4.0

OBJECTIONS DURING HEARING
The Commission admitted twenty-five objections for personal hearing. Some of the objections were of general nature and others were specific to the tariff filing of 2000-01. Summary of these objections based on issues raised are presented below.

4.1

Effective date for implementation of the tariff proposal
Some objectors suggested that the tariff proposal should be effective from 1st April 2001 which would have the following advantages over the usual timings followed by OERC.

1. Audited accounts of the previous year would be available before the tariff for the ensuing year was determined.

2. The reservoir levels would be known enabling a more accurate prediction of hydro power availability.

3. The tariff would be available for a full financial year.

4.2

Unreliable nature of T&D loss figures
The licensee has not given any basis measuring T&D loss either in its entirety or at different supply levels. Pilot studies should have been undertaken in selected urban and rural feeders in each DISTCO to determine technical and commercial losses. CESCO has furnished data relating to loss levels based on a Pilot Study at Balasore which is not the licensee’s area of operation and the study is of 1998 and therefore unreliable.

4.3

Cost of Employees, material cost, A&G expenses
The cost of employees, material cost and A&G expenses were excessive and the same should be pruned as per OERC norms.

4.4

High Transmission and Distribution Losses
There was strong abjection to high T&D loss assumed by CESCO for calculating its revenue requirement. It was pointed out by the objectors that CESCO’s estimation of loss was not accurate as 54% of the meters were either defective or non-existent. Therefore OERC should not allow the total loss to exceed 32% out of which 3.5% should be EHT loss and the rest distribution loss.

4.5

Provision for bad debts
Provisions of bad debts should be limited to Rs.6 crores in 2000-01.

4.6

Load Factor Billing
The objectors stated that the licensee had not followed the directions of OERC on many matters including installation of meters. Hence load factor billing should not be allowed and in any case the same should be brought down to a level of 10%.

4.7

Multi Year Tariff
A multi year tariff for consumers should be fixed for a longer period of say 5 years and the tariff should not change for every year at least for industrial consumers.

4.8

Calculation of Interest on loan
Interest should not be charged on expenses which do not result in addition of assets. No interest on working capital and penal interest should be allowed as passthrough.

4.9

Calculation of Reasonable Return
Reasonable return should be recalculated after debiting consumers’ contribution and following GOI circular of May, 1999. Reasonable return for investments made upto 15.10.91 should be calculated separately and not at 13%. The later rate is applicable to investments made after 16th October, 1991 and till 31st March, 1999.

4.10

Contingency Reserve
Contingency Reserve should be kept at 1999-00 approved level.

4.11

Calculation of Depreciation
Depreciation for each block of assets should be exhibited in a register by the licensees within a time frame fixed by OERC. It should be calculated on the basis of GOI notification of 1994.

4.12

Special appropriation for previous losses
Special appropriation for previous losses should not be allowed as the licensee has not obeyed the directives of OERC with regard to T&D loss level.

4.13

Penalty for excess drawal
DISTCOS should sign agreement with GRIDCO for monthly demand and annual energy. Excess demand should be penalised and excess annual drawal of energy should be paid back as per the highest cost of energy procured over the quantum assured in BST.

4.14

Export Oriented Units

4.14.1

Some of the objectors suggested that OERC may create a sub-category of consumers namely Export Oriented Power Intensive Industries. The total tariff including demand and energy charges for EOUs should not exceed 200 paise per unit.

4.14.2

Others pointed out that CESCO was trying to give a subsidised tariff to the EOUs and make additional profits out of it. The present proposal for special tariff for EOUs should be rejected as a better incentive tariff was already in operation.

4.15

Power Tariff for Salt Industry
Astarang Salt Production & Salt Co-operative Society has pointed out that salt industry was seasonal like agriculture and operated between January and June. As in agriculture, electrical energy was used for lifting sea water. As such power tariff for salt industry should be at par with Irrigation pumping & Agriculture category.

4.16

Simultaneous Maximum Demand for Railways
The South Eastern Railway, Garden Reach, Calcutta has represented that while the proposed BST to GRIDCO allowed the benefit of simultaneous maximum demand to CESCO, the latter did not allow the benefit to Railways.

4.17

Interruption, Low Voltage and Unreliable Supply
Due to power interruption, low voltage and unreliable supply, consumers were put to unnecessary harassments. Sometimes costly machines were damaged due to low voltage. Consumers standard as prescribed by OERC should be strictly adhered to, the objectors suggested.

4.18

Effect of Cyclone
Like CESCO, the consumers were also affected by cyclone. CESCO should have opted for insurance so that the cyclonic damage would have been passed on to the insurance company rather than to the consumers.

4.19

Unauthorised and illegal abstraction of Electricity
Despite persistent objection by genuine consumers unauthorised and illegal abstraction of electricity had not stopped. This has resulted in higher tariff for the honest consumers.

4.20

CLARIFICATIONS SOUGHT BY DIRECTOR (TARIFF), OERC
Director (Tariff), Orissa Electricity Regulatory Commission sought certain clarifications from CESCO in regard to the latter’s tariff filing. These are indicated below :

1. CESCO’s loss projection at 42.66% did not take EHT loss into consideration. The T&D loss is worked out at 47.07% incorporating EHT loss. Further no authentic document has been submitted to justify the loss figure of CESCO.

2. The licensee must carry out pilot studies for determination of commercial and technical loss for the period of January, 2001 to April, 2001 and furnish the same to the Commission.

3. Justification for proposing Rs.7.00 crores towards consultancy charges may be given.

4. CESCO may clarify why the estimated loss of Rs. 29.00 crores entirely is being claimed for recovery through tariff for 2000-01 and later. The licensee may further clarify why normative level of maintenance expenses allowed for old assets shall be permitted for new assets.

5. Reasons for provision of Rs.13.77 crores towards previous loss to be recovered through tariff may be stated.

6. CESCO may clarify why the expenditure for PMU works should not be limited to the last year’s level for the purpose of calculation of capital expenditure. The authority under which CESCO proposes to incur expenditure of Rs.70.78 crores towards cyclone damaged works over the approved capital expenditure of Rs.51.35 crores may please be clarified.

7. CESCO has to explain why a huge store of Rs.31.23 crores should form part of the capital base.

8. CESCO must explain why the expenses on employees would go that high despite the reduction in the number of employees.