability should be taken
for 2000-01 would not be legally correct and they request the Commission to be consistent
in their methodology.
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5.3.2
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The allegation that hydro power was low because of non payment of dues to
OHPC was incorrect and has been denied by GRIDCO. They have then said that projections
made by objectors were unrealistic. Drawal from Machkund for just six months was 147.082
MU and CPP supply was infirm and drawal from CPP has been based on actuals during May-Aug,
2000. On 23.12.2000 they have annexed the latest generation plan of OHPC which shows a
drawal of 2798.30 MU from the four old stations of OHPC and 1710.44 MU from Indravati. The
reservoir levels as on 01.12.2000 have been also submitted. They however have requested
Commission not to change the generation plan as proposed by GRIDCO in its application. In
a revision to application dt.02.01.2001, GRIDCO has changed its stand and requested
Commission to consider drawal from OHPC as projected by the OHPC on 22.12.2000.
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5.3.3
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Regarding generation from state thermal sources it has clarified that OPGC
machines were having downtime and so it may not be able to reach projections made by
GRIDCO. For TTPS, GRIDCO has stated that it had projected generation based on PLF of for
seven months. It had not accepted the PLF of 57.5% as proposed by NTPC before CERC. It has
clarified that it had taken up steps with Nalco to maximise generation and supply to
Nalco. However, the availability from CPPs was uncertain and may not be more than 365 MU
during FY 2001.
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5.4
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Power Procurement Costs
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5.4.1
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GRIDCO has submitted that the costing of power made by objectors based on
Commission’s order dated December’99 would not reflect true position of increase
in cost of power as the cost of power of different stations change over a period of time
due to change in cost of fuel, addition of capacity, additional capitalisation.
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5.4.2
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For Indravati on 08.12.2000 it stated that the number of machines
scheduled to be in operation during FY 2001 was different than the number of machines in
FY 2000 and so rates proposed by it were realistic. On 23.12.2000 GRIDCO recalculated the
rates of Indravati and proposed rates of 56.54 paise/unit for April to Sep’2000,
63.61 paise/unit for Oct’2000 to Jan’2001 and 70.68 paise/unit for Feb’2001
to March’2001.
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5.4.3
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For TTPS on 08.12.2000 it stated according to PPA the expenditure on
renovation and modernisation would be incorporated for purpose of determination of revised
tariff and therefore the renovation expenses capitalised upto FY 2001 has to be taken into
account.
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5.4.4
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Further, CERC has to determine tariff for TTPS and therefore GRIDCO has
adopted the rates proposed by NTPC before CERC. On 23.12.2000 it has clarified in response
to query of Director (Tariff) if Commission does not accept the proposed revision of costs
as no order has been passed by CERC then the additional assets if any may be allowed as
surcharge as and when CERC passes the order. They have annexed revised tariff calculation
of TTPS.
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5.5
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Central Sector Stations
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5.5.1
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The income tax of the central sector stations was levied on the
constituents as per the existing agreements and tariff notification from Govt. of India.
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5.5.2
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For central sector stations the GRIDCO had taken NTPC petitions before
CERC for revision of fixed charges due to capitalisation and Foreign Exchange Rate
variation. These were true costs which would be effective as and when CERC passed any
order. If the Commission did not consider the costs then additional costs when approved by
CERC would increase financial burden of GRIDCO. It has requested Commission that if those
costs were not accepted by Commission in absence of CERC order then it should allow those
costs as surcharge from effective date of proposed BST FY 2001.
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5.6
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Transmission lines
They have clarified that the Rangit-Siliguri and Malda-Bongaigaon are under commercial
operation since December, 1998 and April, 2000 respectively and therefore are recognised
costs which will be approved by CERC in due course. These costs, therefore, may be
accepted by OERC. These PGCIL lines transfers surplus Eastern Region power to other
regions and hence help in reducing NTPC tariff rates in Eastern Region.
