-
BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION
GANDHINAGAR
CASE NO. 1841/2019
Filing of the Petition for True Up of FY 2018-19
&
Determination of Tariff for FY 2020-21
Under GERC (Multi Year Tariff) Regulations, 2016 along with
other Guidelines and
Directions issued by the GERC from time to time AND under Part
VII (Section 61 to Section 64) of the Electricity Act, 2003 read
with the relevant Guidelines
Filed by:-
MadhyaGujarat Vij Company Ltd.
Corp. Office: Sardar Patel Vidyut Bhavan, Race Course, Vadodara
– 390007.
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 2
BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION
GANDHINAGAR
Filing No:
Case No:
IN THE MATTER OF Filing of the Petition for True Up of FY
2018-19,and
Determination of Tariff for FY 2020-21under GERC (Multi Year
Tariff) Regulations, 2016 along with other Guidelines and
Directions` issued by the GERC from time to time AND under
Part VII (Section 61 to Section 64) of the Electricity Act,
2003
read with the relevant Guidelines
AND
IN THE MATTER OF Madhya Gujarat Vij Company Limited, Sardar
Patel Vidyut Bhavan,
Race Course,
Vadodara – 390007
PETITIONER
Gujarat Urja Vikas Nigam Limited
Sardar Patel Vidyut Bhavan,
Race Course,
Vadodara - 390 007
CO-PETITIONER
THE PETITIONER ABOVE NAMED RESPECTFULLY SUBMITS
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 3
TABLE OF CONTENTS
SECTION 1. INTRODUCTION
........................................................................................
8
1.1. PREAMBLE
...................................................................................................
8
1.2. INTRODUCTION
..............................................................................................
8
1.3. MULTI YEAR TARIFF REGULATIONS, 2016
..............................................................
9
1.4. SUBMISSION BY MGVCL TO THE HON’BLE COMMISSION
............................................ 9
SECTION 2. EXECUTIVE SUMMARY
.............................................................................
10
2.1. PREAMBLE
.................................................................................................
10
2.2. TRUE UP OF FY 2018-19
...............................................................................
10
2.3. REVENUE GAP FOR FY 2020-21
.......................................................................
12
2.4. PROPOSED CHANGES IN THE TARIFF STRUCTURE FOR FY 2020-21
................................ 14
SECTION 3. TRUE UP FOR FY 2018-19
.........................................................................
15
3.1. PREAMBLE
.................................................................................................
15
3.2. PRINCIPLES FOR TRUE UP FOR FY 2018-19
.......................................................... 15
3.3. CATEGORY WISE SALES
...................................................................................
15
3.4. DISTRIBUTION LOSSES
....................................................................................
16
3.5. ENERGY REQUIREMENT AND ENERGY BALANCE
...................................................... 16
3.6. POWER PURCHASE COST
................................................................................
17
3.7. CAPITAL EXPENDITURE
...................................................................................
19
3.8. FUNDING OF CAPITALISATION
...........................................................................
21
3.9. FIXED COST FOR FY 2018-19
..........................................................................
22
3.10. OPERATION & MAINTENANCE
EXPENSES..............................................................
22
3.11. DEPRECIATION
............................................................................................
26
3.12. INTEREST & FINANCIAL CHARGES
.......................................................................
26
3.13. INTEREST ON WORKING CAPITAL
.......................................................................
28
3.14. PROVISION FOR BAD DEBTS
.............................................................................
28
3.15. RETURN ON EQUITY
.......................................................................................
29
3.16.
TAXES.......................................................................................................
30
3.17. NON-TARIFF INCOME FOR FY 2018-19
..............................................................
30
3.18. AGGREGATE REVENUE REQUIREMENT FOR FY 2018-19
........................................... 31
3.19. SHARING OF GAINS & LOSSES
...........................................................................
31
3.20. SHARING OF GAIN/ (LOSS) FOR FY 2018-19
........................................................ 33
3.21. REVENUE FOR FY 2018-19
.............................................................................
33
3.22. REVENUE GAP/SURPLUS FOR FY 2018-19
........................................................... 34
SECTION 4. DETERMINATION OF REVENUE GAP/ (SURPLUS) FOR FY
2020-21 ................ 36
4.1. PREAMBLE
.................................................................................................
