THE HARYANA ELECTRICITY REGULATORY COMMISSION

Transcription

1 BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION Filing of the Petition for Annual Performance Review for FY and Annual Revenue Requirement for FY by Dakshin Haryana Bijli Vitaran Nigam Limited under HERC (Terms and Conditions for Determination of Tariff for Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 and 1 st Amendment MYT draft Regulations, 2016 along with the other guidelines and directives issued by the Hon ble Commission from time to time and under Section 45, 46, 47, 61, 62, 64 and 86 of the Electricity Act 2003 read with the relevant guidelines. FILED BY, DAKSHIN HARYANA BIJLI VITRAN NIGAM LIMITED, HISAR Superintendent Engineer (Regulatory Affairs) FIRST FLOOR, VIDYUT SADAN, HISAR

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3 Petition for APR FY and ARR for FY for DHBVNL BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION, AT ITS OFFICE 33-36, SECTOR -4 IN PANCHKULA, HARYANA IN THE MATTER OF: Filing of the Petition for Annual Performance Review (APR) for FY , Annual Revenue Requirement (ARR) for FY by Dakshin Haryana Bijli Vitran Nigam Ltd. under HERC (Terms and Conditions for determination of tariff for generation, transmission, wheeling and distribution & retail Supply under Multi Year Tariff Framework) Regulations, 2012 as amended from time to time and under Section 45, 46, 47, 61, 62, 64 and 86 of The Electricity Act 2003 read with the relevant guidelines. AND IN THE MATTER OF: DAKSHIN HARYANA BIJLI VITRAN NIGAM LIMITED (hereinafter referred to as "DHBVN ), having its registered office at Vidyut Sadan, VIdyut Nagar, Hisar, Haryana. DHBVN respectfully submits as under: - 1. The Petitioner is a State owned Distribution Company and registered under the companies Act, 1956, formed under corporatisation/ restructuring of erstwhile Haryana State Electricity Board (HSEB) and is creditworthy for the distribution and retail supply of electricity (License No. DRS-2 of 2004) in the South Zone of State Haryana. 2. Pursuant to the enactment of the Electricity Act, 2003, every utility is required to submit its Aggregate Revenue Requirement (ARR) for the control period and Tariff Petitions as [Nov-16] Page i

4 Petition for APR FY and ARR for FY for DHBVNL per procedures outlined in section 61, 62 and 64, of Electricity Act 2003, and the HERC (Terms and conditions for Determination of Tariff for Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 as amended from time to time herein referred as HERC MYT Tariff Regulations The Multi-year Tariff (MYT) petition for control period FY to FY was filed on by DHBVN and accordingly the Hon ble Commission had issued the MYT order against the said petition on Furthermore, the control period has been extended till FY as per the 1 st amendment to HERC MYT Tariff Regulations, The present petition is filed before the Hon ble Commission for Annual Performance Review (APR) for FY and Annual Revenue Requirement (ARR and Tariff for FY ) considering the approved values of Tariff order dated 7 th May 2015 and subsequent HERC tariff order 1 st August This petition has been prepared in accordance with the provisions of Part VII- Principles for Determination of Tariff and Norms of Operation for Distribution Business and Part VIII -Filing Of Aggregate Revenue requirement, as per the HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 along with Sections 61, 62 of the Electricity Act, DHBVN along with this petition is submitting the regulatory formats with data & information to an extent applicable and would make available any further information/ additional data required by the Hon ble Commission during the course of proceedings. 7. In view of power delegated to Managing Director by Board of Directors in its meeting held on against agenda item no , the current APR being filed has been discussed and approved by the Managing Director of DHBVN and Mr. Rajinder Kumar [Nov-16] Page ii

5 Petition for APR FY and ARR for FY for DHBVNL Sabharwal, SE/RA, DHBVN has been authorized to execute and file the said APR on behalf of DHBVN. 8. Further, while making the projections the Nigam has considered the issues raised in review petition filed vide Memo No. CH-10/SE/RA-557 dated against the Impugned Tariff Order dated and the projection thus made in the current petition are subjected to change based on the outcome of the Order against the review petition. 9. This filing is without prejudice to the review petition filed by the Nigam against tariff order dated and any other matters of DHBVN pending before the Hon ble Commission. 10. Further the HERC vide Order dated 7 th November, 2016 has stated as below: i) Two months time, from the date of this Order, is allowed to the power utilities i.e. HPGCL, HVPNL, UHBVN and DHBVN to finalize their respective Business Plan, Capital Investment Plan for the FY and the ARR/Tariff Petition (s) for the FY Accordingly, for the FY , there shall be annual determination of the ARR/Tariff. However DHBVN is filing a petition before the Hon ble Commission while reserving its right to file any additional submissions and revised petition after the decision on the Review Petition filed against the Tariff Order dated or otherwise till the date of extended period i.e (two months from ). [Nov-16] Page iii

6 Petition for APR FY and ARR for FY for DHBVNL Prayers to the Commission: The petitioner respectfully prays that the Hon ble Commission may: a) Take the accompanying current APR filing of DHBVN on record and accept the petition for filing including requests for truing up of the expenses and revenue for FY , Revised estimates for ARR for FY and projection of ARR gap for FY b) To file any additional submissions and revised petition after the decision on the review petition filed against the order dated or otherwise till the date of extended period i.e (two months from ) as already submitted. c) To continue the current levels of Tariff and FSA to meet the expenses while the gap will be funded by OFR as proposed under UDAY scheme d) Treat the current APR filing as complete in view of substantial compliance as also the specific requests for waivers with justification placed on record. e) To condone any inadvertent omissions/errors/shortcomings and permit DHBVN to add/change/modify/alter this filing with revised figures as may be required at a future date. f) Pass such Order, as the Hon ble Commission may deem fit and appropriate keeping in view the facts and circumstances of the case submitted by the Petitioner. Hisar, Haryana Dated: Dakshin Haryana Bijli Vitran Nigam Limited Petitioner [Nov-16] Page iv

7 Petition for APR FY and ARR for FY for DHBVNL Table of Contents CHAPTER 1. INTRODUCTION PROFILE OF DHBVNL CURRENT PETITION CHAPTER 2. TRUE-UP SUMMARY OF FY PREAMBLE APPROACH OF TRUE-UP PETITION FOR FY SUMMARY OF TRUE-UP FOR FY CHAPTER 3. PERFORMANCE REVIEW FOR FY AND ANNUAL REVENUE REQUIREMENT FOR FY PREAMBLE ASSESSMENT OF ENERGY SALES FOR FY AND FY ENERGY AVAILABILITY FOR HARYANA FOR FY AND FY TRANSMISSION LOSSES DISTRIBUTION LOSSES TRANSMISSION CHARGES ENERGY BALANCE OPERATION & MAINTENANCE EXPENSES COMPUTATION OF INFLATIONARY INDICES EMPLOYEE EXPENSES REPAIR & MAINTENANCE EXPENSES ADMINISTRATION & GENERAL EXPENSES SUMMARY OF O&M EXPENSES CAPITAL EXPENDITURE CWIP & GFA WORKINGS RETURN ON EQUITY INTEREST & FINANCE CHARGES DEPRECIATION NON-TARIFF INCOME TRUE UP OF RE SUBSIDY FOR FY REVENUE ESTIMATION REVENUE FROM INTER-STATE SALES AGRICULTURE SUBSIDIES REVENUE FROM FSA [Nov-16] Page v

8 Petition for APR FY and ARR for FY for DHBVNL CHAPTER 4. PERFORMANCE REVIEW FOR FY AND ANNUAL REVENUE REQUIREMENT FOR FY CHAPTER 5. RECOVERY OF GAPS RECOVERY OF GAPS CHAPTER 6. PRAYERS TO THE COMMISSION: ANNEXURE 1: ANNEXURE OF DIRECTIVES [Nov-16] Page vi

9 Petition for APR FY and ARR for FY for DHBVNL List of Tables Table 1: Summary of truing up gap for FY Table 2: Statement of sales for FY and FY Table 3: Power Purchase Details for FY & FY Table 4 Summary of Impact of APTEL Judgement for FY and FY Table 5: Summary of Transmission Charges for FY and FY Table 6: Energy Balance for DHBVN FY and FY Table 7: Bulk Supply tariff for DHBVN Table 8: Employee Expenses for FY & FY Table 9: R&M Expenses for FY & FY Table 10: A&G Expenses for FY and FY Table 11: Summary of O&M Expenses for FY and FY Table 12: Capital Expenditure for FY and FY Table 13: CWIP for FY and FY Table 14: GFA for FY and FY Table 15: Return on Equity for FY & FY Table 16: Existing Working Capital, Operation Loss and REC/PFC Loans for FY Table 17: Existing Working Capital, Operation Loss and REC/PFC Loans for FY & FY Table 18: Interest on Consumer Security Deposit for FY and FY Table 19: Interest & Finance Charges for FY and FY Table 20: Depreciation for FY Table 21: Non- Tariff Income for FY and FY Table 22: True up of RE subsidy for FY Table 23: Revenue Estimations for FY Table 24: Revenue from Sale of Power for FY Table 25: Revenue from Inter-state Sale of Power for FY 17 and FY Table 26: ARR for FY and FY Table 27: Wheeling and Retail ARR for FY and FY [Nov-16] Page vii

10 Chapter 1. Introduction 1.1 Profile of DHBVNL The Company is a Distribution Licensee within the meaning of Section 2 (17) of Electricity Act 2003 and pursuant to the Section 14 of the Electricity Act. Further, Section 42 and 43 of the Electricity Act 2003 prescribes the following duties of the Distribution Licensee: To develop and maintain an efficient, co-ordinated and economical distribution system; To supply electricity on an application of the consumer in accordance with the provisions specified in the Electricity Act 2003; To provide non-discriminatory open access to the consumers; To establish a forum for redressal of grievances of the consumers; Since DHBVN has been vested with the function of distributing power by the State Government of Haryana, the Business Scope of the Company falls within the legal framework as specified in the Act and can include: To develop and maintain an efficient, co-ordinated and economical distribution system; To Operate the existing distribution infrastructure efficiently & effectively; Merchant Sale of Power in the event of availability of surplus power after meeting the requirement of own consumers with whom the capacity is contracted presently; Other associated business like providing Training, Research and Development activities, Technical consultancy services and O&M related services; Contracts for outsourcing of distribution related activities, joint venture participation; [Nov-16] Page 8

11 1.1.3 DHBVN is responsible for distribution of power in following districts of South Haryana: Sirsa Hisar Bhiwani Rewari Gurgaon Mewat Palwal Faridabad Mahendragarh Jind Fatehabad It is submitted that Jind is now under DHBVN area of operation, w.e.f. 3 rd July 2013, However, the approved MYT by Hon ble HERC in MYT Order, vide dated 29 th May 2014, Jind Circle was considered under the operational area of UHBVNL as the segregation of accounts was to be completed post the implementation of scheme However the allocation of assets and liabilities from UHBVN to DHBVN is completed thereafter and same has been available in detail with the annual accounts of Discoms of FY It is therefore submitted that, JIND circle has been considered as the part of DHBVNL for the annual estimation of ARR The Hon ble Commission had issued HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012 (herein MYT Regulations) notified on [Nov-16] Page 9

