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Andhra Pradesh Electricity Regulatory Commission Hyderabad

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Andhra Pradesh Electricity Regulatory Commission Hyderabad Andhra Pradesh Electricity Regulatory Commission Hyderabad O.P. NO. 01/2003 O.P. NO. 02/2003 O.P. NO. 03/2003 O.P. NO. 04/2003 O.P. NO. 05/2003 Dated:24.03.2003 Present: Shri. G.P. Rao, Chairman Shri. D.Lakshminarayana, Member Shri. K Sreerama Murthy, Member Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) Eastern Power Distribution Company of Andhra Pradesh Limited (APEPDCL) Central Power Distribution Company of Andhra Pradesh Limited (APCPDCL) Northern Power Distribution Company of Andhra Pradesh Limited (APNPDCL) Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL) …………. Applicants The Andhra Pradesh Electricity Regulatory Commission (hereinafter called ‘the Commission’) having heard the consumers, representatives of various consumer organizations, political parties, the Staff of the Commission representing the consumers on the 19th, 20th, 21st and 22nd February, 2003 at Hyderabad and on the 24th and 25th February 2003 at Tirupati, the Principal Secretary, Energy Department, Government of Andhra Pradesh on the 22nd February 2003 at Hyderabad, the Chairman & Managing Director, APTRANSCO, Director (Commercial & Coordination), APTRANSCO, the Chairmen and Managing Directors of the Distribution Companies (DISCOMS) and having consulted the members of the Commission Advisory Committee on the 6th March, 2003 and having considered the documents available on record, passed the following order:- 1 CHAPTER – I : INTRODUCTION The Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) is the holder of Transmission and Bulk Supply Licence (Licence No. 1/2000) to carry out the Transmission and Bulk Supply business in Andhra Pradesh. The four Distribution Companies (DISCOMS) namely, Eastern Distribution Company of A.P Limited (APEDPCL), Central Distribution Company of A.P Limited (APCPDCL), Northern Distribution Company of A.P Limited (APNPDCL) and Southern Distribution Company of A.P Limited (APSPDCL) are the holders of Distribution and Retail Supply Licences (Licence Nos. 12/2000, 13/2000, 14/2000 and 15/2000 respectively) to carry out Distribution and Retail Supply business in their respective areas of Andhra Pradesh. 2. In terms of section 26 (5) of the Andhra Pradesh Electricity Reform Act, 1998 (Reform Act) read with Amendment to Andhra Pradesh Electricity Regulatory Commission (APERC) (Conduct of Business) Regulations 2000 (Regulation No. 8), the guidelines for Revenue and Tariff Filings framed by the Commission dated 7-10-1999 ("the Guidelines") and the provisions of licences, each licensee is obliged to file every year before the 31st December its calculations related to each licensed business for the ensuing financial year regarding (i) its expected aggregate revenue from charges under its currently approved tariff, (ii) its expected cost of service, and (iii)its expected revenue gap (if any) and a general explanation on how it proposes to deal with the revenue gap. 3. APTRANSCO and the four DISCOMS have filed separately their Aggregate Revenue Requirement (ARR) and Tariff Proposals for FY 2003-04 for Transmission and Bulk Supply business (T&BS) and Distribution and Retail Supply business (D&RS) respectively on 31-12-2002. The Commission has to determine the tariffs for FY 2003-04 both for T&BS and D&RS based on the filings of APTRANSCO and DISCOMS and the objections/suggestions received/heard from general public. 2 CHAPTER – II : REVIEW OF TARIFF FILINGS FY 2002-03 4. The Commission approved Tariffs for FY 2002-03 on 24-03-2002. This is the third tariff order of the Commission. While the first tariff order attempted the initial steps of reforms in the electricity sector, the second and third Orders focused on rationalisation and consolidation. Towards this end the Commission initiated a number of steps. 5. APTRANSCO in their filing for FY 2002-03 have proposed uniform single part Bulk Supply Tariff (BST) of Rs.2.071 ps/unit to the DISCOMS. However, the Commission felt that the historical factors which have shaped the DISCOMS stand in the way of uniform BST. The area of supply vested in one DISCOM as per the second transfer scheme varies significantly from others, among other things, in terms of consumer mix (i.e., the proportion of different consumer categories), losses and cost structure. The differences in consumer mix between DISCOMS result in differences in cross subsidy available to different DISCOMS. Similarly different losses and different cost structures affect the financial viability differently. Further Section 26(8) of the Reform Act directs the Commission to “endeavour to fix tariffs in such a manner that, as far as possible, similarly placed consumers in different areas pay similar tariff”. Considering all the above the Commission preferred to continue with differential BST for the year 2002-03. 