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Bangalore Electricity Supply Company Limited MYT for 3rd control period (FY14 FY16)
CHAPTER 8
Annual Revenue Requirement For The 3rd Control Period(FY-14 to FY-16)
Principles for computation of Annual Revenue Requirement (ARR ) of the Distribution Licensee is laid down in chapter-III of MYT regulations -2006 framed by the Commission. Computation of ARR of each year of the Control period shall comprise of the following, namely:
(a) Power Purchase Costs } for Retail Supply
} Business
(b) Transmission and SLDC Charges }
(c) Operation and maintenance expense
(d) Interest on loan capital
(e) Return on equity
(f) Depreciation
(g) Interest on working capital
(h) Taxes on Income
(i) Other expenses if any
(j) Less: Non-tariff income, income from Other Business.
Based on the above Principles, the following cost are estimated as under:
8.1 Power Purchase Costs:
Power Purchase for FY 13:-
1. The Commission has approved source wise power purchase quantum and cost for FY 13. The actual cost incurred upto Sept 2012 and the Commissions approved figures for FY-13 is tabulated below.
Source
Approved
Actual upto Sept-2012
Energy in MU
Cost in Rs/Crore
Energy in MU
Cost in Rs/Crore
KPCL Hydel
3596.27
246.81
1421.40
118.45
KPCL Thermal
8840.78
2757.14
3042.36
1148.13
CGS
5659.02
1704.79
2720.87
713.19
IPPs
2817.18
1055.40
1193.15
425.91
NCE
2692.05
958.95
1909.51
649.18
Others
134.97
29.33
382.62 (Section11)
202.79
Short term
7564.51
3369.22
3491.09
1510.95
Transmission Charges
-
952.09
-
467.56
SLDC Charges
-
11.07
-
-
PGCIL
-
207.80
-
86.99
Total
31304.78
11292.61
14161.02
5323.15
2. GOK vide order dated 23.4.2012, has revised the share of allocation and the same is incorporated in Tariff order for 2013. The revised source wise allocation is as below.
KPCL:-
Hydel
Sharavathy
16.97%
Others
41.58%
Thermal
RTPS 1 to 7
49.62%
RTPS 1 x 250 MW
BTPS
DG Plant
100%
CGS:-
NTPC, NLC, PGCIL, MAPS& Kaiga
49.62%
Major IPPs:-
Tata, Rayalaseema (upto Aug12) & UPCL
49.62%
NCE:-
Wind, Mini hydel, Biomass, Co-gen (Based on Geographical Area)
100%
Short term:-
M/s JSW, PTCIL, NETS etc
70.62%
3. The Tariff of state owned stations (KPCL) is as per PPA approved by KERC and at provisional tariff for which PPAs are yet to be approved (Varahi 3 & 4, erstwhile VVNL Hydel and RTPS 1x 250 MW).
The Tariff of CGS is as per CERC Tariff Regulations 2009. The Tariff of atomic stations is as approved by Department of Atomic energy.
The Tariff of Tata Power is as per PPA and that of UPCL is provisionally approved by GOK. The final Tariff is yet to be approved by CERC.
The tariff of short term contracts is as per PPA.
4. There is acute shortage in power availability due to failure of monsoon and to mitigate the shortage, BESCOM had entered into short term contracts and procured power from Non PPA Generators as per GOK order dated 27.1.2012, under Section 11 of Electricity Act 2003. The rate provisionally fixed by GOK is Rs 5.30 per unit which is subject to approval of the Commission. BESCOM had filed a petition for determination of tariff which is yet to be finalized.
5. The power procurement details from short term and section 11 periods is as below.
(a) Short term purchase:-
Name of the Company
Energy in MU
Amount in Rs/Crore
Rate Rs/Unit
M/s NETS
536.38
216.50
4.04
M/s JSW
1728.45
757.41
4.38
M/s PTCIL
67.07
35.62
5.31
BMM ISPAT
72.42
29.69
4.10
M/s Harekrishna
14.23
7.33
5.15
M/s Tata
27.53
14.76
5.36
M/s NSL (Tungabhadra)
17.32
9.18
5.30
M/s GUVNL
1027.69
440.46
4.29
Total
3491.09
1510.95
(b) Section 11 period purchase (April-12 and May-12)
Name of the Company
Energy in MU
Amount in Rs/Crore
JSW
210.73
111.69
NSL Tungabhadra
11.52
6.10
Core Sugars
6.15
3.26
Sathavahana Ispat Ltd
2.20
1.17
Indian Cane Sugars
16.95
8.99
Star Metallics
12.10
6.41
Satish Sugars
5.39
2.86
Parrys Sugars
1.09
0.58
Sadhashiva Sugars
2.69
1.43
Davangere Sugars
15.90
8.43
Dhruvdesh Meta Steel
5.42
2.87
Vishwanath Sugars
7.01
3.72
Ugar Sugar Works (Chikkodi)
0.65
0.35
JK Cements
3.34
1.77
Himatsingka
3.50
1.86
Ugar Sugar Works (Yadgir)
2.42
1.28
Nirani Sugars
12.69
6.72
Renuka Sugars
9.91
5.25
Gem Sugars
6.22
3.30
Sunvik Steels
0.53
0.28
Surana
10.39
5.51
Prabhulingeshwara
4.41
2.34
Bannari
4.77
2.53
Jamakhandi Sugars
5.96
3.16
Nandi Sahakari Sakkare
6.34
3.36
Godavari Bio Refinaries
9.27
4.89
GM Sugars
1.48
0.78
Shiva shakthi sugar
1.56
0.82
Indian Sugar
2.03
1.08
Total
382.62
202.79
6. Available energy for the next half year of FY-13 is shown in the table below:
Source
Availability from Oct-12 to Mar-13
Energy in MU
Cost in Rs/Crore
KPCL Hydel
1817.74
112.05
KPCL Thermal
4402.05
1217.14
CGS
2801.06
960.31
IPPs
2923.29
1087.98
NCE
1.97
1.18
Others
11.49
0.18
Short term
3531.45
1417.97
Total
15489.05
4796.81
7. Though the power procurement from following projects are approved by the Commission, the same is not available to BESCOM since the projects are not yet commissioned as at the end of Sept 2012.
Name of the Company
Energy in MU
BTPS Unit II
932.69
NLC II Expansion 1
71.28
NLC II Expansion 2
8.49
Simhadri 2
256.47
Vallur TPS Stage 1
100.8
Vallur TPS Stage 2
60.48
NCE (New)
66.58
Others (TB dam and Jurala)
134.97
Total
1631.76
8. The total power purchase cost for FY-13 after subtracting the energy not available is shown in the table below:
Source
Approved
Actual upto Sept-2012
Availability from Oct-12 to Mar-13
Projected for FY-13
Energy in MU
Cost in Rs/Crore
Energy in MU
Cost in Rs/Crore
Energy in MU
Cost in Rs/Crore
Energy in MU
Cost in Rs/Crore
KPCL Hydel
3596.27
246.81
1421.4
118.45
1817.74
112.05
3239.14
230.50
KPCL Thermal
8840.78
2757.14
3042.36
1148.13
4402.05
1217.14
7444.41
2365.27
CGS
5659.02
1704.79
2720.87
713.19
2801.06
960.31
5521.93
1673.50
IPPs
2817.18
1055.4
1193.15
425.91
2923.29
1087.98
4116.44
1513.89
NCE
2692.05
958.95
1909.51
649.18
1.97
1.18
1911.48
650.36
Others
134.97
29.33
382.62 (Sec11)
202.79
11.49
0.18
202.97
Short term
7564.51
3369.22
3491.09
1510.95
3531.45
1417.97
7022.54
2928.92
Transmission Charges
-
952.09
-
467.56
484.53
952.09
SLDC Charges
-
11.07
-
-
PGCIL
-
207.8
-
86.99
86.99
173.98
Total
31304.78
11292.61
14161
5323.15
15489.05
5368.34
29650.07
10691.49
Less: Energy Not available
1631.76
580.35
Grand Total
28018.31
10111.14
The Commission in its order OP 08/2009 had treated certain extra expenditure on power purchase as Regulatory Asset and further ordered that the Regulatory Asset of Rs.37.74 Crore shall be passed on to the consumers in three equal installments in each year of the control period FY11-13. Accordingly, the Commission in its MYT Order dated 07.12.2010 had included an amount of Rs.12.58 Crore for each of the years during FY11-13. Accordingly, Rs.12.58 Crore is included in the power purchase cost for FY13. The Power Purchase Cost works out to Rs. 10123.72 Cr.