12 5 th December As per the MYT Regulations, a Distribution Licensee is to file the MYT Petition (ARR and Tariff Proposal for the control period) by 30 th November of the year proceeding the first year of the control period As per the MYT Regulations The petition shall contain information regarding salient features of the project including the capacity, location, site specific features, fuel, beneficiaries, break-up of the capital cost estimates, financial package, schedule of commissioning, reference price level, estimated completion cost including foreign exchange components, if any, consent of beneficiary licensees to whom the electricity is proposed to be sold etc DHBVN had filed its MYT Petition on Dec. 19 th 2013 for the control period of FY to for approval of the year wise Annual Revenue Requirement (ARR), under MYT Tariff Framework. Further, the Hon ble Commission issued a common MYT Order for both Discoms on the same on 29 th May DHBVN is filing the present petition to perform the annual performance review of FY , on the basis of available cost & expenditure of initial half year. In line with the above, DHBVNL is filing its Annual Performance Review for FY and Annual Revenue Requirement for FY for consideration of the Hon ble Commission. 1.2 Current petition This petition for Annual Performance Review (APR) for FY and Annual Revenue Requirement for FY is being submitted by Dakshin Haryana Bijli Vitaran Nigam Limited considering half yearly available income & expenditure of DHBVNL for FY and on the basis of further revised estimates for next six months of FY and thereafter new projections for FY has been envisaged. [Nov-16] Page 10

13 1.2.2 The current petition has been prepared in accordance with the provisions of the following Acts/ Policies/ Regulations: a) Electricity Act 2003; b) National Electricity Policy; c) National Tariff Policy; d) HERC (Terms and Conditions for Determination of Tariff for Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012; e) HERC (Terms and conditions for grant of connectivity and open access for intra- State transmission and distribution system) Regulations, 2012 and applicable current amendments; DHBVN has made genuine efforts for compiling all relevant information relating to this APR for FY and ARR tariff petition for FY , as required by the regulations issued by the Hon ble Commission and has also made every effort to ensure that information provided to the Hon ble Commission is accurate and free from material errors. However, there may be certain deficiencies owing to the compilation of accounts of Petitioner company and hence, DHBVN prays to the Hon ble Commission that the information provided be accepted for the current filing and at the same time DHBVN assures that it is taking appropriate measures to improve its management information system for improved data collection. [Nov-16] Page 11

14 Chapter 2. True-up Summary of FY Preamble This section deals with summary of true-up exercise carried out for FY , which has been separately filed by the Petitioner. 2.2 Approach of True-up Petition for FY The Commission in the order dated 7 th May 2015 has determined the Aggregate Revenue Requirements and Wheeling/distribution & Retail supply tariff for wheeling/supply of electricity by Discom within the state of Haryana for FY The true-up exercise for FY has been performed on the basis of available audited annual accounts of DHBVNL for FY Summary of True-up for FY The summary of truing-up of FY is hereby tabulated for reference purpose only. The effect of truing-up has been provided in the APR and ARR tariff petition of DHBVNL. The difference in approved and actual expenditure as per the summary table below for DHBVN has been given below: Table 1: Summary of truing up gap for FY Summary of Actual ARR for FY15-16 Sr. Particulars Approved Actual* 1 Power Purchase Expenses 11, , Transmission Charges SLDC Charges , Operations and Maintenance Expenses , Employee Expense Administration & General Expense Repair & Maintenance Expense Terminal Liability [Nov-16] Page 12

15 Summary of Actual ARR for FY15-16 Sr. Particulars Approved Actual* 5 Depreciation Total Interest & Finance Charges , Return on Equity Capital Prior Period Expense Other Debits Total Expenditure 13, , Less: Non Tariff Income Net Aggregate Revenue Requirement 13, , Total Revenue 12, Revenue from Interstate sales Revenue from Intrastate sales 11, Gap 3, Govt. subsidy Net Gap *Delayed payment surcharge is not considered in Non-Tariff Income The Petitioner (DHBVNL) has requested Hon ble Commission to approve the net revenue (gap) of Rs Cr. along with the suitable carrying / holding cost for FY to be recovered through tariffs for FY of Distribution Company The petitioners further submits that in the truing up for FY 15-16, the delayed payment surcharge is not considered in the Non-Tariff income. [Nov-16] Page 13

16 Chapter Performance Review for FY and Annual Revenue Requirement for FY 3.1 Preamble This chapter deals with the annual performance review of ARR for FY and ARR for FY against as approved by the Hon ble Commission vide MYT order dated 29 th May 2014, HERC Tariff Order dated 7 th May, 2015 and HERC tariff order dated 1 st August In order to undertake Annual Performance Review for FY & Annual Revenue Requirement for FY , various assumptions and other practical approaches have been taken into the consideration. The same has been described in detail, while projecting each component. Further the HERC vide Order dated 7 th November, 2016 has stated as below: Two months time, from the date of this Order, is allowed to the power utilities i.e. HPGCL, HVPNL, UHBVN and DHBVN to finalize their respective Business Plan, Capital Investment Plan for the FY and the ARR/Tariff Petition (s) for the FY Accordingly, for the FY , there shall be annual determination of the ARR/Tariff. However the DHBVN is filing a petition before the Commission while reserving its right to file any additional submissions and revised petition after the decision on the review petition filed against the order dated or otherwise till the date of extended period i.e (two months from ). 3.2 Assessment of Energy Sales for FY and FY In order to estimate the respective consumer category wise energy sales of DHBVNL for the FY and FY , the Petitioner has relied upon the CAGR of previous year s data for connected load, sales and the resulting consumer category wise consumption per [Nov-16] Page 14

17 kw. Hence, after applying the projected load factor/ specific per kw consumption to the projected consumer category wise connected load, the consumer category wise sales for the FY have been arrived at. The methodology applied by the petitioner for estimating the metered sales is as under: The category-wise connected load and energy sales for the FY , FY , FY , FY , FY & FY were considered The category wise connected load for the FY and FY is arrived at by multiplying full year category wise connected load for the FY with the respective year CAGR of historical data of connected load The category wise energy sales of the FY is calculated by multiplying category wise connected load above for the FY with consumption per kw calculated for FY based on the analysed category wise actual consumption per kw pattern for past 3 years The category wise energy sales of the FY is calculated by multiplying category wise connected load above for the FY with consumption per kw calculated for FY based on the analysed category wise actual consumption per kw pattern for past 3 years Agriculture consumption for the FY and FY is calculated by assuming a growth rate of 5% in actual sales over the year FY reported by the feeder level data and as per the methodology adopted by the Hon ble commission in previous tariff orders. [Nov-16] Page 15

18 Table 2: Statement of sales for FY and FY Category of Consumers Projection of Sales for FY & FY Approved for FY (MU) Sales till Sep-16 (MU) RE Sales for FY (MU) RE Sales for FY (MU) Domestic 4,716 2,572 4,487 4,859 Non Domestic 4,155 1,417 2,781 3,167 HT Industry 5,431 2,304 4,835 4,895 Lift Irrigation LT Industry ,025 Agriculture Metered 2,672 1,986 5,217 5,478 Agriculture 1, Un Metered Bulk Supply Railway Traction DMRC Street Lighting Public Water Works Total (MU) 21,471 10,449 19,777 21, DHBVNL request Hon ble Commission to approve energy sales, as per revised projections for FY and FY tabulated above. 3.3 Energy Availability for Haryana for FY and FY For FY and FY , Month Wise Energy availability at the state periphery in Mu has been projected based on the Allocated Share to Haryana of Central Generating Stations, State Generation and Independent Power Producers and other Stations. The Energy Availability in Haryana is calculated based on the average PLF of FY , FY and FY , Share capacity of Haryana from Central Generating Station IPP. The energy availability to DHBVN is calculated by multiplying the total availability with the ratio of drawal of UHBVN and DHBVN. [Nov-16] Page 16

19 The Monthly energy sale is determined by distributing the same in the percentage of month of consumption of FY The energy sales hereby projected has been grossed up with the losses approved under UDAY scheme to reach at the normative energy required at the Discom periphery and then by the intrastate transmission losses to arrive at the normative energy required at the State Periphery. Then the Normative energy required at the State is assumed to be met through the Available Energy from Must Run Plant i.e. plants which cannot be backed down like Hydro Power Plants, Solar Power Plant and Biomass. The remaining demand is met through the Thermal Power Plant i.e. HPGCL, IPPs and NTPC as per the Merit order dispatch based upon the Variable charges as per the actual bills of FY The Impact of Interstate losses on the Inter State Generating station has already been taken while calculating the availability at the state periphery. The Backing Down of the Unit is assumed to be limited to the backing down capacity and any surplus created on account of same is assumed to be banked with other states and consumed during the months of deficit. The Actual Variable Charges of FY has been escalated at an average rate of 5% per year to arrive and multiplied with the total estimated energy drawn from various generators to arrive at the total variable cost of power generation for FY , however for FY the variable cost has been kept at same levels as that of FY The same has been projected in view of Licensee s attempt for better power purchase planning and load forecasting etc. Similarly, the fixed charges paid to the generators in FY are escalated at an average rate of 5% to arrive at the fixed charges to be paid for FY and FY in [Nov-16] Page 17

20 anticipation of the similar increase in fixed charges as per the CERC tariff order for control period for FY for the central sector generating stations. Further, the Hon ble APTEL in its Judgment dated 7 th April, 2016 has allowed certain generators like Adani Power, GMR Kamalganga, Sasan Power Ltd and CGPL recoveries on account of force majeure / change in law / date of COD etc. The Licensees has already submitted the issues in detail vide various submissions namely vide Memo No. Ch- 25/GM/RA/N/F-25/Vol-62, Ch-37/GM/RA/N/F-54/Vol-XI, Memo No. CH-55/SE/RA/N/F- 24/VOL-XI(A) and Memo No.Ch-66/GM/RA/N/F-54/Vol-XI(A) dated , and and respectively. It is submitted that out of the above liabilities of Rs Cr the Licensee has already made payment of Rs Cr up to , therefore the same has been included in the power purchase cost of FY Further, the monthly impact based on the bills on account of above works out to Rs Cr, accordingly the licensee has worked out the additional power purchase cost on pro-rata basis for 5 months of FY and full year for FY The additional power purchase cost due to the impact of Hon ble APTEL s Judgment works out to Rs Cr and Rs Cr for FY and FY respectively which has been added in the overall projected power purchase cost. Table 3: Power Purchase Details for FY & FY Sl. No Power Plants Quantum FY FY Energy Charge Fixed Charges Total Charges Quantum Energy Charge Fixed Charges Total Charges 1 Anta 2 Auriya 3 Dadri 4 Faridabad Gas [Nov-16] Page 18

21 Sl. No Power Plants Quantum FY FY Energy Charge Fixed Charges Total Charges Quantum Energy Charge Fixed Charges Total Charges 5 Feroz Gandhi Unchahar-1 6 Feroz Gandhi Unchahar-2 7 Feroz Gandhi Unchahar-3 8 Farraka Super Thermal 9 Kahalgaon-1 10 Kahalgaon-2 11 Koldam 12 NCTPS (DADRI-II) 13 Rihand Thermal Power St Rihand Thermal Power St Rihand Thermal Power St Singrauli Super Thermal 17 TOTAL NTPC LTD (A) 18 BAIRASUIL 19 SALAL 20 TANAKPUR 21 CHAMERA-I 22 URI 23 CHAMERA-II 24 DHAULIGANGA 25 DHULHASTI 26 SEWA-II 27 CHAMERA III 28 PARBATI III 29 URI-II , , , , [Nov-16] Page 19