6. While finalising the third Tariff order the Commission laid emphasis on greater public participation. Arrangements were made to invite general public as well as media to the public hearings. Notices regarding the public hearing process were issued well in advance and it was ensured that the licensees response to the objectors were made available to the objectors before the public hearing. 7. Of the total revenue requirement projected by APTRANSCO and DISCOMS of Rs.8998.08crores (net of non-tariff income, wheeling, grid support charges, etc.,) the Commission admitted Rs.8243.34crores for the year 2002-03, 3 reducing the filed revenue requirement by Rs.754.74crores. With the expected revenue requirement from the tariffs existing as on 31-03-2002 of Rs.6388.42crores, a gap of Rs.1854.92crores was required to be covered. The Commission directed DISCOMS to achieve efficiency gains of Rs.300crores leaving a gap of Rs.1554.92 crores to be covered on the basis of fully allocated cost. 8. The Government of Andhra Pradesh (GoAP) u/s. 12(3) of the APER Act, 1998 gave directions to reduce the tariff to certain categories (domestic, cottage industries, local bodies, LT agriculture, RESCOS, HT agriculture, sugarcane crushing and Aqua culture) and agreed to provide Rs.1509.38crores as subsidy. Finally Commission permitted a net increase in revenue of Rs.45.54crores (0.718%) by marginal adjustment of the tariffs prevailing as on 31-03-2002, to fully cover the revenue gap. 9. The Central Power Research Institute (CPRI) engaged by the Commission to assess the Extra High Tension (EHT) losses i.e. above 33 kV, submitted its report on technical losses on EHT during the end of financial year 2001-02 according to which, the transmission losses on EHT within AP was estimated as 6.65%. The Commission noted the difference between the transmission loss of 6.65% as per the CPRI study and the licensee’s projected loss of 8% and opined that this difference could be due to commercial losses in the EHV system and directed APTRANSCO to conduct a separate study on commercial losses observed in the EHV system and to submit its findings by identifying the sources of these losses. It also directed APTRANSCO to file a time bound action plan to reduce the transmission losses in the EHV system. 10. Another salient feature of the Tariff Order for FY 2002-03 was the manner in which the Commission wanted the licensees to estimate the agricultural consumption. The Commission wanted a census study to provide data on the number of pumpsets and their capacity. The specific consumption per HP, mandal wise, was also required to be ascertained from meter readings on LV 4 side of the transformers feeding agriculture pumpsets exclusively. It was directed that the Agricultural consumption be assessed based on the above studies. 11. Major changes initiated with regard to tariffs in the Tariff Order for FY 02-03 are as follows. (i) Domestic – LT-I 12. The Commission reduced the number of slabs in LT-I Domestic from the existing six slabs to five slabs by merging the two high-end slabs. This decision has been taken after careful examination of the arguments of the public, the Licensees and the GoAP for retaining the number of slabs at six and after taking into account discernible changes in consumption patterns of households and the fact of existence of multiple connections in a single household. 13. Simultaneously, the Commission directed the licensees to undertake a drive on a door-to-door basis for verification and merger of multiple connections. Such door-to-door verification ensures payment of bills on the basis of correct meter readings and also help check a large number of services where only minimum charges are being paid. (ii) Non-Domestic/Commercial- LT-II 14. The number of slabs in this category were reduced from 3 to 2. Further, the rate for the second slab was reduced and fixed at Rs7.00 per unit as against Rs.7.55 per unit proposed by the DISCOMs and the then prevailing rate of Rs 7.45 per unit for the highest slab. (iii) General Purpose - LT- VII 15. The Commission reduced the tariff in this category from Rs.4.30 per unit in FY 2001-02 to Rs.4.00 per unit as against the increase proposed by the licensee in tariff to Rs. 4.50 per unit. 5 (iv) Agriculture – LT -V 16. (a) While retaining the tariff proposed for agriculture on a flat rate basis, the Commission preferred to continue with the 'optional' metered tariff of 20 ps./unit for the first 2500 units of consumption and 50 ps./unit for consumption above 2500 units per annum. This was done to help all farmers who avail themselves of power supply for about 1200 Hrs. in a year with a cheaper metered consumption bill relative to the flat rate, for all capacities of pumpsets. The benefit of 50% rebate continued to be available if the farmers undertook DSM measures as proposed in the tariff order for FY 2001-02.
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