energy availability & cost for 2013-14 to 2015...

Bangalore Electricity Supply Company Limited MYT for 3rd control period (FY14 FY16)

CHAPTER 8

Annual Revenue Requirement For The 3rd Control Period(FY-14 to FY-16)

Principles for computation of Annual Revenue Requirement (ARR ) of the Distribution Licensee is laid down in chapter-III of MYT regulations -2006 framed by the Commission. Computation of ARR of each year of the Control period shall comprise of the following, namely:

(a) Power Purchase Costs } for Retail Supply

} Business

(b) Transmission and SLDC Charges }

(c) Operation and maintenance expense

(d) Interest on loan capital

(e) Return on equity

(f) Depreciation

(g) Interest on working capital

(h) Taxes on Income

(i) Other expenses if any

(j) Less: Non-tariff income, income from Other Business.

Based on the above Principles, the following cost are estimated as under:

8.1 Power Purchase Costs:

Power Purchase for FY 13:-

1. The Commission has approved source wise power purchase quantum and cost for FY 13. The actual cost incurred upto Sept 2012 and the Commissions approved figures for FY-13 is tabulated below.

Source

Approved

Actual upto Sept-2012

Energy in MU

Cost in Rs/Crore

Energy in MU

Cost in Rs/Crore

KPCL Hydel

3596.27

246.81

1421.40

118.45

KPCL Thermal

8840.78

2757.14

3042.36

1148.13

CGS

5659.02

1704.79

2720.87

713.19

IPPs

2817.18

1055.40

1193.15

425.91

NCE

2692.05

958.95

1909.51

649.18

Others

134.97

29.33

382.62 (Section11)

202.79

Short term

7564.51

3369.22

3491.09

1510.95

Transmission Charges

-

952.09

-

467.56

SLDC Charges

-

11.07

-

-

PGCIL

-

207.80

-

86.99

Total

31304.78

11292.61

14161.02

5323.15

2. GOK vide order dated 23.4.2012, has revised the share of allocation and the same is incorporated in Tariff order for 2013. The revised source wise allocation is as below.

KPCL:-

Hydel

Sharavathy

16.97%

Others

41.58%

Thermal

RTPS 1 to 7

49.62%

RTPS 1 x 250 MW

BTPS

DG Plant

100%

CGS:-

NTPC, NLC, PGCIL, MAPS& Kaiga

49.62%

Major IPPs:-

Tata, Rayalaseema (upto Aug12) & UPCL

49.62%

NCE:-

Wind, Mini hydel, Biomass, Co-gen (Based on Geographical Area)

100%

Short term:-

M/s JSW, PTCIL, NETS etc

70.62%

3. The Tariff of state owned stations (KPCL) is as per PPA approved by KERC and at provisional tariff for which PPAs are yet to be approved (Varahi 3 & 4, erstwhile VVNL Hydel and RTPS 1x 250 MW).

The Tariff of CGS is as per CERC Tariff Regulations 2009. The Tariff of atomic stations is as approved by Department of Atomic energy.

The Tariff of Tata Power is as per PPA and that of UPCL is provisionally approved by GOK. The final Tariff is yet to be approved by CERC.

The tariff of short term contracts is as per PPA.

4. There is acute shortage in power availability due to failure of monsoon and to mitigate the shortage, BESCOM had entered into short term contracts and procured power from Non PPA Generators as per GOK order dated 27.1.2012, under Section 11 of Electricity Act 2003. The rate provisionally fixed by GOK is Rs 5.30 per unit which is subject to approval of the Commission. BESCOM had filed a petition for determination of tariff which is yet to be finalized.

5. The power procurement details from short term and section 11 periods is as below.

(a) Short term purchase:-

Name of the Company

Energy in MU

Amount in Rs/Crore

Rate Rs/Unit

M/s NETS

536.38

216.50

4.04

M/s JSW

1728.45

757.41

4.38

M/s PTCIL

67.07

35.62

5.31

BMM ISPAT

72.42

29.69

4.10

M/s Harekrishna

14.23

7.33

5.15

M/s Tata

27.53

14.76

5.36

M/s NSL (Tungabhadra)

17.32

9.18

5.30

M/s GUVNL

1027.69

440.46

4.29

Total

3491.09

1510.95

(b) Section 11 period purchase (April-12 and May-12)

Name of the Company

Energy in MU

Amount in Rs/Crore

JSW

210.73

111.69

NSL Tungabhadra

11.52

6.10

Core Sugars

6.15

3.26

Sathavahana Ispat Ltd

2.20

1.17

Indian Cane Sugars

16.95

8.99

Star Metallics

12.10

6.41

Satish Sugars

5.39

2.86

Parrys Sugars

1.09

0.58

Sadhashiva Sugars

2.69

1.43

Davangere Sugars

15.90

8.43

Dhruvdesh Meta Steel

5.42

2.87

Vishwanath Sugars

7.01

3.72

Ugar Sugar Works (Chikkodi)

0.65

0.35

JK Cements

3.34

1.77

Himatsingka

3.50

1.86

Ugar Sugar Works (Yadgir)

2.42

1.28

Nirani Sugars

12.69

6.72

Renuka Sugars

9.91

5.25

Gem Sugars

6.22

3.30

Sunvik Steels

0.53

0.28

Surana

10.39

5.51

Prabhulingeshwara

4.41

2.34

Bannari

4.77

2.53

Jamakhandi Sugars

5.96

3.16

Nandi Sahakari Sakkare

6.34

3.36

Godavari Bio Refinaries

9.27

4.89

GM Sugars

1.48

0.78

Shiva shakthi sugar

1.56

0.82

Indian Sugar

2.03

1.08

Total

382.62

202.79

6. Available energy for the next half year of FY-13 is shown in the table below:

Source

Availability from Oct-12 to Mar-13

Energy in MU

Cost in Rs/Crore

KPCL Hydel

1817.74

112.05

KPCL Thermal

4402.05

1217.14

CGS

2801.06

960.31

IPPs

2923.29

1087.98

NCE

1.97

1.18

Others

11.49

0.18

Short term

3531.45

1417.97

Total

15489.05

4796.81

7. Though the power procurement from following projects are approved by the Commission, the same is not available to BESCOM since the projects are not yet commissioned as at the end of Sept 2012.

Name of the Company

Energy in MU

BTPS Unit II

932.69

NLC II Expansion 1

71.28

NLC II Expansion 2

8.49

Simhadri 2

256.47

Vallur TPS Stage 1

100.8

Vallur TPS Stage 2

60.48

NCE (New)

66.58

Others (TB dam and Jurala)

134.97

Total

1631.76

8. The total power purchase cost for FY-13 after subtracting the energy not available is shown in the table below:

Source

Approved

Actual upto Sept-2012

Availability from Oct-12 to Mar-13

Projected for FY-13

Energy in MU

Cost in Rs/Crore

Energy in MU

Cost in Rs/Crore

Energy in MU

Cost in Rs/Crore

Energy in MU

Cost in Rs/Crore

KPCL Hydel

3596.27

246.81

1421.4

118.45

1817.74

112.05

3239.14

230.50

KPCL Thermal

8840.78

2757.14

3042.36

1148.13

4402.05

1217.14

7444.41

2365.27

CGS

5659.02

1704.79

2720.87

713.19

2801.06

960.31

5521.93

1673.50

IPPs

2817.18

1055.4

1193.15

425.91

2923.29

1087.98

4116.44

1513.89

NCE

2692.05

958.95

1909.51

649.18

1.97

1.18

1911.48

650.36

Others

134.97

29.33

382.62 (Sec11)

202.79

11.49

0.18

202.97

Short term

7564.51

3369.22

3491.09

1510.95

3531.45

1417.97

7022.54

2928.92

Transmission Charges

-

952.09

-

467.56

484.53

952.09

SLDC Charges

-

11.07

-

-

PGCIL

-

207.8

-

86.99

86.99

173.98

Total

31304.78

11292.61

14161

5323.15

15489.05

5368.34

29650.07

10691.49

Less: Energy Not available

1631.76

580.35

Grand Total

28018.31

10111.14

The Commission in its order OP 08/2009 had treated certain extra expenditure on power purchase as Regulatory Asset and further ordered that the Regulatory Asset of Rs.37.74 Crore shall be passed on to the consumers in three equal installments in each year of the control period FY11-13. Accordingly, the Commission in its MYT Order dated 07.12.2010 had included an amount of Rs.12.58 Crore for each of the years during FY11-13. Accordingly, Rs.12.58 Crore is included in the power purchase cost for FY13. The Power Purchase Cost works out to Rs. 10123.72 Cr.

