GUJARAT ELECTRICITY REGULATORY COMMISSION Tariff Order Truing up for FY 2011-12 and Determination of Tariff for FY 2013-14 For Uttar Gujarat Vij Company Limited Case No. 1283 of 2013 16th April 2013 1st Floor, Neptune Tower, Opp.: Nehru Bridge, Ashram Road Ahmedabad-380 009 (Gujarat), INDIA Phone: +91-79-26580350 Fax: +91-79-26584542 E-mail: [email protected] : Website www.gercin.org GUJARAT ELECTRICITY REGULATORY COMMISSION (GERC) AHMEDABAD Tariff Order Truing up for FY 2011-12 and Determination of Tariff for FY 2013-14 For Uttar Gujarat Vij Company Limited Case No. 1283 of 2013 16th April 2013 Uttar Gujarat Vij Company Limited Truing up for FY 2011-12 and Determination of Tariff for FY 2013-14 CONTENTS 1. Background and Brief History ........................................................ 1 1.1 Background ................................................................................................................. 1 1.2 Uttar Gujarat Vij Company Limited (UGVCL) ............................................................... 2 1.3 Commissions Order for the second Control period ...................................................... 3 1.4 Admission of the current petition and public hearing process ....................................... 3 1.5 Contents of this order .................................................................................................. 4 1.6 Approach of this order ................................................................................................ 5 2. Summary of UGVCL’s Submission ................................................. 7 2.1 Actuals for FY 2011-12 submitted by UGVCL .............................................................. 7 2.2 Summary of projected revenue gap till FY 2011-12 ..................................................... 7 2.3 Summary of projected revenue gap for FY 2013-14 .................................................... 8 2.4 UGVCL‟s request to the Commission: ......................................................................... 9 3. Objections raised by various stakeholders, UGVCL response and Commission’s comments ............................................................. 10 3.1 Public response to the Petition ................................................................................. 10 3.2 Common Objections / Suggestions to all DISCOMs ................................................. 10 3.3 Objections / Suggestions specific to UGVCL ............................................................. 36 4. Truing up of FY 2011-12 ................................................................. 44 4.1 Energy sales .............................................................................................................. 44 4.2 Distribution losses ..................................................................................................... 45 4.3 Energy requirement ................................................................................................... 46 4.4 Power purchase cost ................................................................................................. 48 4.4.1 Gains / losses due to distribution losses ............................................................. 50 4.5 Fixed Charges ........................................................................................................... 51 4.5.1 Operations and Maintenance (O&M) expenses for FY 2011-12 .......................... 51 4.5.2 Employee Cost ................................................................................................... 52 4.5.3 Repairs and Maintenance (R&M) expenses ........................................................ 53 4.5.4 Administration and General (A&G) expenses ...................................................... 54 4.5.5 Other Debits ........................................................................................................ 55 4.5.6 Extraordinary Items ............................................................................................. 55 4.5.7 Net prior period expenses / income ..................................................................... 56 4.5.8 Other expenses capitalized ................................................................................. 56 4.5.9 Capital expenditure, Capitalization and Funding of CAPEX ................................ 57 4.5.10 Depreciation ...................................................................................................... 58 4.5.11 Interest and Finance charges ............................................................................ 60 4.5.12 Interest on Working Capital ............................................................................... 63 4.5.13 Provision for bad debts ..................................................................................... 65 Gujarat Electricity Regulatory Commission Page v April 2013 Uttar Gujarat Vij Company Limited Truing up for FY 2011-12 and Determination of Tariff for FY 2013-14 4.5.14 Return on equity ................................................................................................ 66 4.5.15 Taxes ................................................................................................................ 68 4.5.16 Non-Tariff Income ............................................................................................. 69 4.6 Revenue from sale of power ...................................................................................... 70 4.7 ARR approved in the truing up ................................................................................... 71 4.8 Sharing of Gains / (losses) for FY 2011-12 ................................................................ 72 4.9 Revenue gap / surplus for FY 2011-12 ...................................................................... 74 4.10 Consolidated revenue gap of the Discoms for FY 2011-12 ...................................... 75 5. Aggregate Revenue Requirement for FY 2013-14 ........................ 78 5.1 Introduction ................................................................................................................ 78 5.2 Approved ARR for FY 2013-14 .................................................................................. 78 5.3 Projected Revenue from existing tariff for FY 2013-14 ............................................... 79 5.4 Estimated Revenue and Revenue gap/surplus for FY 2013-14 .................................. 79 6. Fuel and Power Purchase Price Adjustment ................................ 82 6.1 Fuel Price and Power Purchase Price Adjustment ..................................................... 82 6.2 Formula .................................................................................................................... 82 6.3 Base price of power purchase from various sources .................................................. 84 6.4 Base FPPPA charge fixed at 61 paise/unit ............................................................... 86 7. Wheeling charges and cross subsidy surcharge ......................... 88 7.1 Allocation matrix ....................................................................................................... 88 7.2 Wheeling charges ...................................................................................................... 89 7.3 Cross subsidy charges .............................................................................................. 90 8. Compliance of Directives ............................................................... 93 8.1 Compliance of Directives .......................................................................................... 93 8.2 New Directives........................................................................................................ 101 9. Tariff Philosophy and Tariff Proposals ....................................... 103 9.1 Introduction .............................................................................................................. 103 9.2 Proposal of UGVCL for tariff structure and changes in tariff structure ..................... 103 9.3 Commission‟s Analysis ............................................................................................ 104 9.4 Revenue Gap / Surplus ........................................................................................... 104 COMMISSION’S ORDER ................................................................... 106 ANNEXURE: TARIFF SCHEDULE FOR FY 2013-14 ........................ 107 Gujarat Electricity Regulatory Commission Page vi April 2013 Uttar Gujarat Vij Company Limited Truing up for FY 2011-12 and Determination of Tariff for FY 2013-14 LIST OF TABLES Table 2.1: Actuals submitted by UGVCL for FY 2011-12....................................................................... 7 Table 2.2: Projected Revenue Gap till FY 2011-12 ................................................................................ 8 Table 2.3: ARR, Revenue and Gap for FY 2013-14 .............................................................................. 8 Table 4.1: Category-wise actual sales for FY 2011-12 ........................................................................ 44 Table 4.2: Energy sales approved in truing up for FY 2011-12 ........................................................... 45 Table 4.3: Distribution losses considered for truing up for FY 2011-12 ............................................... 46 Table 4.4: Energy requirement and Energy balance as submitted by UGVCL for FY 2011-12