BEFORE

THE UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION

LUCKNOW 

In the Matter of:            Application for Annual Revenue Requirement for the year 2002-03 under section 24 of the Uttar Pradesh Electricity Reforms Act 1999

Petitioner:                     The Uttar Pradesh Power Corporation Limited 

ORDER

The Commission received an Application for Annual Revenue Requirement for the Year 2002-2003 under Section 24 of the Uttar Pradesh Electricity Reforms Act 1999 (The ‘Act’ henceforth) on 29th April 2002. The Commission has carefully examined the Application. As the licensee is aware that the tariff proposals are to be framed as per the requirements given in Sixth Schedule of Electricity (Supply) Act, 1948 read with section 24 of the U.P.Electricity Reforms Act 1999, in particular sub section 4(a) thereof, as also in accordance with the provisions contained in Chapter 6 of the UP Electricity Regulatory Commission (Conduct of Business) Regulations 2000, in particular regulations 121 and 124. The Commission has carried out preliminary scrutiny of the proposal and has found that the licensee has: -

         i.            Deviated from the Sixth Schedule but has not provided sufficient reasons for doing so.

       ii.            Not specified why the Commission should deviate from the Sixth Schedule in determining Annual Revenue Requirement for year 2002-2003.

      iii.            Not submitted the information as required by the Commission in the formats prescribed by it from time to time. 

Hence the Commission is of the opinion that the Application submitted by the Licensee is incomplete and that the licensee should provide:

1. All information, data and calculations as required under Sixth Schedule.
2. List of deviations proposed from the Sixth Schedule, with reasons.
3. Calculation of ARR, tariff increase and proposal to meet the uncovered gap (if any) under proposed methodology as compared to the methodology given in the U.P. Electricity Reforms Act, 1999 and the UPERC (Conduct of Business) Regulations, 2000.
4. UPPCL to submit complete data in the formats as prescribed by the Commission. If the UPPCL is not in a position to submit some specific information in the prescribed format, request for waiver with reasons should be made. Further, a specific timeframe when such information in the required formats would be available should also be indicated.

The Commission would also like to point out that there are other important gaps in the proposal, some of which are given below:

a)      The supporting information for estimating energy sales is missing.

b)      Methodology for estimation of demand of un-metered categories of consumers has not been included in the ARR. UPPCL should provide a recent study to support the assumptions regarding consumption by unmetered categories of consumers.

c)      Power Purchase Agreements between UPPCL and the State generating companies has not been included in the ARR.

d)      Action plan for reduction of T & D loss from 36.5% to 33.5% in FY 03 as proposed in the ARR should be spelt out.

e)      Cost of service to different categories of consumers at various voltage levels

f)        Documentary evidence of slab wise, category wise, voltage wise consumption based on the study (2001-02) of at least four billing cycles should be provided. The Commission is extremely concerned with the implication of the numbers given in the ARR. The Commission understands that the segregation of the existing information on the Revenue as used by the UPPCL is based on one billing cycle of FY 2000-01. The ARR being filed is for 2002-03 and the information relating to 2001-02 should have been used to project the revenue requirement for the purpose. The Commission in the Tariff Order for 2001-02 dated 1.9.2001 had noted that as “ details recorded in this context are based on information collected from the billing agents for one billing cycle, the Commission is of the view that this information may not reflect the actual position. Hence the licensee is directed to conduct a detailed examination of the billing information of at least 4 billing cycles of all categories of consumers before filing of the ARR for the next financial year.” The ARR should thus be based on information collected from billing agents for at least four billing cycles of 2001-02.

g)      Details of category wise efficiency assumed for estimating revenue collection and action plan for improvements assumed in the ARR.

h)      The total subsidy indicated by the State Government for the year 2001-02 and actual subsidy received by UPPCL against the same.

i)        In the Para 7.41 of the Tariff Order dated 2001-02 the Commission had prescribed the schedule of payment of subsidy by the State Government to UPPCL in the year 2001-02 in the following manner:

(a)    Rs. 425 crores to be released and credited to the account of the licensee by September30, 2001

(b)   The balance subsidy amount of Rs. 425 crores to be released in equal monthly installments starting from October 2001

(c)    Each monthly installment to be credited to the account of the licensee by 21^st of the respective month

(d)   The State Government to pay interests @ 15% per annum on the outstanding amount proportionately for the month for which the amount is not paid by the prescribed date.