22 Sl. No Power Plants Quantum FY FY Energy Charge Fixed Charges Total Charges Quantum Energy Charge Fixed Charges Total Charges 30 TOTAL NHPC LTD (B) SJVNL SJVNL (RAMPUR) THDC THDC KOTESHWAR RAPS NAPS BBMB 1, , PTC TALA PTC J&K Aravali Co. Pvt. Ltd JHAJJAR POWER LTD. 2, , , , PRAGATI POWER Coastal Gujrat Power Ltd. 1, , ADANI POWER LTD 5, , , , , , SASAN POWER LIMITED 1, , PTC GMR KAMALANGA 1, , PTC KARCHAMWANGTOO PTC Lanco Amarkantak 1, , DVC MEJIA DVC KODERMA PTPS-V (HPGCL) PTPS-VI (HPGCL) PTPS-VII (HPGCL) PTPS-VIII (HPGCL) YTPP-I&2 (HPGCL) 1, , RGTPS 1&2 (HPGCL) 2, , , , WYC Kakaroi HPGCL (FSA) SLDC CH. OF HPGCL OTHER LONG TERM ( C) 24, , , , , , , , P&R GOGRIPUR small hydro Bhoruka Power Corps. Ltd. Small hydro HPSEB/MITTAL SMALL HYD Megahalya/ APPC SHAHBAD SUGAR MILL CH. DEVI LAL SUGAR MILL Haryana Co. Sugar Mill Hafed Sugar Mill Meham Sugar Mill [Nov-16] Page 20

23 Sl. No Power Plants Quantum FY FY Energy Charge Fixed Charges Total Charges Quantum Energy Charge Fixed Charges Total Charges 70 Puri Oil Mill small hydro SUGAR MILL AND SMALL HYDRO (D) SDS SOLAR PVT LTD. DH C&S Electrical DH CHANDRALEELA SOLAR DH SUKHBIR SOLAR DH ZAMIL SOLAR DH SIWANA SOLAR POWER DH H.R. MINERAL SOLAR UH TAYAL & CO SOLAR UH VKG SOLAR UH Solar Energy Corporation of India Ltd SOLAR POWER (E) STAR WIRE INDIA GEMCO ENERGY LTD AB GRAIN SPIRIT PVT LTD SRI JYOTI BIOMASS POWER (F) Total Long term (A+B+C+D+E+F) 28, , , , , , , , New Power Plants (FY ) Bio-Mass based Generation Projects Bagasse Nariangarh Sugar mill Budhil HP (IPP) through PTC (H.P.) (Case under Dispute) Tehri PSP (Uttranachal)- THDC Kishanganga (J&K)- NHPC Kotli Bhel (All 3 Stages) (Uttranachal)-NHPC Parbati II, HEP (H.P.)-NHPC Siang Middle HEP (Arunachal Pradesh), Reliance Energy Ltd 98 Kameng HEP (Arunachal Pradesh), NEEPCO Tipaimukh (IPP) (Manipur), Hydro [Nov-16] Page 21

24 Sl. No Power Plants Quantum FY FY Energy Charge Fixed Charges Total Charges Quantum Energy Charge Fixed Charges Total Charges 100 Solar Power Projects at wasteland of HPGCL Solar PV (Through NIT Route) Unchahar IV (NTPC) New Plants (FY ) Subansari, ER NHPC (Arunachal Pr.), Hydro Solar Power Projects at wasteland of HPGCL Teesta III, Sikkim (IPP), Hydro Solar PV Throu NIT Total 28, , , , , , , , The Nigam prays that in case of any variance in the actual generation cost and projected generation cost of new power generating plants, the Nigam should be allowed to recover the additional cost at through appropriate mechanism. Table 4 Summary of Impact of APTEL Judgement for FY and FY Output Units FY FY Power Purchase Cost Crs 11, , Revenue from Inter State SoP/(Purchase) Crs Net Cost Crs 10, , Impact of APTEL Judgements Crs Transmission losses For the FY and FY the inter-state transmission losses and intra-state transmission losses have been considered as 3.82% and 2.46% respectively. 3.5 Distribution losses For FY and , the distribution losses of DHBVN have been projected as 21.70% and 17.94% respectively in line with the target of UDAY scheme, notified by the Government of Haryana. [Nov-16] Page 22

25 3.6 Transmission Charges For FY inter-state transmission charges and Intra state transmission charges have been projected on the basis of the actual details available from HPPC for FY It is submitted that the transmission charges has been divided between both the Discoms based on the actual power drawl ratio of individual Discoms. The actual interstate and intrastate transmission charges for FY are projected at rate of 3.32% for estimation and projection of transmission charges for FY and FY The detailed transmission charges for Discoms for the period of FY and FY has been tabulated below: Table 5: Summary of Transmission Charges for FY and FY Particulars DHBVN Summary FY FY Inter State (Rs. Cr.) Intra State (Rs. Cr.) Total (Rs. Cr.) The Nigam prays that in case of any variance in the actual transmission cost and projected transmission cost, the Nigam should be allowed to recover the additional cost at through appropriate mechanism. 3.7 Energy Balance DHBVN has computed the energy balance based on the availability of power based on the drawl ratio, sales forecast and projected transmission and distribution losses for FY and [Nov-16] Page 23

26 3.7.2 The petitioner has summarised the working of energy balance for DHBVN as an individual which are tabulated below: Table 6: Energy Balance for DHBVN FY and FY Energy Balance Units FY FY Power Purchase at State Periphery Mus 28, , Energy Sales to the Consumers Mus 19, , T&D loss %age 21.70% 17.94% Energy Sales at Discom Periphery Mus 25, , Intra- State Transmission Loss %age 2.46% 2.46% Energy Sales at State Periphery Mus 25, , Deficit met through Banking Mus Surplus Mus 2, , The Nigam has assumed that the surplus power available will be sold entirely as interstate sales throughout the FY and FY at 80% of average variable power purchase cost DHBVN request the Hon ble Commission to approve the above submission for FY and FY The Petitioner also submits the bulk supply tariff computed for DHBVNL as given below: Table 7: Bulk Supply tariff for DHBVN Bulk Supply Tariff Units FY FY Net energy available at state boundary for use in DHBVN Mus 28, , Intra-state transmission losses % 2.46% 2.46% Intra-state transmission losses Mus Energy available for sale to distribution licensee at distribution periphery Mus 28, , Power purchase cost Rs Cr 10, , Inter-state transmission charges Rs Cr [Nov-16] Page 24

27 Bulk Supply Tariff Units FY FY Intra-state transmission charges Rs Cr Total bulk purchase and transmission charges Rs Cr 12, , Power purchase per unit Rs/Kwh Inter-state transmission charges Rs/Kwh Intra-state transmission charges Rs/Kwh Average BST for DHBVN Rs/Kwh Operation & Maintenance Expenses The operation and maintenance expenditure of DHBVNL comprises of Employee Expenses, Repair & Maintenance expenses and Administration & General expenses. The O&M expenses, as per the MYT regulations, 2012 are considered as controllable Factor with the exception of terminal benefits. The cost of terminal benefits has been considered as uncontrollable factor The HERC MYT Regulations, 2012 as amended from time to time have clearly set out the methodology to calculate the O&M expenses for the Distribution and Retail supply business, the same is reproduced below: The actual audited O & M expenses for the financial year preceding the base year, subject to prudence check, shall be escalated at the escalation factor of 4% to arrive at the O & M expenses for the base year of the control period. The O&M expenses for the nth year of the control period shall be approved based on the formula given below. Where, O&Mn = (R&Mn + EMPn + A&Gn)* (1-Xn) + Terminal Liabilities R&Mn Repair and Maintenance Costs of the Distribution Licensee(s) for the nth year; EMPn Employee Costs of the Distribution Licensee(s) for the nth year excluding terminal liabilities; A&Gn Administrative and General Costs of the Distribution Licensee(s) for the nth year; [Nov-16] Page 25

28 The above components shall be computed in the following manner. (a) R&Mn = K * GFA * INDXn / INDXn-1 Where, K is a constant (expressed in %) governing the relationship between O&M costs and Gross Fixed Assets (GFA) for the nth year. The value of K will be 1.65% for DHBVN and UHBVN respectively for the entire control period; GFA is the average value of the gross fixed asset of the nth year. INDXn means the inflation factor for the nth year as defined herein after. (b) EMPn (excluding terminal liabilities) + A&Gn = (EMPn-1+A&Gn1)*(INDXn/ INDXn-1) Where, INDXn Inflation Factor to be used for indexing the Employee Cost and A&G cost. This will be a combination of the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) for immediately preceding year and shall be calculated as under: INDXn = 0.55*CPIn +0.45*WPIn. Note 1: For the purpose of estimation, the same INDXn value shall be used for all years of the control period. However, the Commission shall consider the actual values of the INDXn at the end of each year during the annual performance review exercise and true-up the employee cost and A&G expenses on account of this variation. Note 2: Any variation in employee cost and A&G cost on account of reasons beyond variation in INDXn shall be subject to the incentive and penalty framework specified in regulation 12. [Nov-16] Page 26

29 Note 3: As and when any material price index specific to power sector or a more relevant Index becomes available, the same shall replace the Index used for working out R&M cost. Note 4: Terminal liabilities shall be approved as per actual expenditure incurred by the distribution licensee or established through actuarial valuation for the ensuing year. Note 5: O&M expenses made on account of extraordinary situations (if any) shall be submitted to Commission for its approval. Such expenses shall be filed separately and will not be subjected to incentive and penalty framework. The approved amount by the Commission shall be trued up in the annual performance review. Note 6: Changes in the pay scales of employees necessitated on account of pay revision by Pay Commission or by the State Government orders shall be considered by the Commission for true-up during the annual performance review. (c) Xn is an efficiency factor for nth year The Value of Xn will be determined by the Commission in the MYT order for the control period. 3.9 Computation of Inflationary Indices The computation of applicable Inflationary Indices for the projection of O&M expenses and its sub-heads are as under: Table 9: Inflation factor for WPI & CPI WPI Inflation Month/Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average Increase FY % FY % FY % FY % CPI Inflation Month/Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average Increase FY % [Nov-16] Page 27

30 Month/Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average Increase FY % FY % FY % Period WPI CPI Total Weightage Avg Indexation for FY Avg Indexation n-1 (Index * Wt.) Avg Indexation for FY Avg Indexation n (Index * Wt.) Combined Inflation (Indxn/Indxn-1) 3.80% DHBVNL submits herewith that as per the calculations tabulated above, the applicable combined inflation indices, after taken considerations of weightage average ratios of WPI & CPI of 45:55 of FY and FY has been computed as 3.80 %, and the same has been put into the calculations of O&M Expenses, discussed in consecutive paras of this submission Employee Expenses The employee expenses primarily include costs towards salaries, dearness allowances, bonus, staff welfare and medical benefits, leave travel and earned leave encashment, and the terminal benefits in the form of pension, gratuity etc The Inflation Index of 3.80% as indicated in above table has been considered over FY to arrive at employee cost for FY The recommendations of the 7 th Pay Commission are being implemented in DHBVN and therefore the Employee cost has been projected for FY and FY incorporating the impact of the pay revision for regular and contractual employees Petitioner has projected the amount paid for terminal benefits, as Rs.400 Cr. for FY and Rs 385 Crores for FY The petitioner has made best [Nov-16] Page 28

31 effort to incorporate the expected impact of pay revision in employee cost, however, any variation on account of pay revision may be allowed to pass through at the time of truing up The capitalization of the employee cost for FY and FY has been considered as per the actual capitalization ratio of FY Particulars Table 8: Employee Expenses for FY & FY Actual FY Approved for FY RE for FY (Rs. Cr.) Projection for FY Employee cost excluding terminal benefits as per annual accounts of FY Estimated Employee cost (excluding terminal benefits) Terminal benefits DHBVN request the Hon ble Commission to approve total employee cost for FY and FY as per the above tabulated computation Repair & Maintenance Expenses The petitioner has projected R&M expenses for the FY and FY , as per the formula defined in HERC MYT Regulations, 2012 and same has been quoted again as below: (a) R&Mn = K * GFA * INDXn / INDXn-1 Where, [Nov-16] Page 29

