TRUING UP FOR FY-19 - Pages - karunadu Order 2020... · 2020-01-09 · TRUING UP FOR FY-19 Page 11 1. Truing up of Revenue billed and Revenue available towards ARR: In the Tariff

TRUING UP FOR FY-19 Page 10

CHAPTER – 3

TRUING UP FOR FY-19

BESCOM is seeking true up for 2018-19 in line with regulations of the Hon’ble

Commission in its Terms and Conditions for Determination of Tariff for Distribution

and Retail Sale of Electricity Regulations, 2006 has specified scope of truing up under

the head 2.8.5, the extract is reiterated:

“2.8.5

The scope of the annual performance review shall be a comparison of the

performance of the Licensee with the approved forecast of ARR and ERC.

Upon completion of annual performance review, the Commission shall pass

an order recording:

a) Any financial loss or gain on account of variation in power purchase cost

either on account of change in hydro-thermal mix or other uncontrollable

factors and the mechanism by which the licensee shall pass through such

gains or losses.

b) The approved aggregate gain or loss to the Licensee on account of other

Uncontrollable factors and the mechanism by which the Licensee shall

pass through such gains or losses.

c) The approved aggregate gain or loss to the Licensee on account of

Controllable factors and the mechanism to share such gains or losses.

d) The approved modifications to the forecast for the remainder period of

the Control period, if any.”

Therefore based on the above, BESCOM is now seeking true-up of 2018-19

Karnataka Electricity Regulatory Commission (KERC) approved the Annual Revenue

Requirement (ARR) of BESCOM for FY-19 in its Tariff Order 2018, dated 14th May

2018.

Annual Accounts for FY-19 is finalized, audited by the Statutory Auditors and certified

by Accountant General of India. BESCOM is submitting truing up of FY-19 before the

Commission based on this audited accounts.


1. Truing up of Revenue billed and Revenue available towards ARR:

In the Tariff Order 2018, dated: 14.05.2018 the Hon’ble Commission had projected

sale of energy of 28286.75 MU for FY-19. Against the same, BESCOM has actually

billed 27762.47MU as sale of energy.

Table 3.1

Category Approved (MU) Actual (MU)

LT-1 BJ/KJ-more than 40 units 47.83 47.20

LT-2a 7139.2 6919.35

LT-2b 52.37 51.57

LT-3 2190.77 2083.65

LT-4 (b) 2.96 1.53

LT-4 (c) 5.95 5.08

LT-5 1190.52 1243.08

LT-6-WS 934.94 1193.64

LT-6-SL 452.74 499.92

LT-7 166.07 135.04

HT-1 702.42 726.15

HT-2 (a) 4928.94 4512.96

HT-2 (b) 2624.34 2448.41

HT-2C 365.31 321.45

HT-3(a)& (b) 17.96 45.67

HT-4 109.76 70.04

HT-5 103.78 85.87

Sub-Total other than BJ/KJ & IP sets 21035.86 20390.60

LT-1 BJ/KJ 127.68 169.56

LT-4 (a)IP Sets 7123.21 7202.32

Sub Total BJ/KJ & IP sets 7250.89 7371.87

Total 28286.75 27762.47

From the above table it can be seen that the energy sales of BESCOM has declined

from the approved sales by 524.28 MU. The major reductions in energy sales are in

LT-2a, LT-3, HT-2a and HT-2b category. The reduction in energy sales of LT-2a

category may be contributed to demand side management initiatives like installing

LED lights, solar water heaters etc. The progress and energy savings of Hosa Belaku

scheme, Pavan scheme and solar water heater are depicted in the below table:


Table 3.2

Particulars Cumulative

Progress (Nos.)

Energy Savings in

MUs

9W LED bulbs (December-2015 to

September-2019)

1,07,58,736

433.64

20W LED tube lights (January-2017 to

September-2019)

2,73,054

12.04

BEE 5 star rated Ceiling fans (April-

2017 to September-2019)

40,592

1.48

Solar water heater:

Total SWH installed from Dec-2007 to Nov-2018: 7008049

Annual energy savings in MU: 700.97

The HT sales have continued to reduce further as HT consumers are exiting the

BESCOM network by opting for open access. For FY-19, 4260.68 MU is procured by

HT consumers through wheeling/open access, captive/non-captive. Hence, there is a

fall in HT consumption than the approved sales. The details of energy sales procured

by HT consumers from BESCOM and energy sales procured by HT consumers from

open access/wheeling for the years 2016-17, 2017-18 and 2018-19 are depicted in the

table below:

Table 3.3

Year Category

Energy procured

by HT consumers

from BESCOM

(MU)

Energy procured by HT

consumers under Open

access/ wheeling (MU)

Total BESCOM

sales &

OA/wheeling

consumption(MU)

2016-17

HT-2A

4456.17 1962.38 6418.55

2017-18 4470.59 2557.85 7028.44

2018-19 4512.96 2639.87 7152.84

2016-17

HT-2B

2619.62 997.88 3617.5

2017-18 2562.32 945.57 3507.89

2018-19 2448.41 1551.30 3999.71

2016-17

HT-2C

270.05 43.89 313.94

2017-18 312.39 50.27 362.66

2018-19 321.45 68.81 390.26


The major increase in energy sale is found in LT water supply, LT Street light and LT4

– agricultural sales.

For FY-19, actual specific consumption for IP set is 8107.56 units/IP/annum as

against the approved specific consumption of 8037 units/IP/annum, the difference

being 70.56 units/IP/annum.

Table 3.4

Particulars FY-18 FY-19

LT4a - Installations (Nos.) 872229 904463

Mid-year installations (Nos.) 888346

LT4a - Sales(MU) 7202.3

Specific consumption in units/IP/annum 8107.6

Actual specific consumption in units/IP/annum for 5 years is depicted in the

below table:

Table 3.5

Particulars FY-14 FY-15 FY-16 FY-17 FY-18 FY-19

LT4a - Installations

(Nos.)

691785 768516 809170 841228 872229 904463

Midyear installations

(Nos.)

730151 788843 825199 856729 888346

LT4a - Sales(MU) 5759.12 6189.80 7285.47 6289.04 7202.3

Specific consumption

in units/IP/annum

7887.6 7846.7 8828.7 7340.8 8107.6

Though there is a decrease in LT-2a, LT-3 categories from the approved figures of the

Commission, there is an overall increase of 1795.21 MU over the previous year i.e. FY-

18. Comparison between the actual sales for FY-18 and FY-19 are shown in the below

table:


Table 3.6 Sales in MU

Category FY-18 FY-19 Difference

LT-2a 6616.53 6919.35 302.82

LT-2b 49.29 51.57 2.28

LT-3 2005.97 2083.65 77.68

LT-4 (b) 0.95 1.53 0.58

LT-4 (c) 4.52 5.08 0.56

LT-5 1185.41 1243.08 57.67

LT-6-WS 813.85 1193.64 379.79

LT-6-SL 455.98 499.92 43.94

LT-7 157.12 135.04 -22.08

HT-1 679.43 726.15 46.72

HT-2 (a) 4470.59 4512.96 42.37

HT-2 (b) 2562.32 2448.41 -113.91

HT2C 312.39 321.45 9.06

HT-3(a)& (b) 26.76 45.67 18.91

HT-4 68.85 70.04 1.19

HT-5 84.62 85.87 1.25

Sub-Total other than

BJ/KJ & IP sets 19495 20343.40 848.40

LT-1 BJ/KJ 183.65 216.75 33.10

LT4 (a)IP Sets 6289.04 7202.32 913.28

Sub Total BJ/KJ & IP

sets 6472.69 7419.07 946.38

Total 25967.26 27762.47 1795.21

There is increase in the overall metered category sales over the previous years, except

for HT-2b category. There is increase in the unmetered category sales over the previous

year.

Energy Requirement for FY-19:

Table 3.7

Particulars Approved Actuals Variation

Sales in MU 28286.75 27762.47 -524.28

Percentage distribution losses in % 12.25 12.54 0.29

Distribution losses in MU 3948.86 3979.88 31.02

Energy at interface point in MU 32235.61 31742.35 -493.26

Percentage transmission losses in % 3.08 3.70 0.62

Total energy requirement in MU 33261.05 32960.66 -300.39

From the above table, it can be seen that BESCOM has purchased 32960.66 MU as

per the annual accounts, which is less by 300.39 MU compared to the approved


quantum of power purchase i.e., 33261.05 MU. From the above table, it can also be seen that

there is reduction in the energy sales of BESCOM by 524.28 MU as against the approved energy

sales of 28286.75 MU.

Change in calculation of T&D loss for FY-19:

Earlier, the calculation of Distribution loss and AT&C loss of BESCOM was arrived based on

the present month input and present month DCB. Concerns were expressed during the June-

18 meeting that the method opted to arrive T&D and AT&C loss is technically not accurate and

suggested to work out by considering previous month input and present month DCB for

calculation of T&D and AT&C losses (i.e. for April month the energy input shall be taken from

March month and the DCB of April month shall be considered).

There was a change in the methodology for calculation of T&D and AT&C loss. Based on this,

the T&D and AT&C losses were calculated for the year 2018-2019. Wherein energy input for

FY-19 is considered from March-18 to Feb-19(i.e.31616.53 MUs including SRTPV input of

92.18MU) and DCB of April-18 to March-19 (i.e.27736.005 MU) and the distribution loss for

FY-19 is computed to 12.27%. The details of the month wise distribution loss for the year FY-

19 is shown in the below table:

Table 3.8

Month Total Input Energy to

BESCOM in MU

Metered Sales in MU

Unmetered Sales MU

Total Sales in MU

Energy Loss in MU

% Distributio

n Loss

1 2 3 4=2+3 5=1-4 6=5/1

Apr-18 2923.08 1785.35 752.70 2538.05 385.03 13.17%

May-18 2970.21 1885.98 821.10 2707.08 263.13 8.86%

Jun-18 2539.83 1858.25 447.34 2305.59 234.24 9.22%

1st Qtr 8433.12 5529.58 2021.14 7550.72 882.40 10.46%

Jul-18 2303.14 1691.54 383.33 2074.87 228.27 9.91%

Aug-18 2505.95 1702.96 514.66 2217.62 288.33 11.51%

Sep-18 2525.06 1723.30 541.06 2264.36 260.70 10.32%

2nd Qtr 7334.15 5117.80 1439.05 6556.85 777.30 10.60%

Oct-18 2484.65 1659.88 545.54 2205.42 279.23 11.24%

Nov-18 2481.85 1719.96 493.44 2213.40 268.45 10.82%

Dec-18 2574.72 1602.62 655.33 2257.95 316.77 12.30%

3rd Qtr 7541.22 4982.46 1694.31 6676.77 864.45 11.46%

Jan-19 2772.09 1667.22 726.33 2393.55 378.54 13.66%

Feb-19 2795.47 1627.75 748.74 2376.49 418.98 14.99%

Mar-19 2648.30 1608.89 572.74 2181.63 466.67 17.62%

4th Qtr 8215.86 4903.86 2047.81 6951.67 1264.19 15.39%

Cum FY-19 31524.35 20533.69 7202.31 27736.00 3788.34 12.02%

Considering 92.18

MU of solar roof top

till as on Mar-19

31616.53 20533.69 7202.31 27736 3880.52 12.27%


*27762 MU is the sales after considering 26 MU of energy imported by IPPs during non-

generation period (27762MU-26MU=27736MU).

