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TTHHEE HHOONN’’BBLLEE
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FILED BY
MEGHALAYA POWER DISTRIBUTION CORPORATION LTD.
LumJingshai, Short Round Road, Shillong - 793 001
BEFORE THE HON’BLE MEGHALAYA STATE ELECTRICITY REGULATORY
COMMISSION
FILE / PETITION NO………
IN THE MATTER OF
TRUING-UP OF THE ANNUAL REVENUE REQUIREMENT (ARR) FOR THE YEAR 2009-10
AND IN THE MATTER OF
MEGHALAYA POWER DISTRIBUTION CORPORATION LIMITED, LUMJINGSHAI,
SHILLONG – 793001, MEGHALAYA
PETITIONER
The Petitioner respectfully submits as under:
1. The Power Supply Industry in Meghalaya had been under the control of the erstwhile
Meghalaya State Electricity Board (MeSEB) with effect from 21st January 1975. The
Government of Meghalaya (GoM or State Government) unbundled and restructured the
Meghalaya State Electricity Board with effect from 31st March 2010. The Generation,
Transmission and Distribution businesses of the erstwhile Meghalaya State Electricity Board
were transferred to four successor companies. The State Government issued a Notification “The
Meghalaya Power Sector Reforms Transfer Scheme 2010” thereby giving effect to the transfer
of assets, properties, rights, liabilities, obligations, proceedings and personnel of the erstwhile
MeSEB. On 31st March 2012, Government of Meghalaya issued further amendment to the
above mentioned transfer scheme, to transfer Assets and Liabilities including all rights,
obligations and contingencies with effect from 31st March 2012 to namely :
Generation: Meghalaya Power Generation Corporation Ltd. (MePGCL)
Transmission: Meghalaya Power Transmission Corporation Ltd. (MePTCL)
Distribution: Meghalaya Power Distribution Corporation Ltd. (MePDCL)
Meghalaya Energy Corporation Limited (MeECL), a Holding company.
2. The Meghalaya State Electricity Regulatory Commission (hereinafter referred to as “MSERC”
or “the Hon’ble Commission”) is an independent statutory body constituted under the
provisions of the Electricity Act (EA), 2003. The Hon’ble Commission is vested with the
authority of regulating the power sector in the State inter alia including determination of tariff
for electricity consumers.
Provisions of Law
3. The Hon’ble Commission has notified the Meghalaya State Electricity Regulatory Commission
(Terms and Conditions for Determination of Tariff) Regulations, 2011 on 10th February 2011.
This Regulation provides the framework under which the licensees shall operate. Accordingly,
the key provisions of the said Regulation are reproduced below for reference.
15. Review and Truing-Up
(1) ……...
(2) After Audited accounts of a year are made available, the Commission shall undertake
similar exercise as above with reference to the final actual figures as per the Audited
accounts. This exercise with reference to Audited accounts shall be called ‘truing-Up’.
(3) The generating company or the licensee, as the case may be, shall make an application
before the Commission, for ‘truing up’ of ARR of the previous year by 30th September of the
following year, on the basis of Audited statement of accounts and the Audit Report, thereon.
The generating company or the licensee shall get their accounts Audited within a specified
time frame, either by the Comptroller & Auditor General of India or by a Statutory Auditor
drawn from the panel of Statutory Auditors approved by the Comptroller & Auditor
General of India, from time to time, to enable them to file the application for ‘truing up’
within the specified date, that is 30th September of the following year.
4. Section 61 & Section 62(c) & (d) of Electricity Act 2003 empowers the Hon’ble Commission to
determine tariff for wheeling and retail sale of electricity for the Licensee. Accordingly, this
petition is submitted according to the aforementioned provisions of the Tariff Regulations and
on the basis of actual performance.
5. It is submitted that this Petition for Final True up for FY 2009-10 is hereby filed, based on
Annual Audited Accounts of erstwhile MeSEB and in pursuant to the Orders below, namely,
(i) Order dated 5th August 2010 passed by the Hon’ble Commission in “Remand Proceedings
No. 1 of 2010” in the matter of “Remand Order dated 19.04.2010 passed by the Hon’ble
Appellate Tribunal for Electricity in Appeal No. 67 of 2010 read with I.A.No.86 of 2010”
(A copy of Order dated 05.08.2010 is enclosed as Annexure I), and
(ii) Order dated 19th November 2010 passed by the Hon’ble Commission in the matter of
“Application seeking modification, recall and / or review of certain observations and
findings in the Order dated 05.08.2010 passed by the Commission in Remand Proceedings
No. 1 of 2010”, (A copy of Order dated 19.11.2010 is enclosed as Annexure II),
6. The Comptroller & Auditor General of India (CAG) have Audited the Balance Sheet of
Meghalaya State Electricity Board as on 31st March 2010, Net Revenue and Appropriation
Account for the year ended on that date under Rule 14 of the Electricity (Supply) Annual
Accounts Rules, 1985 read with Section 172 (a) and 185 (2) (d) of the Electricity Act 2003 and
submitted the Separate Audit Report of GAC on 1st July 2011 which is attached as Annexure
III.
Final Truing Up for FY 2009-10
7. The following sections outline the deviations in actual expenses for FY 2009-10 based on the
Audited Accounts of erstwhile MeSEB in comparison with the expenditure provisionally
assessed by the Hon’ble Commission vide Order dated 5th August 2010.