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5.7
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Evacuation from Eastern Region
They have stated that new PGCIL lines being constructed will be used to ease surplus power
in Eastern Region. GRIDCO is fully safeguarding its interest on issues related to NTPC and
PGCIL as it has filed objections before CERC on tariff norms proposed by NTPC for TTPS and
also against revision of fixed charges for super thermal stations. It has also petitioned
before CERC not to consider payment of incentive to TSTPS and KhSTPS till there is load
demand of Eastern Region to absorb full generation availability.
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5.8
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Transmission Costs
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5.8.1
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Employee Costs
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5.8.1.1
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GRIDCO has clarified that employee costs were based on audited accounts of
FY 1999 and projections for FY 2000 and FY 2001. The objector’s view that employee
costs should be based on approved costs of FY 2000 was not realistic as the provisional
costs of 1999-00 were higher than the approved costs. They have denied any wasteful
expenditure.
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5.8.1.2
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As regards retirement benefits they have clarified that according to
Accounting Standard AS-15 (Accounting for retirement benefits in the financial statements
of employers) the employer should mandatorily provide for incremental liabilities through
an Actuarial valuation. They have said that provision of Rs.39.07 crores for FY 1999 has
been done as per the actuarial valuation and provision of Rs.27.4 for FY 2001 has been
accordingly worked based on rates of D.A. Further, it has stated that GRIDCO has not
applied for recovery of liability of FY 1999, and has asked for recovery of Rs.27.4 crores
for terminal benefits pertaining to FY 2001. On 23.12.2000 they have provided details of
terminal benefit granted to employees in 1999-00.
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5.8.2
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A&G expenses
GRIDCOs projection for FY 2001 is nominally higher than actual expenditure of FY 1999. No
wasteful expenditure has been incurred with regard to A&G expenses.
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5.8.3
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Repair & Maintenance expenses
The R&M program suffered in the FY 2000 on account of cyclone. The provision for
FY 2001 would be spent as materials have been procured and so may be allowed.
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5.8.4
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Expenditure for restoring cyclone damages
GRIDCO has requested that as on this issue the Commission has given an order the same
treatment should be given in tariff. On 08.01.2001 it has clarified that Special Relief
Commissioner had allocated Rs.4 crores out of Calamity Relief Fund (CRF) as Govt. grant
and Rs.15 crores out of National Fund for Calamity Relief Fund (NFCR) as loan to energy
department during 1999-00 towards repair/restoration of transmission network damaged due
to cyclone. However, Department of Energy, Govt. of Orissa vide letter No. 6687
dt.05.06.2000 intimated that the sanction of loan to the tune of Rs.15 crores to GRIDCO
from NFCR was irregular and needs to be refunded. Upto 14.12.2000, Rs.40.8523 crores had
been incurred on repair and damaged assets. Commission vide letter dt.13.07.2000 had
accepted Rs.13.27 crores. The balance of Rs.23.58 crores (Rs.40.85-Rs.13.27-Rs.4 crores)
may be kept in view by Commission for future consideration. Further, they have stated that
entire cyclone restoration work was expected to cost Rs.43 crores. They have stated that
only Rs.4 crores has been received as grant from GOO out of CRF.
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5.8.5
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Depreciation
To the issues raised on depreciation by objectors, GRIDCO has replied that the issues had
been raised in earlier tariff hearings and Commission had already settled the issue.
GRIDCO has restated that base line for calculation of the value of fixed assets have been
the transfer scheme dated 01.04.96 and additions made thereafter on the basis of accounts
and information received from field accounting units. GRIDCO has also already initiated
the process of preparing an Asset Register. The required information on addition of assets
has been furnished in formats prescribed by OERC.
