case no. 165 of 2011

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400 005.

Tel. No. 022 22163964/65/69 – Fax 022 22163976

E-mail: [email protected]

Website: www.mercindia.org.in

Case No._165 of 2011

IN THE MATTER OF

Petition filed by The Tata Power Company Limited- Distribution Business (TPC-D) for

approval of its Multi Year Tariff Business Plan for the second Control Period (FY 2012-

13 to FY 2015-16)

Shri V. P. Raja, Chairman

Shri Vijay L. Sonavane, Member

Date: 26 August, 2012

ORDER

Upon directions from the Maharashtra Electricity Regulatory Commission (Commission or

MERC), The Tata Power Company Ltd.’s Distribution Business (TPC-D), submitted its

application for approval of the Multi Year Tariff (MYT) Business Plan for the second Control

Period from FY 2011-12 to FY 2015-16, under affidavit.

The Commission, in its First Amendment to Maharashtra Electricity Regulatory Commission

(Multi Year Tariff) Regulations, 2011 (hereinafter referred to as MERC MYT Regulations)

dated 21 October, 2011, has specified that for the Generating Company or Transmission

Licensee or Distribution Licensee for whom there is no order of exemption under Regulation

4.1 and if the Commission is satisfied that there is a difficulty in giving effect to the

determination of tariff with effect from 1 April, 2011 under these Regulations and in the

event tariff is required to be determined from 1 April, 2012 or any further period under these

Regulations, the repealed Regulations in respect of the said tariff determination shall continue

to be in-force, and the provisions of these Regulations shall not apply to the determination of

tariff for the period till 1 April, 2012 or such further period.

Further, pursuant to the First Amendment to the MERC MYT Regulations, the Commission

vide its letter dated 4 November, 2011 directed TPC-D to submit its Petition for approval of

mailto:[email protected]

http://www.mercindia.org.in/

Case No.165 of 2011 MERC Order for TPC-D Business Plan Petition for FY 2012-13 to FY 2015-16

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ARR for FY 2011-12, as per the MERC (Terms and Conditions of Tariff) Regulations, 2005

latest by 30 November, 2011. However, TPC-D is yet to submit the same as on date of

issuance of this Order.

In view of the above, the Commission, in exercise of the powers vested in it under Section 61

and Section 62 of the Electricity Act, 2003 (EA 2003) and all other powers enabling it in this

behalf, and after taking into consideration all the submissions made by TPC-D, issues raised

during the Public Hearing, and all other relevant material, approves the MYT Business Plan

for TPC-D for the second Control Period from FY 2012-13 to FY 2015-16 as under.


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Table of Contents

1 BACKGROUND AND BRIEF HISTORY ................................................................. 9

1.1 Evolution of Regulatory Regime for Distribution Tariff .......................................... 9

1.2 MERC MYT Regulations ...................................................................................... 10

1.3 Petition for MYT Business Plan Approval, Admission of The MYT Business Plan

Petition and Public Process .............................................................................................. 10

1.4 Organisation of the Order ...................................................................................... 12

2 OBJECTIONS RECEIVED, TPC-D’S RESPONSE AND COMMISSION’S

RULING .................................................................................................................... 13

2.1 Delay in Submission of MYT Business Plan Petition ............................................ 13

2.2 Maintenance of Separate Accounts ........................................................................ 14

2.3 Distribution Licence of TPC-D ............................................................................. 14

2.4 Power Procurement Plan ....................................................................................... 16

2.5 Power Purchase from TPC-G ................................................................................ 18

2.6 Power Purchase from Renewable Sources ............................................................. 20

2.7 Power Purchase Cost ............................................................................................. 21

2.8 Average Cost of Power Supply.............................................................................. 21

2.9 Standby Power from Lodhivali .............................................................................. 22

2.10 Capital Expenditure on Network Roll Out plan .................................................. 23

2.11 Cost of Parallel Network.................................................................................... 25

2.12 Distribution Losses ............................................................................................ 28

2.13 Transmission Losses .......................................................................................... 28

2.14 Number of Consumers ....................................................................................... 29

2.15 Classification of Consumers .............................................................................. 29

2.16 Discrimination among consumers ...................................................................... 30

2.17 Open Access Consumers ................................................................................... 33

2.18 Customer Service Centres .................................................................................. 34

2.19 Bill Payment Facility ......................................................................................... 36

2.20 Complaint regarding meters of Changeover Consumers ..................................... 36

2.21 Non-Tariff Income ............................................................................................ 37

2.22 Income from other Business .............................................................................. 37

2.23 Load Management Charges ............................................................................... 38

2.24 Consumer Awareness ........................................................................................ 38

2.25 Supply Margin ................................................................................................... 38

2.26 Scenario Analysis .............................................................................................. 40

2.27 Tariff Implications of the Business Plan ............................................................ 41


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2.28 Uniform Tariff ................................................................................................... 42

2.29 Power Factor Penalty ......................................................................................... 43

2.30 Participation of authorised Consumer Representatives in the proceedings .......... 43

2.31 Wrong Use of Terminology in MYT Business Plan ........................................... 44

2.32 Environmental Issues ......................................................................................... 44

2.33 Energy Accounting ............................................................................................ 45

2.34 Load Enhancement ............................................................................................ 45

2.35 Performance Indices .......................................................................................... 46

3 SALIENT FEATURES OF THE MYT BUSINESS PLAN PETITION ................. 48

3.1 Applicability of this Order from FY 2012-13 to FY 2015-16 ................................. 48

3.2 Premise for Business Plan ..................................................................................... 49

3.3 Business Overview of TPC-D ............................................................................... 50

3.4 MYT Business Plan Philosophy ............................................................................ 57

3.5 Brief Decription of the MYT Business Plan Petition ............................................. 59

3.6 Key Assumptions made by the Petitioner .............................................................. 60

4 MYT BUSINESS PLAN COMPONENTS ............................................................... 64

4.1 Market Assessment ............................................................................................... 64

4.2 Capital Investment Plan ........................................................................................ 68

4.3 Demand Side Management Plan ............................................................................ 78

4.4 Organisation Structure .......................................................................................... 81

4.5 Human Resource Plan ........................................................................................... 81

4.6 Human Resource Development Plan ..................................................................... 86

4.7 Risk Mitigation Plans ............................................................................................ 87

4.8 Risk Analysis and Mitigation ................................................................................ 87

4.9 Environment Policy and Initiatives ........................................................................ 88

4.10 Future Business Opportunities ........................................................................... 89

4.11 Corporate Social Responsibility ......................................................................... 89

4.12 Response to Business Challenges ...................................................................... 89

5 ARR COMPONENTS UNDER MYT BUSINESS PLAN ....................................... 91

5.1 Sales ..................................................................................................................... 92

5.2 Distribution Losses and Energy Input Requirement ............................................. 112

5.3 Power Purchase Plan ........................................................................................... 115

5.4 O&M Expenses ................................................................................................... 140

5.5 Capital Expenditure and Capitalisation ................................................................ 142

5.6 Depreciation........................................................................................................ 151

5.7 Interest Expenses ................................................................................................ 154

5.8 Return on Equity (RoE)....................................................................................... 160

5.9 Provision for Bad and Doubtful Debts ................................................................. 162


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5.10 Contribution to Contingency Reserves ............................................................. 164

5.11 Demand Side Management and Other expenses ............................................... 165

5.12 Income Tax ..................................................................................................... 167

5.13 Non-Tariff Income .......................................................................................... 169

5.14 Aggregate Revenue Requirement of TPC-D .................................................... 175

5.15 Approval Of MYT Business Plan Scenario ...................................................... 177

6 DIRECTIONS FOR FILING MYT PETITION FOR THE SECOND CONTROL

PERIOD ................................................................................................................... 186

6.1 Other Directions .................................................................................................. 187

APPENDIX -1 .............................................................................................................. 188

APPENDIX - 2 ............................................................................................................. 189


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List of Abbreviations

A&G Administrative and General

ACA Asset Condition Assessment

ACOS Average Cost of Supply

AMR Automated Meter Reading

AMRI Automatic Meter Reading Infrastructure

APR Annual Performance Review

ARR Aggregate Revenue Requirement

ASAI Average System Availability Index

ATE Appellate Tribunal for Electricity

AT&C Aggregate Technical and Commercial losses

BEE Bureau of Energy Efficiency

BEST Brihanmumbai Electric Supply & Transport Undertaking

BLY Bachat Lamp Yojna

CAGR Compound Annual Growth Rate

CAIDI Customer Average Interruption Duration Index

CAIFI Customer Average Interruption Frequency Index

Capex Capital Expenditure

CERC Central Electricity Regulatory Commission

CGRF Consumer Grievance Redressal Forum

CMR Customer Relationship Management

CPD Coincident Peak Demand

CRC Customer Relationship Centre

CSR Corporate Social Responsibility

CSS Customer Substation

DAS Distribution Automation System

DCC Distribution Control Centre

DPR Detailed Project Report

DR Demand Response

DSM Demand Side Management

DSS Distribution Substation

DTR Distribution Transformer

EA 2003 Electricity Act, 2003

ECS Electronic Clearing System

EE Energy Efficiency

EPP Energy Efficiency Power Plant

FAC Fuel Adjustment Cost


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FBSM Final Balancing and Settlement Mechanism

FIT Feed In Tariff

FY Financial Year

GERC Gujarat Electricity Regulatory Commission

GET Graduate Engineer Trainees

GoM Government of Maharashtra

GFA Gross Fixed Assets

G, T & D Generation, Transmission and Distribution

HHU Hand Hold Units

HO & SS Head Office and Support Services

HT High Tension

IBSM Interim Balancing & Settlement Mechanism

IDC Interest During Construction

IoWC Interest on Working Capital

LMC Load Management Charges

LT Low Tension

kVA Kilo Volt Ampere

kW Kilo Watt

kWh Kilo Watt hour

kWp Kilo Watt peak

LCC Load Control Centre

LEC Licensed Electrical Contractor

MVA Mega-Volt Ampere

MCGM Municipal Corporation of Greater Mumbai

MERC Maharashtra Electricity Regulatory Commission

MMRDA Mumbai Metropolitan Region Development Authority

MOP Ministry of Power

MSEDCL Maharashtra State Electricity Distribution Company Ltd.

MSLDC Maharashtra State Load Despatch Centre

MSMED Act Micro, Small Medium Enterprise Development Act

MU Million Units

MW MegaWatt

MYT Multi Year Tariff

MERC Tariff Regulations MERC (Terms and Conditions of Tariff) Regulations,

2005

MERC MYT Regulations, 2011 MERC (Multi Year Tariff) Regulations, 2011

NABL National Accreditation Board for Testing and Calibration


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Laboratories

NCPD Non-Coincident Peak Demand

OA Open Access

O&M Operation and Maintenance

OLA Outside Licence Area

PAN Permanent Account Number

PBT Profit Before Tax

PLF Plant Load Factor

PPA Power Purchase Agreement

R&M Repair and Maintenance

RE Renewable Energy

RInfra Reliance Infrastructure Limited

RoE Return on Equity

RPO Renewable Purchase Obligation

RPO Regulations MERC (Renewable Purchase Obligation, its Compliance

and implementation of REC framework) Regulations,

2010

RPS Renewable Purchase Specification

SAIDI System Average Interruption Duration Index

SAIFI System Average Interruption Frequency Index

SBI PLR State Bank of India Prime Lending Rate

SLDC State Load Despatch Centre

SMP System Marginal price

TDS Tax Deducted at Source

TOD Time of Day

TOSE Tax on Sale of Electricity

TPC The Tata Power Company Limited

TPC-D The Tata Power Company-Distribution Business

TPC-G The Tata Power Company-Generation Business

TPC-T The Tata Power Company-Transmission Business

TTSC Total Transmission System Cost

TVS Technical Validation Session

USO Universal Service Obligation

VAT Value Added Tax

WDV Written Down Value


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1 BACKGROUND AND BRIEF HISTORY

A Petition has been filed by The Tata Power Company Limited (TPC), for approval of the

MYT Business Plan for its Distribution Business (TPC-D), for the second Control Period

from FY 2011-12 to FY 2015-16, under Section 61 and 64 of the Electricity Act, 2003 and

Regulation 7 of the MERC MYT Regulations.

TPC-D has been granted a Licence by Government of Maharashtra (GoM) for the supply of

electricity in Mumbai, vide resolution No.: IEA-2001/CR-10509/NRG-1 dated 12 July, 2001.

After the enactment of Electricity Act 2003, the Commission had notified MERC (Specific

Conditions of Distribution License applicable to TPC-D) Regulations, 2008, and on the basis

of this licence TPC-D is entitled to sell, supply, and distribute electricity to the public for all

purposes in accordance with the provisions of the Act, which is valid up to 15 August, 2014.

1.1 EVOLUTION OF REGULATORY REGIME FOR DISTRIBUTION TARIFF

The Commission, in exercise of the powers conferred by the Electricity Act, 2003, notified

the Maharashtra Electricity Regulatory Commission (Terms and Conditions of Tariff)

Regulations, 2005, on 26 August, 2005. Subsequently, the Commission, considering the

requests made by the Utilities, vide its Order dated 20 December, 2005 in the matter of

Applicability of Multi Year Tariff Framework granted exemption for all the Utilities in

Maharashtra from implementation of MYT framework for FY 2006-07. The Commission, in

the said Order, stated that the Commission would determine the tariff under a Multi Year

Tariff framework with effect from 1 April, 2007 instead of 1 April, 2006 as stipulated in

MERC (Terms and Conditions of Tariff) Regulations, 2005 and accordingly, the first Control

Period for MYT framework shall be the three financial years from 1 April, 2007 to 31 March,

2010. The Commission, at the start of the first Control Period issued the MYT Order for each

Utility in the State, approving their ARR for each year during the Control Period. The

Commission subsequently issued the Annual Performance Review (APR) Orders for each

Utility in each year of the Control Period, which included truing up of the ARR of the past

year or (n-1)th year, provisional truing up of the ARR of current year or n

th year and

determination of revised ARR/tariff for the ensuing year or (n+1)th

year. The Distribution

Utilities for which such Orders were issued include Maharashtra State Electricity Distribution

Co. Ltd (MSEDCL), Distribution Business of The Tata Power Co. Ltd (TPC-D), Distribution

Business of Reliance Infrastructure Ltd (RInfra-D), and Brihanmumbai Electric Supply &

Transport Undertaking (BEST). The Commission has issued Orders determining such

Distribution Tariff from time to time on an annual basis.


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1.2 MERC MYT REGULATIONS

The Commission, in exercise of the powers conferred by the EA 2003, notified the

Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011,

(hereinafter referred as the MERC MYT Regulations, 2011) on 4 February, 2011. These

Regulations are applicable for the second Control Period starting from FY 2011-12 to FY

2015-16. The said Regulations were amended vide notification dated 21 October, 2011 called

Maharashtra Electricity Regulatory Commission (Multi Year Tariff) (First Amendment)

Regulations, 2011.

As per the said Amendment, the Commission has specified that for the Generating Company

or Transmission Licensee or Distribution Licensee for whom there is no order of exemption

under Regulation 4.1 and if the Commission is satisfied that there is a difficulty in giving

effect to the determination of tariff with effect from 1 April, 2011 under these Regulations

and in the event tariff is required to be determined from 1 April, 2012 or any further period

under these Regulations, the repealed Regulations in respect of the said tariff determination

shall continue to be in-force, and the provisions of these Regulations shall not apply to the

determination of tariff for the period till 1 April, 2012 or such further period.

1.3 PETITION FOR MYT BUSINESS PLAN APPROVAL, ADMISSION OF THE

MYT BUSINESS PLAN PETITION AND PUBLIC PROCESS

Pursuant to notification of MERC MYT Regulations, 2011 on 4 February, 2011, the

Commission vide letter dated 25 March, 2011 directed all Licensees and Generating

Companies to submit their MYT Business Plan and MYT Petition for the Second Control

Period from FY 2011-12 to FY 2015-16, latest by 31 March, 2011. TPC-D submitted its

MYT Business Plan Petition for the second Control Period under affidavit on November 29,

2011.

Subsequently, the Commission vide email dated 24 December, 2011 communicated the

preliminary data gaps identified in the Business Plan. The Commission scheduled a Technical

Validation Session (TVS) on TPC-D’s Petition for approval of MYT Business Plan for FY

2011-12 to FY 2015-16 on 27 December, 2011, in the presence of Consumer Representatives

authorised under Section 94 (3) of EA 2003 to represent the interest of consumers in

proceedings before the Commission wherein TPC-D was directed to submit the replies to the

preliminary data gaps along with the revised MYT Business Plan within one week to ten days

of the TVS. The list of individuals, who participated in the Technical Validation Session, has

been provided in Appendix-1. Subsequently, the Commission vide email dated 28 February,

2012 and 28 March, 2012 communicated additional data gaps identified in the MYT Business


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Plan Petition and also directed TPC-D to submit additional information and clarifications on

the issues raised during the TVS. TPC-D filed the revised MYT Business Plan Petition vide

its letter dated 9 April, 2012 after incorporating all required information, with the following

main prayers:

“

Approve the MYT Business Plan for the Distribution Business of the Tata Power

Company Ltd. for the Control Period (FY 2011-12 to FY 2015-16) in accordance

with Paragraph 7 of the Maharashtra Electricity Regulatory Commission (Multi

Year Tariff) Regulations, 2011.

Condone any inadvertent omissions/ errors/ shortcomings and permit Tata Power

to add/ change/ modify/ alter this filing and make further submissions as may be

required at a future date.

Any other relief that the Hon’ble Commission may deem fit.”

The Commission admitted the Petition of TPC-D on 17 April, 2012. In accordance with

Section 64 of the EA 2003, the Commission directed TPC-D to publish its MYT Business

Plan Petition in the prescribed abridged form and manner, to ensure adequate public

participation. The Commission also directed TPC-D to reply expeditiously to all the

suggestions and objections received from stakeholders on its Petition. TPC-D issued the

Public Notice in newspapers inviting suggestions and objections from stakeholders on its

MYT Business Plan Petition. The Public Notice was published in Hindustan Times (English),

The Indian Express (English), The Financial Express (English), Loksatta (Marathi) and

Pudhari (Marathi) newspapers on 20 April, 2012. The copies of TPC-D’s Petitions and its

summary were made available for inspection/purchase to members of the public at TPC-D’s

offices and on TPC-D’s website (www.tatapower.com). The copy of the Public Notice and

Executive Summary of the Petition was also available on the website of the Commission

(www.mercindia.org.in) in downloadable format. The Public Notice specified that the

suggestions and objections, either in English or Marathi, may be filed in the form of affidavit

along with the proof of service on TPC-D.

The Commission received written suggestions and objections on various issues. The Public

Hearing was held on 19 May, 2012 at 10:00 hours at Rangsharda Natya Mandir, Bandra

Reclamation, Bandra (W), Mumbai 400 050.

The list of persons who participated in the Public Hearing is provided in Appendix – 2.

http://www.tatapower.com/

http://www.mercindia.org.in/


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The Commission has ensured that the due process as contemplated under the law to ensure

transparency and public participation was followed at every stage meticulously and adequate

opportunity was given to all the persons concerned to file their say in the matter.

Various suggestions and objections that were raised on TPC-D’s Petition after issuance of the

Public Notice both in writing as well as orally during the Public Hearing, along with TPC-D’s

response and the Commission’s rulings have been detailed in Section 2 of this Order.

1.4 ORGANISATION OF THE ORDER

This Order is organised in the following five Sections:

Section 1 of the Order provides a brief history of the quasi-judicial regulatory process

undertaken by the Commission. For the sake of convenience, a list of abbreviations with

their expanded forms has been included.

Section 2 of the Order lists out the various suggestions and objections raised by the

objectors in writing as well as during the Public Hearing before the Commission. The

various suggestions and objections have been summarized issue-wise, followed by the

response of TPC-D, and the rulings of the Commission on each of the issues.

Section 3 of the Order summarises the salient features of the MYT Business Plan Petition

filed by TPC-D.

Section 4 of the Order discusses the MYT Business Plan components, Key issues and

Commission’s Ruling on the same.

Section 5 of the Order details the views of the Commission on the projection of ARR

components as submitted by TPC-D for the purpose of MYT Business Plan Approval.

Section 6 of the Order provides necessary directives to TPC-D for filing MYT Petition

for the second Control Period.


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2 OBJECTIONS RECEIVED, TPC-D’S RESPONSE AND

COMMISSION’S RULING

2.1 DELAY IN SUBMISSION OF MYT BUSINESS PLAN PETITION

Shri. Sandeep Ohri, one of the authorised Consumer Representatives for this Case, submitted

that in the present Petition, TPC-D is seeking ‘approval’ for its MYT Business Plan for the

second Control Period of five years from FY 2011-12 to FY 2015-16, however, the first year,

i.e., FY 2011-12 is already over. He asked TPC-D to submit the reasons for such delay.

TPC’s Response

TPC submitted that it is pertinent to note that the MERC MYT Regulations, 2011, which

stipulate the submission of five-year MYT Business Plan, were notified on February 4, 2011.

TPC submitted that the said Regulations required submission of a five-year Business Plan

from FY 2011-12 to FY 2015-16 based on the norms approved in these Regulations. Further,

a detailed plan for the proposed capex and capitalisation for the Control Period was to be

submitted to the Commission along with several other Forms that were to be filled as a part

of MYT Business Plan. TPC submitted that such detailed Plan requires lot of deliberation and

it has submitted the MYT Business Plan in October, 2011 (however, the Commission

directed TPC-D to submit the MYT Business Plan in the form of a Petition, which was

submitted by TPC-D on 29 November, 2011) after putting considerable amount of time and

effort.

Commission’s Ruling

Pursuant to notification of the MERC MYT Regulations, 2011 on 4 February, 2011, the

Commission vide letter dated 25 March, 2011 had directed all Licensees and Generating

Companies to submit their MYT Business Plan and MYT Petition for the Second Control

Period from FY 2011-12 to FY 2015-16, latest by 31 March, 2011.

As regards treatment of the submissions made by TPC-D for FY 2011-12 under this MYT

Business Plan, the Commission vide its letter dated 4 November, 2011 directed TPC-D to

submit its ARR and Tariff Petition for FY 2011-12 as per MERC (Terms and Conditions of

Tariff) Regulations, 2005. However, TPC-D has not complied with this direction and has not

filed its Petition for approval of ARR for FY 2011-12, in accordance with MERC (Terms and

Conditions of Tariff) Regulations, 2005. The Commission has issued certain directions in this

regard to TPC-D in the relevant Sections of this Order, regarding submission of ARR for FY

2011-12.


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2.2 MAINTENANCE OF SEPARATE ACCOUNTS

Shri Raksh Pal Abrol, Shri Vinayak G. Joshi, and Nagari Nivara Parishad enquired whether

TPC-D has complied with Regulation 71 of MERC MYT Regulations, 2011, which specifies

separation of accounts for Wires and Retail Supply Business and also provides for

preparation of “Allocation Statement” for these Businesses. They enquired from TPC if it has

been maintaining separate accounts for its Wires and Supply Business.

TPC’s Response

TPC-D submitted that the present Petition is for approval of MYT Business Plan of TPC-D

in which it has presented separate computation of Fixed Charge for Wires Business and

Supply Business and the issue of preparation of ‘Allocation Statement’ shall not arise in this

case.


TPC-D has submitted its projected expenses relating to Wires Business and Supply Business

separately in the MYT Business Plan Petition in accordance with the MERC MYT

Regulations, 2011, and as prescribed in the Formats for the Control Period.

As regards the Allocation Statement, the Commission is of the view that the same is not

required in case of the present Petition which is for approval of MYT Business Plan of TPC-

D and is not a Tariff Petition. TPC-D will be required to submit the same, along with its

MYT Petition, while seeking truing up of expenses and revenues for the respective years.

2.3 DISTRIBUTION LICENCE OF TPC-D

Shri Sandeep N. Ohri submitted that TPC-D’s Distribution Licence expires in two years, i.e.,

August 15, 2014, and in such a scenario if the MYT Business Plan Petition is approved by the

Commission it will imply automatic ‘renewal’ of its licence. He further submitted that the

Electricity Act, 2003 does not permit renewal of Licence and the same has already been

showcased in the case of RInfra. He further submitted that TPC-D may not apply for a fresh

Distribution Licence, and in this scenario, the significance of approving the MYT Business

Plan Petition at this stage may have to be considered.

On similar lines, Shri Raksh Pal Abrol also submitted that Section 14 of the EA 2003 does

not empower the Commission to amend the expired licence and only a fresh licence for 25

years can be issued under this Section.


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Shri Ramchandra Narayan Patkar, Shri Arun Jagtap, and Smt. Shreeya Kulkarni representing

Siddhi Electricals submitted that in the month of August 2011, the Commission has rejected

the Licence Application of four Companies namely, Torrent, Indiabulls, Lanco and MSEDCL

stating that:

“it does not conform to aspects relevant to grant of distribution license, on account of

lack of action plan for geographical coverage and time frame for rolling out its own

distribution network in the area of supply for which the license is sought for.”

Smt. Kulkarni further submitted that if TPC-D is a Distribution Licensee under the provisions

of the Electricity Act, 2003 then the basis on which the Applications of above mentioned four

Companies were rejected should be applicable to TPC-D also. She enquired whether the

Commission can initiate proceedings for cancellation of TPC-D’s licence on the basis that it

does not have a full fledged network and has also failed to submit a roll out plan.

TPC-D’s Response

TPC submitted that it has considered the implication of the expiry of the licence in the MYT

Business Plan and it has been assumed that the licence of TPC-D would continue (through re-

application) till the end of the Control Period and beyond.


The Commission has taken into account the objectors' concerns regarding the expiry of

TPC’s distribution licence since, there is no provision under the Electricity Act, 2003 for the

renewal of the Distribution Licence. However, for the purpose of MYT Business Plan, the

Commission has assumed that the Business is an on-going business, and is approving the

Business Plan for the Control Period from FY 2012-13 to FY 2015-16 subject to grant of

licence to TPC for distribution of electricity after expiry of its current licence. Further, the

issues relating to grant of Distribution Licence to TPC-D beyond August 2014 would be

addressed, based on TPC-D's Application and after following due regulatory process.

As regards network development in Mumbai Suburbs, the issue of changeover and network

addition by TPC-D was the subject matter of another proceeding before the Commission in

Case No. 151 of 2011, and the Commission has issued its Order in Case No. 151 of 2011 on

22 August, 2012. TPC-D has to ensure that the rulings of the Commission in Case No. 151 of

2011 are complied with and supply is given to consumers in accordance with the provisions

of the EA 2003 and the applicable Rules and Regulations. Further, the Commission directs

TPC-D to submit details of capital expenditure for network development separately for

RInfra and BEST area. It is clarified that network development by TPC-D in BEST area is

subject to the proceedings in Civil Appeal No. 4223 of 2012 pending before the Hon’ble

Supreme Court.


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2.4 POWER PROCUREMENT PLAN

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that the MERC MYT Regulations,

2011 specifies the manner in which the Power Procurement Plan for the MYT Period needs

to be considered by the Commission. They submitted that the Regulations give an impression

that it is imperative for the Distribution Licensee to identify the source of power while

submitting the Power Procurement Plan. Shri Vinayak Joshi further submitted that bilateral

power purchase and purchases from imbalance pool cannot be part of the Power Procurement

Plan, however, TPC-D has submitted that these two sources account for 10% of the total

requirement. He requested the Commission to direct TPC-D to identify the source of supply

while approving the Power Procurement Plan. He further requested the Commission to

disallow bilateral power purchase and purchase from Imbalance Pool as the same is not

envisaged in MERC MYT Regulations, 2011. He added that dependence on short-term power

purchase sources leads to unrestricted power purchase at higher price and ultimately the

consumer is made to bear the high cost.

It was further suggested that if 75% of the average demand and 25% of the peak demand is

considered as base for the power purchase quantum, it will provide around 10% cushion and

the Distribution Licensee will not have to resort to unrestricted short-term procurement even

if 10% of the identified sources fail to deliver power.

He further asked the Commission to direct TPC-D to include the following in its MYT

Business Plan:

i. Plans regarding augmentation of its existing generation capacity over next five years.

ii. Plans for setting up new generation plants in India over next five years.

iii. The likely increase in the Generation capacity in the country over the next five years

which will be available for sourcing the power for Mumbai Licence area.

Shri Sandeep Ohri and Shri Raksh Pal Abrol submitted that from the Power Procurement

Plan shown in the Petition, it is observed that though the allocated capacity from TPC-G has

remained constant at 985 MW from FY 2012-13 to FY 2015-16, an increase of 12.5% in MU

terms has been shown in the MYT Business Plan Petition. They enquired regarding the basis

for showing an increase in MU from 5100 MU in FY 2012-13 to 5740 MU in FY 2015-16

when the allocated capacity in MW is expected to remain constant at 985 MW from FY

2012-13 to FY 2015-16.

Shri Bapat submitted that oil prices have changed 14 times in two years while the Bank Rate

has changed 12 times in 15 months. He added that the coal prices have already risen and in


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such scenario, estimation of power purchase cost and tariff for five years is not very

meaningful.

Shri Ponrathnam, Shri George John, Shri Mahesh Vaswani and advocate Shri Arun Jagtap

submitted that the Commission had directed TPC-D to explore all the possible sources for

procuring reliable power at reasonable rate and TPC-D should be considerate about

protecting consumer interest and supply electricity at reasonable rates to all the consumers.

TPC-D’s Response

TPC-D replied that bilateral power purchase contracts are essentially in the nature of short-

term contracts of less than one year, hence, it is difficult to identify the short-term sources of

power, i.e., the bilateral power purchase for the entire five year Control Period, as a part of

this MYT Business Plan.

TPC-D further submitted that it has considered that about 4% of the total power purchase

quantum would be available through the Imbalance Pool, which is based on its experience

during the period from April 2011 to September 2011. TPC-D added that in any case, even if

the power available through the Imbalance Pool is considered to be a part of short-term

bilateral power purchase, it will not have any impact on the power purchase cost as the rate

considered for both, i.e., bilateral power purchase and Imbalance Pool, is the same.

TPC-D submitted that it has not been able to understand the relevance of considering 75% of

the average demand and 25% of the peak demand for the computation of power purchase

quantum, as suggested by the objector. TPC-D clarified that it has computed its energy

requirement at G < > T interface and has planned its power purchase accordingly.

TPC-D further submitted that in case of forced outage of generation capacity, it has proposed

for an arrangement of standby power from MSEDCL and Tata Power-Lodhivali. TPC-D

added that if additional quantum of up to 10% of the total requirement is tied up through

long-term sources, as suggested by the objector, it will only add to the fixed cost of power

purchase and therefore, it has not proposed any additional reserve capacity and it would await

the directions of the Commission in this regard.

TPC-D added that it does not have any generation capacity and it does not plan to set up any

generation capacity during the MYT Control Period. TPC-D submitted that most of its power

requirement is met through power purchase from TPC-G, details of which have been

provided in the MYT Business Plan.


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TPC-D submitted that it appreciates the request of the Objector to include information about

the likely increase in the generation capacity in the country over the next five years, which

will be available for sourcing power for the Mumbai Licence area. However, this requires a

detailed study of all the generation capacities coming up in the country and their likelihood of

commissioning during the MYT Control Period. TPC-D further submitted that this will also

require estimating demand growth in the country to estimate the surplus/deficit capacity and

will be a separate exercise in itself, which may not be a part of the MYT Business Plan. TPC-

D added that it awaits the direction of the Commission in this regard.

TPC submitted that it has identified the sources of power purchase for the MYT Control

Period and the same have been listed in the MYT Business Plan Petition. TPC further

submitted that it has in the MYT Business Plan Petition, submitted the justification with

respect to the estimation of power purchase rates from various sources.


The detailed analysis of power purchase expenses for the period from FY 2012-13 to FY

2015-16 is given in Section 5.3 of this Order. TPC-D should take all measures to ensure that

the power purchase expenses are optimised. Further, as mentioned earlier, the Commission

has directed TPC-D to submit its ARR for FY 2011-12 as per the MERC Tariff Regulations,

2005 as a separate section in its MYT Petition for FY 2012-13 to FY 2015-16.

2.5 POWER PURCHASE FROM TPC-G

Shri Bapat submitted that in Table No. 8 of the Executive Summary, TPC-D has indicated

that the power purchase rates from TPC-G are projected to increase from Rs. 4.54/kWh in FY

2011-12 to Rs. 5.25/kWh in FY 2013-14, and again reduce to Rs. 4.12/kWh in FY 2015-16.

He asked TPC-D to submit the reasons for this change in the rates of power purchased from

TPC-G.

Shri Sandeep Ohri submitted that Fixed Charges of TPC-G Unit 8 are projected to increase

from Rs. 107 Crore in FY 2011-12 to Rs. 170 Crore in FY 2015-16. He enquired as to why

the total Fixed Charges of Unit 8 are projected to increase by 28% in the first year, i.e., from

Rs. 214 Crore in FY 2011-12 to Rs. 274 Crore in FY 2012-13, whereas subsequent increase

is negligible, i.e., to Rs. 283 Crore in FY 2015-16.

Shri Sandeep Ohri further submitted that similarly, the Energy Charges of Unit 8 of TPC-G

are also projected to increase from Rs. 215 Crore in FY 2011-12 to Rs. 335 Crore in FY

2015-16. He enquired as to why the total Energy Charges are projected to increase by 24% in


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the first year, i.e., from Rs. 430 Crore in FY 2011-12 to Rs. 531 Crore in FY 2012-13,

whereas subsequent increase is negligible, i.e., to Rs. 559 Crore in FY 2015-16.

TPC’s Response

TPC-D replied that the rate of power purchase from TPC-G has been considered based on

TPC-G's MYT Business Plan Petition submitted for approval to the Commission. TPC-D

further submitted that TPC-G has proposed to convert Unit 6, which is presently run on Oil

and RLNG, to a coal-fired Unit and since, coal is a relatively cheaper fuel, it is expected that

the cost of generation from FY 2015-16 will reduce. Hence, TPC-D has projected a reduction

in the cost of power purchase from TPC-G from that year.

As regards the significant increase in the Fixed Charges and Energy Charges of Unit 8, TPC

submitted that the increase is on account of the increase in capacity contracted from Unit 8.

TPC submitted that in FY 2011-12, only 200 MW (average) (100 MW to TPC-D and 100

MW to BEST) from Unit 8 was contracted on regulated basis during FY 2011-12 and

therefore, Fixed Charges of Rs. 214 Crore proposed by TPC-G for FY 2011-12 are for a

capacity of 200 MW of Unit 8; whereas the Fixed Charges in the future years are for 250

MW capacity, hence, a substantial increase in Fixed Charges is felt between first and second

year of the Control Period.

Further, the Energy Charges equivalent to 200 MW of regulated capacity have been

considered in FY 2011-12, whereas capacity considered for FY 2012-13 onwards is the entire

installed capacity of 250 MW. Hence, the difference between Energy Charges in FY 2011-12

and FY 2012-13 appears to be substantial.


The Commission has approved the MYT Business Plan of TPC-G through Order dated 9

August, 2012 in Case No. 166 of 2011, on the basis of which TPC-G is required to file a

MYT Petition for the second Control Period. The cost of power purchase from TPC-G has to

be considered in accordance with the tariffs to be approved for TPC-G's various Units on the

basis of the above-said MYT Petition to be filed by TPC-G. Further, as explained by TPC-D,

the increase in the incidence of Fixed Charges and Energy Charges payable to Unit 8 of TPC-

G over the years, is on account of increase in the Contracted Capacity from Unit 8.


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2.6 POWER PURCHASE FROM RENEWABLE SOURCES

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that in the past it has been seen that

none of the Distribution Licensees are in a position to fulfil their RPO obligations and the gap

is met by short-term power purchases. They further suggested that since the dependence on

short-term power purchase sources are not good as far as consumer interest is concerned,

hence, the Commission should reconsider the RPO obligations, keeping in view the past

performances and overall scenario in India. They added that it would be prudent to include

only 50% of the target RPO, i.e., 3.5% to 4.5% from RPO while the balance should be from

identifiable sources.

Shri Bapat submitted that from the MYT Business Plan, it is observed that the power

purchase from renewable sources is projected to increase from 430 MU in FY 2011-12 to 660

MU in FY 2013-14 and 738 MU in FY 2015-16, and it is doubtful whether such quantum of

Renewable Energy would be available.

Shri Ulhas Chaudhary suggested that the Renewable Energy sources for Mumbai should be

generated in Mumbai by using the rooftops.

TPC’s Response

TPC-D submitted that it has always been meeting its RPO except in FY 2010-11. TPC-D

submitted that it has provided its proposed plan to procure power from Renewable Energy

sources and details of RE power tied-up in the MYT Business Plan Petition. TPC-D further

submitted that the REC market is developing and is expected to mature over a period of time

and the same is expected to facilitate TPC-D in meeting the RPO for the untied quantum.

TPC-D also added that it has purchased about 188,390 RECs (equivalent to RE component

for 188.39 MU) in FY 2011-12.

TPC-D submitted that it agrees with the suggestion that generation through rooftop solar

should be explored in Mumbai. TPC-D added that in line with its commitment towards

promotion of renewable energy, it has set up a 60 kWp rooftop solar (installed at Carnac

Bunder) through Tata Power-Solar at preferential tariff determined by the Commission.


The detailed analysis of projected power purchase expenses for FY 2012-13 to FY 2015-16

including purchase from RE sources are given in Section 5.3 of this Order. Moreover, the

RPO obligations have been specified under separate Regulations, viz., MERC (Renewable

Purchase Obligation, Its Compliance and Implementation of REC Framework) Regulations

2010 and cannot be amended through this process.


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2.7 POWER PURCHASE COST

Shri Vinayak Joshi submitted that the cost of incremental unit in FY 2011-12 is Rs.7.88/

kWh, which is projected to increase to Rs.8.22/ kWh and Rs.10.59/ kWh in FY 2012-13 and

FY 2013-14, respectively. He submitted that there is no explanation for the increase in power

purchase cost in the MYT Business Plan except the working in Form-2. He further added that

TPC-D has submitted the share of Utility in the cost of generation without giving details of

PPA between TPC-D and TPC-G and also the Power Purchase Plan submitted by TPC-D

provides no information about the obligations of TPC-D under PPA with TPC-G to purchase

the additional units at such a high incremental cost.

TPC’s Response

TPC submitted that the approach followed by the Objector for computing the increase in

power purchase cost is incorrect, as the increase in power purchase cost is primarily on

account of two factors, viz., (i) increase in quantum of power purchase, and (ii) increase in

rate of power purchase. TPC-D submitted that the Objector has not taken into account the

increase in rate of power purchase, and therefore, the computations leads to distorted figures

of marginal power purchase cost.

TPC-D submitted that it has provided details of capacity contracted (in MW) by TPC-D from

TPC-G and TPC-D’s share (in MU) in total generation of TPC-G on page 72 of the MYT

Business Plan Petition. TPC-D added that the cost of power to be purchased from TPC-G is

considered same as that presented by TPC-G in its MYT Business Plan Petition.


The detailed analysis of power purchase expenses for the period from FY 2012-13 to FY

2015-16 are given in Section 5.3 of this Order.

2.8 AVERAGE COST OF POWER SUPPLY

Shri George John submitted that the MYT Business Plan Petition contains mostly technical

explanations, which a normal consumer is unable to understand. He submitted that the

Average Cost of Supply being higher than the average cost of generation is not acceptable

since, the distribution losses are included separately and the wheeling charges are also billed

separately. He submitted that he had recomputed the Average Cost of Supply (AcoS) for

TPC-D for the entire Control Period from FY 2011-12 to FY 2015-16 and requested the

Commission to consider and approve the same. He also suggested that TPC-D may be

requested to give comparable figures for the past two years in a column to the left for

reference as done in Balance Sheet, etc., while publishing the Public Notice for

ARR/APR/Truing up,


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Shri Bapat enquired regarding the reasons for projected increase in Average Cost of Supply

from Rs. 5.85/kWh in FY2011- 12 to Rs. 6.65/kWh in FY 2013-14 and then a decrease in

FY 2015-16 to R. 5.97/kWh.

TPC’s Response

As regards the suggestion with respect to smoothening of the increase in Average Cost of

Supply over the future years, TPC-D submitted that it may always be prudent to recover the

cost of supply in the year it is incurred rather than deferring it, as it adds the interest burden in

future years. TPC added that the decision regarding the same lies with the Commission at the

time of tariff determination.

TPC submitted that it has used an effective and rational basis for projecting each component

of the cost of supply during the MYT Control Period. TPC-D submitted that the assumptions

and the norms considered for projection of Average Cost of Supply (ACOS) have been

explained in detail in the MYT Business Plan Petition and the changes in the ACOS can be

appreciated only after analyzing the changes in the individual components of the ACOS.


The Commission has analysed in detail all the components of the ARR and hence, the ACOS,

as detailed in subsequent Sections of this Order. However, the actual ARR for the Control

Period will be approved as part of the MYT Order based on the MYT Petition to be filed by

TPC-D, and the ACOS will also be calculated in the MYT Order, and has not been computed

in the present Order.

2.9 STANDBY POWER FROM LODHIVALI

Shri Bapat submitted that in the Executive Summary of the MYT Business Plan, TPC-D has

cited that on September 29, 2011, 1275 MW of generation was unavailable and help was

taken from Lodhivali for 32 MW and around 150 MW of load was shed. He enquired from

TPC-D regarding the gap between 1275 MW and 182 MW, which has not been accounted

for.

Shri Raksh Pal Abrol submitted that TPC-D should not be allowed the projected standby

charges since, as it is having its own standby arrangement, it does not require to pay for the

same to MSEDCL and also does not have any PPA with RInfra for power supply. He further

added that since TPC-D has terminated its relations with RInfra and also TPC-G has set up its

own Power Generation Plant for outages purpose at Trombay Thermal Power Station, RInfra


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can have their own arrangement for standby and the consumers of TPC-D should not be

burdened with these charges.

TPC’s Response

TPC-D submitted that in its MYT Business Plan Petition, it has mentioned that generation

capacity of 1275 MW was not available to service the entire Mumbai Licence Area, on the

particular day. However, to compensate for this loss, generation from other Units was picked

up and power was drawn from the intra-State system. In spite of this, there was a shortage of

about 180 MW which was partially addressed through 32 MW from Lodhivali and partially

through rotational load shedding.


The Commission’s observations and ruling as regards standby support from Lodhivali are

detailed in Section 5.3 of this Order.

2.10 CAPITAL EXPENDITURE ON NETWORK ROLL OUT PLAN

As regards the capital expenditure on the network roll out plan, Shri Vinayak Joshi and

Nagari Nivara Parishad submitted that TPC-D, in its MYT Business Plan, has not indicated

clearly the total capital investment required to complete the network roll out plan as

envisaged by the Commission, i.e., replacing the usage of RInfra’s network and for the

proposed new development in RInfra’s licensed area. They submitted that the MYT Business

Plan also does not reflect the impact of completion of the network roll out plan on the supply

cost of TPC-D as the elements will include additional expenses like depreciation, interest,

ROE, R&M cost, HR cost, etc. Shri Ramchandra Narayan Patkar also submitted that TPC-D

has failed to submit the network roll out plan in its MYT Business Plan Petition.

Shri Vinayak Joshi requested the Commission to approve a Capital Investment Plan, which in

the long run will not be detrimental to the interest of the consumers and such Plan should

ensure efficient, co-ordinated, and economical distribution system when implemented. Shri

Manoj Mishra submitted that TPC-D, in its MYT Business Plan, has mentioned that there are

no specific guidelines on network development in the same area by two parallel licensees for

optimum network, yet it continues to undertake capital expenses for network laying.

Shri Mahesh Vaswani, Advocate, High Court, asked TPC-D to submit its detailed network

development plan for its huge licence area in Mumbai. He submitted that the network

development should be first done for existing consumers and then new consumers. He further

suggested that TPC-D should submit its roll out plan in slum areas and should proportionately


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lay out its network in both low growth areas and high growth areas instead of just focussing

on network development in high growth areas.

Shri Ganesh Khankhar, ALMANAC and Smt. Shreeya Kulkarni representing Siddhi

Electricals, submitted that from the Network Development Plan of TPC-D, it has been

observed that TPC-D has proposed to lay network only in areas where there is growth and

enquired whether Universal Service Obligation was not applicable to TPC-D.

Shri Rakshpal Abrol enquired from TPC-D whether it has approached the State or Municipal

Authorities for allocation of space or any developers of societies or commercial and industrial

estates to provide land for setting up CSS and DSS that have been proposed in its MYT

Business Plan.

Shri Bapat also submitted that as a Distribution Licensee, TPC-D (under universal obligation

to supply) will have to cater to any and all prospective consumers. The challenges TPC will

face would be to include laying of distributing and service mains cables in congested areas

and narrow by lanes (e.g. Kalbadevi, Masjid Bunder) where Utilities – water, telephone

cables, have choked up. He further submitted that the distribution substations will

occupy/require space, which is very scant if at all available.