36
4.2. REVENUE GAP/ (SURPLUS) FOR FY 2020-21 WITH EXISTING TARIFF
............................. 36
4.3. REVENUE FROM FPPPA CHARGES
.....................................................................
36
4.4. REVENUE PROJECTION FOR OTHER CONSUMER RELATED INCOME
................................ 37
4.5. AGRICULTURE SUBSIDY
...................................................................................
38
4.6. TOTAL REVENUE FOR FY 2020-21
....................................................................
38
4.7. ESTIMATED REVENUE GAP/ (SURPLUS) FOR FY
2020-21.......................................... 38
4.8. PROPOSED CHANGES IN THE TARIFF STRUCTURE FOR FY 2019-20
.............................. 39
SECTION 5. COMPLIANCE OF DIRECTIVES
...................................................................
40
5.1. PREAMBLE
.................................................................................................
40
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 4
5.2. COMPLIANCE OF DIRECTIVES
....................................................................
40
SECTION 6. PRAYER
..................................................................................................
44
SECTION 7. ANNEXURE 1: TARIFF SCHEDULE FOR FY
2019-20....................................... 47
SECTION 8. ANNEXURE 2: TARIFF FILING FORMATS
..................................................... 67
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 5
LIST OF TABLES
TABLE 1 : TRUE UP FOR FY 2018-19
.......................................................................................
10
TABLE 2 : SUMMARY OF CONTROLLABLE AND UNCONTROLLABLE FACTORS FOR
FY 2018-19 ..................... 11
TABLE 3 : REVENUE GAP FOR FY 2018-19
.................................................................................
12
TABLE 4 : FPPPA COMPUTATION FOR FY 2020-21
.....................................................................
12
TABLE 5: TOTAL PROJECTED REVENUE FOR FY 2020-21 AT EXISTING
TARIFF ........................................ 13
TABLE 6: ESTIMATED REVENUE GAP/ (SURPLUS) FOR FY 2020-21 AT
EXISTING TARIFF ........................... 14
TABLE 7 : CATEGORY-WISE SALES
............................................................................................
16
TABLE 8 : DISTRIBUTION LOSSES
..............................................................................................
16
TABLE 9 : ENERGY REQUIREMENT AND ENERGY BALANCE
...............................................................
17
TABLE 10: NET POWER PURCHASE COST
...................................................................................
18
TABLE 11 : GAIN/ (LOSS) ON ACCOUNT OF DISTRIBUTION LOSSES FOR FY
2018-19 ............................... 19
TABLE 12 : GAINS / (LOSS) - POWER PURCHASE EXPENSES
.............................................................
19
TABLE 13 : CAPITAL EXPENDITURE
...........................................................................................
20
TABLE 14 : FUNDING OF CAPITALISATION
...................................................................................
21
TABLE 15 : OPERATION & MAINTENANCE EXPENSES
.....................................................................
23
TABLE 16 : EMPLOYEE COST FOR FY 2018-19
............................................................................
24
TABLE 17 : REPAIR & MAINTENANCE COST FOR FY 2018-19
.......................................................... 24
TABLE 18 : ADMINISTRATION & GENERAL EXPENSES FOR FY 2018-19
............................................... 24
TABLE 19 : OTHER DEBITS FOR FY 2018-19
...............................................................................
25
TABLE 20: EXTRAORDINARY ITEMS
..........................................................................................
25
TABLE 21: NET PRIOR PERIOD EXPENSE/(INCOME)
........................................................................
25
TABLE 22: TOTAL O&M EXPENSES
..........................................................................................
25
TABLE 23 : FIXED ASSET AND DEPRECIATION FOR FY 2018-19
........................................................ 26
TABLE 24 : TREATMENT OF DEPRECIATION
.................................................................................
26
TABLE 25 : INTEREST & FINANCE CHARGES
.................................................................................
27
TABLE 26 : TREATMENT OF INTEREST & FINANCE CHARGES
.............................................................
27
TABLE 27 : INTEREST ON WORKING CAPITAL
...............................................................................
28
TABLE 28: BAD & DOUBTFUL DEBTS WRITTEN OFF
......................................................................
