1

BETOR"E THE HON'BLE UTEST BENGAL ELECTRICITY REGULATORY COMMISSION, KOLI(ATA

CASE NO.:

IN THE MATTER OF:

Review Petition filed under Regulation 3.3 read with Regulations 3.10, 3.11 and 3.12 of the West Bengal Electricity Regulatory Commission (Conduct of Business) Regulations, 20 13, against the Order in Case No. APR-35/12-13 dated 09.09.2013 regarding the Annual Performance Review of West Bengal State Electricity Distribution Company Limited for the Financial Year 20ll-I2 and pursuant to Order dated 28.11.2018 in Appeal 267 of 2015 passed by the Hon'ble Appellate Tribunal for Electricity.

AND IN THE MAT'IER OF:

West Bengal State Electricity Distribution Company Limited

... Petitioner 2

MOST RESPECTFULLY SHOIf, ETH:

1. The present Petition is being Iiled by the Petitioner - West Bengal State Electricity Distribution Company Limited

(hereinafter referred to as "trIBSEDCL/Petitloner") seeking

the humble indulgence of this Hon'ble Commission to

review its orders and directions dated 09.09.2013 in Case

No. APR-35/12-13 (hereinafter referred to as "Impugned

OrderP) and reconsider the issues therein holistically.

2. It is respectfully submitted that the Petitioner herein had

previously filed an Appeal (Appeal No. 267 of 2015) before

the Hon'ble Appellate Tribunal for Electricity, New Delhi (hereinafter referred to as "APfEL/Hon'ble Tribunal")

challenging the Order dated 12.06.2014 in Case No. APR-

38113-14 and a subsequent Appeal (Appeal No. 213 of

2014) challeriging the Order dated O9.O9.2013 in Case No.

APR-35/ 12- 13 (However, the same remained pending

before the Hon'ble Tribunal. A copy of the Impugned Order

dated 09.09.2013 is annexed herewith and marked as ANNEXURE - 1. The Petitioner herein, considering the pendency of Appeal before the Hon'ble Tribunal and

petitions hled by the Petitioner for subsequent years before 3

this Hon'ble Commission, requested the Hon'ble Tribunal

to allow the Appeal (Appeal No. 267 of2O15) to be sent back

to this Hon'ble Commission for its holistic re-evaluation

and reconsideration.

3. On 27.1 1.2018, the Petitioner herein made the aforesaid

submission before the Hon'ble Tribunal and accordingly a

Memo was fi1ed seeking withdrawal of the Appeal No. 206 of 2O\4 subject to certain conditions. The counsel

representing this Hon'ble Commission before the Hon'ble

Tribunal also submitted that this Hon'ble Commission will

not be averse to re-iooking into the issues arising in the

Appeal afresh. A copy of the Memo dated 27.11.2018 filed

before the Hon'ble Tribunal is annexed herewith and

marked as ANNEXURE - 2.

4. On 28.11.2018, the Hon'b1e Tribunal after taking into consideration the submissions made by the Petitioner herein and those made on behalf of this Hon'ble

Commission held as under:

"...ue permit tlrc Appellant to rltithdrau.t the Appeals in order to approach the learned State Commission for a 4

holistic reconsideration of all lhe rissues raised in the present set of Appeals subject to :- (a) Tte delag in approaching the Ld. State Commission for reconsideration shall not stand in the tuay of reconsideing all tlw issues on tlrc meits in so for as tlw present appeals haue remained pending before this Tfibunal, and

(b) The Appellant uill haue tlrc libertg to approachthis Tibunal again in tle euent it is still aggieued after the reansideration undertaken bg the Ld. State Commi,ssion.

Accordiruglg, Appeals are d.isposed of as uithdrawn in terms of memo dated 27.11.2018.'

A copy of the Order dated 28.11.2018 in Appeal 267 of 2Ot6

is annexed herewith and marked as ANIYEIKURE - 3.

5. In view of the above facts and circumstances, the Petitioner

has filed the present Review Petition before this Hon'ble

Commission, seeking it to reconsider and allow the issues

arising therein.

6. At the outset the Petitioner herein submits that the

Respondent Commission has failed to consider the

submissions made by the Petitioner in its ApR Petition

dated 15.03.2O13 for determination of APR for the year

2017-12, in the APR Order dated O9.O9.2O 13 on the

following issues namely- 5

a) Prior period depreciation.

b) Carrying cost on balance regulatory asset of

employees terminal benefit fund.

c) Carrying cost on regulatory asset created in the APR

order for the year 2009-10 and 2010-11.

7. It is further Submitted that this Honble Commission is

humbly prayed to consider the aforementioned issues in

light of the West Bengal Electricity Regulatory Commission

(Terms and Conditions of Tariff) Regulations, 2OlL

(hereinafter referred to as "2O11 Tarilf Regrrlatlons") and

other well settled principles in law.

8. It is respectfully submitted that this Hon'ble Commission on

09.09.2013 passed the Impugned Order. In the Impugned

Order, as discussed in detail herein below, this Hon'ble

Commission has erred in disallowing the revenue

requirement of the Petitioner under various heads being

completely contrary to the regulations, which has deprived

the Petitioner of the required funding fof carrying out is

distribution business in an efficient and effective manner.

The Petitioner being aggrieved by various findings of this 6

Hon'ble Commission has set out them issue wise herein

below:

A. NON.ALLOWANCE OF PRIOR PERIOD DEPRECIATION:

(i) It is respectfully submitted that this Hon'ble Commission

ought to have allowed the entire amount of Rs.35789 lakhs

claimed by Petitioner towards depreciation for FY 2O11-12.

This Hon'ble Commission has erred in observing that the

depreciation computed and chargeable in the revenue

account for the year 2OII-12 was Rs. 33259.30 Lakhs and

disallowed the amount of Rs. 1651 Lakhs claimed by the

Petitioner as 'pior period depreciation' from 2008-09 to

20 10- 1 1 for addition of distribution assets which was

commercially operated but not considered in the respective

years. The relevant extracts from the Impugned Order is set

out as under:

"3. 1 1 Depreciation: 3.11.1 An amount of Rs. 35789.OO lakh has been claimed bg WB SEDCL in their APR application for 2 0 1 1 - 2012 touards depreciation on ftxed assels as against Rs. 33259.3O lakh allotued in the ARR for the gear 2 O 1 1 - 2 0 1 2. In the taiff order of WBSEDCL for 2 0 1 1 - 12, tte Commission found tLnt in annual accounts of 7

2011 - 2012 tte amount on ttLe head depreciation uas Rs. 34138.OO lakh and directed WBSEDCL to shou.t in their APR opplication for 2011-12 as to hout tlrcg had computed t?e deprecation o/Rs. 34138.00 lakh as per annual accounts. WBSEDCL ha.s complied uith the direction shouing the computation of depreciation in detail in Form- B to Annentre-7, in Volume-I of ttreir APR application.

3.1 1.2 It is seen from their submission that WBSEDCL capitalized assefs o;f Rs. 41196.0O lakh brought into seruice in preuious gear but not added in tte fixed assels in tlre gear of operation. WBSEDCL has claimed tle depreciation consideing those assets in their computation for the year 2011-12. The d.epreciation so computed for the year 2011-12 came to Rs. 34138.0O lokh. Besides, WBSEDCL has claimed Rs. 1651.0O lakh on account of prior period depreciation for the gears 2008-09, 2009-10 and 2010-11 forthose assets tohich came into operation in earlier gears but add.ed into frxed assets in the gear 201l-lZi. me Commi,ssion decid.es that since those are add-ed- in fixed assets onlg in 2011-12 tlw depreciation for th.e prior period as claimed bg WB SEDC L will not be coniidered in the ApR for 2011-12. The Commission ttats in the APR for 2011 - 2012 admits an amount of Rs. 34138.0O lakh under the h.ead depreciation as computed for tLrc gear for 2011 - 2012 including tlrc depreciation for the gear 2011-12 onlg for fhe assets added into fixed assets in 2011-12 but come into operation in earlier gears. The 8

function usise break-up of tlrc amount allowed in the APR for 2011 - 2012 are found as under:

sl. Function Admitted amount in APR for 2011- trfo. 12 (Rs. in lakh)

1 Generation 7210 2 Distribution 26928 Total 34138 ,,

(ii) It is respectfully submitted that in terms of the 2oll Tariff

Regulations, the Petitioner is entitled to recover depreciation

as a tariff component. Regulation'5.6.2 of 2011 Tariff

Regulations requires that this Honble Commission compute

depreciation from the first year of operation of any asset.

Accordingly, it is submitted that the disallowance of the prior period depreciation is contrary to the 2}ll Tariff

Regulations. The relevant regulation is reproduced herein

below:

"5.6.2 Depreciation

(ui) Depreciation shall be chargeable from the first gear of operation. In case of operation of tlrc asset for part of the gear, depreciation shall be charged on pro-rata basis." 9

(iii) It is respectfully submitted that this Hon'b1e Commission

ought to have acted as per the 201 1 Tariff Regulations. It is

further pertinent to note that the Hon'ble Commission in the

APR order for the year 20 10- 1 t had also allowed the

depreciation for the prior period, wherein the assets were put

to use in 2OO7-O8,2008-09 & 2009-10 and were capitalised

in the year 201O-11. In the book of accounts, the

depreciation for these assets for the year 2OlO-11 were

provided under the head 'Depreciation' and the depreciation

for the prior period was accounted under the head "Prior

Period Expenses". The relevant excerpt flom the order is

cited below for reference:

"3.11.1 An amount of Rs. 35594.49 lakhutas charged

to the books of accounts tou-tards depreciation on fixed ossets as against Rs. 40986.74 lakh allouted in the

ARR for the gear 2010 - 2O11. WBSEDCL also claimed Rs. 35594.49 lakh in their APR application for 201O - 2011 and the said amount of Rs. 35594.49 lakh os

charged in the annual accounts of WBSEDCL for 2010 - 2011 is being admitted in the APRfor 2010 - 2011.

The function u.tise break-up of the amount prouided in 10

the ARR for tLrc Aear 2010 - 2011 and also allowed in

the APR for 2O10 - 2017 are found as under:

Amount lRs. in La,khl As S. .l\Io. Function As per tariff found order admlssible tn APR 1 Generation 10895.87 7101.94 2 Distibution 30090.87 28492.5s Total 40986.74 35594.49

, In tle annual accounts for FY 2010-7 7, in Sclwdule-21,

Rs. 29446 lakh was accounted. for 'd.epreciation', and. in Sctrcdule-3l (Net pior period income/expenditure),

Rs. 6132 lakh u)as accounted for 'depreciation unprouid"ed in preuious gears'. These two in together

was allowed in APR 2010-11."

(iv) The above posits that while the Honble Commission on

earlier occasion has applied Regulation 5.6.2 of 2O11 Tariff

Regulations in its true spirit to allow depreciation for past

period from operationalization of assets. However, has

adopted inconsistent approach on the present issue by

deviating from its past orders. The disallowance of prior

period depreciation from the calculation of depreciation of

fixed assets also goes against the Accounting Standard-S

relating to Net Profit or Loss for the Period, Prior Period 11

Items and Changes in Accounting Policies, which is part of the standards of the Company (Accounting Standards)

Rules, 2006, notified by the Ministry of Corporate Affairs.

This Standard requires the classification and disclosure of extraordinary and prior period items; and the disclosure of certain items within profit or loss from ordinary activities.

It also specifies the accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in accounting policies. The relevant clauses of the Accounting Standard-

5 are as follows:

"4.3 Prior perlod ltem,s are lncome o" expenses

whlch arlse ln the current pet tod as a result oJ etrors or omlss{ons 7n the preparatlon of the

financia,l statements of one or more prior perlod.s.

17. Errors in the preparation of the financial statements of one oi more pior periods mag be discouered in tle q)rrent period. Errors m-ag occur as a result of mattLematical mi,stakes, mistakes in applying accounting policies, misinterpretation of focts, or ouersight. t2

18. Prior period item.s are generallg infrequent in

nahtre and can be distinguished from changes in acaunting estimates.

19. Prior period items are normallg included in the

determination of net proftt or loss for the anrent period.

An altematiue approach is to shaw such items in the

statement of profit and loss afier determination of

cunent net profit or loss. In either case, the objectiue is

to indicate the effect of such items on tle cutrent profit

or loss. "

(v) It can be seen from the above that errors or omissions in

preparation of accounts in one period, discovered in a later

period are considered as Prior Period itemsiThe petitioner as

a matter of accounting policy maintains its asset register

and capitalizes its assets as when the assets are put to use

i.e. operationalized. The relevant extract of the accounting

policy of the Petitioner as declared in the annual accounts of

the Petitioner is reproduced herein below: 13

"2.2 Assets are stated at original (histoncal) cost of acquisition including freight, insurance, duties, taxes and other incidental expenses incurred to bing tLe assets fo use.

2.3 Fixed Assef is accounted for through capital uorks in progress account and transferred to the appropriate ftxed asset account when tle assets are put to use on commissioninq.' (emphasis supplied)

(vi) In this case, the Petitioner has charged depreciation from the

date the assets were put to operation in accordance with

Regulation 5.6.2(vi). The depreciation pertaining to the

period prior to FY 2011-12 has been correctly disclosed as

prior period items, in compliance with the Accounting

Standard 5 for net Profit or Loss for the period, prior period

Items and Changes in Accounting Policies, which is part of

the standards of the Company (Accounting Standards)

Rules, 20O6, notified by the Ministry of Corporate Affairs. In

fact, Regulation 5.6.2 ("ii) requires that accounting

standards shall apply to the extent not inconsistent with the

201 1 Tariff Regulations. The regulation 5.6,2(vii) provides as

follows:

" 5. 6. 2... (uii) Prudent accounting principles shall apply to ttle ertent not inconsbtent uith tlrcse regulations" l4

(vii) It is respectfully submitted that the Accounting Standard

requires the classification and disclosure of extraordinary

and prior period items, and the disclosure of certain items

within profit or loss from ordinary activities. It also specifies

the accounting treatment for changes in accounting

estimates and the disclosures to be made in the financial

statements regarding changes in accounting policies. The

rationale behind the aforementioned provision under

Accounting Standard- 5 is to remove the various

complexities and inconsistencies in the accounts of large

corporations due to pragmatic difficulties in the real time

reporting of income or expenses (such as operationalization

of assets). It is difficult to update the accounting books of

large corporations having multi-step reporting structure and

operations spread over large geographical areas in real time.

Therefore, disallowance of prior period depreciation from the

calculation of depreciation of fixed assets also goes against

the Accounting Standard-S.

(viii) This Hon'ble Commission may appreciate that whilst the

asset is being put to use, it is the responsibility of the

relevant site personnel to inform about the asset being

operational, so that the same can be capitalised. However, 15

sometimes due to inadvertent human errors the site

personnel fails to update about operationalization of a

particuiar asset, leading to delay in capitalization, and the

capitalization in such cases is done along-with accumulated

depreciation in the year such omission is discovered.

(i*) This Hon'ble Commission may appreciate that the Petitioner

which employs more than 30 thousand people, in a

distribution network covering 88O6O Sq.km and serviced 1.2

crore consumers in 2Ol2-13 (1.51 crore consumers in 2014-

15) from varied strata of the society, it was extremely difficult

as a practical matter to keep track of operationalization of

assets as it occurred and collate data from ihousands of sub

stations and stores. As a result, there is bound to be some

time lag between operationalization and capitalization of

assets. It is in this background that Regulation 5.6.2 (vi)

read with the Accounting Standards provide for depreciation

from first year of operation. It is for this reason that the

Comptroller and Auditor General (CAG) also has not

questioned the approach taken by the Petitioner in charging

depreciation on assets operationalized in the prior periods.

(") Without prejudice, it is submitted that, in case the prior

period depreciation is not allowed, then the rate of 16

depreciation will have to be re-aligned with the remaining life

of the asset. In this regard, it is important to note here that

this Hon'ble Commission uide its own regulations has made

it obligatory that in case of any miscalculations or consideration of improper data/missing data is found in

ARR of one year, the same should be rectified in the ensuing

year.

(xi) It may further be noted that the Petitioner presently is in the

process of implementing an interactive computerised

Enterprise Resource Planning (ERP) system to overcome

present operational difficulties, that have resulted in delay

in capitalization of assets.

(xii) In view of above submissions, this Honble Commission is

humbly prayed to a11ow the claim of Rs.1651 lakhs of the

Petitioner, relating to the prior period depreciation from

2OO9-10 to 2O7l-12 for addition of distribution assets which

was commercially operated but not considered in respective

years.