TPC’s Response

TPC-D submitted that it has submitted the network development schemes to the Commission

for its approval by submitting a Detailed Project Report and the network of TPC-D has been

laid based on the schemes approved by the Commission. Further, the issue of duplication of

network has to be analysed based on a greater study by a competent authority as well as the

obligations of a Distribution Licensee under the provisions of the Electricity Act 2003 and

other Regulations.

TPC-D clarified that ‘Growth area’ as mentioned in the MYT Business Plan does not mean

high end consumer areas, rather, it indicates areas where load is increasing rapidly and

network augmentation is required to meet the growing load. TPC-D added that network

rollout with a focus on growth areas may ensure optimum network development.

TPC-D submitted that it has been applying to both MMRDA and MCGM for allotting the

space for DSS in the City Development Plan. TPC-D further submitted that it is also

approaching various developers and builders for allocation of space for DSS and CSS, and

agreed with the observation as regards the challenges faced by TPC-D in this regard.


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As regards the network roll-out plan, TPC-D replied that it has submitted an optimistic

network rollout plan, which can be seen on page 424 to page 442 of the MYT Business Plan

Petition.


The Commission has approved the Capital Investment Plan based on the in-principle

approved schemes and in accordance with the MERC MYT Regulations, 2011. However, the

Commission has made its observations in this Order regarding the network roll out plan and

capitalisation projected during the MYT Control Period in Section 5.5 of this Order.

This issue of changeover and network addition by TPC-D was the subject matter of another

proceeding before the Commission in Case No. 151 of 2011, and the Commission has issued

its Order in Case No. 151 of 2011 on 22 August, 2012. TPC-D has to ensure that the rulings

of the Commission in Case No. 151 of 2011 are complied with and supply is given to

consumers in accordance with the provisions of the EA 2003 and the applicable Rules and

Regulations. Further, the Commission directs TPC-D to submit details of capital expenditure

for network development separately for RInfra and BEST area.

2.11 COST OF PARALLEL NETWORK

Shri Sandeep Ohri, Smt. Amruta Deshmukh, and Shri Jaywant T. Lad submitted that since

RInfra has agreed to share its network with TPC-D, it would not be appropriate to burden the

consumers by laying parallel network in such areas and subsequently require the consumers

to pay more for the network for which they have already paid once.

Shri Manoj Mishra, Shri Shripad Kamlakar Kulkarni, and Shri Raj Kumar Sharma

representing ALMANAC, submitted that laying of parallel network would be against the

principle of economical utilization of resources, which would add up to the infrastructure cost

and ultimately the consumers will have to bear the brunt with rise in tariff every year.

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that the additional cost because of

completion of network roll out plan will be more than the “wheeling charges” that are being

paid to RInfra and in such a scenario, the additional cost will not be justifiable compared with

the wheeling charges that the changeover consumers are paying to TPC-D. Referring to

RInfra’s objection regarding laying of parallel network by TPC-D as stated in the Tariff

Order dated 29 July, 2011, Shri Vinayak G. Joshi enquired about the impact of complete

parallel network of TPC-D, on RInfra’s Wires cost and the extent to which the network of

both the Licensees will remain under-utilized once 100% network roll out is completed by

TPC-D in the area of RInfra. He further enquired from the Commission if it has undertaken


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any exercise to ensure that the two parallel networks, which will come into existence, will be

optimum and beneficial to the consumers and will further help the two Distribution Licensees

to fulfil the obligations under Section 42(1) of the Electricity Act, 2003.

Shri Jacob from Maine Electrical Works, Minerva Premise Co-Op. Soc. Ltd. and Shri Bapat

enquired if TPC-D has proposed to lay a parallel network in BEST’s licence area similar to

that in RInfra’s licence area. Shri Bapat also enquired about the wheeling and cross subsidy

surcharge applicable to such consumers.

Shri Raksh Pal Abrol submitted that the distribution licence of RInfra expired on August 15,

2011. He submitted that the cost of laying the distribution system up to the meter of

consumers has already been recovered by RInfra (30% prior to installation and balance

during the licence period under the approved Tariff charged). He enquired whether RInfra is

still entitled to have the wheeling charges and wheeling losses through TPC-D after August

15, 2011. He added that there is no clarification about the levy of wheeling losses and

wheeling charges applicable after August 15, 2011 and cross subsidy provided to the

consumers. He further submitted that TPC-D should clarify this issue in its MYT Business

Plan.

Shri Ponrathnam submitted that if the load as envisaged in the MYT Business Plan is not

achieved, the Wheeling Charges may shoot up depending upon the load factor of the network.

He further submitted that in today’s scenario wherein consumers are burdened with wheeling

charges, wheeling losses, regulatory asset charge and cross subsidy surcharge, the consumers

who opt for supply from TPC-D find TPC-D’s wires cheaper. He added that in case the

Wheeling Charges of TPC become higher than the Wheeling Charges of RInfra, it will result

in reduction of load on TPC’s Wires, which will further enhance the wheeling charges for

TPC.

Shri Ravindra K. Kadam submitted that although the power supply from TPC-D is cheaper

compared to that of RInfra, yet the changeover consumers have to pay higher bills on account

of wheeling charges.

TPC’s Response

TPC-D submitted that it has proposed the network development schemes to the Commission

for its approval by submitting a Detailed Project Report and the network has been laid based

on the schemes approved by the Commission. TPC-D further submitted that the issue of

duplication of network has to be analysed based on a study by a competent authority after


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considering the obligations of a Distribution Licensee under the provisions of the Electricity

Act 2003 and other Regulations.

As regards laying of parallel network in RInfra’s Licence area, TPC-D submitted that the

same is the subject matter of Case No. 151 of 2011, which is presently sub-judice before the

Commission; hence, it would not comment on the same.

TPC-D further submitted that for the purpose of MYT Business Plan, it has not considered a

scenario of using the network of BEST for the purpose of wheeling in the parallel licence

area. However, whether it is allowed the use of network of BEST for wheeling the supply of

TPC-D will depend on the Judgment of the Hon’ble Supreme Court in respect of the appeal

filed by BEST against the ATE’s Judgment dated April 4, 2012 in Appeal No. 149 of 2010

and further, the same will also depend on the Order, if any, passed by the Commission for

implementation of the Supreme Court’s Judgment.

As regards laying of network in South Mumbai area, TPC-D submitted that in the Order

passed by the Hon’ble Supreme Court dated 10 May, 2012 in Civil Appeal No. 4223 of 2012

wherein for the interim, Tata Power-D is not allowed to acquire any new consumer and

release electric supply in South Mumbai area, which is covered by licence area of BEST. In

view of this stay order, TPC-D is restricted from laying network in the South Mumbai area.


Section 2(17) of the EA 2003 mandates a "Distribution Licensee" to operate and maintain a

distribution system for supplying electricity to the consumers in his area of supply and

Section 42(1) mandates that the duty of a distribution licensee is to develop and maintain an

efficient, co-ordinated and economical distribution system in his area of supply and to supply

electricity in accordance with the provisions contained in the said enactment. Hence, a

distribution licensee is mandated to “develop”; “operate” and “maintain” a distribution

system for supplying electricity to the consumers in his area of supply. The act of

supplying electricity to the consumers in the area of supply cannot be dehors the duty to

“develop”; “operate” and “maintain” a distribution system.

Hence, the Act requires each Distribution Licensee to have its own distribution system for

supplying electricity to consumers in its area of supply. TPC also will have to set up its

own distribution network in its area of supply, and the utilisation of the existing

distribution network of RInfra-D for supplying to change-over consumers is only an

interim solution, till such time TPC sets up its own network. The issue of network roll out by

TPC-D in the Licence area common to RInfra and TPC, and duplication of network was the

subject matter of another proceeding before the Commission in Case No. 151 of 2011, and


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the Commission has issued its Order in Case No. 151 of 2011 on 22 August, 2012. TPC-D is

required to abide by the rulings of the Commission in Case No. 151 of 2011.

2.12 DISTRIBUTION LOSSES

Shri Raksh Pal Abrol and Shri Sandeep Ohri showed their concern regarding the increasing

trajectory of distribution losses projected by TPC-D and asked TPC-D to submit the reasons

for the doubling of distribution losses during the Control Period from FY 2011-12 to FY

2015-16.

Shri Mahesh Vaswani submitted that on one hand, TPC-D has been rejecting supply to low-

end consumers and on the other hand, supply to the same low-end consumers have been cited

as the reason for increasing distribution losses. He added that the Distribution Licensees

should submit the details of the distribution losses incurred.

Aishwarya Builders & Developers and Mr. Raj Kumar Sharma representing ALMANAC

suggested that as TPC-D’s existing network is very limited, it can design/plan new network

in a more efficient and modern way to avoid/reduce losses. They further submitted that TPC-

D, in its Business Plan, has projected higher losses with increase in sales and since the

projected losses are increasing by around 80% (1.25% to 2.25%) it will have a direct

implication on tariff resulting into a tariff hike.

TPC-D’s Response

TPC submitted that it has projected an increase in distribution loss of 0.25 % per annum

keeping in mind the projected addition of network to the existing network. TPC requested the

Commission to consider the appropriate loss level, for making projections.


For the purpose of the MYT Business Plan, the Commission has approved the distribution

losses trajectory as discussed in Section 5.2 of this Order.

2.13 TRANSMISSION LOSSES

Shri Ulhas Chaudhari suggested that TPC-D should supply 218 MW hydro power to

MSEDCL for supply to agricultural and BPL category consumers and in turn it can procure

power from Uran Gas Project. He added that this will help in reducing the transmission loss.

TPC-D’s Response

TPC-D submitted that the hydro power has been tied up with TPC-D and BEST and hence, it

may not possible to supply to agriculture consumers in MSEDCL area. TPC-D further


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clarified that the transmission loss will not be altered, even by swapping the power sources,

as the transmission loss is the composite figure for the entire State of Maharashtra.


Firstly, this issue is not within the scope of the present Petition, which has been filed by TPC-

D for approval of its MYT Business Plan, whereas the suggestion relates to diversion of the

hydro generation capacity of TPC-G. Secondly, the Hon'ble Supreme Court has ruled that the

Generating Company is free to enter into Power Purchase Agreements with whomsoever it

chooses to do so, hence, no directions can be given to TPC-G in this regard. Thirdly, the

suggested measure will not help in reducing the transmission losses, as electricity is supplied

by displacement method, and the electricity generated is consumed locally, with the energy

accounting being done by MSLDC.

2.14 NUMBER OF CONSUMERS

Shri Raksh Pal Abrol submitted that TPC-D has not mentioned its consumer base in its MYT

Business Plan. Further, TPC-D has only been able to add about 2,50,000 consumers in

Mumbai suburbs after 15 October, 2009, out of 27,00,000 consumers in Mumbai Suburbs.

TPC-D’s Response

TPC-D submitted that it has provided the estimated addition of consumers in Form 3.2 of the

MYT Business Plan Petition. TPC-D submitted that it has estimated a total of about 4,28,000

consumers to either changeover or switchover from other Licensees to TPC-D by FY 2015-

16.


As regards consumer base, TPC-D has projected the number of consumers as given in Form

F3.2 of the MYT Business Plan Petition. Further, as regards addition of consumers in

Mumbai Suburbs, the Commission has considered addition of 50,000 residential consumers

(consuming 0-300 units per month on an average) every year from FY 2012-13 to FY 2015-

16. The detailed analysis of the sales approved by the Commission for the period from FY

2012-13 to FY 2015-16 is given in Section 5.1 of this Order, which includes the details of

number of consumers considered against each consumer category.

2.15 CLASSIFICATION OF CONSUMERS

Shri Sandeep Ohri and Shri Ponrathnam, submitted that classification of consumers into

direct consumers, new consumers and switchover consumers is a new terminology introduced

in the Business Plan Petition by TPC-D and the same is not in compliance with Section 62(3)

of the Electricity Act, 2003.


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Shri Ponrathnam asked TPC-D to submit the basis on which it has categorized the consumers

as commercial and industrial, when historically it had only one category, viz., Non-domestic

category. Shri Raksh Pal Abrol also submitted that the Commercial Categories and Industrial

Categories have not been defined under any notified Regulations or under the Tariff Policy

and have been imposed separately. He further submitted that no provision of law has been

quoted for defining the Commercial and Industrial Consumers and that no NOC is applicable

for these consumers defined under any applicable Central Act or State Act.

TPC-D’s Response

TPC submitted that it has not proposed a new category of ‘switchover consumers’ and the

classification has been done only for the purpose of arriving at the demand projections based

on the anticipated demand of various consumer categories.

TPC submitted that the objection regarding categorisation between commercial and industrial

categories raised by the objector is outside the scope of the present Petition, which is for the

approval of MYT Business Plan and not for tariff determination.


It may be noted that though the Commission has considered the classification between

'changeover' and 'switchover' consumers for the purposes of projections as elaborated in

Section 5.1 of this Order, this should not be seen as approval or acceptance by the

Commission for this classification.

2.16 DISCRIMINATION AMONG CONSUMERS

Shri Anil Palande, Shri Dinesh Tripathi, Shri Shaikh Gayasuddin, Shri Ganesh Khankar and

some others submitted that TPC-D is cherry picking its consumers and is not willing to

accept applications given by small consumers, and is only interested in taking big giants.

They submitted that this policy adopted by TPC-D hinders the growth of competition in the

sector and deprives the consumers of the benefits arising out of such competition.

On similar lines, Shri Vikram Patel submitted that on the one hand, TPC-D rejects the

applications of low-end consumers citing excuses like space requirement for substation and

on the other hand, commercial and industrial consumers are proactively approached to give

power supply without asking space for substation. He added that TPC-D’s policy of cherry

picking is evident from its consumer mix wherein maximum consumers are either of

commercial category or industrial category while very few consumers belong to the

residential category. He requested the Commission to derive some formula by way of which


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all the residential subsidized consumers may be divided equally between the three

Distribution Licensees in the suburban area.

Shri Hussain Khan, Shri Dinesh Tripathi, Shri Sunil Chavan, Shri Sanjeet Singh, Shri

Namdev Malore, and Smt Sneha Wadke, submitted that TPC-D has rejected the changeover

and switchover applications of many low-end consumers mostly residing in the slum areas

from Borivali East, Malad, Kandivali, etc., without any valid reasons leading to violation of

the Universal Service Obligation by the Distribution Licensee, and also depriving the poor

people of cheaper power available in the suburban area of Mumbai.

Shri Balkrishna.S. Amre, Shri Sikander, Shri Deepak Israni, Smt. Vandana Sable, and some

others, submitted that many changeover applications have been rejected by TPC-D on the

grounds like non-submission of requisite documentation such as PAN Card as identity proof

from low income people, category wise consumption, no network in particular areas, space

requirement for substation, etc.. They enquired whether it is compulsory to produce a PAN

Card as identity proof and why Ration Card was not being accepted by TPC-D towards

identity proof. Shri Yadav enquired whether there are some guidelines from the Commission

to accept/reject the changeover applications on the basis of category wise consumption.

Shri Chandrakant Mudras, and Smt Sheetal Shah submitted that TPC-D should focus more in

improving consumer awareness regarding various requirements for changeover and

switchover, etc., so that the consumers do not have to face rejection of applications on the

basis of incomplete or improper documentation.

AWESIS Electronics & Electricals submitted that TPC-D should open its office in slum areas

to educate the low-end consumers regarding various benefits it is giving to its consumers.

Shri Shaikh Gayasuddin suggested that TPC-D should provide supply to changeover

consumer on the basis of photocopy of the RInfra bill only.

TPC-D’s Response

TPC-D submitted that in compliance with the Interim Order of the Commission in Case No.

50 of 2009 dated October 15, 2009, TPC-D requires the necessary documents from the

consumers (including changeover consumer).

TPC-D submitted that it accepts any one of the several documents listed in its Application

Form as a proof of identity, which also includes Photo Pass and Voter’s Identification Card,

and clarified that PAN card is not the only identity proof accepted by it from consumers.


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TPC-D further submitted that the income tax laws stipulate deduction of Tax at source (TDS)

for interest payable above a certain amount (Rs. 5000 presently) and therefore, in case of

consumers having load more than 20 kW, the interest on security deposit may exceed the

threshold of Rs. 5,000/- for deduction of TDS as per Section 194 A of the Income Tax, Act,

1961. TPC-D submitted it hence, requests the consumers with load above 20 kW to submit

the copy of the PAN card to enable it to correctly record the tax that has been deducted at

source, which is at present about 10%. TPC-D added that as per the existing laws, in case no

PAN card details are submitted, then TDS would be deductible at a higher rate of 20 %.

As regards the rejection of applications on the basis of consumption, TPC-D submitted that it

accepts all the applications received for either changeover or for direct supply of consumers

irrespective of the consumer category. TPC-D submitted that it complies with Regulation 4

(Period for giving supply) of MERC (Standards of Performance) Regulations, 2005 with

respect to taking consumers on its direct network (direct consumers and switchover

consumers).

TPC-D further expressed the following difficulties faced by it during the process of switching

over consumers:

In order to provide LT supply, TPC requires space for sub-station or feeder pillars

when the consumer is at a substantially greater distance from the existing sub-

station/feeder pillar.

Space needs to be arranged by the consumer for putting TPC-D’s meter either by

providing new meter cabin or by arranging to remove the meter of the existing

Licensee.

TPC-D submitted that the observation made by the Objector that TPC-D was cherry-picking

its consumers is incorrect, and TPC-D has added about 250,000 consumers from October

2009 to March 2012, out of which about 200,000 consumers are residential consumers. TPC-

D added that there the changeover consumers included a large number of residential

consumers even in the category "less than 300 Units". TPC-D further submitted that the main

reason for changing over RInfra to TPC is the difference in the tariff between the two

Licensees, after accounting for wheeling losses, wheeling charges and Cross Subsidy

Surcharge. TPC-D added that such difference is likely to be large in commercial category of

consumers and it is quite likely that this consumer category has greater incentive to change

over as compared to the other categories.

TPC-D further clarified that it has been entertaining all the applications for giving power

supply that are complete in all respects.



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The issues relating to changeover consumers, the process of changeover adopted by TPC-D,

rejection of applications for changeover, and alleged cherry-picking by TPC-D were the

subject matter of another proceeding before the Commission in Case No. 151 of 2011, and

the Commission has issued its Order in Case No. 151 of 2011 on 22 August, 2012. TPC-D is

required to abide by the rulings of the Commission in Case No. 151 of 2011.

2.17 OPEN ACCESS CONSUMERS

Shri Ponrathnam submitted that TPC-D, in its MYT Business Plan, has not considered open

access consumers, i.e., the consumer who is supplied energy by any other company (trading/

generating/distributing) through its network. He further submitted that the consumers having

sanctioned load above 1 MW are deemed open access consumers and TPC-D in its MYT

Business Plan has not considered the impact of such consumers though it is very vital in the

calculation of cost of supply.

Shri Bapat submitted that the switchover consumers may include open access migrants, for

whom wheeling of energy is compulsory for other licensee (e.g. BEST). He submitted that

TPC-D has not mentioned such consumption (sale) in its MYT Business Plan.

Shri Ulhas Chaudhary submitted that as per the Open Access Policy, consumers consuming

more than 1 MW should be excluded from distribution and included in transmission and

should be charged transmission charges.

TPC-D’s Response

TPC submitted that on page no. 40 and page no. 41 of the MYT Business Plan, it has

presented the reasoning for not considering the consumption of open access consumers

separately.

TPC-D clarified that switchover customers are the customers of other Distribution Licensees

who were being supplied power by that Licensee using its own network, now opting for

power supply from TPC-D through TPC-D's network. TPC-D submitted that it has

considered switchover sales in its entire Licence area, i.e., the area overlapping with BEST as

well as with RInfra. TPC-D further added that it has considered the switchover sales in the

licence area overlapping with RInfra from FY 2011-12 while the switchover sales in the

licence area overlapping with BEST have been considered only from FY 2013-14.

TPC-D submitted that the issue of excluding the consumers having consumption more than

1 MW from distribution and including them under transmission has to be analysed based on a


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detailed study by a competent authority considering the impact on cross subsidy, calculation

of additional surcharge, etc.


The detailed analysis of the sales approved by the Commission for the period from FY 2012-

13 to FY 2015-16 is given in Section 5.1 of this Order.

By a letter dated 30 November 2011, the Ministry of Power, Government of India, has

requested various functionaries under the EA 2003 including the SERCs to take necessary

steps for immediately implementing the provisions relating to open access under the said Act

in the light of an opinion from M/o Law & Justice.

Hence, this Commission has suo motu initiated solicitation of views and suggestions from the

members of public and from all stakeholders in the State of Maharashtra on the four broad

findings rendered under the opinion of M/o Law & Justice and also other relevant and

attendant issues.

A Public Notice dated 18 May 2012 was published in various newspapers, viz., Sakal, Times

of India, DNA and Maharashtra Times on 21 May, 2012 as well as on the website of the

Commission on the above issue and suggestions/objections of the stakeholders have been

sought. The last date of receipt of suggestions/objections was extended till 20 July, 2012. The

matter is in progress.

2.18 CUSTOMER SERVICE CENTRES

AWEIS Electronics and Electricals, Shri P.J. Bhar, Shri Chandrakant Mudras and Smt.

Sheetal Shah submitted that TPC should open more consumer centres and payment centres to

provide better services to the consumers including changeover consumers and it should also

focus on improving the services provided by the existing call centres, which are presently

unsatisfactory.

Shri Raksh Pal Abrol submitted that as there is no word such as 'customer' in any of the Acts

and Regulations and therefore, TPC-D should change the name from Customer Service

Centre to “Consumer Care Centre”. He further submitted that TPC-D must have sufficient

Application Collection Centres in all the 26 Municipal Wards, and in the Mira Bhayandar

area.


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Shri Ravindra K. Kadam also submitted that TPC has not yet established adequate number of

Customer Centres, Bill Payment Drop Boxes and other services like RInfra and is not

providing better services to its customers.

Shri Laxman Sawant, on behalf of Shri Ramesh Shinde, submitted that the call centres of

TPC do not give proper response to the complaints of the customers. Smt Sheetal Shah, Shri

Ashish V. Mhatre, and Shri Kamlesh Gaglani added that TPC-D should train their employees

so that they can resolve consumer grievances more efficiently.

Shri Raksh Pal Abrol submitted that TPC-D has changeover consumers from RInfra after

October 15, 2009 and presently have more than three Lakh changeover consumers. He

submitted that the changeover consumers are mostly from Mumbai Suburbs especially from

Borivali, Andheri, Jogeshwari, Ghatkopar, Chembur, Malad, Kandivali, Dahisar, Mira

Bhayandar, Khar Santacruz and BKC including Kurla and Vikhroli. He further suggested that

for so many consumers, there must be one CGRF in the Suburbs and the details of the same

should be printed boldly on the monthly bills.

TPC-D’s Response

TPC-D submitted that it currently has twenty Customer Relationship Centres (CRC) in

Mumbai and it has proposed to have one CRC within 2 km reach of every consumer.

TPC-D replied that Regulation 3.2 of the MERC (CGRF and Electricity Ombudsman)

Regulations, 2006 specifies that a Distribution Licensee within the city of Greater Mumbai

and adjoining areas shall have at least one CGRF for such area of supply. TPC-D submitted

that presently, only one CGRF has been established at Dharavi Receiving Station, which is a

central location to address to the needs of the consumers in South Mumbai as well as Mumbai

Suburbs. TPC-D further submitted that in FY 2010-11, there were only 4 cases registered in

its CGRF and therefore, at present there may not be any need to establish an additional CGRF

in Mumbai Suburbs.

TPC-D further added that it is continuously striving to improve consumer service and

relations.


TPC-D should take note of the issues and grievances raised by the consumers regarding the

quality of consumer service and redressal mechanism and ensure that all necessary steps are

taken to provide quality service to the consumers.


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2.19 BILL PAYMENT FACILITY

Smt. Sheetal Shah and Smt Sneha Wadke submitted that bills are not sent on time. Shri P.J.

Bhar, Smt. Amruta Deshmukh and Shri. Siddesh J. Sawant added that the consumers of TPC-

D are not happy with the inadequate payment facilities. Shri Manoj Mishra submitted that

TPC-D has not yet defined any strategy and process for consumer services like bill delivery

and payment avenues. He further asked TPC-D to submit the time line for establishing such

important services to its consumers.

TPC-D’s Response

TPC-D submitted that it has developed adequate, diverse, and well spread out Bill Payment

Facilities like Customer Relation Centres, Online Payment, Electronic Clearance System,

Self Service Kiosk, Bank and ATM, Electronic/Manual Drop Boxes, Bill Collection Van,

Post Offices, etc.

TPC-D added that the detailed address of the bill collection locations have been depicted on a

google map on the following webpage of TPC:

https://cp.tatapower.com/customer_care/payment-options/offline-payment.aspx

TPC-D submitted that the Bill Collection Centres, now renamed as Customer Relation

Centres (CRC), do provide various services like application collection, duplicate bill

generation, bill collection, etc. TPC-D submitted that the CRCs collect payment of bill in

cash up to Rs. 20,000/- per bill and that the ceiling of Rs. 20,000/- has been done to ensure

control on cash collection at these centres.


TPC-D should take note of the objections and suggestions of the consumers and provide

adequate number of payment options to consumers and in case such facilities have already

been extended, then TPC should ensure that adequate publicity is given to these payment

options through its electricity bills, so that the consumers are made aware of the same.

2.20 COMPLAINT REGARDING METERS OF CHANGEOVER CONSUMERS

Shri Ponrathnam submitted that the Commission, in its changeover Order, had envisaged the

standardization of the different software versions, in order to be compatible with the meters

from TPC-D, RInfra or any consumer. He further submitted that the complaints made by

TPC-D regarding the difficulty in uploading meter data or changing of the defective meters

are not acceptable.

TPC-D’s Response

https://cp.tatapower.com/customer_care/payment-options/offline-payment.aspx


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TPC has not replied to the above objection.


This issue is not within the scope of the present exercise, which is being undertaken

to approve the MYT Business Plan submitted by TPC-D.

2.21 NON-TARIFF INCOME

Shri Mahesh Vaswani submitted that the projected Non-Tariff Income in the MYT Business

Plan is very low and not justifiable.

TPC-D’s Response



The detailed analysis and computation of Non-Tariff Income for the period from FY 2012-13

to FY 2015-16 is given in Section 5.13 of this Order.

2.22 INCOME FROM OTHER BUSINESS

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that Regulation 94 of the MERC

MYT Regulations, 2011 deals with the aspects of Income from other Business, while the

Business Plan submitted by TPC-D does not disclose any such information. He requested the

Commission to direct TPC-D to give full disclosure regarding the activities, which may be

undertaken by TPC-D during the Control Period that will have impact on ‘Income from Other

Business’ and give estimates of the same that may be further included in the ARR during the

Control Period as per the norms specified in Regulation 94 of MERC MYT Regulations.

TPC-D’s Response

TPC-D submitted that presently it is not engaged in any other business. TPC-D further

submitted that it has mentioned in the MYT Business Plan Petition that under the present

rapidly changing situation and the existing Rules and Regulations, it may be difficult to

identify future business opportunities and hence, the same have not been considered in the

MYT Business Plan Petition.


The Commission has noted the submissions of TPC-D in this regard. Further, keeping in view

the provisions of Section 51 of the EA 2003, the Commission is of the opinion that all

possible options of generating revenue from other business should be explored by TPC-D, so

that the same could be used for reducing the charges for distribution.


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2.23 LOAD MANAGEMENT CHARGES

Shri Raksh Pal Abrol submitted that the Hon’ble ATE has set aside the Load Management

Charges (LMC) and TPC-D should refund these charges back to the consumers.

TPC-D’s Response

TPC-D submitted that as per the directions of the Commission in its letter No

MERC/DSM/TPC/10/07/712 dated April 2, 2008, the LMC collected would be used to meet

the DSM programme budget.


As stated by TPC-D, the Commission has already ruled that the amounts collected under the

erstwhile LMC are to be used to meet the DSM programme budget. The Commission hereby

directs TPC-D to utilize these funds available under LMC fund to meet the DSM expenses

and then claim the balance DSM expenses under the MYT Petition.

2.24 CONSUMER AWARENESS

Shri Raksh Pal Abrol, submitted that TPC-D has not yet started educating the consumers

regarding energy usage and conservation of energy and should start the same as early as

possible.

TPC-D’s Response

TPC-D submitted that it has initiated various DSM programmes, which not only educate the

consumers on energy usage and conservation but also incentivize the consumers to save

energy. TPC-D submitted that these DSM programmes are advertised through the medium of

electricity bill, TPC’s website and consumer meets. TPC-D further submitted that at present,

an energy efficient ceiling fan programme for residential consumers and energy audit

programme for industrial and commercial consumers is being run. TPC-D also submitted that

several other programmes are being run on pilot basis with the approval of the Commission.


The Commission approves DSM schemes submitted by TPC-D under a separate process after

due scrutiny, however, the expenses and benefit towards the same are included in the

Business Plan as detailed in Section 5.11.

2.25 SUPPLY MARGIN

Shri Soumen Mukherjee, Shri Vimal Rawat and others submitted that in its MYT Business

Plan Petition, TPC-D has claimed before the Commission that there has not been any addition

to its profits in spite of serving the changeover consumers. Objectors submitted that TPC-D


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in its Petition has also mentioned that if the Commission would not allow it to earn profits by

levy of Supply Margin, changeover sales may not be sustainable.

Shri Kulkarni, Shri Mahesh Vaswani and Shri Raj kumar Sharma enquired from TPC-D

regarding the provisions of the Electricity Act, 2003 or Regulations or the Commission’s

Order under which it is proposing to charge Supply Margin to changeover consumers. Smt.

Pallavi Dev requested the Commission to reject the unwarranted proposal of TPC-D to levy

Supply Margin on changeover consumers as it would lead to tariff hike.

TPC-D’s Response

TPC-D submitted that the computations of ARR for the various years of MYT Control Period

do not include any element of Supply Margin and as such it has not considered any Supply

Margin for computing the Average Cost of Supply.

TPC-D submitted that however, it has in the MYT Business Plan, drawn the attention of the

Commission to the supply made to the changeover consumers and the margins derived by

TPC in effecting such sales. TPC-D further submitted that the Commission is aware that the

profits of any Distribution Licensee are derived through Return on Equity (RoE), which in

turn is allowed only if there is a capital investment and since for a changeover consumer the

wires of RInfra are used, there is no investment from TPC-D (except through the change of

meter if desired by the consumer), there is no Return on Equity accruing to TPC-D. Hence, a

large fraction of TPC-D’s sales (to changeover consumers) is effected without any addition to

the profit.

It was further submitted by TPC-D that it has proposed the concept of Supply Margin to the

Commission, which if recovered would be only through the tariff to be charged to the

consumers and such tariff has to be determined by the Commission. TPC-D added that such

powers to determine the tariff have been vested with the Commission by the Electricity Act,

2003.


The Commission had considered the issue of Supply Margin at the time of finalising the

MERC MYT Regulations, 2011, and has not provided for the same to be recovered through

the tariff to be charged to the consumers. Further, this issue is not relevant to the present

Petition, which is for the approval of MYT Business Plan of TPC-D.


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2.26 SCENARIO ANALYSIS

Shri Sandeep Ohri submitted that while making projections, TPC-D has presented three

different scenarios in the Business Plan Petition. He further enquired regarding the basis of

projecting such scenarios. He further enquired whether the consideration of growth in sales in

MU terms is a justifiable basis for projecting the various scenarios, and enquired whether

factors such as number of consumers, types of consumers, areas being serviced should also

not be included for making such projections termed as optimistic, realistic, and pessimistic

scenarios.

As regards the Capital Expenditure Scenario, Shri Sandeep Ohri enquired regarding the

reasons for projecting the same Capital Expenditure under all the three scenarios. He further

submitted that the huge capital investment of Rs. 2250 Crore can only be justified with a

quantifiable and reasonable growth, which is not reflected in the present Petition. He

enquired from TPC-D regarding the amount of capital investment per consumer and how this

expenditure compares with that of other Distribution Licensees.

He further requested the Commission to direct TPC-D to re-evaluate the basis for each

scenario and clearly define in the Petition what each scenario means, i.e. Optimistic,

Realistic, and Pessimistic.

TPC-D’s Response

TPC-D submitted that the Commission had directed it to submit scenarios based on Sales,

Power Purchase Availability, Capital Expenditure and O&M Cost. TPC-D submitted that on

Page No. 151 of the MYT Business Plan Petition it has submitted the reasons for not

submitting the scenarios based on Power Purchase Availability, Capital Expenditure and

O&M cost.

TPC submitted that the Capital Expenditure plan has been made with a long-term view and

also keeping in mind the obligations to supply irrespective of the short-term impact of sales

that would be effective on the additional network and therefore it has not altered the capital

expenditure under any of the three scenarios.


The Commission has undertaken detailed analysis of TPC-D’s submissions in the MYT

Business Plan Petition, including the Scenarios, as detailed in subsequent Sections of this

Order and accordingly computed the ARR over the second Control Period for the years from

FY 2012-13 to FY 2015-16.


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2.27 TARIFF IMPLICATIONS OF THE BUSINESS PLAN

Shri Sandeep Ohri submitted that the Petition is voluminous in terms of contents and mostly

contains technical and accounting data, which the normal consumers are not able to

understand and in such cases the consumers are not able to comment or make suggestions

regarding the Petition. He further submitted that the consumers are interested to know the

tariff implications of the MYT Business Plan, while the Petition is silent in this regard. He

enquired whether the Commission would approve the MYT Business Plan without taking into

consideration the effect of the same on the tariff of the consumers and whether there will be

another similar voluminous Petition for tariff fixation in future. He further requested the

Commission to approve the MYT Business Plan Petition only if the tariff implication on the

consumers is clearly reflected in the Petition.

Shri Raksh Pal Abrol enquired if this Petition is for determination of tariff under Sections 61

to 64 of the Electricity Act, 2003.

Shri Bapat submitted that the MYT Business Plan has very little utility to the consumers in

the absence of category-wise projected tariff. He enquired regarding the reasons for not

including the tariff projections.

Shri Ponrathnam submitted that TPC has merely put forward that Demand Charges and TOD

tariff chargeable from consumers need to be reviewed to address the issue of huge gap in

demand during peak and off peak hours, but has not proposed the specific modification

desired by TPC-D.

TPC-D’s Response

TPC-D submitted that the present Petition is not for determination of tariff and has been filed

as per Regulation 7 of MERC (MYT) Regulations, 2011, which requires filing of the

Business Plan. As per Regulation 4.2 of MERC (MYT) Regulations, 2011, the MYT Tariff

Petition has to be submitted based on the Business Plan. Hence, TPC-D shall submit the

revised MYT Tariff Petition on approval of Business Plan.

TPC further submitted that the Average Cost of Supply table shown on Page No. 24 of the

Business Plan Petition shows the changes in the Average Cost of Supply over the Control

Period, which in turn will impact the tariff. However, the additional amounts recoverable on

account of the Hon’ble ATE's Judgments and recovery of Regulatory Assets shall be

presented as a part of the MYT Petition. This will impact the ultimate tariff payable by the

consumer. TPC submitted that the category-wise tariff shall be presented as a part of MYT

Petition and the MYT Business Plan does not entail submission of category-wise tariff.


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As regards the Demand Charges and TOD tariffs, TPC submitted that in the MYT Business

Plan Petition, it has highlighted the ‘Market Issues and Challenges’ under which, it has

submitted that a huge gap in peak and off peak requirements is a challenge for TPC-D. TPC-

D further submitted that in order to address this challenge it has to make attempt to smoothen

the load curve of TPC-D, which can be achieved by creating awareness and implementing

DSM initiatives to a large base of customers or mandating through specific tariff structures

and hence, Demand Charges and TOD tariffs need to be reviewed from this perspective.


The present Petition is for approval of MYT Business Plan for the second Control Period,

which is required to be submitted in accordance with the MERC MYT Regulations, 2011.

The Commission has also prescribed the Structure of the MYT Business Plan and the Data

Formats required to be submitted along with the MYT Business Plan. TPC-D has submitted

the MYT Business Plan in accordance with these Regulations and Guidelines prescribed by

the Commission. Based on the approved MYT Business Plan, TPC-D will have to file the

MYT Petition, wherein it will have to propose the category-wise and consumption slab-wise

tariffs to recover the projected ARR, and also ensure cross-subsidy reduction, etc. In order to

enable the consumers to assess the impact of the variables projected in the MYT Business

Plan, the Licensees have also presented the projected Average Cost of Supply over the

Control Period, which gives a very good idea regarding the projected movement of the tariffs

over the Control Period.

2.28 UNIFORM TARIFF

Shri Vikram Patel, Shri Sunil Chauhan, and Shri Shripad Kamlakar Kulkarni, submitted that

there should be a Uniform Tariff throughout the city of Mumbai.

TPC-D’s Response

TPC has not replied to this objection.


The Commission is of the view that this suggestion is not relevant to the present Petition,

which is for approval of MYT Business Plan. Moreover, this issue has been debated at length

on other occasions also, and the Commission has clearly stated that in view of the differential

consumer mix and consumption mix as well as differences in the power purchase costs and

other expenses across different Distribution Licensees in the city of Mumbai, it is not feasible


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to have a uniform Retail Supply Tariff, unless the State Government provides the necessary

subsidy support to offset the revenue loss due to the tariffs of different Licensees being kept

at the same level.

2.29 POWER FACTOR PENALTY

Shri George John suggested that the Commission should double the Power Factor penalty

below 0.9 PF with ceiling at 14% instead of 7%, and double the rates for power consumption

during peak hours, so that the peak demand will come down, and give incentive for usage

during off-peak hours, which would result in better performance of the Distribution

Companies.

TPC-D’s Response

TPC-D submitted that the suggestion of the objector is a part of tariff determination process

and may be considered by the Commission at the time of tariff determination.


The Commission is of the view that this objection is not relevant to the present Petition,

which is for approval of MYT Business Plan of TPC-D.

2.30 PARTICIPATION OF AUTHORISED CONSUMER REPRESENTATIVES IN

THE PROCEEDINGS

Shri Raksh Pal Abrol submitted that TPC-D has not arranged a single meeting with the

Consumer Representatives authorised by the Commission under Section 94(3) of the EA

2003, to share information in the last MYT Period or before the present Business Plan for the

second MYT Control Period was submitted with the Commission.

Shri Mahesh Vaswani submitted that the objections raised during the Public Hearing are not

considered during the decision making process and the objections and suggestions presented

in the Hearing are not reflected in the final Orders passed by the Commission.

TPC-D’s Response

TPC-D submitted that it has been involving the authorised Consumer Representatives in

various matters as and when directed by the Commission and forwarding all the documents in

this regard. TPC-D further added that it has also replied to the queries of the Consumer

Representatives raised from time to time.


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TPC-D further submitted that it has also shared the information requested by the Members of

Parliament and Members of Legislative Assembly of the State from time to time through

replies to the queries from Mantralaya, Government of Maharashtra.

TPC-D added that further directions of the Commission in this matter are awaited.


Authorised Consumer Representatives have been fully involved in the regulatory processes

related with the approval of MYT Business Plan for the second Control Period from FY

2012-13 to FY 2015-16 at different stages including the Technical Validation Session and

Public Hearing. The Commission has accordingly asked TPC-D to provide the copies of all

the relevant submissions to the Authorised Consumer Representatives from time to time.

As regards objections and suggestions from other consumers are concerned, the Commission

has duly considered while taking any decision on the Petition and the same is also reflected in

the Orders, where the objections are summarised issue-wise, along with the Utility's response

and the Commission's ruling on the same.

2.31 WRONG USE OF TERMINOLOGY IN MYT BUSINESS PLAN

Shri Sandeep Ohri and Shri Raksh Pal Abrol submitted that the Electricity Act, 2003 has

defined the word ‘Consumer’ rather than the word ‘Customer’, and there is no such word as

‘customer’ defined even under the repealed Acts or Rules and Regulations. They further

requested the Commission to direct TPC-D to use the correct terminology as defined under

Act or Regulations.

TPC-D’s Response

TPC submitted that it has used the term ‘customer’ and ‘consumer’ interchangeably. TPC

added that it will ensure that the term ‘consumer’ is used henceforth.


The Commission directs TPC-D to ensure that the correct terminology is used in its Petitions

as well as in interactions with consumers.

2.32 ENVIRONMENTAL ISSUES

Shri Raj Kumar Sharma, representing ALMANAC and Shri Rakesh Vijay Singh Verma

submitted that since, TPC-G plans to convert its Unit 6 generation to coal fired generation,

the cost of supply has been reduced in the MYT Business Plan Petition. However, this would

lead to an addition in the pollution level in the environment and hence, TPC-D should focus


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more into exploring other options to avail cheaper cost of power rather than adding to

environmental risk.

Shri Shaikh Gayasuddin submitted that due to the various power generating stations, citizens

of Mumbai face various environmental hazards while the same people are deprived of

cheaper power as the power is being sold outside Mumbai for profits.

TPC-D’s Response



The Commission is of the view that the above objection is not relevant to the present Petition,

which is for approval of the MYT Business Plan Petition filed by TPC-D, whereas the

objection refers to TPC-G's plans for conversion of Unit 6 from oil fired to coal fired.

However, it may be noted that TPC-G will be able to undertake the same only after requisite

clearances and approvals, including environmental clearances and capex approval of the

Commission, are obtained.

2.33 ENERGY ACCOUNTING

Shri Ponrathnam submitted that in general practice, energy accounting is made on 30 minutes

basis, but TPC-D in its MYT Business Plan has suggested accounting on 15 minutes basis

while the metering is capable of accounting on five minutes basis. He asked TPC-D to submit

the reasons for the same.

TPC-D’s Response

TPC submitted that it has not suggested implementation of 15 minute basis for accounting of

energy supplied by TPC-D to its consumers. TPC-D submitted that MSLDC has implemented

15 minute accounting under Final Balancing and Settlement Mechanism from 1 August, 2011

for settling the State energy accounts where TPC-D is one of the pool participants.


The Commission is of the view that the above objection is not relevant to the present Petition,

which is for the approval of MYT Business Plan filed by TPC-D.

2.34 LOAD ENHANCEMENT

Shri Raksh Pal Abrol submitted that under BMC Act, 1888, MSMED Act, 2006, and

Industries (Development & Regulation) Act, 1951 (65 of 1951), there is no provision for

submission of PAN Card or Registration under Shops & Establishment Registration Act,


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1948 for use of Electricity for Commercial/Industrial purposes and therefore, consumers in

Mumbai/Mira Bhayandar should not be insisted upon for the same while seeking

enhancement of sanctioned/Contract Demand of Electricity Load.

TPC-D’s Response

TPC-D submitted that as per its understanding of the Electricity Supply Code, the

Application as envisaged in Regulation 4 includes Application for new connection, load

enhancement, etc., and therefore, the requirements for the load enhancement cases is the

same as that for new application. TPC-D submitted that the additional documents are required

for compliance of various statutes in case of load enhancement for a particular consumer type

as per Industries (Development & Regulation) Act, 1951, Mumbai Municipal Corporation

Act, 1888 to establish the purpose and the quantum of approved load.


The Commission is of the view that this objection is not relevant to the present Petition,

which is for approval of MYT Business Plan filed by TPC-D.

2.35 PERFORMANCE INDICES

As regards the various performance Metrics, Shri Sandeep Ohri submitted that all the

performance parameters defined in the Business Plan are technical in nature and out of the

scope of the consumers. He suggested that while measuring the performance of Distribution

Licensee, the consumer should be involved and for this some new metrics such as consumer

satisfaction index, time taken to fulfil obligations, number of complaints pending more than

say 30 days or so, penalties paid to statutory authorities, etc., should also be considered.

Smt. Amruta Deshmukh submitted that TPC-D does have requisite expertise in distribution

business and the same is being reflected in its performance. She further submitted that in spite

of having such fewer networks, cable faults have increased along with an increase in

commercial complaints.

TPC-D’s Response

As regards the objection regarding expertise in the Distribution Business, TPC-D submitted

that it has been in the business for the last many years. TPC-D submitted that presently, it has

more than 250,000 consumers in Mumbai licence area. TPC-D further added that it also has a

subsidiary, M/s Tata Power Delhi Distribution Ltd. (earlier known as North Delhi

Distribution Ltd.) which is a Distribution Utility in North Delhi. Hence, it has adequate

experience to carry out the business of Distribution in Mumbai.


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As regards the increasing cable faults, TPC-D replied that as highlighted during the Technical

Validation Session (TVS) before the Commission, the primary reason for increase in cable

faults has been the damage to the cable network during the excavation work carried out in

Mumbai for rapid infrastructure development. TPC-D submitted that now it is taking

precautionary measures for avoiding cable faults on account of infrastructure development,

by shifting/modifying the cables in the area, where the infrastructure development is

proposed to be taken up.

TPC-D submitted that its performance in terms of network reliability indices is not at all

inferior to that of other Licensees in Mumbai.