28
TABLE 29 : TREATMENT OF BAD & DOUBTFUL DEBTS
.....................................................................
29
TABLE 30 : RETURN ON EQUITY
..............................................................................................
29
TABLE 31 : TREATMENT OF RETURN ON EQUITY
...........................................................................
29
TABLE 32 : INCOME TAX
.......................................................................................................
30
TABLE 33 : TREATMENT OF INCOME TAX
...................................................................................
30
TABLE 34 : TREATMENT OF NON-TARIFF INCOME
.........................................................................
31
TABLE 35 : AGGREGATE REVENUE REQUIREMENT FOR FY 2018-19
................................................... 31
TABLE 36 : NET GAIN/ (LOSS) FOR FY 2018-19
..........................................................................
33
TABLE 37 : REVENUE FOR FY 2018-19
.....................................................................................
34
TABLE 38 : REVENUE GAP/ (SURPLUS) FOR FY 2018-19
...............................................................
35
TABLE 39: REVENUE AT EXISTING TARIFF FOR FY 2020-21
.............................................................
36
TABLE 40: WEIGHTED AVERAGE POWER PURCHASE COST FOR FY 2020-21
........................................ 37
TABLE 41: COMPUTATION OF REVISED FPPPA CHARGES (RS. /KWH)
................................................. 37
TABLE 42: REVENUE FROM FPPPA CHARGES FOR THE FY 2020-21
................................................. 37
TABLE 43: OTHER CONSUMER RELATED INCOME FOR FY 2020-21
.................................................... 38
TABLE 44: AGRICULTURE SUBSIDY FOR FY 2020-21
.....................................................................
38
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 6
TABLE 45: TOTAL REVENUE FOR FY 2020-21
.............................................................................
38
TABLE 46: ESTIMATED REVENUE GAP FOR FY 2020-21 AT EXISTING
TARIFF ........................................ 39
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 7
ABBREVIATIONS
1. ARR Aggregate Revenue Requirement
2. DGVCL Dakshin Gujarat Vij Company Limited
3. FPPPA Fuel and Power Purchase Price Adjustment
4. FY Financial Year
5. GEB Erstwhile Gujarat Electricity Board
6. GERC Gujarat Electricity Regulatory Commission
7. GERC MYT Regulations, 2016
GERC (Multi Year Tariff) Regulations, 2016
8. GETCO Gujarat Energy Transmission Corporation Limited
9. GoG Government of Gujarat
10. GoI Government of India
11. GSECL Gujarat State Electricity Corporation Limited
12. GUVNL Gujarat Urja Vikas Nigam Limited
13. kV Kilo Volt
14. kVA Kilo Volt Ampere
15. kVAh Kilo Volt Ampere Hour
16. kWh Kilo Watt Hour
17. MCLR Marginal Cost of Funds based Lending Rate
18. MGVCL Madhya Gujarat Vij Company Limited
19. MTR Mid-Term Review
20. MU Million Units (Million kWh)
21. MVA Mega Volt Ampere
22. MW Mega Watt
23. MYT Multi Year Tariff
24. MYT Control Period FY 2016-17, FY 2017-18, FY 2018-19, FY
2019-20 & FY 2020-21
25. O&M Operation & Maintenance
26. PGVCL Paschim Gujarat Vij Company Limited
27. UGVCL Uttar Gujarat Vij Company Limited
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 8
SECTION 1. INTRODUCTION
1.1. PREAMBLE
1.1.1. This section presents the background and reasons for
filing this Petition.
1.2. INTRODUCTION
1.2.1 The Government of Gujarat (hereinafter referred to as
“GoG”) notified the Gujarat
Electricity Industry (Reorganization and Regulation) Act 2003
(herein after called as
“Act”) in May 2003 for the reorganization of the entire power
sector in the State of
Gujarat.
1.2.2 Pursuant to the above, Government of Gujarat in their
letter vide GO / 19th August
2003 had directed GEB to form four Distribution Companies
(Discoms) based on
geographical location of the circles. Accordingly, the four
distribution companies had
been incorporated with the Registrar of Companies (RoC) on
September 15th, 2003.