Category wise Sales and Revenue
8. Comparison of category wise audited sales and revenue and provisionally assessed sales and
revenue for FY 2009-10 is shown in the following Table :-
Table 1 : Category wise Sales and Revenue
Category
FY 2009-10 Provisionally assessed by MSERC
vide Order dated 5.8.2010 Audited
Sales (MUs)
Revenue (Rs. Crs)
Sales (MUs)
Revenue (Rs. Crs)
Domestic
71.60 232.27 70.99 Commercial 27.02 52.24 31.35 Industrial 224.45 468.63 235.25 Public Lighting 0.99 1.49 0.98 Irrigation & Agriculture 0.11 0.63 0.11 Public Water Works 12.31 31.58 12.31 Bulk Supply to Others 29.94 60.91 30.01 Misc/General Purpose 6.17 48.64 1.06 Construction Project H.T. 2.01 1.35 Inter-State Sale 13.16 4.96 UI Sale 26.97 67.29 22.51 Wheeling Charges 0.45 Other Recovery 4.41 Total 896.09 399.56 978.85 415.74
It is submitted that the revenue of RS 415.74 crore from sale of power included an amount of
Rs 231.82 crores billed to HT & EHT Industrial Consumers as per tariff determined in the
Hon’ble Commission’s Tariff Order dated 30th September, 2008 (applicable for the period of 8
months in FY 2009-10) and Tariff Order dated 30th November, 2009 (applicable for 4 months in
FY 2009-10).
9. It is submitted that the Hon’ble Supreme Court, in its Order dated 28.08.2012, has held that the
tariff rates passed by Tariff Order dated 10.09.2009 of this Hon’ble Commission shall be
deemed to have come into effect from 01.10.08. A copy of the Hon’ble Supreme Court’s Order
is enclosed as Annexure IV.
10. Pursuant to the Order dated 28.08.2012 of the Hon’ble Supreme Court, the MeECL petitioned
the Hon’ble Commission to consider the following:-
a) Revision of bills as per Tariff Order dated 10.09.2009 with retrospective effect, only for
IHT and IEHT categories.
b) The benefit of tariff rate revision for categories other than IHT and IEHT may be passed in
2013-14.
c) To revise the trued-up ARR 2008-09 in view of the revision of bills as per Tariff Order
dated 10.09.2009 with retrospective effect for IHT and IEHT categories.
However, this Hon’ble Commission, vide Order dated 14.12.2012, dismissed the petition as not
being maintainable. A copy of this Hon’ble Commission’s Order is enclosed as Annexure V.
11. In the circumstances, the MePDCL proceeded to revise the bills as petitioned before this
Hon’ble Commission. The revised bills were served to the IHT and IEHT consumers in March
2013. In view of the above revision in bills of Industrial Consumers, revenue from sale of
power of HT & EHT Industrial Consumers for FY 2009-10 has reduced from Rs 231.82 crore
by Rs 54.57 crore to Rs 177.25 Crores. Therefore, this has resulted in reduction in total revenue
from sale of power from Rs 415.74 crore to Rs 361.17 Crores. It is submitted before the
Hon’ble Commission to kindly approve Revenue from sale of power at Rs 361.17 Crores for
FY 2009-10.
12. It is submitted before the Hon’ble Commission that by revising only the bills of IHT and IEHT
consumers, it raises the issue of discrimination in tariff and showing undue preference to IHT
and IEHT consumers. Therefore, to avoid any discrimination, the tariff for other categories
other than IHT and IEHT may be adjusted in subsequent tariff orders as detailed below :-
a). The difference in average rate for each category is calculated as shown in ANNEXURE VI.
b). The actual sales for the period from April 2009 to October 2009 for FY 2009-10 and the
amount to be adjusted against each category is calculated as shown in ANNEXURE VII.
Power Purchase Expenses
13. It is submitted that apart from own generation, power was purchased power from NEEPCO,
NHPC, NTPC, IPPs, Traders, and other sources. A comparison of power purchase expenses as
per the Audited Accounts and as provisionally assessed by Hon’ble Commission for FY 2009-
10 is shown in the following Table below.
Table 2: Power Purchase Expenses for FY 2009-10
Particulars Provisionally assessed by MSERC vide Order dated
5.8.2010
FY 2009-10 (Audited) Deviation
Power Purchase Cost 223.74 222.63 (1.11) Add understated Amount* - 1.28 1.28 Total Power Purchase Cost 223.74 223.91 0.17
* Audit Objection of understatement of Expense pertaining to amount payable to PTCIL & PGCIL as shown in serial no 8 in page 3 of Statement of accounts for FY 09-10
It is submitted that the Hon’ble Commission had provisionally assessed Power Purchase Cost at
Rs.223.74 Crs. However, as per audited Annual Accounts for the FY 2009-10, the power
purchase cost amounts to Rs.223.91 Crs. It is submitted before the Hon’ble Commission to
kindly true up the power purchase expenses at Rs 223.91 crore.
Fixed Costs for FY 2009-10
14. Based on the Capital Cost and the consequent Capitalized Expenditure, Equity Component and
Normative Debt, the fixed cost for FY 2009-10 has been determined in accordance with the
MSERC Tariff Regulations 2011 outlined thereof. As outlined under the regulations, the fixed
cost has been determined under the following major heads:
o Operation and Maintenance Expenses
o Depreciation
o Interest and Finance Charges
o Income Tax
o Return on Equity
O&M Expenses
15. Operations and Maintenance (O&M) Expenses of the Company consists of the following
elements:
o Repairs and Maintenance Costs
o Employee Expenses
o Administrative and General Expenses
Repairs and Maintenance Expenses go towards the day to day upkeep of the assets of MeECL
and form an integral part of the Company’s efforts towards reliable and quality power supply as
also in the reduction of losses in the system.
