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To-Hukeri-2014 KARNATAKA ELECTRICITY REGULATORY COMMISSION TARIFF ORDER 2014 OF HUKERI RURAL ELECTRIC CO-OPERATIVE SOCIETY (Under MYT Framework) ON Annual Performance Review for FY13 & Approval of Revised ARR & Retail Supply Tariff for FY15 10th JULY 2014 6th and 7th Floors, Mahalaxmi Chambers 9/2, M.G. Road, Bangalore-560 001 Phone: 080-25320213 / 25320214 Fax: 080-25320338 Website: www.karnataka.gov.in/kerc / E-mail: [email protected] C O N T E N T S CHAPTER Page No. 1.0 Brief History of Hukeri Rural Electric Co-operative Society 2 Ltd., (HRECS) 1.1 HREC’s Profile 3 1.2 Background for Current filing 3 1.3 Public Hearing Process 3 2 Annual Performance Review for FY13 8 2.0 HREC’s Application for APR of FY13 8 2.1 HRECS’s Submission 8 2.2 Hukeri RECS Financial Performance as per Audited 9 Accounts for FY13 2.3 Annual Performance Review for FY13 9 2.4 Abstract of Allowable ARR for FY13 18 2.5 Average Cost of Supply 19 2.6 Revenue for FY13 20 2.7 Gap in Revenue 20 3 Revised Annual Revenue Requirement for FY15 23 3.0 Revised ARR for FY15 23 3.1 Annual Revenue Requirement for FY15 24 3.2 Capital Investment for FY15 24 3.3 Abstract of Approved ARR for FY15 36 3.4 Average Cost of Supply 37 3.5 Revenue for FY15 37 3.6 Gap in Revenue 38 3.7 Subsidy payable by GoK 39 4.0 Hukeri RECS Proposal and Commission’s Analysis for FY15 40 4.1 Tariff Application 40 4.2 Statutory Provisions guiding determination of Tariff 40 4.3 Consideration for Tariff setting 41 4.4 Revenue at existing tariff and deficit for FY15 42 4.5 Other Issues 69 4.6 Determination of Wheeling charges 69 4.7 Other tariff related issues 72 4.8 Effect of Revised Tariff 75 4.9 Summary of Tariff Order 2014 75 4.10 Commission’s Order 77 Appendix 78 ii LIST OF TABLES Table Content Page No. No. 2.1 Proposed ARR for FY13 8 2.2 Financial Performance of Hukeri RECS for FY13 9 2.3 O & M Expenses – Hukeri RECS submission 13 2.4 Normative O & M expenses for FY13 14 2.5 Allowable Uncontrollable O & M Expenses for FY13 14 2.6 Allowable O & M Expenses for FY13 15 2.7 Allowable Depreciation for FY13 15 2.8 Allowable Interest on Working Capital for FY13 16 2.9 Allowable Interest & Finance Charges for FY13 17 2.10 Approved RoE for FY13 18 2.11 Allowable consolidated ARR for FY13 19 2.12 Average Cost of Supply for FY13 19 2.13 Revenue from sale of power for FY13 20 2.14 Gap in Revenue for FY13 20 2.15 Additional Subsidy for FY13 22 3.1 Proposed ARR for FY15 23 3.2 Approved Retail Sales for FY15 29 3.3 O & M Expenses for FY15 – Hukeri society Proposal 31 3.4 Calculation of Weighted Average Inflation Index (WII) 32 3.5 Computation of Normative O&M expenses for FY15 32 3.6 Approved Depreciation for FY15 33 3.7 Approved Interest on Loans – FY15 34 3.8 Approved Interest on Working Capital for FY15 35 3.9 Approved Interest on consumer Deposits for FY15 35 3.10 Approved Interest & Finance Charges for FY15 35 3.11 Approved RoE for FY15 36 3.12 Approved consolidated ARR for FY15 37 3.13 Average Cost of Supply for FY15 37 3.14 Revenue at existing Tariff for FY15 37 3.15 Revenue Gap for FY15 39 3.16 Subsidy Payable by GoK – FY15 39 4.1 Revenue Deficit for FY15 42 4.2 Wheeling Charges 70 LIST OF ANNEXURES SL. DETAILS OF ANNEXURES PAGE NO. NO. 1 Electricity Tariff 2015 82 iii KARNATAKA ELECTRICITY REGULATORY COMMISSION BANGALORE-560001 Dated this 10th day of July 2014 APPROVAL OF ANNUAL PERFORMANCE REVIEW FOR FY13, REVISION OF ARR & TARIFF FOR FY15 OF HUKERI RECS. In the matter of: Application in respect of the Annual Performance Review for FY13, Revision of ARR & Tariff for FY15 under Multi Year Tariff framework of Hukeri RECS. Present: Sri M.R.Sreenivasa Murthy Chairman Sri H.D.Arun Kumar Member Sri D.B.Manival Raju Member ORDER Hukeri Rural Electric Co-operative Society, Hukeri, Belgaum District has filed its application for Annual Performance Review for FY13 on 20th December 2013. The Society has further filed a separate application dated 30th December 2013 for approval of Revised ARR and Retail Supply Tariff for FY15. In exercise of the powers conferred under Sections 62, 64 and other provisions of the Electricity Act, 2003, read with KERC (Terms and conditions for Determination of Tariff for Distribution and Retail Sale of Electricity) Regulations 2006, and other enabling Regulations, the Commission has considered the applications and the views and objections submitted by the consumers and other stakeholders. The Commission’s decisions are given in this Order. iv CHAPTER – 1 INTRODUCTION 1.0 