ENERGY AVAILABILITY & COST FOR 2013-14 to 2015-16

Total energy requirement of ESCOMs for multi-year tariff period from 2013-14 to 2015-16 is shown in the table below:

Energy in MU

ESCOMs

2013-14

2014-15

2015-16

BESCOM

30660.00

33791.18

37273.45

GESCOM

8330.00

9130.37

9683.29

HESCOM

11129.00

14170.83

15962.44

MESCOM

5018.00

5250.79

5782.34

CESC, Mysore

6874.00

7950.45

8222.58

Total

62011.00

70293.62

76924.10

The projected energy availability and power purchase cost is allocated among the ESCOMs based on GoK order dated 23rd April 2012.

The year wise availability of energy and deficit for the year 2013-14 to 2015-16 is as detailed below:

Energy in MU

Year

Availability

Deficit/Surplus

2013-14

58532

-3479

2014-15

60572

-9722

2015-16

77780

856

ESCOMs having a long term power purchase agreement with KPCL Hydel, Thermal, Central Generating Stations, Independent power producers, Non conventional Energy Source and others. ESCOMs have entered into agreement with traders for procurement of power on medium term basis through competitive bidding route.

KPCL, Hydro

Energy availability of hydel stations is anticipated based on the inflows for the past ten years moving average minus 1% auxiliary consumption as per PPA. In case of KPCL thermal stations, auxiliary consumption considered by KPCL is shown in the table below:

Thermal stations

Auxiliary Consumption in %

RTPS unit 1 to 7

9.00

RTPS Unit 8

8.50

BTPS Unit 1

7.50

BTPS Unit 2

7.50

DG plant

4.50

Yermarus Unit 1 & 2

6.00

BTPS Unit 3

6.00

Bidadi CCCP

3.00

As per KPCL statement on energy projection, following units are expected to commission during control period of 2013-14 to 2015-16, as shown in Table.

Units

Expected date of commissioning of unit

Yermarus Unit-1

2014-15

BTPS Unit 3

2015-16

Bidadi CCCP

2015-16

Yermarus Unit 2

2015-16

The details of energy availability furnished by KPCL in respect of Hydel and thermal generating stations have been considered. The availability of hydel generation is as shown in Table.

Energy in MU

Sl no

Generating Station

Design Energy

2013-14

2014-15

2015-16

1

Sharavathy valley project

3737.95

4982.23

4759.72

4759.72

2

Kali Valley projects

2058.77

2954.17

2686.86

2686.86

3

Varahi Valley projects

848.69

1027.38

1014.75

1014.75

4

Bhadra & Bhadra Right Bank

50.49

62.50

52.47

52.47

5

Ghataprabha(GDPH)

84.97

94.24

91.08

91.08

6

Kadra Dam

419.90

345.09

311.85

311.85

7

Kodasalli Dam

372.48

327.72

295.02

295.02

8

Gerusoppa/STRP

442.62

521.99

502.92

502.92

9

Almatti

384.00

531.36

548.46

548.46

10

Shiva

249.48

238.10

303.93

303.93

11

Shimsa

41.58

67.32

67.32

12

Munirabad

64.69

98.87

70.29

70.29

13

MGHE-Jog

118.00

236.76

301.92

301.92

Total of KPCL Hydel

11461.99

11006.62

11006.62

The availability of KPCL Thermal generation @ ex-bus is as shown in Table

Energy in MU

Sl no

Generating Station

2013-14

2014-15

2015-16

1

RTPS unit I &7

8348.34

9418.50

9418.50

2

RTPS Unit 8

1516.16

1603.08

1603.08

3

BTPS Unit 1

3283.75

3225.48

3225.48

4

BTPS Unit 2

3219.00

3225.48

3225.48

5

BTPS Unit -3

4421.76

6

Diesel Plant Yelahanka

35.34

447.90

447.90

7

Yermarus TPS Unit -1 &2

1380.67

9741.41

8

Bidadi CCCP

3567.66

Total KPCL thermal

16402.59

19301.11

35651.27

HYDEL

The tariff rates are worked out based on KERC order dated 03.08.2009 for hydel stations except for Shivasamudram, Shimsha, Munirabad & MGHE. The tariff for the hydel stations is based on the design energy of the station and incentive is considered for over and above the design energy. A rate of 15 paise per kwh or 3% of the ROE whichever is less has been considered as per PPA for the energy over and above the design energy. The average cost paise per unit including primary and secondary energy charges furnished by the KPCL is as shown in the Table

Rate paise per unit

Sl no

Generating Station

2013-14

2014-15

2015-16

1

Sharavathy valley project

24.43

26.24

27.15

2

Kali Valley projects

45.96

51.99

53.98

3

Varahi Valley projects

76.63

80.38

83.36

4

Bhadra & Bhadra Right Bank

243.23

303.83

319.65

5

Ghataprabha(GDPH)

85.48

90.65

93.61

6

Kadra Dam

156.97

177.54

182.03

7

Kodasalli Dam

122.06

138.53

142.33

8

Gerusoppa/STRP

112.68

118.26

120.61

9

Almatti

157.95

149.34

125.95

10

Shiva

83.63

68.85

71.48

11

Shimsa

91.39

94.40

97.60

12

Munirabad

48.67

69.68

72.67

13

MGHE-Jog

69.86

57.33

59.12

14

Varahi Unit 3 & 4

35.26

33.81

31.91

Average cost

59.12

62.85

63.26

Paise 4 per unit as royalty charges is considered for the actual generation

KPCL Thermal

The tariff rates worked out based on KERC order dated 03.08.2009 for thermal stations 1 to 7 is at 72% PLF. The PLF for DG plant Yelahanka is considered at 72.5%. The PLF for unit 1 & 2 of BTPS is considered @ 80 %. The average rate per unit including Capacity and energy charges for thermal station including DG plant & Bidadi CCCP has been furnished by KPCL. The variable cost /energy charges is escalated at 2.5% each year. The year wise rate is shown in Table

Rate paise per unit

Sl no

Generating Station

2013-14

2014-15

2015-16

1

RTPS unit I &7

355.69

360.10

369.29

2

RTPS Unit 8

373.78

379.91

386.64

3

BTPS Unit 1

315.51

315.01

315.64

4

BTPS Unit 2

346.26

314.65

313.93

5

BTPS Unit -3

360.74

6

Diesel Plant Yelahanka

1433.16

1297.64

1331.52

7

Yermarus TPS Unit -1 &2

450.34

418.93

8

Bidadi CCCP

668.00

Average cost

349.79

374.83

414.69

Central Generating Station

ESCOMs have a share in NTPC Southern Region station of Ramagundam, Talcher Phase II, Neyveli Lignite Corporation, Kaiga Atomic Power Station , Madras Atomic Power Station and Simhadri Unit-II.

The energy available to KPTCL depends on the scheduled generation and share in the station in a month. The available energy for Central Generating Stations as furnished in LGBR for the year 2011-12 has been taken into consideration for 2013-14 to 2015-16.

The Karnataka share in existing Central generating stations is based on allocation made for the month of October 2012 ( including unallocated share) and other new units are based on MoP, GoI notification, the allocation percentage of existing CGS is shown in Table.

Central generation Stations

Capacity in MW

% allocation to Karnataka State

N.T.P.C-Ramagundam

2100

19.61

NTPC-VII

500

20.48

NTPC-Talcher

1800

18.67

NLC TPS2-Stage 1

630

20.7

NLC TPS2-Stage 2

840

20.95

NLC TPS1-Expn

420

25.59

MAPS

440

7.48

Kaiga unit I &II

440

27.82

Kaiga Unit 3 &4

440

30.32

Simhadri Unit -1 &2

1000

20.79

The Kudamkulam Nuclear power projects , NLC expansion Unit 1 & 2 and Vallur JV projects Unit 1 & 2 is expected to commission during 2013-14 and Vallur JV unit 3 and Tuticorin Unit 1 &2 is expected to commission during 2014-15. The share of Karnataka in these projects are shown in Table

Generating Stations

Total installed capacity of the Generating unit

Karnataka share in the project (in %)

NLC Expansion Stage-2 Unit-1 & 2

500

25.88

KudamKulam Unit 1&2

2000

26.00

Vallur TPS Unit-1,2 & 3

1500

8.03

Tuticorin Unit 1 &2

1000

15.80

The availability of energy for the above projects to be commissioned is based on normative availability factors as per CERC 2009 regulation ie Vallur JV - 85%, Kudamkulam Nuclear power project 68.5%, NLC expansion stage -2-80% and Tuticorion-85%.

