Faisalabad Electric Supply Company Limited
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FAISALABAD ELECTRIC SUPPLY COMPANY LIMITED FESCO OFFICE OF THE Phone No. 041-9220242 FINANCE DIRECTOR Fax No. 041-9220217 Email: [email protected] FESCO FAISALABAD No 1o7g(c--R FD/FESCO/CPC Dated R8 06 /2013 The Registrar NEPRA, rd Floor, OPF Building, Sector G-5/2, Islamabad Subject: - PETITION FOR DETERMINATION OF CONSUMER END TARIFF FOR FY 2013-14 IN RESPECT OF FAISALABAD ELECTRIC SUPPLY COMPANY LIMITED (FESCO). I am pleased to file Tariff Petition for FY 2013-14 on behalf of Faisalabad Electric Supply Company Limited (FESCO) in accordance with rule 3 (1) of NEPRA Tariff andd Procedure Rules, 1998. The Demand Draft No. ,3524582.-4 dated alq--06.-2tt3 for Rs. 744,192/- (Seven Lac Forty Four Thousands One Hundred & Ninety Two Only), is attached as petition fee. Subsequent changes, documentation and information will be communicated/ provided for becoming a part of the accompanying Tariff Petition. It is requested that the attached Tariff Petition of FESCO for the FY 2013-14 may be admitted. DA/ As Above Yours Truly, (DR. RANA ABDUL JABBAR KHAN) CHIEF EXECUTIVE OFFICER C.0 To: Joint Secretary (Power), Ministry of Water & Power Islamabad. Faisalabad Electric Supply Company Limited FESCO TARIFF PETITION FY 2013 - 14 FESCO Tariff Petition FY:2013-14 TABLE OF CONTENTS 1. PETITION SUMMARY 1.1 Details of petitioner L1.1 Name & address 1.1.2 License Details 1.1.3 Representatives of FESCO 1.1.4 Grounds for petition 1.2 Concise Statement (Grounds and facts forming basis of the Petition) 1.3 Key aims and features of the petition 2. REVENUE REQUIREMENT 2.1 Power Purchase Price 2.1.1 Transmission and distribution losses 2.2 Distribution Margin 2.2.1 Operation & Maintenance Expenses ➢ Fresh Employment ➢ Basic pay ➢ Allowances ➢ Employees benefits ➢ Retirement benefits ➢ Repair & Maintenance ➢ Other operating expenses 2.2.2 Return on rate base 2.2.3 Depreciation 2.2.4 Investment Plan 2.2.5 Other Income 2.3 Prior Year's Adjustment 2.4 Other Issues 2.4.1 Late Payment Surcharge/ Cost of Working Capital 2.4.2 TFC Loans and Mark-up by DISCOs 2.4.3 Safeguard the Interest of Majority of Industrial Consumers from the Invasion of Temporary/Captive Power Industrial Consumers through Consumer Discipline 2.4.4 Bifurcation/Creation of Operation Sub-Divisions, Divisions and Circles 2.4.5 Target of Pay Out Ratio • 2.4.6. Incentive to Consumers in terms of Reduction in Tariff in accordance with their Savings in Energy Consumption 3. PRAYER/ REQUEST 1 FESCO Tariff Petition F1:2013-14 THE TARIFF PETITION 1. PETITION SUMMARY 1.1 Details of the Petitioner 1.1.1 Name and Address Faisalabad Electric Supply Company Limited (FESCO), Canal Road, Abdullahpur, Faisalabad 1.1.2 License Details FESCO is the licensee of National. Electric Power Regulatory Authority (NEPRA) and holds the Distribution License bearing No. 02/D1./2002. 1.1.3 Representatives of FESCO The petition is being filed through Dr. Rana Abdul jabbar Khan. Chief Executive Officer of FESCO who has been duly authorized by Board of Directors vide Resolution (ANNEXURE-A) passed in its 111th/ 37th meeting held on 14th May 2013 to sign and file annual tariff petition for FY 2013-14 along with the following officers of FESCO have also been authorized by the Board to sign individually or jointly the tariff petition FY 2013-14 and the necessary documents in support of the petition and also • to appear- before the AuthoritY as needed and do all acts necessary for completion and processing oldie application:- a. Muhammad Iqbal Ghori Finance Director. b. Muhammad Naeeni Ullah Director (HR&A) c. Ghazanfar Ali Baloch G.M. (Operation) d. Khurshid Alam • Chief Technical Officer, (then-C(:O) e. Ch. Ghulam Rasul Chief Commercial Officer, (then,(;1.1 .1.&(;) f. Sheikh Akhtar Hussain • Chief Engineer (T&G), (then-(;1'O) g. Aziz Ahmed Addl; D.G (IS) h. Abdul Razzaq Addl; D.G (L&L) The Affidavit of the signatory/ CEO is appended as ANNEX R E-B and the deposit receipt of the requisite fees is ANNEX URE-C. 1.1.4 Grounds for Petition Under the "Regulation of Generation, Transmission & Distribution of Electric Power Act, 1997 (hereinafter called as `NEPRA Act')", the Regulator is responsible for determining tariffs and other terms and conditions for the supply of electricity by the generation, transmission and distribution companies. NEPR.\ is also responsible for determining the process and procedures for reviewing tariffs and recommending tariff adjustments. 2 FESCO Tariff Petition FF:2013-14 FESCO is a licensed public limited company distributing and supplying electricity to the distribution area within jurisdiction of company, as set out in I'I :.SCO's license. The tariff petition for FY 2013-14 is being filed by FESCO in order to ensure its financial viability through timely recovery of its prudently incurred costs/expenditure and reasonable return, to comply regulatory standards and future investment for network expansion. The petition is being filed in accordance Rule 3 of "NEPRA (Tariff Standard and Procedural) Rules, 1998 (hereinafter called as `Tariff Rules')". 