Madhya Gujarat Vij Company Limited (MGVCL) is one of the
distribution companies
engaged in distribution of electricity in the middlezone area of
Gujarat.
1.2.3 The Madhya Gujarat Vij Co. Ltd obtained its Certificate of
Commencement of Business
on the 15th October, 2003. However, the company did not commence
its commercial
operations during the financial year ending 31st March, 2005.
The Company has
started its commercial function w.e.f. 1st April 2005.
1.2.4 The Gujarat Electricity Regulatory Commission (hereinafter
referred to as “GERC” or
“the Hon’ble Commission”), an independent statutory body
constituted under the
provisions of the Electricity Regulatory Commissions (ERC) Act,
1998 and is currently
under purview of the Electricity Act, 2003. GERC is vested with
the authority of
regulating the power sector in the State inter alia including
determination of Tariff for
electricity consumers.
1.2.5 Hon’ble Commission notified the Gujarat Electricity
Regulatory Commission (Multi-
Year Tariff) Regulations, 2016 (“GERC MYT Regulations, 2016”) on
29th March 2016
and shall be applicable for determination of tariff in all cases
covered under the
regulations from 1st April, 2016 onwards.
1.2.6 The Hon’ble Commission issued Order in Case No. 1624 of
2016 dated 31st March,
2017 for Truing up of FY 2015-16, approval of final ARR for FY
2016-17 and approval
of Multi-Year ARR for FY 2016-17 to FY 2020-21 and determination
of Tariff for FY
2017-18. Subsequently, the Hon’bleCommission issued Order in
Case No. 1701 of
2017 dated 31st March, 2018 for Truing up of FY 2016-17 and
determination of Tariff
for FY 2018-19.
1.2.7 The Hon’ble Commission issued Order in Case No. 1761 of
2018 dated 24 April 2019
for Truing up of FY 2017-18, Mid-Term Review of ARR of FY
2019-20 & FY 2020-21 and
determination of Tariff for FY 2019-20.
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 9
1.3. MULTI YEAR TARIFF REGULATIONS, 2016
1.3.1 Under section 62 of the Electricity Act, 2003 and under
the MYT Regulation, 2016
along with other guidelines and directions issued by the GERC
from time to time,
MGVCL is required to file a Petition for Truing-Up for FY
2018-19and Determination of
Tariff for FY 2020-21 with the Hon’ble Commission. The relevant
extracts of the MYT
Regulations, 2016 are given in the following paragraphs.
Section - 3.1 of MYT Regulations, 2016:
“3.1 The Commission shall determine tariff within the Multi-Year
Tariff
framework, for all matters for which the Commission has
jurisdiction
under the Act, including in the following cases:
1. Supply of electricity by a Generating Company to a
Distribution Licensee;
………………………
2. Intra-State transmission of electricity;
3. SLDC Fees and Charges;
4. Intra-State Wheeling of electricity;
5. Retail sale of electricity.” (Emphasis Added)
Section 17 of the GERC MYT Regulations, 2016:
“17.2 The filing for the Control Period under these Regulations
shall be as under:
b) From the second year of the Control Period and onwards, the
Petition shall
comprise of:
i. Truing Up for FY 2016-17 and onwards to be carried out under
Gujarat
Electricity Regulatory Commission (Multi-Year Tariff)
Regulations, 2016;
ii. Revenue from the sale of power at existing tariffs and
charges for the ensuing
year;
iii. Revenue gap or revenue surplus for the ensuing year
calculated based on
Aggregate Revenue Requirement approved in the MYT Order and
truing up
for the previous year;
iv. Application for determination of tariff for the ensuing
year.”
1.4. SUBMISSION BY MGVCL TO THE HON’BLE COMMISSION
1.4.1 Under section 62 of the Electricity Act, 2003 and GERC MYT
Regulations, 2016,
MGVCLhereby submits the Petition for True-up of FY 2018-19, and
determination of
Tariff for FY 2020-21to the Hon’ble Commission for approval.
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 10
SECTION 2. EXECUTIVE SUMMARY
2.1. PREAMBLE
2.1.1. This section highlights the summary of the Petition for
True Up for FY 2018-19 and
Revenue gap/surplus for FY 2020-21.