The availability of energy is considered for the initial 3 to 4 months @ 70% PLF for new projects since plant requires time for stabilization.

Point of connection losses applicable for injection generation stations/states for the week 5.11.2012 to 11.11.2012 is considered to arrive at energy @ KPTCL periphery, the POC losses considered for availability of energy is shown in Table.

Generating Station

Injection State/generating station in %

Withdrawal state losses in %

N.T.P.C-Ramagundam

2.21

1.91

NTPC-VII

2.21

1.91

NTPC-Talcher

2.51

1.91

NLC TPS2-Stage 1

1.91

1.91

NLC TPS2-Stage 2

1.91

1.91

MAPS

2.51

1.91

Kaiga unit I &II

1.91

1.91

Kaiga Unit 3 &4

1.91

1.91

Simhadri Unit -1 &2

2.51

1.91

NLC expansion Stage II unit 1&2

2.51

1.91

Vallur Unit 1,2&3

2.51

1.91

Kudamkulam

2.51

1.91

Tuticorin

2.51

1.91

The availability of energy @ KPTCL periphery after deducting the applicable losses in respect of central generating stations for the period 2013-14 to 2015-16 is shown in Table

Energy in MUs


2013-14

2014-15

2015-16

N.T.P.C-Ramagundam

2865.20

2865.20

2865.20

NTPC-VII

685.84

685.84

685.84

NTPC-Talcher

2510.23

2510.23

2510.23

NLC TPS2-Stage 1

658.12

658.12

658.12

NLC TPS2-Stage 2

937.15

937.15

937.15

NLC TPS1-Expn

654.27

654.27

654.27

MAPS

192.21

192.21

192.21

Kaiga unit I &II

755.30

755.30

755.30

Kaiga Unit 3 &4

675.44

675.44

675.44

Simhadri Unit -1 &2

1458.87

1458.87

1458.87


758.42

782.87

782.87

Vallur Unit 1,2&3

632.36

801.91

801.91

Kudamkulam

1994.80

1994.80

1994.80

Tuticorin

38.47

706.84

1051.91

Total

14814.99

15679.05

16024.12

The present tariff regulation 2009 of CERC is applicable for the period from 1st April 2009 to 31st March 2014. The capacity charges as determined by the CERC for existing station for the year 2013-14 is considered for 2014-15 & 2015-16 also.

The new PoC regulation came into effect from 1st July 2011. The POC rates (Rs /MW) for different Demand & Generation Zones are being computed from time to time on half year basis as per prevailing CERC regulations. Further, PoC charges for future period will depend on the quantum of approved injection/approved drawl.

The PoC transmission charges for the period 2012-13 (April-2012 to September -2012) is escalated based on quantum of energy allocated from different generating stations during each year, which is shown in Table

Year

Transmission charges in Rs crore

2013-14

486.87

2014-15

502.99

2015-16

502.99

Capacity charges determined by CERC for the year 2013-14 in respect of existing CGS units is considered till 2015-16 without escalation since interest on loan and repayment of loan will be reduced. The variable charges for the period April-2012 to September -2012 is considered for 2013-14 with escalation of 2.5% every year.

The Tariff fixed by CERC has been considered for existing stations and tariff proposed before CERC for determination of tariff in respect of new stations has been taken. In case a petition is not filed for determination of tariff by generating stations, for such projects provisional tariff as indicated by the Generating Stations is considered.

The Central Electricity Regulatory Commission (CERC) has issued Order in petition No. 94/2010 on 17.03.2011, filed by PGCIL on behalf of Power System Operation Corporation Limited (POSOCO) for approval of charges of SRLDC for the control period from 01.04.2009 to 31.03.2014 U/S 4 of Section 28 of Electricity Act 2003.

The payments are to be made as per CERC order dated 17th March 2011 and allocation among the beneficiary depends upon the allocation of capacity. The POSOCO charges payable by ESCOMs to SRLDC for the year 2013-14, 2014-15 and 2015-16 is Rs 3.60, 3.69 & 3.88 crore respectively.

The average cost including capacity, energy charges and income tax in respect of central generating stations for the period 2013-14 to 2015-16 is shown in Table.

Paise per unit


2013-14

2014-15

2015-16

N.T.P.C-Ramagundam

223.05

227.14

231.33

NTPC-VII

300.27

305.27

310.39

NTPC-Talcher

247.06

251.18

255.41

NLC TPS2-Stage 1

274.51

279.74

285.09

NLC TPS2-Stage 2

274.46

279.69

285.04

NLC TPS1-Expn

330.08

334.78

339.61

MAPS

229.07

234.53

240.13

Kaiga unit I &II

331.80

339.89

348.19

Kaiga Unit 3 &4

332.74

340.83

349.13

Simhadri Unit -1 &2

369.08

374.08

379.19


392.14

399.49

409.48

Vallur Unit 1,2&3

464.56

463.14

470.22

Kudamkulam

422.90

432.05

441.42

Tuticorin

366.00

375.15

384.53

Average Cost

345.31

354.13

360.86

Independent Power Producers

UPCL

M/s Udupi Power Corporation Limited declared commercial operation of first unit-I on 11th November 2010 and the second unit on 19th August 2012.

The availability of energy from UPCL is considered at 85% of the installed capacity (90% of 1200 MW) minus auxiliary consumption of 7.5%. The UPCL has entered into PPA with PSPCL for sale of its 10% installed capacity.

The availability of energy from UPCL is shown in Table

Year

Energy in MU

2013-14

7438.55

2014-15

7438.55

2015-16

7438.55

The tariff of Rs 3.127 per unit is provisionally considered for the years 2013-14 to 2016-17 as interim tariff for the power supplied by M/s Udupi Power Corporation Limited subject to final adjustment after determination of tariff by CERC. The tariff of Rs 3.127 per unit comprises Rs 1.1515 towards capacity charges and Rs 1.9755 towards energy cost which is being contested.

Non conventional Energy Source.

The actual generation of Bio-mass, Co-generation, Mini-Hydel, Wind, Solar and captive power projects for the year 2011-12 have been considered for 2013-14 to 2015-16.

In case of new NCE projects, the details furnished by KREDL are likely to be commissioned from 2013-14 to 2015-16 is considered. However, in respect of wind projects, only 33% of the projected capacity by KREDL has been considered in each year based on previous years data.

These projects are allocated to ESCOMs based on the geographical location of the project.

The availability of energy in respect of new NCE projects like solar power, Wind Mills, & Mini Hydel is based on KERC tariff regulation .(Solar PV-19%, Solar Thermal-23%, Wind Mills -26.5% & mini Hydel-30%).

Wind projects of Madurgudda and Guledagudda of NTPC stations are likely to commission during 2014-15.

The PLF for the above NTPC stations is considered @ 23% as per CERC regulation.

KREDL invited bid for 80 MW solar powers, based on rates obtained in competitive bid, 70 MW solar power projects allotted to ESCOMs. The PLF for these projects are taken as per KERC regulation.

The above solar projects are likely to be commissioned during January 2014 and 2015.