As regards the Commercial Complaint Index, TPC-D submitted that the Commercial

Complaint Index has been in the range of 10% to 12% during the last three years. TPC-D

submitted that after the changeover Order in October 2009, there were a large number of

consumers who moved to TPC-D and it has done its best to ramp up its existing capacity and

infrastructure to handle this inflow and restrict the Commercial Complaint Index to 11.87%.

TPC-D further added that it will endeavour to reduce the Commercial Complaint Index

during the MYT Control Period.


The Commission is of the view that TPC-D should ensure that the reliability of its network is

maintained at the highest levels, and the commercial complaint index should be minimised to

the extent possible, by taking all necessary steps in this regard.


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3 SALIENT FEATURES OF THE MYT BUSINESS PLAN

PETITION

3.1 APPLICABILITY OF THIS ORDER FROM FY 2012-13 TO FY 2015-16

The Commission, in its First Amendment to Maharashtra Electricity Regulatory Commission

(Multi Year Tariff) Regulations, 2011 dated 21 October, 2011, has specified that for the

Generating Company or Transmission Licensee or Distribution Licensee for whom there is

no order of exemption under Regulation 4.1 and if the Commission is satisfied that there is a

difficulty in giving effect to the determination of tariff with effect from 1 April, 2011 under

these Regulations and in the event tariff is required to be determined from 1 April, 2012 or

any further period under these Regulations, the repealed regulations in respect of the said

tariff determination shall continue to be in-force, and the provisions of these Regulations

shall not apply to the determination of tariff for the period till 1 April, 2012 or such further

period.

Further, pursuant to the First Amendment to the MERC MYT Regulations, 2011, the

Commission, through its letter dated 4 November, 2011 also directed TPC-D to submit its

Petition for approval of ARR for FY 2011-12, as per the MERC (Terms and Conditions of

Tariff) Regulations, 2005 latest by 30 November, 2011. However, TPC-D is yet to submit the

same as on date of issuance of this Order. TPC-D had submitted a letter dated 14 November

2011 requesting the Commission to accept the MYT Petition for FY 2011-12 in accordance

with the MERC MYT Regulations rather than the MERC Tariff Regulations, 2005, since,

TPC-D would be entitled to higher O&M expenses and Return on Equity under the MERC

MYT Regulations. TPC submitted that in case it was not possible to determine the tariff for

FY 2011-12 under the MERC MYT Regulations, then the ARR for FY 2011-12 could be

trued up under the MERC MYT Regulations. The Commission communicated to TPC-D that

it could submit the MYT Petition for the period from FY 2011-12 to FY 2015-16 in

accordance with the MERC MYT Regulations. However, during the TVS on TPC-D's MYT

Petition, the Commission clarified that in accordance with the MERC MYT Regulations, the

MYT Petition was required to be submitted by incorporating the decisions of the Commission

in its Order on approval of the MYT Business Plan, and hence, the MYT Petition could be

considered only upto a point. Thus, since, FY 2011-12 is already over, the tariff for FY 2011-

12 cannot be determined under the MERC MYT Regulations, with retrospective effect.

Further, there is no merit in TPC's request that in case it is not possible to determine the tariff

for FY 2011-12 under the MERC MYT Regulations, then the ARR for FY 2011-12 could be

trued up under the MERC MYT Regulations, since, truing up has to be done on the same

principles as the original Order, and the extant Order that was in force in FY 2011-12 was the


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earlier Tariff Order dated 12 September, 2010, issued in accordance with the MERC Tariff

Regulations, 2005.

Hence, the Commission directs TPC-D to submit its ARR for FY 2011-12, as per MERC

(Terms and Conditions of Tariff) Regulations, 2005 along with its MYT Petition for FY

2012-13 to FY 2015-16. Since, FY 2011-12 is over, the Commission is satisfied that there is

a difficulty in giving effect to the determination of tariff with effect from 1 April, 2011 under

the MYT Regulations and tariff is required to be determined from 1 April, 2012 under the

MYT Regulations. Accordingly, the Commission has approved the MYT Business Plan for

TPC-D for the period from FY 2012-13 to FY 2015-16.

3.2 PREMISE FOR BUSINESS PLAN

In view of the directives issued by the Commission and after incorporating the suggestions

and replies to data gaps raised by the Commission, TPC submitted the revised MYT Business

Plan Petition for its Distribution Business for the second Control Period from FY 2011-12 to

FY 2015-16 as per Regulation 7 of MERC MYT Regulations, 2011, on 9 April, 2012. The

details regarding MYT Business Plan components as submitted by TPC-D and the

Commission’s ruling are elaborated in subsequent Sections of this Order. Regulation 7 of the

aforesaid MERC MYT Regulations, 2011 is reproduced below for reference:

“ 7.1 The Generating Company, Transmission licensee and Distribution Licensee

shall file a Business Plan, for the Control Period of five (5) financial years from April

1, 2011 to March 31, 2016, as directed by the Commission, which shall comprise but

not be limited to detailed category-wise sales and demand projections, power

procurement plan, capital investment plan, financing plan and physical targets, in

accordance with guidelines and formats, as stipulated by the Commission from time

to time.

7.2 The capital investment plan shall show separately, ongoing projects that will spill

into the year under review and new projects (along with justification) that will

commence but may be completed within or beyond the tariff period. The Commission

shall consider and approve the capital investment plan for which the Generating

Company and Transmission Licensee or Distribution Licensee may be required to

provide relevant technical and commercial details”


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As part of the MYT Business Plan, TPC-D also submitted the Capital Investment Plan in line

with Regulation 76 of MERC MYT Regulations, 2011, as reproduced below:

“76.1 The Distribution Licensee shall submit a Capital Investment Plan with full

details of its proposed capital expenditure projects to the Commission for approval,

as a part of the Business Plan:

76.2 The Capital Investment Plan shall cover all capital expenditure projects of a

value exceeding Rs Ten (10) Crore and shall be in such form as may be stipulated by

the Commission from time to time.

76.3 The Distribution Licensee shall submit the Capital Investment Plan in

accordance with Regulation 7 of these Regulations.

76.4 The Commission shall approve the MYT Business Plan in accordance with the

principles specified in these Regulations.”

3.3 BUSINESS OVERVIEW OF TPC-D

3.3.1 Brief History and Background

The Tata Power Company Ltd. is a Company incorporated under the provisions of the Indian

Companies Act, 1913, with its registered office at Bombay House, 24, Homi Mody Street,

Fort, Mumbai 400 001. TPC-D submitted that it has emerged as a key private sector player in

the Indian power sector with its presence in all business segments of the power sector

including the distribution business.

TPC-D submitted that till FY 1999-2000, "Tata Electric Companies" comprised of The Tata

Hydro Electric Supply Company Ltd. (established in 1910), The Andhra Valley Power

Supply Company Ltd. (established in 1916), and The Tata Power Company Ltd. (established

in 1919). On 1 April, 2000, The Tata Hydro-Electric Power Supply Company Limited and

The Andhra Valley Power Supply Company Limited were merged into The Tata Power

Company Ltd. to form a unified entity.

TPC-D further submitted that subsequent to the merger, the licenses of the above mentioned

companies were also merged and it was granted a license by the Government of Maharashtra

(GoM) for the supply of energy in Mumbai, vide resolution No: IEA-2001ICR-10509INRG-

1, dated 12 July, 2001. TPC-D further submitted that after the enactment of Electricity Act,

2003, the Commission has notified MERC (Specific Conditions of Distribution License


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applicable to The Tata Power Company Ltd.) Regulations, 2008. TPC-D submitted that on

the basis of the said licence, it is entitled to sell, supply, and distribute electricity to the public

for all purposes in accordance with the provisions of the Act. TPC-D submitted that the said

licence is valid up to 15 August, 2014. TPC-D added that it has considered the implication of

the expiry of the licence in the MYT Business Plan and has assumed that its licence would

continue (through reapplication) till the end of the Control Period and beyond for the purpose

of MYT Business Plan for the entire Mumbai Licence Area (i.e., South Mumbai and Mumbai

Suburbs).

3.3.2 Distribution Business in Mumbai Area

TPC-D submitted that its area of supply in Mumbai extends from Colaba in the South to

Vasai Creek in the North and Vikhroli on the Central side and the total spread of the licence

area is about 485 sq. km. and it houses a population of approximately 1.25 Crore. TPC-D

submitted that the area covered includes 26 wards of Municipal Corporation of Greater

Mumbai (MCGM) and the area administered by the Mira-Bhayander Municipal Corporation.

However, the Commission vide its Order dated 3 July, 2003 in Case No. 14 of 2002 had

restrained TPC-D from providing new connections to consumers in the retail category. The

Hon'ble ATE, vide its Judgment dated 22 May, 2006, in Appeal No. 31 and 43 of 2005 also

restrained TPC-D from providing new connections to all categories of consumers.

TPC-D submitted that it then appealed against the Judgment of the Hon'ble ATE before the

Hon'ble Supreme Court, and vide its Order dated 8 July, 2008, the Hon'ble Supreme Court

has reaffirmed TPC's right to supply power to all categories of consumers including retail

consumers.

TPC-D further submitted that during the period from July 2003 to July 2008, it could supply

power only to its existing consumer base as a Distribution Licensee, however, subsequent to

the Hon'ble Supreme Court's Order, it is confirmed that there are multiple distribution

licensees operating in Mumbai with overlapping Distribution Licence Areas - TPC-D and

BEST in South Mumbai, and TPC-D and RInfra in the Mumbai Suburbs.

TPC-D further submitted that the Commission, for the benefit of consumers, vide its Tariff

Order dated 15 June, 2009 and the Clarificatory Order dated 22 July, 2009 in the matter of

"TPC-D Petition for Truing up for FY 2007-08, APR for FY 2008-09 and Tariff

Determination for FY 2009-10", had directed TPC-D to use the Distribution Network of

RInfra to cater to the applications for electricity supply in the Mumbai Suburbs, which has

created a situation where there are two Distribution Licensees in play, viz., one "Wheeling

Licensee" who provides its wires or network to be used and other "Supply Licensee" who

provides the supply to the consumers, which is being implemented for the first time in India.


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TPC-D submitted that along with the new consumers it can supply power to consumers who

wish to changeover from RInfra.

TPC-D submitted that as regards the Licence Area common to BEST and TPC-D, the

Commission vide its Order dated 22 February, 2010 stated that TPC-D has to operate in terms

of its licence conditions, which enjoin it to lay its distribution system or network in an

economical manner, against which BEST filed an Appeal before the Hon'ble ATE. TPC-D

further submitted that the Hon'ble ATE, vide it Judgment dated 14 February, 2011 in Appeal

No. 149 of 2010 upheld the Commission's Order, however, BEST had further appealed

against the Hon'ble ATE’s Judgment before the Hon'ble Supreme Court, which stayed the

ATE's Judgment on 15 March, 2011.

TPC-D submitted that post the Hon'ble Supreme Court's Judgment and the various Orders of

the Commission, it now operates in a unique environment in the Mumbai License Area; i.e.,

it shares its distribution licence area with two other Utilities, viz., BEST and RInfra. TPC-D

submitted that in view of this, it has following two types of consumers:

a) Consumers who are supplied using TPC-D’s own network, i.e., it is both the

"Wheeling Licensee" and the "Supply Licensee.”

b) Consumers who are supplied using other Licensees’ network, i.e., TPC-D is only the

"Supply Licensee.”

TPC-D submitted that currently its consumer base is around 250,000 of which more than

80% are supplied using the network of other distribution Utility. TPC-D further submitted

that the annual sales on its own network is around 2700 MU, which is catered by using about

1900 km HT and LT cable distribution network connecting various Transmission Receiving

Stations and sub-stations in its licence area.

Performance Indices

The performance of TPC-D on various parameters over the last five years as submitted in the

MYT Business Plan Petition is given in the table below:

Table: Performance Indices of TPC-D in the last few years

Year CAIFI

(No.)

CAIDI

(Min.)

SAIFI

(No.)

SAIDI

(Min.)

ASAI

(%)

DTR

Failure

Rate (%)

Cable

(Faults/ 100

Ckt Km)

FY 2005-06 2.47 25.95 1.53 39.63 0.64 6.34

FY 2006-07 2.12 31.56 1.60 50.37 0.00 5.25

FY 2007-08 2.97 28.78 2.28 65.60 0.30 5.10


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Year CAIFI

(No.)

CAIDI

(Min.)

SAIFI

(No.)

SAIDI

(Min.)

ASAI

(%)

DTR

Failure

Rate (%)

Cable

(Faults/ 100

Ckt Km)

FY 2008-09 3.04 26.98 2.01 54.34 99.38 0.85 6.62

FY 2009-10 2.43 25.18 1.77 44.33 99.49 0.25 10.69

FY 2010-11 3.32 26.60 2.43 64.73 99.26 0.00 11.63

Note: (i) CAIFI - Customer Average Interruption Frequency Index,

(ii) CAIDI - Customer Average Interruption Duration Index

(iii) SAIFI - System Average Interruption Frequency Index

(iv) SAIDI - System Average Interruption Duration Index

(v) ASAI - Average System Availability Index

(vi) DTR - Distribution Transformer

TPC-D submitted that in addition to ensuring reliable and continuous power supply, it has

given equal focus to consumer service. TPC-D submitted that it has well defined processes to

address all consumer requirements right from the application stage to addressing all queries

and complaints regarding power supply. TPC-D further submitted that on account of this, it

has been able to increase its consumer base to around 2,50,000 from around 23,000, post the

Hon’ble Supreme Court's Judgment dated 8 July, 2008, confirming the Distribution Licence

of TPC-D. The performance of TPC-D for retail parameters as submitted in the MYT

Business Plan Petition is given in the Table below:

Table: Performance Indices of TPC-D in the last three years

Year Commercial

Complaint

Index (%)

Billing

Efficiency (%)

Collection

Efficiency (%)

AT&C Losses

(%)

FY 2008-09 12.02% 99.33% 99.32% 1.35%

FY 2009-10 10.19% 99.37% 99.81% 0.82%

FY 2010-11 11.87% 98.87% 99.86% 1.27%

TPC-D further submitted that it has taken up benchmarking exercises with International

Utilities to enhance quality and availability of power to the consumers and one such exercise

was bench-marking of distribution network reliability indices with an international Utility,

viz., Kinetrics, Canada. TPC-D submitted that this exercise involved bench marking of the

Asset Management Processes with the International Utility and included the following:

Formulation of a Health Index Report on all assets based on the results of the Asset

Condition Assessment (ACA).

Quantitative Risk of Failure Assessment based on the Health Index.


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Identification of assets to be replaced based on risk of failure.

Assessment and taking into account cost of failure consequences.

Prioritization of assets to be replaced, using cost benefit analysis.

An optimal capital and levelized plan for assets to be replaced.

A review of time-based and condition based maintenance practices and recommended

improvements.

Identification of condition data gaps and recommendation for their prioritized closure.

TPC-D submitted that these benchmarking exercises will further enhance reliability, optimize

cost of operations, and improve competencies of Asset Management.

3.3.3 SWOT Analysis

The SWOT analysis of TPC-D as submitted in the MYT Business Plan Petition is given

below:

Strengths

Integrated Power Business: TPC-D submitted that TPC has marked its presence in

the entire value chain, viz., Generation based on thermal, hydro, solar and wind

energy, Transmission or Distribution, and its biggest strength lies in its integrated

business, which has enabled it to supply uninterrupted power supply in Mumbai

region.

Long-Term Contracts: TPC-D submitted that it has entered into long-term contracts

with its generating Units for supplying power to its consumers at competitive rates

and therefore, is capable of supplying reliable power to its consumers at lowest tariff

in Mumbai.

Reliable Power Supply: TPC-D submitted that in terms of distribution network, it

has been using the latest technology followed with well set preventive and predictive

maintenance practices resulting in reliable power supply to consumers and high levels

of consumer satisfaction.

Weakness

Constraints in Distribution Network development in the past: TPC-D submitted

that till recently, it was restricted in supplying power to new consumers due to the

issues of interpretation of its licence being subjudice, which has resulted in a very

limited LT network to cater to the retail consumers. TPC-D also added that the

existing network is also very old and critically loaded thus requiring capital

expenditure.


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Dependence on network of other Utility: TPC-D submitted that at present almost

80% of its consumers are being supplied by using the network of other Utility, which

has resulted into its dependence on other Utility to a certain extent for performance

and service to the consumer. TPC-D submitted that it does not have control on

dissatisfaction on account of performance of other Utilities. TPC-D further submitted

that dependence on network of other Utility also imposes unnecessary restriction on it

with respect to online availability of certain information and monitoring of service

standards for its consumers, thus requiring additional capital expenditure, which leads

to unnecessary burden on consumers.

MCGM and MMRDA do not have an electricity infrastructure planning cell:

TPC-D submitted that MCGM and the Maharashtra Metropolitan Region

Development Authority (MMRDA) do not have an electricity infrastructure planning

cell for providing distribution network space and corridors while conducting an

exercise for town planning and infrastructure development, which further leads to

challenges in getting space/corridors for electricity network development and

augmentation.

Opportunities

Expansion of Consumer Base in the licence area: TPC-D submitted that the

Hon'ble Supreme Court's Judgment dated 8 July, 2008, and the various subsequent

Orders of the Commission have opened up new avenues for it to expand its retail

consumer base in the licence area.

Creating benchmark services for our consumers: TPC-D submitted that due to a

smaller consumer base it was not able to deploy the advanced technologies for

consumer service, which necessarily require economies of scale. TPC-D further

submitted that considering the increased consumer base, it has an opportunity to

install new and efficient advanced technologies, which will assist in providing

benchmark services to its consumers.

Threats

Lower load factor on account of consumers moving to open access: TPC-D

submitted that due to implementation of open access within the State and availability

of cheaper power on the Power Exchange, in the absence of cross-subsidy surcharge

for most of the categories, there is a threat that certain category of consumers will

prefer to buy power from the alternate sources, thus, impacting its load factor.

Review of Reinstatement Charges levied on Utilities by MMRDA, MCGM, and

Railways: TPC-D submitted that it has been carrying out the laying of HT and LT

cable work across Mumbai Licence area for which the road constructed by MCGM


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and MMRDA has to be excavated. TPC-D added that these Local Bodies recover

Reinstatement Charges from the Utilities for the excavated portion of the road, which

are exorbitant compared to the cable cost itself leading to an increased cost of network

augmentation and development, which in turn increases the tariff of the end

consumers.

TPC-D submitted that MCGM and MMRDA levy the Reinstatement Charges for the

newly constructed roads across Mumbai Licence area to the extent of 1.2 to 1.5 times

of the Reinstatement Charges levied for normal roads. The comparison of

Reinstatement Charges with the cable cost in the recent past as submitted by TPC-D

in its Petition is as follows:

Table: Comparison of Cable Cost and Reinstatement Charges

Financial Year Cable Cost

(Rs. Per metre)

Reinstatement Charges

(Rs. Per metre)

FY 2008-09 1700 4500

FY 2009-10 1823 5600

FY 2010-11 1980 7500

FY 2011-12 2230 10000

TPC-D further added that in addition to the Reinstatement Charges, the Local Bodies

also collect the security deposits, which are not refunded to the Utilities for years

together and since, no carrying cost is provided on these security deposits, it directly

impacts the profitability of the Licensee, which is already regulated.

Volatility of fuel cost: TPC-D submitted that volatility of fuel cost has a direct

impact on its tariff, as in the absence of allocation of cheaper Central Generating

Stations' power, it sources most its generation from TPC-G, which does not have

access to cheaper domestic fuel and is dependent on international fuel, which is prone

to market fluctuations. TPC-D further submitted that because of the above said

reason, it is exposed to international fuel rate fluctuations and variations in logistic

tariffs and foreign exchange rate movements.

The Commission has made a note of the above submissions of TPC-D, however, the

Commission has discussed the issue of network development in RInfra and BEST licence

area in detail in Section 5.5 of this Order.


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3.4 MYT BUSINESS PLAN PHILOSOPHY

TPC-D submitted that it has prepared the MYT Business Plan with the view to address the

areas covering (i) Regulatory Changes, (ii) Network Development, (iii) Tariff Management,

and (iv) Customer Service.

3.4.1 Regulatory Changes

TPC-D submitted that its business has witnessed several changes in the past such as

ratification of retail licence by the Hon’ble Supreme Court of India in 2008, and is expected

to also undergo such changes in future, i.e., during the second Control Period, such as expiry

of its distribution licence in 2014. TPC-D submitted that it has considered the implication of

the same in the MYT Business Plan and has assumed that the Licence of TPC-D would

continue (through reapplication) till the end of the Control Period and beyond for the purpose

of MYT Business Plan for the entire Mumbai Licence Area (i.e., South Mumbai and Mumbai

Suburbs).

The Government of India, on 30 November, 2011, had forwarded the opinion of the Law

Ministry under which it had suggested that the SERC would not determine the tariff for

consumers greater than 1 MW and the tariff between the distribution licensee and the 1 MW

consumers may be mutually negotiated. In this context, TPC-D submitted that at this point of

time, it is difficult to assess the implication of the same, particularly in view of difficulty in

its implementation and the same would require greater debate on the subject. TPC-D further

submitted that in view of the difficulty in implementation, it has assumed that the present

methodology of tariff setting would continue for 1 MW consumers too and hence, it has

included the sales for such consumers in its projections.

TPC-D also submitted that there are a few cases pending in the various courts pertaining to

the Cross Subsidy Surcharge, laying of wires in BEST's licence area, cessation of changeover

transactions, etc., that would have a bearing on its performance during the next Control

Period. TPC-D added that it has considered an appropriate timing of the decision from the

competent Court in the matters, and the impact of the same has been factored in its Business

Plan.

3.4.2 Network Development Strategy

TPC-D submitted that as stipulated in Section 43 of the Electricity Act, 2003, the Distribution

Licensees are obliged to give power supply to any consumer who desires to avail the same

from the Distribution Licensee. TPC-D submitted that at present, it is meeting its obligation

partly through direct connection to the consumers as well as through the wires of RInfra and

would continue to meet its obligation in the future too for which it proposes to lay network in


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different areas. TPC-D also submitted that the network is laid out in a prudent and

economical manner, which is one of the duties of the Distribution Licensee and has been

factored in the MYT Business Plan and it believes that such development is necessary to

arrive at the optimum tariff.

TPC-D further submitted that accordingly, it has proposed its distribution network layout in

the areas where there is growth and the network in these areas is made to create a network

backbone there so that it would be able to meet its Universal Service Obligation.

TPC-D also added that as required by law, it would provide supply to all the consumers who

approach for supply within the time frame provided in the Electricity Act 2003, in the areas

where TPC-D has its network including the changeover consumers. However, it was also

submitted by TPC-D that if the consumer is already getting power supply from another

licensee, the availability of additional space for providing the step down transformer as well

the LT bus bar and meters will have be ensured on a case to case basis for effecting power

supply. TPC-D submitted that the capital investment that it has proposed in the MYT

Business Plan is on the above assumptions.

3.4.3 Tariff Management

TPC-D submitted that at present, the Commission determines the tariff on a cost plus

approach and the costs incurred are passed on to the consumers, subject to prudence check.

TPC-D submitted that the major components of Tariff are power purchase costs and the

network costs and it is imperative that such costs are optimized, hence, in its MYT Business

Plan, it has optimized the same through power purchase from long-term PPAs, Case 1

Bidding and purchase from renewable sources. TPC-D further submitted that it has kept

dependence on bilateral power purchases to the minimum. TPC-D also added that the

network development is being carried out on a prudent basis with the objective of meeting the

USO as well as to maintain the tariff impact at its minimum.

3.4.4 Customer Service

TPC-D submitted that in its MYT Business Plan, it has focussed towards serving the

consumers effectively and has accordingly planned to serve the consumers in the Control

Period through various initiatives such as application collection from door to door, through

mobile vans and has also provided for application collection at the various offices of TPC-D.

TPC-D also submitted that in order to render effective service during supply, it would

augment its resources and infrastructure in the form of more number of Customer Care

Centres, Call Centre facilities with separation for technical and commercial complaints along


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with providing multiple bill payment channels including spot billing and would organise

consumer meets during the Control Period. TPC-D added that it has also planned some

Demand Side Management (DSM) programmes in co-operation with the consumers.

The Commission has noted the above submissions of TPC-D, however, the issue of network

development in RInfra and BEST licence area has been discussed in detail in Section 5.5 of

this Order. Further, the issues raised by TPC-D regarding implementation of changeover

mechanism have been considered separately by the Commission in its Order dated 22 August,

2012 in Case No. 151 of 2011, and TPC-D has to abide by the Commission's rulings in the

above-said Order.

3.5 BRIEF DECRIPTION OF THE MYT BUSINESS PLAN PETITION

TPC-D, in the present Petition, has submitted its MYT Business Plan for the second Control

Period under various subheads, namely, Business Overview of TPC-D, Market Assessment,

Demand and Sales Assessment, Power Purchase Plan, Capital Investment Plan, Demand Side

Management Plan, Human Resource Plan, Environment Policy and Initiatives, Risk

Mitigation Plan, and other Plans. A brief description of the various Plans submitted by TPC-

G is given below:

a) Business Overview: TPC-D has submitted in detail the overview of its distribution

business in Mumbai Area and the MYT Business Plan philosophy on which the

present Petition is based.

b) Market Assessment: TPC-D has submitted in detail various market conditions

impacting its distribution business. TPC-D has submitted the various statutory and

regulatory frameworks playing important role in defining how a distribution licensee

should operate, various competition and challenges like implementation of parallel

licensing and open access that would impact its distribution business.

c) Demand and Sales Assessment: TPC-D has submitted in detail projected demand

and sales for the Control Period and the factors that would affect the same including

the changeover and switchover consumers.

d) Power Purchase Plan: TPC-D has submitted in detail estimated quantum and cost of

power purchase from various sources to meet its projected demand.

e) Capital Investment Plan: TPC-D has submitted in detail the proposed capital

expenditure and capitalisation plan for the second Control Period. TPC-D submitted

that the majority of its capital expenditure would be to address the projected demand

requirement. TPC-D submitted that in order to estimate the total capitalisation, it had

assessed the capital expenditure requirements for Network and Supply related

activities. TPC-D submitted that the while network related capital expenditure is for


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strengthening and expanding the distribution network and improving the reliability

and performance parameters of the distribution network through automation of

Distribution Sub-Station (DSS) and Consumer Sub-Stations (CSS) of TPC-D, the

Supply related capital expenditure is related to billing of consumers and infrastructure

required for consumer including meters and all meter related equipment and software.

f) Demand Side Management: TPC-D has submitted in details the various DSM

programmes that it has initiated or it proposes to initiate for the Control Period along

with the cost estimates and annual savings in MU due to the implementation of these

DSM schemes.

g) Human Resource Plan: TPC-D has submitted its Manpower requirement,

Recruitment policy, Training and Development plan, Reward, and Recognition

policy.

h) Risk Mitigation Plan: TPC-D has identified various risks and action plans to

mitigate the identified risks.

i) Environment policy and Initiatives: TPC-D has proposed various activities, which

shall contribute towards a clean and green environment.

j) Other Plans: TPC-D has proposed various activities that it shall do towards meeting

its Corporate Social Responsibility, response to business challenges and its future

business plans.

Other than the above plans, TPC-D in its MYT Business Plan, has submitted the computation

of ARR and projected tariff based on different scenarios, i.e., Optimistic, Realistic, and

Pessimistic. TPC-D submitted that the MYT Business Plan is based on the Realistic Scenario.

Each of these aspects of the MYT Business Plan submitted by TPC-D have been discussed

and analysed in detail in Section 4 of this Order.

3.6 KEY ASSUMPTIONS MADE BY THE PETITIONER

TPC-D submitted that the present MYT Business Plan is being submitted in accordance with

the MERC MYT Regulations, 2011. TPC-D submitted that it has prepared the MYT Business

Plan for the second Control Period from FY 2011-12 to FY 2015-16 considering the

prevailing scenario and is accordingly subject to change with the change in

Regulations/Orders from the various judiciary bodies.

Further to the above, TPC-D has considered the following principles for projection for the

second Control Period.


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a) TPC-D has assumed that its licence would continue (through reapplication) till the

end of the Control Period and beyond for the purpose of MYT Business Plan for the

entire Mumbai Licence Area (i.e., South Mumbai and Mumbai Suburbs).

b) The present methodology of tariff setting would continue for 1 MW consumers too

and hence, TPC-D has included the sales for such consumers in the projections.

c) As regards the sales projections, TPC-D has made the following assumptions:

(i) The projections for Residential, Commercial and Industrial consumers are based

on increase in consumption from existing consumers, and estimated consumption

from new consumers along with the changeover of the consumers from other

Utilities using their network has been considered.

(ii) For projecting consumption from existing consumers, growth rates as recorded in

the past are considered, which are then applied to the consumption recorded in

FY 2010-11.

(iii) For Residential category, a growth rate of 1.43% has been considered both in the

specific consumption of the existing consumers as well as the new consumers

being added during the Control Period.

(iv) For LT Commercial category, a growth rate of 5.81% has been considered both in

the specific consumption of the existing consumers as well as the new consumers


(v) For HT Commercial category, a growth rate of 4.77% has been considered both

in the specific consumption of the existing consumers as well as the new

consumers being added during the Control Period.

(vi) For LT Industrial category, growth rate of 6.45% has been considered both in the



(vii) For HT Industrial category, growth rate of 1.28% has been considered both in the



(viii) It has been considered that the sales for changeover consumers will taper down

by FY 2012-13, hence, a growth rate of 2% has been considered. TPC-D

submitted that it has assumed that all changeover consumers added beyond FY

2011-12 will be residential consumers with an average monthly consumption of

175 kWh.

(ix) TPC-D would be allowed to expand network in South Mumbai area from FY

2013-14 after the final Judgment from the Hon’ble Supreme Court is delivered,

hence, it has not considered any switchover consumers in South Mumbai area till

then.


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d) Since, the LT consumers in TPC-D’s network will increase; it has assumed an

increasing distribution loss level trajectory along with the transmission loss of 4.85%

and load factor of 0.73 for the Control Period.

e) As regards the Power Purchase Plan, TPC-D has made the following assumptions:

(i) Although the Commission has approved the quantum for Case I Bidding, yet

TPC-D has reworked the quantum considering a minimum off take guarantee of

65% for the Diurnal Load. TPC-D also submitted that since the approval was till

FY 2014-15, it has for the purpose of MYT Business Plan, considered the amount

of power to be purchased in FY 2015-16 under Case I Bidding to be same as that

in FY 2014-15.

(ii) TPC-D has considered 4% of the requirement as being met from the purchase

from the State pool.

(iii)As regards the power purchase prices from different sources, TPC-D has assumed

the following rates:

Source Rate (Rs./kWh)

Renewable Power Purchase: Solar 15.61

Renewable Power Purchase: Non-Solar 5.50

Case I Bidding 4.50

Purchase from Pool 4.50

Bilateral Purchase 4.50

(iv) For the second Control Period, TPC-D has considered 40 MW power purchase

from Lodhivli as Standby Unit, and hence, has reduced the standby charges from

MSEDCL accordingly.

(v) For projecting the Transmission Charges, the present Total Transmission System

Cost (TTSC) as approved by the Commission and escalated by 5% per annum has

been considered.

f) TPC-D has projected the Return on Equity at the rate of 15.5 % per annum for its

Wires Business and at the rate of 17.5% per annum for its Supply Business,

respectively, and in accordance with the methodology specified in the MERC MYT

Regulations.

g) Interest on Long-Term Loans has been projected considering the debt: equity ratio of

70:30 as specified in the MERC MYT Regulations and based on the debt estimated;

the interest liability has been calculated at weighted average rate of interest of the loan

portfolio.

h) TPC-D has considered the IDFC Loan for meeting the capex requirements for FY

2011-12 and FY 2012-13, and normative loans for the additional capitalization, i.e.,

the capitalization projected for FY 2013-14 to FY 2015-16. Such normative loans


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have been assumed to be financed at the weighted average rate of interest calculated

on the basis of the actual loan portfolio at the beginning of each year. TPC-D

submitted that if considered prudent, it would finance these normative loans through

actual loans.

i) Depreciation has been computed as per rates specified in the MERC MYT

Regulations on the assets projected to be added during the Control Period. TPC-D

submitted that the depreciation has been estimated based on asset additions up to 31

March, 2011 in line with the MERC MYT Regulations and for assets added during

the year in the Control Period, only 50% of the depreciation has been considered for

that year.

j) The Operations and Maintenance (O&M) Expenses for the second Control Period

have been considered as per the MERC MYT Regulations.

k) As regards the Contingency Reserves, TPC-D has assumed that the Contingency

Reserves would not exceed 5% during the Control Period.

l) TPC-D has considered Provisions for doubtful debts at the rate of 1.5% per annum in

accordance with the MERC MYT Regulations, 2011.

m) For projecting the Non-Tariff Income, TPC-D has considered Interest on Contingency

Reserve as interest in previous year plus interest on new investments at the rate of 8%.

TPC-D has also considered the rent as average of last three years, escalated at the rate

of 5.72% per annum every year for its Wires Business.

n) Interest on working capital for its Wires Business has been computed on normative

basis in accordance with the MERC MYT Regulations considering book value of

Stores and Spares equal to that for the past two years and Interest on Consumer

Security Deposit has been considered nil for the purpose of determination of impact

of the Business Plan. TPC-D submitted that for its Supply Business, Consumer

Security Deposit has been considered on the basis of past data, which is

approximately 3.5% of ARR.

o) Tax on Income has been considered at an Income Tax rate of 32.45% and MAT rate

of 20.01%.


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4 MYT BUSINESS PLAN COMPONENTS

4.1 MARKET ASSESSMENT

TPC-D submitted that in order to prepare a Business Plan, it is essential to understand the

market and various forces acting in the market. TPC-D submitted that it has categorised the

Market Assessment broadly into following heads:

4.1.1 Statutory and Regulatory Framework

TPC-D submitted that under the EA 2003, “Distribution” is a licensed activity to be regulated

as per the Licence Conditions, Licensing Regulations and other Regulations that govern the

Distribution Business. The introduction of parallel licensing has given immense power to the

consumers in terms of choice of Utility, and direct competition has resulted in better tariffs

and services, but has also resulted in a number of issues and challenges in terms of operating

this concept at ground level. TPC-D submitted that the following issues and challenges have

arisen while implementing the above concept:

Supply Margin to the Supply licensee: TPC-D submitted that despite serving

consumers, there is no addition to the profits of the Supply Licensee in the present

scheme of operations as most of the addition to the profit comes out of Return on Equity,

which is based on assets used for wheeling and not on the increased sales. The turnover

and the activities of the Supply Licensee increase, but there is no addition in the profits,

which may not be sustainable in future. Hence, there is a need to provide a supply margin

to the Supply Licensee.

Optimum Network development: TPC-D submitted that there is no criteria/guideline

on development of network in the scenario of two or more distribution licensees

operating in the same area, such that the ultimate network developed is optimum with

minimum burden on the end consumer.

Energy Accounting in FBSM under changeover consumer scenario: TPC-D

submitted that the procedure for energy accounting on 15-minute basis under the

changeover consumer scenario needs to be established.

Tariff Rationalisation and determination of Cost of Service: TPC-D submitted that

the subsidy to be provided to any category of consumers should be provided by the State

Government u/s 65 of the Electricity Act, 2003 and not through cross subsidisation

across tariff categories. TPC-D further added that cross subsidisation through the tariff

structure will eventually result in distribution licensees becoming uncompetitive vis-a-vis

the open access generator.


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4.1.2 Competition and Challenges

Parallel Licensee: TPC-D submitted that for the proper implementation of the

concept of parallel licensing, it has to address the following challenges:

a) Development of distribution network at optimum capital expenditure to enable power

supply to new consumers.

b) Sourcing of cheap and reliable power (including renewable) to cater to the increasing

load of new consumers. TPC-D submitted that it will have to enter into additional

long-term contracts apart from the existing contracts to meet the future load

requirements.

c) Resource Management in the areas of Manpower, Finance, IT infrastructure, Land for

new Distribution Substations, cable laying, etc., in view of TPC-D's entry into the

retail business on a large scale; at the same time maintaining competitive tariffs.

d) Acquiring common metering data for changeover consumers.

e) Levy of Cross Subsidy Surcharge (CSS) - TPC-D submitted that as the CSS has been

computed de-novo from FY 2011-12 and in order to be in line with the approach

suggested by the Tariff policy regarding gradual reduction of CSS, it can be computed

considering FY 2011-12 as the base year and progressively reduced to 20% of FY

2011-12 levels, within 5 years of the MYT Control Period. TPC-D further suggested

that the Commission may give clear-cut direction as to the phasing/diminishing of the

CSS or at least the maximum CSS that may be applicable to the changeover

consumers in the coming years of the MYT Control Period as the same will ensure

that consumers have a reasonable certainty and predictability with respect to the

impact of CSS while deciding to changeover. TPC-D further added that in the absence

of such a certainty with regards to maximum applicable CSS, the consumers may

frequently changeover and reverse changeover, resulting in serious issues for the

distribution licensee to predict and procure the required quantum of power, leading to

sub-optimal cost of power purchase as also increase in unproductive or non-value

adding costs due to frequent processing of changeover applications. TPC-D submitted

that its observation as regards the above matter is without prejudice to any of TPC-D's

rights and contentions with respect to the appropriateness of levying CSS and

Regulatory Asset Charge on the changeover consumers.

Open Access: TPC-D submitted that the Commission is taking steps for the

promotion of distribution open access, which gives a choice to the consumers to source their

own power from any supplier other than the distribution Utility they are connected to, and

though open access in distribution business is in nascent stage, it is likely to accelerate in the

coming years. In view of the above, TPC-D submitted that it has to address the following

challenges under the open access scenario:


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a) Power supply to the city of Mumbai is predominantly from generation based on

imported coal. Hence, the tariffs within Mumbai are exposed to international fuel

prices, logistics cost, and foreign exchange fluctuations. TPC-D further submitted that

it is pertinent to note that in order to maintain the competitive advantage of Mumbai

and to attract further investments into Mumbai and Maharashtra, Mumbai, which is

the capital of the State should be provided access to cheaper fuel and/or cheaper

power from Central Generating Stations.

b) Sourcing of cheap and reliable power (including renewable) to cater to the increasing

load of new consumers. However, it is difficult to estimate the exact quantum of long-

term power requirement when short-term open access is allowed to the consumers.

c) Partial Open Access can cause substantial disparity in peak and off-peak demand, if

substantial number of consumers avail open access and this disparity needs to be

addressed by reviewing the ToD tariffs.

d) TPC-D submitted that the cross subsidy in the tariff determination needs to be

reviewed for enabling the distribution licensee to compete with the open access

generators.

4.1.3 Market Issues and Challenges

TPC-D submitted that the Mumbai Distribution market is a peculiar market with additional

supply constraints on one side and the load curve reflecting positive excess kurtosis during

the peak hours.

Transmission Capacity Constraints: TPC-D submitted that till the recent past, the

power requirement of Mumbai was being met by the generating capacities within Mumbai,

however, the energy demand of Mumbai is increasing exponentially, and power needs to be

procured from outside Mumbai to meet the demand. TPC-D also submitted that in addition,

there is an RPO obligation on account of which, the Distribution Licensee needs to procure

renewable energy, which again is commissioned outside Mumbai. TPC-D further submitted

that in view of this, the existing transmission capacities available for bringing power to

Mumbai will not be sufficient to cater to the huge demand requirements of Mumbai and

therefore, the transmission capacities need to be added/upgraded on an urgent basis to ensure

reliable power supply to the city of Mumbai.

Huge gap in peak and off peak requirements: TPC-D submitted that a huge gap in

peak and off peak requirement results in surplus power being available during off peak period

and shortage of power during peak period therefore, it is imperative to smoothen the load

curve through demand side management, which would further involve creating awareness

and implementing demand side management initiatives to a large base of consumers or

mandating the same through specific tariff structures. TPC-D added that Demand Charges

and TOD tariffs need to be reviewed from this perspective.


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4.1.4 Market Outlook

TPC-D submitted that the power distribution reforms are widely viewed as fundamental to

improving the commercial performance and financial viability of the power sector in India

and although these reforms in the Distribution sector have been slow post the Electricity Act,

2003, they are definitely and surely happening. TPC-D submitted that the primary focus of

these reforms has been to improve the efficiencies in the Power Distribution Sector and

various models have been tried towards this end such as privatisation model, distribution

franchise model, APDRP schemes, etc.

TPC-D further submitted that competition has been introduced in the Power Distribution

Sector through distribution open access and parallel licensing in Mumbai and considering that

the availability of power is expected to improve over the next five years, distribution

efficiencies and demand management for distribution Utilities and open access will start

becoming the key drivers in the Power Distribution Sector.

TPC-D added that Mumbai’s Distribution market is quite different from the rest of the

country, as the power distribution markets in rest of the country are grappling with resolving

the issues with respect to distribution loss reduction and load shedding, whereas Mumbai

Utilities are focusing on procuring low cost reliable power and demand side management and

further, choice to the consumer in selecting the Utility will also be instrumental in bringing

about consumer focus as never before.

However, TPC-D added that the recent issues in the Generation Sector with respect to Case I

Bidding, wherein many of the Power Purchase Agreements between the Generator and the

Distribution Licensee are taken up by either party to the Regulatory Commissions or Courts

for performance of contracts, raises a concern about the dependability and cost of supply

from long/medium term sources tied up through Case I Bidding.

4.1.5 Commission's Views

The Commission has considered the submissions of TPC-D in this regard. The Commission

understands that the Distribution Licenses will face a lot of challenges in near future, as the

distribution business in India is evolving, and with increase in open access, the competition is

expected to increase and distribution licenses need to gear up and take effective measure to

safeguard consumer interest. In line with the above, the Commission has facilitated the

introduction of parallel licensing and has also facilitated open access as per the EA 2003. The

various implementation issues referred by TPC-D need to be managed by the respective


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Utilities to attain competitive edge over the competing Distribution Licensees to benefit the

end consumers. As regards the need to undertake capital expenditure in an optimum manner,

the Commission's views in this regard are elaborated in Section 5.5 of this Order.

4.2 CAPITAL INVESTMENT PLAN

TPC-D submitted that the demand projections for the Control Period from FY 2011-12 to FY

2015-16 have been made for TPC-D for which its distribution network has to be developed in

such a way that these demands can be met. TPC-D submitted that the majority of the capital

expenditure of TPC-D would be to address this demand requirement.

TPC-D submitted that in order to estimate the total capitalisation, it has assessed the capital

expenditure requirements for Network and Supply related activities separately. TPC-D

submitted that while network related capital expenditure is for strengthening and expanding

the distribution network and improving the reliability and performance parameters of the

distribution network through automation of Distribution Sub-Station (DSS) and Consumer

Sub-Stations (CSS) of TPC-D, the Supply related capital expenditure is related to billing of

consumers and infrastructure required for consumer including meters and all meter related

equipment and software.

4.2.1 Network Capital Investment Plan

TPC-D submitted that the Network Capital Investment Plan was further classified into

following subheads:

a) Capital Investment Plan for Reliability of the distribution system.

b) Capital Investment Plan for Automation of the distribution system.

c) Capital Investment Plan for Greenfield network development.

d) Capital Investment Plan for network strengthening and network distribution.

4.2.1.1 Capital Investment Plan for Reliability of the distribution system

TPC-D submitted that it is committed to give reliable and quality power supply to the

consumers and in its endeavour to further improve the reliability and quality of network; it

has benchmarked its reliability performance measures with leading companies in the power

sector in the world as submitted under Section 3.3 of this Order. In order to achieve this

target, TPC-D has planned the following capital investments:

TPC-D plans to procure 2 DG Sets of 1000 kVA, 2 sets of 500 kVA and 3 sets of 250

kVA and 8 motor vans for mobility of these DG sets.

TPC-D has proposed to install 4 fixed Power Quality Monitoring System (PQM) units

and 4 portable PQM units


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Emergency O&M Mobile Van (6) with equipments and spares.