ENERGY AVAILABILITY & COST FOR 2013-14 to 2015-16
Total energy requirement of ESCOMs for multi-year tariff period from 2013-14 to 2015-16 is shown in the table below:
Energy in MU
ESCOMs
2013-14
2014-15
2015-16
BESCOM
30660.00
33791.18
37273.45
GESCOM
8330.00
9130.37
9683.29
HESCOM
11129.00
14170.83
15962.44
MESCOM
5018.00
5250.79
5782.34
CESC, Mysore
6874.00
7950.45
8222.58
Total
62011.00
70293.62
76924.10
The projected energy availability and power purchase cost is allocated among the ESCOMs based on GoK order dated 23rd April 2012.
The year wise availability of energy and deficit for the year 2013-14 to 2015-16 is as detailed below:
Energy in MU
Year
Availability
Deficit/Surplus
2013-14
58532
-3479
2014-15
60572
-9722
2015-16
77780
856
ESCOMs having a long term power purchase agreement with KPCL Hydel, Thermal, Central Generating Stations, Independent power producers, Non conventional Energy Source and others. ESCOMs have entered into agreement with traders for procurement of power on medium term basis through competitive bidding route.
KPCL, Hydro
Energy availability of hydel stations is anticipated based on the inflows for the past ten years moving average minus 1% auxiliary consumption as per PPA. In case of KPCL thermal stations, auxiliary consumption considered by KPCL is shown in the table below:
Thermal stations
Auxiliary Consumption in %
RTPS unit 1 to 7
9.00
RTPS Unit 8
8.50
BTPS Unit 1
7.50
BTPS Unit 2
7.50
DG plant
4.50
Yermarus Unit 1 & 2
6.00
BTPS Unit 3
6.00
Bidadi CCCP
3.00
As per KPCL statement on energy projection, following units are expected to commission during control period of 2013-14 to 2015-16, as shown in Table.
Units
Expected date of commissioning of unit
Yermarus Unit-1
2014-15
BTPS Unit 3
2015-16
Bidadi CCCP
2015-16
Yermarus Unit 2
2015-16
The details of energy availability furnished by KPCL in respect of Hydel and thermal generating stations have been considered. The availability of hydel generation is as shown in Table.
Energy in MU
Sl no
Generating Station
Design Energy
2013-14
2014-15
2015-16
1
Sharavathy valley project
3737.95
4982.23
4759.72
4759.72
2
Kali Valley projects
2058.77
2954.17
2686.86
2686.86
3
Varahi Valley projects
848.69
1027.38
1014.75
1014.75
4
Bhadra & Bhadra Right Bank
50.49
62.50
52.47
52.47
5
Ghataprabha(GDPH)
84.97
94.24
91.08
91.08
6
Kadra Dam
419.90
345.09
311.85
311.85
7
Kodasalli Dam
372.48
327.72
295.02
295.02
8
Gerusoppa/STRP
442.62
521.99
502.92
502.92
9
Almatti
384.00
531.36
548.46
548.46
10
Shiva
249.48
238.10
303.93
303.93
11
Shimsa
41.58
67.32
67.32
12
Munirabad
64.69
98.87
70.29
70.29
13
MGHE-Jog
118.00
236.76
301.92
301.92
Total of KPCL Hydel
11461.99
11006.62
11006.62
The availability of KPCL Thermal generation @ ex-bus is as shown in Table
Energy in MU
Sl no
Generating Station
2013-14
2014-15
2015-16
1
RTPS unit I &7
8348.34
9418.50
9418.50
2
RTPS Unit 8
1516.16
1603.08
1603.08
3
BTPS Unit 1
3283.75
3225.48
3225.48
4
BTPS Unit 2
3219.00
3225.48
3225.48
5
BTPS Unit -3
4421.76
6
Diesel Plant Yelahanka
35.34
447.90
447.90
7
Yermarus TPS Unit -1 &2
1380.67
9741.41
8
Bidadi CCCP
3567.66
Total KPCL thermal
16402.59
19301.11
35651.27
HYDEL
The tariff rates are worked out based on KERC order dated 03.08.2009 for hydel stations except for Shivasamudram, Shimsha, Munirabad & MGHE. The tariff for the hydel stations is based on the design energy of the station and incentive is considered for over and above the design energy. A rate of 15 paise per kwh or 3% of the ROE whichever is less has been considered as per PPA for the energy over and above the design energy. The average cost paise per unit including primary and secondary energy charges furnished by the KPCL is as shown in the Table
Rate paise per unit
Sl no
Generating Station
2013-14
2014-15
2015-16
1
Sharavathy valley project
24.43
26.24
27.15
2
Kali Valley projects
45.96
51.99
53.98
3
Varahi Valley projects
76.63
80.38
83.36
4
Bhadra & Bhadra Right Bank
243.23
303.83
319.65
5
Ghataprabha(GDPH)
85.48
90.65
93.61
6
Kadra Dam
156.97
177.54
182.03
7
Kodasalli Dam
122.06
138.53
142.33
8
Gerusoppa/STRP
112.68
118.26
120.61
9
Almatti
157.95
149.34
125.95
10
Shiva
83.63
68.85
71.48
11
Shimsa
91.39
94.40
97.60
12
Munirabad
48.67
69.68
72.67
13
MGHE-Jog
69.86
57.33
59.12
14
Varahi Unit 3 & 4
35.26
33.81
31.91
Average cost
59.12
62.85
63.26
Paise 4 per unit as royalty charges is considered for the actual generation
KPCL Thermal
The tariff rates worked out based on KERC order dated 03.08.2009 for thermal stations 1 to 7 is at 72% PLF. The PLF for DG plant Yelahanka is considered at 72.5%. The PLF for unit 1 & 2 of BTPS is considered @ 80 %. The average rate per unit including Capacity and energy charges for thermal station including DG plant & Bidadi CCCP has been furnished by KPCL. The variable cost /energy charges is escalated at 2.5% each year. The year wise rate is shown in Table
Rate paise per unit
Sl no
Generating Station
2013-14
2014-15
2015-16
1
RTPS unit I &7
355.69
360.10
369.29
2
RTPS Unit 8
373.78
379.91
386.64
3
BTPS Unit 1
315.51
315.01
315.64
4
BTPS Unit 2
346.26
314.65
313.93
5
BTPS Unit -3
360.74
6
Diesel Plant Yelahanka
1433.16
1297.64
1331.52
7
Yermarus TPS Unit -1 &2
450.34
418.93
8
Bidadi CCCP
668.00
Average cost
349.79
374.83
414.69
Central Generating Station
ESCOMs have a share in NTPC Southern Region station of Ramagundam, Talcher Phase II, Neyveli Lignite Corporation, Kaiga Atomic Power Station , Madras Atomic Power Station and Simhadri Unit-II.
The energy available to KPTCL depends on the scheduled generation and share in the station in a month. The available energy for Central Generating Stations as furnished in LGBR for the year 2011-12 has been taken into consideration for 2013-14 to 2015-16.
The Karnataka share in existing Central generating stations is based on allocation made for the month of October 2012 ( including unallocated share) and other new units are based on MoP, GoI notification, the allocation percentage of existing CGS is shown in Table.
Central generation Stations
Capacity in MW
% allocation to Karnataka State
N.T.P.C-Ramagundam
2100
19.61
NTPC-VII
500
20.48
NTPC-Talcher
1800
18.67
NLC TPS2-Stage 1
630
20.7
NLC TPS2-Stage 2
840
20.95
NLC TPS1-Expn
420
25.59
MAPS
440
7.48
Kaiga unit I &II
440
27.82
Kaiga Unit 3 &4
440
30.32
Simhadri Unit -1 &2
1000
20.79
The Kudamkulam Nuclear power projects , NLC expansion Unit 1 & 2 and Vallur JV projects Unit 1 & 2 is expected to commission during 2013-14 and Vallur JV unit 3 and Tuticorin Unit 1 &2 is expected to commission during 2014-15. The share of Karnataka in these projects are shown in Table
Generating Stations
Total installed capacity of the Generating unit
Karnataka share in the project (in %)
NLC Expansion Stage-2 Unit-1 & 2
500
25.88
KudamKulam Unit 1&2
2000
26.00
Vallur TPS Unit-1,2 & 3
1500
8.03
Tuticorin Unit 1 &2
1000
15.80
The availability of energy for the above projects to be commissioned is based on normative availability factors as per CERC 2009 regulation ie Vallur JV - 85%, Kudamkulam Nuclear power project 68.5%, NLC expansion stage -2-80% and Tuticorion-85%.