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5.8.6
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Interest on long term liabilities
GRIDCO has denied that any loan from PFC not related to transmission network has been
included in loan amount. They have annexed the details of PFC loans. Further, the power
purchase bonds issued to various generators became a necessity to ensure continuity in
power supply and to reduce the liability on account of delayed payment. The loan amount
from LIC has remained constant at Rs.140.66 crores and interest on the loan as per audited
accounts was Rs.28.39 crores. Compounding of overdue interest was a standard commercial
practice followed by financial institutions and same has been done by LIC and GRIDCO had
to pay this compound interest.
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5.8.7
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Appropriation to Contingency Reserve
GRIDCO has followed the provision of Sixth Schedule in proposing Contingency Reserve and
so cannot remain at same level as FY 2000.
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5.9
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Capital Base
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5.9.1
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Original Cost of fixed assets
GRIDCO has replied to this issue by saying that as per para XVII(6) of Sixth Schedule the
original cost in respect of any asset is the sum of the cost of the asset to the licensee
including certain other costs such as erection charges, interest etc. In the instant case
the cost of assets include cost of assets transferred to GRIDCO by State Govt. and
subsequent addition to their cost.
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5.9.2
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Capital expenditure
GRIDCO has stressed the need for investments which would strengthen the existing network
to comply with operating standards of OERC and to meet future load growth. In a further
clarification on 23.12.2000, GRIDCO has said that capital expenditure has been geared
towards critical projects for crucial evacuation facilities, and improving supply
conditions at load centres. They have given details of EHT lines which were critical and
with addition of new lines/substations there would be further reduction in T&D loss,
improvement in voltage and reliability of power supply.
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5.9.3
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Stores
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5.9.3.1
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The amount proposed as stores was reasonable. The capital stores of
Rs.46.3 crores maintained at project site was controlled by EHT construction Division and
therefore has been treated as part of CWIP. The source of funding was the same as that of
the schemes undertaken for CWIP.
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5.9.3.2
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The capital advance of Rs.25 crores was from 1998-99 which was part of
CWIP. The capital advance was kept constant with decreased outflow towards bills of the
capital works to respective contractors/suppliers. There was no overall impact on the CWIP
except for accounting treatment.
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5.9.4
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Calculation of capital base
GRIDCO has stated that it has funded only about 20.30% of the projects from funding
agencies and therefore denies the allegations that GRIDCO makes no investment from own
sources.
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5.9.5
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Reasonable Return
Loans taken by GRIDCO for creation of distribution assets have been shown as loans to
distribution companies. The fixed assets taken in capital base calculations only relate to
transmission assets.
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5.10
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Miscellaneous Receipts
The miscellaneous receipts have been deducted from revenue requirement as shown in TRF-5
(modified). It has further said that the rates of wheeling charges to MP may be kept at
same level i.e. 17.5 paise/unit as they have appealed for the same before Hon’ble
Orissa High Court.
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5.11
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Rebates
The rebate has been in place to encourage timely payment by DISTCOs. The rebate scheme
proposed by DISTCOs was not acceptable to GRIDCO as it would defeat the purpose of
providing rebate. The rebate would be allowed for payments made through Escrow also.
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5.12
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Levy of overdrawal charges
GRIDCO has not agreed to the methodology suggested by the DISTCOs of charging an year end
adjustment for realising the higher cost resulting for drawal in excess of projected
energy requirement. If the cost escalation would be included in revenue requirement for
next year all the BST consumers would share the additional cost instead of being borne by
the overdrawing DISTCOs. The tariff design should encourage greater accuracy in load
forecasting methodologies adopted by the DISTCOs and discipline in system operation.
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5.13
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Transmission Tariffs
GRIDCO has not agreed to the statement that power flow by displacement method to Madhya
Pradesh & Andhra Pradesh was given by GRIDCO for receiving wheeling charges @17.5
paise/unit for this transmission was a distortion of facts. The tariff for inter state
transmission has to be decided by CERC and decision may be dependent on number of factors
not influencing the case of transmission within the state. OERC is to decide transmission
tariff within the State after commencement of Reform Act, 1995. The GoO resolution of
09.11.92 has lost its legal sanctity. The transmission charge of PGCIL varies from month
to month and does not include transmission loss. Regarding methodology it has stated that
in last tariff order Commission had decided that postage stamp method would be appropriate
method for transmission tariff.