Employee expenses comprise of salaries, dearness allowance, bonus, terminal benefits in the
form of pension & gratuity, leave encashment and staff welfare expenses.
Administrative expenses mainly comprise of rents, telephone and other communication
expenses, professional charges, conveyance and travelling allowances and other debits.
16. Repairs and Maintenance Expenses
Except for Stage I power station, which was renovated in 2001-02, the power stations are
between 20 to 50 years old. These power stations require more expenses to maintain the
scheduled generation. In addition, Meghalaya being the hilly terrain state demands a
comparatively more expenses in maintaining the transmission and distributions network. Repair
and Maintenance expenditure is dependent on various factors. The assets of MeECL are old and
require regular maintenance to ensure uninterrupted operations. MeECL has been trying its best
to ensure uninterrupted operations of the system and accordingly has been undertaking
necessary expenditure for R&M activities. The summary of the comparison of the actual R&M
expenses for FY 2009-10 vis-à-vis the expenses provisionally assessed by the Hon’ble
Commission has been given in the table below:
Table 3: R&M expenses for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order dated 5.8.2010
FY 2009-10 (Audited) Deviation
R & M Expenses 20.26 20.09 (0.17)
It is submitted that R&M expenses cannot be considered as a controllable expenditure as it is
necessary to incur as and when required to supply quality power to its consumers on
continuously. Hence R&M expenses are genuine and legitimate expenditure which may kindly
be approved are as per Audited Accounts.
17. Employee Expenses
The employee expenses comprise the following broad sub-heads of expenditure:
Basic Salary
Dearness Allowance
Overtime
Other Allowances
Earned Leave Encashment
Staff Welfare and Other Expenses
Medical Expenses Reimbursements
Terminal Benefits
o Provident fund contribution
o Gratuity payments
o Pension Payments
o Provision for PF Fund
o Leave encashment on retirement
A significant component of the employee cost has been the salary and terminal benefit which is
being met from the revenue earning on year to year basis. In other words, the actual pension
outflow for the retired personnel is being managed from the revenue earned in the year. Also
new employees are being recruited to meet the shortage of man power due to gradual retirement
of employees. The summary of the comparison of the actual employee expenses for FY 2009-
10 vis-à-vis the expenses provisionally assessed by the Hon’ble Commission has been given in
the table below:
Table 4: Employee Expenses for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order dated 5.8.2010
FY 2009-10 (Audited) Deviation
Employee Expenses 111.03 114.92 3.89
It is submitted that the deviation in Employee Cost is mainly due to increase of D.A., Medical
Allowance and Terminal benefits which are genuine and legitimate expenditure which may
kindly be approved per Audited Accounts certified by the Auditors.
18. Administration and General Expenses
The Administrative and general expenses comprise of following broad sub heads of
expenditure.
Rent, Rates and Taxes
Insurance
Telephone and Postage Charges
Conveyance and Traveling
Audit Fees
Training Expenses
Electricity Charges
Other Expenses including water charges, Printing and Stationary expenses, Legal,
professional and consultancy fees, advertisement, vehicle running, office expenses
and other miscellaneous expenses.
The summary of the comparison of the actual A&G expenses for FY 2009-10 vis-à-vis the
expenses provisionally assessed by the Hon’ble Commission has been given in the Table
below:
Table 5: A&G Expenses for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order
dated 5.8.2010
FY 2009-10 (Audited) Deviation
Administration & General Expenses 8.71 10.01 1.30
The A&G expenses are also increasing gradually due to expansion of the power sector in the
state and also to keep pace with the inflation. As there is increase in the activities of the
Licensee, the A&G expenses have also been increased. Moreover, there was inflationary trend
in the market. Further in the FY 2009-10 Rs 2.74 Cr is spent towards consultancy services
availed for various projects, which has lead to the deviation from the provisionally assessed
figure. It is submitted that A&G expenses are the legitimate expenses incurred and are directly
related to the day to day administration and general operation. It is further submitted before the
Hon’ble Commission to kindly consider the number of employees, size and number of offices,
geographical spread while approving the A&G expenses. A&G expenses are genuine and
legitimate expenditure and hence may kindly be approved as per Audited Accounts certified by
the Auditors.
19. Depreciation
Following table shows the summary of the comparison of the actual depreciation for FY 2009-
10 vis-à-vis the depreciation provisionally assessed by the Hon’ble Commission.
Table 6: Depreciation for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order dated 5.8.2010
FY 2009-10 (Audited) Deviation
Depreciation 17.08 25.94 8.86
The deviation in total depreciation is due to capitalization of Sonapani and revision of
depreciation rates for fixed asset by CERC. The depreciation rate has been considered as per the
CERC Regulations, 2009 (Notification No.L-7/145(160)/2008-CERC dated 19th January,
2009) and calculated the depreciation on fixed assets for FY2009-10. Therefore, it is submitted
before the Hon’ble Commission to consider the parameters impacting depreciation as
uncontrollable and approve the entire amount of depreciation as per Audited Accounts.