The ESCOM wise NCE energy projected for FY 2013-14 to 2015-16 is as shown in Table

Existing projects Energy in MU

Source

BESCOM

GESCOM

HESCOM

MESCOM

CESC

Co-generation

96.96

21.40

187.86

0.00

149.10

Bio-mass

63.36

103.07

0.00

0.00

1.92

Mini Hydel

591.55

146.95

55.17

363.34

369.78

Windmill

2208.46

130.36

479.06

235.67

186.39

KPCL wind mill

13.51

KPCL solar

4.66

3.52

3.52

5.94

Captive

139.77

5.65

Total

2978.49

545.07

725.61

604.65

713.13

New projects- 2013-14 Energy in MU

Source

BESCOM

GESCOM

HESCOM

MESCOM

CESC

Co-generation

0.00

0.00

0.00

Bio-mass

0.00

0.00

0.00

Mini Hydel

0.00

1.27

0.00

61.40

77.60

Windmill

70.83

6.54

106.64

46.97

0.00

NTPC wind

21.02

0.00

KPCL solar

9.44

4.10

4.10

2.87

4.10

Captive

0.00

0.00

0.00

0.00

Total

101.29

11.92

110.74

111.24

81.70

New projects-2014-15 Energy in MU

Source

BESCOM

GESCOM

HESCOM

MESCOM

CESC

Co-generation

0.00

0.00

0.00

Bio-mass

0.00

0.00

0.00

Mini Hydel

6.50

32.98

7.81

166.38

166.25

Wind Mill

128.94

42.48

261.37

67.66

0.00

Waste Energy

21.02

0.00

Solar

38.28

21.61

16.64

11.65

16.64

NTPC wind

147.79

39.49

54.15

24.81

31.60

Total

342.54

136.56

339.97

270.50

214.49

New projects-2015-16 Energy in MU

Source

BESCOM

GESCOM

HESCOM

MESCOM

CESC

Co-generation

0.00

0.00

0.00

Bio-mass

0.00

0.00

0.00

Mini Hydel

14.76

86.64

23.42

248.73

203.65

Wind Mill

175.24

126.92

426.29

72.28

0.00

Waste Energy

21.02

0.00

Solar

38.28

36.79

16.64

11.65

16.64

NTPC wind

147.79

39.49

54.15

24.81

31.60

Total

397.09

289.85

520.50

357.47

251.89

The existing NCE projects except Bio-mass, & wind mills are escalated @ 2.5% on each year. No escalation is considered for bio-mass projects since Bio-mass projects have completed 10 year tariff period. In respect of wind mill projects, tariff is constant for 10 year, hence no escalation is considered.

In respect of new NCE projects the cost per unit is based on KERC tariff regulation 2009 applicable for 2010 to 2015 thereafter escalated @ 10%.

For solar projects, tariff obtained by KREDL through competitive bidding is considered.

Jurala

The 50% of the energy from Jurala Hydro electric Projects( 117 MW) is expected during 2013-14 onwards. The expected energy from the project is indicated in Table

Year

Energy in MUs

Paise per unit

2013-14

240

246

2014-15

240

252.15

2015-16

240

258.45

The energy from T. B. Dam is shared between AP and Karnataka. The Karnataka share in this scheme is 1/5th of the total generation. The availability of energy from TB Dam is based on the FY 11-12, which is estimated @ 36 MU per year and 1/5th share of revenue expenditure is Rs 177 lakhs with escalation of 2.5% on 2014-15 & 2015-16.

Medium Term Power procurement

The LOIs was placed for 1280 MW for procurement of RTC firm power for the period from 1st September 2011 to 15th June 2013 under Case-1 bidding procedure. The tariff at KPTCL periphery ranged between Rs 4.10 per Kwh and Rs 4.51 per Kwh. The energy availability from medium term source from April-2013 to 15th June-2013 is indicated in Table

Source

Energy availability

Rate @ generation Bus in Paise per unit

Average rate paise/unit

JSWPTC

775.20

426.00

426.00

GUVNL

745.66

410.00

426.24

NETS-Balco

149.13

375.00

389.85

NETS-CSPDL

371.67

392.00

408.80

BMM Ispat

111.38

410.00

410.00

Transmission charges

Rs 34.88

The shortage in availability of power shall be made good under procurement of power through medium term/short term. The tariff of such procurement is considered at Rs 4.40 per Unit for FY-14 and Rs.5.00 per Unit for FY-15 and FY-16.

Transmission charges:

The transmission charges towards Central Generating Stations are included in the computation of power purchase cost for the respective years.

The transmission system in Karnataka operates as one composite net work for the purpose of sharing of charges. The Annual Revenue Requirement of various transmission licensees are pooled together and shared by distribution licensees in their proportion of allocation of installed capacity to the ESCOMs as made by the Government of Karnataka. For the 3rd control period,

The approved transmission Tariff for FY-13 was Rs.952.10 Crs. Per annum. The computed transmission charges based on the above assumption is tabulated for the period from FY-14 to FY-16 :

Year

FY-14

FY-15

FY-16

Cost in Rs. Crs.

1316.44

1338.01

1522.06

8.2 Sales and Distribution Loss for FY-13 and 3rd control period (FY-14 to FY-16):

The Commission, in its Tariff Order dated 30.04.2012, had approved sales of 25856 MU. For computing sales for FY-13, half yearly (from Apr-12 to Sept-12) figures are considered. For the remaining period of FY 13, the energy sales are estimated based on the monthly growth rate of FY-12 over FY-11. For the 3rd control period from FY-14 to FY-16, 4 year CAGR growth rate is considered for metered sales and specific consumption is considered for unmetered sales. The details of energy in MU and distribution loss in percentage for the 3rd control period are shown in the table below:

Particulars

FY-13

FY-14

FY-15

FY-16

Total energy sales projected

23142

25387

27751

30220

Energy not supplied due to missing hours in MU

0

300

800

Total Projected Sales including missing hours in MU

25387

28051

31020

Sales growth rate projected in MU

9.70%

10.49%

10.58%

Distribution Loss In %

14.00

13.80

13.60

13.40

Energy at IF Points in MU

26909

29452

32467

35820

Transmission Loss in %

3.96

3.94

3.92

3.90

Energy at Gen. Points in MU

28018

30660

33791

37273

Energy Input growth rate in percentage

9.4%

10.2%

10.3%

Average MW Requirement

3198

3500

3857

4255

Peak MW requirement at LF of 80%

3998

4375

4822

5319

8.3 Capex:

For FY-13, the Commission has approved a Capex of Rs. 510 Crs. Actual as at the end of Sept-12 is shown in the table below:

Sl.

No.

Schemes

Rs.in Crores

1

11KV Lines for New Stations

73.04

2

11 KV Other Works+DTCs including dedicated DTC for DWS Schemes.

3

Re-conduct ring of ACSR/Rabbit to Coyote in Bangalore Urban

4

Re-conducturing of LT line using Rabbit conductor

5

Re-conducturing (Improvement works on 11KV Rural Feeders)

6

Strengthening of 11KV UG cable Network with RMUs

7

NJY

17.81

8

Providing infrastructure to unauthorized IP Sets

2.19

9

Metering Programme

0.05

10

Metering of BJ/KJ, IP sets & Street lights (Unmetered category)

11

RAPDRP & DAS

70.22

12

Service connections

22.58

13

Replacement of Failed DTCs by new ones

45.8

14

Civil engineering works, DSM & Others

1.15

15

RE Works (General )

8.31

16

Electrification Hamlets/Villages

17

Electrification of IP sets

18

Kuteer Jyothi

19

SCP

20

Electrification Hamlets/HBs/Jcs/Thandas

21


22

Kuteer Jyothi

23

TSP

24

Electrification of Tribal Colony

25


26

Kuteer Jyothi

27

T&P and Computers

7.26

28

Other works including Safety measures fund, Local planning, Formation of ALDC, Spill over works etc.

29

Providing AB Cable

Total

248.41

Detailed Capital Investment Plan for the control period (FY-14 to FY-16) is illustrated at Chapter 5.

The table depicting perspective plan for capital investments totaling to Rs.2932.00 Crore for the period from 2013-14 to 2017-18 Year on year, scheme wise proposed investment is furnished below:

Rs. in Crore

Sl. No

Schemes

2013-14

2014-15

2015-16

2016-17

2017-18

Plan

Non Plan

Plan

Non Plan

Plan

Non Plan

Plan

Non Plan

Plan

Non Plan

1

E&I

A

11 KV Lines for New Stations

20.00

50.00

80.00

80.00

80.00

B

11 KV Other Work+ DTCs including dedicated DTCs for DWS Schemes.

15.00

40.00

70.00

70.00

70.00

C

Re- conductoring of ACSR /Rabbit to Coyote in Bangalore Urban

10.00

10.00

30.00

30.00

30.00

D

Re-conductoring of LT line using Rabbit conductor

5.00

5.00

20.00

20.00

20.00

E

Re- conductoring (Improvement works on 11 KV Rural Feeders)

10.00

20.00

20.00

20.00

20.00

F

Strengthening of 11 KV UG cable Network with RMUs

10.00

10.00

25.00

25.00

25.00

2

NJY

370.00

3

Providing infrastructure to Un authorized IP Sets

20.00

60.00

60.00

60.00

60.00

4

(A) DTC Metering Programme Non RAPDRP Area

10.00

25.00

30.00

30.00

30.00

(B) Replacing Mechanical Meter By Electrostatic.