Further, letter dtd: 01.07.2019 from CEA was received for “Discussion on the

methodology of calculation of T&D losses”. In the letter they have mentioned that there

has been increase in open access consumption across various DISCOMS in the

country. The No. of franchisees appointed by DISCOMS in their area of supply is also

increasing. Further, the embedded renewable energy generation at various voltage

levels within the boundary of the DISCOMS is also on the rise. All these factors affect

the T&D losses of the DISCOMS and as their quantum is increasing day by day, it will

have an impact on the T&D loss calculation of the DISCOMS in the coming days.

Hence, it is felt that there is a need to include the impact of these factors in the

methodology of calculation of T&D losses.

Hence, a new format is arrived considering all the above points for calculating the T&D

loss. The provisional details of the month wise distribution loss for the year FY-20

(upto Sep-19) is shown in the below table.

Table 3.9

BESCOM endeavours for taking distribution losses to the lowest possible level.

BESCOM has achieved a significant reduction in distribution losses during recent

years. These efforts shall be continued and will be enhanced in coming years.


However, loss reduction is a slow process and to maintain the rate with which it has

been decreasing is a difficult task. The reduction in HT Sales and increase in LT sales

has also impacted the distribution losses. BESCOM, hence requests the Hon’ble

Commission to approve the actual distribution loss.

Revenue Realized:

As against KERC approved revenue of Rs.19236.16 Crs., BESCOM has been able to

realize an amount of Rs.19538.76 Crs.

Table 3.10

Description Tariff No of

Consumers

Units

Sold Opening

Balance

Opening

Bal -

Unbilled

provision

A/c 23.4

Demand

Revenue

Net of

Unbilled

provision

&

reversal

Net

Revenue

Demand

as per

Accounts

Units

(in MU)

BJ/KJ ( Upto 40 Units ) LT 1

798305 171.29 69.91 7.40 115.96 1.13 117.09

BJ/KJ (Above 40 Units ) 46198 45.46 23.16 1.66 20.81 0.27 21.09

Lighting and AEH LT 2 7900050 6970.92 111.46 268.37 4401.53 66.87 4468.41

Commercial Lighting LT 3 1094837 2083.65 7.35 124.36 2003.52 27.34 2030.86

IP Sets (10HP &

BELOW) FREEZED

BALANCE Upto 31-07-

2008

0.00 1364.27 0.00 0.00 0.00 0.00

IP Sets (10HP & Above ) LT 4B 309 1.53 2.31 0.06 0.80 0.00 0.80

Pvt. HortI, Nuris, Coffee

& Tea Plant LT 4C 1651 5.08 2.97 0.14 2.37 0.09 2.47

LT Industries LT 5 210552 1243.08 2.56 57.14 950.21 7.30 957.51

Water Supply LT 6 A 79322 1193.64 1091.52 42.83 606.89 16.44 623.34

Street lights LT 6 B 65136 499.92 232.24 25.35 353.18 2.39 355.57

Temporary Supply (LT) LT 7A 689370 133.73 -38.66 14.78 205.33 -0.41 204.92

Temporary Supply (LT) LT 7B 4000 1.31 -1.22 0.15 1.65 -0.08 1.57

Power Purchase

(Auxiliary cons.) LT &

SRPTV

12 18.25 0.00 0.00 0.00 0.00 7.73

Pending for

reconciliation of

Sundry debtors

0.00 97.14 0.00 0.00 0.00 0.00

LT TOTAL I 10889742 12367.85 2965.01 542.26 8662.27 121.34 8791.34

Water Supply &

Sewerage Pumping HT 1 248 726.15 46.02 32.38 403.47 3.43 406.90

HT Industries HT 2A 7059 4486.52 71.82 342.32 3785.69 -13.92 3771.77

HT Commercial HT 2B 6787 2448.41 -14.15 237.53 2674.34 4.44 2678.78


HT Hospitals HT 2C 758 321.45 -0.17 23.60 277.39 3.00 280.39

HT Lift Irg. Societies HT 3A 38 44.59 10.42 0.45 13.49 0.37 13.86

HT Lift Irg. Schemes &

Govt Hort. HT 3B 14 1.08 0.06 0.05 0.45 0.12 0.57

HT Residential

Apartment HT 4 252 70.04 0.71 4.02 49.14 0.83 49.97

Temporary Supply ( HT) HT 5 1180 85.87 -5.35 9.40 110.78 1.69 112.47

Power Purchase

(Auxiliary cons.) HT &

SRTPV

1 8.19 3.54 0.00 0.00 0.00 5.24

HT TOTAL II 16337 8192.31 112.92 649.75 7314.75 -0.04 7319.95

TOTAL 1 (LT +

HT+Temporary) III 10906079 20560.16 3077.93 1192.01 15977.02 121.30 16111.29

IP Sets (10HP &

BELOW)

FREE LIGHTING From

01-08-2008 (Subsidy

Due for GOK) LT 4A 904463.00

7202.32 1290.30 188.89 2632.78 54.20 2686.99

Total -2 11810542 27762.47 4368.23 1380.91 18609.80 175.50 18798.28

Less : Provision for

withdrawal of Revenue

Demand

21.86 21.86

Less: Withdrawal of

revenue demand as

credit adjustment.

6.84 6.84

Less :Credit

Adjustment through

Balance Transfer

system

35.99 35.99

Other Operating

Income 98.74 98.74

FAC 169.94 169.94

Cross subsidy

surcharge and

additional surcharge

282.23 282.23

Interest 254.26 254.26

Total - 3 11810542 27762.47 4368.23 1380.91 19350.28 175.50 19538.76

Grand Total 11810542 27762.47 4368.23 1380.91 19350.28 175.50 19538.76


Revenue from Operations:

Table 3.11 Amount in Crs.

Particulars

For the year ended on

31st March 2019

(Ind AS)

Sale of Power LT category (including unbilled revenue) 11478.33

Sale of Power HT category (including unbilled revenue) 7319.95

Total (A) 18798.28

Other Operating Income

Reconnection Fee (D & R) 0.02

Public lighting Maintenance Charges 0.01

Service Connection 70.45

Other Receipts from consumers 21.62

Delayed payment charges from consumers 254.26

Registration fee towards SRTPV connection (Solar rooftop

PV system 0.35

Facilitation fee towards SRTPV connection (Solar rooftop

PV system) 0.03

Fuel Adjustment Charges 169.94

Cross subsidy surcharge and additional surcharge 282.23

Recoveries for theft of power 5.19

Meter Rent Collected from prepaid Consumer 1.07

Total (B) 805.17

Total (A)+(B) 19603.45

Less: Provision for withdrawal of Revenue Demand 21.86

Less: Withdrawal of revenue demand as credit adjustment. 6.84

Less: Credit Adjustment through Balance Transfer system 35.99

Grand Total 19538.76

Revenue realized through tariff is compared with the approved revenue from tariff in

the below table:


Table 3.12

Category Wise Cross Subsidy Calculation- FY-19

Sl

No Category

Approved

Average

Realizati

on in Rs.

Per Kwh

Level of

Cross

Subsidy

in %

with ref.

to ACS

Actuals

Average

Realization

in Rs. Per

Kwh

Level of

Cross

Subsidy

in % with

ref. to

ACS

Rs.7.84

Sales-MU Revenue

Rs.crores

Sales-

MU

Revenue

Rs.crores

1

LT-1[fully

subsidised

by GoK]

127.68 86.82 6.80 -0.01 171.29 115.96 6.77 -15.81%

2 LT-1 47.83 22.1 4.62 -32.07 45.46 20.81 4.58 -71.27%

3 LT-2(a)(i) 6575.56 3870.77 5.89 -13.45 6219.79 3974.76 6.39 -22.68%

4 LT-2(a)(ii) 563.64 315.35 5.59 -17.74 699.56 381.85 5.46 -43.63%

5 LT-2(b)(i) 46.83 37.64 8.04 18.19 44.97 39.43 8.77 10.60%

6 LT-2(b)(ii) 5.54 3.87 6.99 2.66 6.60 5.49 8.31 5.70%

7 LT-3(i) 2021.64 1821.63 9.01 32.49 1894.08 1843.01 9.73 19.43%

8 LT-3(ii) 169.13 145.09 8.58 26.14 189.57 168.26 8.88 11.67%

9 LT-4(a)(i)* 7123.21 2635.59 3.70 -45.6 7202.32 2632.78 3.66 -114.47%

10 LT-4(b) 2.96 1.34 4.53 -33.29 1.53 0.80 5.26 -49.00%

11 LT-4 © 5.95 2.51 4.22 -38.12 5.08 2.37 4.67 -67.79%

12 LT-5(a) 811.46 662.15 8.16 19.98 899.76 696.83 7.74 -1.23%

13 LT-5(b) 379.06 314.62 8.30 22.04 343.32 253.38 7.38 -6.23%

14 LT-6a 934.94 502.35 5.37 -21 1193.64 606.89 5.08 -54.20%

15 LT-6b 452.74 328.74 7.26 6.77 499.92 353.18 7.06 -10.97%

16 LT-7 166.07 214.92 12.94 43.05 135.03 206.90 15.32 48.83%

LT -

TOTAL 19434.24 10965.5 5.64 -17.04 19551.9 11302.71 5.78 -35.62%

1 HT-1 702.42 403.89 5.75 -15.45 726.15 403.47 5.56 -41.10%

2 HT-2(a)(i) 2370.82 1856.02 7.83 15.11 2639.87 2304.65 8.73 10.20%

3 HT-2(a)(ii) 2558.12 2210.12 8.64 27.03 1873.09 1486.28 7.93 1.20%

4 HT-2(b)(i) 2398.12 2415.74 10.07 48.12 2271.72 2495.51 10.99 28.63%

5 HT-2(b)(ii) 226.22 239.71 10.60 55.81 176.69 178.84 10.12 22.54%

6 HT-2(c) (i) 177.39 134.43 7.58 11.43 156.60 124.19 7.93 1.14%

7 HT-2(c) (ii) 187.92 158.59 8.44 24.09 164.84 153.20 9.29 15.64%


8 HT-3(a)(i) 16.25 4.21 2.59 -61.87 42.05 11.92 2.84 -176.52%

9 HT-3(a)(ii) 0.51 0.16 3.14 -53.83 2.54 1.47 5.79 -35.33%

10 HT - 3b 1.19 0.54 4.54 -33.83 1.08 0.54 4.98 -57.44%

11 HT-4(a) 109.76 74.55 6.79 -0.14 70.04 49.14 7.02 -11.75%

12 HT-5 103.78 178.26 17.18 152.56 85.87 110.78 12.90 39.23%

HT -

TOTAL 8852.5 7676.22 8.67 27.5 8210.56 7319.99 8.92 12.06%

TOTAL 28286.74 18641.7 6.59 -3.1 27762.4

7 18622.70 6.71 -16.88%

Misc.