32 K is a constant (expressed in %) governing the relationship between O&M costs and Gross Fixed Assets (GFA) for the nth year. The value of K will be 1.65% for DHBVN and UHBVN respectively for the entire control period; GFA is the average value of the gross fixed asset of the nth year. INDXn means the inflation factor for the nth year as defined herein after The petitioner has projected R&M expenses for the FY , on the actual average Gross Fixed Assets of DHBVNL for FY escalated with the inflation factor computed as per the methodology specifies by HERC MYT Tariff Regulations, 2012 as tabulated below: Table 9: R&M Expenses for FY & FY Particulars Approved for FY RE for FY (Rs. Cr.) Projection for FY Estimated R&M expenses R&M Expense has been 3.80% inflation factor for FY and as per MYT Regulations 2012, the K factor being considered 1.65% at average GFA DHBVN request the Hon ble Commission to approve total R&M expenses for FY and FY as per above submission Administration & General Expenses Administration and General expenses mainly comprise costs towards rent charges, telephone and other communication expenses, professional charges, conveyance and travelling allowances and other debits As per HERC MYT Regulations, 2012, the Inflation factor of 3.80% has been considered over FY to arrive at A&G cost for FY and so on. The computation of A&G cost considering actual expenses of FY , works out to as below: Table 10: A&G Expenses for FY and FY [Nov-16] Page 30

33 Particulars Actual Approved for FY RE for FY (Rs. Cr.) Projection for FY A&G Expenses as per annual accounts of FY Estimated A&G expenses A&G Expense has been 3.80% inflation factor for FY (as per MYT Regulations, 2012) DHBVN prays to the Hon ble Commission to approve total A&G expenses for FY and FY as per above submission Summary of O&M Expenses The summary of projected O&M expenses for FY is tabulated below for reference: Sr. Table 11: Summary of O&M Expenses for FY and FY Particulars Approved for FY RE for FY Rs. Cr Projection for FY Employee Expense Administration & General Expense Repair & Maintenance Expense Terminal Liability Total DHBVN prays the Hon ble Commission to approve total O&M expenses for FY and FY as tabulated above Capital Expenditure The Hon ble Commission has approved a Capex Plan of Rs Cr. for FY However, based on the available half yearly details of actual capital expenditure done by DHBVN and realistic estimate for the second half of FY , it is [Nov-16] Page 31

34 estimated to undertake capital expenditure of Rs.825 Cr. for FY and Rs.1200 Cr. for FY The detailed expected capital expenditure for FY and FY has been given as below: [Nov-16] Page 32

35 Table 12: Capital Expenditure for FY and FY Name of work Actual for FY Revised Estimate for FY Projection for FY AT&C loss reduction plan a Procurement of single phase meters for replacement of defective meters and release of new connections b Procurement of three phase meters for replacement of defective meters and release of new connections c LT Connectivity of already executed HVDS works d Power Factor Improvement (Providing automatic power factor correctors) Load Growth schemes a Creation of new 33 kv sub-stations b Augmentation of existing 33 kv sub-stations c Erection of new 33 kv lines d Erection of new 11 kv lines e Augmentation of existing 33 kv lines f Bifurcation of 11 kv feeders (Work of bifurcation of feeders, augmentation of ACSR) and segregation of Rural Urban load g Material required for release of Non-AP connections & replacement of old assets h Release of Tube well connection on turnkey basis and segregation of AP load from Rural Urban feeders Procurement of power transformers and allied I equipment such as 33 kv CTs, 33 kv PTs, 33 kv and 11 kv VCBs, 33 kv Control and Relay Panels etc. J Release of BPL connections under RGGVY schemes k Mahatma Gandhi Gramin Basti Yojna R-APDRP schemes 0 a Implementation of R-APDRP (Part-A) including SCADA b Implementation of SCADA under R-APDRP (Part-B) in Faridabad town c Relocation of energy meters of DS & NDS consumers outside their premises in Meter Pillar boxes d Civil Works System Strengthening Works under IBRD loan and IBRD equity a Under IBRD Loan b Under IBRD Equity Other works d Revamping of existing Meter Testing labs. at Dadri, Sirsa, Hisar, Faridabad & Gurgaon [Nov-16] Page 33

36 Name of work Actual for FY Revised Estimate for FY Projection for FY e Maintenance free earthing using 'Ground Enhancing Material' for Distribution Transformers, Meter Pillar Boxes and H-pole etc. f Installation of meters on 33 kv Incomers at sub-stations for energy auditing g Providing RF Meters h AMI on large NDS & LT consumers having load about 10 kw (IBRD funded work) i Other works for system improvement - Procurement of IT Equipment & Softwares j Smart City Gurgaon k Setting up of a new testing lab for materials i.e. cable, conductors, transformer oil, distribution transformers etc. at Hisar. l Strengthening of 11 kv & LT Network of bhiwani & jind Town under DHBVN ( Total project cost Rs 75 Cr. To be funded from world bank) m Relocation of energy meters of DS & NDS consumers outside their premises in Meter Pillar boxes n Civil Works Shifing of HT line (33 kv), passing over authorized/unauthorized colonies under jurisdiction of DHBVN. Note:-Hon ble Chief Minister has made an o announcement on the floor of Haryana Vidhan Sabha that all dangerous wires of 33 KV and above levels passing over the various colonies shall be removed. Accordingly, Worthy ACS/Power, Govt. of Haryana, Power Deptt. directed to prepare the detailed scheme in this regar. Also, Worthy ACS/Power, Govt. of Haryana, Power Deptt. has desired that it may be made part of the CAPEX Plan and approval of HERC be obtained. p Improvement works under loss reduction plan, replacement of iron pole and providing of PAT q Mhara gaon jagmag gaon scheme Total B) CAPEX under UDAY (Ujjwal DISCOM Assurance Yojana) Compulsory Feeder and Distribution Transformer a metering Feeder meters have been provided on 100% feeders AMR is already implemented on 1078 feeders. AMR on 4535 Number feeders is to be provided b DT meters with AMR have been provided on DTs in areas under RAPDRP Part - A for meters. DT Meters for left out urban areas is to be provided approx DTs [Nov-16] Page 34

37 c d e f g h i j Name of work Actual for FY Revised Estimate for FY Projection for FY Boundary meters for Villages in Rural Areas (3648 number of villages i.e meters) DT Meters for rural areas is to be provided for reduction of AT&C losses to 30% Engagement of IT firm for Roll out of R-APDRP Application to Non R-APDRP Areas, Procurement and installation of IT hardware at end locations of Sub-Divisions, Providing MPLS connectivity at end location Consumer indexing and GIS mapping of losses # Upgrade or change of transformers / meters etc.(the activities under this scheme have already been covered under Sr No 1a, 1 b, 2g & 3a) Replacement of bare conductor with LT- AB cable in theft prone areas Replacement of defective meters and Relocation of energy meters of DS & NDS consumers outside their premises in MCB (Procurement of 1X1 & 4X1 MCBs for 1 Ph Meters, 1X1 MCBs for 3Ph Meters, 2cx10 mm2 and cx16 mm2 LT PVC armoured/ un-armoured cables and meters). Smart metering of consumers consuming above 200 units AMI Project for smart meters already under implementation in Gurgaon and Faridabad City for about consumers and is expected to be completed by December 2017 (under World Bank Project). Further Roll out will be based on the results. Expected Cost for the project is around Rs 105 Crores) Total # - Cost for the Upgradation or change of transformers and meters already taken under CAPEX planned by DHBVN Grand Total The petitioner requests Hon ble Commission to approve the projected capital expenditure for FY and FY , as tabulated above CWIP & GFA workings Capital Work in Progress for the control period has been projected on the basis of estimated capital expenditure and the capitalization schedule assuming 70% transfer of total Capex (including the CWIP carry forwarded from the previous year and capex added [Nov-16] Page 35

38 during the year) to fixed assets and 30% transfer of total Capex to capital works in progress (CWIP) for each year of operation While estimating CWIP, it is assumed that 70% of the opening balance of CWIP and fresh capital investment shall be capitalized during each year of operation Based on the estimated capital expenditure and capitalization schedule, the gross fixed assets (GFA) are estimated for each year of the Control Period. The category wise additions have been estimated on the basis of the category wise additions made during the previous year The CWIP & GFA of DHBVN for FY and FY is shown in the table below: Table 13: CWIP for FY and FY Sr. No Particulars RE for FY Projection for FY CWIP (Rs. Cr.) (Rs. Cr.) 1 Opening CWIP Capex During the year , Less: Transferred to GFA 1, , IDC during the year Closing CWIP Table 14: GFA for FY and FY Sr. No Particulars RE for FY Projection for FY Gross Fixed Assets (GFA) (Rs. Cr.) (Rs. Cr.) 1 Opening GFA 6, , Add: Transferred from CWIP 1, , Total GFA 7, , Less: Retirement/Disposal of Assets Closing GFA 7, , The petitioner requests Hon ble Commission to approve the estimated CWIP and GFA figures for FY and FY , as tabulated above. [Nov-16] Page 36

39 3.16 Return on Equity As per Regulation 20.1 of HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, 2012; the rate of return on equity shall be decided on the basis of overall performance subject to a ceiling of 14% provided that the ROE shall not be less than the net amount of incentive and penalty The computation of return on equity for FY and FY is tabulated below: Particulars Table 15: Return on Equity for FY & FY Approved Estimated (FY ) Rs. Cr. Projected (FY ) Opening Equity , , addition Closing Equity , , Average , , Rate of RoE 14% 14% 14% Total RoE DHBVN in its APR and ARR Tariff petition submits that RoE is the vital source of funding a portion of Capital Expenditure planned by the Utility in order to improve the system and to achieve further loss reduction. Disallowing RoE on the context of financial performance deprives the Discom of an indispensable source of internal accrual which is more important in view of the financially constrained position that makes it very difficult for it to borrow funds from the market to fund basic capital expenditure The petitioner requests Hon ble Commission to approve the computation of return on equity for FY and FY , as tabulated above. [Nov-16] Page 37

40 3.17 Interest & Finance Charges As per Regulation 21 of HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under HERC MYT Regulations, 2012 as amended from time to time; Interest on Loan Capital for existing loans shall be computed loan-wise and for new loans it shall be equal to the base rate of SBI as applicable on 1st April of the relevant financial year. The relevant regulations are provided here for ease of reference: Existing Loans (i) Interest on loan capital shall be computed loan-wise for existing loans arrived in a manner specified in Regulation 19 and shall be as per the rates approved by the Commission. (ii) The loan outstanding as on 1 st April of each financial year shall be worked out as the gross loan in accordance with regulation 19 by deducting the cumulative repayment as admitted by the Commission up to 31 st March of previous financial year from the gross normative loan; (iii) The rate of interest shall be the weighted average rate of interest on institutional loans calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the project. In case the weighted average rate is not available, the interest rate approved by the Commission in its earlier tariff order shall be allowed. Provided that if there is no actual loan for a particular year but normative loan is still outstanding, the last available weighted average rate of interest shall be considered; Provided further that if the generating plant/project does not have actual loan, then the weighted average rate of interest of the generating company/licensee as a whole shall be considered (iv) The interest on loan shall be calculated on the normative average loan of the year by applying the weighted average rate of interest; [Nov-16] Page 38