Equipment for Condition Monitoring

Replacement of Old Equipments including Transformer, Ring Main Unit, LT Cables,

HT/LT Air Circuit Breaker, 220 V, 24/48 V Battery, 220 V Float cum Boost Charger,

24/48 V Charger and Feeder Pillar

Common Complaint Platform

The total projected capital investment against these schemes over the Control Period is given

in the Table below:

Table: Capital Investment Plan for Reliability of the distribution system (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Total

Mobile DG Sets 1.85 1.85 1.00 0.00 0.00 4.70

PQM Systems 0.00 0.90 0.90 0.00 0.00 1.80

Emergency O&M Mobile Van

with equipments and spares

0.00 0.60 0.30 0.30 0.60 1.80

Condition Monitoring

Equipments

0.00 0.50 1.00 0.00 0.00 1.50

Replacement of Old Equipments 4.66 5.61 6.56 6.96 6.96 30.74

Common Complaint Platform 0.00 0.10 0.00 0.00 0.00 0.10

Total 6.51 9.56 9.76 7.26 7.56 40.64

4.2.1.2 Capital Investment Plan for Automation of the distribution system

TPC-D submitted that it has plans to automate its entire distribution system in order to have

effective monitoring and analyse the strengths and weaknesses of the network. TPC-D added

that the automation system shall also be integrated with GIS and OMS platform. TPC-D has

proposed to develop a Distribution Management system and automate around 40 CSS every

year during the Control Period, the year wise phasing of expenditure is given in the below

Table:

Table: Capital Investment Plan for Automation of the distribution system (Rs. crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Distribution Management System 6.00 7.00 0.00 0.00 0.00 13.00

CSS Automation 1.50 1.50 1.50 2.00 2.00 8.50

Total 7.50 8.50 1.50 2.00 2.00 21.50


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4.2.1.3 Capital Investment Plan for Greenfield network development

TPC-D submitted that based on the information and data from MMRDA, MCGM and

marketing input from its consumer development department, TPC-D has identified green

field areas where development is expected in future. TPC-D submitted that on the basis of the

load growth in the various pockets of Mumbai, TPC-D has identified areas wherein the load

is substantially expected to increase and new network has to be laid down to serve this load

growth. Thus, TPC-D has identified 5 areas in its licence area as Greenfield areas and

estimated the load expected in these areas. TPC-D submitted that based on the same, it has

decided the following timelines for its network readiness in these areas:

Table: Greenfield Area Identification

Sr.

No.

Area Area

(Sq. Km.)

Load

(MW)

Time frame

for Load

Development

Proposed Time

lines for TPC-D’s

readiness

1 Northern Tip of Mira

Bhayander

10.00 8.00 FY 2013-14 Q4 FY 2012-13

2 Northern West of Bhayander-

Uttan

20.00 8.00 FY 2014-15 Q1 FY 2013-14

3 Oswal Agro, Chembur 3.00 5.00 FY 2012-13 Q4 FY 2011-12

4 Mumbai University, Kalina 1.50 5.00 FY 2012-13 Q4 FY 2011-12

5 Eastern Express Highway 2.00 20.00 FY 2013-14 Q4 FY 2012-13

TPC-D submitted that considering the expected load in the identified green field areas, TPC-

D has mapped the load to identify the DSS and the transmission outlets for these DSS, and

thus, the additional requirement of CSS and Cable Network based on certain assumptions as

mentioned in its Business Plan Petition. The summary of network development in Greenfield

Areas proposed by TPC-D is given in the Table below:

Table: Capital Investment Plan for Greenfield network development

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

No. of Substations/Cables


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Distribution Substation (DSS) 0.00 1.00 1.00 1.00 0.00 3.00

Consumer Substation HT

(CSS-HT) 2.00 2.00 2.00 2.00 5.00 13.00

Consumer Substation LT

(CSS-LT) 11.00 11.00 8.00 8.00 24.00 62.00

Total CSS 13.00 13.00 10.00 10.00 29.00 75.00

33kV Cable Network (km) 15.00 30.00 30.00 30.00 19.00 124.00


LT Cable Network (km) 31.00 31.00 28.00 28.00 44.00 162.00

Scheme Value (Rs. Crore)

DSS 0.00 21.60 22.68 23.82 0.00 68.11

CSS-HT 0.69 0.73 0.76 0.80 2.11 5.09

CSS-LT 7.08 7.44 5.68 5.96 18.78 44.94

Total CSS 7.78 8.16 6.44 6.76 20.89 50.03

33kV Cable Network 12.03 25.05 25.65 26.94 18.46 108.13

11kV Cable Network 2.20 25.8 26.53 27.85 5.97 88.36

LT Cable Network 22.53 23.66 22.44 23.56 38.88 131.07

Total Capital Expenditure

Plan 44.54 104.28 103.75 108.94 84.19 445.7

Capital Expenditure Phasing (Rs. Crore)


Phasing 29.62 70.91 72.57 71.19 55.02 299.31

Capitalisation Plan (Rs. Crore)

Total Capitalisation 15.82 39.11 42.4 49.88 42.79 190

TPC-D further submitted that the State Government has informed that it has plans for

redevelopment of Dharavi Area and thus TPC-D plans to install 5 DSS as a part of Dharavi

redevelopment project. However, for the purpose of this Business Plan, TPC-D has assumed

that this load shall be required only after the MYT Control Period and hence, these DSS are

not considered in this Business Plan.

4.2.1.4 Capital Investment Plan for network strengthening and network distribution

TPC-D submitted that based on the information and data from MMRDA, MCGM, marketing

input from its consumer development department and system strength input in various zones

from distribution O&M Department, TPC-D has identified areas for network strengthening

and network diversion. TPC-D submitted that on the basis of the load growth and the

distribution system strength in the various pockets of Mumbai, it has identified areas wherein

the load is substantially expected to increase and the existing network needs to be


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strengthened. Based on the results of this study, TPC-D has identified the following 14 wards

for network strengthening:

Table: Ward wise Network Strengthening required (MVA)

Ward Name Area

Additional

Demand

Envisaged

TPC-D's

network spare

capacity

Additional

Capacity

Required

A to D Churchgate to Grant Road 20.00 0.00 20.00

E to G Mumbai Central to Mahim 25.00 0.00 25.00

K-East Vikhroli 85.00 20.00 65.00

M-West

Jogeshwari, Andheri and Vile Parle-

East 50.00 6.00 44.00

K-West SantaCruz, Khar and Bandra –East 39.00 23.00 16.00

H-East Kurla 47.00 0.00 47.00

N

Jogeshwari, Andheri and Vile Parle-

West 28.00 11.00 17.00

P-South Goregaon 23.00 0.00 23.00

R-South Borivali 23.00 15.00 8.00

Mankhurd-

Chembur Mankhurd and Chembur 26.00 6.00 20.00

P-North Kandivali 17.00 1.00 16.00

R-Central Malad 14.00 19.00 0.00

L Mira-Bhayander 15.00 15.00 0.00

S

Powai, Tagorenagar and

Kanamwarnagar 5.21 4.00 1.21

R-North Dahisar 8.36 15.00 0.00

H-West SantaCruz, Khar and Bandra -West 5.14 0.00 5.14

Total in MVA 430.71 135.00 307.35

TPC-D submitted that considering the expected load in the identified Wards, TPC-D has

mapped the load to identify the DSS and the transmission outlets for these DSS, and thus, the

additional requirement of CSS, Cable Network, Substation Augmentation, DSS

Augmentation and Shifting, Network Augmentation, and Cable Diversion based on certain

assumptions as mentioned in its Business Plan Petition. The summary of network

strengthening and network distribution proposed by TPC-D is given in the Table below:

Table: Capital Investment Plan for network strengthening and network distribution


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

No. of Substations/Cables

DSS 2.00 3.00 3.00 3.00 4.00 15.00

CSS-HT 7.00 13.00 13.00 15.00 16.00 64.00

CSS-LT 34.00 58.00 59.00 67.00 72.00 290.00

Total CSS 41.00 71.00 72.00 82.00 88.00 354.00



LT Cable Network (km) 54.00 78.00 79.00 87.00 92.00 390.00

Capital Expenditure Plan (Rs. crore)

DSS 41.15 64.81 68.05 71.45 100.04 345.50

CSS-HT 2.42 4.73 4.96 6.02 6.74 24.87

CSS-LT 21.89 39.21 41.88 49.94 56.35 209.27

Total CSS 24.32 43.94 46.85 55.95 63.09 234.14

33kV Cable Network 41.21 61.91 65.22 70.77 90.13 329.24

11kV Cable Network 51.68 83.09 87.43 93.77 126.88 442.85

LT Cable Network 39.25 59.93 63.31 73.21 81.29 316.60

Total Cable Network 132.15 204.54 215.97 237.74 298.29 1088.69

Substation Augmentation 6.03 6.34 6.65 6.99 7.34 33.34

DSS Augmentation and

Shifting 0.00 11.57 35.62 20.11 0.00 67.30

Network Augmentation 28.82 28.88 28.93 28.99 29.06 144.68

Cable Diversion 16.83 17.68 18.56 19.49 20.46 93.02


Plan 249.341 377.74 420.63 440.73 518.27 2006.67

Capital Expenditure Phasing (Rs. Crore)


Phasing 165.80 256.87 294.22 288.00 338.65 1343.54

Capitalisation Plan (Rs. Crore)

Total Capitalisation 88.56 141.68 171.90 201.78 263.40 867.33

TPC-D further added that in addition to the above mentioned schemes there are certain

capital investment plans, which were planned and whose implementation was already started

in previous years. TPC-D submitted that the expenditure of these schemes has also been

phased in this Control Period. TPC-D added that the planned expenditures till FY 2010-11

could not be executed on account of unforeseen/uncontrollable reasons and all such capital

expenditure planned in the earlier years and being executed in this Control Period, need to be

added as “Carry forward Schemes” to get the entire capital expenditure plan. TPC-D further

submitted that as done in the past filings, it has allocated expenditure to the extent of Rs. 1

Crore of Head Office and Support (HO & SS) to the Distribution Network business.


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4.2.2 Supply Capital Investment

TPC-D submitted that since the consumer base of TPC-D is currently increasing at a drastic

pace, it is necessary for TPC-D to develop infrastructure within the organisation to provide

efficient services to the consumer. TPC-D submitted that the capital investment plan of the

Supply Business is categorised under following subheads:

a) Meter Management

b) Consumer Care and Services

4.2.2.1 Meter Management

TPC-D submitted that it has to scale up its meter management infrastructure to cater to the

ever growing consumer base. TPC-D submitted that it has planned capital investment towards

the metering infrastructure as under:

Meters: TPC-D submitted that meters are required for all consumers whether direct,

changeover or switchover. Based on the sales projections and the number of

consumers added in each consumer category, TPC-D has determined the meters

required. Thus, while estimating the capital investment towards meters, TPC-D

submitted that is has considered investment towards new meter addition for direct and

changeover consumers and replacement of old meters and defective meters.

Automatic Meter Reading Infrastructure (AMRI)

Other Meter related Capital Investment:

TPC-D submitted that it already has 4 fully automated meter test benches,

however, considering the consumer addition during the Control Period, it has

proposed procurement of an additional bench.

TPC-D has proposed to procure Hand Held Units (HHUs) in a phased manner.

TPC-D submitted that it will require additional resources for meter management to

cater to the increased consumer base and also additional Portable Meter Testing

Devices.

TPC-D has proposed to set up accreditation meter testing and calibration facility

for meter testing.

TPC-D submitted the summary of the total capital investment requirement for meter

management as given in the Table below:

Table: Capital Investment Plan for Meters submitted by TPC-D (Rs. Crore)


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Meters 39.52 26.09 21.99 11.67 12.25 111.52

Automatic Meter

Reading Infrastructure 7.37 8.91 7.10 4.30 4.30 31.98

Other Meter related 0.74 0.02 2.92 0.52 0.67 4.86

Total 47.63 35.02 32.01 16.49 17.22 148.36

4.2.2.2 Customer Management

TPC-D submitted that as its consumer base has spread across the entire Mumbai Licence

Area, TPC-D has to take necessary steps to effectively manage and satisfy its consumers.

TPC-D presently has 13 (During the public hearing, TPC-D submitted this number as 20)

Customer Care Centres and 2 Bill Collection Centres, however, TPC-D intends to add

Customer Care Centres within easy reach of consumers and a Bill Collection Centre within

reach of 2 km for every consumer. Touch Screen Kiosks are planned to be installed across

key locations in Mumbai City. TPC-D has planned to IT-enable its Consumer Service

processes by implementation of robust SAP-CRM, which is integrated with SAP IS-U, GIS

and other related Applications. TPC-D submitted that it further intends to develop its office

space and purchase about 6 additional vehicles each year and each year, 3 old vehicles shall

be replaced by new vehicles.

Table: Capital Investment Plan for Customer Management submitted by TPC-D

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

No. of Customer Care Centres 1.00 1.00 1.00

3.00

No. of Bill Collection Centres 1.00 5.00 1.00 1.00 4.00 12.00

No. of Touch screen kiosks 2.00 4.00 4.00 6.00 4.00 20.00

Capital Investment (Rs. Crore)

Customer Care Centres 6.00 1.50 1.50 0.00 0.00 9.00

Bill Collection Centres 0.12 0.60 0.12 0.12 0.48 1.44

Touch screen Kiosks 0.07 0.14 0.14 0.21 0.14 0.70

CRM 3.50 1.00 0.00 0.00 0.00 4.50

Development of Office

Infrastructure 2.83 0.95 0.97 0.97 1.00 6.72

Conveyance Infrastructure 0.68 0.74 0.82 0.90 0.99 4.12

Total 13.2 4.93 3.55 2.2 2.61 26.48

TPC-D further added that in addition to the above mentioned schemes, it has considered

capital expenditure of Rs. 1 Crore per annum towards allocation of capital expenditure from

HO&SS. TPC-D submitted that it has also phased the expenditure of these schemes in this

Control Period.


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The total Capital Investment Plan for the Control Period as submitted by TPC-D in the MYT

Business Plan is as follows:

Table: Total Capital Investment and Capitalisation Plan for Control Period (Wires+

Supply) submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Capital Expenditure

Phasing Plan

Distribution Network 288.71 483.26 516.93 369.45 404.22 2062.57

Supply Business 61.82 40.95 36.56 19.69 20.83 179.86

Total Capital

Expenditure Phasing 350.53 524.21 553.48 389.13 425.04 2242.40

Capitalisation Plan


Supply Business 61.82 40.95 36.56 19.69 20.83 179.86


The Commission has verified the projected Capital Investment Plan vis-a-vis the in-principle

approved schemes and has approved the capitalisation to be considered for the purpose of

MYT Business Plan, in accordance with the provisions of the MERC MYT Regulations in

relation to capital expenditure and after considering subsequent submissions made by TPC-D

during the regulatory process. The relevant provisions of MERC MYT Regulations, viz.,

Regulation 77, Regulation 27 and Regulation 28, are as under:

"77. Capital Cost: Distribution

77.1 The approved Business Plan of the Distribution licensee shall be the basis for

determining the annual allowable capital cost for each financial year for any capital

expenditure project initiated on or after April 1, 2011 with a value exceeding Rs. Ten

(10) Crore.

77.2 For each capital expenditure project, the sum total of annual allowable capital

cost from the date of commencement of such project till the date of commissioning shall

be original cost of such project.

77.3 The provisions of the statements of Accounting Standards (AS10): Accounting for

Fixed Assets of the Institute of Charted Accountants of India shall apply, to the extent

not inconsistent with these Regulations, in determining the original cost of the capital

expenditure projects and/or original cost of fixed assets capitalized.

77.4 The capital cost shall be allowed as provided in Regulation 27.”

"27. Capital Cost and Capital Structure

27.1 Capital cost for a project shall include:


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(a) the expenditure incurred or projected to be incurred, including interest during

construction and financing charges, any gain or loss on account of foreign exchange

risk variation on the loan during construction up to the date of commercial operation of

the project, as admitted by the Commission, after prudence check;

(b) capitalised initial spares subject to the ceiling rates specified in this Regulation;

and

(c) additional capital expenditure determined under Regulation 28:

Provided that the assets forming part of the project but not put to use or not in use,

shall be taken out of the capital cost.

27.2 The capital cost admitted by the Commission after prudence check shall form the

basis for determination of tariff:

Provided that prudence check may include scrutiny of the reasonableness of the

capital expenditure, financing plan, interest during construction, use of efficient

technology, cost over-run and time over-run, and such other matters as may be

considered appropriate by the Commission for determination of tariff.

27.3 The approved Capital Cost shall be considered for determination of tariff and if

sufficient justification is provided for any escalation in the Project Cost, the same

may be considered by the Commission subject to the prudence check:

Provided that in case the actual capital cost is lower than the approved capital cost,

then the actual capital cost shall be considered for determination of tariff of the

Generating Company or Transmission Licensee or Distribution Licensee.

27.4 The actual capital expenditure on COD for the original scope of work based on

audited accounts of the company limited to the original cost may be considered subject

to the prudence check by the Commission.

27.5 The Commission may approve for each year of the Control Period, an additional

amount equivalent to 20% of the total capital expenditure approved for respective

financial year of the Control Period towards unplanned capital expenditure or the

capital expenditure that is included under the Business Plan but is yet to be approved

by the Commission.” (emphasis added)

"28. Additional Capitalisation

28.1 The following capital expenditure, actually incurred or projected to be incurred,

on the following counts within the original scope of work, after the date of commercial


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operation and up to the cut-off date may be admitted by the Commission, subject to the

prudence check:

.....

28.2 Impact of additional capitalisation on tariff, if any, shall be considered during

Mid-term Performance Review and tariff determination of third Control Period

starting from April 1, 2016." (emphasis added)

In view of the above provisions of MERC MYT Regulations, it is clarified that the detailed

scrutiny, review, and approval of each capital expenditure scheme would be undertaken

separately. However, the Commission has verified the revised estimate of capital cost as

submitted by TPC-D in the present Petition and the Commission’s rulings in the matter are

elaborated at Section 5.5 of this Order, which should be duly considered by TPC-D while

making the capital cost submissions in its MYT Petition. Moreover, in its Order dated 22

August 2012 in Case No. 151 of 2011, the Commission has given certain directions as

regards capital expenditure to be undertaken by TPC-D in the Suburban Mumbai area over

the next one year. TPC-D has to re-draw its capex plan accordingly and comply with the

Commission's directions in this regard.

4.3 DEMAND SIDE MANAGEMENT PLAN

TPC-D submitted that it has initiated Demand Side Management (DSM) activities in FY

2008-09 including load research, and launch of DSM pilot programmes in FY 2009-10 and

FY 2010-11. TPC-D further submitted that the Commission in its MERC (Demand Side

Management Implementation Framework) Regulations, 2010 has mandated the Distribution

Licensees as follows:

Distribution Licensee shall submit its DSM Plans based on Load Research activities

and submit the findings to the Commission and the resulting propositions to

implement DSM programmes to be aggregated as “DSM Plans.”

Distribution Licensees shall specify DSM targets and submit DSM Plans based on

multi-year planning horizon.

The term of the DSM Plan shall correspond with the Multi-Year Tariff term.

Distribution Licensees shall submit multi-year DSM plans along-with the multi-year

tariff filing.

TPC-D submitted that through its various DSM programmes initiated in FY 2010-11, it has

been able to achieve an estimated annual savings of 2 MU.


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TPC-D further submitted that it has prepared a DSM plan in accordance with the guidelines

set forth by the Commission, and has aligned it to the MYT plan from FY 2011-12 to FY

2015-16. TPC-D submitted that the proposed DSM programmes target peak clipping and

strategic conservation, through different measures including replacement of inefficient

appliances with star labelled efficient appliances, promoting energy efficient appliances

wherever new purchase is taking place, providing incentive to designers and builders to set

up green buildings, and creating awareness of energy efficiency and conservation.

TPC-D, in its MYT Business Plan, has considered the following DSM Programmes for

implementation in MYT Control Period:

a) Energy Audits (P-l)

b) Energy Efficient Tube Light Programme (P-2)

c) Thermal Storage (P-3)

d) Demand Response (DR) (P-4)

e) Five Star Refrigerator Program (New Stock Program) (P-5)

f) Gas water Heater Program (New Stock Program) (P-6)

g) Star Ceiling Fan Program (New Stock Program) (P-7)

h) Five Star Air Conditioner Program (New Stock Program) (P-8)

i) Solar Water Heater Program (P-9)

j) National BEE programmes BLY etc.(P-10)

k) HVAC Revamp program (P-11)

l) Tata Power Green Buildings Promotion Initiative (P-12)

m) TPC-D's DSM Training Initiative (P-13)

n) Standard Offer Program (P-14)

o) Energy Efficiency Power Plant (EPP) (P-15)

4.3.1 DSM Cell - Salary

TPC-D submitted that as advised by the Commission, it has formed a DSM Cell. TPC-D

submitted that the DSM Cell would design, implement and roll out the DSM programmes and

will also provide overall supervision along with submitting the necessary reports to the

Commission. TPC-D added that the DSM shall have one top level management officer, two

middle level management officers, and three executive level officers. The total DSM Cell

salary considering the approximate salary of DSM Cell with 10% escalation each year, in

addition to employee expenses, as submitted by TPC-D in its Petition is as follows:

Table: DSM Cell Salary submitted by TPC-D (Rs. Crore)


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

DSM Cell Salary 0.80 0.90 1.00 1.10 1.20

4.3.2 DSM - Other Costs

TPC-D submitted that implementation of DSM measures such as energy conservation,

requires a thorough understanding of the current end-use. TPC-D submitted that DSM

measures in different sectors and consumer segments need to target specific end-uses and

their contribution in the energy use and peak demand. TPC-D submitted that it needs to carry

out load research through market research, questionnaires and sector-wise energy audits and

AMR load profile research, which is a perpetual activity of DSM Cell. TPC-D submitted that

training and internal capacity building is also an important part of success of DSM

programmes and the same is attained through attending seminars, courses and on job training.

TPC-D added that the field of DSM is not developed in India and there is no past experience

available in the country because of which it may require consultancy services for load

research, further design and development of DSM programmes to take the activities to the

next level. TPC-D submitted that the advanced programmes of Energy Efficiency power

plants and standard offer will require national and international expert advice. TPC-D added

that its DSM Cell also intends to roll out awareness campaigns, exhibitions, seminars and

conferences for consumers in different categories, and development of website, leaflets,

demonstrations, etc., are planned during the MYT period. Other costs related to DSM as

submitted by TPC-D are as follows:

Table: DSM-Other Costs submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Load Research, Market Survey and

Capacity Building related costs 0.60 0.00 0.80 0.80 1.00

The Commission has verified the projected DSM Plan vis-a-vis in-principle approved DSM

schemes and has considered the same for the purpose of MYT Business Plan projections. The

detailed analysis of the cost estimates and annual savings in terms of MU of the above said

schemes has been discussed in Section 5.11 of the Order.


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4.4 ORGANISATION STRUCTURE

TPC-D submitted that it is expecting its distribution business to change in a major way owing

to the drastic changes in the distribution environment in the Mumbai licence area. TPC-D

submitted that in view of this evolving scenario in the distribution sector, its organisation

structure will have to meet the immediate requirements as well as keep pace with the long-

term perspective of the Distribution Business.

TPC-D submitted that the organisation structure of TPC-D would be broadly divided into

following three areas:

a) Distribution Consumer Services: This structure will be responsible for consumer

acquisition, meter management, commercial and consumer care and operation and

maintenance of the network.

b) Distribution Support Services: This structure will be responsible for activities related

to distribution capex, billing, and other initiatives like AMR and GIS.

c) Power Management: This structure will be responsible for all activities related to power

procurement, sale of excess power and activities related to scheduling, energy balancing

and settlement.

TPC-D submitted that in addition to the above, there would be support functions relating to

Regulatory, Legal, Human Resource Management, MIS, Performance Improvement,

Sourcing, Safety, and Security which may be either centrally operated functions or attached

to one of the above areas depending on specific requirements.

The Commission has made a note of TPC-D’s submission in this regard.

4.5 HUMAN RESOURCE PLAN

TPC-D submitted that in order to cater to the requirements of the growing consumer base and

execute the capital expenditure plan in addition to continuing with the requirements of

operational norms, it requires to augment its existing staff. TPC-D submitted that in this

regard, for the purpose of projections, it has broadly divided the manpower requirement into

the three areas identified above, based on the skill requirements:

4.5.1 Distribution Consumer Services:

a. Distribution O&M: TPC-D submitted that as per the capital expenditure plan, there

are a number of DSS and CSS that will get added to its distribution network. TPC-D

submitted that based on its past experience, a cluster of 4 DSS and 100 CSS require an O&M

base of One Head and 10 officers, therefore, considering the number of DSS and CSS being

added, there will be 9 such clusters by the end of Control Period as detailed below:


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Table: Addition of DSS and CSS in the Control Period

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

DSS

No. of existing DSS 14.00 17.00 22.00 26.00 30.00

No. of new DSS getting added 3.00 5.00 4.00 4.00 4.00

DSS at the end of each year 17.00 22.00 26.00 30.00 34.00

Cluster of 4 DSS 5.00 6.00 7.00 8.00 9.00

CSS

No. of existing CSS 509.00 563.00 647.00 729.00 821.00

No. of new CSS getting added 54.00 84.00 82.00 92.00 117.00

CSS at the end of each year 563.00 647.00 729.00 821.00 938.00

Cluster of 100 CSS 6.00 7.00 8.00 9.00 10.00

No. of clusters (4 DSS+100

CSS) together 6.00 7.00 8.00 9.00 10.00

TPC-D further submitted that considering the staff strength of 11 per cluster (1 Head and 10

Officers), the manpower required under O&M would be 110 by FY 2015-16 and also there

would be a Distribution Control Centre (DCC) for the overall control and monitoring of the

distribution network, which will be a central body comprising of 12 staff. TPC-D added that

based on its experience, it has considered manpower requirement of 1 person for every 100

km towards Cable O&M and meter management and further it has also considered bench

strength of 2 GETs. The manpower projections based on the above assumptions, as submitted

in the Petition, are as follows:

Table: Manpower Requirement for Distribution O&M

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

O&M Manpower

No. of 4 DSS+100 CSS Clusters 6.00 7.00 8.00 9.00 10.00

Increase in clusters per year 1.00 1.00 1.00 1.00

O&M Manpower per cluster 11.00 11.00 11.00 11.00 11.00

Manpower for O&M of DSS and

CSS 66.00 77.00 88.00 99.00 110.00

No. of km of HT network 1675.00 1933.00 2190.00 2452.00 2727.00

O&M Manpower per 100 Km of

HT network 1.00 1.00 1.00 1.00 1.00

Manpower for Cable O&M and

Meters Management 17.00 20.00 22.00 12.00 12.00

DMS 12.00 12.00 12.00 12.00

GETs 2.00 2.00 2.00 2.00 2.00


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Staff 78.00 83.00 83.00 84.00 82.00

Total Manpower required 163.00 194.00 207.00 222.00 234.00

b. Customer Acquisition: TPC-D submitted that the consumer acquisition team would

be responsible for acquisition of consumers and is further required to be strengthened

considering the change of mix of consumer addition towards increasing residential

consumers.

c. Commercial: TPC-D submitted that the commercial team would be responsible for

meter reading, revenue recovery, and disconnection along with carrying out vigilance

activities.

d. Customer Relations: TPC-D submitted that the customer relations team would be

responsible for attending to consumer complaints, queries and will endeavour to provide

better services to consumers.

The total manpower requirement for Distribution Consumer Services as projected by TPC-D

in its Petition is as follows:

Table: Manpower Requirement for Distribution Consumer Services

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Distribution O&M 163.00 194.00 207.00 222.00 234.00

Consumer Acquisition 18.00 27.00 31.00 31.00 32.00

Commercial 43.00 58.00 63.00 68.00 77.00

Consumer Relations 30.00 33.00 38.00 40.00 41.00

Total 254.00 312.00 339.00 361.00 384.00

4.5.2 Distribution Support Services

a. Distribution Capex: TPC-D submitted that in order to execute the proposed capital

expenditure, dedicated manpower would be required since the projects would be undertaken

on a continuous basis throughout the Control Period. TPC-D has proposed the bench strength

of around 6 engineers to be maintained to take care of the retirement and resignations of

existing staff based on certain thumb rules derived from its past experience. The manpower

requirement projected for Distribution Capex as submitted by TPC-D is as follows:

Table: Manpower Requirement for Distribution Capex for the Control Period


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Capex Manpower

Addition of DSS per year 3.00 5.00 4.00 4.00 4.00

Manpower required for DSS

installation

2.00 2.00 2.00 2.00 2.00

Manpower required for addition

of DSS

5.00 7.00 6.00 6.00 6.00

Addition of CSS per year 54.00 84.00 82.00 92.00 117.00

Manpower required for group of 7

CSS installation

1.00 1.00 1.00 1.00 1.00

Manpower required for addition

of CSS

8.00 12.00 12.00 14.00 17.00

No. of DSS+CSS added per year 57.00 89.00 86.00 96.00 121.00

Civil Manpower required for group

of 7 SS

1.00 1.00 1.00 1.00 1.00

Civil Manpower required for

addition of SS

9.00 13.00 13.00 14.00 18.00

Length of LT Cable added every

year

85.00 109.00 107.00 115.00 136.00

Manpower per 50 km 4.00 4.00 4.00 4.00 4.00

Manpower for LT Cable lying 7.00 9.00 9.00 10.00 11.00

Length of HT Cable added every

year

147.00 258.00 257.00 262.00 275.00

Manpower per 25 km 3 3 3 3 3

Manpower for HT Cable lying 18 31 31 32 33

Engineering and associated 15 15 15 15 15

Total Manpower for Distribution

Capex

62 88 86 91 100

b. Other Support Services Manpower: TPC-D submitted that the other support

services provided are Accounting, Billing, GIS, and AMR. TPC-D submitted that it has

considered that about 20 officers will be required as a part of Accounting team, 5 officers will

be required as a part of Billing Team, 8 officers as a part of GIS team and 5 officers as a part

of AMR team. The total manpower requirement for Distribution Support Services as

projected by TPC-D in its MYT Business Plan Petition is as follows:

Table: Manpower Requirement for Distribution Support Services

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Distribution Capex 62.00 88.00 86.00 91.00 100.00

Accounting 20.00 20.00 20.00 20.00 20.00

Billing 5.00 5.00 5.00 5.00 5.00


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

GIS 8.00 8.00 8.00 8.00 8.00

AMR 5.00 5.00 5.00 5.00 5.00

Total 100.00 126.00 124.00 129.00 138.00

4.5.3 Power Management

TPC-D submitted that a major activity of the Distribution Utility is to manage the power

purchase, sales and the day-to-day operations related to scheduling and monitoring of the

power flow for the Distribution Utility, which includes power purchase related long-term

contracts, short-term purchases, purchases from Renewable Energy sources, and sale of

surplus power. TPC-D also submitted that in addition to the above, it also includes arranging

for the open access on transmission corridors and making energy balance settlements with the

other Utilities of the State as per the prevailing Rules and Regulations. TPC-D added that it

has considered a manpower requirement of 18 people for Power Management.

4.5.4 Summary of Manpower Requirement

The total manpower requirement of the Distribution Business based on the above, as

submitted by TPC-D in its Petition, is given in the following Table:

Table: Projected Manpower of Distribution for the Control Period

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Distribution Consumer Services 254.00 312.00 339.00 361.00 384.00

Distribution Support Services 100.00 126.00 124.00 129.00 138.00

Power Management 18.00 18.00 18.00 18.00 18.00

Total 372.00 456.00 481.00 508.00 540.00

The Commission has made a note of TPC-D’s submission, however, the Commission is of

the view that TPC-D should modify its manpower requirement based on the capex and sales

approved by the Commission in this Order as well as in accordance with the directions given

by the Commission in its Order dated 22 August, 2012 in Case No. 151 of 2011, and ensure

that the O&M expenses for the Control Period from FY 2012-13 to FY 2015-16 are within

the norms specified in the MERC MYT Regulations, 2011.


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4.6 HUMAN RESOURCE DEVELOPMENT PLAN

4.6.1 Recruitment Policy

TPC-D submitted in its Petition that it has in place a detailed, short and long term recruitment

plan, through which it aims to serve current and future business manpower needs. TPC-D

submitted that in order to do this effectively, it has set a target of hiring 50% of its manpower

needs through Graduate Engineer Trainees (GETs) and the remaining through lateral

recruitment. TPC-D submitted that for hiring GETs, it goes to a number of colleges all over

the country while the lateral hiring is done through variety of sources like consultants, job

portals, employee referrals, etc. TPC-D submitted that it always endeavours to ensure that

talent is sourced in the most cost-effective manner and the recruitment policy is geared

towards that.

4.6.2 Training and Development

TPC-D submitted that it believes that the employees are one of the key stake holders of the

organisation and hence, employee training and development becomes integral to achieve the

organisational objectives and for continuous improvement in all the operational and service

areas. TPC-D added that training and development is done through various methodologies

that include training programmes, job rotation opportunities, self-education facility, Tata

Group sponsored programs, Multi-rater sessions, on the job training, power plant simulator

training, class room training, technical workshops, seminars, e-learning, etc.

TPC-D submitted that it has a comprehensive Training and Development Plan, which not

only looks into the organizational needs but also the individual needs based on their

performance and requirements. The Training and Development Plan of TPC-D as submitted

in the Petition, is broadly classified into Operational/Functional and Developmental needs.

4.6.3 Cognition Reward and Recognition Policy

TPC-D submitted that a key imperative for it is to reward performance and nurture a culture

of excellence, one with the help of instituting a holistic compensation philosophy. TPC-D

submitted that the compensation of all officers is reviewed annually based on comparator

data obtained through a scientific study commissioned through expert consultants as well as

internal data collection. TPC-D submitted that high level of performance is encouraged by

linking an individual's variable pay to the performance of the Company and SBU, in addition

to individual performance. TPC-D further submitted that special recognition of top

performers is encouraged through a formal 'Reward and Recognition' Policy having the

following objectives:

To motivate and foster a productive work culture to achieve organizational objectives.


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To encourage employees to excel, take initiative, be creative, and realize their latent

potential as part of a team in contributing to the organisation.

The Commission has considered the submissions of TPC-D in this regard. The Commission

advises TPC-D to strengthen its Regulatory Cell and create scope for multi-disciplinary role.

4.7 RISK MITIGATION PLANS

TPC-D submitted that it follows specific process for identification of risks and has action

plans for mitigation of identified risks. Some of the risks identified are namely, inability to

deliver consumer expectations regarding services, leaving consumers unsatisfied, failure of

assets leading to damage to consumers premises and accidents, load shedding, and threats to

assets on account of terrorism/sabotage, natural disasters, accidents, fire, and unauthorised

access. Some of the actions proposed by TPC-D to mitigate risks are as follows:

Maintaining high level of performance standards regarding operations and services to

consumers.

Planning power purchase meticulously to ensure availability.

Incorporating safety, protection and security features in all assets at design stage itself.

Consumer Education and awareness.


4.8 RISK ANALYSIS AND MITIGATION

TPC-D submitted that the distribution business in Mumbai is currently in a highly flux

situation with a lot of ambiguity regarding how it will evolve in the future. The major

contributors to this situation are:

Number of distribution licensees operating in the same area with the Rules and

Regulations for such operations not being finalised.

Issues like segregation of a wheeling licensee and supply licensee, supply margin and

cross-subsidy though decided have not reached conclusion as regards implementation

and impact.

Open Access supply to consumers is still in an evolving stage.

Not enough experience regarding impact of performance of one Utility over another

Utility, i.e., the driving factors for the choice of Utility by a consumer are yet to be

established.

TPC-D submitted that there would be an impact on the operations of the Distribution

Licensees, once these issues are concluded. TPC-D submitted that the Distribution Licensee

currently has to operate on a number of assumptions on account of this dynamic situation,


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which in itself involves a lot of risk, TPC-D submitted that in spite of the above mentioned

dynamics, it has to continue to maintain its competitive advantage, otherwise, it runs a risk of

losing consumers and to continue maintaining its competitive advantage, it has to:

Have long / medium / short term arrangements for the power requirement of the

consumers of the distribution business.

Ensure that it meets all the consumer service requirements apart from providing

reliable power supply.

Ensure that it has the adequate number of professional and skilled manpower to cater

to the requirements of the distribution business.


4.9 ENVIRONMENT POLICY AND INITIATIVES

TPC-D submitted that it is committed to a clean, safe and healthy environment, and operates

its facilities in an environmentally sensitive and responsible manner and the commitment

towards environmental protection and stewardship is achieved by:

Complying with the requirements and spirit of applicable environmental laws and

striving to exceed required levels of compliance wherever feasible.

Ensuring that the employees are trained to acquire the necessary skills to meet

environmental standards.

Conserving natural resources by improving efficiency and reducing wastage.

Making business decisions that aim towards sustainable development.

Engaging with stakeholders to create awareness on sustainability.

TPC-D submitted that as a Distribution Licensee, it has made and will continue to take the

following specific initiatives towards environment protection and control:

Procurement of Renewable Power: TPC-D has been making all efforts for

maximising its power purchase from renewable energy sources and will continue to

do so in future.

Waste Management: Though the facilities of local authorities are available for solid

waste management, TPC-D is actively engaged in exploring various environment

friendly options such as in-house treatment of organic wastes from the canteens and

colonies, facilitating segregation of wastes in colonies through Stree Mukti

Sanghatana and other such organisations.

The Commission has noted the submissions of TPC-D in this regard.


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4.10 FUTURE BUSINESS OPPORTUNITIES

TPC-D submitted that under the present rapidly changing situation and the existing Rules and

Regulations, it may be difficult for it to identify future business opportunities and hence, it

has not discussed the same in detail in this Business Plan.

TPC-D submitted that at present, it is still evaluating the available opportunities for supplying

power to other areas through Open Access and the same is particularly important in view of

the possibility of implementation of the Government of India opinion on consumers with

Contract Demand more than 1 MW. TPC-D submitted that it has proposed to contract for

power on the assumption that there would not be any migration of consumers from it,

however, in future it may have to face a condition when actually some consumers migrate

with the present contracted capacity remaining unchanged. TPC-D added that such situation

will result in surplus power with it, which then can be supplied on merchant basis to other

Distribution Licensees or Open Access consumers. TPC-D further submitted that it will

assess this situation during mid- term review.

4.11 CORPORATE SOCIAL RESPONSIBILITY

TPC-D submitted that TPC has established Energy Clubs in many schools of Mumbai, which

spread the awareness about the energy conservation among children. TPC-D has further

proposed to increase the penetration of these Energy Clubs to schools and even colleges and

to sensitise the community about the use of safe electric instruments in the slums. TPC-D

added that keeping in mind the importance of Energy Conservation and reducing wasteful

usage of energy, it aims at educating consumers and public at large to reduce energy wastage

and increase energy efficiency.

The Commission has noted the submissions of TPC-D and the Commission’s views in this

regard are discussed in Section 5.11 of this Order.

4.12 RESPONSE TO BUSINESS CHALLENGES

TPC-D submitted that the distribution business is a very public intensive and asset intensive

business and hence, this business has several operational and business challenges. TPC-D

submitted that the operational challenges include development of distribution infrastructure in

a city, which has a huge space constraint, non-availability of any norms, statutes for

development of city spaces leaving the Utility to deal with right of ways for cables and spaces

for substations, infrastructure bottlenecks like limited transmission corridors to bring in

power, limited availability of renewable sources of power, etc. TPC-D further submitted that

the Utilities face a huge challenge in managing peak and off-peak power requirements where


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during peak there is a shortage of power and during off-peak there is surplus power

availability.

TPC-D further submitted that the business challenges include remaining the lowest cost

supplier in a highly competitive market, while at the same time meeting all the consumer

service requirements. TPC-D added that it intends to put in all efforts for efficient asset

management, which include going in for low space consuming equipment, optimum

utilisation of assets and optimising in long-term and short-term power purchases.

The Commission has noted the submissions of TPC-D in this regard.


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5 ARR COMPONENTS UNDER MYT BUSINESS PLAN

TPC-D, in its Petition, has given details of its Operational Plan for its Distribution Business

(TPC-D) for FY 2011-12 to FY 2015-16 under various heads, viz., O&M expenses,

Depreciation, interest on loans, etc., as per the data formats prescribed by the Commission. In

the Guidelines and data Formats stipulated by the Commission for filing the MYT Business

Plan, the Commission had also directed the Distribution Utilities to project their ARR based

on the projected sales, capital expenditure and O&M expenses, so that the consumers would

get an idea of the impact of the Plans proposed by the Licensees. However, approval of the

ARR of the Distribution Utility is not within the scope of the MYT Business Plan Order.

Hence, for completeness of this Order, the Commission has captured the ARR as projected by

TPC-D in this Chapter and has also given its views on the same, while approval of the ARR

would be by Order once TPC-D submits a petition for said purpose.

As regards treatment of the submissions made by TPC-D for FY 2011-12 under this MYT

Business Plan, the Commission vide its letter dated 4 November, 2011 directed TPC-D to

submit its ARR and Tariff Petition for FY 2011-12 as per MERC (Terms and Conditions of

Tariff) Regulations, 2005. However, TPC-D has not complied with this direction and has not

filed its Petition for approval of ARR for FY 2011-12, in accordance with MERC (Terms and

Conditions of Tariff) Regulations, 2005.

TPC-D had submitted a letter dated 14 November, 2011 requesting the Commission to accept

the MYT Petition for FY 2011-12 in accordance with the MERC MYT Regulations rather

than the MERC Tariff Regulations, 2005, since, TPC-D would be entitled to higher

depreciation expenses and Return on Equity under the MERC MYT Regulations. TPC

submitted that in case it was not possible to determine the tariff for FY 2011-12 under the

MERC MYT Regulations, then the ARR for FY 2011-12 could be trued up under the MERC

MYT Regulations. The Commission communicated to TPC-D that it could submit the MYT

Petition for the period from FY 2011-12 to FY 2015-16 in accordance with the MERC MYT

Regulations. However, during the TVS on TPC-D's MYT Petition, the Commission clarified

that in accordance with the MERC MYT Regulations, the MYT Petition was required to be

submitted by incorporating the decisions of the Commission in its Order on approval of the

MYT Business Plan, and hence, the MYT Petition could be considered only upto a point.

Thus, since, FY 2011-12 is already over, the tariff for FY 2011-12 cannot be determined

under the MERC MYT Regulations, with retrospective effect. Further, there is no merit in

TPC's request that in case it is not possible to determine the tariff for FY 2011-12 under the

MERC MYT Regulations, then the ARR for FY 2011-12 could be trued up under the MERC

MYT Regulations, since, truing up has to be done on the same principles as the original


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Order, and the extant Order that was in force in FY 2011-12 was the earlier Tariff Order

dated 12 September, 2010, issued in accordance with the MERC Tariff Regulations, 2005.

Hence, the Commission directs TPC-D to submit its ARR for FY 2011-12 as per MERC

Tariff Regulations, 2005 as a separate section in its MYT Petition for FY 2012-13 to FY

2015-16 as per MERC MYT Regulations, 2011.

In view of the above, while approving the present MYT Business Plan of TPC-D for the

second Control Period, the Commission has not given any views regarding the operational

expenditure heads for FY 2011-12.

For the years from FY 2012-13 to FY 2015-16, the total expenditure under various heads, as

projected by TPC-D along with the Commission's views on the same, have been discussed in

subsequent Sections.

5.1 SALES

TPC-D submitted that it has attempted to forecast demand for a period of five years, i.e., from

FY 2011-12 to FY 2015-16. TPC-D submitted that in February 2011, it had submitted a

Petition to the Commission for approval of quantum of Power Purchase under Case I route

prescribed in the Competitive Bidding Documents notified by the Ministry of Power,

Government of India, and in this Petition, it has made certain projections of sales in the

period from FY 2011-12 to FY 2015-16. TPC-D submitted that suitable modifications have

been done to the above said projections while considering the actual data up to March 2011.

TPC-D submitted that it has projected the sales to existing consumers and new consumers

(prospective consumers likely to be added to TPC-D's consumer base during this period)

separately for the following segments:

1. Direct Consumers: Consumers who are being supplied through TPC-D's own

distribution network and new consumers (who were earlier not the consumers of any

distribution licensee) added to TPC-D’s distribution network, i.e., TPC-D is the

Wheeling Licensee as well as the Supply Licensee to these consumers. TPC-D

submitted that for the purpose of the MYT Business Plan, it has not considered any new

Direct Consumers in South Mumbai Area till FY 2013-14, as the final Judgment of the

Hon’ble Supreme Court is expected by FY 2013-14 and TPC-D has considered addition

of distribution network in South Mumbai Area from FY 2013-14 only.

2. Changeover Consumers: Changeover consumers being supplied power by TPC-D

using the network of another Utility, i.e., TPC-D is only the Supply Licensee for these

consumers. TPC-D submitted that supply under such an agreement has been considered

for Mumbai Suburban Area only.


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3. Switchover Consumers: Switchover consumers that were being supplied power by

another Utility using its own network now opting for power supply from TPC-D

through the network of TPC-D. TPC-D submitted that for the purpose of the Business

Plan, it has not considered any new Switchover Consumers in South Mumbai Area till

FY 2013-14 as the final Judgment of the Hon’ble Supreme Court is expected by FY

2013-14 and TPC-D has considered addition of distribution network in South Mumbai

Area from FY 2013-14 only.

It may be noted that though the Commission has considered the classification between

'changeover' and 'switchover' consumers as proposed by TPC-D for the purposes of

projections over the Control Period, this should not be seen as approval or acceptance by the

Commission for this classification.

5.1.1 Sales Projections of Direct Consumers

TPC-D submitted that in order to project the sales to direct consumers of TPC-D, it has

adopted a category specific approach wherein the projections for Residential, Commercial,

and Industrial consumers are based on increase in consumption from existing consumers and

estimated consumption from new consumers.