20. Interest and Financial Charges
The interest expenditure on account of long-term loans depends on the outstanding loan,
repayments, and prevailing interest rates on the outstanding loans. Further, the projected capital
expenditure and the funding of the same also have a major bearing on the long-term interest
expenditure. Details of source-wise Interest expenses as well as other interest & finance charges
including cost of raising finance have been furnished in the following table.
Table 7: Total Interest and Finance Charges for FY 2009-10
Particulars Amounts (Rs. Crs) Interest on State Govt. Loan 19.91 Interest on Bonds 21.08 Interest on PFC Loan 6.17 Interest on Loan from CSS 0.98 Interest on REC Loan 26.30 Interest on Loan from Bank 13.82 Interest on Loan from HUDCO 2.96 Interest on Loan (Federal Bank) 1.31 Interest on Loan (OECF Japan) 1.56 Interest on Loan (JBIC Japan) 0.17 Penal Interest 3.86 Discount to Consumers for timely payment 0.01 Cost on Raising Finance 0.83 Other Charges 4.45 Total Interest and Finance Charges 103.40
It is submitted that the interest & finance charges also include the Interest on State Govt. Loan
of Rs. 19.91 Crs. Hence, the claimed on Interest and Finance Charges are excluding the Interest
on State Government Loan. The following table shows the summary of the comparison of the
actual interest and finance charges for FY 2009-10 vis-à-vis the interest and finance charges
provisionally assessed by the Hon’ble Commission.
Table 8: Interest & Finance Charges for FY 2009-10
Particulars Provisionally assessed by MSERC vide Order dated 5.8.2010
FY 2009-10 (Audited) Deviation
Interest & Finance Charges 72.70 83.49 10.79
It is submitted that Interest & finance charges are genuine and legitimate expenditure and the
Hon’ble Commission may kindly approve the entire interest & finance charges as per Audited
Accounts.
21. Expenses Capitalized
A summary of the comparison of the actual expenses capitalized for FY 2009-10 vis-à-vis the
expenses capitalized provisionally assessed by the Hon’ble Commission has been given in the
table below:
Table 9: Expenses Capitalised for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order
dated 5.8.2010
FY 2009-10
(Audited) Deviation
Interest & Finance Charges Capitalised 58.65 63.85 5.20 Employee Expenses Capitalised 9.31 9.98 0.67 Administration & General Expenses Capitalised - 0.13 0.13 Total Expenses Capitalised 67.96 73.96 6.00
It is submitted that the Hon’ble Commission may kindly approve the entire expenses capitalized as
per Audited Accounts.
22. Other Debits (including provision for Bad Debts)
A summary of the comparison of the actual other Debits (including provision for Bad Debts)
for FY 2009-10 vis-à-vis the other Debits (including provision for Bad Debts) provisionally
assessed by the Hon’ble Commission has been given in the table below:
Table 10: Other Debits (including provision for Bad Debts) for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order
dated 5.8.2010
FY 2009-10
(Audited) Deviation
Other Debits (including provision for Bad Debts) 10.00 14.24 4.24
The deviation in other debits is mainly due to written off of Nangalbibra Thermal Power station. It
is submitted before the Hon’ble Commission to kindly approve the entire Other Debits (including
provision for Bad Debts) as per Audited Accounts.
23. Income Tax
A summary of the comparison of the income tax as per Audited Accounts of erstwhile MeSEB
for FY 2009-10 vis-à-vis the income tax provisionally assessed by the Hon’ble Commission
has been given in the table below:
Table 11: Income Tax for FY 2009-10 (Rs Crores)
Particulars Provisionally assessed by MSERC vide Order dated 5.8.2010
FY 2009-10 (Audited) Deviation
Income Tax 4.94 - (4.94)
24. Prior Period Credits/Charges
It is submitted that the Accounting Standard 5 (AS 5) issued by Institute of Chartered Accounts
of India deals with the Net Profit/Loss for the Period, Prior Period Items and Changes in
Accounting Policies. As per the AS 5, all items of income and expense, which are recognized in
a period, should be included in determination of net profit or loss for the period unless an
accounting standard requires or permits otherwise. Prior period items’ are material charges or
credits which arise in the current period as a result of errors or omissions in the preparation of
the financial statements of one or more prior periods. The following Table provides the details
of the prior period credits/ (charges) for FY 2009-10.
Table 12: Net prior period credits / (charges) for FY 2009-10 (Rs Crores)
Particulars FY 2009-10 (Audited) Income relating to Previous Year Excess Provision for Depreciation 0.00 Excess Provision for Interest and Fincance Charges 0.00 Other Excess Provision 1.03 Other Income 0.31 SUB TOTAL 1.34 Expenses / Losses relating to Previous Year Purchase of Power relating to prior period 11.72 Operating Expenses Employees Costs relating to prior period 4.47 Depreciation under provided in prior period 4.24 Interest and Other Charges relating to prior period 81.33 Administration Expenses relating to prior period 0.00 Wheeling Charges relating to prior period 4.99 Other Expenses relating to prior period 0.03 SUB TOTAL 106.78 NET PRIOR PERIOD CREDITS/(CHARGES) (105.44)
The disclosure of prior period items is in line with Accounting Standard (AS)-5 on Prior Period
and Extraordinary Items, which emphasizes that Prior period items should be separately
disclosed in the current statement of profit and loss together with their nature and amount; and
in a manner that their impact on current profit or loss can be perceived. Therefore prior period
items which are necessary for smooth functioning of the company are pertaining to the previous
financial year but recognized during current year and hence are of uncontrollable nature.