The availability of energy is considered for the initial 3 to 4 months @ 70% PLF for new projects since plant requires time for stabilization.
Point of connection losses applicable for injection generation stations/states for the week 5.11.2012 to 11.11.2012 is considered to arrive at energy @ KPTCL periphery, the POC losses considered for availability of energy is shown in Table.
Generating Station
Injection State/generating station in %
Withdrawal state losses in %
N.T.P.C-Ramagundam
2.21
1.91
NTPC-VII
2.21
1.91
NTPC-Talcher
2.51
1.91
NLC TPS2-Stage 1
1.91
1.91
NLC TPS2-Stage 2
1.91
1.91
MAPS
2.51
1.91
Kaiga unit I &II
1.91
1.91
Kaiga Unit 3 &4
1.91
1.91
Simhadri Unit -1 &2
2.51
1.91
NLC expansion Stage II unit 1&2
2.51
1.91
Vallur Unit 1,2&3
2.51
1.91
Kudamkulam
2.51
1.91
Tuticorin
2.51
1.91
The availability of energy @ KPTCL periphery after deducting the applicable losses in respect of central generating stations for the period 2013-14 to 2015-16 is shown in Table
Energy in MUs
Central generation Stations
2013-14
2014-15
2015-16
N.T.P.C-Ramagundam
2865.20
2865.20
2865.20
NTPC-VII
685.84
685.84
685.84
NTPC-Talcher
2510.23
2510.23
2510.23
NLC TPS2-Stage 1
658.12
658.12
658.12
NLC TPS2-Stage 2
937.15
937.15
937.15
NLC TPS1-Expn
654.27
654.27
654.27
MAPS
192.21
192.21
192.21
Kaiga unit I &II
755.30
755.30
755.30
Kaiga Unit 3 &4
675.44
675.44
675.44
Simhadri Unit -1 &2
1458.87
1458.87
1458.87
NLC expansion Stage II unit 1&2
758.42
782.87
782.87
Vallur Unit 1,2&3
632.36
801.91
801.91
Kudamkulam
1994.80
1994.80
1994.80
Tuticorin
38.47
706.84
1051.91
Total
14814.99
15679.05
16024.12
The present tariff regulation 2009 of CERC is applicable for the period from 1st April 2009 to 31st March 2014. The capacity charges as determined by the CERC for existing station for the year 2013-14 is considered for 2014-15 & 2015-16 also.
The new PoC regulation came into effect from 1st July 2011. The POC rates (Rs /MW) for different Demand & Generation Zones are being computed from time to time on half year basis as per prevailing CERC regulations. Further, PoC charges for future period will depend on the quantum of approved injection/approved drawl.
The PoC transmission charges for the period 2012-13 (April-2012 to September -2012) is escalated based on quantum of energy allocated from different generating stations during each year, which is shown in Table
Year
Transmission charges in Rs crore
2013-14
486.87
2014-15
502.99
2015-16
502.99
Capacity charges determined by CERC for the year 2013-14 in respect of existing CGS units is considered till 2015-16 without escalation since interest on loan and repayment of loan will be reduced. The variable charges for the period April-2012 to September -2012 is considered for 2013-14 with escalation of 2.5% every year.
The Tariff fixed by CERC has been considered for existing stations and tariff proposed before CERC for determination of tariff in respect of new stations has been taken. In case a petition is not filed for determination of tariff by generating stations, for such projects provisional tariff as indicated by the Generating Stations is considered.
The Central Electricity Regulatory Commission (CERC) has issued Order in petition No. 94/2010 on 17.03.2011, filed by PGCIL on behalf of Power System Operation Corporation Limited (POSOCO) for approval of charges of SRLDC for the control period from 01.04.2009 to 31.03.2014 U/S 4 of Section 28 of Electricity Act 2003.
The payments are to be made as per CERC order dated 17th March 2011 and allocation among the beneficiary depends upon the allocation of capacity. The POSOCO charges payable by ESCOMs to SRLDC for the year 2013-14, 2014-15 and 2015-16 is Rs 3.60, 3.69 & 3.88 crore respectively.
The average cost including capacity, energy charges and income tax in respect of central generating stations for the period 2013-14 to 2015-16 is shown in Table.
Paise per unit
Central generation Stations
2013-14
2014-15
2015-16
N.T.P.C-Ramagundam
223.05
227.14
231.33
NTPC-VII
300.27
305.27
310.39
NTPC-Talcher
247.06
251.18
255.41
NLC TPS2-Stage 1
274.51
279.74
285.09
NLC TPS2-Stage 2
274.46
279.69
285.04
NLC TPS1-Expn
330.08
334.78
339.61
MAPS
229.07
234.53
240.13
Kaiga unit I &II
331.80
339.89
348.19
Kaiga Unit 3 &4
332.74
340.83
349.13
Simhadri Unit -1 &2
369.08
374.08
379.19
NLC expansion Stage II unit 1&2
392.14
399.49
409.48
Vallur Unit 1,2&3
464.56
463.14
470.22
Kudamkulam
422.90
432.05
441.42
Tuticorin
366.00
375.15
384.53
Average Cost
345.31
354.13
360.86
Independent Power Producers
UPCL
M/s Udupi Power Corporation Limited declared commercial operation of first unit-I on 11th November 2010 and the second unit on 19th August 2012.
The availability of energy from UPCL is considered at 85% of the installed capacity (90% of 1200 MW) minus auxiliary consumption of 7.5%. The UPCL has entered into PPA with PSPCL for sale of its 10% installed capacity.
The availability of energy from UPCL is shown in Table
Year
Energy in MU
2013-14
7438.55
2014-15
7438.55
2015-16
7438.55
The tariff of Rs 3.127 per unit is provisionally considered for the years 2013-14 to 2016-17 as interim tariff for the power supplied by M/s Udupi Power Corporation Limited subject to final adjustment after determination of tariff by CERC. The tariff of Rs 3.127 per unit comprises Rs 1.1515 towards capacity charges and Rs 1.9755 towards energy cost which is being contested.
Non conventional Energy Source.
The actual generation of Bio-mass, Co-generation, Mini-Hydel, Wind, Solar and captive power projects for the year 2011-12 have been considered for 2013-14 to 2015-16.
In case of new NCE projects, the details furnished by KREDL are likely to be commissioned from 2013-14 to 2015-16 is considered. However, in respect of wind projects, only 33% of the projected capacity by KREDL has been considered in each year based on previous years data.
These projects are allocated to ESCOMs based on the geographical location of the project.
The availability of energy in respect of new NCE projects like solar power, Wind Mills, & Mini Hydel is based on KERC tariff regulation .(Solar PV-19%, Solar Thermal-23%, Wind Mills -26.5% & mini Hydel-30%).
Wind projects of Madurgudda and Guledagudda of NTPC stations are likely to commission during 2014-15.
The PLF for the above NTPC stations is considered @ 23% as per CERC regulation.
KREDL invited bid for 80 MW solar powers, based on rates obtained in competitive bid, 70 MW solar power projects allotted to ESCOMs. The PLF for these projects are taken as per KERC regulation.
The above solar projects are likely to be commissioned during January 2014 and 2015.