40.00

30.00

20.00

20.00

20.00

( C ) Smart Meter, HT- TOD Meter Replacing MNR etc .

20.00

40.00

30.00

30.00

30.00

5

RAPDRP & DAS

150.00

140.00

6

Service connections

25.00

25.00

25.00

25.00

25.00

7

Replacement of failure DTCs by new ones

15.00

15.00

15.00

15.00

15.00

8

A)Civil Engineering works, DSM & Others

25.00

25.00

25.00

25.00

25.00

B)Consumer Education

1.00

1.00

1.00

1.00

1.00

9

HVDS

30.00

120.00

10

Providing fault locators

5.00

1.00

1.00

1.00

1.00

11

Electrification Hamlets /Villages

6.00

6.00

5.00

5.00

5.00

12

Energisation of IP Sets

6.00

20.00

20.00

15.00

15.00

13

T &P and Computers

5.00

10.00

10.00

10.00

10.00

14

Other works including Safety measures fund, Local Planning

20.00

20.00

20.00

20.00

20.00

15

Providing AB Cable

30.00

90.00

120.00

100.00

110.00

Total

31.00

817.00

31.00

732.00

30.00

597.00

30.00

572.00

30.00

582.00

Grand total

848.00

763.00

627.00

602.00

612.00

8.4 Operation and Maintenance expenses:

The norms prescribed by the Commission in its MYT regulations-2006 are:

2.5.1 a) The Operation and Maintenance (O&M) costs which include employee-

related costs, repairs & maintenance costs and administrative & general costs, estimated for the Base Year and the actual for the previous two years prior to the Base Year in complete detail, together with the forecast for each year of the Control Period based on the norms proposed by the Distribution Licensee including indexation and other appropriate mechanisms;

3.10 Operation and Maintenance expenses: the Licensee in its filings shall submit the consolidated O&M expenses for the Base Year of the Control Period and for the two years preceding the Base Year. The O&M expenses for the Base Year shall be determined based on latest audited accounts, best estimates of Licensee of the actual O&M expenses for relevant years and other factors considered relevant. The O&M expenses for the Base Year, if required, will be used for projecting the expenses for each year of the control period. The Licensee shall also propose appropriate Inflation Factor Norms for operation and maintenance expenses for the first control period

The Commission in its Tariff Order dated 11.01.2008 approved the following formula for approval of O&M expenses.

O&M Cost t = O&M Cost t-1 * (1 + WII + CGI X)

Where,

O&M Cost t is the normative O&M cost approved by the Commission for the financial year

WII is the weighted inflation index of CPI and WPI (CPI 70% WPI 30%) based on the contribution of employee cost, R&M and A&G towards the total O&M cost

CGI is the Consumer growth index, which is linked to increase (CAGR) in no of consumers.

X is the efficiency factor. For BESCOM the Commission fixes the same as 1%

As per the above norms, BASE YEAR means, the financial year immediately preceding the first year of the Control Period. Hence FY-13 is considered as base year for the 3rd control period. FY-11 and FY-12 is considered as two years preceding the Base year.

Actual Operation and Maintenance expenses (O&M) expenses for the years preceding the base year as per annual accounts are as under:

Sl.

No.

Particulars

FY-11

FY-12

1

R&M Expenses

30.68

32.46

2

Employee cost

542.00

649.89

3

Administrative & General Expenses

60.94

81.75

O&M Cost in Rs. Crs.

650.88

764.10

It is to state that the Commission in its Tariff Order 2011 has approved the O&M expenses for FY-13. Accordingly, the total approved O&M expenses for FY13 is as follows:

Total approved O&M Expenses for FY13

Rs. in Crore

Particulars

FY13

Normative O&M expenses

693.35

Additional O&M expenses (uncontrollable)

129.45

Total approved O&M expenses

822.80

As of now, the half yearly O&M figures for FY-13 as on Sept-12 are available.

Sl.

No.

Particulars

FY-13

(As on 30.09.2012)

1

R&M Expenses

10.10

2

Employee cost

389.17

3

Administrative & General Expenses

45.48


444.75

It is to state that the O&M expenses for FY-13 have been computed based on the following:

Increase in Employee cost over and above the approved cost is due to merger of 76.75% of Dearness Allowance as Dearness Pay as per the Government Order NO. FD 7 SPR 2012 dated 21st April2012.

Dearness Pay is considered as Basic Pay, hence consequential such as House Rent Allowance, Travel Allowance, DCRG and other Basic pay related allowance will be increased.

Month wise breakup of cost booked is shown below. Since the cost increased is due to the said Government Order, we request the Commission to allow the Employees cost in full.

Sl.

No.

Particulars

Apr12

May12

Jun12

July12

Aug12

Sep12

Estimation of Second half year

Total O&M Cost for FY-13

1

R&M Expenses

1.37

0.02

0.64

0.88

3.05

4.14

20.00

30.10

2

Employee cost

51.53

52.83

65.77

82.62

56.44

79.98

480.00

870.17

3

A&G Expenses

5.99

15.12

5.60

4.58

6.62

7.57

46.00

91.98


58.89

67.97

72.01

88.08

66.11

91.69

546.00

992.25

Hence, for the base year FY-13, O&M expenses of Rs. 992.25 Crs. is considered for computation of O&M cost for the 3rd control period ie., FY-14 to FY-16. For projecting the O&M expenditure for the control period, the Commission approved formula is considered.

O&M Cost t = O&M Cost t-1 * (1 + WII + CGI X)

Where,

O&M Cost t is the normative O&M cost or each year of the control period

WII is the weighted inflation index of CPI and WPI at 70:30

CGI is the Consumer growth index, which is linked to increase (CAGR) in no of consumers from 2008 to 2016

X is the efficiency factor. For BESCOM the Commission fixes the same as 1%

Calculation for WII ie., weighted inflation index: Consumer Price Index and Whole sale Price Index applicable to industrial consumers considering the Base 2001=100. Composite series are worked out taking 70 % of CPI and 30% of WPI. Annual escalation rate is worked out for the composite series. Estimation for 2013 to 2016 is on moving average of 4 years.

Year

WPI

CPI

30% of WPI

70%of CPI

Composite series

Annual Escalation rate in Percentage

1

2

3

4=30% of (2)

5=70% of (3)

6=(4+5)

7

2000

81.59

95

24.477

66.5

91.0

2001

85.8

99

25.74

69.3

95.0

4.47%

2002

87.92

103

26.376

72.1

98.5

3.62%

2003

92.6

107

27.78

74.9

102.7

4.27%

2004

98.72

111

29.616

77.7

107.3

4.51%

2005

103.37

116

31.011

81.2

112.2

4.56%

2006

109.59

123

32.877

86.1

119.0

6.03%

2007

114.94

131

34.482

91.7

126.2

6.06%

2008

124.92

142

37.476

99.4

136.9

8.48%

2009

127.86

157

38.358

109.9

148.3

8.32%

2010

140.08

176

42.024

123.2

165.2

11.44%

2011

157.30

197

47.19

137.9

185.1

12.02%

2012

173.14

216

51.94

151.3

203.3

9.83%

2013

185.20

235

55.56

164.3

219.9

8.17%

2014

199.53

254

59.86

177.9

237.8

8.14%

2015

214.39

274

64.32

191.6

255.9

7.63%

2016

228.66

293

68.60

205.0

273.6

6.92%

*Note:

WPI and CPI figures upto 2012 is as per CERC Notification dt.02.04.2012

Estimation for 2013 to 2016 is on moving average of 4 years.

Thus, Weighted Inflation index for the control period FY-14 to FY-16 is considered as 8.14%, 7.63% and 6.92% respectively.

Consumer growth index: Consumer growth rate is estimated based on the CAGR as stated in the sales forecast.

Particulars

FY-14

FY-15

FY-16

Consumer growth rate (CAGR years)

6.37%

6.46%

6.57%

By considering these inputs, O&M Cost for the 3rd control period is under.