TPC-D submitted that it has determined the consumption from existing consumers based on

projected specific consumption of existing consumers, keeping in mind the historic trend of

the same, multiplied by the existing number of consumers ,as shown below:

Consumption from existing consumers= Specific consumption x No. of existing consumers

The specific consumption has been projected on the basis of the historic consumption trend,

as shown below:

Specific Consumption=Consumption/ No. of Consumers

TPC-D further submitted that due to change in the business scenario, it has added a

significant number of new consumers to its consumer base over the last two years, i.e., FY

2009-10 and FY 2010-11. However, the specific consumption has shown a slower growth

rate in some of the consumer categories, as the consumption from new consumers has not

matured. TPC-D further submitted that the specific consumption is expected to increase at a

higher growth rate when the consumption pattern of these consumers matures, and the

consumers start using the full load. TPC-D submitted that for projecting consumption from

existing consumers, it has considered growth rates as recorded in the past, which was applied

to the specific consumption recorded in FY 2010-11. TPC-D added that for new consumers,


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who do not have any historical consumption trend, it has projected the demand based on its

experience in the business while in case of Railways, it has projected consumption to be

constant at FY 2010-11 levels.

Existing and New Direct Consumers

The category-wise projections made by TPC-D and projected by the Commission are

discussed below:

5.1.1.1 Residential

TPC-D submitted that it has considered the growth rate in specific consumption from FY

2006-07 to FY 2010-11 at 1.43% and a similar growth rate trend is expected in future also.

TPC-D further submitted that it has applied this growth rate to specific consumption recorded

in FY 2010-11 for the purpose of projecting the consumption from existing residential

consumers.

TPC-D submitted that in addition to the consumption from existing residential consumers, it

has received bookings from new consumers for two years, i.e., FY 2011-12 and FY 2012-13,

which have been considered for estimating consumption from new consumers for FY 2011-

12 and FY 2012-13. TPC-D submitted that the consumption from new consumers for future

years has been estimated based on bookings received in the past. TPC-D submitted that it has

assumed that the consumption of new consumers will also grow by a rate of 1.43%. The

projected consumption for Residential category as submitted by TPC-D is as follows:

Table: TPC-D's Projection for Residential Consumers (MU)

Residential

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Existing consumers 104.13 105.62 107.13 108.66 110.21 111.78

New consumers 0.00 9.50 14.84 22.07 28.90 37.34

Total 104.13 115.12 121.96 130.73 139.11 149.12

The Commission obtained the data on actual category-wise sales for FY 2011-12 from TPC-

D and has considered the same for projecting the sales from FY 2012-13 onwards.

In line with the methodology adopted by TPC-D to forecast sales, the Commission has

computed sales from existing consumers based on actual sales of FY 2011-12 and escalated

the same year on year based on growth in specific consumption. As regards growth rate of


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specific consumption, the Commission has considered the growth rate of 1.43%, based on the

CAGR for FY 2006-07 to FY 2010-11 as submitted by TPC-D.

Further, sales to new consumers have been considered for the Control Period based on the

number of consumers projected to be added during the year. The Commission has observed

that the new consumer additions have been increasing for TPC-D; in FY 2010-11, TPC-D

added 4134 new consumers and in FY2011-12 the consumer additions were 7270; however,

for the purpose of projections, the Commission has assumed that TPC-D shall add at least the

same number of consumers as added in FY 2011-12, during every year of the Control Period.

Thus, the Commission has projected the consumption from new consumers projected to be

added in the residential category. The total sales projected by the Commission to the

residential category over the Control Period are given in the Table below:

Table: Sales to Residential Consumers projected by the Commission (MU)

Residential Consumption FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Existing consumers 119.29 120.99 122.72 124.47

New consumers 25.81 52.35 79.64 107.71

Total 145.10 173.34 202.37 232.18

5.1.1.2 Commercial

TPC-D submitted that separate projections have been done for LT Commercial and HT

Commercial categories as follows:

a) LT Commercial

TPC-D submitted that some of its LT Commercial consumers were categorised as LT

Industrial consumers in FY 2007-08 and because of such re-categorisation it might not be

appropriate to take longer period growth rate, hence, growth rate from FY 2005-06 to FY

2006-07, i.e., the period prior to such re-categorisation has been considered. TPC-D

submitted that during this period, LT Commercial category has shown an annual growth rate

of 5.81% in specific consumption and the same has been considered for projecting the

consumption of existing LT Commercial consumers for the MYT period.

TPC-D submitted that in addition to the consumption from existing LT Commercial

consumers, it has received bookings for the next 2 years, i.e., FY 2011-12 and FY 2012-13,


12 and FY 2012-13. TPC-D added that the consumption from new consumers for future years

has been estimated based on TPC-D's experience. TPC-D further submitted that it has

assumed the specific consumption of the new consumers to also grow by 5.81% per annum.


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The projected consumption for existing and new consumers as submitted by TPC-D is as

follows:

Table: TPC-D's Projection for LT Commercial Consumers (MU)

LT Commercial

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16


New consumers 0.00 31.30 66.32 104.86 141.96 182.68

Total 243.79 289.25 339.25 393.64 447.52 505.97

The Commission has projected the sales to existing LT Commercial category based on FY

2010-11 sales by escalating the same annually based on growth in specific consumption. The

Commission has considered the growth rate of 5.81% in specific consumption, as submitted

by TPC-D.

As regards sales to new consumers, TPC-D has estimated annual additional sales ranging

from 31 MU to 34 MU during the Control Period based on its experience, however, the

Commission as has assumed additional sales of 30 MU for every year of the Control Period

for simplicity. This increased consumption has been escalated at the growth rate of 5.81% for

the subsequent years of the Control Period. The total sales projected by the Commission to

the LT Commercial category over the Control Period are given in the Table below:

Table: Sales to LT Commercial Consumers projected by the Commission (MU)

LT Commercial Consumption FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16


New consumers 61.74 95.33 130.86 168.46

Total 334.67 384.11 436.41 491.76

b) HT Commercial

TPC-D submitted that in order to project the sales to HT Commercial category, it has selected

a sample of such consumers to calculate the growth in specific consumption of HT

Commercial consumers in the past. TPC-D submitted that the selected sample of consumers

were the consumers of TPC-D for a period of more than 5 years and the average annual

growth rate (four year CAGR) recorded by this sample of consumers is 4.77% between FY


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2004-05 to FY 2008-09, which has been considered to project the consumption from existing

HT Commercial consumers.

TPC-D submitted that in addition to the consumption from existing HT Commercial

consumers, it has received bookings for the next 2 years, i.e., FY 2011-12 and FY 2012-13,


12 and FY 2012-13. TPC-D added that the consumption from new consumers for future years

beyond FY 2012-13 has been estimated based on TPC-D's experience. TPC-D has assumed

that the specific consumption of the new consumers will also grow at the rate of 4.77% per

annum.

The projected consumption of existing and new HT Commercial consumers as submitted by

TPC-D is as follows:

Table: TPC-D's Projection for HT Commercial Consumers (MU)

HT Commercial

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16


New consumers 0.00 71.30 134.10 185.89 247.15 312.62

Total 550.74 648.29 738.59 819.19 910.64 1007.74

The Commission has projected the sales to existing HT Commercial category based on FY


Commission has considered the growth rate of 3.61% (CAGR for FY 2008-09 to FY 2010-

11) in specific consumption, as growth rate submitted by TPC-D was based on very old data

between FY 2004-05 to FY 2008-09.


from 45 MU to 71 MU during the Control Period based on its experience, however, the

Commission has assumed additional sales of 60 MU for every year of the Control Period for

simplicity. This increased consumption has been escalated at the growth rate of 4.77% for the

subsequent years of the Control Period.

The total sales projected by the Commission to the HT Commercial category over the Control

Period are given in the Table below:

Table: Sales to HT Commercial Consumers projected by the Commission (MU)

HT Commercial Consumption FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16


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New consumers 122.17 186.58 253.32 322.47

Total 713.42 799.20 888.07 980.15

5.1.1.3 Industrial

TPC-D submitted that it has made separate projections for LT Industrial and HT Industrial

consumer categories, as discussed below:

a) LT Industrial

TPC-D submitted that it some of its LT Commercial consumers had been re-categorized to

LT Industrial category in FY 2007-08. TPC-D submitted that before the re-categorisation, the

LT Industrial consumers had shown a growth rate of 6.45% in specific consumption from FY

2004-05 to FY 2006-07, and the same has been considered to project the consumption from

existing LT Industrial category consumers.

TPC-D submitted that in addition to the consumption from existing LT Industrial consumers,

it has received bookings for the next 2 years, i.e., FY 2011-12 and FY 2012-13, which have

been considered for estimating consumption from new consumers for FY 2011-12 and FY

2012-13. TPC-D submitted that the consumption from new consumers for future years has

been estimated based on TPC-D's experience. TPC-D added that it has assumed that the

specific consumption of the new consumers will also grow by 6.45% per annum.

The projected consumption of existing and new LT Industrial consumers as submitted by

TPC-D is as follows:

Table: TPC-D's Projection for LT Industrial Consumers (MU)

LT Industrial

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16


New consumers 0.00 1.70 2.91 4.34 5.91 7.65

Total 185.98 199.68 213.66 228.69 244.74 261.88

The Commission has projected the sales to existing LT Industrial category based on FY


Commission has considered the growth rate of 3% in specific consumption. The growth rate

of 6.45% proposed by TPC-D was based on very old data, while the growth rate based on


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CAGR of FY 2008-09 to FY 2010-11 is 1.01%, which is very less. The Commission further

observed that the consumption of LT Industrial consumers taking supply from RInfra-D has

increased by 2.6% based on 6 years CAGR. Hence, the Commission has considered a growth

rate of 3% for LT Industrial consumers for the Control Period, as being representative of the

growth for this category.


from 1.10 MU to 1.70 MU during the Control Period based on its experience, however, the

Commission has assumed additional sales of 1.5 MU for every year of the Control Period for

simplicity. This increased consumption has been escalated at the growth rate of 6.45% for the

subsequent years of the Control Period.

The total sales projected by the Commission to the LT Industrial category over the Control


Table: Sales to LT Industrial Consumers projected by the Commission (MU)

LT Industrial Consumption FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16


New consumers 3.05 4.64 6.28 7.96

Total 200.35 207.86 215.60 223.57

b) HT Industrial

TPC-D submitted that for calculating the specific consumption of HT Industrial category

consumers, it has adopted the same methodology as adopted for HT Commercial category,

i.e., selecting a sample of HT Industrial consumers to calculate the growth in specific

consumption of HT Industrial consumers in the past. TPC-D submitted that the average

annual growth rate recorded by this sample of consumers was 1.28% between FY 2005-06 to

FY 2008-09, which has been considered to project the consumption from existing HT

Industrial consumers.

TPC-D submitted that in addition to the consumption from existing HT Industrial consumers,

it has received bookings for the next 2 years, i.e., FY 2011-12 and FY 2012-13, which have

been considered for estimating consumption from new consumers for FY 2011-12 and FY

2012-13. TPC-D submitted that the consumption from new consumers for future years has

been estimated based on TPC-D's experience. TPC-D added that it has assumed that the

specific consumption of the new consumers will also grow by 1.28% per annum. The

projected consumption of existing and new HT Industrial consumers as submitted by TPC-D

is as follows:


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Table: TPC-D's Projection for HT Industrial Consumers (MU)

HT Industrial

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16


New consumers

1.70 2.82 3.96 5.17 7.44

Total 824.72 836.39 847.61 858.98 870.54 883.31

The Commission obtained the data on actual category-wise sales for FY 2011-12 from TPC-

D and observed that the actual sales to HT Industrial Category consumers is 1002.71 MU,

which is much higher than TPC-D’s projections for the Control Period, and has hence,

considered the actual sales for FY 2011-12 for projecting the sales from FY 2012-13

onwards. The Commission has considered the growth rate of 1.28% over the base sales of FY

2011-12 for projecting the sales for the Control Period.

The total sales projected by the Commission to the HT Industrial category over the Control


Table: Sales to HT Industrial Consumers projected by the Commission (MU)

HT Industrial Consumption FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Total 1015.55 1028.55 1041.72 1055.06

5.1.1.4 Railways

TPC-D submitted that it has observed that the consumption of Railways has been more or

less constant during the last three years, and hence, TPC-D has projected constant sales for

the entire MYT period at 821 MU, i.e., the sales of FY 2010-11.

Table: TPC-D's Projection for Total Railways Consumption (MU)

Railways

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Total 821.13 821.13 821.13 821.13 821.13 821.13

Since, the consumption of Railways have been ranging around the same level for the last

three years, the Commission has considered the actual sales of 830.77 MU recorded in FY

2011-12 for the entire Control Period, as shown in the Table below:


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Table: Sales to Railways projected by the Commission (MU)

Railways Consumption

FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Total 830.77 830.77 830.77 830.77

5.1.1.5 Total Direct Sales Summary

The summary of total sales to existing and new consumers as projected by TPC-D is given

below:

Table: Direct Sales projected by TPC-D (MU)

Total Direct

Consumption

FY 2010-11

(Actuals)

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Residential 104.13 115.12 121.96 130.73 139.11 149.12

Commercial* 794.53 937.54 1077.84 1212.84 1358.15 1513.71

Industrial 1010.70 1036.07 1061.27 1087.66 1115.28 1145.19

Railways 821.13 821.13 821.13 821.13 821.13 821.13

Total 2730.49 2909.86 3082.20 3252.35 3433.67 3629.16

*Temporary Supply sales is included in Commercial Category

The category-wise direct sales projected by the Commission in this Order is given in the

Table below:

Table: Direct Sales projected by the Commission (MU)

Consumer Categories FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Residential 145.10 173.34 202.37 232.18

Commercial*

LT 334.67 384.11 436.41 491.76

HT 713.42 799.20 888.07 980.15

Industrial

LT 200.35 207.86 215.60 223.57

HT 1015.55 1028.55 1041.72 1055.06

Railways 830.77 830.77 830.77 830.77

Total 3239.86 3423.83 3614.94 3813.50

*Temporary Supply sales is included in Commercial Category


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5.1.2 Sales Projection of Changeover Consumers

TPC-D submitted that projection of sales for changeover consumers is a difficult task as the

movement of consumers from other Utilities to TPC-D would depend on various factors and

unlike the case of direct consumers, past trends cannot be used to project the future in case of

Changeover consumers. TPC-D further submitted that the movement of consumers would not

only depend on tariff of TPC-D but also on the tariff of RInfra, i.e., the differential tariff

between TPC-D and RInfra.

TPC-D submitted that it had attempted to project the sales in the month of July 2010, when

the number of applications for changeover had somewhat stabilised. TPC-D submitted that

the estimates for the rest of the months in FY 2010-11 were made on anticipated applications

at that point of time. TPC-D added that while projecting the sales, the application trend, the

specific consumption of consumers at that point of time and the consumer mix in July 2010

was considered.

TPC-D submitted that it had again estimated the sales to changeover consumers in the month

of February 2011 and it was observed that the projections differed as compared to the

projection made on the basis of July 2010 consumption, thereby confirming that the

projections of changeover sales is an extremely difficult exercise and the projections would

vary at different points of time.

TPC-D submitted that for the MYT Business Plan Petition, for FY 2011-12 sales, it has

considered the sales for the month of March 2011 as the “base monthly sale”. TPC-D

submitted that in addition to the base sale, there would be sales due to addition of changeover

consumers in FY 2011-12 and for such new changeover consumers, it has considered the

specific consumption based on past estimates and the quarter wise mix of consumers have

been estimated. The estimated mix of consumers as submitted by TPC-D is given in the table

below:

Table: TPC-D's assumption for projections of Sales for FY 2011-12

Categories

Specific Consumption for FY 2011-

12 from incremental consumers Mix of Addition

kWh/Consumer/Month Q1 Q2 Q3 Q4

Residential 275.00 89.00% 90.00% 93.00% 93.00%

Commercial 4300.00 10.00% 9.00% 6.00% 6.00%

Industrial 5300.00 1.00% 1.00% 1.00% 1.00%

Total 100% 100% 100% 100%


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TPC-D submitted that the number of changeover consumers expected to be added during FY

2011-12 is 1,50,000, however, the rate of addition of consumers may vary from quarter to

quarter.

The number of consumers expected to be added per quarter in FY 2011-12 and their

contribution to sales as submitted by TPC-D is given in the following table:

Table: Changeover sales Consumer Addition in FY 2011-12 as projected by TPC-D

Residential Commercial Industrial Residential Commercial Industrial Total

Q1 17500 15575 1750 175 4.28 7.53 0.93 12.74

Q2 15000 13500 1350 150 3.71 5.81 0.8 10.31

Q3 12500 11625 750 125 3.2 3.23 0.66 7.08

Q4 5000 4650 300 50 1.28 1.29 0.27 2.83

FY

2011-12

No. of

additions

per month in

that quarter

Category-wise no. of Consumers Category-wise sales (MU) added per

The month-wise changeover sales projected by TPC-D for FY 2011-12 are as follows:

Table: Changeover Sales in FY 2011-12 as projected by TPC-D (MU)

Month Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 FY 12

customers added up

to March 2011 182.54 182.54 182.54 182.54 182.54 182.54 182.54 182.54 182.54 182.54 182.54 182.54

Apr-11 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74

May-11 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74

Jun-11 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74 12.74

Jul-11 10.31 10.31 10.31 10.31 10.31 10.31 10.31 10.31

Aug-11 10.31 10.31 10.31 10.31 10.31 10.31 10.31

Sep-11 10.31 10.31 10.31 10.31 10.31 10.31

Oct-11 7.08 7.08 7.08 7.08 7.08

Nov-11 7.08 7.08 7.08 7.08

Dec-11 7.08 7.08 7.08

Jan-12 2.83 2.83

Feb-12 2.83

Total 182.54 195.28 208.02 220.76 231.07 241.38 251.69 258.77 265.85 272.93 275.76 278.59 2882.6

TPC-D submitted that the projected changeover sales for FY 2011-12 worked out to 2882.57

MU. TPC-D further submitted that for estimating the sales for FY 2012-13, it has considered

the projected sales for March 2012 as the base sale. TPC-D submitted that since, it is

envisaged that the changeover consumers will taper down by FY 2012-13, it has considered a

growth rate of 2% for increase in specific consumption. The sales projected by TPC-D for FY

2012-13 are as follows:


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Table: Changeover sales in FY 2012-13

Sr. No. Particulars Unit

1 Projected Sale for March 2012 MU 278.60

2=1*12

months

Projected Sale for FY 2012-13 using March 2012 as

base

MU 3343.20

3 Overall growth considered for including the growth

of consumers as well as the specific consumption

% 2.00%

4=2*(1+3) Sales with Consumers added up to March 2012 MU 3410.07

TPC-D submitted that the projected changeover sales for FY 2012-13 worked out to 3410.07

MU. TPC-D further submitted that though the number of new consumers added in the

coming years would be lower compared to that in previous years, such additions would

contribute to the sales. The addition of changeover consumers projected by TPC-D is as

follows:

Table: Projected changeover consumer Addition from FY 2012-13

Year No. of consumers added

FY 2012-13 75000

FY 2013-14 50000

FY 2014-15 15000

FY 2015-16 15000

TPC-D submitted that it has assumed that all the consumers added beyond FY 2011-12 would

be residential consumers with an average monthly consumption of 175 kWh. The additional

sales to new changeover consumers assuming linear addition of consumers during the years,

as submitted by TPC-D is as follows:

Table: Addition in Changeover Sales beyond FY 2011-12

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Consumer Addition (No.) 75000 50000 15000 15000

Projected Sales (MU) 85.00 56.85 17.92 16.81

TPC-D submitted that in addition to the new changeover consumers, it has considered a rise

of 2% on the closing balance of consumption in the previous year. The summary of sales to

changeover consumers as submitted by TPC-D is as follows:

Table: Changeover Sales Projected by TPC-D (MU)


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Consumption

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Due to opening Balance of Consumers 2190.42 3410.07 3564.97 3694.25 37896.42

Due to new consumers 691.98 85.00 56.85 17.92 16.81

Total 2882.57 3495.07 3621.82 3712.17 3803.23

As regards the Commission’s query regarding the basis for projecting the changeover

consumers from FY 2012-13, TPC-D submitted that the changeover consumers are connected

to the network of the other Distribution Licensees like RInfra and therefore, addition of

consumers in such category is not dependent on the network rollout plan. TPC-D further

submitted that in the projections, it has considered the “switchover” category separately,

which depicts the movement of consumers from being served through the Wires of other

Licensees to the Wires of TPC-D, which would be in turn dependent on the network roll out.

TPC-D added that it has in the MYT Business Plan adjusted the changeover sales accordingly

to that extent.

As regards addition of Changeover consumers during the Control Period, TPC-D has

assumed that gradually the number of changeover consumers would taper down from

1,50,000 in FY 2011-12 to 15,000 in FY 2015-16, however, the Commission has observed

that the Changeover consumers have been increasing every year after the inception of the

concept of Changeover as shown in the below Table. TPC-D has assumed that all the

changeover consumers in future (from FY 2012-13 onwards) would be added only in the

residential category. TPC-D had projected addition of 1,50,000 consumers in FY 2011-12,

however, based on actual consumer addition as submitted by TPC-D during the Public

Hearing, it has added 1,32,686 consumers in spite of discontinuing changeover process for

about 4 months from 15 October, 2011 to 4 February 2012 during the year, as shown in the

Table below:

Table: Growth in Changeover Consumers

Particulars FY 2009-10 FY 2010-11 FY 2011-12

No of consumers 22,703 1,04,657 2,37,343

Addition during the year 81,954 1,32,686

The Commission, in its Order dated 22 August, 2012 in Case No. 151 of 2011 has allowed

changeover of consumers from RInfra to TPC-D only for the residential category consumers

who consume electricity upto average 300 units per month, for a period of one year from the

issue of the said Order. Hence, in this MYT Business Plan Order, the Commission has

assumed that annually around 50,000 changeover residential category consumers consuming


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upto 300 units per month would be added to TPC-D's consumer base for each year during the

Control Period. Though the Commission has restricted the changeover to residential category

of consumers who consume electricity upto 300 units per month only for a period of one

year, in the MYT Business Plan Order, the same assumption has been considered for the

Control Period from FY 2012-13 to FY 2015-16.

As regards TPC-D’s assumption on specific consumption, the Commission has observed that

for FY 2011-12, TPC-D has considered an average monthly consumption for its residential

changeover consumers as 275 kWh/consumer/month, while for the rest of the MYT Control

Period it has considered a specific consumption of 175 kWh/consumer/ month for additional

new consumers (entirely residential consumers).

In view of the Commission's direction in the Order dated 22 August, 2012 in Case No. 151 of

2011, that changeover from RInfra-D to TPC-D is allowed only for the residential category

consuming upto average 300 units per month, the Commission has assumed specific

consumption of 175/kWh/month for the changeover consumers projected to be added during

the Control Period.

Further, TPC-D has escalated specific consumption at 2% for all consumer categories,

however, the Commission has escalated specific consumption at the growth rate assumed for

respective category for direct consumers as it is based on past trends observed by TPC-D for

the respective consumer category.

The Commission has taken into account the approved changeover sales in FY 2010-11 along

with the revised submission of TPC-D for the changeover sales in FY 2011-12. The

changeover sales projected by the Commission based on FY 2011-12 actual sales and

assumptions discussed above are given in the Table below:

Table: Changeover Sales projected by the Commission (MU)

Changeover consumers

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Sales 3010.76 3188.80 3373.51 3565.24

No. of Consumers added 50,000 50,000 50,000 50,000

5.1.3 Sales Projection of Switchover Consumers

TPC-D submitted that since there was no historical data, TPC-D has relied upon its informal

communication with consumers for projecting the sales to switchover consumers, wherein


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some of the consumers have indicated their eagerness to switch over to TPC-D’s network.

TPC-D submitted that it would be facing the following challenges in developing a network in

the above said areas:

5.1.3.1 South Mumbai Area

TPC-D submitted that based on its experience and understanding, it would face the following

challenges for cable lying in South Mumbai Area:

i. Permission from various Authorities such as MCGM/PWD/MMRDA and Traffic Police

needs to be obtained. This process of obtaining permission for cable laying ranges from 1

month to 3 months.

ii. Permission is granted only during fair season, which is practically 6 months (October to

March).

iii. Permission is denied for excavation of roads under 1 year guarantee.

iv. In case of South Mumbai Area, full carriage is concretised as compared to paver blocks

in road shoulders in Mumbai Suburbs area. Permission is denied for breaking concrete

based roads.

Hence, TPC-D submitted that it has considered it prudent to project conservative switchover

sales in South Mumbai Area in view of the case pending in the Hon’ble Supreme Court from

FY 2013-14 onwards. Switchover sales projected by TPC-D in South Mumbai Area are as

follows:

Table: Estimated Capacity and Sales from Switchover Consumers- South Mumbai

Particulars

FY

2013-14

FY

2014-15

FY

2015-16

Addition in Switchover Capacity (MVA) 6.50 25.50 38.75

Sales to Additional Switchover consumers

(MU) 20.16 79.09 120.18

Annual Sales to Switchover consumers (MU) 20.16 99.65 221.83

5.1.3.2 Mumbai Suburban Area

TPC-D submitted that the projection of switchover sales in Mumbai Suburban Area is based

on the same lines as that for South Mumbai Area. Thus, the estimated sales submitted by

TPC-D after considering a load factor of 0.73, power factor of 0.97 and increase in specific

consumption of 2% per annum, is as follows:

Table: Estimated Capacity and Sales from Switchover Consumers- Mumbai Suburbs (MU)


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Addition in Switchover

Capacity (MVA) 12.25 31.74 28.47 26.82 20.13

Sales to Additional

Switchover consumers

(MU) 19.00 98.44 88.30 83.17 62.43

Annual Sales to

Switchover consumers

(MU) 19.00 175.95 368.17 548.77 707.01

The total switchover sale for South Mumbai and Mumbai Suburbs as projected by TPC-D is

given in the following table:

Table: Total Switchover Sales projected by TPC-D (MU)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Due to Opening Balance of

Consumers

0.00 77.51 279.88 486.17 746.22

Due to New Consumers 19.00 98.44 108.46 162.26 182.61

Total 19.00 175.95 388.33 648.42 928.83

TPC-D submitted that it has assumed that the additional sales to switchover consumers in

Mumbai Suburban Area will lead to equal reduction in the projected sales to Changeover

Consumers and therefore, the adjusted sales to changeover consumers projected by TPC-D is

as follows:

Table: Adjusted Sales to Changeover Consumers submitted by TPC-D (MU)

Particulars FY FY FY FY

2012-13 2013-14 2014-15 2015-16

Residential

Sales to changeover consumers (a)

903.71

978.63

1,016.13

1,053.26

Sales to additional switchover sales (b) 5.00 14.42 38.55 77.60

Adjusted sales to changeover consumers

(c=a-b)

898.71

964.22

977.58

975.66

Commercial

Sales to changeover consumers (a) 1903.20 1941.26 1980.09 2019.69




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Particulars FY FY FY FY

2012-13 2013-14 2014-15 2015-16

(c=a-b) 1,780.00 1,699.49 1,618.01 1,523.78

Industrial




(c=a-b)

640.42

589.94

567.82

596.78

Total




(c=a-b) 3319.12 3253.65 3163.41 3096.22

In reply to the Commission’s query regarding the status of network development in South

Mumbai, TPC-D submitted that BEST, the other Distribution Licensee in South Mumbai, has

filed an appeal against the Judgment of the Hon’ble ATE in the Hon'ble Supreme Court and

had asked for a stay on the development of distribution network by TPC-D in the South

Mumbai Area. The Hon’ble Supreme Court in its Order dated 10 May, 2012 has granted

“status quo”. The Commission has accepted TPC-D's submissions regarding Capex schemes

in South Mumbai and granted conditional approval, as it is subject to the Hon’ble Supreme

Court’s Order as discussed in Section 5.5 of this Order.

The Commission is of the view that the switchover sales in South Mumbai area will largely

depend on the Judgment of the Hon’ble Supreme Court of India, and accordingly the

Commission has not considered switchover sales from South Mumbai area in the MYT

Business Plan. The impact of the same shall be considered once the Hon’ble Supreme Court

gives its Judgment in this matter, at the time of Mid-term Review or Final Truing-Up at the

end of the Control Period.

For the switchover sales in Mumbai Suburban area, the Commission has accepted TPC-D's

projections to compute sales. However, the Commission has escalated specific consumption

at the growth rate assumed for respective category for direct consumers as it is based on past

trends observed by TPC-D for the respective consumer category.

It is further observed that out of the total switchover sales, TPC-D has projected that about

70% of the sales is for Commercial consumers, 20% for Industrial consumers, and only 10%

for Residential consumers. Further, as seen from the above table of adjustment of

Changeover sales, it is observed TPC-D plans to switchover only 77 MU of residential

consumption out of 1053 MU till the end of this Control Period, however, 495 MU of


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commercial consumption out of 2019 MU is intended to be switched over to TPC-D’s own

network. The Commission is of the view that TPC-D should accommodate all consumers on

its network, irrespective of the consumer category, to fulfil its obligations as a Distribution

Licensee.

The switchover sales for Mumbai Suburban area as projected by the Commission is shown in

the following Table:

Table: Switchover Sales projected by the Commission in Mumbai Suburban areas (MU)

Particulars Units FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Addition in Switchover Capacity MVA 31.74 28.47 26.82 20.13

Sales to Additional Switchover

Customers

MU 98.44 88.30 83.18 62.43

Annual Sales to Switchover

Customers

MU 138.42 336.72 528.87 704.25

To avoid duplication between changeover and switchover sales, the Commission has adjusted

the changeover sales by reducing the corresponding amount of switchover sales projected by

the Commission. The adjusted category-wise changeover sales projected by the Commission

in this Order, is given in the Table below:

Table: Adjusted Changeover Sales projected by the Commission (MU)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Residential

Sales to changeover consumers (a)

829.50

899.97

971.45

1,043.94

Sales to additional switchover Consumers

(b) 9.84 28.80 46.48 61.83


(c=a-b)

819.65

871.17

924.96

982.12

Commercial



(b) 100.65 241.22 378.85 506.16


(c=a-b)

1,399.79

1,346.36

1,300.92

1,271.16

Industrial



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(b) 27.93 66.70 103.53 136.26


(c=a-b)

652.90

634.55

618.76

607.70

Total



(b) 138.42 336.72 528.87 704.25


(c=a-b) 2872.34 2852.08 2844.65 2860.98

It is reiterated that though the Commission has considered the classification between

'changeover' and 'switchover' consumers for the purposes of projections, this should not be

seen as approval or acceptance by the Commission for this classification.

The summary of category-wise sales projected by the Commission for Direct, Changeover

and Switchover consumers is given in the below Table:

Table: Summary of Category-wise Sales projected by the Commission (MU)

Categories

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

LT I - Residential 963.06 1061.78 1162.28 1264.60

Direct 145.10 173.34 202.37 232.18

Changeover 808.12 859.64 913.43 970.59

Switchover 9.84 28.80 46.48 61.83

LT II - Commercial 1102.94 1197.95 1298.48 1404.85

Direct 319.58 369.02 421.32 476.67

Changeover 730.72 702.78 679.01 663.45

Switchover 52.64 126.16 198.14 264.73

LT - Industry 639.32 641.77 645.79 652.43

Direct 200.35 207.86 215.60 223.57

Changeover 433.83 421.64 411.14 403.80

Switchover 5.14 12.27 19.05 25.07

LT V - Advertisement 0.11 0.11 0.11 0.11

Direct 0.00 0.00 0.00 0.00

Changeover 0.11 0.11 0.11 0.11

Switchover 0.00 0.00 0.00 0.00

LT VII - Temporary Supply 16.20 16.20 16.20 16.20

Direct 15.09 15.09 15.09 15.09

Changeover 1.11 1.11 1.11 1.11


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Categories

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Switchover 0.00 0.00 0.00 0.00

HT I - Industry 1257.41 1295.90 1333.82 1370.16

Direct 1015.55 1028.55 1041.72 1055.06

Changeover 219.07 212.91 207.62 203.91

Switchover 22.79 54.43 84.48 111.19

HT II - Commercial 1422.76 1550.09 1682.95 1821.56

Direct 708.33 794.11 882.98 975.06

Changeover 666.41 640.93 619.26 605.06

Switchover 48.01 115.06 180.71 241.43

HT III - Group Housing Society 11.53 11.53 11.53 11.53

Direct 0.00 0.00 0.00 0.00

Changeover 11.53 11.53 11.53 11.53

Switchover 0.00 0.00 0.00 0.00

HT VI - Temporary Supply 6.52 6.52 6.52 6.52

Direct 5.09 5.09 5.09 5.09

Changeover 1.43 1.43 1.43 1.43

Switchover 0.00 0.00 0.00 0.00

HT V - Railways 830.77 830.77 830.77 830.77

Direct 830.77 830.77 830.77 830.77

Changeover 0.00 0.00 0.00 0.00

Switchover 0.00 0.00 0.00 0.00

Grand Total 6250.62 6612.63 6988.46 7378.73

Direct 3239.86 3423.83 3614.94 3813.50

Changeover 2872.34 2852.08 2844.65 2860.98

Switchover 138.42 336.72 528.87 704.25

5.2 DISTRIBUTION LOSSES AND ENERGY INPUT REQUIREMENT

TPC-D submitted that the demand has been projected by grossing up the projected sales with

the estimated distribution loss, transmission loss, and load factor.

TPC-D submitted that the existing loss level of TPC-D’s distribution network is around 1%,

however, since TPC-D is expecting an increase in the LT network in future years, an increase

in distribution loss level is also expected. The projected distribution loss trajectory as

submitted by TPC-D is as follows:

Table: Distribution Loss projected by TPC-D


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Particulars FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Distribution Loss 1.25% 1.50% 1.75% 2.00% 2.25%

TPC-D submitted that as the changeover sales includes the wheeling losses of RInfra, hence,

it has not grossed up the projections for any loss, for projecting the demand of changeover

consumers for the period from FY 2011-12 to FY 2015-16.

TPC-D further submitted that for the purpose of projections, it has considered a Transmission

Loss of 4.85% and a load factor of 0.73, for the period from FY 2011-12 to FY 2015-16.

The demand projections for FY 2011-12 to FY 2015-16, as submitted by TPC-D, after

considering the above assumptions is summed up as follows:

Table: Demand Projections from FY 2011-12 to FY 2015-16 as submitted by TPC-D

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Direct sales (MU) a 2909.86 3082.20 3252.35 3433.65 3629.15

Switchover sales (MU) b 19.00 175.95 388.33 648.42 928.83

Total sales on TPC-D’s

network (MU) c= a+b 2928.85 3258.15 3640.69 4082.07 4557.98

Distribution loss (%) d 1.25% 1.50% 1.75% 2.00% 2.25%

Sales on TPC-D’s

network at T<>D (MU) e= c/(1-d) 2965.93 3307.76 3705.54 4165.40 4662.91

Changeover sales (MU) f 2863.57 3319.12 3253.64 3163.40 3096.22

Distribution Loss

Applicable (%) g 0.00% 0.00% 0.00% 0.00% 0.00%

Changeover at T<>D

(MU) h=f/(1-g) 2863.57 3319.12 3253.64 3163.40 3096.22

Total consumption at

T<>D i = e + h 5829.49 6626.89 6959.18 7328.80 7759.12

Transmission loss (%) j 4.85% 4.85% 4.85% 4.85% 4.85%

Demand at G<>T

(MU) k=i/(1-j) 6126.64 6964.67 7313.90 7702.37 8154.62

Average demand (MW)

l=(k/8760)

*1000 699.39 795.05 834.92 879.26 930.89

Load factor m 0.73 0.73 0.73 0.73 0.73

Peak demand (MW) n=l/m 958.07 1089.12 1143.73 1204.47 1275.20


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TPC-D submitted that it has projected an increase in distribution loss of 0.25 % per annum

keeping in mind the considerable addition of LT network to the existing network. TPC-D

further submitted that the Commission may consider an appropriate loss level for making

projections.

TPC-D further submitted that considering that the distribution loss of TPC-D is extremely

small (around 1%) and TPC-D is considerably increasing its network and distribution loss

data is not available for adequate number of years, the Commission was requested to permit

truing up of this distribution loss levels at actuals.

The Commission is of the opinion that although the TPC-D network is expected to increase

significantly in the MYT Control Period, the LT:HT ratio in terms of Network and Sales is

not expected to change significantly as shown in the Table below:

Table: Commission’s Analysis of LT:HT ratio

Particulars FY 2009-

10

FY 2010-

11

FY 2011-

12

FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Network

LT (ckt km) 415.02 516.02 641.02 790.02 937.02 1092.02 1268.02

HT (ckt km) 1236.76 1290.94 1383.76 1641.76 1749.22 2011.22 2285.72

LT% 25% 29% 32% 32% 35% 35% 36%

HT% 75% 71% 68% 68% 65% 65% 64%

Sales (MU)

LT sales 511.58 547.57 582.55 747.74 932.54 1118.06 1299.14

Direct Consumers 582.55 680.12 765.31 854.38 947.51

Switchover 0.00 67.62 167.23 263.68 351.63

HT sales 2042.14 2198.87 2439.06 2630.54 2828.01 3025.75 3218.61

Direct Consumers 2439.06 2559.74 2658.52 2760.56 2865.99

Switchover 0.00 70.80 169.49 265.19 352.62

LT% 20% 20% 19% 22% 25% 27% 29%

HT% 80% 80% 81% 78% 75% 73% 71%

As can be seen from the above Table, the HT:LT ratio of the distribution network is expected

to deteriorate from 75:25 to 64:36, an in terms of sales, HT:LT ratio is expected to deteriorate

from 80:20 to 71:29, which should not have that much impact on the distribution losses. Also,


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TPC-D has submitted provisional distribution loss of 0.71% for FY 2011-12. Hence, the

Commission is of the view that TPC-D’s projection of 0.25% increase in distribution loss

year on year holds no merit. However, the Commission accepts the fact that distribution

losses of TPC-D would increase considering the increasing network and LT consumer base

and has accordingly approved a 0.10% increase in distribution loss annually over the

distribution loss of FY 2010-11 for the Control Period, which will have to be trued up during

the Mid-Term Performance Review and final truing up. It is clarified that TPC-D will not be

entitled to any efficiency gain in case the distribution losses turn out to be lower than the

levels approved in this Order, since there is not enough data to make an accurate assessment.

Table: Distribution Loss Trajectory Approved by the Commission

Particulars FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Distribution Loss 1.23% 1.33% 1.43% 1.53% 1.63%

The total energy requirement projected by the Commission for the Control Period from FY

2012-13 to FY 2015-16, after considering the above assumptions is summed up as follows:

Table: Total Energy Requirement approved by the Commission

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Direct sales (MU) a 3239.86 3423.83 3614.94 3813.50

Switchover sales (MU) b

138.42

336.72

528.87

704.25

Total sales on TPC-D’s network (MU) c= a+b 3378.28 3760.55 4143.81 4517.75

Distribution loss (%) d 1.33% 1.43% 1.53% 1.63%

Sales on TPC-D’s network at T < > D

(MU) e= c/(1-d) 3423.95 3815.26 4208.36 4592.79

Changeover sales (MU) f 2872.34 2852.08 2844.65 2860.98

Distribution Loss Applicable (%) g 0.00% 0.00% 0.00% 0.00%

Changeover at T < > D (MU) h=f/(1-g) 2872.34 2852.08 2844.65 2860.98

Total consumption at T < > D i = e + h 6296.30 6667.34 7053.01 7453.77

Transmission loss (%) j 4.85% 4.85% 4.85% 4.85%

Total Energy Requirement at G < >

T (MU) k=i/(1-j) 6617.23 7007.19 7412.51 7833.71

5.3 POWER PURCHASE PLAN

TPC-D submitted that it has proposed to meet the Power Purchase requirement for the

Control Period from the following sources:


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Power Purchase from TPC-G

Power Purchase from Renewable Sources

Short-Term Bilateral Power Purchase

Power Procurement through Case-I bidding (from FY 2012-13 to FY 2014-15)

Power Purchase from the State Pool at System Marginal Price.

5.3.1 Power purchase from TPC-G

TPC-D submitted that in the past, 500 MW of capacity was made available to RInfra on ad-

hoc basis, which was discontinued after due notice to RInfra with effect from 1 April, 2010.

TPC-D submitted that thereafter, out of 500 MW, 100 MW capacity has been committed to

BEST through a long-term PPA, duly approved by the Commission on 1 September, 2010.

TPC-D added that the balance 358 MW (excluding 42 MW of Unit 4), out of which 160 MW

was earlier being procured through TPTCL, is proposed to be procured directly through TPC-

G. TPC-D further submitted that it has considered that an additional capacity of 100 MW

would be available from Unit 8 from FY 2012-13 onwards.

TPC-D submitted that TPC-G has made its projections of generation after running the Merit

Order Model for load of BEST and TPC-D as the entire capacity would be shared between

these licensees from 1 April, 2011. TPC-D submitted that it has projected purchase of power

from TPC-G on the basis of projected generation of TPC-G and the share of TPC-D in the

various Units of TPC-G. The power purchase by TPC-D from TPC-G as submitted by TPC-D

is as follows:

Table: Power Purchase by TPC-D from TPC-G (MU)

Particulars

FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Share % MU Share % MU Share % MU Share % MU Share % MU

Unit 4 to Unit 7 48.84% 3258.02 48.84% 3515.22 48.84% 3496.36 48.84% 3636.17 48.84% 4033.97

Unit 8 50.00% 700.60 60.00% 947.25 60.00% 1068.57 60.00% 1024.48 60.00% 1068.93

Total Thermal 3958.62 4462.47 4564.94 4660.66 5102.90

Hydro 48.84% 673.61 48.84% 637.61 48.84% 567.29 48.84% 637.61 48.84% 637.61

Total 4596.24 5100.09 5132.22 5298.27 5740.51

TPC-D submitted that for the purpose of determining the Power Purchase Cost from Unit 4 to

Unit 7 and Hydro, it is necessary to determine the fixed charges, however, TPC-G has yet not

determined the Unit-wise fixed charges for individual Units in its Business Plan. Hence,

TPC-D has considered a share of 48.8% from the generation though strictly this share of

48.8% is not applicable for Unit 4. The Power Purchase Cost submitted by TPC-D for the

Control Period is as follows:


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Table: Cost of Power Purchase from TPC-G

Particulars

FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Share

%

Rs.

Crore

Share

%

Rs.

Crore

Share

%

Rs.

Crore

Share

%

Rs.

Crore

Share

%

Rs.

Crore

Fixed Charges

Unit 4 to 7 and

Hydro 48.84% 442.63 48.84% 467.51 48.84% 505.53 48.84% 561.12 48.84% 581.87

Unit 8 50.00% 107.16 60.00% 164.33 60.00% 167.41 60.00% 169.60 60.00% 169.78

Total 549.79 631.84 672.94 730.33 751.65

Energy Charges

Unit 4 to 7 and

Hydro 48.84% 1300.72 48.84% 1503.51 48.84% 1679.17 48.84% 1597.89 48.84% 1246.77

Unit 8 50.00% 214.76 60.00% 318.78 60.00% 335.27 60.00% 321.43 60.00% 335.38

Total 1515.49 1822.29 2014.43 1919.33 1582.15

Incentive

Unit 4 to 7 48.84% 2.55 48.84% 7.16 48.84% 0.28 48.84% 7.57 48.84% 4.03

Unit 8 50.00% 0.44 60.00% 0.00 60.00% 1.17 60.00% 0.06 60.00% 1.10

Hydro 48.84% 20.06 48.84% 21.10 48.84% 8.07 48.84% 27.43 48.84% 27.18

Total 23.05 28.27 9.52 35.06 32.32

Total Power

Purchase Cost 2088.33 2482.39 2696.88 2685.11 2366.11

As regards the capacity available from TPC-G, the Commission has approved the PPA

between TPC-G and TPC-D vide its Order dated 31 October, 2011 in Case No. 76 of 2011, as

extracted below:

“With the above, the Commission approves the PPA between TPC-G and TPC-D for

procurement of 358 MW power from 1st April 2011 to 30th September 2011 and for

458 MW power from 1st October 2011, to meet the demand of consumers of TPC-D.

The approved prices as specified in the TPC-G tariff order in the matter of Case 96 of

2009 dated 8th September 2010 shall be applicable.”

In this Order, the Commission has approved the quantum and cost of power purchase from

TPC-G for the second Control Period as submitted by TPC-D. The Commission has not

considered any Incentives payable to TPC-G at this stage, as the same shall be considered

only on actuals. It may be noted that the quantum and cost of power purchase from TPC-G

approved by the Commission herein is subject to the Commission's approval during the

regulatory process of TPC-G’s MYT Petition.


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5.3.2 Power Purchase through Case I Bidding

TPC-D submitted that it has initiated the process for purchasing power under Case I bidding

route, and the Commission vide its Order dated 9 May, 2011 in Case No. 20 of 2011 has

approved the following quantum for procurement through Case I bidding:.