2.2. TRUE UP OF FY 2018-19
2.2.1 MGVCL has worked out its actual Aggregate Revenue
Requirement (ARR) for FY 2018-
19based on the audited accounts and the principles adopted by
the Hon’ble
Commission in its previous Orders.
2.2.2 The actual expenses have been compared against those
approved for FY 2018-19in
the Multi-Year Tariff (‘MYT’)Order dated 31stMarch, 2017. The
detailed comparison
of various cost components with the values approved by the
Hon’ble Commission has
been presented in the next Chapter on True up of FY 2018-19. A
summary of the
actual ARR for Truing-up of FY 2018-19 compared with the
approved ARR for FY 2018-
19is presented in the table given below:
TABLE 1 : TRUE UPFOR FY 2018-19
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Cost of Power Purchase 5,328.11 5,350.66 (22.55)
2 Operation & Maintenance Expenses 427.81 544.06
(116.25)
2.1 Employee Cost 396.26 481.30 (85.04)
2.2 Repair & Maintenance 59.83 41.69 18.14
2.3 Administration & General Charges 74.23 79.28 (5.04)
2.4 Other Debits - -
2.5 Extraordinary Items - -
2.6 Net Prior Period Expenses / (Income) - -
2.7 Other Expenses Capitalised (102.51) (58.20) (44.31)
3 Depreciation 304.84 253.49 51.35
4 Interest & Finance Charges 114.17 54.17 60.00
5 Interest on Working Capital - -
6 Provision for Bad Debts - 6.07 (6.07)
7 Sub-Total [1 to 6] 6,174.93 6,208.45 (33.52)
8 Return on Equity 168.36 139.62 28.74
9 Provision for Tax / Tax Paid 17.59 4.44 13.15
10 Total Expenditure (7 to 9) 6,360.89 6,352.51 8.37
11 Less: Non-Tariff Income 137.11 142.42 (5.31)
12 Aggregate Revenue Requirement (10 - 11) 6,223.77 6,210.10
13.67
Rs in Crore
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 11
2.2.3 In line with the provisions of the GERC MYT Regulations,
2016MGVCL has computed
the gains and losses on account of controllable and
uncontrollable parameters and
hasproposed the sharing of gain/(losses)accordingly.
2.2.4 The cost components have been segregated into controllable
and uncontrollable
factors as per the methodology outlined in Regulation22 of the
GERC MYT
Regulations, 2016. Summary of the difference allocation to
controllable &
Uncontrollable factors is outlined as per the table below:
TABLE 2 : SUMMARY OF CONTROLLABLE AND UNCONTROLLABLE FACTORS FOR
FY 2018-19
2.2.5 As per the mechanism specified in the MYT Regulation 2016,
MGVCL proposes to pass
on a sum of 1/3rd of total gain/(loss) on account of
controllable factors i.e. Rs.
82.09/3 = 27.36 Crore and total gain/(loss) on account of
uncontrollable factor i.e. Rs.
(68.41) Crore to the consumers.
2.2.6 Further, the Hon’ble Commission in its MYT Order had
approved the net Aggregate
Revenue Requirement for FY 2018-19 as Rs. 6223.77 Crore. MGVCL
has worked out
revised Aggregate Revenue Requirement for FY 2018-19,
considering the above
computed gains/(losses) on account of controllable and
uncontrollable factors.
2.2.7 Further, the revenue gap/(surplus) approved by the Hon’ble
Commission on True up
of FY 2016-17of Rs. (105.36) Crore is also considered.
Accordingly, Adjusting these to
the net Aggregate Revenue Requirement, MGVCL has arrived at the
Revised
Aggregate Revenue Requirement for FY 2018-19at Rs.
6,159.46Crore.
2.2.8 This revised Aggregate Revenue Requirement is compared
against the actual income
under various heads including Revenue from Existing Tariff of
Rs. 5,952.00 Crore,
other consumer related income of Rs. 83.62 Crore, agriculture
subsidyof Rs.