O&M Cost t

O&M cost of the Financial year

FY-14

FY-15

FY-16

O&M Cost t-1

O&M Cost of the previous year

992.25

1126.3

1273.7

WII

Weighted inflation index of CP and WPI

8.14%

7.63%

6.92%

CGI

Consumer growth index linked to CAGR

6.37%

6.46%

6.57%

X

Efficiency factor of BESCOM

1.00%

1.00%

1.00%


1126.3

1273.7

1432.8

In order to ensure quality service and to cope with the increasing consumers in BESCOM, new works force needs to be added which will result in increase in employees cost. As the second phase of reforms are started, Central/State Government may initiate new reforms process that may result in increase in the employees cost. It is prayed before the Commission to allow the expenses that may arise on account of new recruitment and further reform process.

Since the Employee cost works out to 85% of O&M cost, R&M and A&G expenditure is apportioned at the rate of 5% and 10% respectively.

Sl.

No.

Particulars

FY-12

FY-13

FY-14

FY-15

FY-16

1

R&M Expenses

32.5

30.1

56.3

63.7

71.6

2

Employee cost

690.7

870.17

957.4

1082.7

1217.9

3

A&G Expenses

80.5

91.98

112.6

127.4

143.3

Total

803.6

992.25

1126.3

1273.7

1432.8

O&M cost is segregated in to Wire and Supply business as under.

Sl.

No.

Particulars

Wire business

Retail Supply

Total

11 KV Lines

LT lines

1

Repair and Maintenance

37%

25%

38%

100%

2

Employee Cost

26%

26%

48%

100%

3

Administration and General Expenses

41%

21%

38%

100%

Consequently, the allocated cost for the 3rd control period is as follows:

(Rs. In Crore)

Particulars

FY-12

FY-13

FY-14

FY-15

FY-16

Repair and Maintenance Cost

Distribution Wire Business

20.13

18.66

34.92

39.49

44.42

Retail Supply Business

12.33

11.44

21.40

24.20

27.22

Employee Cost


359.14

452.49

497.83

562.99

633.31


331.52

417.68

459.53

519.68

584.59

Administration and General Expenses


49.89

57.03

69.83

78.97

88.84


30.57

34.95

42.80

48.40

54.45

8.5 Depreciation:

The norms prescribed by the Commission in its MYT regulations-2006 are:

3.8.1 Depreciation shall be computed in the following manner, namely:

i) The value base for the purpose of depreciation shall be the historical cost of the asset.

ii)Depreciation shall be calculated annually based on straight-line method over the useful life of the asset and at the rates prescribed in Appendix-1 to these Regulations.

iii)The residual life of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the historical capital cost of the asset. Land is not a depreciable asset and its cost shall be excluded from the capital cost while computing 90% of the historical cost of the asset.

3.8.2Depreciation shall be chargeable from the first year of operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis.

3.8.3 The above said rate of depreciation shall be applicable both for the purpose of tariff as well as accounting.

3.8.3 The Commission may consider allowing advance against depreciation to the extent of difference between the amount of depreciation computed and the debt repayment for the financial year.

3.8.4 Benefit of reduced tariff after the assets have been fully depreciated should remain available to the consumers.

As per the Section 61 of Electricity Act as well as the preamble set by the Commission in its MYT regulations-2006, it is stated that the terms and conditions for determination of tariff shall subject to the provisions of the Act, and shall be guided by factors from (a) to (i) specified therein.

As per the factors specified by the under Section 61 Electricity Act 2003,

The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:-

(a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees;

(b) .

(c) ..

Thus, the Principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensee is the guiding factors for determination of tariff by the State Commission.

Central Electricity Regulatory Commission (CERC) in its notification dated 19th January 2009 issued terms and conditions of tariff. The Computation of depreciation as per these regulations is:

Depreciation

(1) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission.

(2) The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the capital cost of the asset.

Provided that in case of hydro generating stations, the salvage value shall be as provided in the agreement signed by the developers with the State Government for creation of the site: Provided further that the capital cost of the assets of the hydro generating station for the purpose of computation of depreciable value shall correspond to the percentage of sale of electricity under long-term power purchase agreement at regulated tariff.

(3) Land other than the land held under lease and the land for reservoir in case of hydro generating station shall not be a depreciable asset and its cost shall be excluded from the capital cost while computing depreciable value of the asset.

(4) Depreciation shall be calculated annually based on Straight Line Method and at rates specified in Appendix-III to these regulations for the assets of the generating station and Transmission system:

Provided that, the remaining depreciable value as on 31st March of the year closing after a period of 12 years from date of commercial operation shall be spread over the balance useful life of the assets.

(5) In case of the existing projects, the balance depreciable value as on 1.4.2009 shall be worked out by deducting the cumulative depreciation as admitted by the Commission upto 31.3.2009 from the gross depreciable value of the assets.

(6) Depreciation shall be chargeable from the first year of commercial operation. In case of commercial operation of the asset for part of the year, depreciation shall be charged on pro rata basis.

For the purpose of projections of depreciation for the 3rd control period, depreciation rate prescribed under Annexure-III of CERC Notification issued dated 19th January, 2009 is considered.

For the purpose of projected depreciation computation for the 3rd control period following assumptions are considered:

1. Actual closing Gross Fixed Assets (GFA) of FY-12 as per provisional accounts of FY-12

2. Estimated Additions and Retirement of assets for FY-13 are based on the accounts available upto 30.09.2012 and estimation for the next half year.

3. 75% of the capex envisaged during each year of the Control period is booked on that year and 90% of the booked cost will be capitalized

4. Capital work in progress at the end of previous year will be categorized in the succeeding year of the Control period

5. Depreciation rates as specified by the CERC is applied on the 90% of the Closing Gross fixed Asset of each year of the control period.

6. Deduction of Depreciation withdrawn from contribution /subsidies as per Accounting Standard-12 is considered at the amount equal to actual of FY-12 for each year of the control period.

Gross fixed assets at the beginning year of year addition and released during FY-12 and half yearly figures of FY-13 as on 30.09.2012 is as under.

Particulars

FY-12

1st Half yearly accounts

of FY-13 as on 30.09.2012

Estimation for 2nd Half year of FY-13

Total of FY-13

Opening Gross Fixed Asset (GFA)

4122.08

4331

4611

4331

Add: Additions during the year

333.24

280

405

685

Less: Retirement

124.32

100

100

Closing GFA

4331

4611

4916

4916

Depreciation for FY-13 based on half yearly details

Particulars

FY-13


4331.00


685.00

Less: Retirement

100.00

Closing GFA

4916.00

90% of GFA

4424.40

Average Dep. Rate ( In %)

4.58%

Depreciation

202.64

Less: Depreciation with drawn from Consumer contribution/subsidies plus withdrawal of depreciation

76.00

Depreciation charged to the Tariff

126.64

Capital Expenditure ( Capex) envisaged for each year of the Control period.

Particulars

FY-14

FY-15

FY-16

Capital Expenditure (Capex) envisaged

848.00

763.00

627.00

Estimated Booking Cost at (75% of the capex envisaged)

636.00

572.25

470.25

Assets categorized ( 90% of booking Cost)

572.40

515.03

423.23

Depreciation envisaged for each year of the Control period

Particulars

FY-14

FY-15

FY-16


4916

5378.40

5773.43


572.4

515.03

423.23

Less: Retirement

110

120.00

130.00

Closing GFA

5378.4

5773.43

6066.65

90% of GFA

4840.56

5196.08

5459.99

Average Dep. Rate ( In %)

4.58%

0.05

0.05

Depreciation

221.70

237.98

250.07

Less: Depreciation with drawn from Consumer contribution/subsidies plus withdrawal of depreciation

78.00

80.00

83.00

Depreciation charged to the Tariff

143.70

157.98

167.07

Depreciation is segregated in to Wire and Supply business as under.

Particulars

Wire business

Retail Supply

Total

11 KV Lines

LT Lines

Depreciation

53%

18%

29%

100%

Consequently, the allocated cost for the 3rd control period is as follows:

(Rs. In Crore)

Particulars

FY-12

FY-13

FY-14

FY-15

FY-16

Depreciation


88.46

89.91

102.03

112.17

118.62


36.13

36.72

41.67

45.81

48.45

8.6 Interest and finance charges:

Interest and finance charges includes following costs.

Interest on loan capital

Interest on Working Capital

Interest payable in consumer Security Deposit/ meter security Deposit.