B. DISALLOtrIANCE OF CARRYING COST ON BALANCE

REGULATORY ASSET OF EMPLOYEES TERMINAL

BENEFIT FUND L7

(i) It is respectfully submitted that the Hon'lcle Commission did

not consider carrying cost which had been claimed by the

Petitioner in its impugned orderiamounting to Rs. 7264.00

lakhs on tJle regulatory asset of Rs. 80003.86 lakhs relating

to employees terminal benefit fund, arising due to

implementation of 6ft Pay Commission. The Hon'ble

Commission did not consider that it is under obligation to

allow carrying cost created for the regulatory asset and that

the licensee cannot be burdened with the cost of financing

of the regulatory asset created by tlle Commission. Further,

the Hon'ble Commission by disallowing the Petitioner to

recover financing cost of regulatory asset from the

consumers without any proper justification, is hindering the

Petitioner's ability to carry out business ,in a reasonable,

efficient and profitable manner.

(ii) It is further submitted that this Hon'ble Commission erred

in disallowing the carrying cost of Rs.29744 lakh for the

period from April 201f to December 2Ol2 on the arrear

amount of Rs. l8O4 18 lakhs recoverable in 48 monthly

installments from consumers. The relevant extracts from the

impugned order is set out below for the convenience of this

Hon'ble Commission: 18 I

"3.28.1 WBSEDCL referring the Paragraph 8.2.2 (b) of the

Taiff Policg and the order dated 1 1 . 1 1 .201 1 of the Hon'ble Appellate Tibunal for Electicity in Case No. Op-1 of 2011 has claimed" carrying cost on the foliouing regulatory assels on the ground that such cost is an entitled amount to WBSEDCL as a reasonable cost to be recouered. a) b) c) The Commi.ssion admitted release o/ Rs. 45500.00 lakh from the regulatory assef o/ Rs. 125503.86 lakh in the ARR of WBSEDCL for 2011-12. WBSEDCL stated that they had to bear the carrying cost of balance regulatory asset o.f Rs. 80003.86 lakh and claimed Rs. 7264.O0 lakh as carrying cost for the gear 20,11-12.

3.28.6 TtE Commission do not consider the claim of

WB SEDCL for carrying cosf o..f Rs. 72 64. 00 lakh on the balance regulatory asset of Rs. 80003.86 lakh as stated. in (c) aboue as the amount of such release mechanism in number of instalments utas initialtg proposed bg the licensee itsetf after taking into conside.rotion of differ.ent ospects. "

"a) In the tariff order for 2011-12 the Commission gaue directiues for recouery of arrear amount in 4B installments. WBSEDCL has claimed carrying cost of Rs. 64016.00 lakh due to delaged recouery of arrears. b) t9 t.

c) ...

3.28.2 It is seen from the computation of carrying cost submitted by WBSEDCL in Annenture-7 of tleir APR application that WBSEDCL has claimed th'e carrying cost for arrear recouery as per Taiff Order for 2O 1 1-12 in 48 installments as stated in (a) aboue since

1 .4.2O 1 1 till completion of recouery in 48 installments. In the contert of claim of carrying cost since 01.04.201 1, the Commission dectdes that the claim of WBSEDCL cannot be considered fotr the period from 01.04.2011to O1.12.2012 i.e. the date of issuance of the order as tLrc delag in submission of tariff application is on the part of WBSEDCL as they submitted their MYT for the third control peiod onlg on 30.03.2012 i.e. after 16 month,s from the due date of submission. Tluts tLe Comriission considers tte carrying cost o/Rs. 34272.00 lakh for the arrears only for the peiod from 01.01.2013 i.e. the date of commen@ment of arrear in installments upto tle completion of 48 installments."

(iii) It is submitted that as per the Accounting Standards AS 15, the retirement benefits are valued on actuarial valuation

basis and provisions are created based'on the actuarial value i.e. the present value of the terminal bene{its

considering various assumptions relating to average life 20

expectancy, attrition rate and discounting rate. Here, an

estimated interest rate is taken as discounting rate and

present value of the employees terminal benefit fund is

arrived. Present value represents the liability of Petitioner

with respect to retirement benelits if all employees on rolls

retire as on the valuation date. This is in contrast to earlier

practices which was "pay-as-you-go" method which meant

that provisions were not creaied in the accounts and

separate Trust Funds were not maintained. Employees were

paid retirement benelits from the funds available with the

company, as when such employees retired. This could result

in sudden cash flow issues and huge increase in employee

costs to the utility, particularly when retirements take place

in a bunch. To avoid the same, accounting standards as

issued by the ICAI and as recognized by the Ministry of

Corporate Affairs, have mandated actuarial valuation to be

adopted for accounting for retirement benefits.

(i") It may also be noted that the 2O11 Tariff Regulations also

recognize that compliance with accounting standards is

required and hence the Learned Commission is obligated to

allow impact of actuarial valuation. 2t

(v) It is noteworthy that the decision of this Hon'ble Commission

regarding disallowing the amount of Rs.7264 lakh claimed

by the Petitioner as carrying cost runs contrary to the

regulatory framework and tariff policy. The relevant extract

of the tariff policy is reproduced herein below-

"Taiff Policg

TLe facilitg of regulatory asset has been adopted bg the same Regulatory Commission in the past to limit taiff impact in a partianlar gear. This should be done only as exception, and subject to following guidelines: a. The circumstances should bg clearlg defined through regulations, and should onlg include natural causes or force majeure conditions. Under business as usual conditions, tlrc opening balances of uncouered gap must be couered through transition financing arrangement or capital restructuing;

b. Carrying cost of Regulatory Asset sLauld be allotued to the utilities;

c. Recouery of Regulatory Asset should be time bound and uithin a peiod not exceeding three gears at ttLe most and preferablg uithin control peiod;

d. Tl.e use of tlrc facilitg of Regulatory Asset should not be repetitiue.

e. In case uh.ere regulatory asset is proposed to be adopted, it should be ensured that the rehtrn on equitg should not become unreasonablg lotu in anA Aear so that the capabilitg of tle licensee to borrou is not aduerselg affected." 22

("i) The aforementioned provision posit that this Hon'ble

Commission is under an obligation to provide for carrying

cost on regulatory asset created. Moreover, it must also be

noted that the Tariff Policy, also requires that the use of

regulatory asset should not be rep'etitive and that it is

submitted that this Hon'ble Commission in the Impugned Order did not consider the issue of carrying cost on

regulatory asset.

(vii) Further, the Hon'ble Commission erred by not considering

the principle of law as settled by the Honble Tribunal in OP

no. 1 of 201 1 wherein the Tribunal had held that the

Commission must allow carrying cost on regulatory asset to

the utilities in the ARR of the year in which such regulatory

asset has been created. The relevant para of the of the OP

no. 1 of 2011 is reproduced herein below:

'65 (iu) In determination of ARR/ tariff' tle reuenue gaps

ought not to be lefi and Regplatory Asset should not be

created a.s a matter of course except uhere it is justijlable, in acardance utith the Taiff Policg and the

Regulations. The recouery of tle Rerylatory Asset shrtuld

be time bound and tuithin a peiod not exceeding three 23

Aears at the most and preferablg uithin Control Peiod.

Carrying cost of the Regulatory Asset should be allouted to the utilities in the ARR of the gear in which the

Regulatory Assels are created to auoid problem of cash

Jlou-t to the distibution licensee."

(viii) It is respectfully submitted that the Hon'ble Tribunal had

also dealt with the issue of carrying cost of regulatory asset

in the matter of in Appeal no. 192 of 2O1O dated 28.07 .2011 in the matter of Tamil Nadu Electicitg Consumers'

Association us. Tamil Nadu Electicitg Board, etc., wherein it

was held that the power utility is required to raise debts to

meet it revenue shortfall for meeting its obligations and conducting regular business operations and therefore

carrying cost for servicing the debts must be provided in the

ARR and non allowance of such carrying cost would lead to cash flow problems in routine operations and power procurement, which will have an adverse effect on

maintaining a reliable power supply to the consumers.

(ix) In furtherance to above, it may also be noted that this

Hon'ble Commission ought to have followed the principles of

the National Electricity Policy and the 2006 Tariff Policy, as 24

it was required to do under the provisions of Section 61(i) of

the 2O03 Electricity Act. The Tariff Policy specilically

provides that, in case, any regulatory asset is created, then

the carrying cost on such regulatory asset'must be allowed

to the concerned utility.

(x) It is humbly submitted that this Hon'ble Commission may

appreciate that the recovery of Rs' 80003.86 lakhs was

deferred to avoid tariff shock to t-I e consumers and that this Hon'ble Commission was under an obligation to

subsequently allow the recovery of 'carrying cost on the

revenue gap/ regulatory asset created.

(xi) It is significant to note that due to the implementation of the

sixth pay commission and adoption of actuarial valuation as

aforementioned by the Petitioner led to the creation of

Rs.8O003.86 Lakhs. Therefore, the Petitioner claimed a

carrying cost of Rs.7264 Lakh for the year 2Oll-12 on

account of creation of the said regulatory asset. Thus, it is

clear that the Respondent has erred in disallowing the entire

cost of Rs.7264 Lakhs claimed by the Petitioner.

(xii) Further, in relation to disallowance of the carrying cost of

Rs.297 44 lakh for the period from April, 2011 to December 25 :-

2Ol2 on the arrear amount of Rs. 1804 18 lakhs recoverable

in 48 monthly installments from consumers, it is humbly

submitted that this Hon'ble Commission has disallowed the

same on the ground of delay in liling the MYT petition by the

Petitioner.

(xiii) It is also to be noted that in the APR Order dated 09.09.2013 for the FY2Oll-L2, the respondent faited to consider the claim of the Petitioner of carryring cost by the Petitioner amounting to Rs. 29744 lakhs for the period from Ol.O4.2Oll to 31.12.2012 on the similar ground as

aforementioned i.e. delay in filing the MYT Petition for the

third control p'eriod by the Petitioner. However, this Hon'ble

Commission did not consider the three major challenges

faced by the Petitioner in filing the same on time.

(xiv) It is pertinent to note that the issue relating to the carrying

cost has been dealt by this Hon'ble Tribunal in O. P No' I of

2Oll and Appeal No. 192 of 201O as produced in paras above. The analory of the same is not being reproduced

herein for the sake of brevity.

(*rr) It is pertinent.to note that this Hon'ble Commission in the Tariff Order dated O1.12.2012 for the year 2Oll-12 had 26

.*.

given directions for recovery of arrear amount as

aforementioned in 48 installments that will start from energr

bill raised on or after 01.01.2013 as specified in paragraph

8.2.19 of the Tariff Order.

(xvi) It is noteworthy t1:at the delay in frling the MYT Petition was not the fault of the Petitioner and was due to three major

reasons that are listed as follows-

a) The tariff regulations governing the tariff for 2}ll-12 and ensuing years were not in place-

The tariff regulations under which the MYT

Petition was to be filed were not in place and the

same was issued by this Hon'ble Commission

on 29 .O4.2011 and at that time the third control

period had alreadY started.

b) Mechanisms to be understood by the utilities under the new regulation and to Iile the

petition-

The Tariff Regulations, 2O I 1 required the utilities to lile the Petition within one month

from the date of publication of the regulations' 27

However, the utilities needed time to understand the mechanism and ftle the

petition. Therefore, the Petitioner and other

utilities in the state sought extension of time to

file the petition.

c) The Respondent itself granted time to the

utilities to file the Petition-

The Petitioner sought extension of time through

its letter from this Hon'ble Commission to file the MYT Tariff Petition and this Hon'ble

Commission had also allowed extension of time

on the grounds raised by the Petitioner.

(xvii) It is significant to note that the regulations nowhere

provide for disallowance of carrying cost due to delay on

frling the MYT Petition. Therefore, the decision of this Hon'ble Commission to disallow the carrying cost amounting to Rs. 29744 Lakhs for the period from

Ol .O4.2011 to Ol.l2.2Ol2 is not justified and ought to be

reconsidered by this Honble Commission. 2A

(xviii) It is noteworthy that this Honble Commission on the request

of the Petitioner as aforementioned allowed extension of time. Therefore, it is only desirable that this Hon'ble

Commission will not penal,:lze the Petitioner for delay in filing

the MYT Petition after granting the extension of time for the

same.

C. DISALLOWANCE OF CARRYING COST ON REGULATORY ASSET OF CREATED IN THE APR ORDER FOR THE

YEAR 2009-10 AND 2010-11

(i) It is respectfuliy submitted that this Hon'bie Commission in

the APR Order dated 09.09.2013 disallowed the carrying

cost amounting to Rs. 9625 Lakh for the year 2O 10- 1 1 on

regulatory asset ofRs. l228ol Lakhs. However, this Hon'ble

Commission allowed carrying cost only ol Rs. 1115O Lakh for the year 2O7l-12 and the carrying cost of Rs.9625

claimed by the Petitioner for the year 20 1O- 1 1 was not

a11owed.

(ii) It is respectfully submitted that this Hon'ble Commtssron

further, disallowed the carrying cost of Rs.2722 lakhs for the

year 2Ol1-12 with respect to regulatory asset of Rs-29978 29

L-

lakhs created in the APR Order for 2010-11 on the ground

of delay in liling the APR Application for 20 10- 1 1 as the same

was submitted by the Petitioner on 04.O4.2Ol2.The relevant

portions of the impugned order are set out below:

"3.28.1 WBSEDCL refering the Paragraph 8.2.2 (b) of tte Taiff Policy and the order dated 11.11.2011 of tLrc Hon'ble Appellate Tribunalfor Electicity in Case No. Op-1 of 2011 has claimed carging cost on the follouirry regulatory assets oi the ground that such cosf is an entitled amount to WBSEDCL as a reasonable cost to be remuered.

a. .,, b. In the order dated 1 7. 1 0.20 12 for APR for tte gear 2O09-10 in Case No. APR-2O/ 10-11 and in ttte order dated 19.10.2012 for APR for the gear 2O10-11 in Case No. APR-29/ 12-13 the Commi"ssion admitted recouerable amounts of Rs. 122800.69 lakh and Rs. 29477.47 takh respectiuelg ulhich utere not considered in the ARR in the tariff order for 2O11-12 and created regulatory assets. As a result WBSEDCL needs to bear carrying cost on these amounts during tlw year 2011-12. A carrying cost o/ Rs. 24376.00 lakh has been claimed bg WBSEDCL for the gear 2011-12 30 t-

against that regulatory assefs created in the APRfor 2009-10 and 2010-11.

c. "3.28.3 As mentioned in (b) of paragraph 3.28.1 aboue, WBSEDCL has claimed the carrying cost on regulatory asset created in APR order for 20Og-10 from 01.04.,2010 to 31.03.2072 and. on regulatory asset created in APR order for 2010- 11 from 01.04.2011 to 31.03.2012 as follows:

Descrlption Amou Clqim Auerage Carryt nt (Rs. pertod rate of ng cost lo,kh) lnterest (Rs. (n Lo,ktt) Carrying cosf on 12280 01.04.20 2010- 7.84 962s

Regulatory asset as 1 10 to 11 per APR for 2009-10 31.0s.20 201 1- 9.08 12029

1 12 12 Carrying cost on 29978 01.04.20 2011- 9.08 2722 Regulatory asset as 11 to 12 per APR for 2010-11 31.03.20 12

3.28.4 The Commission considers tlrc carrying cost on Regulatory assef o/ Rs. 122801 lakh created as per APR for 2009-10 for tlrc period 2011-12 onlg as the APR petition was submitted. bg WBSEDCL within 30.011.2010 @s per proui.sion of the Tariff Regulations and the order on APR 2009-10 was to be finalized by the 31

Commission bg O1.04.2011. Tlrus tLe carrying

cosf o/Rs. 1 1 1 5O.00 Lakh computed @ 9.OBok on Regulotory asset of Rs. 122801 lakh for the peiod 2011 - 2012 only is admitted bg the Commission. The carrying *it o7 Rs. 9625.00 Lakh claimed bg WBSEDCL for the peiod 2010' 11 on Regulatory asset of Rs. 1228O1.O0 lakh has not been considered bg the Commission due to the reasons stated oboue.

3.28.5 The carrying cost o/Rs. 2722.00 lakhfor th.e period 2011-12 as claimed bg WBSEDCL on Regulatory asset of Rs. 29978.00 lakh created as per APR for 2O10,11 is not considered bg tlrc Commission as thb APR for 2010-11 luos submitted by WBSEDCL u)as onlg on 04.04.2012."