The ESCOM wise NCE energy projected for FY 2013-14 to 2015-16 is as shown in Table
Existing projects Energy in MU
Source
BESCOM
GESCOM
HESCOM
MESCOM
CESC
Co-generation
96.96
21.40
187.86
0.00
149.10
Bio-mass
63.36
103.07
0.00
0.00
1.92
Mini Hydel
591.55
146.95
55.17
363.34
369.78
Windmill
2208.46
130.36
479.06
235.67
186.39
KPCL wind mill
13.51
KPCL solar
4.66
3.52
3.52
5.94
Captive
139.77
5.65
Total
2978.49
545.07
725.61
604.65
713.13
New projects- 2013-14 Energy in MU
Source
BESCOM
GESCOM
HESCOM
MESCOM
CESC
Co-generation
0.00
0.00
0.00
Bio-mass
0.00
0.00
0.00
Mini Hydel
0.00
1.27
0.00
61.40
77.60
Windmill
70.83
6.54
106.64
46.97
0.00
NTPC wind
21.02
0.00
KPCL solar
9.44
4.10
4.10
2.87
4.10
Captive
0.00
0.00
0.00
0.00
Total
101.29
11.92
110.74
111.24
81.70
New projects-2014-15 Energy in MU
Source
BESCOM
GESCOM
HESCOM
MESCOM
CESC
Co-generation
0.00
0.00
0.00
Bio-mass
0.00
0.00
0.00
Mini Hydel
6.50
32.98
7.81
166.38
166.25
Wind Mill
128.94
42.48
261.37
67.66
0.00
Waste Energy
21.02
0.00
Solar
38.28
21.61
16.64
11.65
16.64
NTPC wind
147.79
39.49
54.15
24.81
31.60
Total
342.54
136.56
339.97
270.50
214.49
New projects-2015-16 Energy in MU
Source
BESCOM
GESCOM
HESCOM
MESCOM
CESC
Co-generation
0.00
0.00
0.00
Bio-mass
0.00
0.00
0.00
Mini Hydel
14.76
86.64
23.42
248.73
203.65
Wind Mill
175.24
126.92
426.29
72.28
0.00
Waste Energy
21.02
0.00
Solar
38.28
36.79
16.64
11.65
16.64
NTPC wind
147.79
39.49
54.15
24.81
31.60
Total
397.09
289.85
520.50
357.47
251.89
The existing NCE projects except Bio-mass, & wind mills are escalated @ 2.5% on each year. No escalation is considered for bio-mass projects since Bio-mass projects have completed 10 year tariff period. In respect of wind mill projects, tariff is constant for 10 year, hence no escalation is considered.
In respect of new NCE projects the cost per unit is based on KERC tariff regulation 2009 applicable for 2010 to 2015 thereafter escalated @ 10%.
For solar projects, tariff obtained by KREDL through competitive bidding is considered.
Jurala
The 50% of the energy from Jurala Hydro electric Projects( 117 MW) is expected during 2013-14 onwards. The expected energy from the project is indicated in Table
Year
Energy in MUs
Paise per unit
2013-14
240
246
2014-15
240
252.15
2015-16
240
258.45
The energy from T. B. Dam is shared between AP and Karnataka. The Karnataka share in this scheme is 1/5th of the total generation. The availability of energy from TB Dam is based on the FY 11-12, which is estimated @ 36 MU per year and 1/5th share of revenue expenditure is Rs 177 lakhs with escalation of 2.5% on 2014-15 & 2015-16.
Medium Term Power procurement
The LOIs was placed for 1280 MW for procurement of RTC firm power for the period from 1st September 2011 to 15th June 2013 under Case-1 bidding procedure. The tariff at KPTCL periphery ranged between Rs 4.10 per Kwh and Rs 4.51 per Kwh. The energy availability from medium term source from April-2013 to 15th June-2013 is indicated in Table
Source
Energy availability
Rate @ generation Bus in Paise per unit
Average rate paise/unit
JSWPTC
775.20
426.00
426.00
GUVNL
745.66
410.00
426.24
NETS-Balco
149.13
375.00
389.85
NETS-CSPDL
371.67
392.00
408.80
BMM Ispat
111.38
410.00
410.00
Transmission charges
Rs 34.88
The shortage in availability of power shall be made good under procurement of power through medium term/short term. The tariff of such procurement is considered at Rs 4.40 per Unit for FY-14 and Rs.5.00 per Unit for FY-15 and FY-16.
Transmission charges:
The transmission charges towards Central Generating Stations are included in the computation of power purchase cost for the respective years.
The transmission system in Karnataka operates as one composite net work for the purpose of sharing of charges. The Annual Revenue Requirement of various transmission licensees are pooled together and shared by distribution licensees in their proportion of allocation of installed capacity to the ESCOMs as made by the Government of Karnataka. For the 3rd control period,
The approved transmission Tariff for FY-13 was Rs.952.10 Crs. Per annum. The computed transmission charges based on the above assumption is tabulated for the period from FY-14 to FY-16 :
Year
FY-14
FY-15
FY-16
Cost in Rs. Crs.
1316.44
1338.01
1522.06
8.2 Sales and Distribution Loss for FY-13 and 3rd control period (FY-14 to FY-16):
The Commission, in its Tariff Order dated 30.04.2012, had approved sales of 25856 MU. For computing sales for FY-13, half yearly (from Apr-12 to Sept-12) figures are considered. For the remaining period of FY 13, the energy sales are estimated based on the monthly growth rate of FY-12 over FY-11. For the 3rd control period from FY-14 to FY-16, 4 year CAGR growth rate is considered for metered sales and specific consumption is considered for unmetered sales. The details of energy in MU and distribution loss in percentage for the 3rd control period are shown in the table below:
Particulars
FY-13
FY-14
FY-15
FY-16
Total energy sales projected
23142
25387
27751
30220
Energy not supplied due to missing hours in MU
0
300
800
Total Projected Sales including missing hours in MU
25387
28051
31020
Sales growth rate projected in MU
9.70%
10.49%
10.58%
Distribution Loss In %
14.00
13.80
13.60
13.40
Energy at IF Points in MU
26909
29452
32467
35820
Transmission Loss in %
3.96
3.94
3.92
3.90
Energy at Gen. Points in MU
28018
30660
33791
37273
Energy Input growth rate in percentage
9.4%
10.2%
10.3%
Average MW Requirement
3198
3500
3857
4255
Peak MW requirement at LF of 80%
3998
4375
4822
5319
8.3 Capex:
For FY-13, the Commission has approved a Capex of Rs. 510 Crs. Actual as at the end of Sept-12 is shown in the table below:
Sl.
No.
Schemes
Rs.in Crores
1
11KV Lines for New Stations
73.04
2
11 KV Other Works+DTCs including dedicated DTC for DWS Schemes.
3
Re-conduct ring of ACSR/Rabbit to Coyote in Bangalore Urban
4
Re-conducturing of LT line using Rabbit conductor
5
Re-conducturing (Improvement works on 11KV Rural Feeders)
6
Strengthening of 11KV UG cable Network with RMUs
7
NJY
17.81
8
Providing infrastructure to unauthorized IP Sets
2.19
9
Metering Programme
0.05
10
Metering of BJ/KJ, IP sets & Street lights (Unmetered category)
11
RAPDRP & DAS
70.22
12
Service connections
22.58
13
Replacement of Failed DTCs by new ones
45.8
14
Civil engineering works, DSM & Others
1.15
15
RE Works (General )
8.31
16
Electrification Hamlets/Villages
17
Electrification of IP sets
18
Kuteer Jyothi
19
SCP
20
Electrification Hamlets/HBs/Jcs/Thandas
21
Electrification of IP sets
22
Kuteer Jyothi
23
TSP
24
Electrification of Tribal Colony
25
Electrification of IP sets
26
Kuteer Jyothi
27
T&P and Computers
7.26
28
Other works including Safety measures fund, Local planning, Formation of ALDC, Spill over works etc.
29
Providing AB Cable
Total
248.41
Detailed Capital Investment Plan for the control period (FY-14 to FY-16) is illustrated at Chapter 5.
The table depicting perspective plan for capital investments totaling to Rs.2932.00 Crore for the period from 2013-14 to 2017-18 Year on year, scheme wise proposed investment is furnished below:
Rs. in Crore
Sl. No
Schemes
2013-14
2014-15
2015-16
2016-17
2017-18
Plan
Non Plan
Plan
Non Plan
Plan
Non Plan
Plan
Non Plan
Plan
Non Plan
1
E&I
A
11 KV Lines for New Stations
20.00
50.00
80.00
80.00
80.00
B
11 KV Other Work+ DTCs including dedicated DTCs for DWS Schemes.
15.00
40.00
70.00
70.00
70.00
C
Re- conductoring of ACSR /Rabbit to Coyote in Bangalore Urban
10.00
10.00
30.00
30.00
30.00
D
Re-conductoring of LT line using Rabbit conductor
5.00
5.00
20.00
20.00
20.00
E
Re- conductoring (Improvement works on 11 KV Rural Feeders)
10.00
20.00
20.00
20.00
20.00
F
Strengthening of 11 KV UG cable Network with RMUs
10.00
10.00
25.00
25.00
25.00
2
NJY
370.00
3
Providing infrastructure to Un authorized IP Sets
20.00
60.00
60.00
60.00
60.00
4
(A) DTC Metering Programme Non RAPDRP Area
10.00
25.00
30.00
30.00
30.00
(B) Replacing Mechanical Meter By Electrostatic.
40.00
30.00
20.00
20.00
20.00
( C ) Smart Meter, HT- TOD Meter Replacing MNR etc .