Table: Quantum approved by the Commission for purchase through Case I Bidding (MW)

Supply Period Scheduled

Delivery Date

Scheduled

Expiry Date

Procurement of Power

Base Diurnal (0900:2300)

Supply Period I 1 April, 2012 31 March, 2013 150 100

Supply Period II 1 April, 2013 31 March, 2014 200 150

Supply Period III 1 April, 2014 31 March, 2015 200 150

TPC-D submitted that although the quantum has been approved by the Commission, the

following changes might impact the quantum to be procured from Case I bidding:

a) Change in addition of new demand- TPC-D submitted that due to recent

developments like introduction of Final Balancing and Settlement Mechanism

(FBSM), which will impact the power purchase cost of distribution Utilities, and the

Stay Order of the Hon’ble Supreme Court of India on distribution network expansion

for South Mumbai Area, the addition of new demand that was estimated during the

estimation of quantum for Case I bidding may undergo substantial change.

b) Change in load curve due to addition of changeover consumers- TPC-D submitted

that its load curve has been changing substantially because of the drastic change in the

consumer mix due to addition of changeover consumers, which has effectively led to

increase in demand during the diurnal period.

c) Contract of 100 MW with Unit 8 - TPC-D submitted that it has tied up additional

capacity of 100 MW from Unit 8 with TPC-G, because of which the requirement of

quantum through Case I bidding will have to be reduced for base load.

TPC-D further submitted that the Commission has approved the power purchase under the

Case I route till FY 2014-15, therefore, for FY 2015-16 it has considered the same quantum

as that in FY 2014-15 in this MYT Business Plan. The re-worked quantum with a minimum

off-take guarantee of 65% for the Diurnal Load, as submitted by TPC-D is shown in the

following table:

Table: Power Purchase through Case I Bidding (MW)

Particulars FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16


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Base (0-24) 0.00 0.00 0.00 0.00

Diurnal (9-23) 250.00 250.00 250.00 250.00

TPC-D submitted that based on the rates it has received in the past for such medium-term

power purchase, it has considered a rate of about Rs. 4.50/kWh for Diurnal load (i.e., 0900

hours to 2300 hours). The power purchase cost for the same as submitted by TPC-D is given

below:

Table: Power Purchase Cost through Case I Bidding submitted by TPC-D


Quantum (MU) (Diurnal) 830.38 830.38 830.38 830.38

Rate (Rs./kWh) (Diurnal) 4.50 4.50 4.50 4.50

Cost of Power Purchase (Rs. Crore) 373.67 373.67 373.67 373.67

During the Public Hearing, TPC-D submitted that as the impact of Ministry of Power (MOP)

communication dated 30 November, 2011 on Open Access (OA) is not known, it has deferred

purchase through Case I Bidding for some time. In reply to the Commission’s query, TPC-D

submit that post the MOP communication, the Commission has invited comments and

suggestions from stakeholders regarding the issues on Open Access. Thus, considering the

current status on Open Access, TPC-D submitted that it is too early to predict the impact of

Open Access on the Business Plan. However, TPC-D has prepared a list of the consumers

above 1 MW who fall under the ambit of the MOP communication.

The Commission observed that the power purchase projected by TPC-D under Case I bidding

route meets around 10-12% of the total power requirement during the Control Period from

FY 2012-13 to FY 2015-16, further, TPC-D has projected similar quantum of power purchase

from bilateral sources and imbalance pool. If the power purchase through Case I Bidding is

deferred, TPC-D will have to depend on bilateral sources and imbalance pool for more than

20-25% of the power requirement during the period from FY 2012-13 to FY 2015-16, which

will in turn result in increased cost of power purchase. As TPC-D has not considered the

impact of MOP communication on OA while projecting the sales, it would not be appropriate

to defer the Case I bidding.

The Commission is of the view that TPC-D should continue to procure power through Case I

bidding and reduce its dependence on bilateral purchases in the interest of the consumers.


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For the purpose of MYT Business Plan, the Commission has considered the quantum and

cost of such power purchase as submitted by TPC-D, however, the same shall be subject to

the Commission’s approval of the Case I bidding proposed by TPC-D.

5.3.3 Renewable Purchase Obligation (RPO)

TPC-D submitted that it has proposed to purchase the quantum of power that it requires for

meeting the Renewable Purchase Obligation (RPO), in line with MERC (Renewable

Purchase Obligation, Its Compliance and Implementation of REC Framework) Regulations

2010, which specifies the following percentage of minimum purchases from renewable

energy:

“7.1 Every “Obligated Entity” shall procure electricity generated from eligible

renewable energy sources at the percentages as per the following schedule:

Year Minimum Quantum of purchase (in %) from renewable energy

sources (in terms of energy equivalent in kWh)

Solar Non- Solar (other RE) Total

2010-11 0.25% 5.75% 6.0%

2011-12 0.25% 6.75% 7.0%

2012-13 0.25% 7.75% 8.0%

2013-14 0.50% 8.50% 9.0%

2014-15 0.50% 8.50% 9.0%

2015-16 0.50% 8.50% 9.0%

Provided that Distribution Licensee(s) shall meet 0.1% per year of its Non Solar

including mini and micro hydro (other RE) RPO obligation for the period from FY

2010-11 to FY 2012-13 and up to 0.2% of its Non Solar (other RE) RPO obligation

for the period from FY 2013-14 to FY 2015-16 by way of purchase from Mini Hydro

or Micro Hydro power project.”

TPC-D further submitted that given the increasing need of power purchase from renewable

sources, the rates at which the sellers are willing to offer renewable power are higher than the

rates approved by the Commission. Hence, for the purpose of projections, TPC-D has

considered the availability of Non-Solar power (Wind) at the rate of Rs. 5.50/kWh and the

availability of solar power at the rates approved by the Commission.

The proposed power purchase from Renewable sources, as submitted by TPC-D is given in

the table below:


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Table: Power Purchase from Renewable Sources as submitted by TPC-D


2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

RPO Solar % 0.25% 0.25% 0.50% 0.50% 0.50%

RPO Non Solar % 6.75% 7.75% 8.50% 8.50% 8.50%

Total % 7.00% 8.00% 9.00% 9.00% 9.00%

Energy requirement at G<>T

Interface

MU 6126.64 6964.67 7313.90 7702.37 8154.62

RPO Solar MU 15.32 17.41 36.57 38.51 40.77

RPO Non Solar MU 413.55 539.76 621.68 654.70 693.14

Power Purchase Rate

Solar Rs./kWh 15.61 15.61 15.61 15.61 15.61

Non Solar Rs./kWh 5.50 5.50 5.50 5.50 5.50

Power Purchase Cost

Solar Rs. Crore 23.91 27.18 57.09 60.12 63.65

Non Solar Rs. Crore 227.45 296.87 341.92 360.09 381.23

Total Rs. Crore 251.36 324.05 399.01 420.20 444.88

In reply to data gaps regarding the high cost of power purchase from renewable sources,

TPC-D submitted that for the purpose of MYT Business Plan, the rate of solar power

purchase has been considered as Rs. 15.61 per unit based on the Order dated 29 April, 2011

in Case No. 39 of 2011. TPC-D further submitted that although the preferential tariff for solar

is expected to reduce, it has already tied up about 15 MWp from Solar PV based projects that

were planned to be commissioned before 31 March, 2012. However, the developers have

informed that it seems unlikely that the projects would be commissioned before the target

dates. TPC-D submitted that since there are no firm guiding factors as to the expected future

preferential tariffs of solar energy projects, proposed to be commissioned from FY 2012-13,

it has therefore, considered the rate of Rs. 15.61/kWh for the energy purchased to meet its

Solar RPO.

As regards the Non-Solar Renewable power, TPC-D submitted that most of the wind sites

under Zone 2, Zone 3 and Zone 4 have already been exploited by the developers. TPC-D

submitted that from its experience, it has observed that most of the new projects that are

approaching long-term tie up are falling in Zone 1. TPC-D further submitted that the

Commission, in its Order in Case No. 39 of 2011 dated 29 April, 2011, has determined the

preferential tariff for projects falling under Zone 1 and not claiming accelerated depreciation

as Rs. 5.37/kWh.


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TPC-D also submitted that the preferential tariff for wind projects has increased in FY 2011-

12 as compared to that in FY 2010-11. TPC-D further submitted that in the absence of any

firm guiding factors as to the expected future preferential tariffs for non-solar energy projects,

proposed to be commissioned from FY 2012-13, it has considered the rate of Rs. 5.50/kWh

for the energy projected to be purchased by TPC-D for meeting its Non-Solar RPO.

In reply to the Commission’s query regarding power procurement plan from renewable

sources to meet the RPO Obligation for the Control Period, TPC-D submitted that it would

endeavour to meet its RPO targets as set by the Commission in Regulation 7.1 of MERC

(Renewable Purchase Obligation, Its Compliance and Implementation of REC framework)

Regulations, 2010. TPC-D submitted that it has tied-up around 150 MW from various wind

generating stations and around 15 MWp from various Solar PV based plants. TPC-D added

that it has been making efforts for inviting developers for tying-up additional renewable

energy through advertisement in newspapers.

TPC-D further submitted that the present framework for meeting the RPO does not compel

the Distribution Licensee to rely on the tie-up with a Renewable Energy generator, and the

RPO can also be met through purchase of Renewable Energy Certificates from the

Exchanges. TPC-D submitted that since the market is developing and is expected to mature

over the Control Period, it would not be out of place to add that it has purchased about 85,000

REC from the market, equivalent to 85 MU.

The details of RE power tied-up by TPC-D for the Control Period are as follows:

Table: Power Purchase Tied-up from Renewable Sources as submitted by TPC-D (MW)

Source Developer Site Capacity

Wind Tata Power- Wind Khandke 50

Wind Tata Power- Wind Bramanvel 11

Wind Tata Power- Wind Sadawaghapur 18

Wind Tata Power- Wind Vlaspur 10

Wind Tata Power- Wind Agaswadi 50

Total wind Capacity tied up and commissioned 139

Solar PV Tata Power-Solar Mulshi Phase I 3

Solar PV Tata Power-Solar Carnac Bunder 0.06

Solar PV Tata Power Renewable Energy Ltd. Tata Motors 2

Solar PV Tata Power-Solar Mulshi Phase II 10

Total Solar Capacity tied up and commissioned 15


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TPC-D further submitted that TPC-D is in advanced talks with the developers for contracting

an aggregate additional wind power capacity of about 100 MW, which would be

commissioned during the MYT Control Period. TPC-D submitted that Tata Power-Solar,

Mulshi Phase II may get delayed due to the site specific issues, while the 500 kW Solar

Rooftop project of TPREL may be delayed due to grid connectivity issues, however, it is

making all efforts to tie up additional RE power capacity to meet its RPO requirements.

The Commission has observed that TPC-D has tied up 139 MW capacity from wind and 15

MWp from Solar, which will provide energy to the extent of less than 50% (43% for FY

2012-13 to 37% to FY 2015-16) of its RPO requirement submitted by TPC-D. The

Commission accepts TPC-D’s submission to the extent of capacity tied up at present, and

directs TPC-D to expedite the process of RE Power Purchase tie-up for the MYT Control

Period, thereby reducing its dependence on REC to meet the RPO target.

The Commission has re-computed the quantum of RE power purchase considering the sales

and energy requirement approved in this Order to meet the RPO target for the Control Period

as given below:

Table: Power Purchase Quantum from Renewable Sources considered by the Commission

Particulars Units FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

RPO Solar % 0.25% 0.50% 0.50% 0.50%

RPO Non Solar % 7.75% 8.50% 8.50% 8.50%

Total % 8.00% 9.00% 9.00% 9.00%

TPC-D requirement at G<>T Interface MU 6607.13 6997.09 7402.41 7823.61

RPO Solar MU 16.52 34.99 37.01 39.12

RPO Non Solar MU 512.05 594.75 629.21 665.01

As regards the rate of power purchase considered in the MYT Business Plan, the Commission

had asked TPC-D to submit the source-wise preferential tariff for the actual RE power

purchase during FY 2011-12. Based on TPC-D’s submission for FY 2011-12, the

Commission has considered the following source-wise rate of power purchase for each year

of the Control Period. However, as discussed above, the RE sources tied-up by TPC-D are

not sufficient to meet its RPO requirement, thus, TPC-D shall have to procure power from

other sources for which the preferential tariff is not known. For the purpose of MYT Business

Plan, the Commission has worked out the weighted average rate of power purchase

considering preferential tariff of tied-up sources for Wind power and Solar power,


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respectively. This weighted average rate has been used for determining the power purchase

cost from un-tied wind and solar power required to fulfil TPC-D's RPO. The computation of

weighted average rate of wind power and solar power is given in the below Table:

Table: Power Purchase Rate for Renewable Sources (Rs/kWh)

Site Developer Source Capacity

(MW)

FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Khandke Tata Power Wind 50 4.25 4.40 4.55 4.7

Bramanvel Tata Power Wind 11 4.25 4.40 4.55 4.7

Sadawaghapur Tata Power Wind 18 3.95 4.10 4.25 4.4

Vlaspur Tata Power Wind 6 4.29 4.29 4.29 4.29

Vlaspur Tata Power Wind 4 3.95 4.10 4.25 4.4

Agaswadi Tata Power Wind 50 4.56 4.56 4.56 4.56

Weighted average rate of Wind Power

Purchase 139 4.32 4.41 4.49 4.58

Mulshi Phase I Tata Power Solar PV 3 17.91 17.91 17.91 17.91

Carnac Bunder Tata Power Solar PV 0.06 18.41 18.41 18.41 18.41

Tata Motors

Tata Power

Renewable

Energy Ltd.

Solar PV 2 11.66 11.66 11.66 11.66

Mulshi Phase

II Tata Power Solar PV 10 11.16 11.16 11.16 11.16

Weighted average rate of Solar Power

Purchase 15 13.47 13.47 13.47 13.47

Thus, the RE power purchase rate and cost considered by the Commission is summarised in

the Table below:

Table: Power Purchase Cost from Renewable Sources considered by the Commission

Particulars Units FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Power Purchase Rate

Solar Rs./kWh 13.47 13.47 13.47 13.47

Non Solar Rs./kWh 4.32 4.41 4.49 4.58

Power Purchase Cost

Solar Rs. Crore 22.25 47.12 49.85 52.69

Non Solar Rs. Crore 220.99 262.01 282.82 304.87

Total Rs. Crore 243.24 309.13 332.67 357.56


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5.3.4 Benefit from DSM Programme

The Commission observed that TPC-D has not considered the annual savings on account of

implementation of DSM Programme, while projecting the Energy Requirement.

In reply to the Commission’s query regarding the expected annual savings in MU due to

implementation of various DSM programmes, TPC-D submitted that the expected annual

savings would be 94.89 MU, however, it has not considered any reduction in Power Purchase

in the MYT Business Plan arising out of the implementation of DSM programmes because as

per its assumption the reduction in power purchase on account of various DSM measures

would depend on the response of the consumers.

TPC-D submitted that it has followed a conservative approach of arranging for the quantum

of power without considering the reduction due to DSM programmes. TPC-D further

submitted that based on its experience of the last two- three years, it has observed that such

reductions are not significant enough to be factored in to the yearly plan.

Regulation 7.3 of the MERC MYT Regulations, 2011, states as below:

“7.3 The Distribution Licensees shall project the power purchase requirement after

considering effect of target set for Energy Efficiency (EE) and Demand Side

Management (DSM) schemes:

Provided that the power purchase cost of the Distribution Licensee shall be allowed

after considering the target set by the Commission for Energy Efficiency (EE) and

Demand Side Management (DSM) schemes, if any, and any shortfall in meeting the

target shall be disallowed by the Commission at marginal cost of power purchase of

that Distribution Licensee for determination of tariff.”

Thus, the Commission has undertaken detailed analysis of the DSM schemes submitted by

TPC-D to the Commission for approval and details submitted in its MYT Business Plan

Petition along with the savings in MU due to implementation of these schemes. The

Commission is of the view that the savings on account of implementation of DSM schemes

should be considered while computing the Power Purchase requirement as the expenses

towards the same are considered in the Business Plan for the Control Period. Thus, it would

in the interest of the consumers to avail the benefit of DSM schemes as the expense towards

the same is passed on to the consumers.

The annual savings in MU expected by the Commission is 10.10 MU, and the same has been

reduced from the power purchase requirement considered by the Commission.


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5.3.5 Power Purchase from Short-term sources and Purchase from Imbalance Pool

Purchase from Intra-State Imbalance Pool

TPC-D submitted that from its experience, it has noted that despite good scheduling and

contracting, there is a need to purchase power from the State pool at System Marginal Price

(SMP), which is further required to be budgeted in the power purchase cost of TPC-D. TPC-

D submitted that for the purpose of projections, it has considered 4% of the requirement

being met from the purchase from State pool. TPC-D submitted that the SMP for the

projections has been considered as Rs. 4.50/kWh, which is based on the present rate of about

Rs. 3.50/kWh to Rs. 4/kWh after the commencement of the FBSM.

Table: Power Purchase from Intra-State Imbalance Pool, as submitted by TPC-D


2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Pool purchase MU 245.07 278.59 292.56 308.09 326.18

SMP Rs./kWh 4.50 4.50 4.50 4.50 4.50

Cost of Purchase Rs. Crore 110.28 125.36 131.65 138.64 146.78

As regards the Commission’s query regarding the basis of meeting 4% of its energy

requirement through Intra State Imbalance Pool at a rate of Rs. 4.50/kWh, TPC-D submitted

that its consideration is based on the following observations:

From the recent past data it was observed that the pool imbalance forms about 11% of

the total requirement.

However, the pool purchase would reduce on account of 100 MW from Unit 8

forming a part of Contracted Power supply and the power supply from this 100 MW

having reasonable despatch on account of its lower variable cost.

The expected share of pool with the above assumptions works out in range of 4% to

5%

TPC-D added that the Imbalance Pool settlement is being done on % of allocation basis

between BEST and TPC-D and not on scheduled basis, leading to TPC-D taking power from

the imbalance pool.

As regards the power purchase from Imbalance Pool at a rate of Rs. 4.50/kWh, TPC-D

submitted that the Imbalance Pool prices during IBSM regime were about Rs. 6/kWh to Rs.

7/kWh. TPC-D further submitted that the Imbalance pool prices during the first two months

of FBSM were about Rs. 2.50/kWh, however, the prices are seen to be gradually rising to Rs.

3.75/kWh to Rs.4.35/kWh. TPC-D further added that considering the wide variation in FBSM


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Settlement prices and also its large variance with IBSM settlement prices, it has thought it

prudent to consider the rate equivalent to the rate consider for Bilateral Power Purchase.

Power Purchase from Bilateral Contracts

TPC-D submitted that it has considered the balance power to be purchased through Bilateral

Contracts. TPC-D submitted that the present cost of power purchase from bilateral contracts

is about 4.50/kWh based upon which the projections of power purchase cost from bilateral

sources worked out as follows:

Table: Power Purchase from Bilateral Contracts by TPC-D


2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Quantum MU 856.47 198.45 400.50 572.42 523.64

Rate Rs./kWh 4.50 4.50 4.50 4.50 4.50

Cost of Purchase Rs. Crore 385.41 89.30 180.22 257.59 235.64

As regards the Commission’s query regarding the bilateral power purchase of Rs. 4.50/kWh,

TPC-D submitted that in order to estimate the medium-term power purchase rate, it has relied

on the opportunity cost approach for the merchant generator. TPC-D submitted that it has

assumed that if the independent generator is not able to off-load power through medium-term

power purchase agreement, the generator would resort to selling power in the bilateral

(traders) market or on the Power Exchange, hence, it has considered it prudent to collect the

data for past 2 years to remove the impact of various economic, political and other factors

impacting the traded power prices. TPC-D submitted that the analysis of the above data gave

the following results:

Report Period Price (Rs./kWh)

Power Exchange India

Limited-Diurnal Power

April 2009 to March 2011

4.22

Report on Short-term Power Market in India: 2010-11- CERC, July 2011, page 8

Power Exchange April 2009 to March 2010 4.96

Trading Licensee April 2009 to March 2010 5.26

Power Exchange April 2009 to March 2010 3.47

Trading Licensee April 2009 to March 2010 4.79

TPC-D submitted that it has also analysed the power purchase cost from short-term bilateral

power purchased by it, as given below:


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Table: Short-Term Bilateral Power Purchase Contracts entered into by TPC-D

Trader Source Period Time (hrs) Rate Quantum

From To From To Rs./kWh MW

KISPL Wardha Power 01.03.2011 30.03.2011 12:00 hrs 24:00 hrs 4.52 80

RPG JBIL 03.04.2011 30.04.2011 09:00 hrs 22:00 hrs 4.64 4.7

TPTCL KWHEP (NR) 11.01.2012 31.01.2012 09:00 hrs 20:00 hrs 4.32 100

TPTCL KHWEP (NR) 01.02.2012 09.02.2012 09:00 hrs 20:00 hrs 4.52 100

TPC-D further submitted that although there might be seasonal variations in the power rates,

it has considered the annual average rate of Rs.4.50/kWh.

The Energy Balance for TPC-D and projected Power Purchase Cost for the Control Period

based on the above computations, as submitted by TPC-D are as follows:

Table: Energy Balance submitted by TPC-D (MU)

Particulars

Energy Required at G<>T

Interface 6126.6 100% 6964.7 100% 7313.9 100% 7702.4 100% 8154.6 100%

Met Through

TPC-G 4596.2 75.02% 5100.1 75.23% 5132.2 70.17% 5298.3 68.79% 5740.5 70.40%

Renewable Source 428.86 7.00% 557.17 8.00% 658.25 9.00% 693.21 9.00% 753.92 9.00%

Case I Bidding (Short Term

and Long Term 0 0.00% 830.38 11.92% 830.38 11.55% 830.38 10.78% 830.38 10.18%

from Pool/UI (about 4% of the

Requirement) 245.07 4.00% 278.59 4.00% 292.56 4.00% 308.09 4.00% 326.18 4.00%

Bilateral Power Purchase

(Balancing Figure) 856.47 15.98% 198.45 2.85% 400.5 5.48% 572.42 7.43% 523.64 6.42%

FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Table: Summary of Power Purchase Costs submitted by TPC-D

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

TPC-G (Rs. Crore) 2088.33 2482.39 2696.88 2685.11 2366.11


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Case I Bidding (Rs. Crore) 0.00 373.67 373.67 373.67 373.67

Renewable purchase (Rs. Crore) 251.36 324.05 399.01 420.20 444.88

Purchase from Pool (Rs. Crore) 110.28 125.36 131.65 138.64 146.78

Bilateral Purchase (Rs. Crore) 385.41 89.30 180.22 257.59 235.64

Total (Rs. Crore) 2835.38 3394.78 3781.44 3875.22 3567.08

Power Purchase Quantum (MU) 6126.64 6964.67 7313.90 7702.37 8154.62

Average Cost of Power

Purchase (Rs./kWh) 4.63 4.87 5.17 5.03 4.37

The Commission has not considered any power purchase from the Intra-State Imbalance Pool

as the same is determined only on real- time basis and cannot be projected in the MYT

Business Plan. The Commission has re-computed the quantum of power purchase from

bilateral sources, based on the projected sales and energy availability from TPC-G, Case I

bidding and RE sources as discussed in earlier paragraphs. The Commission has accepted

TPC-D’s submission of rate of power purchase from bilateral sources and computed the cost

of power purchase for the Control Period, as given below:

Table: Power Purchase from Bilateral Contracts considered by the Commission


Bilateral Power Purchase (MU)

(Balancing Figure)

148.10 404.75 607.55 548.60

Power Purchase Cost (Rs. Crore) 66.64 182.14 273.40 246.87

Table: Summary of Power Purchase Quantum approved by the Commission (MU)


13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Total Energy Requirement at G<>T 6617.23 7007.19 7412.51 7833.71

DSM Benefit adjustment 10.10 10.10 10.10 10.10

Power Purchase Requirement 6607.13 6997.09 7402.41 7823.61

TPC-G 5100.09 5132.22 5298.27 5740.51

Case I Bidding 830.38 830.38 830.38 830.38

Renewable purchase 528.57 629.74 666.22 704.12

Bilateral Purchase 148.10 404.75 607.55 548.60

Table: Summary of Power Purchase Costs approved by the Commission (Rs. Crore)


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Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

TPC-G 2454.13 2687.37 2650.06 2333.80

Case I Bidding 373.67 373.67 373.67 373.67

Renewable Purchase 307.41 381.73 403.84 426.82

Bilateral Purchase 66.64 182.14 273.40 246.87

Total (Rs. Crore) 3201.85 3624.90 3700.96 3381.15

Power Purchase Quantum (MU) 6607.13 6997.09 7402.41 7823.61

Average Cost of Power Purchase (Rs./kWh) 4.85 5.18 5.00 4.32

5.3.6 Standby Charges

TPC-D submitted that in the past, the Commission has computed the share of the Standby

Charges payable to MSEDCL on the basis of the share of the coincident peak demand of the

three distribution licensees, viz., TPC-D, RInfra and BEST. TPC-D submitted that it has

adopted the same methodology for projecting Standby Charges payable to MSEDCL for the

Control Period. TPC-D submitted that it has however, proposed to tie-up 40 MW of

generation capacity at Lodhivali from TPC-G as standby capacity for the following reasons:

i. TPC-D has a standby arrangement with MSEDCL for supply of power in case of forced

outages of units at Trombay. Since, Lodhivali is a generation capacity with DG sets,

these units can be brought into service within no time and thus, serve the purpose of

giving standby power to TPC-D to the extent of 40 MW.

ii. With power demand of Mumbai city increasing, more and more power is required to be

sourced from outside Mumbai. This has led to a transmission constraint for bringing

power to Mumbai. In case of an emergency situation when any generation capacity

within Mumbai is out, this problem will get aggravated. In such a situation, an

embedded generation capacity like Lodhivali would help to tide over the situation to

some extent.

iii. Requirement of an embedded generation capacity for the city of Mumbai is one of the

recommendations in the Study Report commissioned by the Commission for the partial

grid disturbance in Mumbai on 18 and 21 November, 2010. The Report says as follows:

“Any outage of generation in Mumbai region does not converge the simulation

until some generation is added locally (say kalwa). The Thus indicate additional

generation requirement in the coming years in Mumbai system. If not physically

located generation, extra power must be brought to the Mumbai network by any

means to cater the load growth.”

iv. Further, during the disturbance at 22 kV MSETCL Trombay system on 29 September,

2011, Unit 5 and Unit 8 tripped at 05:45 hrs and 05:55 hrs, respectively, resulting in


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generation loss of 750 MW. Unit 6 generation was restricted to 275 MW due to super

heater header leakage. RInfra’s Dahanu Unit 2 was out for attending to boiler tube

leakage. This resulted in unavailability of generation to the tune of about 1275 MW in

Mumbai system. Lodhivali Plant was brought on line and generated around 32 MW.

Load shedding of about 150 MW was carried rotationally in TPC-D, BEST, RInfra and

MSEDCL area to control tie line flows. Synchronization of Lodhivali Plant helped in

minimizing the load shedding by about 32 MW in Mumbai Area.

Accordingly, Standby Charges from the two sources as submitted by TPC-D is as follows:

Table: Standby Capacity tied up by TPC-D

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

a

Base TPC-D demand direct

Consumers (as per Tariff Order dt.

12 September , 2010) (MW) 343.00 343.00 343.00 343.00 343.00

b

Base TPC-D demand Switchover

Consumers (MW) 2.39 22.16 49.04 82.09 117.89

c

Changeover Sales at T<>D Interface

(MU) 2863.57 3319.12 3253.64 3163.40 3096.22

d Transmission Loss 4.85% 4.85% 4.85% 4.85% 4.85%

e

Changeover Sales at G<>T Interface

(MU) 3009.53 3488.30 3419.49 3224.65 3254.04

f

Peak demand on account of

Changeover Sales (MW) 470.62 545.49 534.73 519.90 508.86

g=a+b

+f New Projected TPC demand (MW) 816.01 910.65 926.77 944.99 969.74

H Base RInfra Original Demand (MW) 1381.00 1381.00 1381.00 1381.00 1381.00

i=h-b-

f

RInfra demand excluding

changeover and switchover (MW) 907.99 813.35 797.23 779.01 754.26

j

Base BEST demand (as per Tariff

Order dt. 12 September, 2010)

(MW) 646.00 646.00 646.00 646.00 646.00

k Standby % of TPC-D 34.00% 38.00% 39.00% 40.00% 41.00%

l

Standby Capacity provided by

MSEDCL (MW) 500.00 500.00 500.00 500.00 500.00

m=k*l

TPC's share in Standby Capacity

(MW) 172.15 192.12 195.52 199.36 204.59


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

n


Lodhivali (MW) 40.00 40.00 40.00 40.00 40.00

o=m-n

Net Standby Capacity to be provided

by MSEDCL (MW) 132.15 152.12 155.52 159.36 164.59

Table: Projection of Standby Charges payable by TPC-D

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

a


MSEDCL (MW) 500.00 500.00 500.00 500.00 500.00

b

Net Standby Capacity to be provided

by MSEDCL (MW) 132.15 152.12 155.52 159.36 164.59

c

Standby Charges of MSEDCL (Rs.

Crore) 396.00 396.00 396.00 396.00 396.00

d=c/a*

b

Standby Charges payable to

MSEDCL (Rs. Crore) 104.67 120.48 123.17 126.22 130.35

e


Lodhivali (MW) 40.00 40.00 40.00 40.00 40.00

f

Standby Charges payable to

Lodhivali (Rs. Crore) 13.31 21.03 20.89 20.76 20.66

g=d+f Total Standby Charges (Rs. Crore) 117.98 141.51 144.06 146.98 151.01

TPC-D, in its Petition, submitted the computation of Standby Charges payable in case the

entire standby support was to be arranged from MSEDCL (without Lodhivali), for the

purpose of comparison and to highlight the savings in the Standby Charges. The projections

of Standby Charges without Lodhivali as submitted by TPC-D are shown in the following

table:

Table: Projections of Standby Charges without Lodhivali

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

a

Base TPC-D demand direct

Consumers (as per Tariff Order dt.

12 September, 2010) (MW) 343.00 343.00 343.00 343.00 343.00

b

Base TPC-D demand Switchover

Consumers (MW) 2.39 22.16 49.04 82.09 117.89


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

c

Changeover Sales at T<>D Interface

( MU) 2863.57 3319.12 3253.64 3163.40 3096.22

d Transmission Loss (%) 4.85% 4.85% 4.85% 4.85% 4.85%

e

Changeover Sales at G<>T Interface

(MU) 3009.53 3488.30 3419.49 3224.65 3254.04

f

Peak demand on account of

Changeover Sales (MW) 470.62 545.49 534.73 519.90 508.86

g=a+

b+f New Projected TPC demand (MW) 816.01 910.65 926.77 944.99 969.74

h Base RInfra Original Demand (MW) 1381.00 1381.00 1381.00 1381.00 1381.00

i=h-b-f

RInfra demand excluding changeover

and switchover (MW) 907.99 813.35 797.23 779.01 754.26

j

Base BEST demand (as per Tariff

Order dt. 12 September, 2010) (MW) 646.00 646.00 646.00 646.00 646.00

K=g/(g

+i+j) Standby % of TPC-D 34% 38% 39% 40% 41%

L


MSEDCL (MW) 500.00 500.00 500.00 500.00 500.00

m=k*l

TPC's share in Standby Capacity

(MW) 172.15 192.12 195.52 199.36 204.59

n

Standby Charges of MSEDCL (Rs.

Crore) 396.00 396.00 396.00 396.00 396.00

o=m/l*n

Standby Charges of TPC-D (Rs.

Crore) 136.35 152.16 154.85 157.90 162.03

In reply to the Commission's query regarding the formal PPA between TPC-G and BEST/

TPC-D, TPC-D submitted that the 40 MW Lodhivali Plant was a part of the PPA signed way

back in December 2006 between TPC-G and BEST/TPC-D. Although TPC-D has proposed

to avail standby support for the entire capacity of 40 MW, the view of BEST has to be

reconfirmed. TPC-D subsequently submitted that BEST has expressed interest in taking 40%

of the capacity, i.e., 16 MW from the 40 MW Lodhivali plant. Further, BEST has also agreed

to include this requirement in their Business Plan proposal for the MYT period.

Further, in reply to the Commission’s query regarding treatment of power purchased by TPC-

D from Lodhivali during FY 2011-12, TPC-D submitted that at present the arrangement has

not been approved by the Commission and hence, the power purchase from Lodhivali in


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September, 2011 may be considered as an external power purchase for that instance,

however, in the long run if the power is to be made available at short notice, it needs to tie up

the same as a standby support.

TPC-D further added that it has paid Rs. 70.26 Crore to MSEDCL as Standby Charges for the

standby support availed from 1 April, 2011 to 31 January, 2012. TPC-D further submitted

that the Commission, in its Order dated 12 September, 2010 in Case No. 98 of 2009, has

approved Standby Charges of Rs. 84.31 Crore per annum, i.e., Rs. 7.026 Crore per month and

therefore, the charges paid to MSEDCL in FY 2011-12 are as approved by the Commission.

In reply to the Commission’s query regarding TPC-D's total standby requirement, TPC-D

submitted that it would require standby capacity to the extent of the largest of the long-term

contracted capacity not being available for giving power supply. For TPC-D, the largest of its

contracted capacity is from the 500 MW Generating Units at Trombay, wherein TPC-D’s

share is 48.83%, thus, the standby requirement works out to 244 MW. TPC-D further added

that it has identified the following sources for its standby supply requirement:

Table: Standby arrangement

Standby Source Status Capacity for Standby

MSEDCL Existing As per the methodology devised by the

Commission in the Tariff Order

Lodhivali Generating

Station

Proposed 24 MW

Unit 4 at Trombay Existing and when

pollution norms permit

operation

40 MW

TPC-D submitted that the standby capacity availed from MSEDCL is for 550 MVA (500

MW) for total standby charges of Rs. 396 Crore, which works out to Rs. 0.79 Crore/MW.

TPC-D further submitted that it has considered the standby charges for Lodhivali Generating

Station equivalent to the Annual Fixed Charges for the Station and the corresponding per

MW Standby charges ranges from Rs. 0.33 Crore/MW to Rs. 0.53 Crore/MW. Thus, the

standby charges for Lodhivali are lower than that being paid to MSEDCL.

TPC-D submitted that it will reduce the standby capacity, which it avails from MSEDCL to

the extent as availed from Lodhivali Station. However, TPC clarified that it has so far not

approached MSEDCL for their consent in the matter and shall approach MSEDCL once the

Commission has approved the same.


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TPC-D, in its submission dated 31 July, 2012, stated that TPC-D needed to explain the need

to have various standby sources and their advantages. TPC-D requested the Commission that

as there had been more than one submission by TPC-D in this context over the period of time,

in case of any conflict, the Commission should consider the stand given by TPC-D in the

latest submission, as follows:

TPC-D submitted that through this submission, TPC-D was responding in a comprehensive

manner on TPC-D's philosophy and methodology of tying up Standby Capacity. TPC-D

submitted that the standby arrangements are necessary as TPC-D supplies power to the city of

Mumbai, where majority of the load is critical or essential in nature, and 24x7 quality of

electricity supply is a requirement. TPC-D added that the Standby arrangements have proved

very useful in the past and have helped in maintaining a reliable and continuous power supply

to the city of Mumbai.

a. The imperatives and assumptions submitted by TPC-D on the matter of calculating

requisite standby capacity are:

1. Respect and utilize the existing arrangement with MSEDCL for provision of standby

power to TPC-D.

2. Use of load ratio of various DISCOMs at the time of Co-incident Peak Demand

3. Avoid load shedding for TPC-D consumers

4. TPC-D’s highest exposure to tripping of a base load Unit.

5. Need to delink requirement of each Distribution Utility in recognition of the fact that

as RInfra, TPC-D and BEST no longer buy power from same/single source.

Earlier power from TPC-G’s largest 500 MW Unit was purchased by three

Distribution Companies. Hence, in case of tripping of such Unit, the impact on each

Utility was in proportion to their PPA arrangement. However, with RInfra moving

out, power from these Units is getting divided among BEST and TPC-D only. As a

result of this additional allocation of power from these 500 MW Units, exposure of

TPC-D has now increased in case of tripping of such Units, which needs to be

mitigated with suitable standby capacity.

6. Provide the most cost optimal solution for TPC-D’s consumers.

b. Methodology for calculating the Standby requirement for TPC-D:

TPC-D submitted that with the changing scenario as explained above, in case of tripping of

500 MW Unit, which operates at full capacity at peak time, TPC-D will face shortfall to the

extent of about 49% of that capacity. Hence, TPC-D will have to tie up about 250 MW (50%

of 500 MW) of standby capacity to avoid load shedding during peak hours.


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c. Standby Capacity to mitigate Discontinuity of Supply:

TPC-D submitted that it has identified standby arrangements, in case the generation

capacities with which TPC-D has long-term/short-term contracts are not in a position to

provide power supply, either on account of forced shutdowns or planned shutdowns.

A. Standby Capacity share from MSEDCL

TPC-D submitted that in its past Orders, the Commission has used the ratio of Co-incident

Peak Demand to arrive at the respective percentage share for Mumbai Distribution Utilities

for the payment of Rs. 396 Crore of standby charge payable to MSEDCL. TPC-D added that

at present, there is only an 'arrangement' with MSEDCL for availing Standby Support. Based

on the share proposed in the MYT Business Plan Petition, the standby support available for

TPC-D for FY 2012-13 would be 175 MW as against 105 MW in FY 2010-11 from the

MSEDCL pool.

B. Standby Requirement from Lodhivali

TPC-D submitted that as per the approved arrangement of 500 MW tripping of base load

(Trombay), despite the capacity tie up with MSEDCL, there is still a shortfall of 75 MW (250

MW – 175 MW from MSEDCL) and considering the proposed standby support from

Lodhivali of 24 MW, there is still a gap of 51 MW.

C. No stand by support from Unit 6

TPC-D clarified that during peak hours, Unit 6 operates at its full capacity and does not have

any excess capacity to provide additional buffer as standby capacity.

TPC-D submitted that as the fixed charges associated with Lodhivali are lower as compared

to MSEDCL standby charges, it makes better option for procuring additional standby

capacity rather than procuring the same from MSEDCL. TPC-D submitted that the effect of

procuring 24 MW standby capacity from Lodhivali is expected to save Rs. 6.4 Crore in FY

2012-13 for TPC-D consumers, as compared to procuring additional Standby Capacity from

MSEDCL. TPC-D added that this savings are expected to continue for the remaining MYT

tenure.

TPC-D submitted that this capacity is an embedded generation capacity and available for

Mumbai and can provide power to the city of Mumbai even during transmission constraints.

TPC-D added that due to inherent quick start-stop capabilities of Lodhivali, it can be utilised

as per the requirement during the day and is very similar to typical standby support provided

by MSEDCL.


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TPC-D added that even after procuring 24 MW from Lodhivali, the total tied up standby

capacity would be 199 MW (175 MW + 24 MW). If TPC-D was to tie up additional 51 MW,

standby cost burden will increase significantly, thus TPC-D has decided to limit its

requirement as of now and review it later in the next Control Period.

D. Standby Capacity for increasing Supply from Trombay’s Unit 4

TPC-D submitted that 150 MW Unit 4 at Trombay is used as a standby for fulfilling supply

gap due to increase in the peak. Unit 4 is a part of the approved PPA between TPC-G and the

Distribution Utilities (BEST and TPC-D). The Unit has been kept out due to environmental

constraints. However, Unit 4 can also be run during scheduled outages of other regulated

Units of Trombay or during transmission constraints when it can run on gas, to be within

environmental limits. TPC-D added that considering the increasing demand for power in

Mumbai and transmission constraints, TPC-D continues to maintain 150 MW Unit 4 in

service-worthy condition to utilise it whenever required. However, Unit 4 like any typical

base load Unit can be made available on planned basis.

The Commission has studied all the submissions of TPC-D in this regard. The Commission

observes that TPC had also submitted a Petition (Case No 54 of 2010) on September 2, 2010

seeking clarification and confirmation that the Tariff for the 40 MW Lodhivali Station would

not be determined by the Commission and this project would fall under the competitive

bidding process. The Commission, in its Order dated 13 December, 2010, in Case No. 54 of

2010, clarified as follows:

"Based on the above observations, the Commission clarifies that the question of

determining the tariff of the said DG capacity of TPC would arise only if and when

TPC files a petition for determination of tariff under Section 64 of the Electricity Act,

2003. Alternatively, the Commission shall adopt the tariff under Section 63 if such

tariff has been determined through transparent process of bidding in accordance with

the guidelines issued by the Central Government."

Thus, it is seen that TPC had earlier projected the same 40 MW DG capacity at Lodhivali as a

generation Unit, which is now being projected as a Standby Unit, in addition to the Standby

Capacity being availed from MSEDCL.

At present, the Standby support of 500 MW is provided by MSEDCL for Mumbai and the

same is availed by TPC-D, BEST and RInfra-D. The total standby charges of Rs. 396 crore

are shared by these Utilities in the ratio of their Coincident Peak Demand. The Commission,

in its Tariff Order dated 12 September, 2010 in Case No. 98 of 2009 for FY 2010-11 of TPC-


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D also considered the same methodology while approving the Standby Charges to be paid to

MSEDCL.

Therefore, reduction in the Standby capacity availed from MSEDCL by any one Utility shall

have implications on the other Utilities, viz., BEST and RInfra as well, as they may have to

bear some incremental cost on account of the reduction in the standby capacity by TPC-D

from MSEDCL or on the other hand MSEDCL may have to reduce the Standby Charges to

the extent of reduced Standby capacity by TPC-D.

The Commission is of the view that all the parties to the current Standby arrangement, viz.,

MSEDCL, RInfra-D, BEST, TPC-G and TPC-D, which may be affected on account of the

arrangement as proposed by TPC should be heard before taking any view in the matter.

Therefore, the Commission is of the view that the approval of 40 MW Lodhivali Station as a

standby capacity for TPC-D and BEST cannot be addressed through the present Business

Plan Order. The Commission has therefore, not considered the Lodhivali Station as a standby

capacity for TPC-D and BEST. However, TPC may file a separate Petition for approval of 40

MW Lodhivali Station as a standby capacity for TPC-D and BEST, and make the other

Utilities respondents to the Case.

As regards Standby Charges under the MYT Business Plan, the Commission has revised the

contribution of TPC-D, BEST and RInfra-D based on the average of Coincident Peak

Demand and Non-Coincident Peak Demand used for sharing the Total Transmission System

Charges (TTSC) for FY 2012-13 in its Order dated 21 May, 2012 in Case No. 51 of 2012.

The Commission had considered the same contribution to average of Coincident Peak

Demand and Non-Coincident Peak Demand as summarised in the following Table:

Table: Share of average of coincident peak demand and non-coincident peak demand

Particulars Share of avg. of

CPD and NCPD

% share of avg. of

CPD and NCPD

Distribution Licensees (MW) (%)

MSEDCL 12779 81.74%

TPC-D 1013 6.48%

RInfra-D 1036 6.63%

BEST 806 5.15%

TOTAL 15634 100.0%

Accordingly, 35.48% of the Standby Charges payable to MSEDCL have been allocated to

TPC-D for FY 2012-13, which works out to Rs. 140.51 Crore. For the purpose of this MYT

Business Plan, the Commission has considered the same Standby Charges for the Control

Period.


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Table: Standby Charges (Rs. Crore)

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Standby Charges 140.51 140.51 140.51 140.51

5.3.7 Transmission Charges and SLDC Charges

TPC-D submitted that the transmission system in Maharashtra State operates as one

composite network for the purpose of sharing of transmission charges. TPC-D submitted that

the ARRs of the various Transmission Licensees are pooled together (Total Transmission

System Cost or TTSC) and shared by the various Distribution Licensees in proportion to the

co-incident peak (however, average of Coincident Peak Demand and Non-Coincident Peak

Demand should be considered as per MERC MYT Regulations, 2011) of these Distribution

Licensees.

TPC-D submitted that in order to project the Transmission Charges, TPC-D has considered

the present TTSC as approved by the Commission and escalated the same by 5% p.a. The

demand of various Distribution Licensees and TPC-D’s share of Transmission Charges as

submitted by TPC-D are as follows:

Table: TPC-D's Share of Transmission Charges as submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

TPC-D Demand (MW) 816.01 910.65 926.77 944.99 969.74

RInfra Demand (MW) 907.99 813.35 797.23 779.01 754.26

BEST Demand (MW) 646.00 646.00 646.00 646.00 646.00

Base MSEDCL Demand (as

taken in the Order dated 10

September, 2010) (MW) 13429.00 13429.00 13429.00 13429.00 13429.00

Total Demand (MW) 15799.00 15799.00 15799.00 15799.00 15799.00

% share of TPC-D in Total

Demand 5.16% 5.76% 5.87% 5.98% 6.14%

TTSC 2786.42 2925.74 3072.02 3225.63 3386.91

Transmission Charges for

TPC-D 143.92 168.64 180.20 192.93 207.89

The Commission, vide its Order dated 21 May, 2012 in Case No. 51 of 2012, has suo motu

determined the Transmission Tariff for Intra-State Transmission System (InSTS) for FY


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2012-13 of the second MYT Control Period, which is applicable from 1 June, 2012. For FY

2012-13, the Commission has considered Transmission Tariff for 2 months as per the

Commission’s Order dated 10 September, 2010 in Case No. 120 of 2009, and for 10 months

the revised Transmission Tariff has been considered as per the Order dated 21 May, 2012 in

Case No. 51 of 2012. From FY 2013-14 onwards, Transmission Tariff determined in Order

dated 21 May, 2012 in Case No. 51 of 2012 has been escalated at the rate of 5% per annum.