1.2 Concise Statement As per Rule 17 (3) (i) of Tariff Rules, the tariff should allow licensees the recovery of any and all costs prudently incurred to meet the demonstrated needs of their consumers. These 'Revenue Requirements' of FF,SCO for 1;Y 2013-14 have formed the basis for this petition on the following Facts & Grounds i. The existing Distribution Margin (DM) is not sufficient for FESCO to meet the anticipated Revenue Requirement in FY 2013-14 due to inflationary impact, increase in regulatory asset base, expansion of network (addition of sub-divisions & divisions), construction of new grids, increase in salaries wages, repair & maintenance and increase in depreciation etc. It is obvious to determine the Distribution Margin keeping in view the narrated above factors for onward reflection in consumer end tariff. ii. Due to delayed Determination & Notification of tariff for IN: 21)12-13, FESCO remained unable to recover its Revenue Requirement which. has increased the requirements of FY 2013-14. iii. Allow FESCO to pay mark-up on TI'(; Loan arranged by Power Holding (Pvt.) Limited. iv. Allow FESCO to maintain Consumers Discipline (on B-3, B-4 categories). v. To allow FESCO to create 12 new Sub Divisions and 03 new Divisions in the Phase during FY 2013-14: vi. Promote conservation of energy that may include incentives to consumers in terms of reduction in tariff in accordance with their savings in energy consumption. vii. The line losses (10.83%) and sales mix (8,767 NIKV,h) etc., have been estimated as per existing trend. However, the order of Supreme Court of Pakistan dated 21-05-2013, "to supply available electricity equitably in between the domestic and industrial consumers" May change the consumer mix and load profile. Copy of the decision attached at ANNEXU E- D. 3 FESCO Tariff Petition FF:2013-14 1.3 Key Aims and Features of the Petition The aim of this petition is to request the Authority to determine FI,ISCO's Tariff well in time for FY 2013-14 that may be prejudiced by decision of the Authority on Motion for Leave to Review filed by FESCO. The purpose of filing this petition is to obtain approval for the immediate implementation of cost reflective tariffs to yield FESCO's required revenues on annual basis for ultimate benefit of consumers. The objective of tariff petition is to: i. Instant recovery of Cost of Service to protect existing as well as future consumers. ii. 1'o provide efficient usage of installation, and investment in, FFISCO's distribution network. iii. To provide protection to FESCO against uncontrollable risks. iv. To promote financial sustainability of FESCO to the ultimate benefit of consumers. v. To recover on account of Prior Year Adjustment. vi. To provide safe and secure working environment to its work force. vii. To provide sufficient working capital in order to pay its current liabilities promptly to avoid accumulation of circular debt at central level. viii. Induction of . Emerging Technologies like Smart Metering • (Real Time Monitoring), Smart Grids and SCADA etc. ix. To motivate the determination of tariff to meet the Revenue Requirements those are explained hereinafter- x. Implementation of ERP. 2. REVENUE REQUIREMENT NEMO. Act allows the Distribution licensee to recover the prudently incurred cost of services as well as the rate of return which promotes continued reasonable investment in equipment and facilities for improved and efficient services. This is to meet with the requirement of revenue; to ensure financial viability; for continuity in operations and reliability in supply of electricity; funding for system expansion; improvement/ rehabilitation and thereby benefiting the consumers in the end. No doubt that advanced tariff is developed/ determined on notional basis and law provides the mechanism of adjustment however to save the consumer from unwanted fluctuations the more realistic approach in making references shall be appreciated. On basis of trend of demand and availability, the projected revenue requirement of FESCO for FY 2013-14 is calculated on anticipated sale of 8.767MKWh units with a growth of 2.80".a over previous year actual/projected sales of 8,528 MKWh. As per law, the "Annual Revenue Requirement" of FESCO consists of:- 1. Power Purchase Price including impact of T&D Losses; ii. Distribution Margin; and iii. Prior Year Adjustment 4 FESCO Tariff Petition FF:2013-14 Table — I FY 2013-14 Description (Projected) Rs./KWh Rs. in Million Energy Transfer Charges (ETC) 8.214 80,857 Capacity Transfer Charges (CTC) 2.186 21.493 Use of System Charges (UoSC) 0.185 1,823 Total Cost of Power 10.595 104,173* • See Serial # 4 of the Cakulation Tahk 2.1.1 Transmission and Distribution Losses NEPRA has to determine.