73.87Crore and GUVNL profit allocation of Rs. 4.56 Crore,
summing up to a Total
Revenue of Rs. 6114.05 Crore. Accordingly, total revenue
gap/(surplus) of MGVCL for
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factors
Gain/(Loss) due to
Uncontrollable
Factors
1 Cost of Power Purchase 5,328.11 5,350.66 95.58 (118.13)
2 Operation & Maintenance Expenses 427.81 544.06 (7.43)
(108.82)
2.1 Employee Cost 396.26 481.30 (20.52) (64.51)
2.2 Repair & Maintenance 59.83 41.69 18.14 -
2.3 Administration & General Charges 74.23 79.28 (5.04)
-
2.4 Other Debits - - - -
2.5 Extraordinary Items - - - -
2.6 Net Prior Period Expenses / (Income) - - - -
2.7 Other Expenses Capitalised (102.51) (58.20) - (44.31)
3 Depreciation 304.84 253.49 - 51.35
4 Interest & Finance Charges 114.17 54.17 - 60.00
5 Interest on Working Capital - - - -
6 Provision for Bad Debts - 6.07 (6.07) -
7 Return on Equity 168.36 139.62 - 28.74
8 Provision for Tax / Tax Paid 17.59 4.44 - 13.15
9 ARR (1 to 8) 6,360.89 6,352.51 82.09 (73.72)
10 Non - Tariff Income 137.11 142.42 - (5.31)
11 Total ARR (9-10) 6,223.77 6,210.10 82.09 (68.41)
Rs in Crore
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 12
FY 2018-19after treatment of gain/(loss) due to controllable /
uncontrollable factors is
computed at Rs. 45.41 Crore as shown in the table below:
TABLE 3 : REVENUE GAP FOR FY 2018-19
2.3. REVENUE GAP FOR FY 2020-21
2.3.1. The sales projections for FY 2020-21 as per MTR Order in
Case No. 1761/2018 dated 24
April, 2019 are11,076MU.
2.3.2. Based on projected sales & existing retail tariff,
revenue from sale of power works out
to Rs. 4,919.83Crore for FY 2020-21.
2.3.3. In the True up Order for FY 2017-18 and Mid-Term Review
of ARR for FY 2019-20 & FY
2020-21 dated 24th April 2019, the Hon’ble Commission has
considered the base
power purchase cost at Rs. 4.32/unit and base FPPPA at Rs.
1.61/unit. As per approved
FPPPA formula, any changein power purchase cost during the year
vis-a-vis base
power purchase cost of Rs. 4.32/unit is to be passedthrough
corresponding change in
FPPPA charges with respect to base FPPPA of Rs. 1.61/unit on
quarterly basis. As per
projected ARR for FY 2020-21, the weighted average power
purchase cost is worked
out to be Rs. 4.30/unit vis-à-vis base power purchase cost of
Rs. 4.32/unit. Thus, the
change inpower purchase cost of Rs. (0.02)/unit (i.e. Rs. 4.30 -
4.32)for FY 2020-21will
require corresponding change in base FPPPA of Rs. 1.61/unit.
Therefore, estimated
revenue from FPPPA is considered at Rs. 1.59/unit for FY 2020-21
as shown below.
TABLE 4 : FPPPA COMPUTATION FOR FY 2020-21
Rs in Crore
Sr. No. ParticularsFY 2018-19
(Actual)
1Aggregate Revenue Requirement originally approved
for FY 2018-196,223.77
2 Add: Gap/(Surplus) of FY 2016-17 (105.36)
3Gain / (Loss) on account of Uncontrollable factor to
be passed on to Consumer (68.41)
4Gain / (Loss) on account of Controllable factor to be
passed on to Consumer (1/3rd of Total Gain / Loss)27.36
5Revised ARR for FY 2018-19
(1 + 2 - 3 - 4)6,159.46
6 Revenue from Sale of Power 5,952.00
7 Other Income (Consumer related) 83.62
8Total Revenue excluding Subsidy
(6 + 7)6,035.62
9 Agriculture Subsidy 73.87
10 GUVNL Profit / (Loss) Allocation 4.56
11Total Revenue including Subsidy
(8 + 9 + 10)6,114.05
12Revised Gap after treating gains/(losses) due to
Controllable/ Uncontrollable factors (5 - 11) 45.41
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 13
2.3.4. In the above submitted computation, the income under the
head “other consumer
related income” has been considered the same as of FY 2018-19.
