Retail Supply Tariff Order FY 2017-18 MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION 5th Floor, Metro Plaza, Bittan Market, Bhopal - 462 016 AGGREGATE REVENUE REQUIREMENT AND RETAIL SUPPLY TARIFF ORDER FOR FY 2017-18 Petition Nos. Petition No. 71/2016 PRESENT: Dr. Dev Raj Birdi, Chairman A. B. Bajpai, Member Alok Gupta, Member IN THE MATTER OF: Determination of Aggregate Revenue Requirement (ARR) and Retail Supply Tariff for FY 2017-18 based on the ARR & Tariff Petition filed by the Distribution Licensees namely Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Limited (East Discom), Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Limited (West Discom) and Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Limited (Central Discom), and Madhya Pradesh Power Management Company Limited (MPPMCL). Madhya Pradesh Electricity Regulatory Commission Page 1 Retail Supply Tariff Order FY 2017-18 Table of Contents A1: ORDER .............................................................................................................................. 6 A2: AGGREGATE REVENUE REQUIREMENT FOR FY 2017-18 OF PETITIONERS (EAST, WEST AND CENTRAL DISCOMS) .......................................................................... 14 Sales forecast as projected by the Petitioners ...................................................................... 14 Commission’s Analysis .......................................................................................................... 15 Energy Balance....................................................................................................................... 17 Commission’s Analysis ............................................................................................................17 Assessment of Energy Availability ...........................................................................................18 Assessment of Power Purchase Cost .......................................................................................29 Petitioners Submissions ...........................................................................................................29 Renewable Power Obligation (RPO) .......................................................................................45 Inter State Transmission Charges associated with existing capacities ...................................49 Capitalization and CWIP ...................................................................................................... 56 Commission’s Analysis on Asset Capitalization.................................................................. 57 Operations and Maintenance Expenses ............................................................................... 58 Petitioners Submissions ...........................................................................................................58 Employee Expenses ..................................................................................................................58 A&G Expenses .........................................................................................................................59 R&M Expenses .........................................................................................................................59 Commission’s Analysis on O&M Expenses ........................................................................... 60 Depreciation............................................................................................................................ 62 Petitioners Submissions ...........................................................................................................62 Commission’s Analysis of Depreciation ................................................................................ 62 Interest and Finance Charges ............................................................................................... 64 Petitioners submissions ............................................................................................................64 Commission’s Analysis of Interest and Finance Charges .................................................... 66 Interest on Working Capital ................................................................................................. 69 Petitioners Submissions ...........................................................................................................69 Commission’s Analysis of Interest on Working Capital ....................................................... 70 Interest on Consumer Security Deposit ............................................................................... 72 Petitioners Submissions ...........................................................................................................72 Commission’s Analysis of Consumer Security Deposit ......................................................... 72 Return on Equity.................................................................................................................... 72 Petitioners submissions ............................................................................................................72 Commission’s Analysis of Return on Equity ......................................................................... 73 Bad and doubtful debts ......................................................................................................... 74 Petitioners submissions ............................................................................................................74 Commission’s Analysis on Bad and Doubtful debts .............................................................. 75 Other Income .......................................................................................................................... 75 Petitioners submissions ............................................................................................................75 Commission’s Analysis on Other Income .............................................................................. 76 Segregation of admitted ARR between Wheeling and Retail Sale activities .................... 77 Madhya Pradesh Electricity Regulatory Commission Page 2 Retail Supply Tariff Order FY 2017-18 Aggregate Revenue Requirement (ARR) admitted by the Commission for FY 2017-18 78 Revenue from revised tariffs ................................................................................................. 79 A3: WHEELING CHARGES, CROSS SUBSIDY SURCHARGE AND ADDITIONAL SURCHARGE ............................................................................................................................. 81 A4: FUEL COST ADJUSTMENT CHARGE ..................................................................... 91 A5: PUBLIC SUGGESTIONS AND COMMENTS ON LICENSEES’ PETITIONS .... 96 A6: RETAIL TARIFF DESIGN ......................................................................................... 114 Legal Position ....................................................................................................................... 114 Commission’s Approach to Tariff Determination ............................................................ 114 Linkage to Average Cost of Supply .................................................................................... 114 A7: COMPLIANCE ON DIRECTIVES ISSUED IN TARIFF ORDER FOR FY 2016-17 122 Annexure-1 (List of Stakeholders) ..................................................................................... 141 Annexure-2 (Tariff Schedules for Low Tension Consumers) .......................................... 150 Annexure-3 (Tariff Schedules for High Tension Consumers) ......................................... 177 Madhya Pradesh Electricity Regulatory Commission Page 3 Retail Supply Tariff Order FY 2017-18 List of Tables Table 1 : Snapshot of the petition for FY 2017-18 (Rs. Crore) ...................................................... 7 Table 2: Public hearings.................................................................................................................. 8 Table 3: Distribution loss reduction trajectory as per Regulations ................................................. 8 Table 4: Status of feeder meterisation ............................................................................................ 9 Table 5: Status of meterisation of un-metered rural domestic consumers ...................................... 9 Table 6: Status of meterisation of agricultural DTRs ................................................................... 10 Table 7: ARR admitted by the Commission for FY 2017-18 (Rs. Crore) .................................... 11 Table 8: Category wise sale projected by Petitioners (MU) ......................................................... 15 Table 9: Category wise sale admitted by the Commission (MU) ................................................. 16 Table 10: Energy requirement for FY 2017-18 as proposed by Petitioners ................................. 17 Table 11: Loss targets as per Regulations (in %) ......................................................................... 17 Table 12: Power purchase requirement as worked out by the Commission ................................. 18 Table 13: Energy availability Projections ..................................................................................... 19 Table 14: MPPMCL allocated stations ......................................................................................... 19 Table 15: Stations which are considered by the Petitioners