41 (v) The generating company and the licensee shall from time to time review their capital structure i.e. debt and equity and make every effort to restructure the loan portfolio as long as it results in net savings on interest. The costs associated with such re-financing shall be borne by the beneficiaries and the net savings (after deducting the cost of refinancing) shall be subjected to incentive / penalty framework as mentioned in the regulation 12 which shall be dealt with at the time of mid-year performance review/true-up. (vi) The changes to the loan terms and conditions shall be reflected from the date of such re- financing and benefit passed on to the beneficiaries; (vii) In case of any dispute relating to re-financing of loan, any of the parties may approach the Commission with proper application along with all the relevant details. During the pendency of any dispute, the beneficiaries shall not withhold any payment on account of orders issued by the Commission. (viii) In case any moratorium period on repayment of loan is availed of by the generating company or the licensee, depreciation provided for in the tariff during the years of moratorium shall be treated as repayment during those years and interest on loan capital shall be calculated accordingly New Loans (on or after ϭ st April 2013) (i) Rate of interest on new loans shall be equal to the base rate of SBI as applicable on 1 st April of the relevant financial year plus an appropriate margin that realistically reflects the rate at which generating company or the licensee can raise loans from the market. They shall however, be required to submit due justification to the Commission for the terms and conditions of the loans raised by them. Provided that interest and finance charges on works in progress shall be excluded and shall be considered as part of the capital cost; [Nov-16] Page 39

42 Provided further that neither penal interest nor overdue interest shall be allowed for computation of Tariff (ii) Any variation above or below the allowed interest rate shall be subject to the incentive and penalty framework specified in regulation 12. (iii) The amount of loan shall be arrived in the manner as specified in regulation 19 and shall be based on the approved capital investment plan. (iv) In case any moratorium period on repayment of loan is availed of by the generating company or the licensee, depreciation provided for in the tariff during the years of moratorium shall be treated as repayment during those years and interest on loan capital shall be calculated accordingly It is submitted that the Government of India has notified Ujwal Discom Assurance Yojana (UDAY) scheme for operational and financial turnaround of power distribution companies (DISCOMs), on 20th Nov 2015 under which State shall take over 75% of Discom debt as on 30th September, 2015 over two years 50% of Discom debt shall be taken over in FY and 25% in FY The implementation of UDAY leads to changes in the projections of interest and finance charges for the Discoms which had an impact on the revenue requirement of the Discoms It is submitted that the first tranche of UDAY bonds against 50% of the debt as on amounting to Rs crore has been issued, after the finalization of the loans to be taken over under this tranche and the terms and conditions of the UDAY bonds. Now the second tranche has also been taken over towards 25% of the debt The major provisions of the UDAY scheme that have been taken into the account while preparing the revised ARR: 75% of outstanding debt as on to be taken over in the form of equity / loan / Grant to DISCOMS. Take-over in year 1: 50%, Year 2: 25% [Nov-16] Page 40

43 Take-over assumed at the end of second quarter from year 2 The Bonds have been issues at an average coupon rate of 8.19% In line with the above Regulation as well as considering the impact of UDAY scheme, DHBVN has adopted the following methodology to estimate the Interest & Finance Charges for the control period: Table 16: Existing Working Capital, Operation Loss and REC/PFC Loans for FY WCTL FY Opening Balance as on loans during FY ROI Planned Receipt Principal Repayment Closing Balance as on Interest during the Year Bank Loan 4, % % , Bank Bond under FRP 2, % - 2, PFC TFL 2, % % , REC TFL % % , HVPNL Bonds %- 9.45% State Govt.loan uder UDAY % 4, , Loan from UHBVN % 2, , CC./OD % % Total WCTL 10, , , , , Capex Loan REC Scheme 1, REC IBRD % % , %- 11.5% [Nov-16] Page 41

44 FY Opening Balance as on loans during FY ROI Planned Receipt Principal Repayment Closing Balance as on Interest during the Year REC-RGGVY % PFC % PFC-RAPDRP % Bank uder Electrification scheme % World Bank LIBOR NCRPB % NABARD %- 7% APDRP % % PMGY %- 12% Total Capex 1, , G.Total 12, , , , , Other Interest &Finance charges 1.62 Interest on Consumer Security Total Loan with Interest Cost 1, Table 17: Existing Working Capital, Operation Loss and REC/PFC Loans for FY & FY [Nov-16] Page 42

45 FY WCTL Existing loans for first half of FY16-17 ( to ) Opening Balance as on ROI Planned Receipt Principal Repayment Closing Balance as on Interest upto Bank Loan % % Bank Bond under FRP % PFC TFL 1, % % - 1, REC TFL 1, % % - 1, HVPNL Bonds %- 9.45% State Govt.loan uder UDAY 4, % 1, , Loan from UHBVN 1, % 1, , , CC./OD % % Total WCTL Capex Loan REC Scheme 1, % % , REC-RGGVY % PFC % PFC-RAPDRP % Bank under Electrification scheme % World Bank LIBOR NCRPB % %- APDRP % [Nov-16] Page 43

46 FY Existing loans for first half of FY16-17 ( to ) Opening Balance as on PMGY 0.66 ROI Planned Receipt Principal Repayment Closing Balance as on Interest upto %- 12% Total Capex G.Total Estimates of loan for second half of FY16-17 ( to ) Opening Balance as FY October on WCTL Bank Bond under FRP HVPNL Bonds1 HVPNL Bonds HVPNL Bonds State Govt.loan under UDAY1 4, State Govt.loan under UDAY State Govt.loan under UDAY State Govt.loan under UDAY loan from banks (CC/OD) bonds (HVPNL) bonds (HVPNL) Capex loan ROI 9.80% 9.45% 9.83% 8.62% 8.21% 8.18% 8.14% 8.06% 10.95% 9.79% 9.45% 12.12% Planned Receipt Principal Repayment Closing balance as on Interest booked (Oct 16 to Mar 17) , [Nov-16] Page 44

47 Estimates of loan for second half of FY16-17 ( to ) FY October FRP bonds Opening Balance as on Grant in aid - State Govt. loan 31/3/ State Govt. loan 15/6/ State Govt. loan 30/06/ State Govt. loan 4/07/ CC./OD ROI 9.80% 0.00% 8.21% 8.18% 8.14% 8.06% 10.90% Planned Receipt Principal Repayment Closing balance as on Interest booked (Oct 16 to Mar 17) Total WCTL Capex Loan REC Scheme REC-RGGVY PFC PFC-RAPDRP Bank under Electrification scheme World Bank NCRPB APDRP PMGY 1, % % , % 9.00% 9.00% 9.75% LIBOR % % % %- 12% Total Capex 2, , [Nov-16] Page 45

48 Estimates of loan for second half of FY16-17 ( to ) FY October Opening Balance as on ROI Planned Receipt Principal Repayment Closing balance as on Interest booked (Oct 16 to Mar 17) G.Total 10, , , FY Opening Balance as on Projection of loans for FY ROI Planned Receipt Principal Repayment Closing balance as on Interest booked during the year WCTL Bank Bond under FRP % HVPNL Bonds % HVPNL Bonds % HVPNL Bonds % State Govt.loan uder UDAY % State Govt.loan uder UDAY % State Govt.loan uder UDAY % State Govt.loan uder UDAY % loan from banks (CC/OD) % bonds (HVPNL) % bonds (HVPNL) % Capex loan % FRP bonds % Grant in aid % State Govt. loan 31/3/ % State Govt. loan 15/6/ % State Govt. loan 30/06/ % State Govt. loan 4/07/ % CC./OD % % [Nov-16] Page 46

49 FY Opening Balance as on Projection of loans for FY ROI Planned Receipt Principal Repayment Closing balance as on Interest booked during the year Total WCTL Capex Loan REC Scheme % REC-RGGVY % PFC % PFC-RAPDRP % Bank under Electrification scheme % World Bank LIBOR NCRPB % APDRP % % PMGY %- 12% Total Capex G.Total Other Interest &Finance charges 3.00 Interest on Consumer Security Total Loan with Interest Cost Interest on Capex Loan to be raised for the ensuing control period: The increase in the loans for capital expenditure are estimated as per the capital structure for funding of assets and debt to be raised as per the Capital Investment Plan Interest on Consumer Security Deposit: The petitioner submits that Interest on Security Deposit amount has been claimed as per the provision of MYT Regulations, As per Para 21.4 of MYT Tariff Regulations, dated 26/12/2012, [Nov-16] Page 47

50 Interest shall be allowed on the amount held as security deposit held in cash from Transmission System Users, Distribution System Users and Retail consumers, at the Bank Rate as on 1st April of the financial year in which the petition is filed provided it is payable by the transmission/distribution licensee. Hence, the Petitioner has considered Interest for Security Deposit as per prevailing RBI Bank Rate of 7.75% as on 1 st April, The increase is consumer security deposit for FY and FY is projected on the basis of actual increase in past two years. Table 18: Interest on Consumer Security Deposit for FY and FY Sr. Particulars Actual for FY RE for FY Projected for FY Opening Security Deposit , , Addition during the year Cumulative Security Deposit at the end of year 1, , , Total 1, , , Average applicable amount to pay interest 1, , , Bank Rate (as on ) 7.75% 7.75% 6 Interest on Security Deposit Repayment of Working Capital Loans: The Petitioner requests the Hon ble Commission to kindly allow the repayment of FRP loans to be considered under Interest and Finance charges as an exceptional scenario. It is further submitted that these are different from capex wherein the repayment of loans are funded through the depreciation allowed by the Hon ble Commission Interest Capitalized: The interest capitalization ratio for FY and FY is considered same as per the actual capitalization ratio for FY The summary of total interest and finance charges for FY and FY is given below: Table 19: Interest & Finance Charges for FY and FY Sr. Particulars Actual for FY RE for FY Projected for FY Total Interest and finance charges on short term loan 1, Interest on Capex Loan [Nov-16] Page 48

51 Sr. Particulars Actual for FY RE for FY Projected for FY Total Interest and Finance Charges 1, , Less: Interest and Finance Charges capitalized during year Net Interest and Finance Charges 1, , Interest on security deposit Guarantee fee (2%) Total Interest and Finance Charges (Cr.) 1, , The petitioner requests Hon ble Commission to approve the estimated interest and finance charges for FY and FY , as tabulated above Depreciation For FY and FY , DHBVN has estimated depreciation charges on the basis of estimated additions in GFA as per the capital investment plan for the FY The transfer of total Capex to fixed asset has been considered as 70%. Based on the Capex done from April 2016 to September 2016, the Capital expenditure is estimated to be Rs. 825 Cr. in FY and Capital expenditure during FY has been projected as Rs Cr For the purpose of projecting depreciation charges for FY , the licensee has considered the category-wise actual depreciation rates (as a percentage of opening balance of asset-class-wise GFA for that year) as per HERC MYT Tariff Regulations, 2012 as amended from time to time. The addition of the assets in different heads has been done on the basis of actual ratio of FY The following depreciation rates have been used for calculating depreciation: Table 23: Asset Wise Depreciation Rate Asset Type Rate of Depreciation Land - Buildings 3.34% Plant & Machinery 5.28% Vehicle 18.00% Furniture and fixtures 6.33% The following depreciation workings have been provided for the reference: [Nov-16] Page 49

52 Particulars Table 24: Depreciation for FY Opening assets during the year Addition in GFA in FY Gross Block as on Rate of deprecia tion (%) Depreciation during the year Land & Land Rights Buildings & Civil Structure % 6.52 Plant & Machinery 6, , % Vehicles % 2.47 Furniture & Fixture % 1.13 Less: Depreciation on assets contributed by Consumers and grants Total (Rs. Cr.) 6, , Particulars Table 20: Depreciation for FY Opening assets during the year Addition in GFA in FY Gross Block as on Rate of deprecia tion (%) Depreciation during the year Land & Land Rights Buildings & Civil Structure % 7.57 Plant & Machinery 7, , , % Vehicles % 2.77 Furniture & Fixture % 1.32 Less: Depreciation on assets contributed by Consumers and grants Total (Rs. Cr.) 7, , , The petitioner requests Hon ble Commission to approve the depreciation computed based on the estimated addition to GFA for FY and FY , as tabulated above Non-Tariff Income The Non-Tariff income mainly comprises the following elements: Interest on staff loans & advances; Interest on fixed deposits with banks & company etc; Meter Service Rental; [Nov-16] Page 50