(iii) It is respectfully submitted that the decision and Iindings as

postulated above, of this Hon'ble Commission run contrary

to the extant regulatory framework. It is noteworthy that the

regulations nowhere provide for disallowance of carrying

cost due to delay in release of regulatory assets. It is

submitted that the disallowance of carrying cost due to

delayed submission of APR application for 2010- I I is

erroneous as per the erstwhile tariff regulations the APR

application for 2010-11 should have been filed by November 32

2O11, but in the present case the sarne was not possible in

view of the fact that the tariff order for 2010-11 was itself

issued on 30.12.2011 (case no. TP-41/O8'09). Tariff order

for an ensuing year is necessaq/ to iarry out APR for that

year, as in the APR, the actual performarrce parameters of the utility are compared to the approved performance

projected in the tariff /ARR order. Therefore, the Petitioner needed some time to retrospectively calculate the

implications of such tariff order oh its revenue and expenses,

and file the APR petition. Accordingly, the Petitioner took four months to frle APR for 2010-11. APR filing was submitted by the Petitioner on'O4.O4.2O12. During that

period, Petitioner was also working on ARR {iling for the third '14), control period (FY 12, 13 & which they filed on

29.03.2012. Hence this delay of three mbnths is justified

and should be:acceptable to this Hon'ble Commission.

(iv) It is most humbly submitted that disallowance of carrying

cost due to delayed submission of APR Application for 20 10-

1 1 is not in consonance with the erstwhile tariff regulations.

This Hon'ble Commission ought to have appreciated the fact

that delay in filing the was due to the delay in issuance of

tariff order as the same was issued on 30.12.2011. 33 L.

In the light of the aforementioned paragraph it is clear that this Hon'ble Commission has erred in disallowing the

carrying cost as claimed by the Petitioner and this Hon'ble

Commission should reconsider its decision.

Filed by

West Bengal State Electricity Company Limited (Petitioner)

Filed through:

HSA Advocates

81/ 1 , Adchini, Sri Aurbindo Marg New Delhi - 110 017

Date: Place: eq

qFuc.i.r qfr-qqaiqra wesr BENGAL 29AB 948939

BEFORE THE HON'BLE WEST BENGAL ELECTRICITY RDEULATORY CoMMISSIOIY, KOLI(ATA

CASE NO.:

IN THE MATTER OF: Review Petition Iiled under Regulation 3.3 read with Regulations 3. 10, 3' 11 and 3.12 of the West Bengal Electricity Regulatory Commission (Conduct of Business) Regulations, 2O13, against the Order in Case No. APR-38/13-14 dated, 12.06.2014 regarding the Annual Performance Review of West Bengal state Electricity Distribution company Limited for the Financial Year 2ol2- 13 and pursuant to Order dated 28.11.2018 in Appeal 2O6 of 2Ol4 and Appeal 213 of 2015 passed by the Honble Appellate Tribunal for Electricity.

AI{D IN THE MATTER OF: West Bengal State Electricity Distribution Company Limited ... Revlew Petltloncr A['FIDAVIT I, Sudipta Mukhopadhyay, S/o of Late Deb Kumar Mukhopadhyay aged about 55 years, r/o 2 Kundan Bye Lane, Liluah Howratt - 711204, working rh.,'l*iL n /L_9 q- Ltv- t- ^/ p/---- ;6 fB 20te S. CI-lA-r1'r'1ntJ !IE t".rndctr Licensc(j : .. 1,.;r oou$n. C. C. Ccu;t 3s for gain of the Petitioner Company do hereby solemnly affirm and state as under:

1 . That I am the authorized signatory for the Petitioner Company. I am fully conversant with the facts and circumstances of the case and I have been duly authorized and am, therefore, competent to affirm this affidavit.

2. I say that I have read the accompanying Petition and have understood the contents thereof and I say that the same has been drafted under my instructions.

3. That the contents of this Petition are within my personal knowledge and are based on information received by me which I believe to be true.

4. That the annexures filed along with the accompanying Petition are true copies of their respective originals.

J ;^. .\-pf;-(*.-J'{J7 ^ 4 7 -:

c!ie[Bd{HE[€0 u tation)J Regulation Departmenl,. VERIFICATION WBSEDCL

I, Sudipta Mukhopadhyay, the above-named deponent do hereby verify that the contents of this affidavit are true and correct to my knowledge, no part of it is false and nothing material has been concealed therefrom.

Q-.ia tt "rfJgT DEPONENT

t^a^<,t "H:t:i"P,'ffi"5$T-*iffI Verified by me on ,gAday ofPebn*arf, 2Ol9 at Kolkati. WBSEDCL 5;ar1 t- ft,--t,up^Ag a g6

L BEFORE THE HON'BLE WEST BENGAL ELECTRICITY REGIULATORY COMMISSIOI{, KOLKATA

CASE NO.: VAKALATNAMA

IN ?HE MATTER OF: Review Petition hled under Regulation 3.3 read with Regulations 3.10, 3.11 and 3.12 of the West Bengal Electricity Regulatory Commission (Conduct of Business) Regulations, 2013, against the Order in Case No. APR-35/12-13 dated 09.09.2013 regarding the Annual Performance Review of West Bengal State Electricity Distribution Company Limited for the Financial Year 2011-12 and pursuant to Order dated 28.11.2018 in Appeal 267 of 2015 passed by the Hon'ble Appellate Tribunal for Electricity.

AND IIT THE MATTER OF: West Bengal State Electricity Distribution Company Limited ... Review Petitioner

I, Sudipta Mukhopadhyay, am t.l:e authorized representative of the Petitioner Company * West Bengal State Electricity Distribution Company Limited in the above petition and do hereby appoint:

Mr. Hemant Sahai, Mr Apoorva Mishra, Mr Shreshth Sharma, Mr Pratik Ghose, Ms. Puja Priyadarshini, Ms. Amrita Narayan, Ms. Prarya Ohri, Mr Nitish Gupta, Mr Aditya Kumar $ingh, Ms. Molshree Bhatnagar, Mr Varun Kapur, Mr. Ishaan Mukherjee, Ms. Himangini Mehta, Mr Kush Saggi, Ms. Kanika Kumar, Mr. Avishek Roy Chowdhury and Mr. Ashwin Rakesh, Advocates Office at: HSA Advocates, 81/1, Adchini, Shri Aurobindo Marg, New Delhi - 110 017 (hereinafter balled the Advocate) to be my/our Advocate in the above noted case and authorized him/her: -

To appear, plead act for us in the above petition and to conduct and prosecute all proceedings that may be taken in respect thereof and a7

applications for return of documents, enter into compromise and to draw moneys payable to us in the said proceedings.

Place: Kolkata rf'-*"-7^447 Date: 9,"+t

Executed in my presence:

"Accepted" (nsk c.u,,^- HSA Advocates Hemant Sahai Associates Advocates for the Petitioner 81 / 1 , Adchini, Sri Aurobindo Marg New Delhi - 110017 Ph: +91 11 6638 7000 Fax: +91 lI 663a7099

,, ANNEXURE - A 93

ORDER

OF THE

WEST BENGAL ELECTRICITY REGULATORY COMMISSION

lN CASE NO.: APR -351 12- 13

IN RE THE APPLICATION OF THE WEST BENGAL STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED FOR ANNUAL PERFORMANCE REVIEW FOR THE FINANCIAL YEAR 2O{1 _ 2012.

DATE: 09.09.02013

Cstiicd to baTrrro CoPY (x5\" c"t*^"' Afuctlc eg

Order on APR of WBSEDCL for the year 2011.12

CHAPTER - 1 INTRODUCTION

1.1 ln terms of the provisions contained in regulation 2.6 of the West gengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2011, (hereinafter referred to as the "Tariff Regulations, 2011,) the generating companies or the licensees, as the case may be, are subject to an Annual Performance Review (in short 'APR'). The West Bengal Electricity Regulation ,,Commission") Commission (hereinafter referred to as the introduced Multi year Tariff (in short "MYT") procedure and as such, ApR aims at carrying out adjustments arising out of difference between the actual performance and projected performance under different factors / heads of accounts. Such adjustments are to be done in the manner as specified in the Tariff Regulations. Accordingly, the West Bengal State Electricity Distribution Company Limlted (in short 'WBSEDCL') submitted their application of ApR to the Commission on 15rh March,2013 for the financial yeat 2011 - 2012. lt provided the related data / information as required for an ApR in the specified proforma along with the copy of its audited annual accounts for the concerned year. The application was numbered as APR-35/12-13.

1.2 The instant application of WBSEDCL is their first application for the ApR of the period. third control The adjustments, as were found necessary on review of the performance of the previous years, were effected while determining the amount recoverable through tariff during the years following the years of such review. Similarly, the adjustments, as may arise out of the review of the instant application fo( 2011 - 2012 w be considered for giving effect whire determining the amount of revenue recoverable through tariff of any ensuing year or through separate order as specified in regulation 2.6.6 of the Tariff Regulations.

1.3 WBSEDCL has submitted their application for Annual performance Review for 2011 - 2012 in terms of the provision contained in the Tariff Regulations.

West Bengal Electricity Regutatory Commission Qo

Order on APR ofWBSEDCL for the year 2011-12

1.4 APR is to cover the annual fixed costs and fixed charges that is to be allowed to

the licensee as per the Tariff Regulations 2011 , amended till date.

1.5 The APR for the year 2011 - 2012 is, therefore, the review of the different factor elements of fixed charges, categorized as controllable and uncontrollable allowed to WBSEDCL through the ARR of the tariff order for the year 2011 - 2012, vis-it- vis the actuals as per the audited accounts. The instant application of WBSEDCL for the year 2011 - 2012 is being viewed in the subsequent parts of this order.

1.6 ln terms of regulation 2.6.12 of the Tariff Regulations, WBSEDCL submitted a draft gist of the APR application at the time of submission of apptication for ApR year for the 2011 - 2012. The apptication of ApR of 2011 - ZOLZ of WBSEDCL was admitted by the Commission on 19th April, 2013 in Case No. ApR-35/12-.13. The Commission also approved the gist of the ApR application submitted by WBSEDCL. After admission of the application WBSEDCL was directed to publish the approved gist of the application in newspapers and also in their website. Accordingly, the gist of the application was published simultaneously in ,Ananda Bazar Patrika' , 'Telegraph' , Hindustan Times and Sanmarg on 25rh April,2013 inviting objections and suggestions from all interested parlies and members of public. the The extended due date for submission of objections and suggestions by the interested parties at the office of the Commission wAS 27.05.2013.

1.7 Objections and suggestions on the application of WBSEDCL for ApR in respect of the year 20'11 - 2012 were received by the Commission from only one person, i e., All Bengal Electricity consumer's Association (ABECA) within the stipurated time i.e. 2/h May, 2013. The said objections and suggestions on the application, in question, have been dealt with in Chapter - 2.

West Bengal Electricity Regulatory Commission 4t

Order on APR of WBSEDCL for the year 2011-'12

CHAPTER - 2 OBJECTIONS

Objections and suggestions against the application of APR for 2011-12 submitted by WBSEDCL

2.0 The stake holder from whom objections and suggestions on the application of APR for 2011 - 2012 of WBSEDCL have been received within the stipulated time is mentioned in Paragraph 1.8 of Chapter-1. The points of objections and suggestions are summarized in subsequent paragraphs of this Chapter along with views of the Commission.

21 All Bengal Electricity Consumers' Association (ABECA) has submitted their objections and suggestions on the application of APR of WBSEDCL for 2011 - 2012. The objections submitted by ABECA are divided in two parts while in the first part some general issues have been raised by ABECA and in the second part they have submitted point wise objections and suggestions.

2.2 ln Paragraph 1 and 2 of their submission ABECA has stated that as per clause 2.6.1 of the Tariff Regulations a comparative statement showing the different elements of fixed cost as approved in the tariff order of the concerned year as well as the actual audited figure against such element shall be given by the licensee and as per clause 2.6.9 of Tariff Regulations the scope of Annual Performance Review shall be the comparison of the actual performance of the licensee with approved projection as given in the Tariff Order of the first ensuing year of the control period. lt is stated that the APR application of WBSEDCL for 2011-12 does not comply with the above requirement. lt is observed from the application of WBSEDCL for APR 2011-12 that WBSEDCL in their petition as well as in Form E(B) to Annexure-1 in Volume- I of their APR application has mentioned both the amount claimed and amount admitted in the tariff order for 201'l-12 against each head of expenses. Thus the objection raised by ABECA

West Bengal Electricity Regulatory Commission /12-

Order on APR of WBSEDCL for the year 2011-,12

has no merit. lt is also stated that WBSEDCL has submitted their claim after two years which vitiated the basic object and provision of Section 56(2) of the ,Act') Electricity Act, 2003 (hereinafter referred to as and:proposed to reject the APR application of wBSEDCL of 2011-12. rn this context the commission feers that as wBSEDCL has submitted the ApR apprication for 2011-12 folowing the provisions made in Regulation 2.6.9 of the Tariff Regulations within two months from the date of issue of the Tariff Order,for 2A11_12, the provisions of the Regulations or the Act has not been viorated. Regarding the provision of sub- section (2) of section 56 of the Act as refe,ed by ABEQA, it is stated that the referred sub-section is rerated to disconnection of suppry in defaurt of payment of due against any birr raised on him by the ricensee and is not rerevant in the matter of submission of ApR application. l

ln paragraph 2.3 3 of their submission ABECA hjs stated that though Section 61( C) of the Electricity Act, 2003 mandated the factors which would encourage competition efliciency, economical use of resources, good performance and optimum investment yet it appears from the Tariff Regulations that the commission fixed the norms in favour of ricensee to give incentive and other related benefits. rt is arso stated that in most ApRs the,craim of wBSEDCL is found much higher than that admitted in Tariff order and as a resurt consumers are to pay more and more tariff with anear for which consumers are not responsible. ABECA has also opposed this type of ApR and suggest to change norms and to folow provisions the raid down in section 6'r( c ) of the Act. rn this context it is stated that the norms are stipurated in the Tariff Regurations which are framed after inviting suggestions and objections from the public and stake holders. There is no scope to review the norms in the process of ApR for any year.

24 ln paragraph 4 of their submission ABEcA has stated that in order to bring the transparency in functioning of the commission as per section 86(3) in the tariff

West Bengal Electncdy Regulatory Commtsston 4s

Order on APR of WBSEDCL for the year 20i,l.l2

determination and APR of the licensee, public hearing is essential. lt is also slated that most of the Regulatory Commissions in lndia do take recourse of ,APTEL,) public hearing. Hon'bte Appe ate Tribunal for Electricity (in short also upheld this view in their orde r daled 4.4.2011 in lA 62 of 2011 in Appeal No. .l 73 of 2010 in case of Hooghly Chamber of Commerce and Another Vs. WBERC. But WBERC has not yet resumed the pubtic hearing and lhey hope that WBERC will resume public hearing from now on. Regarding public hearing issues during tariff determination and ApR, Commission,s views were given in the earlier orders. However, it is further reiterated that in regul?tio n 2.4 of the Tariff Regulations it is clearry spert out that suggestionq and objections shafl arways mean as submifted in written form onry and it has arso been crearry spert out thal hearing on invitation of suggestions and objections shall plways be in a manner and at a stage which is only specifically provided in the Act and the Regulations made thereunder. Accordingly, any application for ApR can be dealt with through invitation of objections and suggestions. Thus the prayer gf ABECA for hearing is not maintainable. Regarding the comments of ABECA on Hon,ble ApTEL,s order dated 04 -04.2011 it is stated that the commission was directed to direcr WBSEDCL to file composite tariff application in accordance with Tariff Regulations publish and to the same inviting objections and suggestions from the public. Even paragraph in (2) of the direction it was specilically mentioned that the State Commission shall give reasonable time to fih their objections and suggestions. The commission was never directed through the order to conduct public hearing on the application of WBSEDC.L as claimed by ABECA. ln paragraph S of their submission ABECA has stated that the Tariff Order for

2011-12 was passed 1 .12.2012 on with the date of effect from 1.4.201 1 . The gist APR application of of WBSEDCL for 2011-12 was published in the daily newspapers in April 2013 and the same will also be effective from 1.4.2011. Thus it will result in huge unnecessary burden on aI categories of consumers for which consumers are not responsible. ABECA has also suggested that the Tariff should West Bengal Electricity Regutatory Commrssion 4tt

Order on APR ofWBSEDCL for the year 2011-12

be determined each year and the actuals should be adiusted in the subsequent year immediately after finalization of the audited data and income & expenditure. ln this context it is stated that the APR is the review of performance of the licensee on the basis of their audited expenditure under the head of different controllable and uncontrollable items. The adjustable amount after truing up of the admitted expenditure during the year with the revenue recovered through tariff during that year, either be recoverable or refundable. Such adjustable amount may either be adjusted in the ARR of any ensuing yea(s) or shall be adjusted through a separate order as may be decided by the Commission.