Interest on loan capital: The norms prescribed by the Commission in its MYT regulations-2006 are Interest on loan capital shall be computed loan wise.

Projection of interest for each of the control period is on following basis.

Loan outstanding as on 31.03.2012 as per provisional accounts duly considering the rate of interest, and terms of repayment

For FY-13, loan existing as on 30.09.2012 and the estimation for the next half year is considered for computation of interest.

For financing of future capital cost of projects, a Debt: Equity ratio of 70:30 is adopted as per the norms framed by the Commission under 3.7.1 of MYT regulations

Loan Capital outstanding as on 31.03.2012 and loan wise details are as under.

Sl. No.

Acc. Code

Name of the loan

Year of Drawal

Amount out standing as on 31.03.12 in Rs. Crs.

Rate of Interest per annum

Loan term

Average amount of repayment per year in Rs. Crs.

Int.

due

1

53.308

PMGY- loan from GOI through GOK

carried forward from KPTCL

1.1

12

20

0.11

0.13

2

53.332

Loan from GOK-APDRP


45.87

11.5

20

4.1

5.28

3

53.333

Loan from REC-APDRP

2006

100.72

8.5-11.5

13

19.66

11.08

4

53.336

Loan from REC-RGGY


15.59

5.4 to12.25

15

0.94

1.71

5

53.337

Loan from Gok- Ganaga kalyana

2006

2.16

11

10

0.54

0.24

6

53.501

Loan from Comml. Bank-SPA Schemes-SBI(RLMS)

2005

21.45

11

10

14.28

2.36

7

53.501

Loan from Comml. Bank-SPA Schemes-Canara Bank

2011

399.99

10.85-11.25 Repayment from 2013 (40 quarterly installments)

13

20

44.00

8

53.501

Loan from Comml. Bank-SPA Schemes-BOI

2010

200

12 Repayment from 2013 (40 quarterly installments)

13

20

24.00

9

53.961

Loan from PFC


1.1

11

13

0.111

0.12

10

3.3477

RAPDRP(PFC)(A)

2009

78.4

11.5 Repayment from 2013 (40 quarterly installments

20

5.88

9.02

11

53.348

RAPDRP(PFC)(B)

2010

43.54

11.5 Repayment from 2015 (40 quarterly installments

20

3.26

5.01

12

53.337

PFC(DRUM)

2010

12.3

11.25-12

6

1.96

1.41

13

Japan Bank JBIC

96.64

12

11.11

Total

1018.86

90.841

115.47

Loan for FY-13: For FY-13 upto Sept-12, Rs. 280 Crs. has been booked towards Capex through internal resources. BESCOM applied loan to an extent of R.400 Crs. Banks are yet to sanction the loan as on 31.10.2012. Hence interest provision to an extent of 3 months is provided for R.400 Crs.

Interest on new loan capital; Capex envisaged for each year of the control period is as under:

Particulars

FY-14

FY-15

FY-16

Capex envisaged for the control period

848

763

627

For financing of future capital cost of projects, a Debt : Equity ratio of 70:30 should be adopted is the norms fixed by the Commission.

The share of equity ie., 30% of the future capital cost will meet through

40% of the Planned Capital Works is met through loan from GoK which will be converted as equity in future.

Consumer Security deposit

Cash component collected from the consumers as Service Line Cost and

Return earned on equity for each of the control period.

As Balance sheet of BESCOM will not support any more borrowings from the Commercial Banks. It is obvious to BESCOM to go for loan from Power Finance Corporation or other Financial Institutions recommended by the Ministry of Power, Government of India. The rates of interest of Central Government financial institutions are usually higher than the Commercial Banks. Hence following assumptions are considered for projecting the interest

3 years moratorium period for repayment of loan

Term loan be 10 years and repayment is on quarterly basis

Interest rate at 11.75%

(i) Means of Finance:

Internal resources generated though collection of Government of Karnataka (GoK) Loan, MMD , Addl. MMD, Service line cost and Return on Equity is considered as the internal resources for the capex plan. Total Amount of internal resources available for the capex for the 2nd control period is shown below:

Rs. in Crs.

Particulars

FY-14

FY-15

FY-16

Capitalization out of fresh investments

253.42

256.86

272.90

Means of Finance

1.Consumer deposit

114

114

114

2. Consumer Contribution

30

30

30

3. ROE

69.42

82.86

98.90

4. GoK Loan

40.00

30.00

30.00

Total

253.42

256.86

272.90

(ii)Debt Equity ratio:

Rs. in Crs.

Particulars

FY-14

FY-15

FY-16

Capex

848

763

627

Internal Resources

253.42

256.86

272.90

Borrowings

594.58

506.14

354.10

Debt Ratio

70%

66%

56%

Equity Ratio

30%

34%

44%

(iii) Borrowings:

It is proposed to raise the funds required for the capex plan through various financial institutions and Commercial banks. Prevailing SBI lending rates of 11.75% as on 1st of April of the year is considered. The new loan and repayment is spread over for the whole year. The loan borrowed for the year is the difference between the new loan and the repayment. For computation of interest half of the above difference is reckoned. interest to be paid is computed by adding the opening balance and portion is arrived . The detailed computation is furnished below.

Rs. in Crs.

Sl.

No.

Years

FY-14

FY-15

FY-16

Interest on Fresh Borrowings

1

Opening Balance

0

594.58

1,100.72

2

New loan addition

594.58

506.14

354.10

3

Half of Sl. No.2 ( 2 X0.5)

297.29

253.07

177.05

4

Net New loan considered for computation.(1+3)

297.29

847.65

1,277.78

5

Rate of interest @11.75% on opening balance + mean

34.93

99.60

150.14

Computation of interest on the existing Loan for control period

Years

FY-13

FY-14

FY-15

FY-16

Opening Balance

1418.86

1328.02

1237.18

1146.34

Average Repayment

90.84

90.84

90.84

90.84

Closing Balance

1328.02

1237.18

1146.34

1055.5

Rate of Interest (weighted average)

150.46

140.17

129.88

119.59

Abstract of interest on Loan capital

Particulars

FY-14

FY-15

FY-16

Interest on existing loan Capital

140.17

129.88

119.59

Interest on New loan Capital

34.93

99.60

150.14

Total

175.10

229.48

269.73

Interest on working capital: Norms fixed by the Commission for the purpose of computation of interest on working capital as per MYT regulations are as under:

3.11.1Working capital shall cover:

(a) Operation and maintenance expenses for one month;

(b) Maintenance spares @ 1% of the historical cost of assets at the beginning of the year and

(c) Receivables equivalent to two months average revenue.

3.11.2 Rate of interest on working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on 1st April of the year. The interest on working capital shall be payable on normative basis notwithstanding that the Distribution Licensee has not taken working capital loan from any outside agency.

Table below depicts the estimated cost towards working capital

Particulars

FY-14

FY-15

FY-16

1/12th Operation and Maintenance

93.86

106.14

119.40

1% of Gross fixed assets at the beginning of the year

58.55

63.57

67.90

2 months Receivables

2,017.00

2,254.00

2,525.00

Estimated Working Capital

2169.32

2423.42

2712.13

Projected Interest on working capital at 14.75%p.a as on 13th Aug 2011

319.97

357.45

400.04

Interest on consumer Security deposit and Meter Security Deposit: Norms fixed by the Commission for the purpose of payment of interest on Consumer Security deposit vide regulation 8 of KERC (Security Deposit) Regulations-2007 are as under

The Licensee shall pay interest on Security Deposit (ISD, ASD & Meter Security Deposit) of the Consumer as specified under K.E.R.C. (Interest on Security Deposit) Regulations, 2005

As per Regulations,2005 interest on security deposit of the consumer at the Bank Rate prevailing as on 1st April of the financial year for which interest is due

Consumer Security Deposit (ISD and ASD) and Meter Security Deposit held for FY-11 to FY-16 is as under.

Following assumptions are made for the purpose of computation of interest on Consumer Security deposits.

Net Security deposit collected in the previous control period is approximately about One hundred Crore. Hence it is presumed that Rupees One hundred and ten Crore will be collected in each year of the 3rd control period.