53 Recovery of theft of Power; Interest Income on Provident Fund; Misc. Charges from consumers; Income from staff welfare activities; Miscellaneous receipts; Rent from Residential Building; The petitioner has estimated non-tariff income for FY and FY at escalation rate of 5% based on the actuals of FY The year wise non-tariff income is given below: Table 21: Non- Tariff Income for FY and FY Rs. Cr Particulars Approved for FY RE for FY FY Non-Tariff Income The Petitioner further submits that delayed payment surcharge is collected against the receivables from the consumers that are not received in time. As there is a delay in receiving the revenue, the Nigam has to procure additional working capital. Therefore, the revenue received on account of delayed payment surcharges is not an income of the Nigam, rather it s a carrying cost recovered from consumers to pay the interest on the increased portion of working capital which occur because of delay in receiving the revenue. Therefore, it is requested that the revenue from delayed payment surcharge should not be considered as income of the Nigam DHBVN prays the Hon ble Commission to approve non-tariff income for FY and FY as tabulated above after adjusting the income on account of delayed payment surcharge True up of RE subsidy for FY The total agricultural sales approved by the Hon ble Commission in FY were and against the same a subsidy of Rs for UHBVN and DHBVN was allowed. This amounts to a per unit subsidy of Rs /unit. Based on the feeder data, the actual agricultural sales, following HERC methodology of 16% losses on AP Feeder data emerges to 8, MUs for UHBVN and MUs for DHBVN. [Nov-16] Page 51

54 Therefore, for total sales of MUs, the eligibility of subsidy emerges to Rs Cr. Consequently, post true up, the surplus subsidy emerges to Rs Crores Table 22: True up of RE subsidy for FY Particulars Total RE subsidy allowed by HERC in Tariff order for (Rs Crs) 6, Total Agricultural sales approved by HERC in T.O (Mus) 8, Approved Per unit Subsidy (Rs./unit) 7.23 Agriculture Sales based on Feeder data minus 16% losses (Mus) UHBVN 3, Agriculture Sales based on Feeder data minus 16% losses (Mus) DHBVN 4, Agriculture Sales based on Feeder data minus 16% losses (Mus) 8, Eligibility of subsidy based on actual sales of (Rs. Crs) 6, Subsidy Outstanding/(Surplus) (Rs. Crs) Revenue Estimation The revenue calculations have been done considering the Average Billing Rate (ABR) of from April to September 2017 and the category wise sales estimated for FY Category wise ABR is estimated based on the actual revenue collected divided by actual units billed in first half of FY The ABR achieved as above is being used for revenue estimation for FY and FY , the details of revenue calculations have been given below: [Nov-16] Page 52

55 Table 23: Revenue Estimations for FY FY Consumer Category Sales (MUs) Average Billing Rate Energy Charge (Rs. Per unit) (Cr.) Domestic 4, , Non Domestic 2, , HT Industry 4, , Lift Irrigation LT Industry Agriculture 5, Bulk Supply Railway Traction DMRC 0.00 Street Lighting Public Water Works , , Fixed Charge Total 19, , Collection Efficiency 99% Revenue (Cr.) 9, Table 24: Revenue from Sale of Power for FY FY Consumer Category Sales (MUs) Average Billing Rate Energy Charge ( Rs. Per unit) ( Cr.) Domestic 4, , Non Domestic 3, , HT Industry 4, , Lift Irrigation LT Industry 1, Agriculture 5, Bulk Supply Railway Traction DMRC 0.00 Street Lighting [Nov-16] Page 53

56 Consumer Category Sales (MUs) FY Average Billing Rate ( Rs. Per unit) Energy Charge ( Cr.) Public Water Works , , Fixed Charge 1, Total 21, , Collection Efficiency 99% Revenue (Cr.) 10, It is submitted by petitioner that above computed revenue is based on the Average Billing Rate of FY ; and revised projections of sales for respective years and thus, the Hon ble Commission is requested to approve the same Revenue from inter-state sales Revenue from inter-state sales projected for FY and FY has been considered at 80% of average variable power purchase cost Table 25: Revenue from Inter-state Sale of Power for FY 17 and FY 18 Particulars FY FY Inter State Sales (MU) Average Variable Power Purchase Cost (Rs./kWh) Total Revenue (Rs. Cr.) Hon ble Commission is requested to approve the same Agriculture Subsidies The Agriculture Subsidy for the FY has been taken after escalating the approved subsidy of FY by 5%. Impact of Truing up of subsidy of FY has also been considered in FY [Nov-16] Page 54

57 3.24 Revenue from FSA The Nigam pursuant to directive of Hon ble Commission given vide the tariff order dated has filed replies vide SE/RA, UHBVN, Panchkula Memo No. CH-55/SE/RA/N/F- 24/VOL-XI (A) dated The Nigam has also filed Review petition against the impugned tariff order dated vide Memo No. CH-10/SE/RA-557 dated The Nigam has proposed levy of FSA across the categories at the rate determined vide order dated against the confirmed liabilities rising on account of APTEL judgements on Change in Law, CoD and Force Majeure. The Nigam has considered an income of FSA against these liabilities in FY and FY i.e. Rs Cr and Rs Cr. Chapter Performance Review for FY and Annual Revenue Requirement for FY This chapter summarises the aggregate revenue requirement for the period FY to FY and also provides the break-up into Wheeling and Supply business on the basis of the Allocation adopted by DHBVN The following table summarizes the estimated and projected Aggregate Revenue Requirement (ARR) of DHBVN for FY and FY respectively. Table 26: ARR for FY and FY Summary of Actual ARR Sr. Particulars Revised Estimate for Projected for FY FY Total Power Purchase Cost 13, , Power Purchase Expenses 11, , Inter-state transmission charges Intra-state transmission charges Operations and Maintenance Expenses 1, , Employee Expense Administration & General Expense [Nov-16] Page 55

58 Summary of Actual ARR Sr. Particulars Revised Estimate for Projected for FY FY Repair & Maintenance Expense Terminal Liability Depreciation Total Interest & Finance Charges 1, Return on Equity Capital Prior Period Expense 7 Other Debits Total Expenditure 16, , Less: Non Tariff Income Net Aggregate Revenue Requirement 16, , Total Revenue 10, , Revenue from Interstate sales Revenue from Intrastate sales 9, , Regulatory (Gap)/Surplus (5,713) (5,532) 14.1 Govt. subsidy 2, , True-up of Subsidy FY True-up of Subsidy FY Revenue (Gap)/Surplus after Subsidy (3,140) (2,943) 17 Revenue (Gap)/Surplus after FSA (1,011) (1,004) 17.1 FSA of Order Dated , , p [Nov-16] Page 56

59 Petition for APR FY and ARR for FY for DHBVNL Table 27: Wheeling and Retail ARR for FY and FY ARR of DHBVN Criteria FY FY Particulars Wheeling Retail Wheeling Retail Wheeling Retail Power Purchase Cost 0% 100% - 13, , Employee Cost 48% 52% A&G Expenses 42% 58% R&M expenses 70% 30% Terminal Liability 48% 52% Depreciation 82% 18% Interest on Long Term Loan 90% 10% Interest on Short Term Loan 10% 90% Interest on security Deposit 10% 90% ROE 90% 10% Non Tariff Income 11% 89% Net ARR 1, , , , Revenue (Interstate) 0% 100% Revenue (Intrastate) 29% 71% 2, , , , Agriculture Subsidy 0% 100% - 2, , Interest from FSA 0% 100% - 2, , Carrying Cost Total Revenue 2, , , , Gap to be addressed ( after conceding FSA Income ) 1, (2,900) 1, (3,197) Thus, the Hon ble Commission is requested to approve the cumulative revenue gap from FY to FY after taking into consideration the revenue gaps, holding costs and subsidies to be availed.. [Nov-16] Page 57

60 Petition for APR FY and ARR for FY for DHBVNL Chapter 5. Recovery of Gaps 5.1 Recovery of Gaps The ARR has been prepared on the basis of actual wherein the foreseen expenses and revenue have been projected. The Hon ble Commission is requested to continue with the current levels of tariff and FSA based on which the total gap after Truing-up of FY , revised estimates of FY and FY has been computed. The Commission is requested to all the revenue gap of previous years along with carrying cost The resultant gap after continuation of current levels of tariff and FSA will be met through the OFR as proposed under UDAY. Nov-16 Page 58

61 Petition for APR FY and ARR for FY for DHBVNL Chapter 6. Prayers to the Commission: The Nigam respectfully prays that the Hon ble Commission may: Take the accompanying current APR filing of DHBVN on record and accept the petition for filing including requests for true up of expenses and revenue for FY , Reestimated ARR gap for FY and projected ARR gap for FY ; To file any additional submissions and revised petition after the decision on the review petition filed against the order dated or otherwise till the date of extended period i.e (two months from ) as already submitted. To approve reasonable return on equity as proposed. Condone any inadvertent omissions/errors/shortcomings and permit DHBVN to add/change/modify/alter this filing and make further submissions as may be required at a future date. Pass such Order, as the Hon ble Commission may deem fit and appropriate keeping in view the facts and circumstances of the case submitted by the Petitioner. To Allow fixed charges of Power purchase as per the actual for FY , and that projected for FY and FY as same is not the function of T&D losses and must not be allowed based on the normative power purchase. To continue the current levels of Tariff and FSA to meet the expenses while the gap will be funded by OFR as proposed under UDAY scheme. Hisar, Haryana Dated: Dakshin Haryana Bijli Vitran Nigam Limited Petitioner Nov-16 Page 59

62 Petition for APR FY and ARR for FY for DHBVNL Annexure 1: Annexure of directives Sr. No. Description of Directive 1 The HERC vide its Regulation (Standards of Performance for Distribution Licensee) Regulations 2004, has specified the failure rate of distribution transformers as maximum 5% for urban area DTs and maximum 10% for rural area DTs.The distribution licensee shall maintain a proper record of failure of the distribution transformers and submit the same in the quarterly report to the Commission. In Commission s order dated 07th May, 2015 on APR petition of the licensees for the FY and revised ARR for FY , the licensees were directed examine the cause of damage of DTs in the areas where it is above the norms and endeavour to bring down the distribution transformer damage rate below the prescribed limits by ensuring proper maintenance and protection In compliance of the above directive, the licensee DHBVNL has not submitted any satisfactory reply except that requisite instructions have been imparted to all the S.Es vide Sales Instruction No. 10/2015. To summarize, the cause of damage of DTs has not been examined and intimated to the Commission. As per Regulation 65.1 (iii) of Haryana Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations 2012, the distribution licensee shall maintain a Reply All efforts are being made to reduce the damage rate of DTs in urban & rural area. The performance /status of each circle (subdivision wise) is being reviewed/ monitored at management level regularly. The causes/ reasons for damage of distribution T/F have been got analysed from field offices and deliberated during ORC meetings. The main reasons for damage of DTs noted are as under:- 1. Overloading of DTs in Agriculture due to nondeclaration of load. 2. Poor Maintenance 3. Improper earthing 4. Loose joints/connection of HT/LT side. 5. Unauthorized Kundi connection 6. Overheating 7. Spark in G.O Switch 8. Low oil level in DTs 9. Improper phase balancing of load on DTs. 10. Oversize fuse on HT and LT. The preventive measures are being taken to protect the T/F s from damage due to above reasons. Nov-16 Page 60

