6.52

Expected Revenue from charges

6.52.1

GRIDCO in its rejoinder dated 30 March 2002, has submitted a revised estimate for expected revenue for Rs.1721 crore after taking into consideration the revenue from export of power as well as sale to CPPs for the FY 2001-02. This has been examined at the Commission’s end and the expected revenue is calculated for the FY 2001-02 on the basis of Bulk Supply Tariff in force since 01.02.2001 and is given in Table-50.

Table : 50
Expected revenue from charges

6.52.2

The above amount does not include wheeling charges of Rs.37.57 crore in 2001-02 considered separately as miscellaneous revenue. As the revenue requirement is Rs.1639.49 crore and expected revenue is Rs.1683.08 crore the year may end with a surplus of Rs.43.59 crore, which will be dealt in accordance with the provisions of the Sixth Schedule to the Supply Act, 1948.

6.52.3

For the purpose of Bulk Supply Tariff 2001-02, GRIDCO has proposed a demand charge of Rs.250/KVA/month and Rs.156.10 paise/unit as energy charge.

6.52.4

In Table-48 the revenue requirement has been calculated by applying necessary correctives to power and transmission cost. Based on that, the approved revenue requirement does not call for any change in the existing Bulk Supply Tariff applicable for all the four DISTCOs for the year 2001-02. We, therefore, direct that energy charges and demand charges as applicable to the various DISTCOs effective since 01.02.2001 and approved by the Commission in order dt.19.01.2001 shall continue upto the date of new tariff for 2002-03 comes into force as determined in later part of this order. Any revision of tariff in accordance with the OER Act, 1995 can be applied prospectively. The reason is that a seven clear day’s notice before its implementation is necessary under Sec. 26(5) of the OER Act, 1995. Revision of tariff cannot be done in case of the FY 2001-02 which is already over. This situation arose because of deficiencies on the part of the licensees to submit the revenue requirement and tariff application in complete shape in time. As such, the tariff revision proposal for the year 2001-02 submitted by the licensee is rejected.

6.52.5

As observed in para 6.51.10 if the decision of the Government of Orissa goes contrary to the recommendations made by Commission the revenue requirement for the year 2001-02 as determined in this order without applying the correctives shall be due for recovery. Since the FY 2002 is already over and no fixation of tariff is possible with retrospective effect, the Commission will treat the gap between the revenue requirement and expected revenue for the FY 2001-02 as a regulatory gap for recovery at a future date.

6.52.6

In as much as tariff proposals for FY 2001-02 have been rendered infructuous, GRIDCO and DISTCOs propose that the Commission proceed under Section 26 (6) of the OER Act, 1995 to determine tariff for FY 2002-03 on the basis of revenue requirement for that year as approved by the Commission. Hence the Commission has proceeded under section 26(6) to determine tariff under section 26(6) of the OER Act, 1995 for the FY 2002-03.

6.53

Bulk Supply Tariff for FY 2002-03

6.53.1

Zonal variations like difference in load factor, unequal volume of energy consumption, difference in the time of occurrence of the peak demand from utility to utility, wide variation in HT and EHT loads across the four distribution utilities are endemic to the power system of Orissa.

6.53.2

Condition 8.2 of the Bulk Supply and Transmission (2/97) licensee as amended by OERC order dated 31.03.1999 in Case No.21/98 issued to GRIDCO provides for use of system services to any user on price or other terms which materially differ from those offered to other users, where such differences reflect different circumstances of service including load factor, power factor, level and timing of peak demand and any other relevant factors.

6.53.3

It is also a fact that some amount of cross-subsidy through a higher BST will be available from one utility to the consumers of other utility with lower BST to maintain uniform retail tariff through out the State.

6.53.4

Based on the aforesaid considerations the Commission deems it desirable to continue with differential Bulk Supply Tariff for the four distribution companies and uniform retail tariff through out the State.

6.53.5

Determination of Demand and Energy Charge

6.53.5.1

Demand Charge is levied in consonance with the philosophy of realisation of cost in proportion to the capacity requirement of the utilities. Energy charge is recovered in proportion to the actual quantum of energy consumed by the utilities.

6.53.5.2

After taking into consideration the revenue requirement for the FY 2002-03, the Commission does not consider it necessary to revise the existing rate of demand charge upwards to Rs.250/KVA/month as proposed by GRIDCO. Therefore, the existing demand charges for 2002-03 is approved at Rs.200/KVA/month which is the prevailing rate. The expected revenue from the demand charge based on the maximum demand for the various distribution companies approved by the Commission for the FY 2002-03 is given in Table 51.

