4.0

OBJECTIONS DURING HEARING

The Commission has considered all the objections raised by various objectors. Some of the objections were found to be of general nature whereas others were specific to the proposed tariff filing for the financial year 2001-02. Based on their nature and type, these objections may be categorised broadly as indicated below.

4.1

High Transmission and Distribution Losses

4.1.1

Objectors have generally expressed dissatisfaction over the prevailing level of distribution loss and felt that the Distribution Loss is abnormally high. Licensee has failed to arrest the distribution loss and also has not taken any steps to improve it. Consumer associations (OCA and Grahak Panchayat), UCCI and other objectors have lamented that the efficiency, standard of service and reduction of T & D loss has not improved. So Commission should not penalise the consumers to make good the loss of licensee. Some objectors have suggested that any loss other than technical loss should be borne by Licensee.

4.1.2

A number of objectors have suggested that considering massive investment that has already gone into system improvement, the T&D loss for 01-02 should be 32%, transmission loss for 01-02 be fixed at 3.5%, and distribution loss at HT/LT should be at 29.5%. The performance of the Distribution Companies may be evaluated on the basis of losses in HT and LT distribution system rather than on the overall basis including the zero loss consumption of the EHT consumers.

4.2

Consumer Service

4.2.1

A number of objectors have expressed their dissatisfaction about the quality of consumer service provided by SOUTHCO. They recollected that the reason behind privatisation of electricity was to bring in efficient management, provide quality consumer service, ensure development of the power sector in an economic manner and meet the essential needs of the public. But the licensee has failed to do so. They have deplored that the energy bill is not served on consumer in time, thereby depriving them of rebate. The Licensee alters the billing cycle as well and takes advantage of higher rate slab and penalise the consumer.

4.2.2

The redressal mechanism of consumer grievances both at GRF level and Bijuli Adalat is not satisfactory.

4.3

Pilot study

Objectors have pointed out that despite Commission's directive, licensees have not carried out pilot study for assessment of distribution loss. Even they are not co-operating with Commission's own study and are not providing basic information such as connected load, consumer code, etc. There is need for a detailed study and analysis to be made by experts and plan made for its improvement.

4.4

Cost of Employees, material cost, A&G expenses

4.4.1

Some objectors wondered when the inflation rate at the national level has come down and the wages of the employees have not changed, why the employees' cost should go up by 17%. SOUTHCO has to give voluntary retirements and retrenchments to the unscrupulous employees, who are causing loss to the consumer as well as to the company and unnecessarily harassing the honest consumers.

4.4.2

A general objection is that employees' cost, material cost and AG expenses have been overstated and are to be reduced according to the Commission norms.

4.5

Provision for bad debts

Some objectors namely Sri R. P. Mohapatra and Sri R. C. Padhi have suggested that the Commission should only make a token provision for bad debt, as allowance of 15% of incremental arrears towards bad debt is a premium for inefficiency. On the other hand, some objectors felt that no bad debt should be passed through the tariff. The proposal to write off the arrears will encourage default in payment and lead to further loss to licensee.

4.6

Load Factor Billing

4.6.1

Most of the objectors have decried the load factor billing. OCA questioned that when it is the statutory obligation of the Licensee to replace meters, why the consumers are billed on load factor basis. Rayagada Municipality complained that street light metering has not been done and switching of street lights is not in the hands of the municipality. Consequently, the municipality is badly affected by load factor billing.

4.6.2

The objectors have suggested that to avoid pilferage, the load factor system should be withdrawn and average billing basing on the 12 months consumption should be adopted for billing purpose in case of consumers with defective meter.

4.7

Multi Year Tariff

Objectors from industries, industrial associations and some others believe that revising the tariff every year affects growth of the industries. They suggest that tariffs should be revised once in five years.

4.8

Interest on loan

Objectors believe that interest on loans has been overstated by SOUTHCO and requested the Commission to determine the interest burden appropriately. Interest on Loans and Working Capital increases due to failure to make payment of power bills. The licensee should reduce interest burden by better recoveries. OCA has pointed out that the past dues of GRIDCO has been shown by the licensee as a loan from GRIDCO which is carrying 13.5 % interest. OCA considers that this interest is not payable by consumer. Sri R.C. Padhi requested that the interest not contributing to assets should not be allowed.

4.9

Depreciation and lack of asset register

Most of the objectors raised the issue of non-maintenance of asset register by the licensee without which, they said, depreciation can not be calculated accurately.

4.9.1

Objectors have pointed out that even after five years of reform, the asset register is not available and without such a register, it is not possible to determine depreciation correctly. Sri R. C. Padhi has suggested that in the absence of an asset register, depreciation may be allowed as per ESA for the asset created prior to 4/94. Some objectors pointed out that GOI notification on depreciation applies to new assets and for second hand assets the rate of depreciation has to be determined by the competent Government in each case based on the nature, age, and condition of the assets.

4.9.2

Objectors consider that the amount of depreciation charges allowable to the licensee shall be less than 25% of the amount claimed in the revenue requirement.