63 Petition for APR FY and ARR for FY for DHBVNL proper record of failure of the distribution transformers and submit the same in the quarterly report to the Commission. The licensees, however, have failed to do so in spite of issuing directions in Commission s order on ARR of the two licensees for the control period FY to FY and also in Commission s order dated 07th May, 2015 on their APR petitions for FY The Discoms are again directed to submit these quarterly reports in future. 2 Non replacement of defective energy meters by the distribution licensees: In Commission s order dated 07th May, 2015, the following targets were assigned to the licensees for replacement of defective energy meters. a. Single phase meters: The number of defective energy meters should not exceed 10,000 at any time after December, b. Three phase meters: The number of defective energy meters should not exceed 500 at any time after December, The two licensees are nowhere to these targets except that in respect of UHBVNL, the number of defective three phase energy meters is The licensees are, therefore, directed to submit a detailed report within two months from the date of issue of this order, indicating the detailed reason During FY , DTs damaged rate (excluding warranty period) in urban and rural areas is 3.98% &6.14% respectively. Further, the damage rate of DTs (excluding warranty period) in urban & rural area for FY (upto September 2016) is 2.11% &4.28 % respectively. From the above it is evident that Nigam has controlled the damage rate of transformers in rural and urban area within limit in the previous financial year. Further, the summer seasons for current financial year is already over and the remaining period of the year is a lean period, thus DHBVN endeavours to restrict the damage rate within the prescribed norms. The meter being defective with passage of time in the system and their replacement is a continuous process. In DHBVN there are about 12 Lakh consumers in urban area and about 18 Lakhs in rural area. All efforts are being made to replace the defective meters with main thrust on urban area. For replacement of defective meters in urban area feeder sanitization scheme has been launched under UDAY under which all the meters are being relocated outside and defective meters are being replaced. In rural area similar activity of relocation of meter outside and replacements of defective meter is being carried out under Mhara Gaon Jagmag Gaon scheme. During current FY no defective meters have been replaced upto September, 16 Nov-16 Page 61

64 Petition for APR FY and ARR for FY for DHBVNL for not meeting with the targets assigned failure to do so shall attract penal action as per the Electricity Act, The total population of defective meters as on is given as under. Area Single Phase Three Phase Urban Rural Total Non replacement of Electro-mechanical Meters: In Commission s order 07 th May, 2015 on APR petitions of the licensees for FY , the licensees were directed to replace these Electro-mechanical meters by 31st March, 2016 by making all necessary arrangements. But as per progress report, the number of electro-mechanical meters have reduced only by about in a span of 9 months. The licensees are directed to file, within 3 months, the detailed reasons for not complying with the directive of the Commission. A failure to do so shall attract penal action as per the Electricity Act, 2003 The Nigam intends to replace the defective meter through above scheme in urban and rural area. It has been noticed that about 5% of the total meters remain defective in the system, being a continuous process of occurring defective with the passage of time. The status of replacement of electromechanical meters during FY upto September, 2016 is as under:- Year (upto Sept. 16) No. of Electromechanical meters replaced with electronic meters No. of Electromechanical meters Nov-16 Page 62

65 Petition for APR FY and ARR for FY for DHBVNL 4 Procurement of single phase and three phase LT meters: This Tariff Policy, 2016 specifies that the Commission shall mandate for smart meters for consumers having monthly consumption above 500 units at the earliest but not later than and for consumers having monthly consumption above 200 units by The licensees are, therefore, directed that in future only the smart meters, which can be configured both for pre-paid and post-paid functions, be procured. The normal meters which are in the pipeline may be provided in the rural areas only. 5 The Commission Orders that the Discoms may continue with the revised Tatkal Scheme for any applicant for AP connection, who has applied after and who is desirous of obtaining a tube well connection expeditiously can opt for a connection under Tatkal facility subject to the condition that such applicant shall pay Rs. 1 Lac besides the estimated cost of releasing such electricity connection for jumping the queue. This is subject to the condition that the release of connections under Tatkal shall in no way affect the number of tube-well connections to be released under general category. It is submitted that most of the electro mechanical meters pertain to rural area which contribute only 7-8% to the total revenue. Due to practical scenarios, Nigam is focusing primarily on Urban consumers. In urban area all the electromechanical meters will be replaced by In rural area, electromechanical meters are being replaced under Mhara Gaon Jagmag Gaon scheme. The smart meters technology is still in the evolving stage. Also at present the cost of smart meters is very high in the stage of 5-6 times the static meters. A pilot project is being implemented in Panipat by NEDO and also DHBVN is planning to launch smart meter project in Gurgaon under smart Grid Projects. Thereafter final decision will be taken. Since large numbers of meters become defective on daily/monthly/yearly basis, it may not be possible to immediately switch over to smart meters, which are not freely available at competitive rates. The Nigam has already extended the facility of Tatkal connection to AP consumer irrespective of their date of application vide Sales Circular No. D-30/2015. The connections to be released under the said scheme shall in no way affect the number of tubewell connection to be released under General Category. Further, the Nigam has issued Sales Circular No. D- 11/2016 on wherein it has been stipulated that demand notice in respect of AP category shall be Nov-16 Page 63

66 Petition for APR FY and ARR for FY for DHBVNL 6 The Commission directs the licensee that for any capex undertaken by the licensee without the approval of the Commission and on the direction of the State Govt., the funding of the same has to come from grant/subvention from the State Govt. and cannot be allowed through ARR/Tariff. Additionally, the Capex details provided by the licensee further reveals that the licensee has over spent on some capital works without the prior approval of the Commission. In respect of the work Release of Tube well connections on turnkey basis the expenditure spent is Rs Crores against approved investment of Rs Crores. In their last year filing, the licensee had indicated that an expenditure of Rs Crores had been made on this work upto September 2014 and that during next six months the likely expenditure would be Rs.1.55 Crores. As such the licensee demanded a revised investment of Rs Crores on this work which was approved, but now the actual expenditure incurred is intimated as Rs Crores stating the reason that more connections were applied and released. From statistical data of the licensee it is gathered that they have released only tube well connections during FY which are even less than the tube well connections released in FY , FY and FY The licensee is, therefore, directed to file a detailed report justifying this expenditure. The licensee is again directed by the Commission to keep the work wise expenditure within the limit of investment approved for a particular work. issued to applications received upto under General Category. Out of total of no. Tubewell connections released during FY , 8192 no. Tubewell connections were released under Self Execution scheme during FY Further, it is intimated that approximately Rs Lacs expenditure has been incurred on the release of one no. Tubewell connection. An additional amount of Lacs has been incurred due to the release of tubewell connections under self execution scheme, which has been financed by the concerned consumer applied for their tubewell connections which was excluded from the amount intimated to Hon ble Commission. Nov-16 Page 64

67 Petition for APR FY and ARR for FY for DHBVNL 7 The Commission has given 3 months time to the Distribution Licensees to submit status report bringing out the measures/ efforts taken/ made to meet the targets provided in the directives and detailed reason for non-compliance, failing which the proceedings under Section 142 of the Act, may be initiated against the defaulting Discoms. Similarly other directives i.e. timely payment of interest on consumer s security deposit, centralisation of pay and pension disbursement, age wise audit of receivables etc. which was also raised by the interveners, the Commission gives further 45 days time to the Discoms to comply and submit a compliance report to the Commission. It is made clear that the directives needs to be complied with meticulously and no reasons / justification for noncompliance shall be accepted by the Commission A. Timely payment of interest on consumer s security deposit:- Sales Instructions No. 9/2016 has been issued on the subject. In the ibid Sales Instructions directions have been passed to field offices that the updated ACD of the consumers is to be provided to the billing agencies for incorporation in the consumer s data base up to so that the procedure regarding interest on ACD / revision of ACD is carried out through the system. In case there is delay in the payment of interest the interest paid on outstanding amount shall be recovered from the delinquent officers/officials. B. Centralization of Pay & Pension Disbursement:- In DHBVN, the pay of all group A & B officers is already centralized. The efforts for centralized pay disbursement of rest of the staff are underway. The Haryana Power Discoms are in the process of implementing ERP solutions and the software of centralized disbursement of pay is proposed under such ERP Solution. The centralized Pension Disbursement Cell (PDC) has already been set up in DHBVN and all the employees who are retiring at present are given pension through in-house PDC. Further the pension payment cases from all the DDOs in DHBVN have already been transferred to in-house PDC and their pension is being Nov-16 Page 65

68 Petition for APR FY and ARR for FY for DHBVNL disbursed by the PDC instead of through various DDOs located at different places. For the employees who are getting their pension through the banks of their choice at their request, the DHBVN is in the process to call back all such pension cases from the banks in phases to avoid any inconvenience to our pensioners/senior citizens. 8 The Commission orders that the recovery of FSA pertaining to the FY shall be stopped forthwith. In case any FSA amount pertaining to the FY has been recovered after , the same shall be quantified and intimated to the Commission by the Discoms within 15 days from the date of this Order C. Presently, a facility to work out the age wise analysis of debtors is not available and this analysis of such a large consumer base cannot be carried out manually by outsourcing this work to various CA firms. The requirement for developing a suitable mechanism for tracking of debtors through ageing analysis is being explored with the billing agency so that system based analysis could be carried out for this purpose. In compliance to the above directives FSA pertaining to FY has been stopped w.e.f vide Sales Circular No. D-27/2016. Regarding recovery of FSA amount of Rs paise/unit for the period after 1/04/2016 i.e. April to August, it is stated that the billing software of DISCOM shows the consolidated FSA as applicable in the bill of a consumer pertaining to particular category. However based on the total units (other than AP) billed for the period April to August, 2016 in DHBVN Nov-16 Page 66

69 Petition for APR FY and ARR for FY for DHBVNL 9 The commission directs the licensee provide incentive of Rs. 1/kWh instead of Rs. 0.25/kWh for rooftop solar system, installed under the new Solar Policy of Haryana Government after by DS consumers. 10 A rebate of 5% allowed for the consumers availing supply through prepaid meters. 11 The Commission directs the Discoms to take up the issue of direct transfer of RE Subsidy to the eligible AP consumers in their Aadhar linked bank account as already implemented by the Central Government for Domestic LPG (direct benefit transfer). 12 Issuance of bills and realization of payment thereof in urban areas It will be mandatory for consumers of all categories with a load of 20 KW and above to download their bills from the Discoms website. are crores hence the Rs paise/unit on this billed units worked out to Rs crores. The requisite instructions in this regard has been circulated vide Sales Circular No. D-25/2016. The process for extending this rebate through billing software has been finalized and shall be implemented shortly. The requisite instructions in this regard has been circulated vide Sales Circular No. D-44/2014 issued on Falls under the purview of State Govt. The Consumer database is under compilation. Once the same is completed, the directions of the Hon ble Commission will be implemented. Domestic consumers with a load less than 20 KW in urban areas falling under the Municipal Corporation/Municipal Committee shall have three options:- a) The consumers who would download their bills from the website of the Discoms shall be given a rebate of Rs.5/- per bill. However, Senior Citizen shall get a rebate of Rs.10/- per bill. b) The consumer can opt for the bills through SMS or on without any charges. c) However, the consumer who opts for a printed copy of the bill, will be provided the same on a payment of Rs.5/- except senior citizens and consumers with a load less than 8 KW. Nov-16 Page 67