2.6 ln paragraph 6, 7 & 8 of their application it is stated by ABECA that WBSEDCL has not furnished all the required documents as per format and as per provision of Tariff Regulations and thus their claim of Rs. 2808.84 Crore is not reasonable. As such they have opposed the claim. Commissron's view in this regard has already been given in Paragraph 2.2 of this chapter. However the extent of allowable expenditures against the claim of WBSEDCL is analyzed in subsequent chapters.

2.7 ln paragraph I of the submission, ABECA has stated that in each year tariff determination merged with APR claim of the previous year, so called regulatory asset, enhances tariff every year beyond the affordable capacity of the consumers. As such, ABECA have opposed the enhanced claim of APR of WBSEDCL. Commission's view in this aspect has already been given in para 2.5 above.

2.8 Regarding point-wise objection on APR claim of WBSEDCL, ABECA has stated that the amount claimed in revenue requirement form in the APR fot 2011-12 and the amount recoverable as per Tariff Order for 2011-12 is in excess of Rs132360.17 lakh against which reasons are not stated and they oppose the claim as that is not reasonable and justified.

West Bengal Electricity Regulatory Commission 45

Order on APR ol WBSEDCL for the year 201l -12

2.9 The detailed enhancement of item-wise claims and objections thereon given by

ABECA are as follows :

i) Salary: ABECA has stated that increase in claim of WBSEDCL under this head is Rs 285 lakh over that admitted in the Tariff Order and has opposed the increase stating the reasons that there is no case of revision of pay and allowances of the staff during the year. The difference in the claim of WBSEDCL in the APR fot 2011-12 and the amount admitted in the Tariff order for 2011-12 under the head "salary" is only 0.30/o of the amount admitted in the Tariff Order and as , it is an uncontrollable item the Commission considers the same.

ii) Cost of outsourcing: ABECA has stated that irrcrease in expenditure claimed by WBSEDCL under both the head 'cost of outsourcing man power related in distribution' and 'cost of outsourcing excluding man power' is Rs. 737 lakh and Rs 248.88 lakh respectively and opposed the said claims. The Commission considers the amount claimed by WBSEDCL under the head 'cost of outsourcing man power related' for distribution and 'cost of outsourcing excluding man power' for distribution and submission made by WBSEDCL as per provisions of the Tariff Regulations.

iii) Rates and Taxes: ABECA has stated that there is an abnormal increase of Rs'1287.68 lakh towards claim on account of rates and taxes and thus opposed. The rates and taxes are paid by the licensee to the local bodies as a statutory obligation. The expenditure under the head 'Rates and Taxes' ts considered by the Commission as uncontrollable item as specified in the Tariff Regulations.

iv) Operation and Maintenance (O&M): lt is stated by ABECA that WBSEDCL has claimed an enhancement of Rs 9782.64 lakh under the head O&M

West Bengal Electricity Regulatory Commission 4e

Order on APR of WBSEDCL for the year 2011-12

expenditure but their service condition is very bad. According to ABECA load-shedding, low voltage and power breakdown as stated is a regular feature in WBSEDCL's area while O&M cost of WBSEDCL is increasing every year both in tariff and APR and as such ABECA opposes the enhanced cost of Rs 9782.64 lakh under this head. ln this context ABECA could not submit any supporting data in support of their claim in services. Moreover, on this issue appropriate remedial measures can be achieved through as mentioned in paragraph 2.12 of this order. v) lnterest cost: ABECA has stated that additional claim of Rs 10223 lakh under this head is not justified as the rate of interest on loan from different sources are continuously decreasing. They have further stated that if WBSEDCL pays the loan amount in due time and switch over the higher cost Ioan to the lower cost loan then the amount will be reduced. They have also mentioned that whether any benefit comes out of such enhanced interest is not stated anywhere. vi) Interest on Security Deposit: ABECA has stated that WBSEDCL did not give any interest to the consumers during 2011-12 on Security Deposit. Moreover, WSEDCL took security deposit from consumers and invested in their business, then why the amount of interest on security deposit will be taken as a cost of electricity. ABECA have opposed the enhanced claim under this head. vii) Depreciation: ABECA have stated that the enhanced claim of Rs 2530 lakh I under this head is not justified as there is a norm of depreciation fixed by WBERC in the Tariff Regulations and the assets are known to WBSEDCL. They have also stated that depreciation cannot be increased to the tune of Rs 2530 lakh without showing any increase in assets with proper justification

West Bengal Electricity Regulatory Commission 4t

Order on APR of WBSEDCL for the year 2011-12

viii) Reserve for unforeseen exigencies: ABECA have opposed the claim and suggested not to allow any amount under this head as this is not a cost at all and cannot be claimed in the APR.

ix) Others: The claim of WBSEDCL of Rs 233 lakh in APR under this head is opposed by ABECA as it was not allowed in the tariff and not a cost at all. lt is a vague claim in APR and not consistent with the Acts and Regulations.

x) Normative Return: ABECA has stated that the excess claim in APR over Tariff Order fot 2011-12 under this head is Rs 10558.40 lakh which is not justified as because in the period in question the allowed relurn is consistent with the then base year calculation

xi) Special Allocation: The claim under this head to the tune of Rs 6065.63 lakh in APR has been opposed by ABECA as that is not justified and not a cost at all and was not in the tariff.

xii) Carrying Cost: ABECA have stated that the carrying cost on swap power in APR claim to the tune of Rs 64016 lakh should not be allowed as because it was neither proposed nor admifted in the Tariff Order for 2011-12. On the same reason the total earning cost of Rs 17199.63 lakh should not be allowed, as suggested by them. ln this regard it is mentioned that the amount mentioned by ABECA against this head is not correct. However, the carrying cost of swap power claimed by WBSEDCL is Rs 1543.63 lakh only.

Regarding item-wise objection raised by ABECA under item no. (i) to (xii) above, Commission's view is given in the Chapter-3 while determining the allowable expenditure of WBSEDCL under different heads.

2.10 lt is stated by ABEGA that WBSEDCL has submitted their audited report for 201'l-12 where so many auditor's questions and reply of WBSEDCL are given

West Bengal Electricity Regulatory Commission 10 4s

Order on APR of WBSEDCL for the year 2011-12

and they have suggested for prudence check by the Commission on the audited report. The Commission has gone through the audit observations and taken appropriate decision as and when it was requlred.

2.11 ABECA have also opposed the claim of WBSEDCL in APR for 2011-12 on account of Research and Development as this is not a cost at all as per Electricity Act, 2003. The Commission's views in this regard are given in the next chapter.

2.12 ABECA have also stated that as per Annexure-l in Page-3s of the application of WBSEDCL there is a surplus energy during off-peak hours. lt is noticed that interruption of power supply together with continuing low voltage and load shedding is a regular feature in WBSEDCL supply area for which consumers are suffering in several ways as stated by them. ABECA have further stated that WBSEDCL is not giving true picture to the Commission and is suppressing the load shedding and low voltage situation before the Commission. ln this context it is mentioned that Commission has framed regulation on 'Standard of Performance of the Distribution Licensee relating to the Consumer Services' and the complaints as mentioned by ABECA are to be dealt as per provisions of that Regulations.

West Bengal Electricity Regulatory Commission 11 4)

Order on APR of WBSEDCL for the yeat 2011-12

CHAPTER _ 3 FIXED CHARGES

3.'l The Uncontrollable elements of fixed charges are those elements where variations of actual expenditure with the expenditure allowed by the Commission in the ARR for the concerned year are caused by the factors beyond the control of the generating company or the licensee. The amounts of actual expenses / charges under such heads of accounts are, therefore, to be considered on prudent check for carrying out positive or negative adjustments, as the case may be. On the contrary, in case of controllable head of expenses, the applicant is supposed to contain the expenditure within the total amount so allowed except in the specific cases that has been mentioned in the Tariff Regulation& The review of each of such controllable and uncontrollable heads of fixed charges with reference to the amounts allowed through tariff and the actual based on the, audited accounts of WBSEDCL is being taken up hereunder one by one.

3.2 Transmission Charges Payable to Central Transmission Utility (CTU):

3.2.1 After making necessary adjustment of timely payment of rebate of Rs. 344.00 lakh from the gross amount of transmission charges of Rs. 17997.00 lakh for the year 2011-12 which is a fixed charge, the net amount of Rs, 17653.00 lakh was paid by WBSEDCL during the year 2011 - 2012 to Power crid Corporation of lndia Limited (in short'PGCIL), the Central Transmission Utility (in short "CTU"). Besides, WBSEDCL paid Rs. 2600.00 lakh to PGCIL during the year 2011 - 2012 as arrear charges due to rate variation. Thus the total CTU charges paid by WBSEDCL to PGCIL during the year 2011 - 2012 come to Rs. 20253.00 lakh (Rs. 17653.00 lakh + Rs. 2600.00 lakh) and the same amount has been claimed by WBSEDCL in their APR application for the year 2011 - 2012. The Commission admits the said amount of Rs. 20253.00 lakh in the APR for 2011 - 2012 under distribution function.

3.3 System Operation Charges payable to POSOCO: 3.3.1 WBSEDCL paid Rs. 402.00 lakh for the year 2011 - 2012 and Rs. 186.00 lakh on account of arrear due to rate variation totaling to an amount of Rs.

West Bengal Electricity Regulatory Commission 12 5o

Order on APR of WBSEDCL for the year 2011-12

588.00 lakh (Rs. 402.00 lakh + Rs. 186.00 lakh) on account of system operation charges to Power System Operation Corporation (POSOCO) during the year 2011-12. The said amount of Rs. 588.00 laktr which is a fixed cost has now been admitted by the Commission in APR fot 2011-12 and the entire amount is allocated to distribution function.

3.4 Transmission Charges Payable to State Transinission Utility:

3.4.1 After making necessary adjustment of timely payment rebate of Rs. 1346.00 lakh from the gross fixed charges, the net.amount of Rs. 65938.00 lakh was paid by WBSEDCL to West Bengal State Electricity Transmission Company Limited (in short 'WBSETCL'), the State Transmission Utility (in short "STU"), as notified by the State Government under sub-.section (1) of section 39 of the Electricity Act, 2003, for the year 2011 -2012. ln the tariff order of WBSETCL for the year 2011-12, the Commission admitted the,Annual Transmission Charge (in short 'ATC') of WBSETCL at Rs. 72591.51 lakh which is payable by WBSEDCL as a sole user of the state transmission system. Any under- recovery/ over-recovery for the year 2011-12 are to be recovered by WBSETCL in installments. The amount ,of Rs. 72591.51 lakh was also considered in the ARR of WBSEDCL on account of STU charges for the year 2O11-12. The Comrnission thus considers STU charges of Rs. 72591.51 lakh claimed by WBSEDCL in their APR application for the year 2011-12 as STU charges. The said amount of Rs. 72591.51 lakh is admitted by the Commission in the APR for 2011 - 2012 and allocated to distribution function.

3.5 Charges Payable to Eastern Regional Power Committee (ERPC):

3.5.1 An amount of Rs. 15.00 lakh was paid to Eastern Regional Power Committee (in short "ERPC) by WBSEDCL against the admitted amount of Rs. 15.00 lakh in ARR in the tariff order for 2011-12. WBSEDCL has also claimed Rs. '15.00 lakh under this head in their APR application lor 2011 - 2012. fhe entire amount of Rs.15.00 lakh is admitted in the APR for the year 2011-12 and is allocated to the distribution function.

West Bengal Electricity Regulatory Commissaon 13 5t

Order on APR of WBSEDCL for the yeat 2O11-12

J.b Employees' Cost:

3.6.1 Employees' costs including the provisions for terminal benefits are the uncontrollable elements of fixed charges. The Commission allowed a total amount of Rs. 90823.00 lakh in the ARR for the year 2011 - 2012 in the tariff order dated 01 .12.2012 in respect of WBSEDCL.

3.6.2 WBSEDCL has claimed Rs. 91108.00 lakh on account of employee cost in their APR application fot 2O11 - 2012. fhe employee cost of Rs. 91 '108.00 lakh as claimed by WBSEDCL is inclusive of payment of Rs. 285.00 lakh to the employees related to prior period made in the yeat 2011-12 for delayed pay fixation.

3.6.3 lt is seen from the Note 27 and Note 28 to the audited accounts for the year 2011 - 2012 and the submission made by WBSEDCL that the total amount chargeable to revenue account of WBSEDCL towards employees' cost came to Rs. 91108.00 lakh I Rs 90823.00 lakh + Rs. 285.00 lakh] including terminat benefit and net of capitalization.

3.6.4 The amount towards employee cost of Rs. 91 1O8.OO lakh is admitted by the Commission in the APR for 2O11 - 2012, out of which Rs. 3535.02 lakh is for generation function and Rs. 87572.98 lakh is for distribution function as per allocation given by WBSEDCL.

3.7 Operation & Maintenance Expenses

3.7.1 Operation & Maintenance (O&M) expenses generally fall under following two major categories:

(D Repairs and Maintenance including Cost of Consumables and

(iD Administrative and General Expenses.

3.7.2 Repair and maintenance expenses and adminishative and general expenses for distribution and transmission systems are categorized in table 2.5.5-1 of the Tariff Regulations as controllable. The total amount of (O&M) expenses

West Bengal Electricity Regulatory Commission 52

Order on APR of WBSEDCL for the year 201'l -12

for distribution function as allowed in the tariff order for the yea( 2011 - 2012 was Rs. 24850.89 lakh.

3.7.3 While determining the ARR of WBSEDCL for all the ensuing years in the tariff order of the first ensuing year of the third control period i.e. for 201 1-'12, the Commission admitted Rs. 29101.27 lakh under the head Operation and Maintenance (O&M) expenses for the year 2011 - 2012. ln function wise breakup of the O&M expenses the Commission allowed Rs. 4250.38 lakh for the year 2011 - 2012 under the head O&M expenses in a composite manner for generation function as per norms which include the administrative and general expenses and expenses for repair and maintenance in the area of generation segment. Since the O&M expenses under generation was admitted as per norms and as it is a controllable item, the Commission admits Rs. 4250.38 lakh as allowed in the tariff order under the head of O&M expenses for generation function also in the APR for 2011-12 under the head O&M expenses for generation function.

3.7.4 The Commission allowed head wise expenditure of O&M expenses of Rs. 24850.89 lakh under distribution function which include Rs. 16117.98 lakh for repair and maintenance ( in. short'R&M). lt is found from the submission of

WBSEDCL that the actual expenses under Repair and Maintenance head in distribution system during the year 2011 - 2012was Rs. 19324.18|akh which is higher than that allowed in tariff order. WBSEDCL in their submission has stated that during the year 2011-12 distribution network of WBSEDCL has increased by 14.57%. ln the Tariff order for 2011,12, the Commission while determining the allowable expenditure under repair and maintenance head considered the annual growth rate in distribution network in terms of distribution line in cklkm during third control period in the range ol 2o/o as projected by WBSEDCL in their MYT application. The actual grovvth in distribution network during the year 2011-12 was 14.57o which is 12.57% more than the admitted annual gro\,vth of 2% in the Tariff order for 2011-12 as per projection of WBSEDCL in the MYT applicatioh. On such base of Rs. 15421.00 lakh, if we consider the increase of 10% over actual expenditure ol 2O1O - 2011 as considered in' tariff order which includes West Bengal Electricity Regulatory Commission 15 53

Order on APR ot WBSEDCL for the yeat 2011-12

inflationary trend also, as well as expansion 'ate ol 14.57o/o in distribution network then the claimed amount of Rs. 19324.18 lakh in APR lor 2011 - 2012 is found to be reasonable and could be passed through subject to conditions as laid down in clause (v) of regulation 2.6.10 of the Tariff Regulations. Accordingly, the Commission considers the expenditure of Rs. 19324.18lakh under the head of repair and maintenance in the light of clause (v) of regulation 2.6.10 of the Tariff Regulation as follows:

: i) Return on Equity (RoE) for the year = Rs. 52772.00 lakh

iD N_UI_R = Amount receivable against Ul oyer the year Amount payable over the year.