Table : 51
Annual Demand Charges (Estimated)

6.53.5.3

Taking into account the facts presented to the Commission, it now approves the following energy charges applicable to various distribution licensees after expiry of seven days of the publication by the licensee under section 26(5) of the OER Act, 1995.

			Existing	Revised
CESCO	Demand charge	:	Rs.200/KVA/month	Rs.200/KVA/month
	Energy charge	:	99 paise/unit	92.00 paise/unit
WESCO	Demand charge	:	Rs.200/KVA/month	Rs.200/KVA/month
	Energy charge	:	101.74 paise/unit	96.50 paise/unit
NESCO	Demand charge	:	Rs.200/KVA/month	Rs.200/KVA/month
	Energy charge	:	100 paise/unit	86.00 paise/unit
SOUTHCO	Demand charge	:	Rs.200/KVA/month	Rs.200/KVA/month
	Energy charge	:	90 paise/unit	84.00 paise/unit

6.53.5.4

Based on the aforesaid rates the revenue as estimated from the energy charges determined on the quantum of energy approved for the different distribution companies is given in Table-52.

Table : 52
Energy Charges

6.53.5.5

As against GRIDCO’s total revenue requirement of Rs.1796.98 crore, it will recover Rs.441.80 crore through demand charge and Rs.1031.82 crore from energy charge meeting its revenue requirement of Rs.1473.62 crore for the year 2002-03 from the DISTCOs and the company will earn an amount of Rs.323.40 crore on account of export of power outside the State and sale to Captive Power Plants.

6.54

Over drawal Charges

6.54.1

GRIDCO follows the principle of least cost procurement of power to minimize the total cost of generation. Any excess drawal from the annual procurement plan provided by the DISTCOs will require procurement of power from the costlier sources not covered in the revenue requirement of GRIDCO. GRIDCO has drawn the attention of the Commission to the BST approval order for the 2000-01 where the Commission had approved that higher cost resulting from any drawal in excess of the projected requirement by DISTCOs to be charged as a year end adjustment to cover the marginal cost of power purchase plus transmission charges and transmission losses. GRIDCO has sought for approval of the same in their tariff application of 2001-02 with a rider that GRIDCO may be allowed to raise the bill for overdrawal automatically.

6.54.2

This issue of overdrawal charges has been fully discussed in order 27 dtd.19.01.2001 in para 6.29.4 which has also been quoted by GRIDCO in its BST application of FY 2001-02. As far as the financial year 2001-02 is concerned, the Commission has taken into consideration the total cost of power purchase on the basis of latest available billing figures of generators raised on GRIDCO for the purpose of determination of the revenue requirement for this year. Therefore, it leaves no scope or opportunity for any kind of adjustment for the year 2001-02 on account of overdrawal as the entire cost of GRIDCO is supposed to have been allowed for recovery in the present tariff order. Therefore, there would not be any necessity on the part of GRIDCO to raise the bills for overdrawal automatically. This, however, excludes some additional expenditure that may be required to be met by GRIDCO on account of orders of Central Electricity Regulatory Commission or on account of any revision of billing based on subsisting power purchase agreements which has to be dealt in accordance with appropriate legal orders. Likewise for the FY 2002-03, the Commission has gone on the basis of the data submitted to it both by GRIDCO and DISTCOs to determine the demand charge and energy charge. Therefore, it is decided that any excess drawal over the approved quantum for the year 2002-03 should be billed by GRIDCO at the actual cost of power purchase plus transmission charges and transmission losses, and payable as an year end adjustment.

6.54.3

GRIDCO in its rejoinder has stated that it is not supposed to submit the certified and complete set of bills of DISTCOs but shall submit the same to the Commission for the purpose of levy of overdrawal charge. The Commission would like to clarify that the claim of GRIDCO has to be supported by the auditor’s certificate and objections, if any, to that may be raised before the Commission by the DISTCOs by following the appropriate procedure of law for settlement of disputes between the licensees.

6.55

Rebate

6.55.1

The proposal submitted by GRIDCO was examined at the Commission’s end. The Commission approves that on payment of the monthly bill, the Retail and Distribution Licensees shall be entitled to a rebate of

• Two percent (2%) of the amount of the monthly bill (excluding arrears), if full payment is made within 48 hours of the presentation of the bill.

