5.0

WESCO's Rejoinder to objections

5.1

Audited accounts

5.1.1

WESCO has submitted that its accounts for FY 2000-01 were duly audited for tax purposes and the same were submitted to the Commission. The proposal for tariff revision is based on these accounts and can be considered as reasonably accurate.

5.2

Transmission and distribution loss

5.2.1

WESCO is taking steps to reduce losses but high reduction in system loss within a year is not possible due to many reasons. Refurbishment of distribution network during a year consists of only a small portion of the total network of WESCO and this reduces only a small fraction of technical loss. Moreover, after system improvement the input to WESCO system invariably increases but no increase in billing is noticed as it was not possible to eliminate tampering and bypassing of meter. WESCO submitted that loss reduction can only be a gradual process.

5.3

Employees' cost, Material Cost and A&G expenses

5.3.1

The expenditure on account of employee and A&G has been estimated based on the actual expenditure of 2000-01. Separate claim of expenses towards contribution to PF, Pension, Gratuity, Training and bonus etc has been made only as these are specifically asked for in the format. It has not been claimed twice.

5.4

Collection efficiency and provision for bad and doubtful debt

5.4.1

The collection made during 2000-01 is Rs. 364.10 crore against the billing of Rs, 472.47 crore, with collection efficiency of 77%. For the year 2001-02, WESCO has proposed the collection efficiency of 79% making an increase of 2%. The increase in debtors is due to cumulative effect, which is increasing as collection efficiency is less than 100%.

5.4.2

The collection efficiency is calculated for all the consumers and not to LT consumers alone. The company is making all out efforts to improve its collection efficiency.

5.4.3

The provision made for bad and doubtful debt is only 4.5% on gross sale.

5.5

Cross subsidy

5.5.1

Cross subsidisation is necessary to large number of LT consumers who pay tariff much lower than the cost of supply. The socio-economic condition of the people in the state does not allow immediate curtailment in the cross-subsidisation. The process has to continue for some more time and the cross subsidy has to exist till such time.

5.6

Provision of previous loss shown in special appropriation

5.6.1

Only 20% of the previous loss has been claimed as per the provisions of the Schedule VI of Electricity Supply Act, 1948.

5.7

Interest

5.7.1

As the interest payable on account of power bond is normal expenditure, it should be charged to the distribution business.

5.8

Interruption, Low Voltage and Unreliable supply

5.8.1

The system voltage and frequency generally depends on the grid condition of the EREB system and power system disturbances are often due to failure of the grid.

5.8.2

Tripping cannot be totally eliminated for industries availing of power supply at 33 kV in the existing system network. Tripping is due to grid failure in many cases.

5.9

Miscellaneous

5.9.1

The tariff for construction power should be similar to the relevant category depending on the load of construction power. The tariff should have two-part as consumption for construction power would contribute to the demand recorded by WESCO, for which it has to pay on two-part basis.

5.9.2

WESCO has submitted proposal for special tariff for industries with load factor of 80% and above in its application.

5.9.3

WESCO has a high regard for its consumers and always attempts to keep its consumers satisfied. The complaints of the consumers are promptly attended and redressed within reasonable time.

5.9.4

A special tariff allowed to industrial colony consumption, which cannot be extended beyond a reasonable limit. The procedure for allowing only 10% of the total consumption by a HT industry as housing colony consumption at a reduced tariff is a concession. The argument that the classification of consumers should be based on usage therefore is not valid in this case. The primary usage of electricity in a HT industry is for commercial reasons and not for domestic purpose.

5.9.5

To maintain a good power factor of the system, an industrial consumer should have almost unity power factor and in no case it should go below 90%. Incentive has been offered to the consumers who have power factor very close to unity, i.e. above 97%.

5.9.6

The consumer is expected to pay the energy bill within due date falling which delayed payment surcharge is payable, hence there is no reason why a consumer should be allowed incentive for payment within due date. The present rebate of 1% of the monthly bill at full payment is made within 48 hours of presentation of bills is an adequate incentive.

5.9.7

A high load factor of a consumer helps the licensee in better utilisation of the system and hence concession has been allowed for consumption above 50% load factor. Any load factor less than 50% cannot be considered as a high load factor.