Revenue 594.48

916.05

Grand

Total 28286.74 19236.2 6.80 -0.01

27762.4

7 19538.75 7.04 -11.40%

From the above table, it can be seen that there is a reduction in HT sales of 641.94

MU from the approved level. This has resulted in the percentage reduction of cross

subsidy component of 15.44% (27.5%-12.06%). Increase in IP sales needs to be

compensated with increase in cross subsidy component of 78.85% (-35.62%-(-

114.47%)).

It can be seen from the above table that the average realization rate has increased

from the approved Rs.6.80 per unit to Rs.7.04 per unit. But, due to increase in the

average cost of supply, the revenue for FY-19 is not reflecting the actual cost.

Power Purchase Cost:

The Hon’ble Commission in its Tariff Order 2018, dtd 14.05.2018 has approved the

Power Purchase quantum of 33261.05MU and Power Purchase cost of Rs.16000.78

Crs. and the Average Power Purchase rate at Rs. 4.81/unit. As against the approved

Average Power Purchase rate the actual Average Power Purchase cost incurred by

BESCOM is Rs. 5.68/unit. Detailed summary of the power purchase is shown in the

below table:


Table 3.13

Name of the Generating

Station

BESCOM’s Approved Power Purchase For FY19 BESCOM Actual Power Purchase Difference

%

share of

energy allowed

Energy allowed (MU)

Capacity Charges (Rs. Cr)

Energy Charges

Per

Unit Rate (Rs/Kwh)

Energy allowed (MU)

Capacity Charges (Rs. Cr)

Energy Charges

Per Unit Rate (Rs/Kwh)

Energy allowed (MU)

Total Cost (Rs.Cr)

KPCL

Thermal Stations

Raichur thermal Power

Station_RTPS-1-7 (7x210)

68.4000 5664.43 586.91 1772.97 4.17 4723.3 431.59 1636.37 4.38 -941.10 -291.9

Raichur thermal Power Station_RTPS-8 (1x250)

66.0000 784.05 153.22 240.08 5.02 765.58 155.35 255.73 5.37 -18.50 17.80

Bellary thermal Power

Station_BTPS-1 (1x500)

66.0000 1440.73 204.66 540.28 5.17 1079.20 191.56 417.41 5.64 -361.50 -136

Bellary thermal Power Station_BTPS

-2 (1x500)

66.0000 1672.44 310.52 568.63 5.26 1217.34 312.01 439.35 6.17 -455.10 -127.8

Bellary

thermal Power Station_BTPS -3 (1x700)

66.0000 528.00 0.00 164.74 3.12 204.82 281.09 71.86 17.23 -323.20 188.2

YTPS Unit- 1 66.0000 528.00 0.00 123.55 2.34 462.08 451.27 143.63 12.87 -65.90 471.4

YTPS Unit- 2 66.0000 528.00 0.00 123.55 2.34 -528.00 -123.6

Total KPCL Thermal

11145.65 1255.3 3533.79 4.30 8452.32 1822.88 2964.34 5.66 -2693.3 -1.90

CGS Sources

N.T.P.C-RSTP-I&II (3X200MW+3X500MW)

48.7226 1290.17 95.47 309.64 3.14 1243.95 90.81 317.13 3.28 -46.20 2.80

N.T.P.C-RSTP-III (1X500MW)

48.7226 315.72 24.94 75.77 3.19 308.62 26.10 76.73 3.33 -7.10 2.10

NTPC-Talcher (4X500MW)

48.7226 1197.11 88.59 181.96 2.26 1162.84 87.93 203.43 2.51 -34.30 20.80

Simhadri Unit -1 &2

(2X500MW)

48.7226 557.87 92.05 157.32 4.47 518.95 96.19 154.73 4.84 -38.90 1.60

NTPC

Tamilnadu Energy Company Ltd (NTECL)_

Vallur TPS Stage1&2 &3

48.7226 339.11 63.34 101.73 4.87 357.09 84.08 130.99 6.02 18.00 50.00


(3X500MW)

Neyveli Lignite Corporation_

NLC TPS-II

48.7226 334.51 40.14 97.01 4.10 373.52 33.21 96.78 3.48

39.00 -7.20

Stage I (3X210MW)

Neyveli Lignite Corporation_ NLC TPS-II Stage 2

(4X210MW)

48.7226 467.15 56.52 135.47 4.11 541.40 46.42 130.58 3.27 74.30 -15.0

Neyveli Lignite

Corporation_ NLC TPS I

48.7226 330.66 46.95 89.28 4.12 302.89 34.63 79.53 3.77

-27.80 -22.1

EXP (2X210MW)

Neyveli Lignite Corporation_ NLC TPS2 EXP

(2X250MW)

48.7226 248.49 52.93 67.09 4.83 206.39 51.56 49.17 4.88 -42.10 -19.3

NLC

Tamilnadu power ltd(NTPL)(TUTICORIN)

(2X500MW)

48.7226 503.79 94.21 164.24 5.13 504.02 102.04 163.37 5.27 0.20 7.00

MAPS

(2X220MW) 48.7226 86.59 0.00 19.31 2.23 46.32 13.14 2.84 -40.30 -6.20

Kaiga Unit 1&2

(2X220MW)

48.7226 425.84 0.00 137.54 3.23 1025.23 388.19 3.79 152.60 106.3

Kaiga Unit 3

&4 (2X200MW)

48.7226 446.79 0.00 144.31 3.23

NPCIL-

KudanKulam Atomic Power Generating Station

48.7226 437.53 0.00 184.64 4.22 598.42 270.45 4.52

160.90 85.80

(KKNPP U1 (1X1000MW)

NPCIL-KudanKulam Atomic Power Generating

Station

48.7226 437.53 0.00 184.64 4.22 978.85 304.71 3.11

541.30 120.1

(KKNPP) U2(1X1000MW)

DVC-Unit-1 &2 Meja TPS

(2x500MW)

48.7226 709.40 99.32 157.49 3.62 1282.2 208.46 301.40 3.98 -313.70 -52.8

DVC-Unit-7 & 8- KODERMA

TPS (2x500MW)

48.7226 886.51 143.61 162.23 3.45

Kudgi 61.0000 981.04 187.38 353.17 5.51 1855.41 535.68 753.89 6.95 874.40 749.0


TOTAL CGS

Energy @ KPTCl periphery

9995.81 1085.45 2722.85 3.81 11306.1 1397.1 3434.21 4.27

1310.30 1023

Total Major IPPS

Udupi Power

Corporation Ltd _UPCL (2x600)

65.2850 4381.93 705.49 1380.31 4.76 3188.38 782.04 1183.14 6.16 -1193.6 -120.6

KPCL HYDEL

STATIONS

Sharavathi Valley Project_SVP

(10x103.5+2x27.5)

1.4310 64.99 0.00 2.86 0.44 71.18 0.19 3.94 0.58 6.20 1.30

Mahatma

Gamndhi Hydro-electric Power house_MGHE

17.9170 46.25 0.00 2.82 0.61 33.86 0.42 2.56 0.88

-12.40 0.20

(4x21.6+4x13.

2)

Gerusoppa_GP

H (Sharavathi Tail RACE_STR) (4x60)

17.9170 92.06 0.00 14.95 1.62 92.25 2.86 9.67 1.36 0.20 -2.40

Kali Valley Project_KVP

(2x50+6x150)

2.0000 55.76 0.00 3.90 0.70 66.33 0.31 3.48 0.57 10.60 -0.10

Varahi Valley

Project _VVP (4x115+2x4.5)

17.9170 185.28 0.00 22.48 1.21 224.77 3.73 22.58 1.17 39.50 3.80

Alamatti Dam Power House_ADPH (1x15+5x55)

17.9170 82.29 0.00 13.19 1.60 71.79 3.46 7.18 1.48 -10.50 -2.50

Bhadra Hydro-electric Power

House_BHEP

17.9170 9.37 0.00 4.05 4.32 10.51 0.14 3.74 3.69

1.10 -0.20

((1x2+2x12)+ (1x7.2+1x6))

Kadra Power House _KPH (3x50)

17.9170 44.36 0.00 10.12 2.28 64.88 0.70 9.06 1.51 20.50 -0.40

Kodasalli Dam Power House _KDPH (3x40)

17.9170 50.60 0.00 8.07 1.59 59.23 0.55 6.48 1.19 8.60 -1.00

Ghataprabha Dam Power

House_GDPH

17.9170 13.50 0.00 2.72 2.01 14.20 0.05 2.31 1.66 0.70 -0.40

(2x16)

Shivasamudram (4x4+6x3) & Shimshapura

(2x8.6) Hydro stations.

17.9170 52.06 0.00 5.15 0.99 51.29 0.63 4.34 0.97 -0.80 -0.20


Munirabad

Power House (2x9+1x10)

17.9170 17.55 0.00 1.12 0.64 15.88 0.08 1.07 0.72 -1.70 0.00

TOTAL KPCL HYDRO

714.09 0.00 91.43 1.28 776.17 13.10 76.43 1.15 62.10 -1.90

OTHER

HYDRO

Priyadarshini

Jurala Hydro Electric Station (6x39)

17.9170 19.71 0.00 8.08 4.10 7.39 5.28 7.15 -12.30 -2.80

TUNGABHADRA DAM POWER

HOUSE_TBPH (4x9+4x9)

17.9170 2.37 0.00 0.24 1.03 4.94 0.33 0.67 2.60 0.10

TOTAL

OTHER HYDRO

22.08 8.33 3.77 12.33 5.61 4.55 -9.70 -2.70

Renewable sources of Energy Sources

Wind-IPPS 2356.83 0.00 824.89 3.50 2939.71 1078.79 3.67 582.90 253.9

KPCL-Wind (9x0.225+10x0.230)

7.76 0.00 2.71 3.49 5.11 1.92 3.76 -2.60 -0.80

Mini Hydel-IPPS

290.71 0.00 95.39 3.28 456.69 144.18 3.16 166.00 48.80

CO-GEN 0.00 0.00 828.98 386.06 4.66 829.00 386.1

Captive 0.00 0.00

Biomass 64.62 0.00 31.84 4.93 63.62 35.59 5.59 -1.00 3.80

Solar 1583.82 0.00 886.94 5.60 2528.94

1265.03 5.00 945.10 378.1

Solar-New Park- Pavagada

46.3900 463.27 0.00 222.37 4.80 675.98 375.01 5.55 212.70 152.6

Solar-KPCL (Yelesandra, Itnal,

Yapaldinni, Shimsha) (3x1+3x1+1x3

x1x5)