• One and half percent (1.5%) of the amount of the monthly bill (excluding arrears), if a minimum of 85% of the whole amount (excluding arrears) is paid within 48 hours of the presentation of the bill and one percent (1%) on the balance amount if paid in full within 15 days from the date of the presentation of the bill.

• One percent (1%) on the amount of the monthly bill (excluding arrears), if full payment is made within 15 days from the date of the presentation of the bill.

6.56

Delayed Payment Surcharge

6.56.1

GRIDCO in para 4.5 of its BST application for 2001-02 has submitted that the surcharge for delayed payment for bulk supply bills i.e. payment after the period of 30 days from the date of submission of bill may be retained at 2% per month. As indicated in para 3.7.1 of this order, GRIDCO proposes continuance of the existing provisions relating to DPS as approved by the Commission in its order dated 19.01.2001.

6.56.2

The Commission directs that monthly charges as calculated with other charges and surcharge on account of delayed payments, if any, shall be payable by the Retail and Distribution Licensee within 30 days from the date of bill. If payment is not made within the said period of 30 days, delayed payment surcharge at the rate of 2% (two percent) per month shall be levied pro-rata for the period of delay from the due date, i.e. from the 31st day of the bill, on the amount remaining unpaid (excluding arrears on account of delayed payment surcharge).

6.57

Transmission Tariff

6.57.1

The proposal of GRIDCO with regard to the transmission tariff as given in para 3.10 of this order is repeated for convenience.
“GRIDCO has estimated that the full cost of transmission including reasonable return will come to Rs.621.73 crore. On the basis of its cost estimate, the calculation of transmission tariff proposed by GRIDCO is given below:

Table : 53
Transmission Tariff

6.57.2

GRIDCO has proposed that fixation of transmission tariff for the CPPs at 52.8 paise per unit will defeat the very purpose of setting up of CPPs which are considered as second cheapest source of power to GRIDCO at present. Hence, for encouraging installation of more number of CPPs in the State, the wheeling charges to the CPPs for transportation of power to their sister units may be fixed at 17.5 paise per unit in line with the wheeling charge being levied for MPSEB and other states for wheeling of power through interstate transmission lines.”

6.57.3

In this connection, the Commission sought clarification from GRIDCO as to why GRIDCO has proposed wheeling charges for utilisation of its transmission system @17.5 p/u apparently to encourage growth of more CPPs for availing cheap power. On the other hand, the actual drawal from the CPPs is very dismal. At the present juncture, the logic of charging a rate lower than the cost of transmission calculated at 52 p/u leading to loss of miscellaneous revenue need to be adequately justified.

6.57.4

In response to the aforesaid queries, GRIDCO has replied that it had proposed to charge 17.5 p/u as wheeling charge in place of 52.80 p/u as calculated. In the past years the tariff applications contained a contention that the wheeling charges should be at par with per unit cost of transmission considering the over all power transmitted.

6.57.5

After detailed examination of facts and figures, the Commission approves a total transmission cost of Rs.363.42 crore for the year 2001-02 and Rs.376.39 crore for 2002-03. As the FY 2001-02 is already over the Commission would not like to change the existing rate of 31 paise/unit for the year 2001-02.

6.57.6

The Commission has approved the sale figure of 11361.13 MU for the DISTCOs and wheeling of 300 MU to CPPs for the year 2002-03. Applying the principle of embedded cost, the transmission tariff per unit works out to 32.27 paise/unit which is rounded to 32 paise per unit. When a CPP is located away from an industrial unit the energy utilised by the industrial unit is deemed to have been transmitted over GRIDCO’s transmission system from the CPP wherever agreement exists. This rate shall be applicable on the quantum of energy consumed by such industrial units. This rate shall also be applicable for transmission of power from outside the State to an industry located inside the State through the use of GRIDCO’s EHT transmission system.

6.58

Transmission loss for wheeling

6.58.1

GRIDCO has proposed that out of the energy supplied to transmission and bulk supply licensee, 4.6% shall be deducted towards transmission loss and balance is liable to be delivered at delivery point at 220/132 kV. Based on the facts and figures submitted to the Commission, it is observed that the transmission loss for the FY 2001-02 works out to 4.18%. However, for the purpose of billing the transmission loss shall remain unchanged i.e. @3.7% as approved by the Commission in its order dated 19.01.2001 till the new tariff hereunder comes into force.

6.58.2

For the year 2002-03, the loss is fixed at a level of 3.88%. It is, therefore, decided by the Commission that the energy consumed by an industry supplied by a CPP situated at a distant location or wheeling of power from outside the State to an industry within the State, 3.88% of the energy will be deemed to have been lost in transmission on which also transmission charges shall be levied for 2002-03.