20.00
40.00
30.00
30.00
30.00
5
RAPDRP & DAS
150.00
140.00
6
Service connections
25.00
25.00
25.00
25.00
25.00
7
Replacement of failure DTCs by new ones
15.00
15.00
15.00
15.00
15.00
8
A)Civil Engineering works, DSM & Others
25.00
25.00
25.00
25.00
25.00
B)Consumer Education
1.00
1.00
1.00
1.00
1.00
9
HVDS
30.00
120.00
10
Providing fault locators
5.00
1.00
1.00
1.00
1.00
11
Electrification Hamlets /Villages
6.00
6.00
5.00
5.00
5.00
12
Energisation of IP Sets
6.00
20.00
20.00
15.00
15.00
13
T &P and Computers
5.00
10.00
10.00
10.00
10.00
14
Other works including Safety measures fund, Local Planning
20.00
20.00
20.00
20.00
20.00
15
Providing AB Cable
30.00
90.00
120.00
100.00
110.00
Total
31.00
817.00
31.00
732.00
30.00
597.00
30.00
572.00
30.00
582.00
Grand total
848.00
763.00
627.00
602.00
612.00
8.4 Operation and Maintenance expenses:
The norms prescribed by the Commission in its MYT regulations-2006 are:
2.5.1 a) The Operation and Maintenance (O&M) costs which include employee-
related costs, repairs & maintenance costs and administrative & general costs, estimated for the Base Year and the actual for the previous two years prior to the Base Year in complete detail, together with the forecast for each year of the Control Period based on the norms proposed by the Distribution Licensee including indexation and other appropriate mechanisms;
3.10 Operation and Maintenance expenses: the Licensee in its filings shall submit the consolidated O&M expenses for the Base Year of the Control Period and for the two years preceding the Base Year. The O&M expenses for the Base Year shall be determined based on latest audited accounts, best estimates of Licensee of the actual O&M expenses for relevant years and other factors considered relevant. The O&M expenses for the Base Year, if required, will be used for projecting the expenses for each year of the control period. The Licensee shall also propose appropriate Inflation Factor Norms for operation and maintenance expenses for the first control period
The Commission in its Tariff Order dated 11.01.2008 approved the following formula for approval of O&M expenses.
O&M Cost t = O&M Cost t-1 * (1 + WII + CGI X)
Where,
O&M Cost t is the normative O&M cost approved by the Commission for the financial year
WII is the weighted inflation index of CPI and WPI (CPI 70% WPI 30%) based on the contribution of employee cost, R&M and A&G towards the total O&M cost
CGI is the Consumer growth index, which is linked to increase (CAGR) in no of consumers.
X is the efficiency factor. For BESCOM the Commission fixes the same as 1%
As per the above norms, BASE YEAR means, the financial year immediately preceding the first year of the Control Period. Hence FY-13 is considered as base year for the 3rd control period. FY-11 and FY-12 is considered as two years preceding the Base year.
Actual Operation and Maintenance expenses (O&M) expenses for the years preceding the base year as per annual accounts are as under:
Sl.
No.
Particulars
FY-11
FY-12
1
R&M Expenses
30.68
32.46
2
Employee cost
542.00
649.89
3
Administrative & General Expenses
60.94
81.75
O&M Cost in Rs. Crs.
650.88
764.10
It is to state that the Commission in its Tariff Order 2011 has approved the O&M expenses for FY-13. Accordingly, the total approved O&M expenses for FY13 is as follows:
Total approved O&M Expenses for FY13
Rs. in Crore
Particulars
FY13
Normative O&M expenses
693.35
Additional O&M expenses (uncontrollable)
129.45
Total approved O&M expenses
822.80
As of now, the half yearly O&M figures for FY-13 as on Sept-12 are available.
Sl.
No.
Particulars
FY-13
(As on 30.09.2012)
1
R&M Expenses
10.10
2
Employee cost
389.17
3
Administrative & General Expenses
45.48
O&M Cost in Rs. Crs.
444.75
It is to state that the O&M expenses for FY-13 have been computed based on the following:
Increase in Employee cost over and above the approved cost is due to merger of 76.75% of Dearness Allowance as Dearness Pay as per the Government Order NO. FD 7 SPR 2012 dated 21st April2012.
Dearness Pay is considered as Basic Pay, hence consequential such as House Rent Allowance, Travel Allowance, DCRG and other Basic pay related allowance will be increased.
Month wise breakup of cost booked is shown below. Since the cost increased is due to the said Government Order, we request the Commission to allow the Employees cost in full.
Sl.
No.
Particulars
Apr12
May12
Jun12
July12
Aug12
Sep12
Estimation of Second half year
Total O&M Cost for FY-13
1
R&M Expenses
1.37
0.02
0.64
0.88
3.05
4.14
20.00
30.10
2
Employee cost
51.53
52.83
65.77
82.62
56.44
79.98
480.00
870.17
3
A&G Expenses
5.99
15.12
5.60
4.58
6.62
7.57
46.00
91.98
O&M Cost in Rs. Crs.
58.89
67.97
72.01
88.08
66.11
91.69
546.00
992.25
Hence, for the base year FY-13, O&M expenses of Rs. 992.25 Crs. is considered for computation of O&M cost for the 3rd control period ie., FY-14 to FY-16. For projecting the O&M expenditure for the control period, the Commission approved formula is considered.
O&M Cost t = O&M Cost t-1 * (1 + WII + CGI X)
Where,
O&M Cost t is the normative O&M cost or each year of the control period
WII is the weighted inflation index of CPI and WPI at 70:30
CGI is the Consumer growth index, which is linked to increase (CAGR) in no of consumers from 2008 to 2016
X is the efficiency factor. For BESCOM the Commission fixes the same as 1%
Calculation for WII ie., weighted inflation index: Consumer Price Index and Whole sale Price Index applicable to industrial consumers considering the Base 2001=100. Composite series are worked out taking 70 % of CPI and 30% of WPI. Annual escalation rate is worked out for the composite series. Estimation for 2013 to 2016 is on moving average of 4 years.
Year
WPI
CPI
30% of WPI
70%of CPI
Composite series
Annual Escalation rate in Percentage
1
2
3
4=30% of (2)
5=70% of (3)
6=(4+5)
7
2000
81.59
95
24.477
66.5
91.0
2001
85.8
99
25.74
69.3
95.0
4.47%
2002
87.92
103
26.376
72.1
98.5
3.62%
2003
92.6
107
27.78
74.9
102.7
4.27%
2004
98.72
111
29.616
77.7
107.3
4.51%
2005
103.37
116
31.011
81.2
112.2
4.56%
2006
109.59
123
32.877
86.1
119.0
6.03%
2007
114.94
131
34.482
91.7
126.2
6.06%
2008
124.92
142
37.476
99.4
136.9
8.48%
2009
127.86
157
38.358
109.9
148.3
8.32%
2010
140.08
176
42.024
123.2
165.2
11.44%
2011
157.30
197
47.19
137.9
185.1
12.02%
2012
173.14
216
51.94
151.3
203.3
9.83%
2013
185.20
235
55.56
164.3
219.9
8.17%
2014
199.53
254
59.86
177.9
237.8
8.14%
2015
214.39
274
64.32
191.6
255.9
7.63%
2016
228.66
293
68.60
205.0
273.6
6.92%
*Note:
WPI and CPI figures upto 2012 is as per CERC Notification dt.02.04.2012
Estimation for 2013 to 2016 is on moving average of 4 years.
Thus, Weighted Inflation index for the control period FY-14 to FY-16 is considered as 8.14%, 7.63% and 6.92% respectively.
Consumer growth index: Consumer growth rate is estimated based on the CAGR as stated in the sales forecast.
Particulars
FY-14
FY-15
FY-16
Consumer growth rate (CAGR years)
6.37%
6.46%
6.57%
By considering these inputs, O&M Cost for the 3rd control period is under.
O&M Cost t
O&M cost of the Financial year
FY-14
FY-15
FY-16
O&M Cost t-1
O&M Cost of the previous year
992.25
1126.3
1273.7
WII
Weighted inflation index of CP and WPI
8.14%
7.63%
6.92%
CGI
Consumer growth index linked to CAGR
6.37%
6.46%
6.57%
X
Efficiency factor of BESCOM
1.00%
1.00%
1.00%
O&M Cost in Rs. Crs.
1126.3
1273.7
1432.8
In order to ensure quality service and to cope with the increasing consumers in BESCOM, new works force needs to be added which will result in increase in employees cost. As the second phase of reforms are started, Central/State Government may initiate new reforms process that may result in increase in the employees cost. It is prayed before the Commission to allow the expenses that may arise on account of new recruitment and further reform process.