4.15 0.00 2.57 6.18 3.79 2.13 5.62 -0.40 -0.40

Total NCE 4771.16 0.00 2066.7 4.33 7502.83 3288.71 4.38 2731.7 1222

Solar Park at Pavagada- Bundled with Thermal power

of NTPC

46.6430 1272.3 0.00 422.25 3.32 176.67 77.87 4.41 -1095.6 -344.4

Power

purchase from Co-gen-Medium Term/ Energy

balancing/ Inter ESCOM

47.7880 463.94 0.00 223.81 4.82 1477.69

655.61 4.44 1013.80 431.8

Short term

power purchase May 2018

50.0000 494.10 0.00 201.59 4.08 67.89 207.26 30.53 -426.20 5.70


TRANSMISSIO

N CHARGES 0.00 0.00 0.00 0.00

PGCIL

CHARGES 758.70 0.00 1252.01 0.00 0.00 493.3

KPTCL CHARGES

1528.66 0.00 1539.27 0.00 0.00 10.60

SLDC 15.03 0.00 15.03 0.00 0.00 0.00

POSOCO CHARGES

1.08 0.00 0.00 -1.10

TOTAL

INCLUDING TRANSMISSION & LDC CHARGES

33261.05 5349.72 10651.05 4.81 32960.38 6821.43 11893.18 5.68 -300.70 2713.8

• The above table depicts the source wise increase in actual power purchase cost

as against the approved power purchase cost during FY-19. BESCOM’s actual

energy input is 300.7 MU less than the approved energy input for FY-19 but

there is an increase of Rs.2713.8 Crs in the actual power purchase cost against

the approved power purchase cost for FY-19.

• The actual capacity charges against the approved capacity charges for BTPS-3,

YTPS-1, UPCL, Kudgi and the PGCIL charges are shown in the below table.

Table 3.14

Source

Approved

Capacity charges

in Crs.

Actual Capacity

Charges in Crs.

Difference

in Crs.

BTPS-3 0.00 281.09 281.09

YTPS Unit- 1 0.00 451.27 451.27

UPCL 705.49 782.04 76.55

Kudgi 187.38 535.68 348.30

PGCIL charges 758.7 1252.01 493.31

Total 1651.57 3302.09 1650.52

• The increase in the above capacity charges has significantly affected the

increase in actual power purchase cost for FY-19.

• The State is now faced with surplus power availability situation due to more

Renewable Energy injected into the Grid (Solar & Non Solar).

• The NCE injection is nearly 50% of total daily consumption during the months

from July to September.

• As RE power doesn’t come under merit order dispatch, the thermal stations

having higher variable cost are being backed down or put into Reserve Shut


down (RSD), but ESCOMs continue to pay fixed cost.

• ESCOMs have to procure RE power at the rate agreed in PPA during surplus

situation.

• The average power purchase cost of RE power is around Rs 4.46 per unit for

2018-19.

• BESCOM has to pay the fixed charges for the thermal stations declaring

availability at 85% though they are backed down or under RSD.

• BESCOM has paid nearly Rs 528 Crore towards fixed cost without purchasing

any power from thermal stations having higher variable cost during June-18 to

September-18

• BESCOM has sold 391.50MU in IEX at an average rate of Rs.4.22 /unit which

has resulted in Rs.165.04 Crs. The said amount is depicted under the head

‘Other Income’.

• Power Purchase expenditure is approximately 85% of the total expenditure of

the Company. Hence, variations in power purchase cost incurred by the

Company other than that approved in the Tariff Order would impact the

financials of the Company.

• Date of commissioning of the below thermal stations are indicated.

BTPS –Unit 3: 16.09.2016

YTPS -Unit 1: 07.03.2017

Unit 2: 6.4.2017

Kudgi: Unit 1: 31.7.2017

Unit 2: 31.12.2017

Due to the above reasons, the increase in the actual power purchase cost as against

approved power purchase cost for BESCOM is Rs.2713.8 Crs. for FY-19.

Average power purchase costs of all ESCOMs are shown in the below table:

Table 3.15

BESCOM MESCOM HESCOM GESCOM CESC ESCOMs

2017-18 4.84 4.43 4.99 4.41 4.26 4.72

2018-19 5.68 3.72 4.68 4.24 4.01 4.93

Diff 0.83 -0.71 -0.31 -0.16 -0.26 0.21


The above table depicts ESCOMs Avg. PP cost (Rs. /unit) for FY-18 and FY-19. From

the table it can be seen that Avg. cost of power purchase for the State is Rs.4.72/unit

and Rs.4.93/unit for FY-18 and FY-19 respectively. This shows that there is a

marginal increase in Avg. cost of power purchase of Rs.0.21/unit for FY-19 over FY-18.

But the Avg. power purchase cost increase for BESCOM for FY-19 is 0.83 Rs/unit over

FY-18.

BESCOM most respectfully submits that the above changes are beyond the reasonable

control of BESCOM but well within the regulatory provisions for consideration in true

up. Hon’ble Commission in its MYT Order has stated that, since the power purchase

cost are uncontrollable as per MYT regulations, any excess quantum or cost will be

trued up in the Annual Performance Review of the respective years. Hence, requests

the Hon’ble Commission to approve the power purchase expenses for FY-19 as per the

Audited Accounts.

Renewable Purchase Obligation (RPO) target for FY-18:

As per KERC (Procurement of Energy from Renewable Sources)(Sixth Amendment)

Regulations, 2018, target for FY-19 for Non-Solar RPO is 12% of the total power

procurement and target for Solar RPO is 6% of the total power procurement.

The Commission approved the power procurement of 33261.05 MU which includes

6175.04 MU of energy from NCE sources for FY-19 to BESCOM. The actual

percentage of NCE to the total purchase is 13.49 % and solar energy works out to

10.42% of the actual power purchase. Details are as under.


Table 3.16

RPO COMPLIANCE FOR 2018-19

Total Energy 31627.35

Add: Energy Balancing excld.

Hydel energy of 189.22 MU 1,143.43

Net Energy

Less: Hydel Energy 788.50

Net energy for calculation of

RPO 31982.28

Solar RPO Non solar RPO

31982.28 31982.28

target @ 6% for Solar & 12% for

Non solar 1918.94 3837.87

Total RPO to be achieved 1918.94 3837.87

Actual Energy Procured 3,333.67 4,313.24

Total energy procured 3333.67 4313.24

Surplus Solar & Non solar energy -1414.74 -475.36

Non solar RPO Achieved 4313.24 13.49%

Solar RPO achieved 3333.67 10.42%

BESCOM has exceeded both the Non-Solar RPO and solar RPO during FY-19.


Capital Expenditure for FY-19:

The capital expenditure incurred for FY-19 is depicted in the table below:

Table 3.17

Sl.

No. Nomenclature of work

KERC

approved

Budget

Sanctioned

Budget

Actual

expenditure

incurred

1 E & I Works

(11kV link lines) 88.84 137.20 125.10

2 E & I Works (Additional DTC's)

79.26 68.33 39.80

3

Expenditure incurred

under E& I Works

(HT and LT reconductoring,

SDP, Providing AB cable

and Corporate reserve fund)

323.53 445.61 285.05

4 Local Planning, Urgent/

Emergency works 165.51 129.53 95.90

5 Ganga Kalyana 80.30 149.62 168.67

6 Meter Programming 91.60 125.62 55.07

7 Service Connection &

Drinking water supply 148.17 106.33 85.95

8

Replacement of Faulty

transformers by new

Transformers

0.00 134.90

9 Providing infrastructure to

Unauthorised IP sets 418.00 357.79 341.79

10 Other Works 741.21 882.17 603.02

11 RGGVY 12th plan 0.00 2.97 -7.36

12 Niranthara Jyothi Yojane 183.96 187.60 286.97

13 R-APDRP Part-A (IT implementation)

5.90 4.02 -8.31

14 DAS 0.00 27.64 22.01

15 R-APDRP Part-B 1.20 -8.73

16 HVDS 120.00 201.09 241.37

17 Civil Eng. works 64.16 65.83 74.24

18 DDUGJY 60.00 246.00 118.43

19 IPDS 266.00 327.93 215.49

Total 2836.44 3466.47 2869.37

The expenditure booked by BESCOM is more than the KERC approved Capital

expenditure for FY-19.


Operation and Maintenance Expenses:

The Commission, in its Tariff Order 2018, dated 14.05.2018 had approved the

Operation and Maintenance Expenses (O&M Expenses) of Rs.1654.99 Crs., O&M

Expenses includes, Repair and Maintenance expenses, Employee cost and

Administrative and General Expenditure. Commission is approving O&M Expenses

through formula on normative basis. Factors contributing for increase in O&M

expenses are Inflation index and consumer growth rate. Increases in cost by these

indices are reduced to an extent of predetermined BESCOM’s efficiency factor of 1%.

For FY-19, to arrive at normative O&M expenses, Commission considered Whole sale

Price Index (WPI) as per the data available from the Ministry of Commerce & Industry,

Government of India and Consumer Price Index (CPI) as per the data available from

the Labour Bureau, Government of India and adopted the methodology followed by

CERC with CPI and WPI in a ratio of 80:20, allowing annual escalation rate for FY-19

at 8.1059%.

Approved O&M expenses for FY-19 as per Tariff Order 2018, dated 14.05.2018 is

shown below:

Table 3.18

Particulars FY-16 FY-17 FY-18 FY-19

No. of Installations 10696029 11285198 11922900

CGI based on 3 Year CAGR 6.41% 6.11% 5.52%

Inflation index 8.11% 8.11% 8.11%

Base Year O&M expenses (as

per actuals of FY16 )-Rs .Crs 1167.4 1154.68

Total allowable O&M

Expenses- Rs. Crs 1297.83 1469.41 1654.99


Employee expenses comprise of salaries, dearness allowance, 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,

other debits etc.

Repairs and Maintenance Expenses go towards the day to day upkeep of the

distribution network of the Company 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. The following table provides the summary of O&M Expenses (net off

Capitalization) for 2018-19 as per audited accounts, O&M expenses are as follows:


Particulars Actuals(FY-19)

Other operating (Repair &

Maintenance) expenses 128.87

Employee Benefits Expense 1364.82

Other expenses 337.10

Total 1830.79

It is noticed that some expenses which are separately approved as per regulatory

formats are added in A&G expenses (other expenses as per audited accounts).