The dates and amount of subsidy received by UPPCL from the State Government during 2001-02 should be given.

j)        As indicated in the Schedule –D of the Transfer Scheme dated 25.2.2001, the State Government shall have to pay the cash requirement on account of pension and gratuity for personnel and existing pensioners in two installments in the first and seventh month every year. UPPCL to furnish dates and amount of funds received for this purpose from the State Government.

k)      Loans received from the World Bank by the State Government during 2001-02 and the amount transferred to UPPCL should be given.

l)        Further in the order-dated 7.9.2001, the Commission had accepted the State Government’s proposal for paying extra subsidy in lieu of raising the tariff of domestic consumers. The Commission had estimated that the State Government will have to pay an additional Rs.122 Crores to neutralize the additional revenue that would accrue to UPPCL on account of revised tariff for domestic consumers. The Commission had fixed an installment of Rs.20 crores per month from October 2001 to February 2002 and one installment of Rs.22 crores to be paid in March 2002. UPPCL should indicate whether additional subsidy was received and if so, the dates on which it received the funds.

m)    Documentary evidence indicating the Commitment of the State Government to provide subsidy envisaged in the ARR for year 2002-03 should be provided.

n)      Deviation of expenses under each expenses head from the amount approved by the Commission for 2001-02.  Reasons for such deviation should be indicated.

o)      Details of employee cost with break-up category wise and component wise

p)      Details of expenses towards billing and collection

q)      Details of the amount deposited in the Employees’ Trust during FY00, FY01 and FY02

r)       Asset distribution and Energy Interchange between Uttar Pradesh and Uttranchal and its pricing. Licensee should also provide data for segregation of assets, liabilities and expenditure between UPPCL and Uttranchal

s)       Details of Fixed Assets and works-in-progress in the formats prescribed by the Commission

t)        Business plan of UPPCL for the next five years giving year wise targets for reducing the gap between the average cost of supply and average revenue collection from sale of electricity.

u)      Performance analysis both operational and functional in FY 02 with respect to the efficiencies desired by the Commission in it’s order 1.9.2001.

v)      Balance Sheets and Profit & Loss statements for year 2000-01(audited), 2001-02 (audited) and 2002-03(projected)

w)    Justification for the proposed tariff revision for each consumer category should be given.

x)      Reasons for tariffs revision with retrospective effect.  Relevant legal provisions to support this should also be cited.

y)      Details of action taken by the State Government on the recommendations of the Ahluwalia Committee for rescheduling of liabilities. Has the State Government signed the tripartite agreement?

z)       Details of progress made by the UPPCL with regard to commitments made by State Government with Government of India in the MOU. 

The Commission would like to point out that it desires that the Licensees improve their operational efficiency.  To this effect the Commission held several meetings with the Licensees during the year and has sent communications pointing out the areas in which improvement can be achieved. In the communication dated 3^rd April 2002, the Commission had given a consolidated list of the items requiring action from UPPCL and had also directed UPPCL to submit a detailed ‘Action Plan’ with dates for implementation of the directives of the Commission. The Commission has noted that UPPCL has simply provided the status report on the directions of the Commission. The Commission expects UPPCL to submit the Action Plan on the tasks that are still to be carried out or not completed. The Commission further directs UPPCL to give undertaking that the Action Plan so drawn will be implemented in a short time frame.  

In view of the reasons explained above, the required information along with justification for the departure from the principles laid down in the U.P.Electricity Reforms Act 1999 and UPERC (Conduct of Business) Regulations 2000 for tariff determination should be spelt out. After receiving the information, the Commission will proceed further to determine the Annual Revenue Requirement and Tariff for year 2002-2003.

            (Arun Sarkar)                           (S.C. Dhingra)                                       (J.L. Bajaj)

                 Member                                    Member                                             Chairman

Place:     Lucknow

Dated:   7.5.2002    

 

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