GUJARAT ELECTRICITY REGULATORY COMMISSION Tariff Order Truing up for FY 2018-19 and Determination of Tariff for FY 2020-21 For Madhya Gujarat Vij Company Limited (MGVCL) Case No. 1841 of 2019 31st March, 2020 6th Floor, GIFT ONE, Road 5C, Zone 5, GIFT CITY Gandhinagar-382 355 (Gujarat), INDIA Phone: +91-79-23602000 Fax: +91-79-23602054/55 E-mail: [email protected] : Website www.gercin.org GUJARAT ELECTRICITY REGULATORY COMMISSION (GERC) GANDHINAGAR Tariff Order Truing up for FY 2018-19, and Determination of Tariff for FY 2020-21 For Madhya Gujarat Vij Company Limited (MGVCL) Case No. 1841 of 2019 31st March, 2020 Madhya Gujarat Vij Company Limited Truing up for FY 2018-19 and Determination of Tariff for FY 2020-21 CONTENTS 1 Background and Brief History....................................................................................... 11 1.1 Background........................................................................................................... 11 1.2 Madhya Gujarat Vij Company Limited (MGVCL) ................................................... 11 1.3 Commission’s Orders for Approval of final ARR for FY 2016-17 and Approval of Multi- Year ARR for FY 2016-17 to FY 2020-21 ........................................................................ 12 1.4 Commission’s Order for Approval of True Up for FY 2016-17 and Determination of Tariff for FY 2018-19 ....................................................................................................... 13 1.5 Commission’s order for Approval of True up for FY 2017-18, Mid-Term Review of ARR for FY 2019-20 and FY 2020-21 and determination of Tariff for FY 2019-20 ........... 13 1.6 Background of the Present Petition ....................................................................... 13 1.7 Registration of the Petition and Public Hearing Process ........................................ 14 1.8 Approach of this Order .......................................................................................... 16 1.9 Contents of this Order ........................................................................................... 16 2 Summary of MGVCL’s Petition ..................................................................................... 18 2.1 Introduction ........................................................................................................... 18 2.2 True-Up for FY 2018-19 ........................................................................................ 18 2.3 Revenue gap for FY 2018-19 ................................................................................ 19 2.4 Summary of projected Revenue Surplus/(Gap) for FY 2020-21 ............................ 19 2.5 Request of MGVCL ............................................................................................... 20 3 Brief Outline of objections raised, response from MGVCL and Commission’s view ...... 21 3.1 Public Response to the Petition ............................................................................ 21 3.2 Suggestions/ Objections common to all DISCOMs ................................................ 21 3.3 Suggestions/ Objections pertaining to MGVCL ..................................................... 57 4 Truing up of FY 2018-19 .............................................................................................. 64 4.1 Energy Sales ........................................................................................................ 64 4.2 Distribution Losses ................................................................................................ 66 Gujarat Electricity Regulatory Commission Page i March 2020 Madhya Gujarat Vij Company Limited Truing up for FY 2018-19 and Determination of Tariff for FY 2020-21 4.3 Energy requirement .............................................................................................. 67 4.4 Power Purchase Cost ........................................................................................... 68 4.5 Fixed Cost............................................................................................................. 72 4.5.1 Operation and Maintenance (O&M) Expenses for FY 2018-19....................... 72 4.5.2 Capital Expenditure and Capitalization........................................................... 79 4.5.3 Depreciation................................................................................................... 84 4.5.4 Interest and Finance charges ......................................................................... 86 4.5.5 Interest on Working Capital ............................................................................ 89 4.5.6 Bad Debts Written Off .................................................................................... 90 4.5.7 Return on Equity ............................................................................................ 92 4.5.8 Income Tax .................................................................................................... 94 4.5.9 Non-Tariff Income .......................................................................................... 96 4.6 ARR approved in the Truing up for FY 2018-19 .................................................... 97 4.7 Revenue for FY 2018-19 ....................................................................................... 98 4.8 Revenue (Gap) / Surplus for FY 2018-19 .............................................................. 99 5 ARR and Revenue (Gap)/Surplus for FY 2020-21...................................................... 102 5.1 ARR for FY 2020-21 ........................................................................................... 102 5.2 Revenue from existing tariff FY 2020-21 ............................................................. 102 5.3 Revenue from FPPPA charges ........................................................................... 104 5.4 Other (consumer related) income ........................................................................ 107 5.5 Agriculture Subsidy ............................................................................................. 107 5.6 Total Expected Revenue for FY 2020-21 ............................................................ 108 5.7 Estimated Revenue (Gap)/Surplus for FY 2020-21 ............................................. 109 5.8 Consolidated Revenue (Gap)/Surplus of the State-Owned DISCOMs ................. 110 6 Compliance to Directives ........................................................................................... 113 6.1 Compliance to earlier directives .......................................................................... 113 6.2 Compliance to directives in the recent order ....................................................... 117 Gujarat Electricity Regulatory Commission Page ii March 2020 Madhya Gujarat Vij Company Limited Truing up for FY 2018-19 and Determination of Tariff for FY 2020-21 6.3 Fresh Directives .................................................................................................. 118 7 Fuel and Power Purchase Price Adjustment .............................................................. 119 7.1 Fuel Price and Power Purchase Price Adjustment .............................................. 119 7.2 Base Price of Power Purchase (PPCB) ............................................................... 119 7.3 Shifting of Base FPPPA ...................................................................................... 120 8 Wheeling Charges and Cross-Subsidy Surcharge ..................................................... 121 8.1 Allocation Matrix.................................................................................................. 121 8.2 Wheeling charges ............................................................................................... 122 8.3 Cross-Subsidy Surcharge ................................................................................... 123 9 Tariff Philosophy and Tariff Proposals ........................................................................ 125 9.1 Introduction ......................................................................................................... 125 9.2 Rationalisation of Tariff ....................................................................................... 125 9.2.1 Reduction in the Tariff for Lift Irrigation ........................................................ 125 9.2.2 Merging of Street Light and GLP Category .................................................. 126 9.2.3 Night Time Rebate ....................................................................................... 127 9.2.4 Relaxation to BPL category residential consumers ...................................... 128 9.2.5 EHV Rebate ................................................................................................. 128 9.2.6 Applicability of seasonal tariff ....................................................................... 129 Commission’s Order.......................................................................................................... 130 ANNEXURE: TARIFF SCHEDULE ................................................................................... 131 Gujarat Electricity Regulatory Commission Page iii March 2020 Madhya Gujarat Vij Company Limited Truing up for FY 2018-19 and Determination of Tariff for FY 2020-21 List of Tables Table 2-1: ARR proposed by MGVCL for FY 2018-19 True up (Rs. Crore) ........................ 18 Table 2-2: Revenue Surplus/ (Gap) as claimed by MGVCL