SL

No. Particulars

Current Year

2018-19

1 Rent 21.58

2 Postage stamps & Telephone charges 9.53

3 Remuneration to contract agencies 206.95

4 Professional, legal and consultancy 4.38

5 Conveyance & Travel expenses 49.59

6 Fees & Subscriptions 5.05

7 Printing & Stationery 5.42

8 Advertisement Expenses 3.31

9 Computer stationary and floppies 0.6

10 Contributions 0.32

11 Electricity Charges 2.7

Miscellaneous including provisions

12 Miscellaneous including provisions

13 Rates & Taxes 0.52

14 Water Charges 0.54

15 DSM Expenses 0.95

16 Miscellaneous expenses 5.47

17 Details of Payments to Auditors (including legal &

Professional charges)

18 a) Audit Fees

19 - Statutory Audit Fees 0.12

20 - Tax Audit Fees 0.02

21 - GST 0

22 Expenses towards CSR- (Corporate Social Responsibilities) 2.75

23 Less:-Other Expenses charged to capital works (Credit

Account) -0.61

24 Small & Low value items Written off 0.2

25 Asset decommissioning cost 1.47

26 Bank charges 8.92

27 Interest on Security Deposits from staff 0

28 Interest paid to service tax department 0.6

29 Stamp duty 1.42

30 Provision against receivables -2.28

31 Miscellaneous losses and Write offs including provisions 7.6

32 Bad Debts written off 0

33 Provision for Loss on obsolescence of stores, etc in stock 0

Total 337.1


Items added to other expenses are removed and added to the respective heads for the

purpose of regulatory computation.


Sl

No. Particulars

Current

Year 2018-

19

1 Rent 21.58

2 Postage stamps & Telephone charges 9.53

3 Remuneration to contract agencies 206.95

4 Professional, legal and consultancy 4.38

5 Conveyance & Travel expenses 49.59

6 Fees & Subscriptions 5.05

7 Printing & Stationery 5.42

8 Advertisement Expenses 3.31

9 Computer stationary and floppies 0.60

10 Contributions 0.32

11 Electricity Charges 2.70

12 Miscellaneous including provisions

13 Rates & Taxes 0.52

14 Water Charges 0.54

15 DSM Expenses 0.95

16 Miscellaneous expenses 5.47

17 Details of Payments to Auditors (including legal &

Professional charges)

18 a) Audit Fees

19 - Statutory Audit Fees 0.12

20 - Tax Audit Fees 0.02

21 - GST 0.00

22 Expenses towards CSR- (Corporate Social

Responsibilities) 2.75

TOTAL 319.80

The audited O&M Expenses (net off Capitalization) for the 2018-19 as per regulatory

formats are as follows:



FY - 19

Particulars Actual as per

Accounts

Other operating (Repair & Maintenance) expenses

excluding Rs. 12.72 Crs towards material cost variance 116.15

Employee Benefits Expense excluding expense capitalised of Rs.4.91 Crs.

1369.73

Other expenses(A&G) 319.80

Total 1805.68

Commission is approving the O&M expenses on normative basis by considering

weighted inflation index of composite series of CPI and WPI and consumer growth

rate. Actual inflation rate and consumer growth rate for FY-19 is now available.

Considering the actual data, normative O&M expenses is computed as under.

Central Electricity Regulatory Commission (CERC) vide notification dated 02.04.2019

notified the escalation rates 2019 for Inflation rate, escapable transmission charges

for payment by arriving composite series of CPI at 55% and WPI at 45%.

Table 3.23

Year WP

I CPI

45%

of WPI

55%of

CPI

Composi

te series YT/Y1=Rt

Ln

Rt

Year-

1(t-1)

Product

[(t-1) x

(Ln Rt)

1 2 3 4=45% of (2)

5=55% of (3) 6=(4+5)

2007 73.6 130.8 33.12 71.93 105.05

2008 80.0 141.7 36.00 77.92 113.92 1.08 0.08 1 0.08

2009 81.9 157.1 36.86 86.40 123.25 1.17 0.16 2 0.32

2010 89.7 176.0 40.37 96.77 137.14 1.31 0.27 3 0.80

2011 98.2 191.5 44.19 105.34 149.53 1.42 0.35 4 1.41

2012 105.7 209.3 47.57 115.12 162.68 1.55 0.44 5 2.19

2013 111.1 232.2 50.00 127.69 177.69 1.69 0.53 6 3.15

2014 114.8 246.9 51.66 135.80 187.46 1.78 0.58 7 4.05

2015 110.3 261.4 49.64 143.77 193.41 1.84 0.61 8 4.88

2016 110.3 274.3 49.64 150.89 200.52 1.91 0.65 9 5.82

2017 114.1 281.2 51.35 154.63 205.98 1.96 0.67 10 6.73

2018 118.9 294.8 97.06 118.62 215.68 2.05 0.72 11 7.91

A = Sum of "product" 37.36

B= 6 times (6 x A) 224.14

C= (n-1) x n x (2n-1); n = No. of Years of

data = 12 3036.00

D = B/C 0.07

g (Exponential Factor) = Exponential (D) -1 0.08

e = Annual Escalation Rate (%) = g x100 7.66


Recomposing the above table by considering CPI at 80% and WPI at 20% being the

weightage of employee expense as percentage of total O&M cost for CPI (WI) and the

weightage of R&M and A&G as a percentage of total O&M cost for WPI respectively.

Actual weighted inflation is as follows.

Table 3.24

Year WPI CPI 20% of

WPI

80%of

CPI

Compo

site

series

YT/Y1=

Rt

Ln

Rt

Year-

1(t-1)

Product

[(t-1) x

(Ln Rt)

1 2 3 4=

20% of (2) 5=80%of (3) 6=(4+5)

2007 73.6 130.8 14.72 104.62 119.34

2008 80.0 141.7 16.00 113.34 129.34 1.08 0.08 1 0.08

2009 81.9 157.1 16.38 125.67 142.05 1.19 0.17 2 0.35

2010 89.7 176.0 17.94 140.76 158.70 1.33 0.29 3 0.86

2011 98.2 191.5 19.64 153.22 172.86 1.45 0.37 4 1.48

2012 105.7 209.3 21.14 167.44 188.58 1.58 0.46 5 2.29

2013 111.1 232.2 22.22 185.74 207.96 1.74 0.56 6 3.33

2014 114.8 246.9 22.96 197.52 220.48 1.85 0.61 7 4.30

2015 110.3 261.4 22.06 209.12 231.18 1.94 0.66 8 5.29

2016 110.3 274.3 22.06 219.47 241.53 2.02 0.70 9 6.34

2017 114.1 281.2 22.82 224.92 247.74 2.08 0.73 10 7.30

2018 118.9 294.8 23.78 235.84 259.62 2.18 0.78 11 8.55

A = Sum of "product" 40.17

B= 6 times (6 x A) 241.02

C= (n-1) x n x (2n-1); n = No. of Years of data = 12 3036

D = B/C 0.08

g (Exponential Factor) = Exponential (D) -1 0.08

e = Annual Escalation Rate (%) = g x100 8.26

Weighted inflation rate to be considered for FY-19 is 8.26%

Consumer Growth rate:

For the purpose of computation of normative O&M expenses, Commission in its Tariff

Order -2018, dated 14.05.2018 has considered three year compounded annual growth

rate (CAGR) of the number of installations.

Similarly, BESCOM has considered the CAGR for 3 years and computed the consumer

growth rate for FY-19 which is tabulated as under:


Table 3.25

Particulars Numbers

Consumers as on 31.03.2016 (As per Accounts) 10146567

Consumer as on 31.03.2019(As per Accounts) 11810529

Annual Growth rate 5.19%

Based on the above inputs, O&M cost for FY-19 on normative basis is tabulated as

under.

Formula for working out the O&M expenses on normative basis as prescribed by the

Commission in its Tariff Order-2008 dated 11.1.2008 is as follows:

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 t

‘WII’ is the weighted inflation index of CPI and WPI 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 from FY03 to FY07 which is 5.47%

‘X’ is the efficiency factor. For BESCOM the Commission fixes the same as 1%

Here ‘t’ year = FY-19, t-1= FY-18, WII= 8.26%, CGI=5.19%, X=1%

Table 3.26

Particulars FY19

Weighted Inflation Index (WII) 8.26%

Consumer Growth Index (CGI) based on 3 Year CAGR 5.19%

True up O & M expenses for FY18 in Rs. Crs 1499.62

O&M expenses in Rs. Crs = t-1 cost * (1+WII+CGI-X) 1686.39

Commission in its MYT Order 2019, dated 30th May 2019 had limited the O&M

expenses to the actuals and allowed Rs.1499.62 Crores for FY-18. Since, the base

year data i.e. FY-18 includes the O & M expenses exclusive of contribution to the P &


G Trust, BESCOM has considered the contribution to the P & G Trust as additional

employees cost.


Particulars FY19

Normative O&M expenses 1686.39

Additional employees Cost (uncontrollable expenses-P&G Trust) 296.72

Allowable O&M expenses for FY19 1983.11

Comparison of approved, actual and proposed for truing up for FY19 is depicted below:


Particulars

Approved by

the

Commission

for FY-19

Actuals as per

Accounts

Proposed for

Truing UP on

normative

basis

O&M Expenses (in Crs.) 1654.99 1805.68 1983.11

Commission is requested to true up the O&M expenses of Rs. 1983.11 Cr. on

normative basis.

Depreciation:

BESCOM submits that for FY-19, the Hon’ble Commission in it Tariff Order dated 30th

May 2019 has considered the Depreciation in accordance with the provisions of the

KERC (Terms and Conditions for determination of Tariff) Regulations, 2006. On the

similar line BESCOM is claiming the depreciation. A comparison of Depreciation

expense approved by the Hon’ble Commission and actual depreciation expenses of

BESCOM is shown in the following table.



Particulars FY-19

Approved Actual Deviation

Depreciation on Buildings 10.69 7.99 2.7

Depreciation on Civil works (pipeline,

sewage, drainage, water supply etc.,) 0.28 0.27 0.01

Depreciation on Other Civil Works 0.08 0.13 -0.05

Depreciation on Plant and Machinery 144.99 166.15 -21.16

Depreciation on lines, cable, network

etc., 454.89 503.75 -48.86

Depreciation on Vehicles 1.62 1.52 0.1

Depreciation on furniture, fixtures 0.72 0.9 -0.18

Depreciation on Office equipment 0.66 0.98 -0.32

Depreciation on intangible assets 48.31 -48.31

Depreciation charged on released

material intended to re-use 2.65 2.92 -0.27

Sub Total 616.58 732.9 -116.34

Less: Depreciation Withdrawn from

contributions/subsidies as per Ind AS

20

175.9 202.8 -26.9

Total 440.68 530.2 -89.5

Ministry of Corporate Affairs (MCA) has issued Indian Accounting Standards (IND AS),

which is applicable to BESCOM from FY-17 with comparative period of one year. In

pursuance with Ind AS 20, Government Grants/subsidies received from the

Government or other authorities towards capital expenditure as well as consumer’s

contribution to capital works are treated initially under deferred income and taken to

fixed assets based on commissioning of the assets and depreciation is charged in

accordance with the class of assets it belongs.