Although TPC-D has not considered SLDC charges in its MYT Business Plan Petition, the

Commission has considered the same based on its Order dated 30 March, 2012 in Case No.

181 of 2011 for FY 2012-13. For the purpose of this MYT Business Plan, the Commission

has considered SLDC Charges from the said Order for FY 2012-13 and escalated it at the rate

of 5% for the remaining Control Period.

Table: Transmission Charges and SLDC Charges (Rs. Crore)

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Transmission Charges 232.74 272.29 285.90 300.20

SLDC Charges 0.84 0.88 0.92 0.97

5.4 O&M EXPENSES

5.4.1 Wires Business

TPC-D submitted that considering the norms specified in Regulation 78.4 of the MERC MYT

Regulations, 2011 and the projected wheeled energy, the O&M Expenses for Wires Business

are as follows:

Table: Wires Business- O&M Expenditure submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Norms

A&G & Employee expenses (Paise/unit) 12.24 12.94 13.68 14.46 15.28

R&M expenses (% of opening GFA) 2% 2% 2% 2% 2%

Operating Parameters

Wheeled Energy (MU) 2965.93 3307.76 3705.54 4165.40 4622.91

Opening GFA 699.49 885.46 1209.44 1525.08 1877.67

O&M Expenses

A&G and Employee expenses 36.30 42.80 50.69 60.23 71.25

R&M expenses 13.99 17.71 24.19 30.50 37.55


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Total O&M Expenses 50.29 60.51 74.88 90.73 108.80

5.4.2 Supply Business

TPC-D submitted that considering the norms specified in Regulation 92.7 of the MERC MYT

Regulations, 2011 and the projected sales, the O&M Expenses for Supply Business are as

follows:

Table: Supply Business- O&M Expenditure submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Norms

A&G & Employee expenses (Paise/unit) 10.08 10.65 11.26 11.91 12.59

R&M expenses (% of opening GFA) 0.25% 0.25% 0.25% 0.25% 0.25%


Sales (MU) 5792.42 6577.27 6894.33 7245.50 7654.21

Opening GFA 21.56 83.38 124.33 160.88 180.57

O&M expenses

A&G and Employee expenses 58.39 70.05 77.63 86.29 96.37

R&M expenses 0.05 0.21 0.31 0.40 0.45

Total O&M Expenses 58.44 70.26 77.94 86.70 96.82

The Commission has estimated the O&M expenses for FY 2012-13 to FY 2015-16 in

accordance with the provisions of MERC MYT Regulations, 2011 based on the computed

sales and wheeled energy for FY 2012-13 to FY 2015-16 along with the capitalisation

projected by the Commission during the years starting from FY 2012-13. The Commission

has considered the closing GFA of Rs. 684.24 Crore for FY 2010-11 as approved in Case No.

104 of 2011, as the opening GFA for FY 2011-12. The Commission has considered the

segregation of Opening GFA between the Wires Business and Supply Business in accordance

with the proportion submitted by TPC-D in its MYT Business Plan Petition. For arriving at

the opening GFA for FY 2012-13 for the purpose of the current Business Plan approval, the

Commission has considered the revised capitalisation as submitted by TPC-D, without

scrutiny of the same. The same should not be construed as approval of the capitalisation of

FY 2011-12. The same shall be approved as part of a separate regulatory process to be

followed for approval of ARR for FY 2011-12, which the Commission is not taking up as

part of the present Business Plan Petition, for reasons explained in the preceding paragraphs


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of this Order. Based on the above, the Commission has estimated the O&M expense for the

Control Period for Wires Business and Supply Business as given in the below Tables:

Table: Wires Business- O&M Expenditure as computed by the Commission (Rs. Crore)

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Norms

A&G & Employee expenses (Paise/unit) 12.94 13.68 14.46 15.28

R&M expenses (% of opening GFA) 2% 2% 2% 2%


Wheeled Energy (MU) 3423.95 3815.26 4208.36 4592.79

Opening GFA 813.69 1550.60 1657.14 1811.63

O&M Expenses

A&G and Employee expenses 44.31 52.19 60.85 70.18

R&M expenses 16.27 31.01 33.14 36.23

Total O&M Expenses 60.58 83.20 94.00 106.41

Table: Supply Business- O&M Expenditure as computed by the Commission (Rs. Crore)

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Norms

A&G & Employee expenses (Paise/unit) 10.65 11.26 11.91 12.59

R&M expenses (% of opening GFA) 0.25% 0.25% 0.25% 0.25%


Sales (MU) 6250.62 6612.63 6988.46 7378.73

Opening GFA 56.12 92.85 120.75 120.75

O&M expenses

A&G and Employee expenses 66.57 74.46 83.23 92.90

R&M expenses 0.14 0.23 0.30 0.30

Total O&M Expenses 66.71 74.69 83.53 93.20

5.5 CAPITAL EXPENDITURE AND CAPITALISATION

The total estimated capital expenditure and capitalisation submitted by TPC-D for its Wires

Business has been summarised in the Tables below:


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Table: Capital Investment for Distribution Network submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Reliability of Network 6.51 9.56 9.76 7.26 7.56 40.65

Automation of Network 7.50 8.50 1.50 2.00 2.00 21.50

Greenfield Network

Development 44.54 104.28 103.75 108.94 84.19 445.70

Network Development and

Network Strengthening 249.31 377.74 420.63 440.73 518.27 2006.68

Carry Forward Schemes 78.27 136.42 137.89 0.00 0.00 352.58

HO&SS Schemes 1.00 1.00 1.00 1.00 1.00 5.00

Total 387.13 637.5 674.53 559.93 613.02 2872.11

Table: Capital Expenditure Phasing for Distribution Network submitted by TPC-D (Rs.

Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total



Greenfield Network

Development 29.62 70.91 72.57 71.19 55.02 299.31




HO&SS Schemes 1.00 1.00 1.00 1.00 1.00 5.00

Total 288.71 483.26 516.93 369.45 404.22 2062.57

Table: Capitalisation Plan for the Distribution Network submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total



Greenfield Network

Development 15.82 39.11 42.40 49.88 42.79 190.00




HO&SS Schemes 1.00 1.00 1.00 1.00 1.00 5.00


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Total 186.45 324.46 316.12 353.07 316.75 1496.84

The total estimated capital expenditure and capitalisation submitted by TPC-D for its Supply

Business has been summarised in the Tables below:

Table: Capital Expenditure Phasing for Supply Business submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Meter Management 39.52 26.09 21.99 11.67 12.25 111.52

AMR 7.37 8.91 7.10 4.30 4.30 31.98

Other Meter Related 0.74 0.02 2.92 0.52 0.67 4.87

Consumer Management 9.69 3.24 1.76 0.33 0.62 15.64

Development of Infrastructure 3.51 1.69 1.79 1.87 1.99 10.85

HO&SS Schemes 1.00 1.00 1.00 1.00 1.00 5.00

Total 61.82 40.95 36.56 19.69 20.83 179.86

Table: Capitalisation for Supply Business submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Meter Management 39.52 26.09 21.99 11.67 12.25 111.52

AMR 7.37 8.91 7.10 4.30 4.30 31.98

Other Meter Related 0.74 0.02 2.92 0.52 0.67 4.87

Consumer Management 9.69 3.24 1.76 0.33 0.62 15.64

Development of Infrastructure 3.51 1.69 1.79 1.87 1.99 10.85

HO&SS Schemes 1.00 1.00 1.00 1.00 1.00 5.00

Total 61.82 40.95 36.56 19.69 20.83 179.86

The total Capital Investment Plan for the Control Period as submitted by TPC-D in the MYT


Table: Total Capital Investment and Capitalisation Plan for Control Period (Wires+

Supply) submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total

Capital Expenditure Phasing Plan


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16 Total


Supply Business 61.82 40.95 36.56 19.69 20.83 179.86


Phasing 350.53 524.21 553.48 389.13 425.04 2242.40

Capitalisation Plan


Supply Business 61.82 40.95 36.56 19.69 20.83 179.86


The Capital Investment Plan for Wires Business and Supply Business projected by TPC-D

for the Control Period has been discussed in detail in Section 4 of the Order.

As regards Capex towards network development in South Mumbai, the Commission asked

TPC-D to submit the impact of the Hon’ble ATE's Judgment dated April 4, 2012 in Appeal

No. 149 of 2010, as reproduced below:

“(i)The state Commission has jurisdiction to issue directions referred to in the

impugned order to Tata Power Company, the second licensee in South Mumbai area

relating to its obligation to supply under Section 43(1) of the Electricity Act.

(ii)The State Commission has correctly decided that the Tata Power Company, the

second licensee, has to set up its own distribution network to supply electricity to the

Respondent consumers of the Appellant who wish to change over supply from the

Appellant to Tata Power Company. The status of the Appellant as local authority

engaged in the business of supply of electricity can not in any way hinder right of

exercise of choice of supplier by the consumers to switch over to Tata Power

Company the second licensee of the area.”

TPC-D submitted that BEST has filed an appeal before the Hon’ble Supreme Court against

the Judgment of the Hon’ble ATE, and has also sought for a stay with regards to development

of network by TPC-D in the South Mumbai Area. The Hon’ble Supreme Court, in its Order

dated 10 May, 2012 has granted “status quo” in the matter as follows:

“Pending disposal of the appeal, status quo, as of today, shall be maintained by the

parties. Liberty is granted to the parties to mention the matter after pleadings are

complete.”


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TPC-D submitted that on account of the above stay granted by the Hon’ble Supreme Court,

TPC-D has put a stop to most of the activities that are required to give power supply to

consumers in the Licence Area common to BEST and TPC-D.

TPC-D submitted that as the matter was subjudice even at the time of submission of the

Business Plan Petition, TPC-D had not proposed an extensive network development plan in

the South Mumbai area in its Business Plan.

As regards the network development across Mumbai, TPC-D has proposed to develop the

distribution network based on the Cluster approach. The Cluster in a Zone is defined as an

area having identifiable geographic boundary with a spread of about 10 sq km. TPC-D has

proposed to cover about 4 to 5 such Clusters every year. TPC-D submitted that while

concentrated efforts shall be made to augment/rollout the network in the Clusters identified

for the particular year, the available network inside/outside these Clusters (across the

suburban area) will continue to be utilised optimally as before to cater to the requirements of

consumers approaching TPC-D for its power supply requirements. However, TPC-D

submitted that it would not be possible to segregate the proposed capital expenditure into the

areas of BEST and RInfra.

The Commission has verified the projected Capital Investment Plan vis-à-vis the in-principle

approved schemes and has approved the capital cost for the purpose of MYT Business Plan

projections, after giving due consideration to regulatory provisions under MERC MYT

Regulations, 2011 in relation to capital expenditure and subsequent submissions provided by

TPC-D during the regulatory process.

In accordance with Regulation 27 of the MERC MYT Regulations, it is clarified that the

detailed scrutiny, review, and approval of scheme-wise Capital Cost subject to prudence

check would be undertaken separately. However, the Commission has analysed the revised

estimate of capital cost as submitted by TPC-D in the present Petition and Commission’s

views in the matter are elaborated in the subsequent paragraphs, which should be duly

considered by TPC-D while making the capital expenditure submissions in its MYT Petition

for second Control Period.

As FY 2011-12 is already over, the Commission had asked TPC-D to submit the status of

actual capitalisation as on 31 March, 2012. In this context, TPC-D submitted that the actual

capitalisation achieved (unaudited) for FY 2011-12 was Rs. 183.67 Crore for DPR schemes

and Rs. 2.37 crore for Non-DPR Schemes compared to total estimate of Rs 248.27 Crore

submitted in the MYT Business Plan Petition.


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For the purpose of the current Business Plan approval, the Commission has considered the

revised capitalisation of FY 2011-12 as submitted by TPC-D, without scrutiny of the same.

The same should not be construed as approval of the capitalisation of FY 2011-12. The same

shall be approved as part of a separate regulatory process to be followed for approval of ARR

for FY 2011-12, which the Commission is not taking up as part of the present Business Plan

Petition, for reasons explained in the preceding paragraphs of this Order. Accordingly, for the

purpose of MYT Business Plan approval, the Commission has considered the following year-

wise capitalisation for the period from FY 2012-13 to FY 2015-16.

While approving the DPR schemes submitted by TPC-D, the Commission has revised the

phasing of the Capital Expenditure for DPR schemes from around 5 years to 2-3 years, thus,

early Capitalisation and early utilisation of assets has been directed by the Commission.

Accordingly, the Commission had asked TPC-D to submit the revised Capitalisation Plan for

the Control Period and the same has been considered by the Commission. The Commission is

of the opinion that the capital expenditure and other progress should be monitored scheme-

wise or else the on-time completion of capex schemes would be difficult.

On scrutiny, the Commission observed that the Non-DPR schemes of Wires Business

(Mobile DG Sets, Power Quality Monitoring System, Emergency O&M Mobile van and

Equipments & Spares, Equipment for condition monitoring, Common Complaint Platform,

CSS Automation, etc.) submitted by TPC-D for FY 2012-13 are already covered under the

DPR Scheme (In-principle clearance of the scheme for Distribution Activities of TPC-D in

Mumbai Suburban licence area for FY 2012-13). Therefore, these Non-DPR schemes have

been considered as DPR schemes by the Commission. However, for the remaining years

TPC-D submitted that the DPR and Non-DPR schemes are separate.

Based on the Capital Expenditure schemes approved by the Commission, TPC-D submitted

the revised capitalisation for Wires Business and Supply Business, as summarised in the

Tables below:

Table: Revised Capitalisation for Wires Business submitted by TPC-D (Rs. Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Total

In-principle approved 736.39 178.14 66.65 0.00 981.18

Yet to receive in-principle approval 0.00 220.86 258.62 313.15 792.62

Non DPR including HOSS 1.00 5.70 3.30 3.60 13.60

Total 737.39 404.70 328.57 316.75 1787.40

Table: Revised Capitalisation for Supply Business submitted by TPC-D (Rs. Crore)


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Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Total

In-principle approved 30.61 23.25 0.00 0.00 53.86

Yet to receive in-principle approval 27.78 23.77 13.54 14.24 79.33

Non DPR including HOSS 1.00 3.92 1.52 1.67 8.10

Total 59.39 50.94 15.06 15.90 141.29

As regards network development in South Mumbai, the Commission observed that TPC-D

has included network development for South Mumbai area under the DPR scheme

“Distribution Activities of TPC-D in South Mumbai during FY 2011-12” amounting to Rs.

88.96 crore for FY 2013-14 in the MYT Business Plan. The Commission has granted

conditional approval for this scheme stating that “TPC-D is advised not to start actual work

in this regard till further direction of the Hon’ble Supreme Court.” Thus, the Commission

has not considered this scheme for the purpose of this MYT Business Plan; however, the

Commission may consider the same in accordance with the Hon’ble Supreme Court

Judgment in either the Mid-term Performance Review or final truing up, depending on the

Judgment of the Hon’ble Supreme Court.

As regards network development in Mumbai Suburbs, the Commission had allowed TPC-D

to utilise RInfra-D network as an interim measure, and had clearly directed TPC-D to set up

its own network. The same was reiterated in the Order dated February 15, 2012 in Case No.

104 of 2011, relevant extracts from the Order are given below:

“Commission’s Ruling

The Commission has already clarified on this issue in the following orders:-

(1) Order dated 22nd February, 2010 in Case Nos.60, 81, 83, 84, 85 and 86 of 2009,

that “incurring heavy capital expenditure for the network rollout is not the only

option available” was a recommendation. The Commission had clarified that the said

recommendation does not dilute TPC-D’s statutory duty under Section 42(1) of the

EA 2003 to develop and maintain an efficient coordinated and economical

distribution system in its area of supply and to supply electricity in accordance with

the provisions of the said Act and hence TPC-D needs to make arrangement towards

fulfilling its statutory duty on continuous basis.

(2) APR Order for RInfra issued on July 29, 2011 in Case No. 72 of 2010, as under:

"Section 2(17) of the EA 2003 defines a "distribution licensee" as a licensee

authorised to operate and maintain a distribution system for supplying electricity to


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the consumers in his area of supply, while the sixth proviso to Section 14 of the EA

2003 states that "...the Appropriate Commission may grant a license to two or more

persons for distribution of electricity through their own distribution system within the

same area..." Hence, each licensee has to have its own distribution system for

supplying electricity to consumers in its area of supply. As a consequence, TPC also

will have to set up its own distribution network in its area of supply, and the

utilisation of the existing distribution network of RInfra-D for supplying to

changeover consumers is only an interim solution, till such time TPC sets up its own

network."

TPC-D has been directed to submit the detailed network roll-out plan as a part of its

MYT Business Plan Petition, and the Commission will take a decision on the same

while approving the MYT Business Plan.”

“Commission’s Ruling

…

Further, the Commission has already clarified that TPC will have to set up its own

distribution network in its area of supply, and the utilisation of the existing

distribution network of RInfra-D for supplying to changeover consumers is only an

interim solution, till such time TPC sets up its own network.”

This issue of changeover and network addition by TPC-D was the subject matter of another

proceeding before the Commission in Case No. 151 of 2011. The Commission has issued its

Order dated 22 August, 2012 in Case No. 151 of 2011. TPC-D has to ensure that the rulings

of the Commission in this matter as well as in Case No. 151 of 2011 are complied with and

supply is given to all consumers in accordance with the provisions of the EA 2003 and the

applicable Rules and Regulations.

Further, TPC-D has expressed difficulty in segregating the proposed capital expenditure into

the areas of BEST and RInfra, however, the Commission is of the view that clusters can be

identified geographically in BEST and RInfra areas and thus, the capital expenditure can be

segregated. Hence, the Commission directs TPC-D to submit details of capital expenditure

for network development separately for RInfra and BEST area.

Based on TPC-D’s revised submission and the Commission’s rulings relating to Capex

discussed above, for the purpose of MYT Business Plan, the Commission has considered

DPR schemes, which have already been granted in-principle approval by the Commission.

Further, as per Regulation 27.5 of MERC MYT Regulations, 2011 the Commission has

considered an additional amount equivalent to 20% of the total capitalisation approved

towards unplanned capital expenditure or the capital expenditure that is included under the


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MYT Business Plan but is yet to be approved by the Commission or HOSS schemes.

However, in case the capitalisation proposed by TPC-D against DPR schemes that are yet to

be approved by the Commission for a given financial year is less than 20% of approved

capitalisation for that year, the Commission has considered the capitalisation proposed by

TPC-D.

The Commission, for the purpose of MYT Business Plan approval, has considered the

capitalisation towards HOSS for each year from FY 2012-13 to FY 2015-16 at the levels

submitted by TPC-D.

Moreover, in its Order dated 22 August 2012 in Case No. 151 of 2011, the Commission has

given certain directions as regards capital expenditure to be undertaken by TPC-D in the

Suburban Mumbai area over the next one year. TPC-D has to re-draw its capex plan

accordingly and comply with the Commission's directions in this regard.

The summary of capitalization approved by the Commission is given in the Tables below:

Table: Capitalisation approved by the Commission for Wires Business (Rs. Crore)


13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Total

In-principle approved DPR 736.39 89.18 68.20 0.00 893.77

Additional 20% towards

unplanned capital expenditure or

capital expenditure yet to be

approved 1.00 17.84 13.64 0.00 32.48

Total Capitalisation 737.39 107.02 81.84 0.00 926.25

Table: Capitalisation approved by the Commission for Supply Business (Rs. Crore)


13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Total

In-principle approved DPR 30.61 23.25 0.00 0.00 53.86

Additional 20% towards

unplanned capital expenditure or

capital expenditure yet to be

approved 6.12 4.65 0.00 0.00 10.77


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13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Total

Total Capitalisation 36.73 27.90 0.00 0.00 64.63

5.6 DEPRECIATION

While projecting Depreciation Expenditure for the second Control Period from FY 2011-12

to FY 2015-16, TPC-D submitted that it has computed Depreciation in accordance with

Regulation 31 of MERC MYT Regulations, 2011 and considering the asset-class wise

depreciation rates as provided under the said Regulations.

TPC-D submitted that the depreciation for the Control Period has been estimated based on the

additions up to 31 March, 2011. TPC-D submitted that for the assets added during the year in

the Control Period, it has considered only 50% of the depreciation for that year. The

depreciation for the Control Period based on the above Regulations and after considering the

projections of capitalisation, as submitted by TPC-D, is shown in the following tables:

Table: Wires Business- Depreciation submitted by TPC-D (Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015- 16

Depreciation on account of assets

capitalised till 31 March, 2011

32.35 32.47 31.70 30.45 28.76


added in FY 12

4.73 9.46 9.46 9.46 9.46


added in FY 13

- 8.18 16.36 16.36 16.36


added in FY 14

- - 7.96 15.92 15.92


added in FY 15

- - - 8.93 17.87


added in FY 16

- - - - 7.98

Total Depreciation 37.08 50.11 65.47 81.12 96.34

Table: Supply Business- Depreciation submitted by TPC-D (Rs. Crore)


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16


capitalised till 31 March, 2011

0.60 0.59 0.59 0.57 0.55

Depreciation on account of assets added in

FY 12

1.66 3.32 3.32 3.32 3.32


FY 13

1.10 2.21 2.21 2.21


FY 14

0.99 1.98 1.98


FY 15

0.55 1.09


FY 16

0.58

Total Depreciation 2.26 5.02 7.10 8.62 9.73

In compliance with the Commission’s directive in the Order dated 15 February, 2012 in Case

No. 104 of 2011, regarding submission of data related to the impact of year-wise replacement

schemes for TPC-D, TPC-D submitted that the total quantum of assets retired is around Rs

1.54 Crore since the year 2005 (till 31 March 2011), however, TPC-D is unable to provide

year-wise de-capitalisation at this point of time. The Commission has not the considered the

impact of the same at this stage, however, the Commission reiterates its direction given in the

above said Order, as extracted below:

“Since, the data is easily available and has been submitted by TPC-D in the previous

Petitions as well as in the present Petition, the Commission is unable to appreciate

the difficulty expressed by TPC-D in submitting the data related to the impact of year-

wise replacement schemes for TPC-D. However, in the absence of specific

confirmation by TPC-D in this regard, the Commission has not reduced the equity

portion pertaining to these assets at this stage. The Commission directs TPC-D to

comply with the Commission's directions in this regard, and also to confirm whether

the details of de-capitalisation appearing in Depreciation computation/formats can be

considered for this purpose. TPC-D should also submit additional impact on equity or

loans for the respective years on this account, if any. Such details have to be

submitted by TPC-D as part of its Tariff/ARR filings of the next year.”

As regards segregation of GFA into Wires and Supply, the Commission had asked TPC-D to

submit the basis of segregation under MYT Petition in Case No. 179 of 2011. In reply to the


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Commission’s query, TPC-D submitted the details of Supply and Wires GFA over the last

four years as given in the table below:

The Commission, for the purpose of the present MYT Business Plan Order, has computed

depreciation for the years under consideration of the second Control Period starting from FY

2012-13 as under. The Opening GFA for FY 2012-13 has been reworked based on the closing

GFA for FY 2010-11 as approved in the Commission’s Order in Case 104 of 2011, and

considering the actual asset addition and asset retirement during FY 2011-12 as submitted by

TPC-D. The GFA addition and retirement during FY 2011-12 are considered at the same

level as submitted by TPC-D solely for arriving at the opening GFA levels of FY 2012-13

and such consideration should not be construed as approval by the Commission under the

present Business Plan. Further, the revised approved capitalisation for subsequent years in the

Control Period has been considered for the purpose of computation of depreciation.

In view of the above submission of TPC-D, the Commission has considered the segregation

of GFA into Wires and Supply Business in proportion to that submitted by TPC-D in its

Petition.

Further, Regulation 31.2 (a) of the MERC MYT Regulations, 2011 emphasises on reduction

of approved original cost of fixed assets retired/replaced for computation of depreciation of

any Distribution Licensee, as reproduced below:

“31.2 The Generation Company and Transmission Licensee or Distribution Licensee

shall be permitted to recover depreciation on the value of fixed assets used in their

respective Business computed in the following manner:

(a) The approved original cost of the project/fixed assets shall be the value base for

calculation of depreciation:

Provided that the depreciation shall be allowed on the entire capitalised amount

of the new assets after reducing the approved original cost of the project/fixed

assets of retired or replaced assets.” (Emphasis Added)


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The Commission for the purpose of approval of MYT Business Plan has considered the cost

of asset retirement as submitted by TPC-D for computing year-wise reduction in GFA and the

corresponding depreciation. TPC-D while submitting the MYT Petition shall consider the

original cost of retired assets for working out the depreciation in accordance with the above

highlighted provisions of the MERC MYT Regulations.

The Commission, for the purpose of the current MYT Business Plan Order, has computed

depreciation for the years under consideration of the second Control Period starting from FY

2012-13 as under:

Table: Wires Business- Depreciation computed by the Commission (Rs. Crore)

Depreciation FY13 FY14 FY15 FY16

Opening Gross Fixed Assets (GFA) 813.69 1550.60 1657.14 1811.63

Addition of Gross Fixed Assets 737.39 107.02 81.84 0.00

Asset Retirement -0.48 -0.48 -0.48 -0.48

Closing Gross Fixed Assets 1550.60 1657.14 1811.63 1811.16

Depreciation 56.24 76.41 82.47 85.54

Table: Supply Business- Depreciation computed by the Commission (Rs. Crore)

Depreciation FY13 FY14 FY15 FY16

Opening Gross Fixed Assets (GFA) 56.12 92.85 120.75 120.75

Addition of Gross Fixed Assets 36.73 27.90 0.00 0.00

Asset Retirement 0.00 0.00 0.00 0.00

Closing Gross Fixed Assets 92.85 120.75 120.75 120.75

Depreciation 3.62 5.34 6.11 6.15

5.7 INTEREST EXPENSES

5.7.1 Interest on Loans

TPC-D submitted that in the past, it has taken loans from time to time for financing its capital

expenditure and since, the interest rates on the loans keeps on changing in the market from

year to year, it is extremely difficult to predict the interest rate for the Control Period at the

time of submission of the Business Plan. TPC-D added that it would not be prudent to tie up

the entire loan required for capital expenditure planned under the MYT Business Plan at this

point of time as actual capital expenditure would change with the progress of time.


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TPC-D submitted that it has tied up about Rs. 800 Crore from IDFC in FY 2011-12 for

funding the capex schemes of TPC-G, TPC-T, and TPC-D. The salient features of the

funding as submitted by TPC-D are as follows:

Particulars Description

Amount Rs. 800 Crore

Purpose For financing the Company’s capital expenditure requirements in the

Mumbai Area Operations

Interest Rate IDFC 1 year Benchmark rate plus 1.20% p.a. The current rate works out to

be 11.20% p.a. (10%+1.20%)

Interest Reset 12 months from the date of first disbursement; Subsequent Reset shall be

after every 12 months from the last Reset date. The Reset Interest Rate will

be 1 year IDFC Benchmark Rate prevailing on the Relevant Reset Date

plus the spread of 1.20%

Repayment In 44 structured quarterly instalments commencing from the expiry of 24

months from the date of first disbursement, 7.57% every year for the first

10 years and 25% in the last year.

TPC-D further submitted that for the purpose of projections, it has considered the IDFC loan

for FY 2011-12 and FY 2012-13 and the normative loans for additional capitalisation

thereafter. TPC-D submitted that such normative loans have been considered to be financed

at the weighted average interest rate on the opening portfolio of actual loans. TPC-D also

submitted that if considered prudent, it would finance this normative loan component through

actual loans. TPC-D submitted that the loans which it has taken in the past would also impact

the interest costs in the Control Period.

TPC-D submitted that as per the MERC MYT Regulations, for the loans taken to finance

capitalisation up to 31 March, 2011, the cumulative closing balance is required to be worked

out as on 31 March, 2011 and the same would be opening balance for FY 2011-12. The

summarised loan portfolio and the interest rate calculations as submitted by TPC-D are given

in the following Tables:

Table: Wires Business- Interest on Loan submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Balance 269.68 363.11 540.12 695.93 861.96

Addition to Loans 130.51 227.12 221.28 247.15 221.73

Repayment 37.08 50.11 65.47 81.12 96.34


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Closing Balance 363.11 540.12 695.93 861.96 987.35

Effective Interest Rate 10.68% 10.87% 11.00% 11.00% 10.99%

Interest on Loans 33.81 49.08 67.96 85.65 101.66

Table: Supply Business- Interest on Loan submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Balance 0.00 41.01 64.66 83.14 88.30

Addition to Loans 43.28 28.67 25.59 13.78 14.58

Repayment 2.26 5.02 7.10 8.62 9.73

Closing Balance 41.01 64.66 83.14 88.30 93.15

Effective Interest Rate 11.21% 11.21% 11.00% 11.00% 10.99%

Interest on Loans 2.30 5.92 8.13 9.43 9.97

TPC-D, in reply to a specific query raised by the Commission as regards TPC-D’s funding

arrangement in view of inadequacy of its new loan of Rs 800 Crore from IDFC to finance the

proposed debt requirement of TPC-G, TPC-T and TPC-D combined till FY 2012-13,

submitted that IDFC loan would be adequate to finance the debt requirement for FY 2011-12

and some quantum of it shall also be used in FY 2012-13. Hence, the need for tying up

additional loans can be assessed only in the middle of FY 2012-13 based on progress of

capital expenditure in FY 2012-13 and therefore, no additional new loans are envisaged at

this time. TPC-D further submitted that in case there are no actual loans, the same would be

considered as funded through normative loans. Further, TPC-D emphasised that it has

checked the interest rate in the market and has noted that the interest rates are in line with the

interest rate considered for IDBI loan, i.e., 11.21%.

In the absence of a firm tie up for funding arrangement/loan agreements beyond FY 2011-12,

the Commission, for the purpose of approval of the present MYT Business Plan, is

constrained to consider the weighted average interest rate based on interest rate of 11.21%

from IDBI even for FY 2012-13 to FY 2015-16 as submitted by TPC-D. However, the

interest rates considered in the present Order shall be revisited based on actuals, as per the

terms of actual long term loans, subject to submission of necessary documentary proofs for

the same by TPC-D.


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The Opening loan for FY 2012-13 has been reworked based on the closing loan for FY 2010-

11 as approved by the Commission in is Order in Case No. 104 of 2011 and considering the

loan addition and repayment during FY 2011-12 as submitted by TPC-D. The loan addition

and repayment during FY 2011-12 have been considered at the same level as submitted by

TPC-D solely for arriving at the opening loan levels of FY 2012-13 under the present MYT

Business Plan and such consideration should not be construed as approval by the

Commission for the loan and repayment during FY 2011-12.

The Commission have considered the debt amount for each year of the Control Period from

FY 2012-13 to FY 2015-16 based on the revised capitalisation considered under this MYT

Business Plan for the respective years. Since, the IDFC Loan 3 of Rs 800 Crore has been

utilised for TPC-G, TPC-T, and TPC-D, the balance loan available after utilisation by TPC-G

and TPC-T has been considered for TPC-D and the funding thereafter has been considered

through normative loan.

Further, the loan repayments have to be considered at the same level as the depreciation for

the respective years in accordance with Regulation 33.3 of the MERC MYT Regulations. The

rate of interest considered is the weighted average rate of interest calculated on the basis of

the actual loan portfolio at the beginning of each year in accordance with Regulation 33.5 of

the MERC MYT Regulations. Similarly, the interest on loan has been calculated on the

normative average loan of the year by applying the weighted average rate of interest in

accordance with Regulation 33.6 of the MERC MYT Regulations.

The interest expenses on long-term loan, as computed by the Commission for the years under

consideration for the present MYT Business Plan starting from FY 2012-13, in view of the

approved Capitalisation, is summarised in the Table below:

Table: Wires Business - Interest on Long Term loans computed by the Commission

(Rs Crore)

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Balance 308.29 768.23 766.73 741.55

Addition to Loans 516.17 74.91 57.29 0.000

Repayment 56.24 76.41 82.47 85.54

Closing Balance 768.23 766.73 741.55 656.01

Effective Interest Rate 10.44% 10.45% 10.47% 10.48%

Interest 57.20 81.39 79.98 74.16


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Table: Supply Business - Interest on Long Term loans computed by the Commission

(Rs Crore)

Particulars

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Balance 24.13 46.23 60.42 54.31

Addition to Loans 25.71 19.53 0.00 0.00

Repayment 3.62 5.34 6.11 6.15

Closing Balance 46.23 60.42 54.31 48.16

Effective Interest Rate 11.22% 11.09% 11.00% 11.01%

Interest 3.95 5.92 6.31 5.64

5.7.2 Interest on Working Capital and Consumers' Security Deposit

TPC-D submitted that it has computed the interest on working capital by applying the State

Bank of India Advance Rate to the normative working capital as given in the MERC MYT

Regulations, which is equal to 13.25%.

TPC-D submitted that it has considered the book value of Stores and Spares equal to the past

two years. The interest on Working Capital as submitted by TPC-D is given in the table

below:

Table: Wires Business - Interest on working capital submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

O&M Expenses 4.19 5.04 6.24 7.56 9.07

Book value of Stores, materials

and supplies

6.48 6.48 6.48 6.48 6.48

Receivables 27.10 36.25 47.83 59.63 71.46

Total Working Capital

Requirement

37.77 47.78 60.55 73.68 87.00

Interest on Working Capital 5.01 6.33 8.02 9.76 11.53

Table: Supply Business - Interest on working capital submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

O&M Expenses 4.87 5.85 6.50 7.22 8.07

Book value of Stores, materials

and supplies

0.00 0.00 0.00 0.00 0.00

Receivables 538.12 645.39 716.32 736.67 689.57


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Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Less: Power Purchase Expenses (84.08) (101.88) (117.40) (127.50) (129.99)

Less: Security Deposit (118.70) (143.17) (160.47) (167.22) (159.81)

Total Working Capital

Requirement

340.21 406.22 444.94 449.17 407.83

Interest on Working Capital 45.08 53.82 58.95 59.51 54.04

As regards the Interest on Consumers' Security Deposit for its Wires Business, TPC-D

submitted that the projections under this head may be considered as nil for the purpose of the

MYT Business Plan. TPC-D submitted that for its Supply Business, Consumer Security

Deposit has been considered on the basis of past data, which is approximately 3.5% of ARR.

Table: Supply Business - Interest on Consumers' Security Deposit submitted by TPC-D

(Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Consumers' Security Deposit 118.70 143.14 160.47 167.22 159.81

Bank Rate (%) 6.00% 6.00% 6.00% 6.00% 6.00%

Interest on Consumers' Security

Deposit

7.12 8.59 9.63 10.03 9.59

The Commission has computed the total working capital requirement in accordance with the

provisions of MERC MYT Regulations, 2011 and TPC-D’s submission, in the present MYT

Business Plan starting from FY 2012-13 as shown in the table below:

Table: Wires Business - Interest on working capital computed by the Commission (Rs.

Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Interest on Working Capital 6.75 8.95 9.47 9.83

Table: Supply Business - Interest on working capital and Consumers' Security Deposit

considered by the Commission (Rs. Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Interest on Working Capital and

Security Deposit

60.33 67.13 67.77 61.81


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5.8 RETURN ON EQUITY (ROE)

TPC-D submitted that as per Regulation 32.2 of the MERC MYT Regulations, the

Distribution Licensee is entitled to Return on Equity. TPC-D submitted that the Commission,

in its Tariff Order dated 12 September, 2010 has considered Non-DPR schemes only to the

extent of 20% of the quantum of capitalisation under DPR schemes for the purpose of truing

up exercise, against which it has filed an appeal before the Hon’ble ATE. TPC-D further

submitted that since the issue is sub-judice before the Hon’ble ATE, it has considered the

actual capitalisation in the previous years for calculating return on equity, depreciation, etc.,

i.e., the quantum considered is same as that presented in the APR Petition for FY 2010-11.

The projected Return on Equity as submitted by TPC-D is shown in the following tables:

Table: Wires Business - Return on Equity submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Equity 219.86 275.65 372.85 467.54 573.32

Addition to Equity 55.94 97.34 94.83 105.92 95.03

Reduction in Equity - Retirement/

Replacement of Assets (0.143) (0.14) (0.14) (0.14) (0.14)

Closing Equity 275.69 372.88 467.57 573.35 668.23

Return on Opening Equity

(15.50%) 34.08 42.73 57.79 72.47 88.86

Return on Additional Equity

(7.75%) 4.32 7.53 7.34 8.20 7.35

Total Return on Equity 38.40 50.26 65.13 80.67 96.22

Table: Supply Business - Return on Equity submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Equity 6.47 25.01 37.30 48.27 54.17

Addition to Equity 18.55 12.29 10.97 5.91 6.25

Closing Equity 25.01 37.30 48.27 54.17 60.42

Return on Opening Equity (17.50%) +

Return on Additional Equity (8.75%) 2.75 5.45 7.49 8.96 10.03

The Commission has computed RoE at the rate of 15.5% per annum of the equity for the

distribution Wires Business and at the rate of 17.5% per annum on the equity of the Supply


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Business, respectively, in accordance with the MERC MYT Regulations, on the opening

equity of the year and on 50% of the approved levels of asset capitalisation during each year

of the Control Period and considering the normative debt: equity ratio as 70:30.

For the propose of arriving at the Regulatory Equity at the beginning of the year for FY 2012-

13, the closing equity at the end of FY 2010-11 as approved by the Commission in its Order

in Case No. 104 of 2011 as TPC-D’s appeal in the matter is sub-judice before the Hon’ble

ATE and the submissions on revised capitalization for FY 2011-12 of TPC-D have been

considered. The Commission has not scrutinized the equity levels of TPC-D for FY 2011-12

except for consideration of the revision in equity as per the revised capitalization submitted

by TPC-D for the year. As discussed earlier, detailed scrutiny of the capitalisation and equity

addition for FY 2011-12 will be taken up as part of a separate Regulatory Process.

The computation of RoE as considered by the Commission for the years under consideration

under the present MYT Business Plan Order starting from FY 2012-13 is shown in the Tables

below:

Table: Wires Business - Return on Equity computed by the Commission (Rs. Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Equity 245.42 466.06 497.59 521.57

Addition to Equity 220.79 31.68 24.12 0.00

Reduction in Equity- Retirement/

Replacement of Assets 0.14 0.14 0.14 0.14

Closing Equity 466.06 497.59 521.57 521.43

Return on Opening Equity (15.50%) 38.04 72.24 77.13 80.84

Return on Additional Equity (7.75%) 17.10 2.44 1.86 -0.01

Total Return on Equity 55.14 74.68 78.99 80.83

Table: Supply Business - Return on Equity computed by the Commission (Rs.

Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Equity 16.66 27.68 36.05 36.05

Addition to Equity 11.02 8.37 0.00 0.00

Reduction in Equity- Retirement/

Replacement of Assets


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Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Closing Equity 27.68 36.05 36.05 36.05

Return on Opening Equity (17.50%) 2.91 4.84 6.31 6.31

Return on Additional Equity (8.75%) 0.96 0.73 0.00 0.00

Total Return on Equity 3.88 5.58 6.31 6.31

5.9 PROVISION FOR BAD AND DOUBTFUL DEBTS

TPC-D submitted that on the basis of norms given in Regulation 78.6 of the MERC MYT

Regulations, 2011, the provision for doubtful debts has been worked out at 1.5% of the

receivables. TPC-D submitted that for the purpose of projections, it has considered the

receivables same as that in case of computation of Working Capital. The projected Provision

for Doubtful Debts as submitted by TPC-D is given in the Tables below:

Table: Wire Business - Provisions for Bad and Doubtful Debts submitted by TPC-D (Rs.

Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Receivables 27.10 36.25 47.83 59.63 71.46

Maximum Allowable up to 5% of

Receivables 1.36 1.81 2.39 2.98 3.57

Opening Value of Provision of

Doubtful Debts 0.00 0.41 0.95 1.67 2.56

% Provision for Bad and Doubtful Debt 1.50% 1.50% 1.50% 1.50% 1.50%

Provision for Bad and Doubtful

Debts 0.41 0.54 0.72 0.89 1.01

Table: Supply Business - Provisions for Bad and Doubtful Debt submitted by TPC-D (Rs.

Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Receivables 538.12 645.39 716.32 736.67 689.57

Maximum Allowable up to 5% of

Receivables 26.91 32.27 35.82 36.83 34.48

Opening Value of Provision of Doubtful

Debts 10.67 18.74 28.42 35.82 36.83

% Provision for Bad and Doubtful Debt 1.50% 1.50% 1.50% 1.50% 1.50%

Provision for Bad and Doubtful Debts 8.07 9.68 7.39 1.02 0.00


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As regards receivables considered by TPC-D for provisioning of Bad and doubtful debts, the

Commission is of the view that the receivables considered for the purpose of computation of

Working Capital Requirement and the receivables to be considered for provisioning of Bad

and doubtful debts vary significantly, as the receivables to be considered for provisioning of

Bad and doubtful debts are sundry debtors outstanding for a period more than the regular

collection period of the Utility, whereas the receivables considered for the computation of

Working Capital Requirement are the bills outstanding and shall be collected before the next

billing cycle. Further, Regulations 78.6 and 92.9 of the MERC MYT Regulations, 2011,

clearly specify that the Utility may provision for Bad and doubtful debts upto 1.5% of the

receivables shown in the audited accounts duly allocated for Wires and Supply Business as

extracted below:

The provisions for Bad and doubtful debts for Wires Business on the basis of norms are given

in Regulation 78.6 of the MERC MYT Regulations, 2011 which states as:

“78.6 Provision for Bad and Doubtful debts

78.6.1 The Commission may allow a provision for bad and doubtful debts up to 1.5%

of the amount shown as receivables in the audited accounts of the Distribution

licensee, duly allocated for the Wires Business:

Provided that where the amount of such provisioning for bad and doubtful debts

exceed five (5) percent of the amount shown as receivables in the audited accounts of

the Distribution licensee duly allocated for the wires business, no such appropriation

shall be allowed which would have the effect of increasing the provisioning beyond

the said maximum.”

The provisions for Bad and doubtful debts for Supply Business on the basis of norms are

given in Regulation 92.9 of the MERC MYT Regulations, 2011 which states as:

“92.9 Provision for Bad and doubtful debts

92.9.1 The Commission may allow a provision for bad and doubtful debts upto 1.5 %

of the amount shown as receivables in the audited accounts of the Distribution

Licensee, duly allocated for the Supply Business:

Provided that where the amount of such provisioning for bad and doubtful debts

exceeds five (5) per cent of the amount shown as receivables in the audited accounts

of the Distribution Licensee duly allocated for the Supply Business, no such


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appropriation shall be allowed which would have the effect of increasing the

provisioning beyond the said maximum.”

As the audited allocation statement, showing the receivables for Wires and Supply Business

is not available to estimate the provisions for Bad and doubtful debts, the Commission has

not considered provisions for Bad and doubtful debts in the present MYT Business Plan

Order. The Commission directs TPC-D to submit the audited allocation statement, showing

the receivables for Wires and Supply Business for FY 2011-12 and projected for the Control

Period, along with the MYT Petition to estimate the Provision for Bad and Doubtful Debts.