25. The Hon’ble Commission, in its Order dated 5.8.2010 had not allowed the provisional
expenditure of Rs 13.28 crore against prior period. It is submitted that prior period expenses or
revenue are by definition, “items which arise in the current period as a result of errors or
omissions in the preparation of the financial statements of one or more prior periods” and
hence such items are uncontrollable in nature.
26. It is submitted that employee costs relating to prior period, short provision for Income tax in
prior period and administrative expenses relating to prior period are all uncontrollable.
Employee expenses are purely on the basis of the guidelines issued by competent authorities
like the State Government and hence any variation is purely beyond the control of the Licensee.
Similarly, income tax expenses are statutory expenses and cannot be projected. Hence such
legitimate expenses may kindly be allowed.
27. Interest and Other Charges relating to prior period are purely uncontrollable in nature. These
are mainly due to audit objection and reconciliation of loan payable to financial institutions.
The breakup of Interest and other charges related to prior period is mentioned below:
Reconciliation of REC Loan- Rs 68.7 Crs
Audit Objection and understatement of loan in prior period- Rs 12.3 Cr
It is submitted before the Hon’ble Commission to kindly allow total prior period expenses of Rs
102.51 Crs.
Table 13: Uncontrollable Prior Period (Expenses) /Income
Particulars Amounts (Rs. Crs) Purchase of Power relating to prior period 11.72 Employees Costs relating to prior period 4.47 Interest and Other Charges relating to prior period 81.33 Wheeling Charges relating to prior period 4.99 Total Uncontrollable Prior Period (Expenses) /Income 102.51
28. Return on Equity
It is submitted that the return on equity for FY 2009-10 as provisionally assessed by the Hon’ble
Commission vide Order dated 5.8.2010 may kindly be retained.
Aggregate Technical & Commercial (AT & C) Losses.
29. It is submitted that the AT&C loss for FY 2009-10 is 28.60 %, as can be seen from the
calculation shown in Table below:
Table 14: AT&C Losses for FY 2009-10
Particulars Formula Units
Provisionally assessed by MSERC vide Order dated 5.8.2010
Audited
Generation (own as well as any other connected generation net after deducting auxiliary consumption) within area of supply of DISCOMS
A MU 532.31
534.79
Input energy (metered import) received at interface points of DISCOM network.
B MU 819.61
819.61
Input energy (metered Export) by the DISCOM at interface points of DISCOM network.
C MU 13.16
13.16
Total energy available for sale within the licensed area to the consumers of the DISCOM
D=A+B-C MU 1338.76
1341.24
Energy billed to metered consumers within the licensed area of the DISCOM
E MU
896.09
898.40 Energy billed to un-metered consumers within the licensed area of the DISCOM
F MU
Total energy billed G=E+F MU 896.09 898.40
Amount billed to consumers within the licensed area of the DISCOM H Rs.
Crs
393.90
333.69 Amount realized by the DISCOM out of the amount billed at H
Revenue from sale of power Rs.
Crs
340.51
343.40
RE subsidy 12.31
12.31
Total I Rs. Crs
352.82
355.71
Collection Efficiency (%) J=(I/H) x 100 % 89.57
106.60
Energy realized by the DISCOM K=J x G MU 802.64
957.67
Distribution Loss (%) L={(D-G) ÷D}X100 %
33.07
33.02
AT&C Loss (%) M={(D-K) ÷D}X100 %
40.05
28.60
It is submitted that the AT&C loss as provisionally assessed by the Hon’ble Commission vide
Order dated 5.8.2010 may kindly be revised to 28.60 %.
Penalty/ (Incentive) for AT&C Losses for FY 2009-10
30. In the Order dated 05.08.2010 in Remand Proceedings No. 1 of 2010, Hon’ble Commission has
observed , inter alia, held as under:-
“19. The Commission carefully considered the submissions contained in the Affidavit dated
30.07.2010 filed by MeECL and noted with concern that MeSEB / MeECL had sought to
justify the increased level of AT&C losses of 40.05 percent during 2009-10, as against
33.79 percent during 2008-09, by stating that “the collection efficiency during FY 2009-
10 was adversely affected due to part payment of the current bills by the members of the
Byrnihat Industries Association (BIA). It may be informed that the amount paid by the
industries for the period April to November 2009 was Rs.121.34 crores against a demand
of Rs.159.12 crores (as per Tariff Order dated 30th September 2008), and thereby
outstanding amount is Rs.37.78 crores)”. The justification offered by MeSEB / MeECL is
wholly misconceived and untenable. The Commissions Tariff (D) Order dated 30.09.2008
was revised vide Commission’s Tariff(D) Order dated 10.09.2009. The tariff rates were
thereby revised downwards by an average of over 20 percent, with effect from 01.10.2008.
The Commission’s Tariff (D) Order dated 10.09.2009 has not been stayed or set aside by
any Competent Authority. The MeSEB / MeECL were required to comply with the said
Tariff (D) Order dated 10.09.2009 and to implement the directions contained therein. By
continuing to raise / realize electricity bills from consumers, for the period 01.10.2008 to
30.11.2009, as per rates fixed by Tariff(D) Order dated 30.09.2008, as indicated by them
in their said Affidavit dated 30.07.2010, the MeSEB / MeECL have violated the
Commission’s Tariff Order dated 10.09.2009, and are liable to be proceeded against and
penalized as per provisions of Section 142 of the Electricity Act of 2003.