= Rs. 26260 lakh Rs. 12277 lakh - .: = Rs. 13983 lakh

[Note 22 and Note 24 to the Annual Accounts 2011-12 may be referred tol

iii) Disallowance of excess power purchase cost for distribution loss over normative distribution loss (Refer table under para 2.3.2 of lhe Rs. 62047.68 Lakh FPPCA order dated 23.07.2013 in Case no. FPPCA-63/12-13)

= Rs. (52772.00 + 13983.00 - 62047.68) lakh

= Rs. 4707.32 lakh

3.7.5 Since the difference between the actual expenditure and the amount admitted

in ARR for 201 1-1 2 under this head is Rs. 3206.20 lakh (Rs. 19324. 1 8 lakh - Rs. 16117.98 lakh ) which is less than 'A' above the Commission considers it to admit the excess expenditure over the expenditure admitted in ARR under this head. Thus the Commission allows Rs. 19324.18 lakh under repair and maintenance head in distribution system. Since excess amount of Rs. 3206.20 lakh has been allowed under the repair and maintenance head, the

West Bengal Electricity Regulatory Commission 16 5Ll

Order on APR of WBSEOCL for the year 201'l-12

Commission can admit further an amount of Rs. 1501.12 lakh (Rs. 4707.32 lakh - Rs. 3206.20 lakh) only in other heads of controllable items in terms of clause (v) of regulation 2.6.10 of the Tariff Regulations wherever applicable. For other heads of O&M expenses in distribution the expenses that have been admitted as controllable item under other heads of O&M expenses are Rs. 354.46 lakh, Rs. 243.01 lakh, Rs. 143.46 lakh, and Rs. 799'1.98 lakh against rent, legal charges, audit fee and other administrative and general expenses respectively in the ARR tot 2011 - 2012. Being controllable item, the Commission admits the same in the APR for 201 1 - 2012 and the total amount of administrative and general charges under (O&M) expenses thus comes to Rs. 8732.9'l lakh (Rs. 354.46 lakh + Rs. 243.01 lakh + Rs. 143.46 takh + Rs. 7991.98 takh).

3.7.6 Summing up the decision in para 3.7.3, 3.7.4 and 3.7.5 above the O&M expenses of WBSEDCL as found admissible in APR for 2011-12 and function wise breakup of that amount are as below:

st. Particulars As allowed in APR for 2011 .12 No. Generation Distribution Total (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) I Rent 354.46

2 Legal charges 243.01

4 Audit fees 143.46 4250.38 Other administrative 5 7991 and General expenses 98

Repair & l\.4aintenance 19324.18

Total 4250.38 28057 09 32307.47

The Commission, thus, admits Rs.32307.47 lakh as (O&M) expense in APR for 2O11 - 2012 against the claim of WBSEDCL for Rs. 34633.50 lakh in the APR application for 2011 - 2012.

Henceforth, the other administrative and general expenses shall include the cost of spot meter reading and billing.

West Bengal Electricity Regulatory Commission 17 55

Order on APR of WBSEDCL for the yeat 2011-12

3.8 Cost of Outsourcing:

3.8.'l ln the tariff order for 2011-12 the Commission admitted Rs. 16'135.12 lakh under the head 'cost of outsourcing' in the ARR for 2011-12 against the claim of WBSEDCL for an amount of Rs.16414.24 lakh for the year 201 1-12 in their MYT application.

3.8.2 WBSEDCL in their APR application lor 2011-12 has submitted the details of the expenditure incurred by them during the year 2011-12 in different sub- heads of outsourcing cost as admitted by the Commission in the Tariff Order tot 2O11-12. WBSEDCL's submission and decision of the Commission are as follows:

a) Line maintenance (excluding manpower) under distribution head:

As per submission of WBSEDCL the actual expenditure under this head was Rs. 2745 lakh against the admitted amount of Rs. 2647.70 lakh in the tariff order in view of large increase in distribution network and consumer strength. lt is seen from the submission of WBSEDCL that the total distribution lines and cables in Ckt-Km at the end of 2010-11 and 2O11-12 was 274444.99 and 3'14430.72. Thus growth In distribution network during the year 2011-12 was 14.57% against the original projection of 2o/o in tariff order lot 2011 - 2012. Though expenditure under this head is a controllable item Commission considers it to view the excess expenditure under this'head in terms of clause (v) of regulation 2.6.'10 of the Tariff Regulation as already explained in paragraph 3.7.4 above.

As already mentioned in paragraph 3.7.5 above, an amount of Rs. 1501.12 lakh can be allowed under other heads beside repair and maintenance cost in terms of clause (v) of regulation 2.6.10 of the Tariff Regulations.

Since the difference between the actual expenditure and the amount admitted in ARR for 2011-12 under this head is Rs. 97.30 lakh (Rs. 2745.00 lakh - Rs.2647.70 lakh) which is less than the amount of Rs. West Bengal Electricity Regulatory Commission 18 5e

Order on APR of WBSEDCL for the year 2011-12

1501.12 lakh as mentioned above the Commission considers to admit the excess expenditure over the expenditure admitted in ARR under this head. Thus the Commission admits Rs.2745.00 lakh in the APR for 2011-12 under this head in distribution. After admitting the excess amount of Rs 97.30 lakh under this 'head, the Commission can admit further an amount of Rs. 1403.82 lakh (Rs. 1501.12 lakh - Rs. 97.30 lakh) only in other heads in terms of clause (v) of regulation 2.6.10 of the Tariff Regulations. b) Sub-station maintenance (excluding) manpower under distribution:

As per submission of WBSEDCL the actual expenditure under this subhead during the year 2011-12 was Rs. 433.00 lakh as against the admitted amount of Rs. 41 1.40 iakh in the tariff order in view of increase in distribution sub-station with increase in distribution network. lt is seen from the submission of WBSEDCL that the total distribution lines and cables in Ckt-Km at the end of 2010-11 and 2011-12 was 274444.99 and 314430.72. Thus gro\,vth in distribution network during the year 2011-12 was 14.57% against the original projection of 2yo in the tariff order for 2011 - 2012. Though expenditure under this head is a controllable item Commission considers it to view the excess expenditure under this head in terms of clause (v) of regulation 2.6.10 of the Tariff Regtilation as already explained in paragraph 3.7.4 above.

As already mentioned in a) above, arl amount of Rs. 1403.82 lakh can be allowed under other heads in terms of clause (v) of regulation 2.6.10 of the Tariff Regulations.

Since the difference between the actual expenditure and the amount admitted in ARR for 2O11-12 under this head i$ Rs. 21.60 lakh (Rs. 433.00 lakh - Rs. 41 1.40 lakh) which is less than the amount of Rs. 1403.82 lakh as mentioned above in (a) the Commission considers to admit the excess expenditure over the expenditure admitted in ARR under this head. The Commission admits the actual expenditure of Rs. 433.00 lakh under this head in APR fot 2011-12. After admitting the West Bengal Electricity Regulatory Commission 19 57

Order on APR of WBSEDCL for the year 2011-12

excess amount of Rs. 21.40 lakh under this head, the Commission can admit further an amount of Rs. 1382.22|akh (Rs. 1403.82 lakh - Rs. 21.60 lakh) only in other heads in terms of clause (v) of regulation

c) Man power for line maintenance under distribution:

For operation and maintenance of HT lines under distribution, WBSEDCL has engaged personnel of different categories through outsourcing agencies and wages for such personnel of outsourcing agencies are revised from time to time with the revision of minimum wages by the Govt. as per terms and conditions of the agreement of those outsourced activities. The manpowen related expenditure for line maintenance under distribution head during the year 2011-12 was Rs. 2477 lakh as per audited annual accounts lor 2011-12 as against the admitted amount of Rs, 2383.70lakh in the tariff order. The Commission admits the amount of Rs. 2477 lakh in APR for 2011-12 as it is an uncontrollable element as per Tariff Regulations.

d) Manpower for sub-station maintenance under distribution :

For operation and maintenance of distribution sub-station WBSEDCL has also engaged personnel of different categories through outsourcing agencies and wages for such personnel of outsourcing agencies are revised from time to time with the revision of minimum wages by the Govt. as per terms and conditions of the agreement of those outsourced activities. The man power related expenditure for sub-station maintenance under distribution was Rs. 790 lakh as per audited annual accounts and the Commission admits the same in the APR for 2011-12 being an uncontrollable item. e) WBSEDCL has also engaged outsourcing agencies excluding line maintenance and distribution sub-station maintenance under the following sub-heads and claimed expenditure for those activities in their

APR application for 2011-'12. ; West Bengal Electricity Regulatory Commission 5Y

Order on APR of WBSEDCL for the year 2011-12 i) Security Expense under distribution:

For guarding of different units of WBSEDqL under distribution, security personnel is deployed through private security agencies and wages of such security personnel is revised from time to time with the revision of minimum wages by the Government as per terms and conditions of the order. The actual expenditure under this sub-head as per audited annual accounts for 2011-12 was Rs. 2288 lakh and the same is admitted by the Commission as an uncontrollable item. ii) Call Centre (ZCCICRC) as per SOP Regulation under distribution:

The Commission admitted an amount of Rs. 1342 lakh in the ARR for 2011-12 as expenditure under distribution head of outsourcing for call centre. For operation of call centre (ZCCICRC) as per requirement of SOP Regulations personnel are engaged in Five ZCC at Kolkata, Burdwan, Midnapore, Baharampur and Siliguri and CCC to man urban areas for 24 hours and rural areas for 16 hours a day through outsourcing agencies and wage of such personnel is revised from time to time with the minimum wages by the Government as per terms and conditions of the order. The actual expenses under this sub-head as per audited annual accounts for 2011-12 was Rs. 1342.00 lakh and the same are admitted by the Commission in the APR fot 2011-12 an uncontrollable item. iii) Mobile Maintenance Service (MCSU) under distribution head:

For maintenance of Mobile Maintenance Service (MCSU) under distribution, WBSEDCL engaged LT maintenance personnel through outsourcing agencies in shifts for Customer Care Centre (CCC) for LT maintenance work in accordance with the SOP Regulations and wages of such personnel is revised time to time with the revision of minimum wages by the Government as per terms and conditions of the order placed with them. The actual expenses for MCSU under distribution as per annual accounts was Rs. 1838.00 lakh during the

West Bengal Electracity Regulatory Commission 21 5g

Order on APR of \IVBSEDCL for the year 2011-12

year 2011-12 and the same is admitted by the Commission in the APR for 20'11-12 being an uncontrollable item.

Data Warehousing expenses under distribution head:

ln the tariff order for 2011-12 an amount of Rs. 9.00 lakh was admitted by the Commission in the ARR for 2011-12 as expenditure excluding manpower on distribution head of outsourcing for Data Warehouse. As per annual accounts fot 2011-12 the actual expenses under the head was also Rs. 9.00 lakh and the Commission admits the same in APR for

201 1 -12 for distribution function. s) Back office Job under Distribution head:

ln the tariff order for 2011-12 an amount of Rs. 141.00 lakh was admitted by the Commission in the ARR for 2011-12 under this head. The actual expenses as per annual accounts fot 2011-12 was also Rs. 141.00 lakh and the Commission admits the same in the APR for 2011- 12 for distribution function. h) Franchisee Cost under distribution head:

For reading, billing and collection of revenue from the consumers of New Town areas, WBSEDCL engaged New Town Electric Supply Company (NTESC), as franchisee and service charges are paid to NTESC based on the collected amount from the consumers of these areas as per terms and conditions of the agreements between WBSEDCL and NTESC. An amount of Rs. 205.36 lakh was considered in ARR for 2011-12 in the tariff order for 2011-12. As per annual accounts tot 2011-12 the actual expenses for franchisee charge during the year was Rs. 253.00 lakh. Since the expenditure under this head is a controllable item, the Commission admits the amount of Rs. 205.36 lakh as admitted in the ARR fot 2011-12 under this head in the APR for 201 1-12 for distribution function.

Wesl Bengal Electricity Regulatory Commissaon 6o

)-

Order on APR of WBSEDCL for the year 20'11-12

Meter reading job under distribution head:

For meter reading and billing, WBSEDCL has engaged outsourcing agencies viz. a) self help group for meter reading and billing b) agencies for on spot reading and billing and pays service charges to those outsourced agencies as per terms ahd conditions of the order placed with them. WBSEDCL has also engaged outsourcing agencies for meter reading at all interconnection points of WBSEDCL with other licensees and pays service charge to them. The actual expenses as per annual accounts of WBSEDCL for the year 2011-12 under this head during the year was Rs. 3348.00 lakh as against the amounts of Rs. 3341.00 lakh admitted in the tariff order for.2011:12. The Commission admits Rs. 3341.00 lakh under this head in the APR for 2011-12 under distribution as a controllable item.

Bill distribution job under dishibution head :

WBSEDCL has engaged outsourcing agencies for'delivery of the energy bill and defaulters' notices to the L&MV consumer and pays service charges to those agencies as per terms of the order placed with them.

The Commission admits Rs. 1 182.00 lakh under this head in the tariff order for 2011-12. The actual expenses during the year were also Rs. 1'182.00 lakh as per the audited annual accounts lot 2011-12. WBSEDCL in their submission has stated that an amount of Rs. 215.00 lakh relating to collection franchisee has been booked under this head in the annual accounts fot 2011-12 inadvertently. WBSEDCL thus claimed Rs. 967.00 lakh in their APR application after deducting Rs 215.00 lakh from the expenditure of Rs. 1182.00 lakh booked in annual accounts 2OO1-12 under this head. Since the expenditure: under this head is a controllable item the Commission admits Rs. 'l 182.00 lakh in APR for 2011-12 under this head in distribution without deducting the amount of Rs. 215.00 lakh for the time being in order to ensure better visibility in comparison during APR. The anomalies highlighted by WBSEDCL has

West Bengal Electricity Regulatory Commission 23 CL

)-

Order on APR of WBSEDCL for the year 2011-12

been noted by the Commission. WBSEDCL is directed to rectify the anomalies in their annual accounts in the future years.

k) Collection franchisee under Distribution head:

ln order to meet the provision of West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2007 and to cope up with the increasing number of consumer, WBSEDCL has engaged franchisee for collection of revenue from the consumer, deposit of the collections to the Bank alongwith payment reconciliation. WBSEDCL pays service charges to those agencies on thb basis of consumer served. WBSEDCL has also installed teller machine for collection of bill and pays service charges on the basis of number of consumers served to these outsourcing agencies. An amount of Rs. 19966 lakh was admitted on this account in the ARR of WBSEDCL in tariff order for 2011-12. The actual expenses on this account were Rs. 275.00 lakh as per annual . accounts for 2O11-12. MoreoveJ, WBSEDCL made submissions that expenditure for an amount of Rs. 215.00 lakh which is related to collection franchisee are added in the expenditure related to bill distribution job which may be included in the expenditure under this head. The deduction of the amount of Rs. 215.00 lakh from the expenditure related to bill distribution job has not been considered in the admitted amount in 0) above for the reasons explained therein. Thus the amount of Rs. 215.00 lakh is not to be added also in the expenditure related to collection franchisee. However the Commission admits Rs' 199.66 lakh in distribution function under this head being a controllable item. As already mentioned in (j) above the anomalies highlighted by WBSEDCL has been noted by the Commission and directed WBSEDCL to rectify the anomalies in their annual accounts in the future years.