5.9.8

The existing provision regarding overdrawal penalty for maximum demand is required to be maintained to guard against the understatement of contract demand by industries. Overdrawal places additional burden for the system stability and reliability, thereby affecting other consumers.

5.9.9

WESCO has no comments on uniform retail tariff.

5.9.10

Incentive for load management to the extent of waiving penalty for maximum demand exceeding up to 20% of contract demand during off peak hours is already available to industry and a large number of industries are availing of this facility.

5.9.11

The tariff proposal is in accordance with the revenue requirement of WESCO for the year 2001-02. WESCO has no comments regarding the tariffs of other states where Government subsidy or other subsidies are available.

5.9.12

Electricity duty is not within the scope of the tariff revision proposal.

5.9.13

Although WESCO has approached various financial institutions to provide working capital, no one has come forward so far to provide the same since the company is making loss. So there is no alternative but to wait for payment from the consumers to pay GRIDCO its BST bills which is delayed and correspondingly DPS has to be paid.

5.9.14

Captive generation greatly affects the functioning of the power sector in the state. Further addition to captive generation will result in lower generation from the larger power plant, thereby increasing the cost of the generation. In view of the above, captive generation is being discouraged and 3rd party sale is prohibited to maintain a balance between interest of various stakeholders.

5.10

WESCO's response to issues raised by Director(Tariff)

5.11

Distribution Loss

5.11.1

The business plan has been formulated as scheme to gradually achieve break-even of the company. While formulating the business plan although the actual business loss was around 45%, WESCO estimated a substantial loss reduction during the period from August'01 to March'02 and accordingly estimated a system loss of 41% in the business plan. Considering the loss level of 41% during the year 2001-02, reduction of system loss by 2% has been projected for the year 2002-03 and shown as 39%.

5.11.2

The completion of system improvement work depends on the availability of funds due to suspension of World Bank loan the system improvement work as planned could not be completed. Besides the effect of meter installation was not reflected in the next billing immediately.

5.11.3

New 132/33 KV Grid Substations were commissioned at Barkot, Rairakhol, Sonepur, Patnagarh and Junagarh. It was noticed that input of CESCO increased considerably due to better voltage and supply conditions, but increase in billing was negligible. So while estimating system loss in the revenue requirement for 2002-03, WESCO have revised distribution loss to 45% for 2001-02 considering the actual distribution loss of the company upto November'01. Correspondingly, the system loss for 2002-03 was estimated to be 41%, estimating 4% loss reduction during 2002-03.

5.11.4

As regards system loss of 38% shown in tariff proposal for 2001-02, it is only to avoid a sharp rise in tariff although the actual system loss at the time of filing of tariff proposal was 44.73%(April'01 to September'01).

5.12

DPS to GRIDCO

5.12.1

The figures of gross receivable mentioned in the clarification sheet is Rs.511.29 Crore and Rs.631.41 Crore. Even with these receivables the working capital of the company for the year 2001-02 and 2002-03 is negative as seen from OERC Form No.39. This has happened due to sever loss sustained by the company. Besides all the collection of WESCOs are presently routed through Escrow Account, where there is first charge of GRIDCO on receivables. In this circumstances WESCO is unable to get any working capital loan from different banks as well as from financial institutions. So there is no alternative but to pay DPS to GRIDCO, although the rate of DPS is more than the rate of working capital.

5.13

Benefits of Micro Privatisation

5.13.1

Long pending consumer complaints are reserved involving more than 11,000 complaints.

5.13.2

Nearly 8,325 nos. of consumers were able to avail connections.

5.13.3

Consumers no longer have to go out of the village for electricity related problems.

5.13.4

Bill distribution, meter reading and cash collection have become more streamlined/improved.

5.13.5

Large scale metering has brought about reduction in input and improvement in voltage. Distribution transformers are thereby less loaded and distribution transformer failures are reduced.

5.13.6

Consumer satisfaction among consumers has increased.

5.14

Miscellaneous Receipt

5.14.1

WESCO has given the break up of miscellaneous receipt of Rs.3.27 crore and Rs.3.80 crore for the year 2001-02 and 2002-03.

5.15

Loss Reduction Programme for the year 2002-03
Loss reduction programme for the year 2002-03 is given in OERC Form P-14.

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