ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION Singareni Bhavan, Red Hills,Lakdi-ka-pool,Hyderabad – 04 TARIFF ORDER Retail Supply Tariffs for FY 2010-11 In the Supply Areas of CENTRAL POWER DISTRIBUTION COMPANY OF A P LTD EASTERN POWER DISTRIBUTION COMPANY OF A P LTD NORTHERN POWER DISTRIBUTION COMPANY OF A P LTD SOUTHERN POWER DISTRIBUTION COMPANY OF A P LTD nd 22 July 2010 ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION Hyderabad Present Sri A. Raghotham Rao, Chairman Sri R. Radha Kishen, Member Sri C.R.Sekhar Reddy, Member Dated: 22-07-2010 O.P No: 09 of 2010 Central Power Distribution Company of Andhra Pradesh Limited and O.P No: 08 of 2010 Eastern Power Distribution Company of Andhra Pradesh Limited and O.P No: 07 of 2010 Northern Power Distribution Company of Andhra Pradesh Limited and O.P No: 06 of 2010 Southern Power Distribution Company of Andhra Pradesh Limited …Applicants These came up for public hearings before several consumers, the representatives of various consumer organizations, political parties and other stakeholders, on 30.06.2010 at Hyderabad (O P No: 09 of 2010), on 24.06.2010 at Eluru (O P No: 08 of 2010), on 28.06.2010 at Khammam (O P No: 07 of 2010), and on 23.06.2010 at Vijayawada (O P No: 06 of 2010), and having stood over for consideration till this day, the Commission passed the following common O R D E R 1 CHAPTER-I INTRODUCTION General 1. The four Distribution Companies (hereinafter referred to as the ‘distribution Licensees’ or ‘ Licensees ’) namely, the Eastern Power Distribution Company of A.P Limited (hereinafter, ‘APEPDCL’ or ‘EPDCL’), the Central Power Distribution Company of A.P Limited (hereinafter, ‘APCPDCL’ or ‘CPDCL’), the Northern Power Distribution Company of A.P Limited (hereinafter, ‘APNPDCL’ or ‘NPDCL’) and the Southern Power Distribution Company of A.P Limited (hereinafter, ‘APSPDCL’ or ‘SPDCL’), are the holders of Distribution and Retail Supply Licenses (Licenses No.12/2000, 13/2000, 14/2000 and 15/2000, respectively) to carry out the distribution business and the retail supply businesses in their respective areas of Andhra Pradesh for a period of 30 years from 01-04-2001. Regulation for Determination of Tariff 2. The Andhra Pradesh Electricity Regulatory Commission(APERC or Commission), issued Regulation 4 of 2005 on 14-11-2005 laying down the terms and Conditions for Determination of Tariff for Wheeling and Retail Sale of Electricity . 3. Regulation 4 of 2005 introduced Multi Year tariff framework and accordingly, each distribution licensee has to make the filings for its annual revenue requirement(ARR) along with its proposals for tariff (PFT) with the Commission for determination of tariff for (a)Wheeling (Wheeling Tariff henceforth) and (b) Retail Sale of Electricity (Retail Supply Tariff henceforth) for a period of 5 years ( called Control period).The second control period covers the years 2009-10 to 2013-14.The regulation also stipulated the methodology and formats in which the information is to be furnished for determination of tariff. Filings for Determination of Retail Supply Tariff on annual basis for 2010-2011 4. The wheeling tariffs were determined for the control period of 5 years, namely 2009 to 2014. However as regards the determination of retail supply tariff for the 5 year control period, the Licensee expressed its inability to make a filing for retail supply business for a period of 5 years from 2009-10 to 2013-14 as per MYT scheme and instead sought the approval of the commission to file ARR and PFT for the year 2009-10 only. The same was permitted by the Commission and accordingly the 2 filings were made and the retail supply distribution tariff was determined for the year FY 2009-2010 as per tariff Order dated 20-03-2009. 5. For the year under consideration, namely, Financial year 2010-11 too, the Licensees referred to uncertainties surrounding the lift irrigation schemes, Policy uncertainties and the power purchase agreements that are pending finalisation with a few generating stations. It was stated that in view of these circumstances, a reasonable prediction of their revenue requirement and sales cannot be made for the balance years till 2013-2014 to enable them to file ARR and tariff proposals for the remaining 4 years of control period at one go. They therefore sought permission of the Commission to allow them to submit their ARR and Tariff proposals for one year that is, for the year 2010-2011 only. The Commission permitted the Licensees to do so. Delay in filing of ARR and passing of Interim tariff order. 