Since the Employee cost works out to 85% of O&M cost, R&M and A&G expenditure is apportioned at the rate of 5% and 10% respectively.
Sl.
No.
Particulars
FY-12
FY-13
FY-14
FY-15
FY-16
1
R&M Expenses
32.5
30.1
56.3
63.7
71.6
2
Employee cost
690.7
870.17
957.4
1082.7
1217.9
3
A&G Expenses
80.5
91.98
112.6
127.4
143.3
Total
803.6
992.25
1126.3
1273.7
1432.8
O&M cost is segregated in to Wire and Supply business as under.
Sl.
No.
Particulars
Wire business
Retail Supply
Total
11 KV Lines
LT lines
1
Repair and Maintenance
37%
25%
38%
100%
2
Employee Cost
26%
26%
48%
100%
3
Administration and General Expenses
41%
21%
38%
100%
Consequently, the allocated cost for the 3rd control period is as follows:
(Rs. In Crore)
Particulars
FY-12
FY-13
FY-14
FY-15
FY-16
Repair and Maintenance Cost
Distribution Wire Business
20.13
18.66
34.92
39.49
44.42
Retail Supply Business
12.33
11.44
21.40
24.20
27.22
Employee Cost
Distribution Wire Business
359.14
452.49
497.83
562.99
633.31
Retail Supply Business
331.52
417.68
459.53
519.68
584.59
Administration and General Expenses
Distribution Wire Business
49.89
57.03
69.83
78.97
88.84
Retail Supply Business
30.57
34.95
42.80
48.40
54.45
8.5 Depreciation:
The norms prescribed by the Commission in its MYT regulations-2006 are:
3.8.1 Depreciation shall be computed in the following manner, namely:
i) The value base for the purpose of depreciation shall be the historical cost of the asset.
ii)Depreciation shall be calculated annually based on straight-line method over the useful life of the asset and at the rates prescribed in Appendix-1 to these Regulations.
iii)The residual life of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the historical capital cost of the asset. Land is not a depreciable asset and its cost shall be excluded from the capital cost while computing 90% of the historical cost of the asset.
3.8.2Depreciation shall be chargeable from the first year of operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis.
3.8.3 The above said rate of depreciation shall be applicable both for the purpose of tariff as well as accounting.
3.8.3 The Commission may consider allowing advance against depreciation to the extent of difference between the amount of depreciation computed and the debt repayment for the financial year.
3.8.4 Benefit of reduced tariff after the assets have been fully depreciated should remain available to the consumers.
As per the Section 61 of Electricity Act as well as the preamble set by the Commission in its MYT regulations-2006, it is stated that the terms and conditions for determination of tariff shall subject to the provisions of the Act, and shall be guided by factors from (a) to (i) specified therein.
As per the factors specified by the under Section 61 Electricity Act 2003,
The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:-
(a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees;
(b) .
(c) ..
Thus, the Principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensee is the guiding factors for determination of tariff by the State Commission.
Central Electricity Regulatory Commission (CERC) in its notification dated 19th January 2009 issued terms and conditions of tariff. The Computation of depreciation as per these regulations is:
Depreciation
(1) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission.
(2) The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the capital cost of the asset.
Provided that in case of hydro generating stations, the salvage value shall be as provided in the agreement signed by the developers with the State Government for creation of the site: Provided further that the capital cost of the assets of the hydro generating station for the purpose of computation of depreciable value shall correspond to the percentage of sale of electricity under long-term power purchase agreement at regulated tariff.
(3) Land other than the land held under lease and the land for reservoir in case of hydro generating station shall not be a depreciable asset and its cost shall be excluded from the capital cost while computing depreciable value of the asset.
(4) Depreciation shall be calculated annually based on Straight Line Method and at rates specified in Appendix-III to these regulations for the assets of the generating station and Transmission system:
Provided that, the remaining depreciable value as on 31st March of the year closing after a period of 12 years from date of commercial operation shall be spread over the balance useful life of the assets.
(5) In case of the existing projects, the balance depreciable value as on 1.4.2009 shall be worked out by deducting the cumulative depreciation as admitted by the Commission upto 31.3.2009 from the gross depreciable value of the assets.
(6) Depreciation shall be chargeable from the first year of commercial operation. In case of commercial operation of the asset for part of the year, depreciation shall be charged on pro rata basis.
For the purpose of projections of depreciation for the 3rd control period, depreciation rate prescribed under Annexure-III of CERC Notification issued dated 19th January, 2009 is considered.
For the purpose of projected depreciation computation for the 3rd control period following assumptions are considered:
1. Actual closing Gross Fixed Assets (GFA) of FY-12 as per provisional accounts of FY-12
2. Estimated Additions and Retirement of assets for FY-13 are based on the accounts available upto 30.09.2012 and estimation for the next half year.
3. 75% of the capex envisaged during each year of the Control period is booked on that year and 90% of the booked cost will be capitalized
4. Capital work in progress at the end of previous year will be categorized in the succeeding year of the Control period
5. Depreciation rates as specified by the CERC is applied on the 90% of the Closing Gross fixed Asset of each year of the control period.
6. Deduction of Depreciation withdrawn from contribution /subsidies as per Accounting Standard-12 is considered at the amount equal to actual of FY-12 for each year of the control period.
Gross fixed assets at the beginning year of year addition and released during FY-12 and half yearly figures of FY-13 as on 30.09.2012 is as under.
Particulars
FY-12
1st Half yearly accounts
of FY-13 as on 30.09.2012
Estimation for 2nd Half year of FY-13
Total of FY-13
Opening Gross Fixed Asset (GFA)
4122.08
4331
4611
4331
Add: Additions during the year
333.24
280
405
685
Less: Retirement
124.32
100
100
Closing GFA
4331
4611
4916
4916
Depreciation for FY-13 based on half yearly details
Particulars
FY-13
Opening Gross Fixed Asset (GFA)
4331.00
Add: Additions during the year
685.00
Less: Retirement
100.00
Closing GFA
4916.00
90% of GFA
4424.40
Average Dep. Rate ( In %)
4.58%
Depreciation
202.64
Less: Depreciation with drawn from Consumer contribution/subsidies plus withdrawal of depreciation
76.00
Depreciation charged to the Tariff
126.64
Capital Expenditure ( Capex) envisaged for each year of the Control period.
Particulars
FY-14
FY-15
FY-16
Capital Expenditure (Capex) envisaged
848.00
763.00
627.00
Estimated Booking Cost at (75% of the capex envisaged)
636.00
572.25
470.25
Assets categorized ( 90% of booking Cost)
572.40
515.03
423.23
Depreciation envisaged for each year of the Control period
Particulars
FY-14
FY-15
FY-16
Opening Gross Fixed Asset (GFA)
4916
5378.40
5773.43
Add: Additions during the year
572.4
515.03
423.23
Less: Retirement
110
120.00
130.00
Closing GFA
5378.4
5773.43
6066.65
90% of GFA
4840.56
5196.08
5459.99
Average Dep. Rate ( In %)
4.58%
0.05
0.05
Depreciation
221.70
237.98
250.07
Less: Depreciation with drawn from Consumer contribution/subsidies plus withdrawal of depreciation
78.00
80.00
83.00
Depreciation charged to the Tariff
143.70
157.98
167.07
Depreciation is segregated in to Wire and Supply business as under.
Particulars
Wire business
Retail Supply
Total
11 KV Lines
LT Lines
Depreciation
53%
18%
29%
100%
Consequently, the allocated cost for the 3rd control period is as follows:
(Rs. In Crore)
Particulars
FY-12
FY-13
FY-14
FY-15
FY-16
Depreciation
Distribution Wire Business
88.46
89.91
102.03
112.17
118.62
Retail Supply Business
36.13
36.72
41.67
45.81
48.45
8.6 Interest and finance charges:
Interest and finance charges includes following costs.
Interest on loan capital
Interest on Working Capital
Interest payable in consumer Security Deposit/ meter security Deposit.
Interest on loan capital: The norms prescribed by the Commission in its MYT regulations-2006 are Interest on loan capital shall be computed loan wise.
Projection of interest for each of the control period is on following basis.
Loan outstanding as on 31.03.2012 as per provisional accounts duly considering the rate of interest, and terms of repayment
For FY-13, loan existing as on 30.09.2012 and the estimation for the next half year is considered for computation of interest.
For financing of future capital cost of projects, a Debt: Equity ratio of 70:30 is adopted as per the norms framed by the Commission under 3.7.1 of MYT regulations
Loan Capital outstanding as on 31.03.2012 and loan wise details are as under.