70 Petition for APR FY and ARR for FY for DHBVNL 13 Consumers of urban areas falling under Municipal Corporations/Municipal Committee can opt to pay their bills online/rtgs/neft or through authorized banks. In such cases:- I. Consumers whose bill amount is less than Rs.15,000/- can pay their bills online directly on the Discoms website and avail a rebate of Rs.5/-. II. It will be mandatory for consumers having bills exceeding Rs.15,000/- to pay their bills online/rtgs/neft or authorized banks. 14 The commission directs that, in case of non-availability of the bill, the consumers opting for receiving the bills through , shall be entitled to send the snapshot of meter reading of its meter on its scheduled reading date through to Licensees for proper billing and can accordingly pay for the consumption (the difference between the previous reading and the present reading) during the billing cycle which shall be subject to adjustment in the next bill. 15 The Discoms shall endeavour that for consumers with compatible meters, manual reading of the Meters should be stopped forthwith. The reading of all such meters shall be taken through downloadable CMRI (Common Meter Reading Instrument). 16 The AT&C losses as worked out above would be 25.94% against target of 24.48% in respect of UHBVNL and 22.48% against target of 18.74% in respect of DHBVNL. This means that there would be under achievement by both the licensees. As per UDAY, the collection efficiency has been pegged at 99%. The distribution licensees are directed to explain the reason of under achievement even after re-fixing of their AT&C loss trajectory by the Ministry of Power Govt. of India. DHBVN currently has implemented online payment of bills for urban consumers through RTGS/ NEFT for bill amount of more than Rs. 50,000. Further, the Hon ble Commission directive for online bill payment for bill amount of Rs. 15,000 and more for urban consumers may be allowed to be implemented in phased manner up to to avoid any re-conciliation issue for such a large number of consumers. The consumer database is under compilation. Once the same is completed, system will be put in place for implementation of this directive NIT is being floated for this purpose. With introduction of various initiatives like Loss Reduction plan for urban areas and Mhara Gaon Jag Mag Gaon in rural areas, Nigam endeavours to achieve the loss trajectory projected under UDAY scheme in FY Nov-16 Page 68

71 Petition for APR FY and ARR for FY for DHBVNL 17 The Commission directs that the Discoms shall submit consumer category wise FSA recovered viz-a-viz that recoverable as per Order dated within 15 days so that the same can be reviewed for continuation or discontinuation. In an event the Discoms fail to submit the requisite information/details all FSA(s) being recovered under the ibid Order(s) shall be stopped. 18 The Licensee(s) is directed to ensure that power is procured only from those sources for which the Commission has approved PPA s. Additionally, any power from Central Generating Stations, beyond the quantum for which the PPA has been signed and specifically approved by the Commission must be surrendered in case the Discoms have to back down any approved long-term source of power. It is made clear that any power procured from sources not specifically approved by the Commission and/ or excess quantum vis-à-vis the approved PPA purchased by the Discoms shall be disallowed by the Commission. The directives of the Hon ble Commission are noted. The detailed reply have been filed to HERC vide SE/RA UHBVN Panchkula Memo no. Ch- 55 SE/RA/N/F-54 Vol-VI (A) dated A) The directive has been noted to ensure that power is to be procured from those sources for which commission has approved PPAs. The Commission directs that the Discoms shall not procure any additional power over and above the quantum approved in the PPA that may be available to it from the un-allocated share / share relinquished by any other State in the Central Generating Power Stations. The Commission thereto shall disallow all such power procurements and the cost thereto. B) On the above directives, reference is invited to CERC order dated in petition no. 310/MP/2014 of giving M/s Sasan power at par with CPSUs which allow Haryana to schedule the cheapest power from the UMPP projects, if the other beneficiaries of the project relinquish the power. In case, any URS power from these sources available, as per the directives of ARR/HERC, Haryana Discoms are denying to avail the cheapest power for the state, in case it is available. However, System Operation/ HPPC Nov-16 Page 69

72 Petition for APR FY and ARR for FY for DHBVNL The Discoms are directed to manage the UI drawls more efficiently and the Commission may not approve the power purchase cost of such drawls at a rate higher than the average cost of power purchase, any loss on account of that shall be borne by the Discoms. is not giving any consent for scheduling of costly unallocated URS power from Central Generating stations. Reference is further invited on the directives for surrendering of the costly power by relinquishing the share from those projects. In Pragati power, the efforts had been made by writing the DO letter s by then ACS/Power and MD/UHBVN for transfer of share of Haryana to other needy state. In this context, the generator i.e. Pragati Power had intimated that the project share was sought by the then State government at the time of inception and being the bilateral contract there is no clause for any of the party to move out from the contract in the life span of the project. C) A contract agreement has been entered into with RECPDCL (a Govt. of India undertaking) for providing software tool for load forecasting & scheduling. On implementation of the above said project, the power available to the Discoms will be managed more efficiently & the U.I. charges shall be curtailed. Nov-16 Page 70

73 Petition for APR FY and ARR for FY for DHBVNL 19 The Commission directs the licensee to explore the possibility of the surrendering expensive long-term power that is in excess of its requirement. In case the licensee is unable to sell its contracted power at the rate of its energy cost, it is expected to back down the units to that extent so that the loss on account of power purchase is minimised. The directives of the Commission is noted, but it is worth to mention that in exigencies where backing down of the plants are not possible, HPPC carries out the inter-state sale of power at the price prevailing at Exchanges to offset the cost of power as the UI prevailing rates are lesser than the IEX prices. 20 The Commission directs the Discoms to purchase renewable energy or RECs to meet with the RPO targets set for the FY and also to make up for the shortfall of RPO compliance carried forward for the previous years, on actual basis. In view of Haryana Government s mandate to promote RE energy especially roof top solar and Waste to Energy, Discoms are directed to meet the maximum RPO targets from these sources. The Commission, in its Order dated for the FY had made specific provision of Rs In respect of surrendering the costly power, the efforts made by HPPC are as under: 1. Regarding NTPC, Aravali Power Jhajjar and Pragati Power, the request has been made to the quarter concerns to either reallocate the power to the needy state. 2. In Pragati power case, the govt of Delhi/Generator has intimated that there is no exit clause in the PPA and the project share was allocated on the request of Govt of Haryana. Hence Haryana is bound to off take the power from the said project. In respect of NTPC/other CPUSUs, it is submitted that until the allocation of GoI has not been revised the state is bound to pay the charges and off take the power as per merit order. In FY , HPPC has purchased the following quantum of renewable power: FY Target 16 Solar 350 MUs Actual Shortfal achieved l MUs 293 MUs Nov-16 Page 71

74 Petition for APR FY and ARR for FY for DHBVNL Crore in the power purchase cost towards purchase of RPO/REC, the same shall be accordingly utilised in the FY The Discoms are directed to submit details of the RE Energy and/or REC purchased by them against the said amount within a period of three months from the date of this Order. Nonsolar 1285 MUs 1172 MUs 113 MUs In order to meet the RPO targets for the FY , HPPC has taken the following steps: Solar RPO: 1 HPPC has signed PPA with 4 Nos. developers for 23 MW solar power which are expected in FY The PPAs for the said projects have not yet been approved by HERC. 2 HPPC has issued LOI to 13 nos. developers selected through competitive bidding for purchase of 165 MW solar power. The PPAs for the said projects have not yet been approved by HERC. 3 HPPC has agreed to purchase 250 MW of solar power through SECI under JNNSM Rs per KWh for 25 years on VGF basis. This power is expected in FY The petition for approval of the same shall be filed shortly. 4 HPPC has given consent to purchase 553 MW of bundled power, 353 MW solar power and 200 MW thermal power) from NTPC, This power is expected in FY The petition for approval of the same shall be filed shortly. Non-solar RPO: i. HPPC has signed PPA with Naraingarh Sugar Mills for 25 MW capacities and 7 MW (2 nd unit) with M/s GEMCO. Nov-16 Page 72

75 Petition for APR FY and ARR for FY for DHBVNL ii. HPPC is purchasing hydro power from Himachal Pradesh in the range of MW in the FY iii. HPPC has submitted PPA for Waste to energy project, to be commissioned by ULBs. The same is under consideration with the Hon ble Commission. iv. HPPC has floated E-tender for purchase of 300 MUs of Non-solar power. The Discoms are directed to submit an action taken report in furtherance of the latest solar policy issued by the State Government within three month of this order. 21 The Commission directs that the interest on the consumer s security deposit must be paid to all consumers in compliance of the relevant Regulations notified by Commission. It is pertinent to point out that HPPC has filed a petition in HERC seeking amendment in HERC Regulation, 2010 on Renewable Energy in view of Haryana Solar policy The hearing for the same was held on However, HERC order is still awaited. Sales Instructions No. 9/2016 has been issued on the subject. In the ibid Sales Instructions directions have been passed to field offices that the updated ACD of the consumers is to be provided to the billing agencies for incorporation in the consumer s data base up to so that the procedure regarding interest on ACD / revision of ACD is carried out through the system. In case there is delay in the payment of interest the interest paid on outstanding amount shall be recovered from the delinquent officers / officials. Nov-16 Page 73

76 Petition for APR FY and ARR for FY for DHBVNL 22 Both the licensees are directed that they shall regulate their capital expenditure plans for FY and FY as per Regulations 9.7 to 9.12 of the Haryana Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi Year Tariff Framework) Regulations, The Capital Expenditure details was filed by the DHBVN vide its Tariff Petition on for the FY and additional submission made in , including some of the works which were previously not approved by the Hon ble HERC in its MYT Tariff Order for the 1 st Control Period FY to vide order dated These works were incorporated in Capital Investment Plan for FY for successful implementation of UDAY Scheme, which is a tri-partite agreement between the Ministry of Power, Government of Haryana and Haryana Discoms (DHBVN & UHBVN) and as per system requirements. Accordingly, DHBVN had filed the Capital Investment Plan vide Tariff Petition dated and additional submissions made on , for approval of the Hon ble HERC, as the UDAY Scheme was notified in FY and not in initial year of Control Period and thus works related to the UDAY Scheme were not approved during the MYT Order dated Further, it is submitted that DHBVN has tried to regulate the Capital Expenditure of FY as per the Hon ble HERC Regulation, Nov-16 Page 74

77 Petition for APR FY and ARR for FY for DHBVNL 23 It is submitted that, various steps have been taken by Nigam to reduce the Losses with the specific focus on long term improvement in the power quality and reliability. Various strategies are being adopted in urban and rural areas based on their loss level. The steps taken for reduction of technical and commercial losses are as follows:- As stated above there are feeders, both urban and rural, on which the losses are consistently above 50%, but the licensees have not bothered to get energy audit of such feeders done and take suitable measures to curtail the same. The Commission views this lapse on the part of licensees very seriously. The Licensees are therefore, directed to file report on the status of losses on each of these feeders and also prominently display them on their website. They are further directed to file, within 3 months, detailed reasons for noncompliance of the Commission s directives. Failure to do so shall attract action under Section 142 of the Electricity Act, High loss Feeder are being identified and the Sanitization work which is under progress is being monitored. All the Circle (Op) teams have been instructed to speed up in order to complete the pending work so that the loss level would be brought down to normative level. Consumer Indexing for RAPDRP towns, non- RAPDRP towns, & rural areas is under progress which would help the Nigam to calculate the losses from the billing database and further pin point the losses incurred at DT level which will eventually help the Nigam optimize its resources and efforts towards effective loss reduction. Feeder Sanitization Activities are carried out geographically as: (1) Urban Feeder Sanitization & (2) Mhara Gaon Jagmag Gaon Scheme for selected RDS feeders. In both the plans, Nigam has focused on the following four major activities: o Improving accurate reading of energy meters via replacement of Defective, faulty, Burnt, Glass Nov-16 Page 75