3.8.3 Summing up the decisions in para 3.8. 1 and.3.8.2 above' the allocable amount under the head of cost of outsourcing thus comes to Rs 16988'02 lakh [Rs. 8735.00 lakh for cost of outsourcing man-power related + Rs 8253.02 lakh for cost of outsourcing excluding man-power)l as follows :

West Bengal Electricity Regulatory Commission CL

-}-

Order on APR of WBSEDCL for the yeat 2011-12

Admitted amount in APR st. Particulars lot 2011-'12 No. (Rs. in lakh)

1 Line maintenance (excluding man-power ) 2745.00 2 Sub-station maintenance (excluding man- power 433.00 Man-power related cost for line maintenance 2477 .OO 4 Man-power related cost for Sub-statioulg!19!9!99 790 00 5 Security Expenses 2288.OO 6 Call Centre (zCClCRC) 1342.00 7 lvlobile Maintenance Service ([/CSU) 1838.00 9.00 8 Data Ware Housing 141 00 I Back office job 205.36 10 Franchisee Cost 3341.00 11 Meter Reading job 1182.00 12 Bill distribution job 199.66 13 Collection Franchisee Total cost of outsourcing 16991.02 14 ISub (1) to (13) ] Cost of Outsourcing manpower related 8735.00 15 lsub (3) to (7) l cost of Outsourcing excluding manpower 8256.02 16 [1.2and8to13]

'cost of outsourcing 3.8.4 The Commission admits Rs. 8735 00 lakh under the head 'cost of outsourcing man power related' 8nd Rs. 8256'02 lakh under the head the claim of WBSEDCL excluding man power' in the APR for 2011-12 against heads respectively in for Rs. 8735.00 lakh and Rs 8386 00 lakh under those has been their APR application for 2011 - 2012 The entire amount considered for distribution function'

3.9 Complaint Management Mechanism and Lease Rentals: 412 00 lakh in the ARR for 2011-12 as claimed 3.9 1 The Commission admitted Rs head 'Complaint by WBSEDCL in their Tariff application under the obligations under Management Mechanism' related to their discharge of (Standard of Performance of West Bengal Electricity Regulatory Commission 2010' (in short 'SOP Licensees Relating to Consumer Services) Regulations' for 2011-12 also admitted Regulation'). The Commission in the Tariff order item for each year of the the expenditure under this head as an uncontrollable 'Administrative and General third control period and not as a part of applieation that the actual Expenses'. WBSEDCL has stated in the APR fr-".tg*grl El""tti"ity Regulatory commission 69

Order on APR of WBSEDCL for the yeat 2011'12

expenditure under this head came to Rs. 296.43 lakh which ts included under the head telephone expenses in thelr Annual Accounts for the year 2011-12' It is also stated by WBSEDCL that the amount has been excluded from the telephoneexpenditureunderotheradministrativeandgeneralexpensesand theamountofRs'296.43lakhiSclaimedintheirAPRlor201l-l2underthe head Complaint Management Mechanism WBSEDCL has enclosed a certificate from the chartered Accountant segregating such expenses from the telephone expenses WBSEDCL in their APR application has also stated from that SMS charge for forwarding grievances to Mobile Van has started the year 2012-13 and WBSEDCL has to bear that charges lrom 2012-13' in APR for 2011- Thus the Commission admits the amount of Rs 296 43 lakh l2undertheheadcomplaintManagementMechanismbeingtheexpense above mentioned SOP incurred by WBSEOCL to fulfill the obligation of the function' Regulation. The entire amount is allocated to distribution 3.g.2WBSEDCLhasalsostatedintheirtariffapplicationthattosetupthe per of SOP Regulations' complaint management mechanism as requirement MPLS-VPN(MultiProtocolLevelswitching-VirtualPrivateNetwork)facility 2O11 lot establishing and has been introduced in WBSEDCL in 2010 - for the purpose WBSEDCL has also maintaining the communication net work accounts fot 2O11-12 on account of claimed Rs. 692 00 lakh as per annual leaserentalsformaintainingtheMPLS-VPNfacilityformaintainingthe of Rs 692 O0 lakh admitted in Complaint Management against the amount APR fot 2011-12 admits the ARR for 2011-12' The Commission in the 'Lease Rentals' in distribution amount Rs. 692 00 takh under the head 3.10 lnsurancePremium:

3.lo.llnsuranceexpenseshavebeencategorizedasaSeparateanduncontrollable under Commission admitted Rs 85 73 lakh item in the Tariff Regulations The The actual expenditures totaling the head 'insurance' in the ARR fot 2O11-12 as per their annual accounts for to Rs 88.00 lakh as claimed by WBSEDCL Commission The entire amount has 2O11 '2|12has been admitted by the as proposed by WBSEDCL in their been allocated for distribution function APR aPplication f or 2O11-12' fr-"stg*grl El""tn"ity Regulatory commission 64

Order on APR of WBSEDCL for the yeat 2011.12

3.1 1 Depreciation:

3.1 1 .'l An amount of Rs. 35789.00 lakh has been claimed by WBSEDCL in their APR application tot 2011 - 2012 towards depreciation on fixed assets as against Rs. 33259.30 lakh allowed in the ARR for the year 2011 - 2012 |n the tariff order of WBSEDCL lot 2011-12, the Commission found that in annual accounts of 2011 - 2012 the amount on the head depreciation was Rs. 34138.00 lakh and directed WBSEDCI- to show in their APR application fot 2011-12 as to how they had computed the deprecation of Rs 34138 00 lakh as per annual accounts. WBSEDCL has complied with the direction showing the computation of depreciation in detail in Form- B to Annexure-1, in Volume-l of their APR application.

3.11.2 ll is seen from their submission that WBSEDCL capitalized assets of Rs' fixed 41196.00 lakh brought into service in previous year but not added in the assets in the year'of operation. WBSEDCL has claimed the depreciation Fhe considering those assets in their computation for the yeat 2011-12 00 lakh depreciation so computed for the year 2011-12 came to Rs 34138 of prior period Besides, WBSEDCL has claimed Rs 1651'OO lakh on account for those assets depreciation for the years 2OO8-09' 2009-10 and 2010-11 into fixed assets in the which came into operation in earlier years but added are added in fixed yeat 2O11'12. The Commission decides that since those prior period as claimed by assets only in 2011-12 the depreciation for the fot 2011-12' The Commission WBSEDCL will not be considered in the APR of Rs 34138 00 lakh thus in the APR for 2011 - 2012 admits an amount year fo( 2011 2012 under the head depreciation as computed for the - only for the assets added into including the depreciation for the year 2011-12 in earlier years The function fixed assets in 2o11-12but came into operation for 2011 - 2012 are found wise break-up of the amount allowed in the APR as under: Admitted amount in APR for 2011-12 (Rs' in lakh)

W"tt B".S"l Eb"t""ity Regulatory Commission e5

Order on APR ofWBSEDCL for the year 2O1t.l2 3.12 Bad Debts:

3.12.1 lt has been observed from the audited accounts for the year 201 1 - 2012 rhat WBSEDCL charged an amount of Rs. 4.00 lakh towards Bad Debts written off. ln terms of regulation 5.10. 1 of the Tariff Regulations, the Commission may aflow such amount on this account as actualy had been written off in the latest avairabre audited accounts subject to a ceiring of 0.5% of the annuar gross sales revenue. The total sales revenue accounted for during the year 2011 - 2Ot2 was Rs. 1185422.00 takh out of which Rs.1127120.00 takh pertained to sares to own consumers. The commission considers to admit Rs 4.00 rakh in ApR for 2011 - 2012 being ress than 0.5% of Rs. 1121120.00 lakh, the gross sales revenue during the year, against Rs. 4.00 lakh considered in the tariff order for the year 2011 - 2012 and the entire amount has been considered for distribution func on. The cteim of WBSEDCL on account of bad debts written off was also Rs. 4.00 lakh in their application of APR for 2011 -2012. 3.1 3 lnterest on Capital Borrowings:

3.13.'l As per note 2g to the Annual Accounts for the year 2011_12, the actual amount of interest on toan paid by WBSEDCL during the year 2011_12 was Rs. 45649.00 lakh (net of capitalization) after making adjustment of interest income of Rs. 363.00 lakh in the year ZO11_l2related to prior period. The details of the loan, interest on payable loan during the year as shown in Form_ C to Anexure-1 in volume_l of the ApR applications are as follows.

lnterest on AonC a GGnture @[iuAng eension

lnterest on State Govt. Loan

lnterest on Loan from Com6ercial Bank- lnterest on loan from REC LE lnterest on loan from pFC Ltd lnteresl on shortierm loan

West Bengat Electrioty Reguta-oryEmmission 66

Order on APR of WBSEDCL for the year 2011-12

3.'13.2 lt is seen from the detairs as shown above, the total interest payable during the year 2011-12 fot an amount of Rs. 46012.00 lakh (net of capitalization) as craimed by WBSEDCL incrudes interest on shorr{erm roans of an amount of Rs. 10586.00 lakh which is related to. Working Capitat toan. Thus the interest on capital borrowing payable during the year 2011_12 (net of capitalization) comes to Rs. 35426.00 takh (Rs. 46012.0O takh _ Rs. 10586 00 rakh). After adjusting the interest income of Rs. 363.00 rakh net interest on capital borrowing works out at Rs. 35063.00 lakh (net of capitalization).

l 3 13 3 The commission admits the amount of Rs. 35063.00 rakh on account of interest on capitar borrowing in ApR for zo11 - 2012. The function wise break-up ofthe admitted are as under:

3.14 lnterest on pension Trustee Bonds:

3.14.1 An amount of Rs. 13OOS.OO lakh, as was provided in the ARR for the year 2011 2012 towards g.5% pension - interest on Fund Bonds, remained unchanged and the same amount is admitted. However, the allocation of aforesaid admitted amount to the generation and distribution functions has been changed per as allocation claimed by WBSEDCL. :

Admitted amountlnlFR for 2Ol 1_

West Bengal Electricrty Regutaiory Commrssron 67

Order on APR of WBSEDCL for the year 2011-12

3. 15 lnterest on Working Capital:

3.15.1 ln the APR application fot 2011-12 WBSEDCL has submttted that the annuat requirement of Working Capital as per Tariff Regulations worked out at Rs. 128934 lakh. The security deposit rying with wBSEDCL at the end of the year 2011-12 was Rs. 135151.00 rakh which is found to be, sufficient to meet the working capitar requirement. WBSEDCL did not craim any amount under this head. As already stated in paru 3.14.2 of this chapter an amount of Rs. 10586.00 paid rakh against different short-term roans which is rerated to working capitar' since the security deposit herd by wBSEDCL was sufficient lo meet their normative working capitar requirement no interest on short-term loan related to Working Capital is admitted by the Oommission. Thus no amount is admitted ,interest under the head on Working Capital,in ApR for 2011-12.

3.16 lnterest on Consumers, Security Deposil: 3.16.1 The total amount of consumers, security deposits lying with WBSEDCL as submitted by them was Rs. 135151.00 lakh at the end of the year 2011 _ 2012 excruding the security herd by the short{erm consumers. The actuar amount of interest accrued on such security deposits during 2011 _ 2012 as per audited accounts was Rs. 9147.00 lakh as against Rs. 2g70.44 lakh allowed in the Tariff Order.

3.16.2 ABECA, the objector, has stated that WBSEDCL did not give any interest to the consumers during yeat the 2011_12 on security deposit and opposed the enhanced claim under this head. ABECA has also stated that WBSEDCL took security and invested in their business and then why the interest on security deposit will be given to them in tariff.

3.16.3 WBSEDCL shall pay the interest on security deposit to the consumers as per provision of the West Bengal Electricity Regulatory Commission (Miscellaneous provision) Regulations, 2013. Since the security deposit amount is being utilized as Working Capital as confirmed by WBSEDCL and no interest on Working Capital is altowed to WBSEDCL for the year ZO11_j2 West Bengal Etectncrty Regutatory Commrssion ev

Order on APR of WBSEDCL for the year 20.11.12

the amount of interest on security deposit accrued as provided in Annual

Accounts fot 2011-12 and claimed by WBSEDCL, i.e., Rs. 9147.00 takh is

admitted and considered under distribution function in the ApR for 201 1-12.

3.17 Other Finance Charges:

3.17.1 As it comes out from the Note-2g to the audited accounts, total amount of finance charges during the yeat 2011 - ZO12 came to Rs. 560.00 lakh which is admitted for the revenue account as against Rs. s60.00 rakh considered in the ARR in tariff order for the year 201 1 - 2012. The function wise breakup of the amounts admitted are as under:

Sl. No. Function Admifted amount in APR for 2011-12 (Rs. in takh) 1 Generation 21 .00 2 Diskibution 539.00 Total 560.00

3.18 Taxes under lncome Tax Act:

3-'18.1 As it comes out from the Note 32 to the Annual Accounts fot 2011-12, an amount of Rs. 291S.00 lakh with the following break_up was provided in the books towards payable taxes under the provisions of lncome Tax Act. An amount of Rs. 2915.00 lakh was also considered in the ARR fot 2011 - 2012 in the Tariff Order. Break up of the provisions of Tax in the books are as follows:

Rs. in lakh Wealth Tax 1t00 Provision for lncome Tax 2914.00 Fringe Benefit Tax 0.00 Total: 2915.00

318.2 wBsEDcL has craimed the return on equity (RoE) on pre-tax basis. Thus, the Commission does not consider any amount under this head.

West Bengal Electricity Regulatory Commission 3'1 6q

Order on APR of WBSEDCL for the yeat 20j,l-12

3.18.3 WBSEDCL is, however, directed to submit copy of assessment order for the year 2011 - 2012 and copies of the challans for deposit of income tax by them for the year in APR petition for the year 2012 - 2O1g or onward.

3.19 Reserve for Unforeseen Exigencies:

3.1 9.1 ln terms of reguration 5.1 'r of the Tariff Regurations, generating companies and the licensees may provide and maintain a reserve up to 0.25% of the value of the gross fixed assets at the beginning of the year annually for dealing with unforeseen exigencies subject.to an overafl ceiring of 5% of such gross value of fixed assets.

3.19.2 WBSEDCL has ctaimed Rs. 301 1 .00 takh under this head in the ApR apprication fot 2011-12 stating the fact that they have invested Rs. 3011.oo lakh in the fixed deposits of Nationarized Banks as reserve for unforeseen exigencies during the year. Total fund position as stated by WBSEDCL are as under:

of Reserve for Unforeseen for the year 1011-12 Amount (Rs. in lakh for Unforeseen geraies ( E 1638.41 -08) 1424.08 Reserve for Unfo-eseenExigEiEiEl(260&@ 233s.47 Reserve for Unforeseen Exigenci. 112009_.lq 2542.10 ((2010-1 1) 2983.57 II IIEIESI tIII ZUU6-U9 54.63 279.00 lnterest till 2010-1 1 420.00 lnterest trlt 201o-Ti(accrued but not due) 365.00 Unforeseen Exigencies for tre 2006-07 to WBSETCL as 537 .20 Less : lnterest component of sich 116.84 Unforeseen Exigencies for the year 2006-07 to Less:LqD.. nErufluRefund ofor excessexuess amounlamount ot oi Reserve6Keserve lor Unforeseen Exigencies 54.7 4 for the year 2008-09 to WBSETCL as per ApR orOer of ZOOA_O'9 i.e.

Less : lnterest component so 3.94 on excess creation of reserve Totalr orar neserveReserve forror UnloreseenUnforeleEn Exigencies upto 2010_11 & Ooeninc 11329.54 Balance of Reserve for Unforeseen Exrgencies for 201.1-12 as pei financial statement 201 1 -i z

West Bengal Electflcity Regulatory Commissron 32 7o

Order on APR otWBSEDCL for the year 2Oli-i2 Reserve for Unfore 3011.00 loreresr uompone tor 2o1j_12 (net of accrued but not due of last year) 276.00 ,,,(Erqir eurrlpu ell( ror zu I t_ tz (aCCrUed but not due) 681.00 ,v uararue or ror unloreseen ^escrve Extgencies upto 20.11_12 as 15297.54

3.19.3 ln the Tariff order for 2011-12 no amount was aflowed under this head in the ARR for all the ensuing years of the third control period in order to have resser initiar impact on tariff increase in view of requirement of rarge amount of Regulatory release. The Commission also considers not to allow any amount under this head in the ApR lot 2011_12.

3.20 Return on Equity:

3 20 1 Equity base for a,owing returns has got two components, i.e., share capitar and free reserve. lt comes out from ,Note-2: the Reserve & Surplus, in the audited annuar accounts for 2011-12 that wBSEDGL had accumurated ross of Rs. 21593.00 lakh and Rs. 21232.00 lakh at the beginning and end of the year 2011 _ 2012 respectively. lt has, therefore, no free reserve. The equity base of it is only the.amounts of share capital.

3.20.2 lt is evident from Balance Sheet as at 31"r March, 2012 thatduring the year 20'11-12, no amount has been added as equity participation by Government of West Bengal. There is no positive contribution from Reserve & Surplus. Thus no amount has been considered as addition to equity base durlng the year.

3 20 3 rt is evident from Note-11 that transfer to fixed assets from capitar work-in- progress during the year 2O1O _ 20.l 1 is Rs. 97302.00 takh. Since there is no positive contribution from Reserve & Surplus so no equity addition against such addition in fixed asset is considered during the year ZO1.l_12.

3 20 4 The share capitar of wBSEDCL at the beginning and at the end of the year 2011-12 was at Rs. 25S84O.OO lakh as per Annual Account s fot 2011-12. Since there is no equity addition as discussed in paragraph 3.21.3 above the

west Bensar euctlic,f n{ii;i6!E6ffi8[i' 71

Order on APR of WBSEDCL for the year 2O,t lJ2

equity base for allowing returns ls considered at Rs. 255g40.00 lakh for the yeat 2011-12.

3.20.5 WBSEDCL has claimed the entire equity as distribution business and computed the Return on Equity as on pre_tax basis in form 1.20 (a) to Annexure-1, Volumel of the ApR application. The Commission considered the returns on the equity base of Rs. 25S84O.OO @ 2O.63Vo [16.50(,/0 t (1_ 0200078)l on pre-tax basis which comes to Rs. 52772.@ takh.

3.20.6 The Commisslon in terms of regulation 5.6.1 ..1 and 5.6.1 .2 of the Tariff Regulations admits Rs. 52772.00 lakh as return on equity to WBSEDCL for the year 201 'r 2012 against - the craim of WBSEDCL for Rs. 52772.O0 rakh in the APR tor 2O11 _ 2012 subject to adjustment of income tax paid as per assessment order for the year. The entire amount is allocated to distribution function.