20. Considering the critical level of increasing AT&C losses (provisional) during the year
2009-10, as reported by MeECL, the Commission hereby decides to discourage such
inefficiency, and to impose a penalty for MeSEB / MeECL’s failure to reduce the AT&C
loss by the mandated level of 3 percent from the previous year (2008-09) level of 33.79
percent. The penalty is accordingly assessed at Rs.55.27 Crores, as per detailed
calculation shown at Schedule-I Below-
SCHEDULE-I
CALCULATION OF PENALTY FOR FAILURE TO CAUSE A MINIMUM OF 3%
REDUCTION IN AGGREGATE TECHNICAL & COMMERCIAL (AT&C) LOSSES DURING
2009-10
1. AT & C Losses during 2008-09 as reported by MeSEB vide their letter No. MESEB/SE(RA)33/43 dt.14.10.2009. = 33.79%
2 Mandated minimum reduction of AT&C Losses for Entities having AT&C Losses in excess of 30%.
= 3.00%
3.
Maximum permissible AT&C Loss for MeSEB during 2009-10 after reduction of such loss by a minimum of 3% from the previous year’s level.
= 30.79%
4.
Actual AT&C Losses during 2009-10 as reported by MeSEB vide their Affidavit dated 30.07.2010 under cover of their Letter No.MESEB/SE(RA)43/55, dt.30.07.2009.
= 40.05%
5.
Shortfall in minimum reduction of AT&C Losses by MeSEB during 2009-10 = (40.05-30.79%).
= 9.26%
6. Shortfall in minimum reduction of AT&C Losses by MeSEB during 2009-10 in Million Units = (9.26% of 1338.76 Mu’s ).
= 123.9692 MUs
7.
Average aggregate Unit Rate for sale of power by MeSEB during 2009-10 = Revenue income from sale of power during 2009-10 = Rs.399.57 Cr Total Energy billed 896.09 MU (Based on data submitted by MeECL vide their Affidavit dated 30.07.2010 under cover of their Letter No. MESEB/SE(RA)43/55, dt.30.07.2009)
Rs.4.4590
8. Penalty for failure to reduce AT&C Losses by 3% during 2009-10 = 123.9692 MU x Rs.4.4590
= 55.2778 Cr
= Say Rs.55.27 Cr …..”
31. It is submitted that the Hon’ble commission vide its order dated 19th November 2010 held that:
“(b) The observations and findings of the Commission in its order dated 05.08.2010 in
Review Petition No.1 of 2010, as well as its direction to penalizing the Applicant with
regard to AT&C Losses, were made on the basis of level of AT&C reported by the
Petitioner. The circumstances under which in the instant proceedings, could be
appropriately raised by the Petitioner for consideration of the Commission, while truing
up the ARR for the year 2009-10.
(c) Considering the facts and circumstances of the instance case, Commission directs the
Petitioner to submit their proposal for truing-up of their Annual Revenue Requirement for
the year 2009-10 along with the Audited Statement of Accounts for that year and the
Commission to more fully address the issue related to AT&C losses, raised in the instant
Petition.”
32. It is submitted that the above calculation of penalty by Hon’ble Commission was based on
revenue demand at tariff determined by Hon’ble Commission vide its Order dated 30th
September 2009. However, pursuant to Hon’ble Supreme Court’s Order dated 28th August 2012
and subsequent revision of bills for industrial HT & EHT consumers, the revenue demand for
the FY 2009-10 has reduced by Rs 54.57 crores and based on revised revenue demand,
collection efficiency for the FY 2009-10 has also improved, leading to a AT & C loss of 28.60
%.
Table 15 Calculation of Penalty/ (Incentive) for AT&C Losses for FY 2009-10
Particulars Unit Amount AT&C losses approved by Hon'ble Commission in FY 2007-08 % 31.62 Mandated minimum reduction of AT&C Losses for entities having AT&C Losses in excess of 30%. % 3.00
AT & C Loss target to be achieved in FY 2008-09 % 28.62 Mandated minimum reduction of AT&C Losses for entities having AT&C Losses below 30%. % 1.50
AT & C Loss target to be achieved in FY 2009-10 % 27.12 Actual AT&C losses during 2009-10 after implementation of Hon'ble Supreme Court's Order dated 28.08.12.
% 28.60
Shortfall % due to less AT&C Losses during 2009-10 % (1.38) Shortfall in minimum reduction of AT&C losses during 2008-09 in Millions Units = 1.38 % of 978.86 MU MU 13.51
Average aggregate Unit Rate for sale of power during 2009-10 Rs./Unit 3.69 Penalty for AT&C Losses non-achievement 2009-10 Rs. Crs 4.98
Other Income
33. It is submitted that this Hon’ble Commission had provisionally assessed vide Order dated
5.8.2010, the “Other Income”, which includes Delayed Payment Surcharge, at Rs.22.67 Crores.