Theagriculture
subsidy for FY 2020-21 has been considered on pro rata basis of
MGVCL’s agricultural
sale vis-à-vis total projected agricultural sales of all 4 state
discoms in FY 2020-21.
2.3.5. Based on the above projections, the total revenue of the
company comprising of
revenue from sale of power at existing tariff, FPPPA charges,
other consumer related
income and agriculture subsidy has been arrived at Rs. 6,844.29
for FY 2020-21as
shown in table below:
TABLE 5: TOTAL PROJECTED REVENUE FOR FY 2020-21AT EXISTING
TARIFF
2.3.6. The revenue gap/(surplus) of Rs. 45.41 Crore after true
up exercise of FY 2018-
19isalso considered for estimating revenue gap/(surplus) for FY
2020-21.
2.3.7. Based on the above, the estimated revenue gap/ (surplus)
for FY 2020-21at existing
tariff is as outlined in the table below:
(Rs. Crore)
Particulars FY 2019-20 FY 2020-21
Fixed Cost 11,900 12,173
Variable Cost 24,572 26,105
GETCO Cost 4,115 4,502
GUVNL Cost 399 423
PGCIL Charge 2,077 2,181
SLDC Charge 29 33
Total Power Purchase Cost (Rs. Crore) 43,092 45,417
Total Energy Requirement (MU) 99,680 1,05,652
Power Purchase Cost (Rs./kWh) 4.32 4.30
Power Purchase Cost (Rs./kWh) 4.32 4.30
Change in Power Purchase Cost (Rs./kWh) (0.02)
Incremental FPPPA charges (Grossed up by T&D
Losses (0.02)
Base FPPPA Charges (Rs./kWh) 1.61
Revised Base FPPPA Charges (Rs./kWh) 1.59
Rs Crore
Particulars FY 2020-21 (Projected)
Revenue with Existing Tariff 4,919.83
FPPPA Charges 1,761.06
Other Income (Consumer related) 83.62
Agriculture Subsidy 79.78
Total Revenue including subsidy 6,844.29
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 14
TABLE 6:ESTIMATED REVENUE GAP/ (SURPLUS) FOR FY 2020-21 AT
EXISTING TARIFF
2.3.8. The Hon’ble Commission is requested to approve the above
mentioned surplus.
2.4. PROPOSED CHANGES IN THE TARIFF STRUCTURE FOR FY 2020-21
2.4.1. The consolidated resultant revenue gap for all four
distribution companies is more
than Rs. 880Crore. It is envisaged that part of estimated
revenue gap will be mitigated
through efficiency measures. The unmitigated revenue gap, ifany,
will be considered at
the time of final true-up of FY 2020-21. Therefore, no increase
in tariff rates is
proposed in FY 2020-21.
Rs Crore
Sr. No. Particulars FY 2020-21
(Projected)
1 Aggregate Revenue Requirement 6,780.45
2 Revenue Gap from True up of FY 2018-19 45.41
3 Total Aggregate Revenue Requirement 6,825.86
4 Revenue with Existing Tariff 4,919.83
5 FPPPA Charges 1,761.06
6 Other Income (Consumer related) 83.62
7 Agriculture Subsidy 79.78
8 Total Revenue including subsidy (4 to 7) 6,844.29
9 Gap / (Surplus) (3 - 8) (18.43)
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 15
SECTION 3. TRUE UP FOR FY 2018-19
3.1. PREAMBLE
3.1.1. This section outlines the performance of MGVCL for FY
2018-19. In line with the
provisions of the MYT Regulations, 2016,MGVCL hereby submits the
True-Up Petition
comparing the actual performance of MGVCL during FY 2018-19with
the forecast
approved by the Hon’ble Commission vide MYT Order dated 31st
March, 2017.
3.2. PRINCIPLES FOR TRUE UP FOR FY 2018-19
3.2.1. As per MYT Tariff Regulations, 2016, the Hon’ble
Commission is required to undertake
the True-Up of the licensees for FY 2018-19based on the
comparison of the actual
performance of the past year with the approved estimates for
such year. Section 21.1
of the MYT Regulations, 2016 is read as below:
“the Generating Company or Transmission Licensee or SLDC or
Distribution Licensee
shall be subject to truing up of expenses and revenue during the
Control Period in
accordance with these Regulations.”