The proportion equivalent to % of depreciation charged for plant and machinery/line

and cables are reckoned as basis for arriving at depreciation write back against such

quantum received over the year including current financial year under grants/

subsidies/ consumer contribution and the same is charged back as income and

shown distinctively in depreciation schedule in the statement of Profit and Loss.


Depreciation amount of Rs. 732.98 Crs is worked out as per annual accounts for FY-

19. After deducting an amount of Rs. 202.80 Crs. as per Ind AS 20, the net

depreciation works out to Rs. 530.18 Crs.

Commission is requested to true up the depreciation of Rs.530.18 Cr. as per actual.

Interest and Finance Charges:

As per MYT regulations, Commission is allowing actual interest incurred on the loans

borrowed towards creation of Capital Assets, interest paid towards consumer deposit

and interest on working capital on normative basis.

Breakups of interest and finance charges are as under:

Long term loan:

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.

As per the final Accounts, an amount of Rs. 4356.17 Crore of long term borrowings

are existing as at the end of FY-19 Details of loans outstanding and interest paid are

shown below:


Sl

No

Financial

institutions/Banks

FY-19

Opening

Balance

New

loan

addition

Total loan at

the end

of the

year

Repayment

of

principal

Interest

for the

year

Closing

Bal

Secured Loans

1 Loans from REC ( DTC

metering)

124.66

124.66

16.93

14.30

107.73

2 Loans from REC (NJY

Phase-2 )

207.49

207.49

28.18

23.65

179.31

3 Loan from REC

APDRP (10 Towns)

0.92

0.92 0.75

0.15

0.17

4 Loan from PFC-

RAPDRP (PartB)

58.73

58.73

58.73

5

Loan from PFC-

RAPDRP (PartB)

(counter funding)

137.81

137.81

11.99

14.89

125.82

6 REC-HVDS 190.52 21.17


190.52 20.38 169.35

7 REC_UAIP

214.23

214.23

23.80

24.14

190.43

8 REC-General Capex

117.40

193.45

310.85

51.74

29.74

259.11

9 REC-Static meters

95.24

95.24

11.51

95.24

10 REC-RGGVY-12th

Plan 3.12 3.12 1.98 0.32 1.14

11 REC-NJY phase-3

700.75

10.75

711.50

71.15

71.94

640.35

12 REC_HVDS-Phase2

158.66

9.55

168.21

16.81

15.67

151.40

13 REC UNIP

299.46

299.46

3.64

299.46

14 REC DDUGJY

38.44

38.44

0.65

38.44

15 REC IPDS

36.77

36.77

0.19

36.77

16 loans from

Commercial Bank-SBI

619.23

619.23

90.85

48.77

528.38

17 Loan from Commercial

Bank-BOI

28.40

28.40

28.40

3.95

-

18 Loan from commercial

bank-Canara

456.74

562.92

1,019.66

119.99

57.32

899.67

19

Loan from commercial

bank- Bank of

Maharastra

133.84

133.84

57.20

14.56

76.64


Bank-SBM

-

8.09

-


Bank-Bank of Baroda 75.00 4.53 79.53 3.36 6.29 76.17

23 Loans from Vijaya

bank (LRC/LBS)

0.00

0.00

0.00

3,322.74 1,155.87 4,478.61 544.30 370.15 3,934.31

UNSECURED LOANS

1 Loan from GoK-PMGY 0.33 0.33 0.11 0.05 0.22

2 Loan from GoK-

APDRP 16.68 16.68 4.17 2.26 12.51

3 Loan from GoK-Int

free 0.94 0.94 0.94

4 Loan from GoK-RGGY 4.90 4.90 0.59 4.90

5 Loan from GoK-JICA 407.48 407.48 403.29

430.33

- 430.33 4.28 2.90 421.86

Total Long term loan 3,753.07 1,155.87 4,908.94 548.58 373.05 4,356.17


The Indian Audit and Accounts Department had raised audit para regarding JICA

loan. The same is reiterated “BESCOM had obtained loan from Japan Bank for

International Cooperation since 2009-10 for its distribution automation system

project. The loan was originally obtained by Government of India which in turn was

passed on to Government of Karnataka, who disbursed it to BESCOM. The rate of loan

from JICA to GoI was 0.75% per annum and for that from GoK to BESCOM was

0.85% per annum. The loan was dispersed in tranches from 2009-10 to 2016-17 in

accordance with bills submitted by BESCOM. Even though the amount released by

JICA was only Rs. 403.09Cr, the GoK disbursed amount of Rs.4.19 Cr for the project.”

Hence, the Company has not accounted Rs.4.19Cr towards JICA loan in the closing

balance.

Interest is calculated on the normative average loan availed during the year using

Weighted average interest rate as shown in following table:


Particulars Approved Actuals

Opening Balance Long term Loans 4515.84 3,753.07

Add new loans 700 1,155.87

Less: Repayments 369.68 548.56

Total Loan at the end of the year 4846.16 4360.37

Less: JICA loan - Audit para 4.19

Average loan 4681.01 4,054.63

Weighted average rate of interest in % 8.70 9.20

Interest on long term loans 415.16 373.05

Interest paid on Long Term borrowings for the year FY-19 is Rs.373.05. Weighted

Average interest rate works out at 9.20%.

BESCOM request the Commission to consider Rs 373.05 Crs as interest on Long term

loans.

Short term loan and Over drafts:

To meet the day to day expenditure i.e., for working capital, BESCOM borrowed short

term loan and over drafts. As per the final Accounts, an amount of Rs. 3,953.42

Crore of short term and over draft borrowings are existing as at the end of the year

FY-19. Details of loans outstanding and interest paid are shown below:



Sl.

No

Bank name As on

31.03.2018 Additions Total Repayment

As on 31.03.2019

Interest

1 Vijaya Bank 750.00 3,000.00 3,750.00 3,000.00 750.00 61.59

2 Corporation

Bank 250.00 200.00 450.00 100.00 350.00 23.98

3 SBM 100.00

100.00 100.00 - 7.43

4 Syndicate Bank 10.34

10.34 10.34 - 0.07

6 Bank of India 104.00

104.00 104.00 - 3.61

7 Vijaya Bank STL (OD)

300.00 1,000.00 1,300.00 1,300.00 - 20.37

8 Canara Bank 200.00

200.00 99.98 100.02 12.85

9 REC

150.00 150.00 75.00 75.00 6.01

Total short term loan

1,714.34 4,350.00 6,064.34 4,789.32 1,275.02 135.91

BANK OVER

Drafts

10 Bank of Baroda 199.57

199.57

189.56 16.05

11 Vijaya Bank 48.81

48.81

590.70 25.23

12 Canara Bank 999.85

999.85

981.76 80.31

13 Syndicate Bank 326.32

326.32

324.92 29.18

14 Bank of India 93.56

93.56

176.78 12.08

15 State Bank of

Mysore 283.74

283.74

377.18 24.36

16 State Bank of

India 98.53

98.53

37.50 7.50

Over Draft Total 2,050.38 - 2,050.38 - 2,678.40 194.71

Total short term

loan(working Capital) 3,764.72 4,350.00 8,114.72 4,789.32 3,953.42 330.62

Interest on working capital:

As per the Audited Accounts, BESCOM has paid interest on working capital. BESCOM

further submits that the working capital is mainly required to meet the liabilities.

Short term borrowing and over drafts for the year FY-19 is Rs.3953.42 Crs. BESCOM

has incurred an amount of Rs 330.62 Crores towards interest on short term loans and

bank overdrafts as shown in the above table:

Hon’ble Commission in its Tariff Order 2018, dated 14.05.2018 has considered only

11% as rate of interest on working capital for FY19.


Computed interest on working capital on normative basis is as under:


Sl.No Particulars Approved Actuals

1 One-sixth of the revenue 3026.62 3256.46

2 One-twelth of the amount of O&M

Expenses 137.92 150.47

3 1% of Opening Balance of Gross Fixed

Assets 115.06 121.22

Total 3279.60 3528.15

4 Allowable Interest on working capital at

11.4% 360.76 402.21

5 Actual interest incurred for working capital 330.62

6 Savings to the Normative cost

71.59

7

Allowable interest on working capital

(50% of savings+ actual cost) ( As per

amended version)

366.41

*As per RBI notification Base Rate for April 2019: Min 8.45% and Max 8.90% (8.90% + 250

points =11.4%)

BESCOM requests the Commission to allow interest on working capital on normative

basis which works out to Rs.366.41 Crs.

Interest on consumer Security Deposit:

In accordance with the KERC (Interest on Security Deposit) Regulations 2005, the

interest rate on consumer security deposit to be allowed is the bank rate prevailing on

the 1stof April of the financial year for which interest is due. As per Reserve Bank of

India notification dated 1st April, 2018, notified bank rate as 6.40%.


Actual interest paid to consumer security deposit against the approved is tabulated

below:


Particulars FY-19

Approved Actuals

Open balance of Consumer Security

deposit(01.04.2018) 3801.1 3709.76

Added for FY-19 300 529.85

Consumer Security at the end of year 4101.1 4239.61

weighted Average 3951.1 3974.68

Rate of interest 6.25% 6.40%

calculated interest on consumer

security Deposit 246.94 254.38

Interest on Consumer Security deposit

paid 210.56

Commission is requested to allow Rs.210.56 Crs as interest on consumer security

deposit for FY-19.

Other finance charges:

BESCOM submits that it has incurred Other Finance Charges amounting to Rs. 11.52

Crs during the FY-19 as against Commission approved amount of Rs.11.63 Crs.


Bank Charges 8.92

Stamp duty 1.42

Guarantee Commission to GoK 0.59

Interest on Security Deposit from staff 0.00

Interest paid to service tax department 0.60

Total 11.52


Expenses capitalized:

As per the audited accounts following are the expenses capitalized. Hon’ble

Commission is requested to allow 118.25 Cr to capitalize for FY-19.


SL NO Particulars Current Year

2018-19

1 Interest Capitalized 112.73

2 Employee Cost 4.91

3 Administrative and general expenses 0.61

TOTAL 118.25

Interest and Finance Charges approved, actual and proposed for truing up for FY-19

is tabulated as under:


Sl.No Particulars

Approved

by the

Commission

for FY-19

Actuals

as per

Accounts

Proposed

for Truing

up on

normative

basis

1 Interest on Loan Capital 415.16 373.05 373.05

2 Interest on Working

Capital 360.77 330.62 366.41

3 Interest on Consumers

Deposit 246.94 210.56 210.56

4 Other Interest &

Finance Charges 11.63 11.52 11.52

5 LESS: interest & other

expenses capitalised -86 -112.73 -118.25

Total 948.5 813.02 843.29

The Commission is requested to approve the interest and finance charges of

Rs.843.29. Crs, for FY-19.