6. The Licensees were to file their annual ARR and tariff proposals for the year 2010- 2011 by 30th Nov 2009 so that 120 days are available to the ERC as per statute to determine and approve the tariff structure for the financial year 2010-11 commencing on 01-04-2010. The Licensees, however could not file the ARR and tariff proposals in time due to a number of uncertainties and they sought several extensions of time from the Commission vide their letters dated 30-11-09, 15-12- 09, 31-12-09, 30-01-10,15-02-10, 02-03-10,31-03-10. In the last extension letter, time was sought up to 30-04-2010. These requests were allowed. 7. In the meanwhile, as the previously approved tariff order was valid till 31-3-2010 only, the Licensees sought an interim order to permit them to continue to charge the consumers the same tariff that was charged in FY 2009-10. This interim order was sought for the period 01-04-2010 to 31-07-2010. 8. The estimated subsidy amount to be borne by the Government of Andhra Pradesh for these 4 months on account of maintaining the same level of tariff on sales to agriculture sector and other subsidised classes was communicated to the Government of AP by the Commission. The subsidy estimates were made on pro- rata basis for 4 months based on approved sales and tariffs applicable for the year 2009-2010. The Government of Andhra Pradesh, gave its consent / commitment to provide the subsidy to the Licensees. The Commission accordingly passed an interim order on 25-03-2010 enabling the Licensees to charge the tariff as per the 3 FY 2009-10 tariff schedule till 31-07-2010 or till a new tariff order is issued by the Commission and becomes effective. Filing of Tariff Proposals 9. The Licensees filed the Aggregate Revenue Requirement (ARR) and tariff proposals for their Retail Supply Businesses for the year 2010-2011 on 20-04-2010. The main feature of these proposals was that a tariff hike was proposed on certain categories of consumers w.e.f 01-08-2010. The Licensee LICENSEES had also subsequently submitted the detailed annexures to their ARR and TFP as per the formatted and prescribed tables on 07-05-2010. 10. The Commission initiated the tariff determination process by accepting the ARR and tariff proposals filed and assigned O.P numbers as under— O.P. No 09 of 2010 for APCPDCL. O.P No 08 of 2010 for APEPDCL. O.P. No 07 of 2010 for APNPDCL. O.P.No 06 of 2010 for APSPDCL. Notification calling for objections/suggestions 11. The Licensees were directed to serve public notices through a paper publication on 04.05.2010 , in two English and two Telugu newspapers informing the general public that they (Licensees) have filed before the Commission , the ARR and Tariff proposals in respect of their retail sale of electricity for FY 2010-11 and that copies of their filings together with supporting materials were available in the offices of the Chief General Manager, RAC, of the Licensees at their headquarters and also with all Superintending Engineers in charge of Operation Circles. This was to facilitate inspection/perusal/ purchase by interested persons. Suggestions/objections to the ARR and tariff proposals were sought and were to be filed by any interested person before the Licensees by 3rd June 2010. A copy of the suggestions/objections was also to be filed with the Secretary, APERC, by 03-06-2010. Objections/suggestions received 12. Following the public notice, about 234 Persons/organizations had sent their objections /suggestions to the Licensees and the Secretary, APERC, on the proposals of Licensees before the due date i.e.,03-06-2010. The list of objectors is given in Annexure-B to this Order. The Licensees were also directed to send 4 written replies to all the objectors before the scheduled public hearing of the concerned Licensee. The replies were also to be posted on their web site and a copy was to be made available to the Commission too. 13. The public hearings were scheduled as given in table 1 in next paragraph and a notice of the same was given to the Licensees, Government of Andhra Pradesh and was also adequately publicized through press release. Public Hearings 14. The Commission organised one Public hearing in a town/city within the jurisdictional area of each Licensee as detailed in table 1. All those persons who have filed their Objections/Suggestions were also intimated in writing about the schedule of the public hearings by the Commission. General public were also informed of the dates of public hearings on 10.06.2010 through a press release. At the hearings, the persons / organizations which had turned up at the venue directly without they filing either their objections or their requests to be heard in person earlier, were also accommodated. 15. During the hearings, The Licensees (LICENSEES) made a brief presentation on their respective filings and then the Commission heard all the objectors desiring to be heard in person.