Bank rate at 9 per cent per annum is considered as per the MONETARY AND CREDIT INFORMATION REVIEW, Volume VIII , Issue 10 April 2012

Particulars

FY-12

FY-13

FY-14

FY-15

FY-16

Security Deposit( ISD and ASD)

1933.71

2043.71

2153.71

2263.71

2373.71

Meter Security Deposit

73.13

77.13

81.13

85.13

89.13

Total

2006.84

2120.84

2234.84

2348.84

2462.84

Interest paid

105.86

117.99

201.14

211.40

221.66

Rate of Interest paid

5.27%

5.56%

9.00%

9.00%

9.00%

(Source: RBI website)

Other interest and Finance charges for FY-13 are retained at Rs.4.65 Crs as approved in Tariff Order 2012. For the control period an amount of Rs.7.22 is projected.

Consolidated Interest and Finance Charges

Particulars

FY-12

FY-13

(T.O 2012)

FY-14

FY-15

FY-16

Interest on Loan Capital

87.87

150.46

175.10

229.47

269.72


196.51

148.35

319.97

357.45

400.04

Interest on Consumer Security Deposit

105.87

117.99

201.14

211.40

221.66

Other Interest & Finance Charges

7.22

5.06

7.63

7.63

7.63

Total

397.47

421.86

703.84

805.95

899.04

8.7 Other Debits and Prior period Credits:

The Commission has not been considering the projections for other debits and Prior period Credits for the reason that, the same cannot be estimated beforehand. Hence, the same is not estimated. However, the Commission is requested to allow these amounts based on actual.

8.8 Return on Equity:

The accrued RoE for the 3rd control period is shown below:

Rs. in Crs.

Particulars

FY-12

FY-13

FY-14

FY-15

FY-16

Share capital

205.95

205.95

205.95

205.95

205.95

Share capital

340.96

340.96

340.96

340.96

340.96

Reserve and Surplus

(232.54)

(171.62)

(98.91)

(12.10)

91.54

Total

314.37

375.29

448.00

534.81

638.45

RoE

60.92

72.72

86.81

103.63

123.71

8.9 Other Income:

BESCOM has adopted the changes in schedule VI with effect from 01.04.2011in compliance to the Ministry of Corporate Affairs (MCA) revision dated 1st March 2011. As per the new changes, Other income as per audited accounts of FY-11 and FY-12 are as under.

Particulars

AS per Actulas

Estimated

FY-11

FY-12

FY-13

Interest Income

9.46

4.18

0

Profit on sale of Stores

0.56

0.49

0.84

Excess Provision made in prior period which is no longer required

56.13

0

Rental from Staff quarters

1.12

1.52

1.67

Depreciation withdrawn as per AS12

69.24

73.79

Value of materials found excess during physical verification

0.41

0.46

0.2

Rebate for collection of Electricity duty

1.77

2.01

2.11

Rate fluctuation-Power purchase

9.98

Misc. Recoveries

17.66

15.91

17.82

Subsidy from GoK

46.72

10.93

Incentives received

90.29

145.8

150

Total

293.36

265.07

172.64

Since, the Commission is approving of the income in the old format the reports in the new schedule is modified and projections are made accordingly. Details are as under:

Particulars

FY-11

FY-12

FY-13

FY-14

FY-15

FY-16

Interest on Bank Deposits

9.46

4.19

0

0

0

0

Profit on sale of Stores

1.06

0.49

0.84

0.84

0.84

0.84

Sale of Scrap

0.67

0.00

0.27

0.27

0.27

0.27

Rental from Staff quarters

1.12

1.53

1.67

1.72

1.77

1.82

Value of materials found excess during physical verification

0.07

0.41

0.2

0.2

0.2

0.2

Rebate for collection of Electricity duty

1.77

2.02

2.11

2.11

2.11

2.11

Misce. Recoveries

17.4

25.90

17.82

19.60

21.56

23.72

Incentives received

90.29

72.81

150

155

160

165

Total

121.84

107.35

172.91

179.74

186.75

193.96

It is presumed that rental from staff quarters will increase by 3% due to increase in HRA rates to the Urban and Rural areas by the Government of Karnataka.

Misc. Recoveries is increased by 10% as the consumer base is increasing 5% year on year and incentives may increase by 5 crores year on year by efficient financial management.

It cannot be assumed any growth rate in other income groups.

8.10 Projected abstract of ARR for FY-13 and control period (FY-14 to FY-16) is shown below:

Rs. in Crore

Sl. No.

Particulars

FY-13

FY-14

FY-15

FY-16

1

Power purchase cost inclusive of transmission charges and SLDC Charges

10111.14

11358.49

13441.72

15112.12

2

R&M Expenses

30.10

56.30

63.70

71.60

3

Employee Expenses

870.17

957.40

1082.70

1217.90

4

A&G Expenses

91.98

112.60

127.40

143.30

5

Depreciation

126.64

143.69

157.98

167.07

6

Interest & Finance Charges

7

Interest on Loan Capital

150.46

175.10

229.47

269.72

8


148.35

319.97

357.45

400.04

9

Interest on Consumer Deposits

117.99

201.14

211.40

221.66

10

Interest on belated payment of power purchase cost

0

0

0

0

11

Other Interest & Finance Charges

5.06

7.63

7.63

7.63

13

Other Debits (incl. Prov for Bad debts)

0.00

0.00

0.00

0.00

15

Other (Misc.)-net prior period credit

0.00

0.00

0.00

0.00

16

Power purchase cost as per decision in OP No.8/2009 dated 11.12.2009

12.58

17

Total

11664.47

13332.33

15679.46

17611.03

18

ROE

72.7

86.8

103.6

123.7

19

Other Income

172.91

179.74

186.75

193.96

21

Fund towards Consumer Relations / Consumer Education

1

0

0

0

22

NET ARR

11565.28

13239.40

15596.34

17540.78

Segregation of ARR into Distribution and Retail Supply Business

The Consolidated ARR has been segregated into ARR for Distribution Business and ARR for Retail Supply Business based on BESCOMs internal committee report.

Segregation of Costs

Particulars

Distribution Business


Power purchase cost

100%

R&M Expenses

62%

38%

Employee Expenses

52%

48%

A&G Expenses

62%

38%

Depreciation

71%

29%


16%

84%


53%

47%


19%

81%

Other Income

51%

49%

ROE

100%

Accordingly, the following are the ARR for the Distribution Business and the Retail Supply Business:

ARR for Distribution Business FY13 & control period (FY-14 to FY-16)

Rs. in Crore

Sl. No.

Particulars

FY-13

FY-14

FY-15

FY-16

1


0

0

0

0

2

R&M Expenses

18.66

34.91

39.49

44.39

3

Employee Expenses

452.49

497.85

563.00

633.31

4

A&G Expenses

57.03

69.81

78.99

88.85

5

Depreciation

89.91

102.02

112.17

118.62

6


67.50

112.61

128.95

143.85

7


0.00

0.00

0.00

0.00

8


0.00

0.00

0.00

0.00

9


0

0

0

0

10

Total

685.59

817.20

922.61

1029.01

11

ROE

72.7

86.8

103.6

123.7

12

Other Income

88.18

91.67

95.24

98.92

13


14

NET ARR

670.12

812.35

930.99

1053.80

ARR for Retail Supply Business FY13 & control period (FY-14 to FY-16)

Rs. in Crore

Sl. No.

Particulars

FY-13

FY-14

FY-15

FY-16

1


10111.14

11358.49

13441.72

15112.12

2

R&M Expenses

11.44

21.39

24.21

27.21

3

Employee Expenses

417.68

459.55

519.70

584.59

4

A&G Expenses

34.95

42.79

48.41

54.45

5

Depreciation

36.72

41.67

45.81

48.45

6


354.36

591.23

677.00

755.19

7


0.00

0.00

0.00

0.00

8


0.00

0.00

0.00

0.00

9


12.58

0.00

0.00

0.00

10

Total

10978.88

12515.13

14756.85

16582.02

11

ROE

0.0

0.0

0.0

0.0

12

Other Income

84.7

88.1

91.5

95.0

13


1.0

0.0

0.0

0.0

14

NET ARR

10895.15

12427.05

14665.34

16486.98

Gap in Revenue for FY14:

FY-14

NET ARR

13239.40

Revenue from Sale of power

12189.45

Deficit of FY-12

305.86

Revenue Gap

1355.81

Business Plan:

The Business Plan for the period of 5 years (FY-13 to FY-17) will be submitted separately.

Chapter 8 ARR for FY14 to FY16Page 140

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