Other Debits:

Commission is approving the other debits based on actuals. As per accounts other

debits are as under:


SL. NO

Particulars Current Year

2018-19

1 Small & Low value items Written off 0.20

2 Asset decommissioning cost 1.47

3 Material cost variance 12.72

4 Miscellaneous losses and Write offs including provisions

7.60

5 Bad Debts written off 0.00

6 Provision against receivables -2.28

Total 19.72

Commission is requested to consider Rs. 19.72 Crs., as other debits for FY-19.

Commission is not considering the provisions for bad debts provided in the audited

accounts. Hence, Rs. 9.21 Crs., provided as exceptional items (provision for bad and

doubtful debts) is not proposed for truing up.

Return on Equity:

The Commission in Tariff Order dated 14th May, 2018 stated that, in accordance with

the provisions of the MYT Regulations, return on equity has considered at15.5% duly

grossed up with the applicable Minimum Alternate Tax (MAT) of 21.342%. Further, an

amount of Rs.100.00 Crores of recapitalized consumer security deposit as net-worth is

considered as per the orders of the Hon’ble Appellate Tribunal for Electricity in Appeal

No.46/2014.

Return on Equity computed and approved for FY19 is as follows:


Approved Return on Equity for FY19:


Particulars FY-19

Opening balance of paid up share capital 546.915

Share deposit 656.42

Reserve and Surplus -194.32

Less: Recapitalised Security Deposit -100

Total Equity 909.02

Approved Return on Equity with MAT 179.13

Following points are placed for kind consideration of the Commission.

As per Accounts of FY-19, debit and equity ratio for FY-19 is tabulated as under:

As per accounts Debt Equity Ratio:


Particulars GFA Debt Equity

Normative

Debt@70%

of GFA

Normative

Equity@3

0% of

GFA

%age of

actual debt

on GFA

%age of

actual

Equity

on GFA

Opening

Balance 14776.14

4,356.17 546.92 10343.3 4432.8 29.48% 3.70%

Closing Balance 12122.34

3,753.07 925.87 8485.6 3636.7 30.96% 7.64%

From the above table, the percentage of debt to gross fixed asset is within the norms

framed by the Commission under MYT Regulations.

Disallowance on ATE Appeal No. 46/2014: Deduction of Rs. 100/- cr. for

computation of equity.

The Commission is deducting Rs. 100 Cr. from the equity for computation of equity by

referring the Hon’ble Tribunal order in Appeal No. 46/2014 dated: 17th Sept 2014 Dr.

Subrahmanya Bhat, S/O Dr. BheemaBhat, Residing at Hegdekodi,

VeerakambhaVillage, BantvalTaluk, Post-Kodapadavu-574 222 Karnataka State

Versus KERC and MESCOM.

The extract of the findings of the Tribunal Order on this issue is reiterated as under

and emphasis is made by underling the word for better explanation:


“The Fifth Issue is relating to the Computation of Return on Equity.

44. According to the Appellant, the State Commission has ignored the fact of

capitalization of consumer security despot amounting to Rs.49.03 Crores for the

purpose of calculating ROE for the Respondent No.2. The Respondent No.2 is

claiming ROE on the same and the interest on the consumer security is passed

through in the APR as well. The State Commission should have disallowed ROR on

the said amount of Rs.49.03 Crore.

45. According to the learned Counsel for the State Commission, this issue is covered

by the judgment dated 2.1.2013 of this Tribunal in Appeal No.108 of 2010.

According to the learned Counsel for the MESCOM (R-2), the consumer’s deposit was

capitalized as per the Government Order dated 31.5.2003 and they are claiming

interest paid on consumer security deposit as pass through and also ROE strictly in

accordance with the provisions of the MYT Regulations and once the asset has been

capitalized in the books, the ROE will accrue in such capitalized assets. He has also

relied on the decision of the Tribunal in Appeal No.108 of 2013.

46. Admittedly, the consumer security deposit has been capitalized pursuance to the

State Govt order and the Respondent No.2 is claiming ROE on such capitalized sum.

We feel that the consumer security deposit is not a capital asset on which ROE can be

claimed. Even if the State Government has ordered capitalization of consumer

security deposit and accordingly the balance sheet of the Distribution Companies has

been drawn up with gross fixed assets including the consumer security deposit, the

State Commission should have deducted the amount of consumer security deposit

while allowing ROE on the equity component of the capital cost.

47. As already held by this Tribunal, the State Commission is not bound to follow the

audited accounts and the State Commission can scrutinize the same and allow the

expenditure only after prudence check. By allowing ROE on consumer security

deposit and also allowing interest paid by the Distribution Licensee to the consumers

against consumer security deposit in the ARR of the Distribution Licensee, the

consumer has been burdened unreasonably. On one hand the Distribution Company

has been allowed ROE on the security deposit which is contributed by the consumer

and on the other hand the interest paid to the consumer on such deposit is also

allowed as a pass through in the tariff to be recovered from the consumers. This is

wrong.

48. Hence, we find force in the arguments of the Appellant that ROE on consumer

security deposit amount capitalized in the books of accounts of the Distribution

Licensee should not have been allowed in the ARR of the Distribution Licensee.


Accordingly, we direct the State Commission to adjust the excess amount of ROE

allowed in the Impugned Order from FY 2011-12 onwards in the APR/True up for

these years to provide relief to the consumers.

49. The learned Counsel for the State Commission and the Respondent No.2 has

argued that the issue is covered by the decision of this Tribunal in Appeal No.108 of

2010 as against the Appellant. We do not agree with the same. In the judgment

dated 2.1.2013 in Appeal No.108 of 2010, this Tribunal did not go into the issue of

inclusion of the consumer security deposit in the gross fixed assets of the Distribution

Company and consequent allowance of ROE on the same being passed on in the ARR

and retail supply tariff. The Tribunal only noted the statement of the State

Commission that the interest is being paid regularly to the consumers on the

consumer’s deposit despite the capitalization of the security deposit and held that the

issue has become in fructuous.

50. Another issue raised by the Appellant is that the State Commission has violated

the MYT Regulations in so far as ROR in APR as well as ARR are concerned and the

State Commission has allowed ROE on the equity component (aggregate of equity and

free reserve) without considering the debt equity ratio, as per the Regulations.

51. According to the learned Counsel for the State Commission, gross asset in FY

2011-12 is Rs.218 Crores and increase in equity is Rs.57.20 Crore which would

show that component of equity was less than 30%.

52. We find that the State Commission has not shown the break-up of GFA into debt

and equity component. In the absence of the opening and closing GFA figures and

corresponding debt and equity components, we are not able to find whether the debt

equity ratio and ROE has been allowed as per the Regulations. The State

Commission is directed to transparently show the opening and closing GFA along

with break-up into equity and loan component in the tariff order henceforth. The

State Commission is also directed to consider the contentions of the Appellant while

truing-up the accounts for the FYs 2011-12 to 2014-15. Accordingly, this issue is

decided in favour of the Appellant.

From the above Hon’ble Tribunal decided the issue that the Capitalized portion of

Consumer security deposit shall be deducted while allowing ROE. The implied aspect

in the same order is that the State Commission is not bound to follow the audited

accounts and the State Commission can scrutinize the same and allow


Commission’s kind attention is drawn to the Chapter No. 4 in on page NO.60 to 62 of

the Tariff Order -2009 issued on 25th November 2009. Commission noted the break

up furnished by the BESCOM for capitalization Consumer Meter Security Deposit (Not

consumer security deposit) and others. Details in the said order are reiterated as

under.

“4.10 Directive - 10

Directive on Analysis of Consumers’ Security Deposit (Page 29 of Tariff Order dated 11.01.2008)

The relevant extract of the tariff order is as under:

The Commission notes that, besides the above objector, the FKCCI and many other objectors

have been repeatedly raising the issue of differences in the closing balances and opening

balances of consumers’ security deposit, but no satisfactory answer has been provided by

BESCOM. BESCOM is therefore directed to make an analysis of the closing balances and

opening balances before and after the formation of BESCOM, in consultation with KPTCL and

highlight the factual position as to whether a part of the consumer deposits has been

capitalized as equity by the GoK, while arriving at the opening balance sheet figures of

BESCOM. Since this is a matter, which involves public money, the Commission expects that, all

the adjustments made should be brought out in a clear and transparent manner. BESCOM

shall file a status report along with details in this regard within two months from the date of

issue of this order.

Compliance:

The GoK vide Order No: D18/PSR 2003/Bangalore dated 31.05.2003 approved to

recapitalize net worth of KPTCL/ESCOMs by utilizing the balances of meter equipment security

deposit existing in the books of ESCOMs aggregating to Rs.205 Crores. Further, the GoK has

assured the contingent liability arising on account of recapitalization as and when it arises.

KPTCL was consulted on the captioned subject and KPTCL has clarified vide letters dated 15th

&16th May 2008. The separation of Transmission and Distribution business was done

considering Accounting units as the basis. The segregated figures were made available to

GoK, for verifying the Opening Balance Sheets of new Companies. GoK vide Order

dt.31.05.2003 notified the Opening Balance Sheet of KPTCL and ESCOMs as on 31.05.2002.

After notification, the sum total of Trial balance rendered by the Accounting units as on

31.05.2002 under each ESCOM and KPTCL was tallied after taking into BRP Adjustments.

As per May 2002 Closure Accounts, the Security Deposit held by the Accounting units under

the jurisdiction of BESCOM was Rs.632 cores. The Amount of Security deposit from the

consumer notified as Opening Balance by GoK was also Rs.632 Crores and as such no BRP

adjustment was made in respect of Security Deposit from the consumers.


However, GoK vide Order dt.31.05.2003, approved recapitalization of the net worth of

KPTCL/ESCOMs utilizing the balances of meter equipment security deposit existing in the

books of ESCOMs aggregating to Rs.205 Crores. The details of adjustments along with

accounting code and ESCOMs wise are shown below.

Security Deposit – Adjustment

Amount in Rs. Crores

Accounting Codes

Nomenclature BESCOM MESCOM HESCOM GESCOM TOTAL

47.603 Security deposit for meter equipment’s

85.97 47.72 32.29 17.57 183.55

47.604 Revenue suspense 12.07 1.08 0.99 0.04 14.18

47.605 Voluntary loan contribution by IP consumers

2.4 0.12 0.01 0.03 2.56

47.606 Revenue collection pending classification over sundry debtors

0.99 0.11 0.02 4.07 5.19

Total 101.43 49.03 33.31 21.71 205.5

GoK resorted to recapitalization of Deposits to ensure providing viable opening balance sheets

to ESCOMS with ideal Debt: Equity Ratio. This metering security deposit is refundable to the

consumer at the time of termination of contract (permanent disconnection) & the corresponding

obligation in respect of such deposits would stand transferred to the GoK.