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5.14
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Legal sanctity of transmission tariff
GRIDCO has stated that definition of tariff covers specified services and hence covers
charges for transmission. Section 14 of Reform Act, 1995 recognises transmission of
electricity as a business. Section 15 provides for grant of licensee to transmit
electricity in a area of transmission by OERC. Sub-section(4) provides that the conditions
included in the license may require the licensee to establish a tariff or calculate its
charges from time to time in accordance with requirements prescribed by the Commission.
GRIDCO has been granted license for Transmission and Bulk Supply business by OERC.
Further, the Electricity Regulatory Commission Act, 1998 shall not apply to Commission
established under Reform Act, 1995 due to the saving clause given in section 41 of
Electricity Regulatory Commission Act, 1998.
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5.15
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Other Issues
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5.15.1
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GRIDCO has stated that function of Commission is to regulate the tariff
and charges payable keeping in view both the interest of consumers as well as the
consideration that the supply and distribution cannot be maintained unless the charges for
electricity are reasonably levied. Hence charges are to be made keeping both the interests
in consideration.
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5.15.2
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On the issue of Rating Committee and that tariff cannot be revised before
3 years, GRIDCO has stated Section 26(7) of Reform Act, 1995 specifically has provided
that there shall be no Rating Committee. Further, in Section 57 (A) nowhere it is stated
that tariff cannot be revised before three years. It provides that charges fixed by State
Government shall be in operation for such period not exceeding three years as the State
Government may specify in the order.
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5.13.3
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GRIDCO has stated that the present application is in no way affected by
the fact that case is pending before Hon’ble High Court. The present application to
be effective after 01.01.2001 after approval of Commission is not related to case pending
in Hon'ble High Court as the present application was not for review or modification of
earlier order.
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5.13.4
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On consultation with CAC it has stated that Commission was required to
consult CAC before giving its orders and not before accepting application or before
hearing.
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5.13.5
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On suggestion of multi year tariff it has stated that issue cannot be
decided in the present application, as it needs consideration of all related aspects and
guidelines of OERC.
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5.13.6
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Interstate sales have been kept out of calculation of revenue requirement
to insulate consumers from trading risks.
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5.13.7
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No reply has been furnished to issues not related to the transmission and
bulk supply business such as metering interruption, projections and impositions of penalty
for supply of non-standard power to consumers.
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5.13.8
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For improvement of reliability of power supply, GRIDCO was investing in
new lines and substations which showed that it was fulfilling conditions of license.
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5.13.9
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The allegation that there was no nexus between purchase of power and the
sale of energy has been denied by GRIDCO as energy purchase has been calculated by adding
transmission loss to the projected energy sale.
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5.13.10
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Rural electrification, energisation & LI points, cheaper power supply
through Kutir Jyoti was no longer the concern of GRIDCO and so claim of subsidy from Govt.
does not rise.
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5.13.11
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GRIDCO has stated that the application has been given as per provisions of
law and is bonafide. It has submitted its audited accounts for 98-99 and that this was no
ground to disallow tariff application as alleged.
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5.13.12
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Proposal of CESCO for introduction of force majeure clause in the Bulk
Supply Tariff was vague.
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5.13.13
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To the issue of methodology to be specified by Commission it has explained
that Chapter V of Regulations, 1996 deals with the methodology and procedure in relation
to tariffs. In accordance with these regulations the Commission has prescribed
methodologies and procedures from time to time.
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5.13.14
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The issues raised by NALCO had been raised in last years tariff filing
proceedings have been resolved by Commission and do not require any consideration afresh.
The case was also pending before the Hon’ble Orissa High Court.
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5.13.15
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GRIDCO has finally stated that allegations not specifically admitted may
be treated as denied.
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