Sl. No.
Acc. Code
Name of the loan
Year of Drawal
Amount out standing as on 31.03.12 in Rs. Crs.
Rate of Interest per annum
Loan term
Average amount of repayment per year in Rs. Crs.
Int.
due
1
53.308
PMGY- loan from GOI through GOK
carried forward from KPTCL
1.1
12
20
0.11
0.13
2
53.332
Loan from GOK-APDRP
carried forward from KPTCL
45.87
11.5
20
4.1
5.28
3
53.333
Loan from REC-APDRP
2006
100.72
8.5-11.5
13
19.66
11.08
4
53.336
Loan from REC-RGGY
carried forward from KPTCL
15.59
5.4 to12.25
15
0.94
1.71
5
53.337
Loan from Gok- Ganaga kalyana
2006
2.16
11
10
0.54
0.24
6
53.501
Loan from Comml. Bank-SPA Schemes-SBI(RLMS)
2005
21.45
11
10
14.28
2.36
7
53.501
Loan from Comml. Bank-SPA Schemes-Canara Bank
2011
399.99
10.85-11.25 Repayment from 2013 (40 quarterly installments)
13
20
44.00
8
53.501
Loan from Comml. Bank-SPA Schemes-BOI
2010
200
12 Repayment from 2013 (40 quarterly installments)
13
20
24.00
9
53.961
Loan from PFC
carried forward from KPTCL
1.1
11
13
0.111
0.12
10
3.3477
RAPDRP(PFC)(A)
2009
78.4
11.5 Repayment from 2013 (40 quarterly installments
20
5.88
9.02
11
53.348
RAPDRP(PFC)(B)
2010
43.54
11.5 Repayment from 2015 (40 quarterly installments
20
3.26
5.01
12
53.337
PFC(DRUM)
2010
12.3
11.25-12
6
1.96
1.41
13
Japan Bank JBIC
96.64
12
11.11
Total
1018.86
90.841
115.47
Loan for FY-13: For FY-13 upto Sept-12, Rs. 280 Crs. has been booked towards Capex through internal resources. BESCOM applied loan to an extent of R.400 Crs. Banks are yet to sanction the loan as on 31.10.2012. Hence interest provision to an extent of 3 months is provided for R.400 Crs.
Interest on new loan capital; Capex envisaged for each year of the control period is as under:
Particulars
FY-14
FY-15
FY-16
Capex envisaged for the control period
848
763
627
For financing of future capital cost of projects, a Debt : Equity ratio of 70:30 should be adopted is the norms fixed by the Commission.
The share of equity ie., 30% of the future capital cost will meet through
40% of the Planned Capital Works is met through loan from GoK which will be converted as equity in future.
Consumer Security deposit
Cash component collected from the consumers as Service Line Cost and
Return earned on equity for each of the control period.
As Balance sheet of BESCOM will not support any more borrowings from the Commercial Banks. It is obvious to BESCOM to go for loan from Power Finance Corporation or other Financial Institutions recommended by the Ministry of Power, Government of India. The rates of interest of Central Government financial institutions are usually higher than the Commercial Banks. Hence following assumptions are considered for projecting the interest
3 years moratorium period for repayment of loan
Term loan be 10 years and repayment is on quarterly basis
Interest rate at 11.75%
(i) Means of Finance:
Internal resources generated though collection of Government of Karnataka (GoK) Loan, MMD , Addl. MMD, Service line cost and Return on Equity is considered as the internal resources for the capex plan. Total Amount of internal resources available for the capex for the 2nd control period is shown below:
Rs. in Crs.
Particulars
FY-14
FY-15
FY-16
Capitalization out of fresh investments
253.42
256.86
272.90
Means of Finance
1.Consumer deposit
114
114
114
2. Consumer Contribution
30
30
30
3. ROE
69.42
82.86
98.90
4. GoK Loan
40.00
30.00
30.00
Total
253.42
256.86
272.90
(ii)Debt Equity ratio:
Rs. in Crs.
Particulars
FY-14
FY-15
FY-16
Capex
848
763
627
Internal Resources
253.42
256.86
272.90
Borrowings
594.58
506.14
354.10
Debt Ratio
70%
66%
56%
Equity Ratio
30%
34%
44%
(iii) Borrowings:
It is proposed to raise the funds required for the capex plan through various financial institutions and Commercial banks. Prevailing SBI lending rates of 11.75% as on 1st of April of the year is considered. The new loan and repayment is spread over for the whole year. The loan borrowed for the year is the difference between the new loan and the repayment. For computation of interest half of the above difference is reckoned. interest to be paid is computed by adding the opening balance and portion is arrived . The detailed computation is furnished below.
Rs. in Crs.
Sl.
No.
Years
FY-14
FY-15
FY-16
Interest on Fresh Borrowings
1
Opening Balance
0
594.58
1,100.72
2
New loan addition
594.58
506.14
354.10
3
Half of Sl. No.2 ( 2 X0.5)
297.29
253.07
177.05
4
Net New loan considered for computation.(1+3)
297.29
847.65
1,277.78
5
Rate of interest @11.75% on opening balance + mean
34.93
99.60
150.14
Computation of interest on the existing Loan for control period
Years
FY-13
FY-14
FY-15
FY-16
Opening Balance
1418.86
1328.02
1237.18
1146.34
Average Repayment
90.84
90.84
90.84
90.84
Closing Balance
1328.02
1237.18
1146.34
1055.5
Rate of Interest (weighted average)
150.46
140.17
129.88
119.59
Abstract of interest on Loan capital
Particulars
FY-14
FY-15
FY-16
Interest on existing loan Capital
140.17
129.88
119.59
Interest on New loan Capital
34.93
99.60
150.14
Total
175.10
229.48
269.73
Interest on working capital: Norms fixed by the Commission for the purpose of computation of interest on working capital as per MYT regulations are as under:
3.11.1Working capital shall cover:
(a) Operation and maintenance expenses for one month;
(b) Maintenance spares @ 1% of the historical cost of assets at the beginning of the year and
(c) Receivables equivalent to two months average revenue.
3.11.2 Rate of interest on working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on 1st April of the year. The interest on working capital shall be payable on normative basis notwithstanding that the Distribution Licensee has not taken working capital loan from any outside agency.
Table below depicts the estimated cost towards working capital
Particulars
FY-14
FY-15
FY-16
1/12th Operation and Maintenance
93.86
106.14
119.40
1% of Gross fixed assets at the beginning of the year
58.55
63.57
67.90
2 months Receivables
2,017.00
2,254.00
2,525.00
Estimated Working Capital
2169.32
2423.42
2712.13
Projected Interest on working capital at 14.75%p.a as on 13th Aug 2011
319.97
357.45
400.04
Interest on consumer Security deposit and Meter Security Deposit: Norms fixed by the Commission for the purpose of payment of interest on Consumer Security deposit vide regulation 8 of KERC (Security Deposit) Regulations-2007 are as under
The Licensee shall pay interest on Security Deposit (ISD, ASD & Meter Security Deposit) of the Consumer as specified under K.E.R.C. (Interest on Security Deposit) Regulations, 2005
As per Regulations,2005 interest on security deposit of the consumer at the Bank Rate prevailing as on 1st April of the financial year for which interest is due
Consumer Security Deposit (ISD and ASD) and Meter Security Deposit held for FY-11 to FY-16 is as under.
Following assumptions are made for the purpose of computation of interest on Consumer Security deposits.
Net Security deposit collected in the previous control period is approximately about One hundred Crore. Hence it is presumed that Rupees One hundred and ten Crore will be collected in each year of the 3rd control period.
Bank rate at 9 per cent per annum is considered as per the MONETARY AND CREDIT INFORMATION REVIEW, Volume VIII , Issue 10 April 2012
Particulars
FY-12
FY-13
FY-14
FY-15
FY-16
Security Deposit( ISD and ASD)
1933.71
2043.71
2153.71
2263.71
2373.71
Meter Security Deposit
73.13
77.13
81.13
85.13
89.13
Total
2006.84
2120.84
2234.84
2348.84
2462.84
Interest paid
105.86
117.99
201.14
211.40
221.66
Rate of Interest paid
5.27%
5.56%
9.00%
9.00%
9.00%
(Source: RBI website)
Other interest and Finance charges for FY-13 are retained at Rs.4.65 Crs as approved in Tariff Order 2012. For the control period an amount of Rs.7.22 is projected.