Commission’s Views:

The information furnished by BESCOM has been communicated to the FKCCI. The Commission

has informed FKCCI to contact BESCOM, incase further clarification in the matter is required. “

As per the above data, BESCOM’s capitalized consumer meter security deposit is

Rs.85.97 Crs. and not Rs. 100 Crs. Hence, Commission is requested to correct the

amount as Rs. 85.97 Crs. instead of Rs.100/- Cr.

Further, Commission kind attention is drawn for the Annual Account of BESCOM for

the year 2011-2012, 2012-13 and 2013-14 vide Note No.20 ‘Other Income’ head.

Amount received from the Government of Karnataka under tripartite agreement was

credited to other income instead of reducing the receivable from the Government of

Karnataka. Details are as under:



Year Nomenclature Amount in Crs.

2011-12 Subsidy received from GOK 10.93



Total 31.16

Since the amount is credited to other income, Commission has already considered the

amount as a reduction in ARR of respective years for truing of respective years,

BESCOM requests the Commission to credit this amount against the capitalized

consumer security deposit and balance to be considered as reduction in the equity. It

is submitted that, Hon’ble Appellate Tribunal for Electricity ruled in the appeal No.

46/2014 that the State Commission is not bound to follow the audited accounts and

the State Commission can scrutinize the same and allow the expenditure only after

prudence check.

Commission is requested to look into the accounts submitted by the Commission for

the year FY-12, FY-13 and FY-14 and to consider the BESCOMs request. Amount to

be considered for reduction is tabulated below:


Sl.NO. Particulars Amount in Crs.

1 Security deposit for meter equipment 85.97

2

Less: Amount considered as other

income for the year from 2011-12,2012-

13 and 2013-14

31.16

Amount to be considered for reduction in equity

consequent to capitalization of consumer meter

security deposit

54.81


Government of Karnataka induced the equity for FY-19. The details are as

follows:


Additional Equity received during FY19

Amount

in Crores

Received on

No of months

RoE

allowed Rs.Crs.

EN 129 PSR 2018 17.10.2018 8.33 09.11.2018 4 0.43

EN 129 PSR 2018 25.01.2018 8.33 04.02.2019 1 0.11

EN 129 PSR 2018 30.08.2018 16.66 07.09.2018 6 1.29

EN 23 PSR 2018 22.05.2018 25 02.06.2018 10 3.23

EN 53 PSR 2018 10.09.2018 23 26.09.2018 6 1.78

EN 53 PSR 2018 17.10.2018 23 09.11.2018 4 1.19

EN 53 PSR 2018 25.01.2019 30 05.02.2019 1 0.39

EN120 PSR2018 31.10.2018 2.24 15.11.2019 4 0.12

EN120 PSR2018 25.01.2019 1.22 04.02.2019 1 0.02

EN120 PSR2018 10.08.2018 1.22 30.08.2019 7 0.11

EN120 PSR2018 31.10.2018 0.5 15.11.2018 4 0.03

EN120 PSR2018 31.10.2019 0.25 04.02.2019 1 0.00

EN120 PSR2018 31.10.2018 0.25 27.08.2018 7 0.02

TOTAL 140.00

8.71

For FY-19, Government of Karnataka induced Rs.140.20 Crs. towards equity under

different occasions as tabulated above. The Commission is requested to consider the

same for computation of return on equity.

With the above back ground BESCOMs calculated eligible return on equity as under

for FY-19.


Particulars FY-19

Opening balance of paid up share capital 546.915

Share deposit 656.42

Equity addition during the year 8.71

Reserve and Surplus -231.366

Less: Recapitalised Security Deposit -54.81

Total Equity 925.87

Return on Equity @15.5% 143.51


Commission is requested to consider Rs. 143.51 Crs., as RoE for FY-19.

Income Tax:

As per the Audited Annual Accounts for FY19, an amount of Rs.9.30 Crores and Rs.

221.11 Crores are paid towards Current tax and Deferred Tax Liability respectively.

The Commission is allowing the actual tax paid by the Company. Hence the

Commission is requested to allow Rs.9.30 Crores. BESCOM has already paid Income-

Tax returns on a quarterly basis for an amount of Rs. 28.20Crs. BESCOM in its

annual Income Tax returns filing has claimed an amount of 17.95 Cr, Indian Income

Tax return acknowledgement is enclosed.





Other income:

Commission in its Tariff Order dated 14.05.2018 had approved other income to an

extent of Rs. 223.00 Crs.

As per the audited accounts for FY-19 other income is tabulated as under:

Table 3.45 Amount in Crs

Particulars 2018-19

Interest on Income 7.97

Profit on sale of stores 0.00

Losses/gain relating to fixed Assets -4.05

Rent 3.36

Incentive Received 209.36

Value of materials found excess during physical verification

0.12

Miscellaneous 165.69

Interest subsidy received under National Electricity Fund Scheme

30.82

Rebate at 0.5% for Collection of Electricity Duty 6.35

Revenue from sale of power through Indian Energy Exchange (IEX)

165.04

TOTAL 584.65

Major portion of other income is from incentives received i.e., Rs.209.36 Crs.

In order to provide interest subsidy on loans raised by distribution companies to

improve the distribution network, National electricity Fund (NEF), an interest subsidy

scheme has been set up. Under the scheme, loan amount sanctioned by lenders

during the financial year 2012-13 & 2013-14 for capital projects in distribution sector

duly approved by the Steering Committee shall be eligible to take the benefits of

interest subsidy for tenure of 13 years based on annual evaluation as per guidelines.

Interest subsidy received under National Electricity Fund Scheme amounts to

Rs.30.82 Crs.

With efficient financial management, power purchase bills are being paid in advance

to earn incentives on this count. Company is drawing overdraft from the commercial

bank and making advance payments to the Generators to earn arbitrage in the

difference of interest on over draft and the incentive earned.

In this context National Tariff policy, is also quoted for supporting the claims. National

tariff policy states that


“…….Making the distribution segment of the industry efficient and solvent is the key

to success of power sector reforms and provision of services of specified standards.

Therefore, the Regulatory Commissions need to strike the right balance between the

requirements of the commercial viability of distribution licensees and consumer

interests. Loss making utilities need to be transformed into profitable ventures which

can raise necessary resources from the capital markets to provide services of

international standards to enable India to achieve its full growth potential. Efficiency

in operations should be encouraged. Gains of efficient operations with reference to

normative parameters should be appropriately shared between consumers and

licensees…………….”

State Commission is disallowing the interest on belated power purchase payment bills

under the concept that interest on working capital is being passed through. On the

same lines, Incentive earned by the Distribution Company should be allowed to be

retained by the Distribution Company as an efficiency gain.

BESCOM is facing serious cash flow problems. Under recovery of costs over the years

ended in poor financial position. If the efficiency parameters are not apprised and not

fully allowed to retain it will result in disallowing the costs and capturing the income.

BESCOM requests the Hon’ble Commission to share the efficiency gain by at least

50%.


Revised other income is tabulated as under:


Particulars 2018-19

Interest on Income 7.97

Profit on sale of stores 0.00

Losses/gain relating to fixed Assets -4.05

Rent 3.36

Incentive Received (50% of Rs 209.36) 104.68

Value of materials found excess during physical verification

0.12

Miscellaneous 165.69

Interest subsidy received under National Electricity Fund Scheme

30.82

Rebate at 0.5% for Collection of Electricity Duty 6.35

Revenue from sale of power through Indian Energy Exchange (IEX)

165.04

TOTAL 479.97

Commission is requested to consider Rs.479.97 Crs. as other Income for FY-19.

ABSTRACT of Truing up of FY-19:

Based on the above analysis, the summary of ARR (after sharing of efficiency gains

& losses) for the Wires Business and Supply Business, as per Audited Account

and as approved by the Hon’ble Commission, for 2018-19 is presented in the table

below.



Particulars Approved Actual Trued

up

Revenue at existing tariff in Rs. Crs.

1 Revenue from tariff and Misc. Charges 15697.81 16728.06 16728.06

2 Tariff Subsidy from BJ/KJ 82.74 124.56 124.56

3 Tariff Subsidy from IP 2379.15 2686.12 2686.12

Total Revenue 18159.7 19538.74 19538.74

Expenditure in Rs. Crs.

4 Power Purchase Cost 14457.09 15908.29 15908.29

5 Transmission charges of KPTCL 1528.66 1539.27 1539.27

6 Transmission charges of PGCIL 757.1 1252.01 1252.01

7 SLDC Charges 15.03 15.03 15.03

Power Purchase Cost including cost

of transmission 16000.78 18714.6 18714.6

8 Employee Cost 1369.73

9 Repairs and Maintenance 116.15

10 Admin & General Expenses 319.80

Total O&M Cost 1654.99 1805.68 1983.11

11 Depreciation 440.68 530.18 530.18

Interest & Finance Charges

12 Interest on Loans 415.16 373.05 373.05

13 Interest on Working capital 360.75 330.62 366.41

14 Interest on consumer deposits 246.94 210.56 210.56

15 Other Interest & Finance charges 11.63 11.52 11.52

16

Less interest & other expenses

capitalized 86 118.25 118.25

Total Interest and Finance charges 948.48 807.50 843.29

17 Other debits 19.72 19.72

18 Net Prior period debit/credits

19 Return on Equity 179.13 84.77 143.5

20

Funds towards Consumer

Relations/Consumer 1

21 Income tax 230.41 9.30

22 Other Income 223 584.66 479.97

23

Deficit for FY17 carried forward in T.O

2018 -234.1

ARR 19236.16 21608.20 21763.73

GAP -1076.46 -2069.46 -2224.99

Sales 28286.75 27762.47 27762.47

Average cost of supply 6.8 7.78 7.84


Considering Aggregate Revenue Requirement and total Revenue, the revised gap works

out to deficit of Rs. 2224.99 Crs. as against Rs. 1076.46 Crs., deficit approved in Tariff

Order 2018, dated 14.05.2018 by the Hon’ble Commission.

Average Cost of Supply:

Commission determined the average cost of supply at Rs.6.80 per unit for FY-19.

Actual Average Cost of Supply is tabulated below:


Particulars FY-19

Approved Actual

Net ARR (in Crs.) 19236.16 21763.73

Approved/Actual Sales(MU) 28286.75 27762.47

Average Cost of Supply (Rs./unit) 6.80 7.84

As per proposed trued up figures, average cost of supply shoots up to Rs. 7.84 per

unit as against approved average cost of Supply of Rs. 6.80 per unit.

Thus the actual Revenue Gap for FY-19 works out to deficit of Rs. 2224.99 Crs.

BESCOM requests the Hon’ble Commission to allow BESCOM the true up

requirement as submitted above.

Documents

TRUING UP FOR FY-19 - Pages - karunadu Order 2020... · 2020-01-09 · TRUING UP FOR FY-19 Page 11 1. Truing up of Revenue billed and Revenue available towards ARR: In the Tariff