3.21 SpecialAllocation:

32'r'1 rn the tariff orderfot2011 2012, - the commission arowed Rs. 1g424.11 rakh for the year 201'r-12 as against the craim of Rs. 18931 .00 rakh of WBSEDCL for the year in their MyT application on the following aciounts.

a) Amount paid by WBSEDCL to NTpC in 2011_l2capacity Charge against additional capitalization for the period 2004_05 lo 20.10_11in pursuance to the order of Appellate Tribunal.

b) The amount payabre by WBSEDCL to NTpc for additionar cost in the year 2011-12 arising out of provisionar the rarrff order in respect of FSTps Stage-t & I and Talcher TpS.

c) The amount payable by WBSEDCL to DVC for additional cost for the period 2007-08 to 2010_11 due to Tariff Order by CERC on Mejia TpS Unit V & vr. rn addition there is possibirity of additionar cost from other power stations of DVc for the perrod of 2009-14 due to provisionar rariff Order on this account.

WestBengalElectrrcityRegulato[-Comm,ssion 72

Order on APR of WBSEDCL for ihe year 2Ol.t-12

The actual claim on those prior period payments relating to power purchase was taken into consideration in the order on fuel and power purchase cost adjustment for the yeat 2011-12

3.21.2 WBSEDCL in their ApR apprication rot 2011-12 has craimed an amount of Rs. 6065.63 lakh on accumulated loss due to taking over of the assets relating to distribution business of singur-Haripar Rurar Electric co-operative Society Ltd. (SHRELCOP) by WBSEDCL in terms of the Commission,s order dated 28.02.2008. WBSEDCL submitted an apptication on 01 .06.2010 to the commission craiming to rerease of such accumurated ross in their tariff. Decisions of the commission on that apprication and two other apprications on the same issue are pending .for want of further information from WBSEDCL. commission thus decides not to consider any amount under this head in APR for 2011-12.

3.22 lncome from Non-Tariff Sources:

3.22.1 A totar amount of Rs. 36266.00 rakh was considered towards the estimated earnings of WBSEDCL from other non-tariff sources and income from investment. ln actual, (vide,Note-22: Other Operating lncome,to the audited accounts) total non-tariff income came to Rs. 1g697.00 lakh. lt also came out from the audited accounts (vide Note_24 thereto) as well as from their submission that WBSEDCL earned an amount of Rs. 25.00 lakh only as dividend income and Rs. 3979.00 lakh as interest from Bank on Fixed Deposit. The interest income of Rs. 3979..00 rakh incrudes Rs. 957.00 rakh rerating Reserve to for unforeseen Exigencies Fund which is to be added in the fund itserf. Thus the income from investment comes to Rs. 3047.00 rakh + lRs. 25.00 takh (Rs. 3979.00 takh _ Rs. 957.00 takh)1. Besides WBSEDCL earned Rs. 5051.00 takh [Rs. 9055.00 takh _ (Rs. 25.00 lakh + Rs. 3979.00 lakh)l from other business and other general receipts. Thus total other income comes to Rs. 26795.00 lakh [Rs. 19697.00 lakh + Rs. 3047.00 takh +

Rs. 5051.00 lakhl. l

West Bengat Electnctty Regulalory Commission 35 7g

Order on APR of WBSEOCL for the year 2011-12

3.22.2 fhe amount of such earning of Rs. 26795.00 lakh as is admifted in ApR 2011 - 2012 and considered to be deducted from the gross amount of allowable fixed charge. The amount pertains to distribijtion function.

3.23 Unscheduled lnterchange(Ul):

3.23.1 As per the audited accounts for the concerned year (vide Note No.22 and Note No.25 thereto), the amounts received and paid by WBSEDCL towards unscheduled interchange were as under:

Sl. No. Particulars Amount in Rs. in Lakh

Ul charges receivable during (vide 1 2011-12 Note No.22 to accounts) 26260.00

Less Ul charges payable 2 : duing2O11-12 (vide Note No.25 to accounts) 12277 .00

3 Net Ul Charges receivabte during 2011-12 (3=1-2) 13983.00

3.23.2 wsEDcL in their ApR appricauon for 2011-12 made submission for aflowing them keep gain to the from ur during 2011-12 i.e. net Ur receivabres to off-set the disallowances in power purchase cost on account of higher distribution loss on the ground that WBSEDCL has earned the Ul gain through its operational efficiency.

3.23.3 The commission disaflowed Rs. 62407.68 rakh on account of excess power purchase cost due to higher distribution loss than normative distribution loss in the FPPCA IOrder dated 23.01.2013 in Case No. FppCA_63/12_13]. The return on equity (ROE) admitted to WBSEDCL for the year 201.1_12 is Rs. 52772.00 lakh as stated in paragraph 3.21.4 of this chapter. Thus the excess power purchase cost disallowed is more than the ROE admitted for the year. The commission thus considers to admit the part of net ur receivabres for sharing to consumers as per formula specified in regulation 5.17.3 (i) of the Tariff Regulations as follows:

West Bengal Electricity Regulatory Commission 71

J

Order on APR of WBSEDCL for the y6ar 2011]12

ROE = Rs. 52772.00 Lakh

N_UI_R = Net Ul amount receivables for the year- Net Ul amount receivables for the year = Rs. 13983.00 lakh

Excess Power Purchase cost disallowed = Rs..62407.6g Lakh

Part of Net Ul receivable amount entifled for sharing

= ROE+ N-UI-R - Excess Power purchase cost disallowed = Rs. 52772 lakh + Rs. 13983 lakh - Rs. 62407.68 lakh = Rs. 4347.32 lakh

3.23.4 ln terms of regulation 5.17.3 of the Tariff Regulations, the Commission decides to pass on part of net earnings of Ul during 2011 _ 2012 to the consumers in the ApR ror 2011 - 2012, though WBSEDCL craimed to retain such earnings by them in their ApR application as stated in paragraph 3.23.2 above. Thus the amount of Rs.4347.32 lakh as cqmputed in paragraph 3.23.3 above is admitted by the commission a$ part of Net Ur receivabres amount entifled for sharing and considered for deduction from gross amount of alowabre fixed charge in the ApR for 2011-12. The amount is pertaining to distribution function.

3.24 Benefits to be passed on to consumers and other licensees:

3 24.1 WBSEDCL made a totar purchase (net of crU Grid Loss of 196.582 MU) of power to the tune of 30100.239 MU (30296.821 MU._ 196.582 MU) at a power purchase cost of Rs. 9504.16.00 lakh. Out of such total purchase, 645.317 MU was sold to persons other than its own consumers and other licensees. Besides, 1402.807 MU was swapped out byWBSEDCL during the year 2011-12. Thus the total quantum of sale to persons other than consumers and licensees and swap out power was 204g.124 MU.t 645.317 MU + 1402.807 MUI The proportionate purchase cost of energy that is sold persons to the other than consumer and licensee and swap out power was

West Bengal Electricity Regutatory 7s

Order on APR of WBSEDCL for the year 2011-12

Rs. 57865.65 lakh (Rs. 18232.14 takh + Rs. 39633.51 lakh). Commission,s order dated 23.07.2013 in Case No. FppCA -63/12-13 (paragraph 2.2.2.3) may be referred to in this regard.

3.24.2 As mentioned in the earlier paragraph, WBSEDCL sold 645.317 MU of power to persons other than the ricensees and its own consumers. The totar revenue earned by such sale came to Rs. 19631.00 lakh (vide No.21 to the audited accounts lot 2011 - 2012). WBSEDCL atso swapped out 1402.807 MU year during the 2011-12 and revenue income from such energy swapped out is Rs 38671.00 rakh (vide Note No.21 to the audited accounts ior 2o11-,r2). So total revenue earned from such sale comes to Rs. 583O2.OO lakh (Rs. '19631.00 + rakh Rs. 38671.00 rakh). The gains derived through such sare work out as under:

Less : Cost of power for such sale

Amount of gains derived by such sale

3 24.3 rn the tariff order, for 2011 - 2012, the commission considered that the benefits from sare power of to the persons other than its own consumers and licensee passed wi be on to the consumers of wBSEDCL on actuar basis through APR of thg concerned year. Now, the amount of gain derived from such sale comes to Rs. 436.35 lakh. The Commission decides to pass 60% of such gain to the consumers though WBSEDCL prayed to pass 5g% of such gain to the consumers as is being done in earlier year of 2O1O_11. Thus the Commissions admits 60% share of gains of Rs. 436.35 lakh i.e. Rs. 261.81 lakh is to be passed on to the consumers.

3 24.4 The amount of the share of gains to be passed on to the consumers is now being admitted as Rs. 261.g,l lakh in the ApR for 2011 _ 2012 and the same is allocated to distribution function.

West Bengal Electncty Regutatory Commtssion 76

Order on APR of WBSEDCL for the year 20.t 1.12 3.25 lnterest Credit:

3 25.1 ln terms of regulation 5.5.3 of the Tariff Regulations, the amount of interest credit deductible from the ARR for 201.1-12 works out as under:

Admitted amount in APR 201 Sl. No. Partic u lars for 1-12 (Rs. in takh)

1 Depreciation 35789.00

2 Loan repayment 23408.00 3 Excess fund ('l - 2) 12381 .00 Weighted 4 average rate of interest L20% 5 lnterest credit 1139.05

3.25.2 rhe totar amount of interest credit of Rs. 1139.05 rakh as worked out above is admitted by the commission and aflocated to distribution functions to adjust with the ARR .l _ of 201 2012 as against the amount of Rs. 512.79 lakh considered in the ARR for 201 1_12 in the Tariff Order_

3.26 Carrying cost for SWAP power.

3 26.1 rt is submitted by WBSEDCL that due to variation in demand during different t;me period of a day as well as in different months or seasons there remains surplus power in different period of a year. ln such case if the prevailing sale prlce in power market is not cost effective, then the surplus power is banked through swap arrangement for effective utilization of the surplus power to reduce the burden of idle capacity charge on the consumers and also to maintain the grld discipline. ln the process of banking of surplus power through swap arrangement and getting back such power while there is need, they have to bear the carrying cost for such banked power.

3.26.2 ln their APR apprication WBSEDCL has craimed an amount of Rs. 1s43.63 lakh carrying as cost they had to bear for banked power through swap arrangement during the year. The detailed computation of the carrying cost has also been given in their ApR applications.

West Bengal Electrrcity Regutatory Commrssion 77

Order on APR ofWBSEDCL for the year 2011-12

3.26.3 The Commission considered the carrying cost of Rs. 1543.63 lakh as claimed by WBSEDCL and admits the same in the ApR for 2011-12 in distribution function.

3.27 Release of Regulatory Asset:

3.27.1 ln the tariff order of WBSEDoL for the year 2o'n - 20i2, the commission released Rs. 45s00.00 rakh being a part of reguratory asset of Rs. 12s503.86 lakh created in ApR for 2010-11 vide order daled 19.10.2012 in case No. APR-29/12-13. The Commission also considers to release the same amount Rs. of 45500.00 lakh in the ApR for 2011_12..Out of the amount of Rs. 45500.00 lakh, Rs. 4417.00 lakh is related to generation function and Rs. 41083.00 lakh is related to distribution function.

3.28 Carrying cost of regulatory asset:

3.28.1 WBSEDCL referring paragraph the 0.2.2 (b) of the Tariff poricy and the order dared 11 .11.2011 0f the Hon'bre Apperate Tribunar for Erectricity in case No. Op-1 of 2011 has claimed carrying cost on the following regutatory assets on the ground that such cost is an entifled amount to wBSEDCL as a reasonabre cost to be recovered.

a) ln the tariff order for 2011-12 the Commission gave directives for recovery of arrear amount in 4g installments. WBSEDCL has claimed carrying cost of Rs. 64016.00 lakh due to delayed recovery of arrears.

b) ln the order dated 17.10.2012 for ApR for the year 2009-10 in Case No. APR-20/10-11 and in the order dated 19.10.2012 for ApR for the year 2O1O-11 in Case No. ApR-29t12_13 the Commission admitted recoverable .122800.69 amounts of Rs. lakh and Rs. 29471.47 lakh respectively which were not considered in the ARR in the tariff order for 2011-12 and created regulatory assets. As a result WBSEDCL needs to bear carrying cost on these amounts during the year 2011-12. A carrying cost of Rs. 24376.00 lakh has been claimed by WBSEDCL for

West Bengal Electricity Regulatory Commrsston 4A 7v I

Order on APR of WBSEDCL for the year 2011-12

the year 2011-12 against that regulatory assets created in the APR for 2009-10 and 2010-11.

c) The Commission admitted release of Rs. 455OO.OO lakh from the regulatory asset of Rs. 125503.86 lakh in the ARR of WBSEDCL for 2011-12. WBSEDCL stated that they had to bear the carrying cost of balance regulatory asset of Rs. 80003.86 lakh and claimed Rs. 7264.00 lakh as carrying cost for the year 2011-12.

3.28.2 lt is seen from the computation of carrying cost submitted by WBSEDCL in Annexuure-7 of their APR application that WBSEDCL has claimed the carrying cost for arrear recovery as per Tariff Order for 2011-12 in 4g installments as stated in (a) above since 1.4.2011 till completion of recovery in 48 installments. ln the context of claim of carrying cost since 01.04.2011, the Commission decides that the claim of WBSEDCL cannot be considered for period the from 01 .04.2011 to 01 .12.2012i.e. the date of issuance of the order as the delay in submission of tariff application is on the part of WBSEDCL as they submitted their MYT for the third control period only on 30'03.2012 i.e. after 16 months from the due date of submission. Thus the Commission considers the carrying cost of Rs. 34272.00 lakh for the arrears only for period the from 01 .01.2013 i.e. the date of commencement of arrear in installments upto the compretion of 4g instailments.

3.28.3 As mentioned (b) in of paragraph 3.2g.1 above, WBSEDCL has craimed the carrying cost on regulatory asset created in APR order for 200g-10 from 01'04'2010 to 31.03.2012 and on regulatory asset created in ApR order for 2O1O-11 from 01.04.2011 to 31 .Og.2}12as foltows:

Carrying cost on Regulatory 01.04.2010 to asset as per APR for 2009-10 31.03.2012

01.04.2011 to 2011-12 asset as per APR for 2010-11 31.03.2012

West Bengal Electricity Regulatory Commission 41 -79

Order on APR of WBSEDCL for the year 2011-12

3.28.4 The Commission considers the carrying cost on Regulatory asset of Rs. 122801 lakh created as per ApR for 2009-10 for the period 20.11_12 only as the APR petition was submitted by WBSEDCL within 30.011.2010 as per provision of the Tarlff Regulations and the order on ApR 2009_10 was to be finalized by the Commission by 01 .04.201 1. Thus the carrying cost of Rs. 11150.00 Lakh computed @ 9.08% on Regutatory asset of Rs. 12280,l lakh period for the 2O11 - 2012 only is admitted by the Commission. The carrying cost of Rs. 9625.00 Lakh ctaimed by WBSEDCL for the period 2010_11 on Regulatory asset of Rs. 122g01.00 lakh has not been considered by the Commission due to the reasons stated above.

3.28.5 The carrying cost of Rs. 2722.00 lakh for the period 2011_12 as claimed by WBSEDCL on Regulatory asset of Rs. 29978.00 lakh created as per ApR for 2010-1 1 is not considered by the Commission as the ApR for 2010_.11 was submitted by WBSEDCL was only on 04.04.2012.

3 28.6 The commission do not consider the craim of WBSEDCL for carrying cost of Rs. 7264.00 lakh on the balance regulatory asset of Rs. g0003.g6 lakh as stated in (c) above as the amount of such release mechanism in number of instalments was proposed initially by the licensee itself after taking into consideration of different aspects.

3.28.7 Summing up the points discussed above in paragraph 3.2g.4,3.2g.S and 3.28.6 above, the Commission admits the carrying cost of Rs. 45422.00 lakh in the ApR tor 2011-12 and the entire amount is retated to distribution function as proposed by WBSEDCL.

Amount In Rs. lakh

As admitted in the APR for 20't't-'t2

Carrying mst for delayed remvery of anears on tarifl for the year 20'11-12 in 48 instalments

West Bengat Etectacity Regutatoffimmission 42 8o

Order on APR of WBSEDCL for the year 2011-12

b) Carrying mst on recoverable amount as per 24376.00 APR order for 2009-10 and 11150.00 2010-11

c) Carrying cost on balance recovery of regulatory asset 7264.00 0 for 80003.86 lakh

Total 95656.00 45422.00

3.29 Other expenses:

3.29.1 WBSEDCL has craimed in their ApR apprication for 2011-12 an amount of Rs. 233.00 ,Others, lakh under the head on account of loss of materials, compensation paid to staff on injury/death/damages, compensation paid to outsiders on injury/death/damages after adjusting the income relating to prior period. No amount was admitted in ARR in Tariff order for 2011_12. *BSEDCL has booked a, those expenditure in the annuar accounts for 2011- 12 under ,Other the head expenses & provisions,. Since those expenditures are rerating to other generar expenses those are to be cbnsidered in operation and maintenance head which is a controllable item and no amount was admitted in the ARR under this head separately, the Commission decides not to admit any amount under this head in the ApR 2011_12.

