4.0

OBJECTIONS DURING HEARING
The Commission has considered all the objection raised by various objectors. Based on their nature and type, these objections may be categorised broadly as under.

4.1

Effective date for implementation of the tariff proposal

4.1.1

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.

4.1.2

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

4.1.3

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.

4.1.4

The tariff shall be available for a full financial year.

4.2

Necessity for a Pilot study

4.2.1

Pilot studies should be under taken at least in selected urban and rural feeders in each DISTCO to determine technical and commercial losses.

4.3

Cost of Employees, material cost, A&G expenses

4.3.1

Many of the objectors have pointed out that the cost of employees, material cost, A&G expenses are quite high. They should 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

4.4.1

Almost all the interveners strongly objected to high T&D loss assumed by the WESCO 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 its order dated Nov, 1998 and Dec, 1999.

4.5

Provision for bad debts

4.5.1

Provisions of bad debts for 2000-2001, proposed by WESCO is too high and 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

4.6.1

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

4.7

Multi Year Tariff

4.7.1

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

4.8

Calculation of Interest on loan

4.8.1

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 became necessary due to Gridco's inefficiency in collecting dues.

4.9

Calculation of Reasonable Return

4.9.1

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

4.10.1

Contingency Reserve should be kept at 1999-2000 approved level.

4.11

Calculation of Depreciation

4.11.1

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

4.12.1

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

4.13

Penalty for excess drawal

4.13.1

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

4.14

Simultaneous Maximum Demand for Railways

4.14.1

The South Eastern Railway, Garden Reach, Calcutta has represented that while the proposed BST of GRIDCO allows the benefit of simultaneous maximum demand to WESCO, 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.

4.14.2

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 overdrawal may be withdrawn.

4.15

Interruption, Low Voltage and Unreliable Supply

4.15.1

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

4.16

Unauthorised and illegal abstraction of Electricity

4.16.1

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.

4.17

Non payment of Bulk Supply bills by DISTCOS

4.17.1

Despite regular energy bills raised to DISTCOS, DISTCOS 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.

4.18

Excess drawal of power by DISTCOS

4.18.1

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

4.19

Pending Appeal in the High Court

4.19.1

WESCO has filed appeals in the Hon'ble Orissa High Court against the BST order of OERC effective from 1st February, 2000. No order has been passed by the High Court as yet. As such application for revision of tariff effective from 1st February, 2001 is not maintainable.

4.20

Incomplete information supplied by the petitioner

4.20.1

Representative of Sundargarh District Employee's Association pointed out that, petitioner has not made available the copy of the application format immediately in different outlets as notified by the Commission. Petitioner has not supplied floppy with soft copy of spreadsheet nor has he filed the copy of the half-yearly audited balance sheet. Non-supply of audited balance sheet makes the application incomplete.

4.21

Standard commercial practice for sick industry not being followed

4.21.1

None of the standard commercial practice for any sick/loss performing industry has been followed by the petitioner in its tariff application like:-

(1) Induction of interest free funds by the promoter.
(2) Formulation of a scheme for efficiency improvement and reduction of cost .
(3) Undertaking necessary capital expenditure to improve efficiency.
(4) Waiving interest/penal interest by lenders/creditors.

4.22

Improvement in Quality supply to consumers

4.22.1

WESCO should take steps to improve quality supply to the consumers in the following terms:

(1) Voltage fluctuations should be within prescribed limits.
(2) Minimizing the trippings which are detrimental to the processing industries.
(3) Minimizing the frequency fluctuations.

4.23

Installation of Meters

4.23.1

WESCO has replaced only 17,000 meters, in last one year. About 1.5 lakh installations as on date are either unmetered or with defective meters which constitute about 45% of the total consumer. WESCO may be directed to ensure that all the installations are properly metered within a span of two years.

4.24

Power Purchase Expenses

4.24.1

WESCO should take steps to reduce the purchase rates from Gridco who are charging WESCO higher rates in comparison to other distribution companies, even though Western zone of Orissa have hydel power stations which are otherwise cheaper.

4.25

Non-payment of Energy Bills and loans to Gridco

4.25.1

It had been alleged by S.E., BST (PP), Gridco, that Gridco is facing financial difficulties because DISTCOS are not paying energy bills and loan installments in time. WESCO is also not responding to compile accounts of 1998-99 inspite of regular persuasion. WESCO is not submitting their power supply requirement including substation wise demand to Gridco. Gridco is also being compelled to buy costliest power, as DISTCOS draw power in excess of their projected schedule.

4.26

Special appropriation

4.26.1

WESCO has claimed special appropriation for one-third of the previous loss towards expenditure side. Such appropriation can be permitted in case WESCO makes profits after achieving the desired efficiency. Till such period, the losses are to be funded by interest free advances by the petitioner as per prevailing practice for any industry.

4.27

CLARIFICATIONS SOUGHT BY DIRECTOR (TARIFF), OERC

4.27.1

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

4.27.2

WESCO has estimated a sale of 1692.50 MU during the year 2000-01. The voltage wise sale figures are given as:-

LT 777.90
HT 359.60
EHT 555.00
Total : 1692.50

4.27.3

WESCO has proposed distribution loss at 38%. The total power to be purchased from GRIDCO = 1692.50 / (1-0.38) = 2729.84 MU

Loss at EHT is taken as zero by WESCO.
So power available for sale at HT = 2729.84 - 555.00 = 2174.84 MU
Sale at HT & LT = 359.60 + 777.90 = 1137.50 MU
So the T&D loss = 47.70%

4.27.4

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.

4.27.5

Till date none of the licensee have carried out any pilot study to distinguish between commercial and technical loss by installation of meters at distribution transformer end including 100% metering for consumers connected to those transformers. They must carry out a pilot study for determination of commercial and technical loss for the period of January, 2001 to April 2001 and furnish the report to the Commission.

4.27.6

Interest on loan includes penal interest of Rs.7.27 crores towards subsidiary loan and Rs.1.56 crores towards World Bank loan. This is due to non-payment of installments in time. WESCO has to clarify why it should be included in revenue requirement.

4.27.7

WESCO has claimed an amount of Rs.7.18 crores as DPS to GRIDCO. This amount is payable to GRIDCO due to non-payment of dues in time. WESCO has to clarify why consumers should be burdened for its inefficiency in collection of dues resulting in failure to pay GRIDCO.

4.27.8

WESCO’s proposal of carry forward of past losses of 20.34 crores in the year 2000-01 needs clarification.

4.27.9

Security Deposit : WESCO may explain why security deposit of consumers has not been deducted for computation of capital base.