5.10 CONTRIBUTION TO CONTINGENCY RESERVES

TPC-D submitted that the contribution to contingency reserves for the Wires Business and

Supply Business have been worked out in accordance with Regulation 36.1 of the MERC

MYT Regulations, 2011. TPC-D submitted that in order to project the contribution to

contingency reserves, it has assumed that the contingency reserves would not exceed 5%

during the Control Period. The contribution to contingency reserves based on above

assumptions, as submitted by TPC-D is as follows:

Table: Wire Business - Contribution to Contingency Reserves submitted by TPC-D

(Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Gross Fixed Assets 699.49 885.46 1209.44 1525.08 1877.67

% Contingency Reserves 0.25% 0.25% 0.25% 0.25% 0.25%

Opening Balance of

Contingency Reserves 20.00 21.75 23.96 26.99 30.80

Maximum Permissible Reserves 34.97 44.27 60.47 76.25 93.88

Contribution to Contingency

Reserves 1.75 2.21 3.02 3.81 4.69

Table: Supply Business - Contribution to Contingency Reserves submitted by TPC-D

(Rs. Crore)

Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Gross Fixed Assets 21.56 83.38 124.33 160.88 180.57

% Contingency Reserves 0.25% 0.25% 0.25% 0.25% 0.25%


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Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Opening Balance of Contingency

Reserves 0.00 0.05 0.26 0.57 0.98

Maximum Permissible Reserves 1.08 4.17 6.22 8.04 9.03


Reserves 0.05 0.21 0.31 0.40 0.45

The Commission has computed the contribution to contingency reserves at 0.25% of the

Opening GFA in accordance with the provisions of the MERC MYT Regulations, 2011 and

based on the capitalisation approved by the Commission during the years starting from FY

2012-13 for the Wires and Supply Business as shown in the Tables below:

Table: Wire Business - Contribution to Contingency Reserves computed by the

Commission (Rs. Crore)



Reserves 2.03 3.88 4.14 4.53

Table: Supply Business - Contribution to Contingency Reserves computed by the

Commission (Rs. Crore)



Reserves 0.14 0.23 0.30 0.30

5.11 DEMAND SIDE MANAGEMENT AND OTHER EXPENSES

TPC-D submitted that it has computed the cost estimates and annual savings from the DSM

programmes based on the Load Research and Market Study carried out by it. The total DSM

expenses claimed by TPC-D for the MYT Control Period are as follows:

Table: DSM expenses as submitted

by TPC-D (Rs. Crore)Particulars

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

DSM Programme Costs 3.00 5.73 10.86 15.00 14.70

DSM Cell Salary 0.80 0.90 1.00 1.10 1.20

Load Research, Market Survey and

Capacity Building related Cost

0.60 0.00 0.80 0.80 1.00

Total DSM Budget 4.40 6.63 12.66 16.90 16.90


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TPC-D submitted that in addition to the DSM expenses, it has included the expenses towards

Corporate Social Responsibility (CSR) under the same head. TPC-D submitted that Sub-

section 5 of Section 135 of the Companies Bill, 2011, states that:

“ (5) The Board of every company referred to in sub-section (1), shall make every

endeavour to ensure that the company spends, in every financial year, at least two per

cent of the average net profits of the company made during the three immediately

preceding financial years, in pursuance of its Corporate Social Responsibility

Policy:”

In view of the above proposed enactment during the MYT Control Period, TPC-D has

budgeted the expense towards CSR to the extent of 2% of the average ROE for past three

years on rolling basis.

The total expenses under this head as submitted by TPC-D are summarised in the following

table:

Table: Supply Business - DSM and Other Expenses submitted by TPC-D (Rs. Crore)

Particulars FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

DSM Expense 4.40 6.63 12.66 16.90 16.90

CSR Expense

RoE 26.97 32.88 41.16 55.71 72.62 89.63 106.24

Average RoE 33.67 43.25 56.50 72.65 89.50

CSR Expense @ 2%

of average RoE 0.67 0.87 1.13 1.45 1.79

Total DSM Budget 5.07 7.50 13.79 18.35 18.69

As regards DSM Programme Cost, the Commission observed that TPC-D has budgeted DSM

cost of Rs. 49.29 Crore, out of which budgeted cost of approved schemes amount to Rs.

10.77 Crore. The Commission has analysed the DSM schemes submitted by TPC-D and has

considered only the approved DSM schemes with the approved cost of Rs. 11.28 Crore as

against TPC-D’s submission of Rs. 10.77 Crore for this Business Plan. Further, the

Commission has considered the DSM Cell Salary and Load Research, Market Survey and

Capacity Building related Costs as submitted by TPC-D.


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The Commission is of the view that the amounts collected under the erstwhile LMC are to be

used to meet the DSM programme budget. The Commission hereby directs TPC-D to utilize

these funds available under LMC fund to meet the DSM expenses and then claim the balance

DSM expenses under the MYT Petition.

As regards CSR related expenses, firstly, there is no merit in including CSR expenses under

DSM expenses, as projected by TPC-D in its MYT Business Plan Petition. Moreover, the

Commission is of the view that these costs are towards TPC-D’s Corporate Social

Responsibility and should not be passed on to the consumers of TPC-D, and these expenses

should be borne by TPC-D. TPC-D is free to incur such expenses from the returns earned out

of the business. Thus, for the purpose of the Business Plan, expenses under CSR have not

been considered.

Table: Supply Business - DSM Expenses computed by the Commission (Rs. Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

DSM Expenses 2.21 4.28 5.33 5.56

5.12 INCOME TAX

TPC-D submitted that although Income Tax is not a part of Annual Fixed Charges, it has to

be computed for working out the ARR for the supply on own network and for supply on

changeover network. The Income Tax estimated by TPC-D for the second Control Period is

shown in the Tables below:

Table: Wires Business - Income Tax submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

MAT @ 20.01%

Return on Equity 38.40 50.26 65.13 80.67 96.22

RoE Grossed up 48.01 62.82 81.41 100.83 120.27

MAT 9.61 12.57 16.29 20.18 24.07

Income Tax @ 32.45%

RoE-a 38.4 50.26 65.13 80.67 96.22

Tax Depreciation-b 67.32 105.53 137.06 169.47 191.59

Book Depreciation-c 37.08 50.11 65.47 81.12 96.34

Income Tax (a+c-b)*t/(1-t) 3.92 (2.48) (3.1) (3.69) 0.47

Tax for ARR 9.61 12.57 16.29 20.18 24.07


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Table: Supply Business- Income Tax submitted by TPC-D (Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

MAT @ 20.01%

Return on Equity 2.75 5.45 7.49 8.96 10.03

RoE Grossed up 3.44 6.82 9.36 11.20 12.53

MAT 0.69 1.36 1.87 2.24 2.51

Income Tax @ 32.45%

RoE-a 2.75 5.45 7.49 8.96 10.03

Tax Depreciation-b 9.27 14.03 17.40 17.75 18.21

Book Depreciation-c 2.26 5.02 7.10 8.62 9.73

Income Tax (a+c-b)*t/(1-t) (2.04) (1.71) (1.35) (0.08) 0.74

Tax for ARR 0.69 1.36 1.87 2.24 2.51

As regards computation of Income-Tax for FY 2012-13 to FY 2015-16, the MERC MYT

Regulations, 2011 specifies that the Commission may provisionally approve Income Tax

payable for each year of the Control Period based on the actual income tax payable as per the

latest audited accounts and the variation between the actual and approved Income Tax shall

be reimbursed at the time of Mid Term Performance Review.

In accordance with Regulation 34 of the MERC MYT Regulations, 2011, the Income Tax for

FY 2012-13 to FY 2015-16 will have to be considered at the same level as approved by the

Commission for FY 2010-11, in its Order in Case No. 104 of 2011, since that is the latest

year for which audited accounts have been provided and prudence check has been undertaken

by the Commission. Further, the true up based on actual Income Tax paid by TPC-D shall be

considered at the time of mid-term review by the Commission.

The Commission had approved income tax of Rs. 19.76 Crore for FY 2010-11 in its Order in

Case No. 104 of 2011; the same has been allocated to Wires Business and Supply Business in

proportion to the RoE considered for Wires Business and Supply Business. The income-tax

considered by the Commission for the years under consideration for the present MYT

Business Plan starting from FY 2012-13 to FY 2015-16 for Wires and Supply Business is as

summarised in the Tables below:

Table: Wires Business - Income Tax considered by the Commission (Rs Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16


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Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Income Tax 18.46 18.39 18.30 18.33

Table: Supply Business - Income Tax considered by the Commission (Rs Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Income Tax 1.30 1.37 1.46 1.43

5.13 NON-TARIFF INCOME

TPC-D submitted that it had estimated the Non Tariff Income on the basis of the following

methodology:

Interest on Contingency Reserve Investment is the same as the interest in the previous

year, i.e., FY 2010-11, plus Interest on new investments at the rate of 8%. TPC-D

further clarified that the interest rate of 8% has been considered only on the Investment

added during the previous year, whereas interest income of the corresponding previous

year has been held as constant.

Rent has been averaged out for last three years and then escalated at 5.72% every year.

Non Recurring Non Tariff Income has been assumed to be same as that in FY 2010-11.

Table: Wires Business - Non Tariff Income submitted by TPC-D (Rs. Crore)

Particulars FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Contingency Reserve Opening Balance 17 20 22 24 27 31

Interest on Contingency Reserve 1.16 1.40 1.54 1.73 1.97 2.29

Rent 3.72 3.93 4.16 4.39 4.65 4.91

Recurring Non Tariff Income 4.88 5.33 5.70 6.12 6.62 7.20

Delayed Payment Charges 2.82

Sale of Scrap and Stores 0.90

VAT Refund 0.88

Interest on IT Refund 0.09

Interest on Delayed Payment Charges 0.77

Income from Services Rendered 0.39

Others 2.57

Non Recurring Non Tariff Income 8.41 8.41 8.41 8.41 8.41 8.41

Total Non Tariff Income 13.28 13.74 14.10 14.53 15.03 15.60


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Further, TPC-D has considered Rs. 0.40 Crore of Non- Recurring Non-Tariff Income for each

year of the Control Period.

In its reply to the query raised by the Commission regarding 5.72% escalation in the income

from rents, TPC -D submitted that since the rent expenses (if any) are part of O&M expenses

of a Distribution Licensee and the Commission has considered an escalation of 5.72% in the

norms therefore, it had considered it prudent to assume the escalation to be same as that

provided by the Commission. The Commission does not find any merit in TPC-D’s

submission, and has considered a normal escalation rate of 10% on the rent approved by the

Commission in its APR Order in Case No. 104 of 2011 as against 5.72% submitted by TPC-

D.

TPC-D, in reply to the Commission’s query regarding treatment of assets such as Guest

Houses, etc., replied that the Commission, in its Order dated 15 February, 2012 in Case No.

104 of 2011 has restored back the assets transferred to Group Companies in the books of

TPC, which were de-capitalised in FY 2008-09 and allowed by the Commission in its Order

of September 2010. TPC-D has appealed against the same before the Hon’ble ATE.

TPC-D had earlier submitted the details of the assets that were de-capitalised in FY 2008-09.

Although the list comprised of 68 items, it pertained to only 10 locations. The details

provided then are summarized in the table below:

Table: Summary of Assets De-capitalised


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Rs. Crs

Asset

description

Date of

Acquisition

Acquis.val. Accum.dep. Book val.

1 Andheri

Housing

Colony

June 1964,

Mar 1970

0.30 (0.25) 0.05

2 Vashi Guest

House

April ' 1991 0.60 (0.33) 0.27

3 Dharam Jyoti July ' 1995 3.60 (1.40) 2.19

4 NCPA Flat Mar ' 1996 3.96 (1.55) 2.40

5 Mona

Apartments-

Warden Road

Sep' 1997 3.06 (1.02) 2.04

6 Capri Manav

Mandir Road

Mar ' 1998 1.71 (0.57) 1.14

7 Bakhtawar -

Coloba

Feb' 1999 5.94 (1.79) 4.14

8 Delhi Guest

House

Jan' 1991 0.55 (0.28) 0.27

9 Morarjee

Mills Building-

Lower Parel

Sep' 2002 18.18 (3.37) 14.80

10 Electra Apts

Flats & Car

Parking Space

Nov' 1999 10.02 (2.73) 7.29

Grand Total 47.91 (13.29) 34.62

TPC-D clarified that it could actually rent out only the property under Sr. No. 9 which is

office space, while the rest are flats/guest houses and are being used for the stay of Guests of

Tata Power or have been allotted by the Company to their employees. Hence, TPC-D

requested that the quantum to be considered as Non Tariff Income should be limited to the

income enjoyed by TPC from property under Sr. No. 9.

However, as directed by the Commission, TPC-D submitted the market values for

determination of the rent for other places (i.e., other than Sr No 9). The explanation of the

notional income/actual income from the properties is as follows:

Sr No Asset description Remarks and Basis for Evaluation

1 Andheri Housing

Colony

The flats are closed and not used by any one. Hence, no rent

has been considered for these flats

2 Vashi Guest House This is a 2 Bed Room apartment given to Company Guest.

Though no valuation of rent has been carried out, a similar

flat in that area would fetch about Rs. 25,000-40,000 per

month. TPC-D has for the purpose of this exercise considered

a rent of Rs 40,000 per month.

3 Dharam Jyoti This is 3 Bedroom House in Bandra. The same is being used


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by Tata Power’s Strategic Electronics Division to house their

guests. Though TPC-D has not carried out the valuation of the

market rent, it had carried out the market valuation for

apartments in Mahim. The same was determined to be

between Rs 45000 to Rs 55000 p.m for a 2 BHK apartment.

TPC-D has therefore considered a rent of about Rs 75,000

p.m for this 3 BHK Guest House.

4 NCPA Flats These (2 No.s) are being used by the Executive Directors of

Tata Power. Since no evaluation of the market rent been

carried out, TPC-D has considered an average House Rent

Allowance (HRA) paid to the Executive Directors as an

appropriate value of the Fair Rent and such HRA is deducted

from the salary of the Executive Director.

As expenditure of the Executive Directors is apportioned in

the ratio the operating income between Mumbai Licensed

Area and Outside Mumbai Licensed Area, TPC-D has for the

purpose of this income too considered the allocation in the

ratio of the operating income. The share of licensed area for

the purpose works out about 70 %. TPC-D has considered this

for the exercise.

5 Mona Apartments-

Warden Road

This (1 No.) is being used by TPC-D Vice President. Similar

to the above NCPA Flats, no evaluation for this flat has been

carried out. TPC-D has therefore considered the average HRA

of a Vice President for this purpose and an allocation of 70 %

for Mumbai Licensed Area.

6 Capri - Manav

Mandir Road

This is not occupied by any one at present. In the past the

same was occupied by one of the GMs. TPC-D has therefore

considered the average HRA of a General Manager for this

purpose and an allocation of 70 % for Mumbai Licensed

Area.

7 Bakhtawar -Colaba This is not occupied by anyone and the same is vacant.

Hence, no rent is considered.

8 Delhi Guest House This is being used by Tata Power to house guests visiting

Delhi. There is no rent collected by the Company. Further, no

valuation of rents that are derivable by the Guest House has

been carried out. This Guest House has three independent


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rooms. The Guest House is located in Prithviraj Road area of

Delhi.

For the purpose of determination of rent for this exercise,

TPC-D has considered one additional Guest House in Delhi

which Tata Power has actually taken on rent. Though this

Guest House is located in Panchsheel Park area of Delhi and

the rental values may not be the same as the Guest House in

Prithviraj Road, it has 7 independent rooms.

Hence for the purpose of this exercise, TPC-D has considered

the Rents paid by Tata Power for Panchsheel park Guest

House.

9 Electra Apts Flats &

Car Parking Space

Out of the 14 flats, seven of them are Guest Houses.

In a separate exercise, Tata Power had carried out the market

valuation of the rents of the flats for the purpose of employee

compensation. The same was determined to be Rs 45000 to

Rs 55000 per month. TPC-D has therefore considered an

amount of Rs 55000 per month per flat.

TPC-D submitted that the quantum of Non Tariff Income to be considered is as follows:

Table: Non Tariff Income to be considered for the various years

Sr No Asset description Date of Acquisition No of Flats/

Apartments

Rent per

month (Rs )

Rent per Annum

(Rs Cr)- Current -

Considered for

FY 2011-12

FY 2010-11 FY 2009-10 FY 2008-09

1 Andheri Housing Colony June 1964, Mar 1970 NA 0 0 0 0 0

2 Vashi Guest House April ' 1991 1 40000 0.05 0.05 0.05 0.05

3 Dharam Jyoti July ' 1995 1 75000 0.09 0.09 0.09 0.09

4 NCPA Flat Mar ' 1996 2 330000 0.55 0.504 0.442 0.368

5 Mona Apartments-Warden

Road

Sep' 1997 1 162870 0.14 0.124 0.109 0.091

6 Capri Manav Mandir Road Mar ' 1998 1 53000 0.04 0.040 0.036 0.030

7 Bakhtawar -Coloba Feb' 1999 1 0 0.00 0.00 0.00 0.00

8 Delhi Guest House Jan' 1991 1 220000 0.26 0.26 0.26 0.26

9 Electra Apts Flats & Car Parking

Space

Nov' 1999 7 55000 0.462 0.462 0.462 0.462

Subtotal 1.60 1.53 1.45 1.35

add

Office Space

Morarjee Mills Building-Lower

Parel

Sep' 2002 1 2794912 3.35 3.35 3.35 3.35

Grand Total 4.95 4.89 4.80 4.71

For Sr No 4,5,6- the earlier years amounts have been derived by deflating the current amount by the average rise in salary given across the company

Workings for earlier years (Rs Cr) based

on the quantum of FY 2011-12


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TPC-D submitted that it has not sold off any of the above properties and the same are on the

books of TPC.

The Commission has considered the Non-Tariff Income on account of rentals as submitted by

TPC-D for FY 2011-12 for computation of Non-Tariff income for the Control Period and

escalated the same at 10% year on year as discussed earlier for rent income. However, in case

any of the vacant flats/properties are utilised subsequently, then the impact of the same

should be brought to the notice of the Commission at the appropriate time. As the assets were

first considered as de-capitalised by TPC-D in FY 2008-09, the Commission directs TPC-D

to submit the rental income from FY 2008-09 onwards in the ARR for FY 2011-12 along

with the MYT Petition.

While computing the Non Tariff Income, the Commission has considered the approved

Contribution to Contingency reserves as stated under previous paragraphs and an interest rate

of 8% on the additional contribution to contingency reserves in the respective year in

accordance with MERC MYT Regulations, 2011.

It was observed that TPC-D has considered constant non-recurring income while projecting

the Non Tariff Income for the Control Period, however, the Commission has considered

escalation rate of 10% on the income approved by the Commission in its APR Order in Case

No. 104 of 2011 including gains from corporate treasury function.

As regards allocation of Non Tariff Income between Wires and Supply Business, the

Commission observed that TPC-D has included income from Delayed Payment Charges and

Interest on Delayed Payment under Wires Business, however, the same relates to Supply

Business. Further, interest on Contingency reserve can be identified for Wires and Supply

Business separately based on GFA, however, TPC-D has included the same for Wires

Business only. The Commission has considered Delayed Payment Charges and Interest on

Delayed Payment under income of the Supply Business and also computed interest on

Contingency reserve as computed for Wires Business. The Commission directs TPC-D to

further allocate Non-Tariff Income for Wires and Supply Business rationally and logically

while submitting the MYT Petition.

Accordingly, the Non-Tariff Income as considered by the Commission for the present MYT

Business Plan approval starting from FY 2012-13 is summarised in the Tables below:


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Table: Wires Business - Non Tariff Income computed by the Commission

(Rs. Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Rent 4.50 4.95 5.45 4.91

Interest on Contingency

Reserves

2.02 2.33 2.66 3.02

Others 13.36 14.69 16.16 18.86

Total Non Tariff Income 19.87 21.97 24.27 26.79

Table: Supply Business - Non Tariff Income computed by the Commission

(Rs. Crore)

Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Interest on Contingency

Reserves

0.03 0.04 0.04 0.05

Delayed Payment Charges 3.41 3.75 4.12 4.53

Interest on Delayed Payment 0.93 1.02 1.12 1.24

Others 0.44 0.48 0.53 0.59

Total Non Tariff Income 4.81 5.29 5.82 6.40

5.14 AGGREGATE REVENUE REQUIREMENT OF TPC-D

TPC-D submitted that in making the projections, it has restricted itself to the Aggregate

Revenue Requirement (ARR) arising in that year and has not considered the impact of past

year’s performance in terms of Truing-up of FY 2008-09, FY 2009-10 and FY 2010-11 and

the gap arising there from. TPC-D further submitted that the impact of Judgments of the

Hon’ble ATE have also not been factored in, hence, the ARR presented in the MYT Business

Plan is a ‘Stand alone’ ARR for the various years of the Control Period.

The total ARR of TPC-D based on these computations and the estimated Average Cost of

Supply (ACOS) so arrived at by TPC-D is given in the Table below:


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Table: ARR as submitted by TPC-D (Rs. Crore)

Sl. Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-

16

1 Power Purchase Cost 2835.38 3394.78 3781.44 3875.22 3567.08

1.1 Purchase from TPC-G 2088.33 2482.39 2696.88 2685.11 2366.11

1.2 Purchase from Case-I Bidding 0.00 373.67 373.67 373.67 373.67

1.3 Purchase from Renewable 251.36 324.05 399.01 420.02 444.88

1.4 Purchase from Pool (UI) 110.28 125.36 131.65 138.64 146.78

1.5 Purchase from Bilateral

Contracts

385.41 89.30 180.22 257.59 235.64

2 Standby Charges 117.98 141.51 144.06 146.98 151.01

3 Transmission Charges 143.92 168.64 180.20 192.93 207.89

4 TPC-D Wheeling Costs 162.62 217.52 286.98 357.80 428.73

4.1 RoE 38.40 50.26 65.13 80.67 96.22

4.2 Depreciation 37.08 50.11 65.47 81.12 96.34

4.3 O&M 50.29 60.51 74.88 90.73 108.80

4.4 Interest on Loans 33.81 49.08 67.96 85.65 101.66

4.5 Interest on Working Capital and

on consumer security deposits

5.01 6.33 8.02 9.76 11.53

4.6 Provisioning for Bad debts 0.41 0.54 0.72 0.89 1.01

4.7 Contribution to contingency

reserves

1.75 2.21 3.02 3.81 4.69

4.8 Non Tariff Income (13.74) (14.10) (14.52) (15.01) (15.58)

4.9 Income Tax 9.61 12.57 16.29 20.18 24.07

5 TPC-D Supply Cost 131.45 167.41 192.21 204.87 211.42

5.1 RoE 2.75 5.45 7.49 8.96 10.03

5.2 Depreciation 2.26 5.02 7.10 8.62 9.73

5.3 O&M 58.44 70.26 77.94 86.70 96.82

5.4 DSM and other Expenses 5.07 7.50 13.79 18.35 18.69


5.6 Interest on Working Capital 45.08 53.82 58.95 59.51 54.04

5.7 Interest on Security Deposit 7.12 8.59 9.63 10.03 9.59



reserves

0.05 0.21 0.31 0.40 0.45


5.11 Income Tax 0.69 1.36 1.87 2.24 2.51


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Sl. Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-

16

6 Total ARR 3391.34 4089.85 4584.89 4777.80 4566.13

7 Total Sales (MU) 5792.42 6577.27 6894.33 7245.50 7654.21

8 Average Cost of Supply

(Rs./kWh)

5.85 6.22 6.65 6.59 5.97

5.15 APPROVAL OF MYT BUSINESS PLAN SCENARIO

The Commission had directed TPC-D to compute the ACOS under three scenarios, i.e.,

optimistic, realistic, and pessimistic, by varying the following four factors that play a crucial

role in computing ACOS:

Sales

Power Purchase Availability

Capital Expenditure

O&M Cost

TPC-D submitted that while the ARR and the ACOS presented earlier in the MYT Business

Plan Petition have been computed considering the realistic scenario for the above four

factors, it has presented the following scenarios considering only the optimistic and the

pessimistic assumptions regarding the crucial factors:

Sales: TPC-D submitted that while working out the various scenarios, it has considered

only the variation in Sales, which in turn impacts the Power Purchase quantum and the

O&M Costs.

Capital Expenditure: TPC-D submitted that it has not altered the Capital Expenditure

plans as the same are made with a long term view and also keeping in mind the

obligations to supply irrespective of the short term impact of Sales that would be

effective on this additional network.

Power Purchase Availability: As regards the scenario on Power Purchase Availability,

TPC-D submitted that it is of the opinion, that it would be by and large meeting the

requirement of TPC-D through the long-term sources and hence, it has not considered

any variation in the same through the Scenario Analysis except the variation arising out

of the variation in the sales above.

O&M Expenditure: TPC-D submitted that the O&M cost allowed for the purpose of

tariff under the present MERC MYT Regulations, 2011 is allowed on normative basis as

provided in Regulation 78.4 for Wires Business and Regulation 92.7 for Supply Business

and the O&M Cost presented in the MYT Business Plan is on the above basis and


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accordingly, there cannot be any scenario for the O&M expenditure at present for the

purpose of the MYT Business Plan and hence, it has not done any scenario analysis for

O&M Expenditure.

5.15.1 Scenario I – Optimistic Sales

TPC-D submitted that in the Optimistic Sales scenario, it has considered optimistic

assumptions for sales of TPC-D and computed the ARR and the Average Cost of Supply. The

Key Assumptions as submitted by TPC-D are as follows:

Direct Sales: Growth in Direct Sales is assumed to be at 7.65% in FY 2011-12 and

thereafter at 8% for the remaining MYT period.

Changeover Sales: No change has been considered in the assumptions of changeover

sales for this scenario.

Switchover Sales: No change has been considered in the assumptions of switchover

sales for this scenario.

TPC-D, in its reply to the Commission’s query regarding the basis for the projections,

submitted that since FY 2011-12 is almost over, it has a reasonable idea that the sales under

the optimistic sales scenario shall be about 2956 MU and therefore, it has considered an

increase in sales of 8% under optimistic sales scenario. However, TPC-D added that for

projecting the sales under the optimistic scenario it has linked the sales growth to the

projected GDP growth of the country. TPC-D submitted that as per economywatch.com, the

projected GDP growth up to FY 2014-15 is about 8.1% and hence, a round figure has been

considered for projecting the increase in sales under the optimistic scenario.

Based on the above assumptions, the demand projections of TPC-D as submitted in the MYT

Business Plan Petition is as follows:

Table: Optimistic Sales Scenario - Demand Projections (MU)

Demand Projections

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

A Direct Sales 2956.07 3192.55 3447.96 37823.8 4021.7

B Switchover Sales 19 175.95 388.33 648.42 928.83

c=a+b Total Sales on TPC-D's network 2975.07 3368.5 3836.29 4372.22 4950.53

D

Distribution Loss Applicable

(%) 1.25% 1.50% 1.75% 2.00% 2.25%

(e=c/(1-d))

Sales on TPC-D's Network at

T<>D 3012.72 3419.8 3904.62 4461.45 5064.48

F Changeover Sales 2863.57 3319.12 3253.64 3163.4 3096.22

G

Distribution Loss Applicable

(%) 0.00% 0.00% 0.00% 0.00% 0.00%


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Demand Projections

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

(h=f/(1-g))

Changeover consumption (at

T<>D Interface) 2863.57 3319.12 3253.64 3163.4 3096.22

i=e+h

Total Consumption (at T<>

Interface) (MU) 5876.29 6738.92 7158.26 7624.85 8160.70

J

Transmission Loss Applicable

(%) 4.85% 4.85% 4.85% 4.85% 4.85%

(k=i/(1-j))

Demand at delivery point (at

G<>T Interface) (MU) 6175.82 7082.41 7523.14 8013.51 8576.67

('l=k/8760

*1000) Average Demand (MW) 705 808.49 858.81 914.78 979.07

M Load Factor 0.73 0.73 0.73 0.73 0.73

n=l/m Peak Demand (MW) 965.76 1107.53 1176.45 1253.13 1341.19

TPC-D further submitted that it has assumed that there shall not be any transmission

constraints and the additional power requirement shall be met through bilateral power

purchase.

TPC-D also added that it has assumed that the additional sales under the optimistic scenario

are on the existing and the projected network of TPC-D (as considered under the realistic

scenario) and therefore, no change in capitalisation has been considered under this scenario

(with respect to realistic scenario).

The ARR and ACOS under the Optimistic Sales Scenario as submitted by TPC-D in the

MYT Business Plan are as follows:

Table: Optimistic Sales Scenario - ARR and Average Cost of Supply

Sl. Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

1 Power Purchase Cost (Rs.

Crore) 2838.28 3402.37 3796.62 3897.79 3597.70





1.5 Purchase from Bilateral

Contracts 385.41 89.30 180.22 257.59 235.64

2 Standby Charges (Rs. Crore) 117.98 141.51 144.06 146.98 151.01

3 Transmission Charges (Rs.

Crore) 143.92 168.64 180.20 192.93 207.89


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Sl. Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

4 TPC-D Wheeling Costs (Rs.

Crore) 163.21 219.02 289.80 362.24 435.11

4.1 RoE 38.40 50.26 65.13 80.67 96.22

4.2 Depreciation 37.08 50.11 65.47 81.12 96.34

4.3 O&M 50.87 61.96 77.60 95.01 114.94



on consumer security deposits 5.02 6.38 8.12 9.91 11.74



reserves 1.75 2.21 3.02 3.81 4.69


4.9 Income Tax 9.61 12.57 16.29 20.18 24.07

5 TPC-D Supply Cost 131.96 168.71 194.72 208.69 216.77

5.1 RoE 2.75 5.45 7.49 8.96 10.03

5.2 Depreciation 2.26 5.02 7.10 8.62 9.73

5.3 O&M 58.91 71.43 80.14 90.15 101.76







reserves 0.05 0.21 0.31 0.40 0.45


5.11 Income Tax 0.69 1.36 1.87 2.24 2.51

6 Wheeling Charges to RInfra

(Rs. Crore) 0.00 0.00 0.00 0.00 0.00

7 Total (Rs. Crore) 3395.35 4100.25 4605.40 4808.64 4608.47

8 Total Sales (MU) 5838.64 6687.62 7089.94 7535.62 8046.75


(Rs./kWh) 5.82 6.13 6.50 6.38 5.73


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5.15.2 Scenario II – Pessimistic Sales

The Key Assumptions submitted by TPC-D in the MYT Business Plan for the Pessimistic

Sales Scenario are as follows:

Direct Sales: Direct Sales for FY 2011-12 have been considered same as that under

the realistic scenario. However, the Direct Sales growth from FY 2012-13 onwards is

assumed to be lower at 5% for the MYT Period.

Changeover Sales: No new consumers have been considered for estimating the

changeover sales from FY 2012-13 onwards. Further, as assumed in the realistic

scenario, the changeover sales shall grow at the rate of 2% for increase in specific

consumption from FY 2012-13.

Switchover Sales: No change has been considered in the assumptions of switchover

sales for this scenario. However, due to change in the estimation of the Changeover

Sales, there will be a change in the adjusted changeover sales.

TPC-D, in its reply to the Commission’s query regarding the basis for the projections,

submitted that while the growth of 8% in optimistic sales has been considered, the rationale

for projecting sales growth of 5% under the pessimistic scenario is that the sales growth is

linked to the total sales growth of all the licensees in the Mumbai Licence Area, which is in

the range of 3% to 6% for past years.

Based on the above assumptions, the demand projections of TPC-D as submitted in the MYT


Table Pessimistic Sales Scenario - Demand Projections

Demand Projections

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

A Direct Sales (MU) 2909.86 3055.35 3208.12 3368.52 3536.95

B Switchover Sales (MU) 19.00 175.95 388.33 648.42 928.83

c=a+b

Total Sales on TPC-D's

network (MU) 2928.85 3231.30 3596.45 4016.94 4465.78

D

Distribution Loss

Applicable (%) 1.25% 1.50% 1.75% 2.00% 2.25%

(e=c/(1-d))

Sales on TPC-D's

Network at T<>D (MU) 2965.93 3280.50 3660.51 4098.92 4568.57

F Changeover Sales (MU) 2863.57 3234.12 3110.09 2999.06 2911.78

G

Distribution Loss

Applicable (%) 0.00% 0.00% 0.00% 0.00% 0.00%


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Demand Projections

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

(h=f/(1-g))

Changeover

consumption (at T<>D

Interface) (MU) 2863.57 3234.12 3110.09 2999.06 2911.78

i=e+h

Total Consumption (at

T<> Interface) (MU) 5829.50 6514.62 6770.60 7097.99 7480.36

J

Transmission Loss

Applicable (%) 4.85% 4.85% 4.85% 4.85% 4.85%

(k=i/(1-j))

Demand at delivery

point (at G<>T

Interface) (MU) 6126.64 6846.69 7115.71 7459.78 7861.65

('l=k/8760*1000) Average Demand (MW) 699.39 781.59 812.30 851.57 897.45

M Load Factor 0.73 0.73 0.73 0.73 0.73

n=l/m Peak Demand (MW) 958.07 1070.66 1112.73 1166.54 1229.38

TPC-D submitted that the reduced demand in Pessimistic scenario shall lead to reduction in

power purchase from bilateral sources.

As regards the capital expenditure, TPC-D submitted that it has assumed that the drop in sales

would not impact the capitalisation plan as such expenditure is required notwithstanding the

quantum of sales. TPC-D added that it has also assumed that the reduced sales in the medium

term shall not impact TPC-D's long network rollout plan and hence, it has considered no

change in the capitalisation plan of TPC-D.

The ARR and ACOS under the Pessimistic Sales Scenario as submitted by TPC-D in its

MYT Business Plan are shown in the following table:

Table: Pessimistic Sales Scenario - ARR and Average Cost of Supply

Sl. Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

1 Power Purchase Cost (Rs.

Crore) 2835.38 3387.16 3767.06 3857.62 3545.82





1.5 Purchase from Bilateral 385.41 89.30 180.22 257.59 235.64


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Sl. Particulars FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Contracts

2 Standby Charges (Rs. Crore) 117.98 139.17 140.12 142.47 145.95

3 Transmission Charges (Rs.

Crore) 143.92 166.05 175.62 187.42 201.39

4 TPC-D Wheeling Costs (Rs.

Crore) 162.62 217.15 286.34 356.81 427.23

4.1 RoE 38.40 50.26 65.13 80.67 96.22

4.2 Depreciation 37.08 50.11 65.47 81.12 96.34

4.3 O&M 50.29 60.16 74.26 89.77 107.36



on consumer security deposits 5.01 6.32 8.00 9.73 11.48



reserves 1.75 2.21 3.02 3.81 4.69


4.9 Income Tax 9.61 12.57 16.29 20.18 24.07

5 TPC-D Supply Cost 131.96 166.04 189.65 201.77 207.55

5.1 RoE 2.75 5.45 7.49 8.96 10.03

5.2 Depreciation 2.26 5.02 7.10 8.62 9.73

5.3 O&M 58.44 69.07 75.83 83.96 93.33







reserves 0.05 0.21 0.31 0.40 0.45


5.11 Income Tax 0.69 1.36 1.87 2.24 2.51

6 Wheeling Charges to RInfra

(Rs. Crore) 0.00 0.00 0.00 0.00 0.00

7 Total (Rs. Crore) 3391.34 4075.58 4558.78 4746.08 4527.94

8 Total Sales (MU) 5792.42 6465.41 6706.54 7016.01 7377.56


(Rs./kWh) 5.85 6.30 6.80 6.76 6.14


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The Commission has made a note of TPC-D’s submission in this regard. However, based on

the analysis detailed in the previous paragraphs, the Commission has computed the following

scenario of ARR projections over the second Control Period for the years from FY 2012-13

to FY 2015-16. As submitted by TPC-D, the Commission has also restricted the projections

to the Aggregate Revenue Requirement (ARR) arising in that year of the Control Period and

has not considered the impact of past year’s performance in terms of Truing-up of FY 2008-

09, FY 2009-10 and FY 2010-11 and the gap arising there from. However, the Commission

hereby directs TPC-D to include the same in the MYT Petition.

The final ARR, which shall have a bearing on the tariff during the second Control Period,

shall be approved as part of the MYT Order for the second Control Period. The summary of

ARR computed by the Commission for the purpose of the present Order is as given in the

Table below:

Table: Aggregate Revenue Requirement computed by the Commission (Rs. Crore)

Sl. Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

1 Power Purchase Cost 3201.85 3624.90 3700.96 3381.15

1.1 Purchase from TPC-G 2454.13 2687.37 2650.06 2333.80

1.2 Purchase from Case-I Bidding 373.67 373.67 373.67 373.67

1.3 Purchase from Renewable 307.41 381.73 403.84 426.82

1.4 Purchase from Pool (UI) 0.00 0.00 0.00 0.00

1.5 Purchase from Bilateral Contracts 66.64 182.14 273.40 246.87

2 Standby Charges 140.51 140.51 140.51 140.51

3 Transmission Charges 233.58 273.16 286.82 301.16

4 TPC-D Wheeling Costs 236.53 324.93 343.08 352.83

4.1 RoE 55.14 74.68 78.99 80.83

4.2 Depreciation 56.24 76.41 82.47 85.54

4.3 O&M 60.58 83.20 94.00 106.41

4.4 Interest on Loans 57.20 81.39 79.98 74.16

4.5 Interest on Working Capital and on

consumer security deposits

6.75 8.95 9.47 9.83

4.6 Provisioning for Bad debts 0.00 0.00 0.00 0.00

4.7 Contribution to contingency reserves 2.03 3.88 4.14 4.53

4.8 Non Tariff Income -19.87 -21.97 -24.27 -26.79

4.9 Income Tax 18.46 18.39 18.30 18.33

5 TPC-D Supply Cost 137.33 159.25 171.31 174.01

5.1 RoE 3.88 5.58 6.31 6.31


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Sl. Particulars FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

5.2 Depreciation 3.62 5.34 6.11 6.15

5.3 O&M 66.71 74.69 83.53 93.20

5.4 DSM and other Expenses 2.21 4.28 5.33 5.56

5.5 Interest on Loans 3.95 5.92 6.31 5.64

5.6 Interest on Working Capital 52.03 57.63 58.02 52.68

5.7 Interest on Security Deposit 8.29 9.50 9.75 9.13

5.8 Provisioning for Bad debts 0.00 0.00 0.00 0.00

5.9 Contribution to contingency reserves 0.14 0.23 0.30 0.30

5.1 Non Tariff Income -4.81 -5.29 -5.82 -6.40

5.11 Income Tax 1.30 1.37 1.46 1.43

6 Total ARR 3949.79 4522.76 4642.68 4349.66

7 Total Sales (MU) 6250.62 6612.63 6988.46 7378.73

8 Average Cost of Supply (Rs./kWh) 6.32 6.84 6.64 5.89


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6 DIRECTIONS FOR FILING MYT PETITION FOR THE

SECOND CONTROL PERIOD

Through this Business Plan Order, TPC-D is hereby directed to comply with the following

directives while filing the MYT Petition for the second Control Period:

a. TPC-D shall submit its ARR for FY 2011-12 as per MERC Tariff Regulations, 2005,

as a separate section, in its MYT Petition for FY 2012-13 to FY 2015-16.

b. TPC-D should modify its manpower requirement based on the capex and sales

approved by the Commission in this Order as well as in accordance with the

directions given by the Commission in its Order dated 22 August, 2012 in Case No.

151 of 2011, and ensure that the O&M expenses for the Control Period FY 2012-13 to

FY 2015-16 are within the norms as specified in the MERC MYT Regulations, 2011.

c. TPC-D to put in place firm funding arrangement, either from financial institutions or

from its internal accruals, to finance its funding requirements for the MYT Business

Plan Control Period, so as to ensure timely fund availability for achieving

capitalisation planned during the Control Period.

d. In compliance with the Commission’s directive in the Order dated 15 February, 2012

in Case No. 104 of 2011, regarding submission of data related to the impact of year-

wise replacement schemes, TPC-D should submit the same along with MYT Petition.

e. TPC-D while submitting the MYT Petition shall submit the description of assets

proposed to be retired along with original cost of such assets to be retired and the

corresponding impact on equity and loan outstanding over the Control Period.

f. TPC-D has expressed difficulty in segregating the proposed capital expenditure into

the areas of BEST and RInfra, however, the Commission is of the view that clusters

can be identified geographically in BEST and RInfra area and thus the capital

expenditure can be segregated. Thus, the Commission directs TPC-D to submit details

of capital expenditure for network development separately for RInfra and BEST area

along with MYT Petition.

g. As regards the assets that were de-capitalised in FY 2008-09, the Commission directs

TPC-D to submit the rental income from FY 2008-09 onwards, in the ARR for FY

2011-12 along with the MYT Petition.

h. The Commission is of the view that the amounts collected under the erstwhile LMC

are to be used to meet the DSM programme budget. TPC-D should submit the details

of LMC fund and utilize these funds to meet the DSM expenses and then claim the

balance DSM expenses under the MYT Petition.


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i. TPC-D to submit the audited allocation statement, showing the receivables for Wires

Business and Supply Business for FY 2011-12, along with the MYT Petition to

estimate the Provision for Bad and Doubtful Debts.

6.1 OTHER DIRECTIONS

a. As outlined in Section 5.3.2, TPC -D should continue to procure power through Case

I bidding and reduce its dependence on bilateral purchases in the interest of the

consumers.

b. As outlined in Section 5.3.3, TPC-D should expedite the process of RE Power

Purchase tie-up for the MYT Control Period, thereby reducing its dependence on REC

to meet the RPO target.

The current approved Business Plan of TPC-D shall form the basis for filing the MYT

Petition for the second Control Period. TPC-D shall submit the MYT Petition within 60 days

from the date of issuance of this Business Plan Order. With the above, TPC-D's Petition in

Case No. 165 of 2011 stands disposed of.

Sd/- Sd/-

(Vijay L. Sonavane) (V. P. Raja)

Member Chairman


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APPENDIX -1

List of individuals who attended the Technical Validation held on December 27, 2011

Sr. No. Name Institution

1 Mr. V.H.Wagle TPC-D

2 Mr.Kailash Mali TPC-D

3 Mr.Amey Naik TPC-D

4 Mr.R.M.Ranade TPC-D

5 Mr.P.V.Joshi TPC-D

6 Mr.Ashok Sethi TPC-D

7 Mr.T.K.Bhaskaran TPC-D

8 Mr. M.R.Tawade TPC-D

9 Mr.S.N.Joshi TPC-D

10 Mr.Pillay R TPC-D

11 Ms.Shital Khiraiya TPC-D

12 Mr.N.C.Potphode TPC-D

13 Ms.Puja Gupta ABPS Infra

14 Mr.Sanjiv Singh ABPS Infra

15 Mr.Vikas Nikumbh May and Co.


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APPENDIX - 2

List of Objectors who attended Public Hearing on May 19, 2012

Sr. No. Name of the Objector Institution/Individual

1 Shri N. Ponrathnam Vel Induction Hardenings

2 Shri Raksh Pal Abrol Bharitya Udhami Avam Upbhokta Sangh

3 Shri Sandeep N. Ohri Individual

4 Shri Mukul B. Malvi TEXSPAN

5 Shri Sunil Chavan Individual

6 Adv. Mahesh Vaswani Individual

7 Adv. Arun Jagtap Shivsena Grahak Saurakshan Kaksha

8 Shri Vinod Ghosalkar MLA

9 Shri Rakesh Vijaysingh Varma Individual

10 Shri Ulhas Chaudhari Individual

11 Representative Minerva Premise Co. op. Soc. Ltd.

12 Shri George John Individual

13 Smt. Sneha Wadke Individual

14 Representative Kalika Electrical Enterprises

15 Shri Ramesh Dubey Individual

16 Representative 16 Hours Fitness Life

17 Shri Sikandar Azam Individual

18 Shri Vikram Patel Individual

19 Shri Manoj Saundavankar Individual

20 Smt. Vanita Adagatla Thomson Reuters

21 Shri Vijay Vaidya Individual

22 Shri Ganesh Khankar Individual

23 Shri Manoj Mishra Individual

24 Shri SoumenMukherjee Individual

25 Smt. Sheetal Shah National Congress Party

26 Shri Devesh Tripathi Individual

27 Shri Ashish V. Mhatre Individual

28 Shri Jitendra Mhatre Individual

29 Shri Sushil B. Tak Bhayender Shopping Centre

30 Shri Chandrakant Mudras Individual

31 Representative Electrotech Syndicate

32 Shri Rajesh Singh Individual

33 Representative ALMANAC

34 Representative Samajwadi Party Maharashtra Pradesh

35 Shri Sanjay R. Salvi Individual

36 Smt. Pallavi Dev Individual

37 Shri Ravindra K. Kadam Individual


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Sr. No. Name of the Objector Institution/Individual

38 Shri Ashokbhai Pandya Individual

39 Shri Guruprasad Shetty. Individual

40 Representative AWEIS Electronics & Electricals

41 Shri Hussain Khan Individual

42 Shri Anil Palande Individual

43 Shri Ajit Ashok Patil Individual

44 Shri Kamlesh Shekhar Individual

45 Shri Vinay Wardhan Individual

46 Shri Prasun Agrawal Individual

47 Shri Nitesh Naik Individual

48 Shri Montero Individual

49 Shri Kiran Karande Sakal

50 Shri J. M. Jhaver Individual

51 Shri P. F. Pereira Individual

52 Shri Saji Moudh Individual

53 Shri Rhime Individual

54 Shri Rigwander Singh Individual

55 Shri L S Samant Individual

56 Shri Vinay M Individual

57 Shri Sulantah Individual

58 Shri Jone Dias Individual

59 Shri VV Yadav Individual

60 Shri Jay Waghela Individual

61 Shri Sandeep Narale Individual

62 Shri K K Chopra Individual

63 Shri PV Shirgeunkar Individual

64 Shri JJ Gajare Individual

65 Shri Abhishek Bhargava Individual

66 Shri Vijay Malankar Individual

67 Shri Warman H Individual

68 Shri Surut Bhargaw Individual

69 Shri Raman Temkar Individual

70 Shri Sunil Bhargava Individual

71 Shri Parag Alavani Individual

72 Shri Laxman S Samant Individual

73 Shri Deepak Israni Individual