3.30 Research and Development expenses:

3.30.1 WBSEDCL in their ApR application for 2e11-12 has claimed an amount of Rs. 48.54 lakh ineurred by engaging agency for survey on consumer satisfaction under Research and Development head. Since these expenditures are rerating to administrative .and generar expenses that are to be considered in operation and mainrenance head which is a controflable item and no amount was admitted in the ARR under this head separately, the Commission decides not to admit any amount under this head jn the ApR 2011-12.

West Bengal Electricty Regulatory Commrssion 43 8t T

Order on APR of WBSEDCL for the year 201,1-,12

3.3'l Rates & Taxes:

3.31.1 WBSEDCL has craimed Rs. 138s.00 rakh under the head rates and taxes as against the admitted amount of Rs. 97.42 lakh in the ARR for 2011_12. fhe commission admits the actuar expenditure of Rs. 13gs.o0 rakh under this head in APR lor 2011-12 with a functionat breakup.of Rs. 20.00 lakh in .1365.00 generation and Rs. lakh in distribution

3.32 Allowable Fixed Charges in ApR for 20t l _ 2012:

3.32.1 Based on the foregoing anaryses, the totar amount of fixed charges aflowabre separately generation for and distribution functions of wBSEDCL has been shown in Annexure 34. As may be seen there_from, the allowable fixed charges come as under:

amount in APR for 2011-12

West Bengal Electricrty Regulatory Commtssion 44 82

L

Order on APR of WBSEDCL for the year 201 1-,12

ANNEXURE - 3A STATEME

Figures Rs Lakh Sl. No. PARTICULARS ls aourrreo rlreFnTon zoll-tz- GENERATION DISTRIBUTION TOTAL 1 Transmission charges to WBSETCL (STU) 000 72591.51 72591 .51 Transmission charges pGCtt (CTU) to 0.00 20253.00 20253.00 System operation charges pOSOCO to 0.00 588.00 588.00 4 Fees / Charges to ERPC 0.00 15.00 '15.00 Employee Cost 3535.02 87572.9a 91108.00 6 Cost of Outsourcing manpower related 0.00 8735 00 8735.00 7 Cost of Outsourcing excluding manpower 0.00 8256.02 4256.02 8 Operation & Mainrenance @&M;Effi.s . 4250 38 28057 09 32307 .47 I Complaint Management Mechanism 000 296.43 296.43 '10 Rates and Taxed 20.00 1365.00 '1385.00 1 lnsurance Premium 0.00 88.00 88.00 12 rLcresr en uaptrat Eorrowtngs 10923.73 24139.27 35063.00 !nterest on Pension Bonds for pension fund 650 2l 12354.75 13005 00 14 lnteresl on Consumer Security Deposits 0.00 9147.00 9147.OO 15 Other Finance Charges 21.00 539 00 560 00 16 lnterest on Working Capitat 0.00 000 17 Lease rental 0.00 0.0( 692.00 18 Depreciation 692.00 7210.( 26928.00 19 Bad Debt ono 20 Snpeirl Attaa.rl^^,-r-i;l 4.00 4.00 0.00 0.00 0.00 21 I o^ ulusr IrLurrle taxAct 0.00 000 22 Returns 0.00 000 52772.00 52712.00 un,oreseen Extgenctes 000 0.00 0.00 24 Carrying cost for swap power 1543 53 1543.63 z5 Release of Regulatory Asset 4417.0O 41083.00 45500.00 26 Carrying cost of Regulatory asset 000 45422.00 45422.00 27 Gross Fixed Charges 31027.38 442442.Aa 473170.06 Lessr Adjustments a lncome from lnvestmenf b Other Non-Tariff lncome 0.00 26795.00 26795.00 Benefits to be passed 28 d onlo conifrEE and other licensee 0.00 261.81 261.81 Ul Charges 0.001 4347.32 4347.32 f llnterest credit 0.001 1139.05 '1139.05 Sublotal 0.00f 32s43j8 32543.18 29 Net fixed charges (27-28) 31027.3a 409899.s0 i140926.88

West Bengal Etectricity Regutatory Commission 45 Yg

Order on APR of WBSEDCL for the year 2Ol,l -r2

CHAPTER - 4 AMOUNT ADJUSTABLE ON ANNUAL PERFORMANCE REVIEW

4.1 As shown at the concluding paragraph of the previous chapter, the re_determined allowable fixed charges for generation and distribution functions including retail selling activities of WBSEDCL for the year 201 1 - ZO12 come as under.

Particulars Amount (Rs. in Lakh) Generation Function 31027.38 Distribution Function 409899.50

Total 440926.88

4.2 As per audited statement of operating revenue of WBSEDCL for the year ended 31 .03.2012, the amount, realized from sale of energy lo consumers and the licensees, is Rs. 10887g3.00 lakh. The sales revenue earned by WBSEDCL during the year was found as under:

Revenue from power sale of as per Schedule - 16 of Statement of Accounts Less; Revenue recovered lrom sale to persons other than lo consumers and trcensees + swap out power

Revenue from sale of Energy to own consumer and other licensees

4.3 ln the APR order for 2O1O-11, Commission considers Rs. 46907.00 lakh being the arrear realizabre in 201 1-12 due to re-determination of tariff for the year 2010- 11 by the Commission on 31.12.2011 as sale revenue for 2O1O_11 though not accounted for in the Annual Accounts for 2010_11 as per submission of WBSEDCL to reduce the impact of ApR on the consumers. Now, the amount of Rs. 46907.00 lakh rearizabre in 2011-12 arready considered in sare revenue for

West Bengal Etectricity Regulatory Commission 46 Y/(

Order on APR ofWBSEDCL for the year 2011-12

2010-'T1 in the APR order for 2O1O-11 is to be deducted from the sale revenue of Rs. 1088793.00 lakh as computed above,

4.4 WBSEDCL in their ApR apprication for 2011 - 2012 has stated that in view of determination of tariff for the year 2011 - 2012 by the Commission on 01 .12.2012, an arrear amounting to Rs. 180419.00 lakh (includes subsidy of Rs. 28924.o0lakh receivabre from the state Government) has been accrued which is realizabre through subsequent energy bils in 4g monthry instafiments from the consumers ofWBSEDCL against sale of power during thq years 2O1O _ 2011 on account of tariff difference. WBSEDCL has stated to consider the said arrear revenue amount '180419.00 of Rs. lakh as income for the year 201 1 _ 2012 in the APR for 201'l - 2012 in order to reduce the impact of ApF on the consumers. A disclosure in this regard will be given in the annual accounts forthe 2012_2013. 4.5 The amount of total allowable variable costs for the year ZO11 _ 2012, as determined paragraph in 2.5.'r of order on Fuer and power purchase cost Adjustments (vide Order dated 23.01.2013 in Case No. FppCA-63/12_13) is Rs. 757138.10 lakh. The function-wise break-up of this total amount of Rs.75713g.10 lakh is as follows:

Rs. in Lakh Generation 61.43 Distribution 757076.67 Total: 757138.10

4.6 ln the tariff order for 2012 - 2013, the Commission adjusfed Rs. 4000.OO lakh in the ARR for 2012 - 2013 from the recoverable amount of Rs. i22800.69 lakh determined in APR for 2OOg - 2O1O and created a regulatory assel of balance amount of Rs. 118800.69 lakh. The Commission now considers lo release Rs. 24239.02|akh from the balance regulatory asset of Rs. 11gg00.69 lakh on ApR for 2009-10 created in the tariff order for 2012-13. After release of such regulatory asset, the balance of the regulatory asset on ApR for 2009-10 will be

West Bengal Etectricity Regulatory Commisst,on 47 85 +

Order on APR ofWBSEDCL for the year 2Ol1-,12

Rs. 94561.67 lakh. The other regulatory assets as created in the tariff order for 2012-13 will remain same.

4.7 Based on the analyses as done in the foregoing paragraphs, the amount adjustable on the instant case of ApR for the year 2011 _ 2012 works out as under:

sl Particulars Total No (Rs. in Lakh) 1 Variable cost allo!\€d (vide paragraph 4.5) 757138.10 2 Allowable net fixed cost (vjde paragraph a 1) 440926.88 5 Total realizabte sales revenG [3=JG 2)] '1198064.98 Total ! realizable amountlor Nl1 iTin 1198064.98 Less : Aclual Revenue realized 5 during tire year (vide Daraoraoh 4.2) 1088793.00 Add : Arrear revenue realized 6 in 2011_12but considEEO ln APR for 2010-1 1 vide paragraph 4.3 46907.00 Lessr Arrear revenue _ 7 to be realized in 2012 2013 onwards 2011-'12 (vide paragraph 4.4) 180418.00 Add : Retease of Part Regutatory asset of RiJ42DJf lakh (vide para 4.6) 24239.02 I Net amount recoverabte . [(8) = (4) (5)+(6).(7)+(Sl 0.00

4.8 Thus no amount is required to be adjusted wiih the amount of Aggregate Revenue Requirement of WBSEDCL for the year 2013 - 2014 on account of APR for 2010-'1 1 . The decision of the Commission regarding release of balance regulatory asset given wi be in the tariff order of WBSEDCL for the year 2013 _ 2014 ot that for any other ensuing year or in a separate order.

4.9 WBSEDCL is to take a note o, this order.

sd/- sd/- (SUJIT DASGUPTA) (PRASADRANJAN RAY) MEMBER CHAIRPERSON

DATE: 09.09.20,13

West Bengal Electricity Regulatory Commission- 48 c,r'".i1[F[*;: ldvocttc 16

BEFORE THE HON'BLE APPELLATE AT NEW \r."' Vu-tV (APPELLATE ruruSpr6r ,oT '\10! t x$\$ APPEAL NO.206 OF 2014; AppEAL NO.

IN THE MATTER OF:

WEST BENGAL ELECTzuCITY DISTRIBUTION COMPA}TY LIMITED ...APPELLANT VERSUS WEST BENGAL ELECTRICITY REGI.'LATORY COMMISSION & A},IR. ...RESPONDENT

INDEX

PARTICULARS MEMOONBEHffi

FTLED BY

COUNSEL FOR TEE APPELLANTS

FoTESAADVOCATES 8l/1, Ground Floor, Sri Aurbindo Mnrg, Adchini, New Delhi - ilO 017 Ph.: 0ll 663E 7000 nate: Jd.ll. 9016 - Place: Nao De-Q.0^i

Ccrtified to baltue Copy GJ"k c^\'"' L Advocate ANNEXURE- 2 87

BEFORE TIIE HON'BLE APPELLATE IRIEUNAL FOR ELECTRICITY AT NEW DELEI (APPELLATE JURISDICTION)

APPEAL NO. 206 OF 2014; AppEAL NO. 2r3 OF 2ol5 AND 267 OF 20rs

IN THE MATTER OF:

WEST BENGAL ELECTRICITY DISTRIBUTION COMPAT.IY LIMITED ...APPELLANT VERSUS WEST BENCAL ELECTRICITY REGULATORY COMMISSION & ANR. ...RESPONDENT

IVIOST RESPECTFULLY SHOWETH :

l ' The present Appears were risted for hearing before the Hon,bre Tribunar on 27. I L2018, wherein a submission was made by the Appellanr that the present set of Appeals have been pending before this Hon,ble Tribunal since 2014-t5. The Appellant humbly prayed thai these Appeals may be ::"#li: nilI} :J;.: "::L:H ::*.. 1":: holistic re-evaluation and reconsideration. The counsel appearing on behalf of the Ld. Srate Commission also submitted thar rh; Ld. Srate Commission would not b€ averse to re_looking inro the issues raised in rhe present Appeal afresh.

This Hon'ble Tribunal, after hearing both rhe panies, specifically directed that a Memo be filed in this regard, bringing on record the reliefsought.

3. Accordingly, the Appellant humbly submits rhar the preseot ser ofappeats has been pending before this Hon,ble Tribunal since 2014_15 and involve a very large number of highly technical issues. As the Ld. State Commission is open to reconsidering all the issues raised in the presenr set of appears' the Apperant resp€ctfulry pnys lhat it be pcmlitted to approach the Ld. State Commission fora holistic reconsideration ofall the issues raised in the present set ofAppeals on the basis that.

Certificd to be Txue CoPY (r.uk C'.h"'.-' Adv&ale 88 z )

(a) The delay in 'approaching the Ld. State Commission for reconsideration shall not stand in the way of reconsidering all the issues on the merits in so far as the preseDl appeals have remained pending before this Hon'ble TribunBl: and (b) The Appellant rvill have the libeny to approach this Hon'ble Tribunal again in the event it is still aggrieved after the reconsideration rundenahen by the Ld State Commission

It is respectfully srbmin€d that as per the speciEc direction of this Hon'ble Tribunal. an advance copy ofthe present lvlemo has been served upon the

Rcspondent and lntervener

5 In vicw ol the above submissions, this Hon'ble Tribunal may kindly be pleased to allorv the Appcllam o wiihdraw the Appeals and be permitted to opproach the Ld. State Commission for a holistic reconsideration of all

lhe issues raised in the pres€nt set ofAppeals on tlre basis that: (a) The delay in approaching the Ld. State Commission for reconsideration shall not stand in rhe rvay ol reconsidering all the issres on the merits in so far as the present appeals have remained pending b€tbr€ this Hon'ble Tribunal: and (b) The Appellant will have the libeny to approach this Hon'ble Tribunal again in tlrc event it is still aggrieved after the reconsideration undenaken by the Ld State Commission

COUNSEL FOR THE APPELLANTS

Fo ADVOCATES 8l/1, Ground Floor, Sri Aurbindo lvtrrg, Adchioi, Now Delhi - ll0 01? Pb.: 0l I - 6638 7000 Da/.et 2'l-- /t - 2ol8 Placc: /tlet r Da{l-i Y9 11A?DO1A Glrul - F$d: FtU A!0..1 20€ ol 2Ot4 a 2131267 ol2Ot5 | UASEOC| v V\rEnC I APiEt

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CoPY Ccrti6cd to bc !Yu? [v'a'' ffi***'* fi'*uV Attocate Q*"''* @*"-^ [iDtaNrn$5 ur{j0ulNAL li.o.ooslpe t* ^n^IDorrln"r,rc ANNEXURE. S 9o

COURT.I

IN THE APPELLATE TRIBUNAL FOR ELECTRICIry (Appellate Jurisdiction)

APPEAL NO. 206 OF 2014. APPEAL NO. 213 OF 2015 AND APPEAL NO. 267 OF 2015

Dated : 286 November. 20,18

Present: Hon'ble Mrs. Justice Manjula Chellur, Chairperson Hon'ble Mr. S.D. Dubey, Technical Member

ln the mafter of: West Bengal State Electricity Distribution Co. Ltd. .... Appellant(s) west Bengat Etectricity negutato.y cvoe;s;isssion a lnr. .... Respondent(s)

Counsel for the Appellant(s) : Mr. Sri Krishanan Venugopal, Sr Adv. Mr. Apoorva Misra Ms. Molshree Bhata Nagar Ms. Himahgini Mehta

Counsel for lhe Respondent(s) : Mr. C.K. Rai Mr. Sachin Dubey for R.'l

Mr. Gaurv Kumar for R.2

ORDER

We have gone through the memo daled 27 .11.201g filed by the learned senior counsel for the Appellants. Heard the Appellant,s senior counsel as well as the learned counsel for the Respondents. Since the

Respondent Nos.1 and 2 have no objection to allow the played relief sought in the memo, we permit the Appellant to withdraw the Appeats in order to approach the learned State Commission for a holistic

PaEe l of 2 Catilad to be Ttue coPY ff"uk t"u",' 9r reconsideration of all the issues raised in the present set of Appeals subject to:-

(a) The delay in approaching the Ld. State Commission for

reconsideration shall not stand in the way of reconsidering all

the issues on the merits in so far as the present appeals have

remained pending before this Tribunal, and

(b) The Appellant will have the liberty to approach this Tribunal

again in the event it is still aggrieved after the reconsideration

undertaken by the Ld. State Conimission.

Accordingly, Appeals are disposed of as withdrawn in terms of memo

dated 27.11.2018.

(S. D. Dubey) (Justice Manjula Chellur) Technical Member ChairPerson mUs

CogY Certi6cd to'be T:rue G.u r:;,*

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