Consolidated Interest and Finance Charges
Particulars
FY-12
FY-13
(T.O 2012)
FY-14
FY-15
FY-16
Interest on Loan Capital
87.87
150.46
175.10
229.47
269.72
Interest on Working Capital
196.51
148.35
319.97
357.45
400.04
Interest on Consumer Security Deposit
105.87
117.99
201.14
211.40
221.66
Other Interest & Finance Charges
7.22
5.06
7.63
7.63
7.63
Total
397.47
421.86
703.84
805.95
899.04
8.7 Other Debits and Prior period Credits:
The Commission has not been considering the projections for other debits and Prior period Credits for the reason that, the same cannot be estimated beforehand. Hence, the same is not estimated. However, the Commission is requested to allow these amounts based on actual.
8.8 Return on Equity:
The accrued RoE for the 3rd control period is shown below:
Rs. in Crs.
Particulars
FY-12
FY-13
FY-14
FY-15
FY-16
Share capital
205.95
205.95
205.95
205.95
205.95
Share capital
340.96
340.96
340.96
340.96
340.96
Reserve and Surplus
(232.54)
(171.62)
(98.91)
(12.10)
91.54
Total
314.37
375.29
448.00
534.81
638.45
RoE
60.92
72.72
86.81
103.63
123.71
8.9 Other Income:
BESCOM has adopted the changes in schedule VI with effect from 01.04.2011in compliance to the Ministry of Corporate Affairs (MCA) revision dated 1st March 2011. As per the new changes, Other income as per audited accounts of FY-11 and FY-12 are as under.
Particulars
AS per Actulas
Estimated
FY-11
FY-12
FY-13
Interest Income
9.46
4.18
0
Profit on sale of Stores
0.56
0.49
0.84
Excess Provision made in prior period which is no longer required
56.13
0
Rental from Staff quarters
1.12
1.52
1.67
Depreciation withdrawn as per AS12
69.24
73.79
Value of materials found excess during physical verification
0.41
0.46
0.2
Rebate for collection of Electricity duty
1.77
2.01
2.11
Rate fluctuation-Power purchase
9.98
Misc. Recoveries
17.66
15.91
17.82
Subsidy from GoK
46.72
10.93
Incentives received
90.29
145.8
150
Total
293.36
265.07
172.64
Since, the Commission is approving of the income in the old format the reports in the new schedule is modified and projections are made accordingly. Details are as under:
Particulars
FY-11
FY-12
FY-13
FY-14
FY-15
FY-16
Interest on Bank Deposits
9.46
4.19
0
0
0
0
Profit on sale of Stores
1.06
0.49
0.84
0.84
0.84
0.84
Sale of Scrap
0.67
0.00
0.27
0.27
0.27
0.27
Rental from Staff quarters
1.12
1.53
1.67
1.72
1.77
1.82
Value of materials found excess during physical verification
0.07
0.41
0.2
0.2
0.2
0.2
Rebate for collection of Electricity duty
1.77
2.02
2.11
2.11
2.11
2.11
Misce. Recoveries
17.4
25.90
17.82
19.60
21.56
23.72
Incentives received
90.29
72.81
150
155
160
165
Total
121.84
107.35
172.91
179.74
186.75
193.96
It is presumed that rental from staff quarters will increase by 3% due to increase in HRA rates to the Urban and Rural areas by the Government of Karnataka.
Misc. Recoveries is increased by 10% as the consumer base is increasing 5% year on year and incentives may increase by 5 crores year on year by efficient financial management.
It cannot be assumed any growth rate in other income groups.
8.10 Projected abstract of ARR for FY-13 and control period (FY-14 to FY-16) is shown below:
Rs. in Crore
Sl. No.
Particulars
FY-13
FY-14
FY-15
FY-16
1
Power purchase cost inclusive of transmission charges and SLDC Charges
10111.14
11358.49
13441.72
15112.12
2
R&M Expenses
30.10
56.30
63.70
71.60
3
Employee Expenses
870.17
957.40
1082.70
1217.90
4
A&G Expenses
91.98
112.60
127.40
143.30
5
Depreciation
126.64
143.69
157.98
167.07
6
Interest & Finance Charges
7
Interest on Loan Capital
150.46
175.10
229.47
269.72
8
Interest on Working Capital
148.35
319.97
357.45
400.04
9
Interest on Consumer Deposits
117.99
201.14
211.40
221.66
10
Interest on belated payment of power purchase cost
0
0
0
0
11
Other Interest & Finance Charges
5.06
7.63
7.63
7.63
13
Other Debits (incl. Prov for Bad debts)
0.00
0.00
0.00
0.00
15
Other (Misc.)-net prior period credit
0.00
0.00
0.00
0.00
16
Power purchase cost as per decision in OP No.8/2009 dated 11.12.2009
12.58
17
Total
11664.47
13332.33
15679.46
17611.03
18
ROE
72.7
86.8
103.6
123.7
19
Other Income
172.91
179.74
186.75
193.96
21
Fund towards Consumer Relations / Consumer Education
1
0
0
0
22
NET ARR
11565.28
13239.40
15596.34
17540.78
Segregation of ARR into Distribution and Retail Supply Business
The Consolidated ARR has been segregated into ARR for Distribution Business and ARR for Retail Supply Business based on BESCOMs internal committee report.
Segregation of Costs
Particulars
Distribution Business
Retail Supply Business
Power purchase cost
100%
R&M Expenses
62%
38%
Employee Expenses
52%
48%
A&G Expenses
62%
38%
Depreciation
71%
29%
Interest & Finance Charges
16%
84%
Other Debits (incl. Prov for Bad debts)
53%
47%
Other (Misc.)-net prior period credit
19%
81%
Other Income
51%
49%
ROE
100%
Accordingly, the following are the ARR for the Distribution Business and the Retail Supply Business:
ARR for Distribution Business FY13 & control period (FY-14 to FY-16)
Rs. in Crore
Sl. No.
Particulars
FY-13
FY-14
FY-15
FY-16
1
Power purchase cost inclusive of transmission charges and SLDC Charges
0
0
0
0
2
R&M Expenses
18.66
34.91
39.49
44.39
3
Employee Expenses
452.49
497.85
563.00
633.31
4
A&G Expenses
57.03
69.81
78.99
88.85
5
Depreciation
89.91
102.02
112.17
118.62
6
Interest & Finance Charges
67.50
112.61
128.95
143.85
7
Other Debits (incl. Prov for Bad debts)
0.00
0.00
0.00
0.00
8
Other (Misc.)-net prior period credit
0.00
0.00
0.00
0.00
9
Power purchase cost as per decision in OP No.8/2009 dated 11.12.2009
0
0
0
0
10
Total
685.59
817.20
922.61
1029.01
11
ROE
72.7
86.8
103.6
123.7
12
Other Income
88.18
91.67
95.24
98.92
13
Fund towards Consumer Relations / Consumer Education
14
NET ARR
670.12
812.35
930.99
1053.80
ARR for Retail Supply Business FY13 & control period (FY-14 to FY-16)
Rs. in Crore
Sl. No.
Particulars
FY-13
FY-14
FY-15
FY-16
1
Power purchase cost inclusive of transmission charges and SLDC Charges
10111.14
11358.49
13441.72
15112.12
2
R&M Expenses
11.44
21.39
24.21
27.21
3
Employee Expenses
417.68
459.55
519.70
584.59
4
A&G Expenses
34.95
42.79
48.41
54.45
5
Depreciation
36.72
41.67
45.81
48.45
6
Interest & Finance Charges
354.36
591.23
677.00
755.19
7
Other Debits (incl. Prov for Bad debts)
0.00
0.00
0.00
0.00
8
Other (Misc.)-net prior period credit
0.00
0.00
0.00
0.00
9
Power purchase cost as per decision in OP No.8/2009 dated 11.12.2009
12.58
0.00
0.00
0.00
10
Total
10978.88
12515.13
14756.85
16582.02
11
ROE
0.0
0.0
0.0
0.0
12
Other Income
84.7
88.1
91.5
95.0
13
Fund towards Consumer Relations / Consumer Education
1.0
0.0
0.0
0.0
14
NET ARR
10895.15
12427.05
14665.34
16486.98
Gap in Revenue for FY14:
FY-14
NET ARR
13239.40
Revenue from Sale of power
12189.45
Deficit of FY-12
305.86
Revenue Gap
1355.81
Business Plan:
The Business Plan for the period of 5 years (FY-13 to FY-17) will be submitted separately.
Chapter 8 ARR for FY14 to FY16Page 140