As per the Audited Accounts 2009-10, other income was Rs 58.50 crore. However, due to
revision in bills of industrial HT & EHT consumers, Delayed Payment Surcharge has also
reduced from Rs 48.59 crore by Rs 15.56 crore to Rs 33.03 crore. Therefore, the MePDCL
humbly prays before the Hon’ble Commission to kindly reduce Other Income from Rs 58.50
crore by Rs 15.56 crore to Rs 42.93 crore, as shown below :
Table 16 Calculation of Penalty/ (Incentive) for AT&C Losses for FY 2009-10
Sl. No. PARTICULARS
Provisionally assessed by MSERC vide Order dated 5.8.2010
FY 2009-10
(Audited)
Truing up after implementation of Hon'ble Supreme Court's Order dated 28.8.12,vide this petition
1 Interest on Staff Loans and Advances
226700000 108907 108907
2 Income from Investment 53211511 53211511 3 Interest on Loans and
Advances to licensee
4 Delayed payment charges from consumers 485921283 330306162
5 Discount/Rebates from suppliers/contractors 31455996 31455996
6 Interest from Bank (other than fixed deposit) 277208 277208
7 Income from Trading 3123628 3123628
8 Income from staff welfare activities
9 Miscellaneous Receipts 10912332 10912332 10 Total 226700000 585010865 429395744
Aggregate Revenue Requirement and Revenue Gap/Surplus for FY 2009-10
34. It is submitted that due to changes in Revenue from Sale of Power, AT&C losses and Other
Income, the Annual Revenue Requirement for FY 2009-10 will also change. The table below
summarizes the Revised Aggregate Revenue Requirement and Revenue Gap/Surplus for FY
2009-10.
Table 17: Aggregate Revenue requirement and Revenue Gap/Surplus for FY 2009-10
Particulars
FY 2009-10 Provisionally
assessed by MSERC vide
Order dated 5.8.2010
(Actual) Deviation
Power Purchase Cost including Transmission Charges 223.74 223.91 0.17 Repair & Maintenance Expenses 20.26 20.09 (0.17) Employee Expenses 111.03 114.92 3.89 Administration & General Expenses 8.71 10.01 1.30 Depreciation 17.08 25.94 8.86 Interest & Finance Charges 72.70 83.49 10.79
Other Debits (Incl Provisions for Bad Debts) 10.00 14.24 4.24
Income Tax 4.94 - (4.94) Prior Period Charges /(Credits) 102.51 102.51 Revenue Expenditure 468.46 595.10 126.64 Less: Expenses Capitalised Interest & Finance Charges Capitalised 58.65 63.85 5.20 Employee Expenses Capitalised 9.31 9.98 0.67 Administration & General Expenses Capitalised 0.13 0.13 Net Revenue Expenditure 400.50 521.15 120.65 Return on Equity Capital 28.28 28.28 -
Aggregate Revenue Requirement 428.78 549.43 120.65 Less: Non Tariff Income Other Income 22.67 42.94 20.27 R.E.Subsidy 13.68 12.31 (1.37) Fiscal Loss for failure to cause 3% reduction of AT&C loss 55.27 4.98 (50.29) Net Aggregate Revenue Requirement 337.16 489.20 152.04 Revenue from Sale of Power 399.56 361.17 (38.39) Net Gap/ (Surplus) (62.40) 128.03 190.43
Prayer
In view of new facts, circumstances and submissions made in this petition, the Petitioner prays that
this Hon’ble Commission may be pleased to consider the submissions made in this petition and :
(a) Approve the ARR of Rs 489.20 Crores against the provisionally assessed vide Order dated
5.8.2010 of Rs 337.16 Crores.
(b) Approve the revised Revenue of Rs 361.167 Crores against provisionally assessed vide Order
dated 5.8.2010 at Rs 399.57 Crores.
(c) Allow the deficit of Rs 128.03 crores for FY 2009-10 to be adjusted in the subsequent year.
(d) Allow that the tariff for other categories other than IHT and IEHT may be adjusted in
subsequent tariff orders.
(e) Pass such orders, as Hon’ble Commission may deem fit and proper and necessary in view of
the facts and circumstances of the case.
(f) Condone any inadvertent omissions, errors & shortcomings and permit the applicant to
add/change/modify/alter this filing and make further submissions as required.
Petitioner
S.B. Umdor
Superintending Engineer (R-O)
For & on behalf of Meghalaya Power Distribution Corporation Limited
ITEM NO.4 COURT NO.12 SECTION XVII
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CIVIL APPEAL NOS. 1237-1238 OF 2011
BYRNIHAT INDUSTRIES ASSN. Appellant(s)
VERSUS
MEGHALAYA STATE ELCT.REG.COMMN. & ANR. Respondent(s)
(With appln(s) for stay and office report)
(FOR FINAL DISPOSAL)
Date: 28/08/2012 These Appeals were called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE SURINDER SINGH NIJJAR
HON'BLE MR. JUSTICE H.L. GOKHALE
For Appellant(s) Mr. C.A. Sundaram,Sr.Adv.
Mr. M.G. Ramachandran,Adv.
Mr. K.V. Mohan,Adv.
Mr. Anand K. Ganesan,Adv.
Ms. Swapna Sheshadri,Adv.
For Respondent(s) Mr. P.S. Narsimha,Sr.Adv.
Mr. Vishal Anand,Adv.
Mr. Pukhrambam Ramesh Kumar,Adv.
Mr. A.V. Rangam,Adv.
UPON hearing counsel the Court made the following
O R D E R
The appeals are dismissed as having become infructuous in terms of the signed order.