4.10

Power Tariff for Salt Industry

An objector from the salt co-operative submitted that the salt producers in the state are in a disadvantageous position as compared to other states because of high tariff. He requested the Commission to treat the salt industry, for the purpose of tariff fixation, at par with agriculture/irrigation pumping and not with general industry.

4.11

Interruption, Low Voltage and Unreliable Supply

4.11.1

A number of objectors have complained about frequent interruption of power supply, low voltage and lack of urgency in attending the complaints. SOUTHCO resorts to undeclared power cuts in most of the areas to reduce the purchase bill and pay less by way of less demand charges, ignoring suffering of the consumers.

4.11.2

The licensee should improve the quality of power supply to consumers by supplying power at proper voltage and minimising the interruptions.

4.12

Unauthorised and illegal abstraction of Electricity

Objectors were unanimous in decrying the failure of the licensee in controlling unauthorised abstraction of power. Some of them suggested that every division has unscrupulous meter tampering gang who seduce the consumers so that benefits are shared. Objectors also pointed out that cumbersome procedures often encourage illegal activities. For example, the process for availing of a temporary connection is so cumbersome that people are forced to take up hooking.

4.13

Incentive for load factor

Objectors from the small and medium industries submitted that concessional rates for load factor above 50% could not be availed by the small and medium industries running only one shift. They suggested that small and medium industries consuming power more than 16% LF should be given power at concessional rates.

4.14

Incentive for Power factor

Objectors, mainly from industries, have submitted that the eligibility for PF incentive relief has been increased from 90% to 97% which has resulted in almost denial of incentive after a huge investment made by industries to improve the power factor. They requested that PF incentive should start for PF above 90% and the incentive should be given at the same rate as for penalty.

4.15

Other issues

• Uniform retail tariff throughout the state should be maintained.

• All the LT consumers (below 100 kW) may be allowed 15 days time to avail of incentive/rebate for prompt payment.

• Bi-monthly domestic bills are incurring loss to the licensee because of paying interest to financing agencies and DPS to Bulk supply company.

• No additional investment has been made by the Distribution Company.

• The licensee should accept the payment by account payee cheques drawn on any schedule Bank instead of account payee DD. This would reduce bank charges paid by consumers.

• Construction industries to be classified separately and no demand charge should be levied.

• Cross-subsidies should be reduced in phases.

• R&M expenses shall be at the normative level or the actual, whichever is less.

• Consumers of SOUTHCO should have lesser tariff because of Hydropower generation in SOUTHCO.

• The Distribution Companies should draw power at 132 kV and be responsible for operation and maintenance of EHT lines and Sub-stations.

• Provision of previous loss is not due.

• Tariff for Public Institution should be fixed at par with Domestic tariff.

• Policy framed by the state government (IPR) in respect of benefits to small-scale industries is not being followed.

4.16

Clarification from SOUTHCO by DIRECTOR (TARIFF)

• SOUTHCO in its revenue requirement for 2002-03 has asked the total power purchase to be 1584.5 MU whereas in the load forecast submitted to GRIDCO the power purchase requirement is stated as 1713.7 MU. This discrepancy may be clarified.

• In the RR application T&D loss proposed for the year 2002-03 is 38.7% whereas for the same year it is shown here 39.2% in the business plan. Similarly for 2001-02 in the tariff application T&D loss is proposed at 37.8%. But in the business plan it is shown at 40.89%. Reason for the discrepancy may be provided.

• In the RST proposal for 2001-02 the distribution loss is shown at 37.91% whereas the same for the year 2001-02 in the ARR application of 2002-03 is shown at 40.57%. This may be clarified.

4.17

Finance:

• Why DPS to GRIDCO shown under the head interest on working capital of Rs.12.35 crore during 2001-02 and 21.35 crore during 2002-03 shall be allowed to be recovered through tariff when SOUTHCO has a huge receivable of Rs.318.45 crore as on 31.03.2002 and Rs.376.25 crore as on 31.03.2003. As reported in F-17 of the ARR 2002-03, 436 days of sales revenue is estimated to be the receivable as on 31.03.2002 and 387 days of sales revenue is estimated to be the receivable as on 31.03.2003.

• In form No.F-23, SOUTHCO has claimed rent including lease rent of Rs.1.08 crore for 2001-02 and Rs.1.19 crore for the FY 2002-03. It is understood that the licensee has taken some meters as financial lease from BSES Ltd. If it is so as per accounting policy issued to the licensee the assets under financial lease should be treated as assets in the book of the lease for which lease rental need not be paid. This may be got clarified.

• Meters have been installed in large scale. Why SOUTHCO has shown a lower figure of miscellaneous receipt towards meter rent of Rs.2.25 crore in 2001-02 and Rs.3.55 crore in 2002-03 when the miscellaneous receipt including meter rent in 1999-00 was Rs.5.76 crore as revealed from the audited accounts for tax audit purposes for 2000-01 submitted by licensee to Commission.

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