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3.12 of the West Bengal APR-35/12-13 Appellate Tribunal

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3.12 of the West Bengal APR-35/12-13 Appellate Tribunal 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".
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