4.0

OBJECTIONS DURING HEARING

The Commission admitted fifteen 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 of the objectors, like Shri R.P. Mohapatra of Jayadev Vihar, have suggested that the tariff proposal should be effective from 1st April 2001. This will have the following advantages over the other timings followed by OERC :

1. Audited accounts of the previous year will be available before the tariff for the ensuing year is determined.

2. The reservoir levels of the hydro power stations at the beginning of the storage season (1st November) will be known enabling a more accurate prediction of hydro power availability.

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

4.2

Necessity for a Pilot Study

Pilot studies should be undertaken in selected urban and rural feeders in each DISTCO to determine actual technical and commercial losses.

4.3

Cost of Employees, material cost, A&G expenses

Many of the objectors have pointed out that the cost of employees, material cost, A&G expenses are quite high. They need to be pruned as per OERC norms and fixed at 6% higher over the corresponding figures approved by OERC for 1999-2000.

4.4

High Transmission and Distribution Losses

Almost all the objectors strongly objected to high T&D loss assumed by the NESCO for calculating its revenue requirement. It was pointed out by the objectors that, the estimation of loss is not accurate as most of the meters are 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 28.5% should be distribution loss. Unfortunately the quantum of T&D Loss has been kept constant by the Commission in both its orders dated Nov, 1998 and Dec, 1999.

4.5

Provision for bad debts

Provisions of bad debts for 2000-2001, proposed by NESCO is too high an should not be accepted. The Commission should only make a token provision for bad debt, as allowing 15% of incremental arrears as bad debt will be a premium on inefficiency.

4.6

Load Factor Billing

The licensee has not followed the directions of OERC like installation of meters. Therefore load factor billing should not be allowed to continue or at least, load factor should be brought down.

4.7

Multi Year Tariff

Tariff for consumers should be fixed for a period of 5 years and should not change every year at least for industrial consumers for enabling them their future strategy.

4.8

Calculation of Interest on loan

Interest should not be charged on expenses which do not result in addition of assets. Penal interest on loan and interest on loan for working capital should not be allowed because they have become necessary due to NESCO’s inefficiency in collecting dues.

4.9

Calculation of Reasonable Return

Reasonable return should be recalculated after debiting consumer's 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 1999-2000 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 relevant 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 kept within maximum limit permitted by OERC with regard to reduction of T&D loss and directions to improvement of efficiency.

4.13

Penalty for excess drawal

DISTCOS should sign agreement with GRIDCO for monthly demand and annual energy. Excess drawal over demand booked should attract penalty and excess annual drawal of energy should be paid for at the highest marginal rate.

4.14

Export Oriented Units

4.14.1

Some of the EOUs suggested that OERC may create a sub category of consumers namely, Export Oriented Power Intensive Unit. The total tariff including demand and Energy Charges for EOUs should not exceed 200 paise/units.

4.14.2

Some of the objectors pointed out that NESCO is trying to give a subsidised tariff to the EOUs to make additional profits out of it. The present proposal for special tariff for EOUs should be rejected as a better incentive tariff is already in operation.

4.15

Simultaneous Maximum Demand for Railways

4.15.1

The South Eastern Railway, Garden Reach, Calcutta has represented that while the proposed BST of GRIDCO allows the benefit of simultaneous maximum demand to NESCO, the latter does not pass on the benefit to Railways. Further the integration period for recording of maximum demand should be restored to 30 minutes from the existing 15 minutes as per General Conditions of Supply, 1995 of OSEB.

4.15.2

It was also argued that Railways load fluctuation is due to extraneous factors like accidents and public agitation etc. and hence the proposed penalty on over-drawal may be withdrawn.

4.16

Interruption, Low Voltage and Unreliable Supply

Due to power interruption, low voltage and unreliable supply, consumers are put to unnecessary harassment. Sometimes, costly machines are damaged due to low voltage. Consumer standard as prescribed by OERC should be strictly adhered to.

4.17

Unauthorised and illegal abstraction of Electricity

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

4.18

Non payment of Bulk Supply bills by DISTCOs

Despite regular energy bills raised to DISTCOs, they are not making payment of the Bulk Supply bills in full. This has resulted in huge arrears against DISTCOs, due to which GRIDCO is unable to make payment to Generators and financing Institutions and paying a large amount towards DPS and interest.

4.19

Excess drawal of power by DISTCOs

DISTCOs are drawing power in excess of the projected schedule by GRIDCO, thereby GRIDCO is being compelled to procure costlier power and hence loosing a large amount on this account.

4.20

CLARIFICATIONS SOUGHT BY DIRECTOR (TARIFF), OERC

During Hearing Director (Tariff), OERC sought certain clarifications from NESCO on the following issues.

4.20.1

NESCO has estimated a sale of 1483.689 MU during the year 2000-01. The voltage wise sale figures are given as:-

NESCO has proposed distribution loss at 38%. The total power to be purchased from GRIDCO = 1483.689/(1-0.38) = 2393.04 MU

Loss at EHT is taken as zero by NESCO.

So power available for sale at HT = 2393.04 – 503.74 = 1889.3 MU

Sale at HT & LT = 396.03 + 583.90 = 979.94 MU

So the T&D loss = 48.13%

Similarly, it can be shown that the T&D loss level varies from licensee to licensee. But strangely all the three licensee of BSES group have proposed same level of T&D loss for the year 2000-01.

4.20.2

None of the licensee has carried out any study till date to differentiate and separately quantify commercial and technical loss by installation of meters at distribution transformer end including 100% metering for consumers connected to those transformers.

4.20.3

NESCO proposes a special rate for the power intensive industry engaged in export and wants a relief of Rs.16.60 crores. Justification for this huge rebate which would be otherwise loaded to other classes of consumers is not furnished.

4.20.4

No interest is paid to the consumers on security deposit and security deposit has not been deducted while calculating capital base. The same may be justified.

4.20.5

Interest on loan includes penal interest of Rs.9.24 crores towards subsidiary loan and Rs.1.46 crores towards World Bank loan. This is due to non-payment of installments in time. NESCO has to clarify why it should be included in revenue requirement.

4.20.6

NESCO proposed to avail long-term loan from IFC amounting to Rs.58 crores for meeting long-term working capital need. Interest burden has been estimated at Rs.3.06 crores. Why interest on working capital loan should be considered for the purpose of revenue requirement in addition to the provisions of Sixth Schedule.

4.20.7

NESCO has claimed an amount of Rs.15.98 crores as DPS to GRIDCO. This amount is payable to GRIDCO due to non-payment of dues in time. NESCO has to clarify why consumers should be burdened for its inefficiency in collection of dues resulting in failure to pay GRIDCO.

4.20.8

NESCO proposed to incur capital expenditure amounting Rs.55.86 crores (52.05 + 3.81 IDC) only in the year 2000-01. The break up of the expenditure is given below :

It is seen from the above that there is a big gap between the figures proposed during 99-00 tariff filing and 2000-00 filing. Although Commission in their last order has excluded RE works for the purpose of calculation of capital base, still the expenditure approved by the Commission is much higher than the actual achievement during 1999-00.

NESCO may explain the reason for not reducing the capital expenditure to a comparative level as per the actual expenditure last year.

4.20.9

NESCO’s proposal of carry forward of past losses of 7.26 crores in the year 2000-01 needs clarification.