6.59

Delayed Payment Surcharge (For transmission charges)

GRIDCO has proposed delayed payment surcharge for delay in payment of transmission charges as detailed in modified DF-20 (Clarification to queries on BST FY 2001). The Commission approves that the monthly charges as calculated with other charges and surcharge on account of delayed payments, if any, shall be payable within 30 days from the date of bill. If payment is not made within the said period of 30 days, delayed payment surcharge at the rate of 2% (two percent) per month shall be levied pro-rata for the period of delay from the due date, i.e. from the 31st day of the bill, on the amount remaining unpaid (excluding arrears on account of delayed payment surcharge).

6.60

Duty and Taxes

6.60.1

The Commission approves that the electricity duty levied by the Government of Orissa and any other statutory levy/duty/tax/cess/toll imposed under any law from time to time shall be charged over and above the tariff.

6.60.2

The Commission has approved GRIDCO’s revenue requirement for 2002-03 at Rs.1796.98 crore (applying all correctives) which GRIDCO is allowed to recover at an approved tariff over a period of 12 months. Until the revised tariff comes into force GRIDCO’s BST rate till the date of implementation of the new tariff hereunder will be higher than the new rate being fixed. For this GRIDCO will be making an excess recovery over the revenue requirement calculated for the period of 2002-03 which can be adjusted against the past dues of DISTCOs.

6.60.3

In calculating the expected aggregate revenue for 2002-03, the revenue earning by GRIDCO from export of power to APSEB has also been taken into account. The rate at which this power has been sold being higher than the procurement cost of GRIDCO, this will benefit the consumers of the State in the form of reduction of Bulk Supply Tariff. It is needless to emphasize that the extra revenue earned due to export of power will reduce the burden of the consumers of the State.

6.60.4

The Commission have made several recommendations to the Government of Orissa for their implementation w.e.f. 01.04.2001. Accordingly the Commission have determined the Bulk supply Tariff and Transmission Tariff applying all correctives based on its recommendations to the Government. If a decision to the contrary is taken by the Government the revenue requirement for the FY 2002-03 as determined without applying the correctives shall be due for recovery from the consumers. It will raise the revenue requirement by Rs.387.69 crore on the basis of our present estimate which shall be as follows.

CESCO	Demand charge	:	Rs.200/KVA/month
	Energy charge	:	142.13 paise/unit
WESCO	Demand charge	:	Rs.200/KVA/month
	Energy charge	:	146.70 paise/unit
NESCO	Demand charge	:	Rs.200/KVA/month
	Energy charge	:	135.25 paise/unit
SOUTHCO	Demand charge	:	Rs.200/KVA/month
	Energy charge	:	135.75 paise/unit

This is based on the assumption that the tariff approved in para 6.53.5.3 is effective from 01.05.2002 to 31.07.2002 and the above rate shall be valid from 01.08.2002 to 31.03.2003 provided the recommendation as indicated earlier are not accepted by the Government by 31.07.2002.

This tariff effective from 01.08.2002 shall be subject to such proportionate reduction as may be necessary to the extent the Government accepts the recommendation made by the Commission. The reductions being purely arithmatical in nature shall take effect without any further proceeding for amendment under section 26(6) of the OER Act 1995. However it is made clear that in case of such reduction a fresh notification under section 26(5) of the OER Act will be made by the licensees with the approval of OERC.

6.60.5

Finally, the Commission orders as follows with reference to the prayers of the applicant. The Commission does not approve the transmission and bulk supply charges as proposed by GRIDCO for 2001-02 and rejects the tariff revision proposal.

6.60.6

The Commission also does not approve the revenue requirement for the FY 2002-03 as proposed by GRIDCO and directs for implementation of Bulk Supply Tariff, Transmission charges and other charges as determined by the Commission in this order to be effective after expiry of seven days of the publication by the licensee under section 26(5) of the OER Act 1995.

6.60.7

In case the recommendations made by the Commission for necessary correctives for determination of revenue requirement are accepted in toto by the Government, the tariff determined in para 6.53.5.3 shall continue unchanged after 31.07.2002.

6.60.8

Pursuant to order dated 19.04.2002 of the Hon’ble High Court of Orissa the order is not being notified to the licensee in terms of section 26(6) but is filed in sealed cover in the Hon’ble High Court of Orissa.

The application of M/s GRIDCO is disposed off accordingly.