(A.S. BISHT) (INDU BALA KAPUR)
COURT MASTER COURT MASTER
(Signed order is placed on the file)
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1237-1238 OF 2011
BYRNIHAT INDUSTRIES ASSOCIATION Appellant(s)
VERSUS
MEGHALAYA STATE ELCTRICITY REGULATORY COMMISSION
AND ANR. Respondent(s)
O R D E R
By order dated 10.9.2009 passed by the Meghalaya State Electricity Regulatory Commission, the unit rates of demand charges/energy charges were revised and fixed in the manner specified in Column (3) of Table VII attached with the aforesaid order. The said orders states that these rates shall be deemed to have come into effect from 1st October, 2008 and shall remain valid till the Tariff (D) is next revised by the Commission. On the basis of the tariff now fixed by the Commission, the amount due from the appellants was Rs.358.31 crores for the fiscal year 2008-09. The appellants had actually paid Rs.371 crores although the original claim by the respondents was Rs.465.73 crores.
In our considered opinion, since the final amount due has been fixed at Rs.358.31 crores, the present appeals have been rendered infructuous. The appeals are accordingly dismissed as having become infructuous.
However, any surplus amount which may have accrued to the appellants shall be adjusted against the future bills in accordance with law.
.....................J
(SURINDER SINGH NIJJAR)
.....................J
(H.L. GOKHALE)
New Delhi;
August 28, 2012.
ANNEXURE VI
Difference in average rate against each category between Tariff Order Dated 30.09.2008 and Tariff Order dated 10.09.2009.
LT Category Sale in
MU
Rate as per Tariff Order Dated 30.09.2008 Rate as per Tariff Order Dated 10.09.2009
Difference of Average
Rate Connected Load (KW)
Demand Charge (Rs per
KW)
Total Demand Amount
Slab of Units Rates
(paisa per unit)
Amount in each
slab (Lakhs)
Total Revenue (Rs. In Cr)
Average rate (Rs per unit)
Demand Charge (Rs per
KW)
Total Demand Amount
Rates (paisa
per unit)
Amount in each
slab (Lakhs)
Total Revenue (Rs. In Cr)
Average rate (Rs per unit)
Domestic (DLT) 192.11 218307 25 654.92
First 100 Units 235 2528.13
58.83 3.06 25 654.92
225 2420
56.29 2.93 0.13 Next 100 Units 275 1426.42 264 1369
Above 200 Units 390 1273.74 363 1185
Commercial (CLT) 30.63 42910 70 360.44
First 100 Units 400 428.80
17.58 5.74 70 360.44
400 429
17.57 5.74 0.00 Next 100 Units 475 509.20 475 509
Above 200 Units 500 459.50 500 459
Industrial(ILT) 4.68 10771 100 129.25
First 500 Units 400 18.80
3.57 7.63 100 129.25
400 19
3.56 7.61 0.02 Next 500 Units 480 33.60 478 33
Above 1000 Units 500 175.50 500 175
Public Lighting (PL) 1.49 323 70 2.71 All Units 500 74.50 0.77 5.18 70 2.71 490 73 0.76 5.08 0.10 Public Water Supply (WSLT)
6.43 4206 60 30.28 All Units 390 250.77 2.81 4.37 60 30.28 400 257 2.87 4.47 -0.10
Agriculture (AP) 0.61 476 30 1.71 All Units 150 9.15 0.11 1.78 30 1.71 132 8 0.10 1.59 0.18
General Purpose (GP)
8.95 8911 50 53.47
First 100 Units 440 86.68
4.87 5.44 50 53.47
440 87
4.86 5.44 0.00 Next 100 Units 475 93.57 475 93
Above 200 Units 505 253.00 505 253
Kutir Jyoti metered (KJ)
2.70
Rs. 50/-
15.39 0.15 0.56
Rs. 50/-
15.39 0.15 0.56 0.00 Kutir Jyoti unmetered (KJ)
Rs. 60/- Rs. 60/-
Office employees 45.00 10 45.00 0.45 0.100 44 44 0.44 0.098 0.002
HT Category Contract Demand
(KVA)
Rate (Rs per Kva)
Rate (Rs per Kva)
Domestic HT
79.16 61909 300 1671.55 All Units 300 2374.8 40.46 5.11 225 1253 225 1781 30.34 3.83 1.28 Public Service (Bulk supply)
Commercial (CHT) 6.15 6492 280 163.60 All Units 350 215.25 3.79 6.16 242 141 286 176 3.17 5.15 1.01 Public Water Works (WSHT)
19.52 7458 170 114.12 All Units 280 546.56 6.61 3.38 170 114 280 546 6.60 3.38 0.00
ANNEXURE VII
Actual Sale in MU and amount (Rs) for the period from April 2009 to December 2009
Sl. No. LT Category
Difference of Average
Rate (Rs per unit)
Actual Sale in MU for the period from April
2009 to December 2009
Amount (Rs in crore)
1 Domestic (DLT) 0.13 149.61 1.94
2 Commercial (CLT) 0.00 28.71 0.00
3 Industrial(ILT) 0.02 4.16 0.01
4 Public Lighting (PL) 0.10 1.12 0.01
5 Public Water Supply (WSLT) -0.10 4.67 -0.05
6 Agriculture (AP) 0.18 0.44 0.01
7 General Purpose (GP) 0.00 8.15 0.00
8 Kutir Jyoti metered (KJ) 0.00 3.56 0.00
9 Office employees 0.002 27.59 0.01
HT Category
1 Domestic HT 1.28 12.95 1.66
2 Public Service (Bulk supply) 1.28 41.93 5.37
3 Commercial (CHT) 1.01 8.65 0.87
4 Public Water Works (WSHT) 0.00 18.54 0.00