Brief History of Hukeri Rural Electric Co-operative Society (HRECS) Hukeri Rural Electric Co-operative Society (HRECS) was established on 21st July 1969 as a rural electric co-operative society under the provisions of the Karnataka Co-operative Societies Act, 1959. Hukeri Rural Electric Co-operative Society (HRECS) is a Distribution Licensee under Section 14 of the Electricity Act, 2003 (herein after referred to as the Act) responsible for purchase of power, distribution and retail supply of electricity to its consumers in the Hukeri Taluk of Belguam District. At present the Society is catering to 109047 consumers. The distribution area of HRECs is divided into the following divisions: 1. Hukeri East 2. Hukeri West 3. Sankeshwar 4. Yamakanamaradi 5. Hidkal Dam The HRECS area has five numbers of 110 / 11 kV substations and two numbers of 33 / 11 kV sub-stations. v 1.1 HRECS’s Profile The profile of HRECS is as indicated below: As on 31.03.2014 Sl. Particulars Statistics No 1. Area Sq. km. 991.49 2. Consumers Nos 109047 3. Energy Consumption MU 284.87 4. Distribution Transformers Nos. 1864 5. Assets Rs. Crores 39.27 6. HT line Kms. 1200 7. LT line Kms. 3771 8. Revenue demand – FY14 Rs. Lakhs 10643.30 9. Revenue collection – FY14 Rs. Lakhs 10273.51 HRECS has filed its application for approval of APR for FY13 and revision of ARR and Retail Supply Tariff for FY15. HRECS’s proposals and the Commission’s decisions thereon are discussed in detail in the subsequent Chapters of this Order. 1.2 Background for Current filing: Hukeri RECS has filed its application for approval of APR for FY13 on 20th December, 2013 and revision of ARR and Retail Supply Tariff for FY15 on 30th December, 2013. The Commission, upon initial scrutiny, communicated its preliminary observations to HRECS on 10th January, 2014. HRECS has furnished its replies to the Commission on 18th January, 2014. 1.3 Public Hearing Process The Commission, in its letter dated 24th January 2014 has treated the application of HRECs as petition and directed HRECs to publish the vi summary of ARR and Tariff proposals in the newspapers and call for objections from the stakeholders. HRECS has published the same in the following newspapers: Name of the News Paper Date of Publication Vijaya Karnataka 8th & 9th February 2014 Kannadamma 7th & 9th February 2014 Vijayavani 9th & 10th February 2014 Indian Express 7th & 8th February 2014 Deccan Herald 8th & 9th February 2014 In response to the notifications published in the above newspapers, the Commission had not received any objections. In the meantime, in view of the notification of general elections to the Lok Sabha, the “Model Code of Conduct” was imposed from 5th March, 2014 and the polling in the State was scheduled on 17th April, 2014, and therefore, the public hearing of HRECS could not be conducted during March – April 2014. Further, the Commission had conducted public hearing on the Tariff Petitions of KPTCL and ESCOMs during 21st April, 2014 to 30th April, 2014 and issued Tariff Orders on 12th May, 2014. As the cost of power purchase of HRECS is based on the approved source wise power purchase cost of HESCOM, the Commission decided to determine the tariff of HRECS after finalisation of ARR and tariff of HESCOM. The Commission issued the public hearing notice in newspapers on 28th May, 2014 and held a Public Hearing on 6th June, 2014 at the Head office of Hukeri RECS at Hukeri. During the Public Hearing, the Resident Engineer of HRECS elaborated on the profile and performance of the Society. The Commission while appreciating the role of HRECS in electricity distribution suggested that the Society should improve its efficiency in terms of increasing reliability of vii power supply and reducing distribution losses. The Commission sought clarifications on the following points: [1] Details of Trade Receivables of Rs.47 Crores shown in the Accounts for 2012-13 without any details. [2] Payment of Advances to Contractors of Rs.6.92 Crores for RGGVY works and Rs.9.48 Crores for NJY Scheme for which HRECS did not create equivalent assets and has not furnished the progress of work so far undertaken. [3] RoE of Rs.10.49 Crores claimed on the Equity in the filing on the projected Paid-up Share Capital of Rs.4.93 Crores and Reserves and Surplus amounting to Rs.42.30 Crores, when the assets projected for FY15 were only Rs.39 Crores. [4] Action taken to realise arrears due from Rural and Urban Local Bodies of the order of Rs.4.88 Crores.
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