3.2.2. In line with the provisions of MYT Regulations,2016,MGVCL
has filed this Petition for
True-Up ofthe year FY 2018-19. Information provided in the
True-Up for FY 2018-19is
based on audited actual performance and considering principles
adopted by the
Hon’ble Commission in its previous Orders. The actual
performance has been
compared with the approved numbers as per the MYT Order dated
31st March, 2017.
3.2.3. Accordingly, actual data for revised Aggregate Revenue
Requirement, revenue and
gap for FY 2018-19are given in the following paragraphs of this
chapter.
3.2.4. For the purpose of True-Up all the expense heads have
been categorized into
controllable and uncontrollable factors. A head-wise comparison
has been made
between the values approved by the Hon’ble Commission and the
actual values for
various expenditures ofFY 2018-19.
3.3. CATEGORY WISE SALES
3.3.1. The actual category wise sales for FY 2018-19 was10,004
MU as against the approved
sales of 9,900 MU. The table below highlights the comparison of
actual category wise
sales of MGVCL against that approved by the Hon’ble Commission
vide its Tariff
Order.
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 16
TABLE 7 : CATEGORY-WISE SALES
3.4. DISTRIBUTION LOSSES
3.4.1. In FY 2018-19, the actual distribution loss was9.98% as
against the MYT approved
level of11.65%. The table below highlights the comparison of
actual distribution loss
of MGVCL against distribution lossapproved by the Hon’ble
Commission vide its Tariff
Order.
TABLE 8 : DISTRIBUTION LOSSES
3.4.2. As per theMYT Regulations, 2016distribution loss is
acontrollable
factor.Accordingly,any gain or loss on account of distribution
losseswould be shared
with the consumers as per Regulations 24 of MYT Regulations,
2016.
3.4.3. MGVCL submits that it has achieved a significant
reduction in distribution loss
inrecent years. The Hon’ble Commission has approved the
distribution loss levels for
MGVCL at 11.65% for FY 2018-19and the actual loss achieved was
9.98% for FY 2018-
19. MGVCL shall continue its efforts to lower distribution
losses further.
3.4.4. Since MGVCL has losses lower than those approved by the
Hon’ble Commission, its
effect relating to power purchase and the gains and losses has
been captured in the
section below.
3.5. ENERGY REQUIREMENT AND ENERGY BALANCE
3.5.1. The gross energy requirement of MGVCL is given in the
table below:
FY 2018-19
(Approved)
FY 2018-19
(Actual)
FY 2018-19
(Approved)
FY 2018-19
(Actual)
A LT Consumers
1 RGP 2,831 2,609 1,646.12 1,400.06
2 GLP 71 63 40.279 37.28
3 Non-RGP & LTMD 1,571 1,543 1072.229 1,097.65
4 Public Water Works 288 302 146.062 156.96
5 Agriculture - Metered 1,070 857 260.66
6 Agriculture - Unmetered 472 475 136.948
7 Public Lighting 65 61 35.975 35.32
LT Total (A) 6,366 5,910 3,337.96 3,142.77
B HT Consumers
8 Industrial HT 3,534 4,094 2,686.14 2,809.23
9 Railway Traction - - -
HT Total (A) 3,534 4,094 2,686.14 2,809.23
Grand Total (A + B) 9,900 10,004 6,024.10 5,952.00
Sr. No. Particulars
Sales(MUs) Revenue (Rs. Crores)
415.50
1 Distribution Losses 11.65% 9.98%
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 17
TABLE 9 : ENERGY REQUIREMENT AND ENERGY BALANCE
3.5.2. The gross energy requirement for sale to the consumers in
FY 2018-19 is 11,794 MUs
as compared to 11,867 MUs as approved by the Hon’ble
Commission.
3.6. POWER PURCHASE COST
3.6.1. The company has been currently allocated share of
generation capacities as per the
scheme worked out by GUVNL. In order to minimize power purchase
cost, GUVNL
adopts the Merit Order Despatch principles for despatching power
from the
generating stations based on the demand and accordingly power
gets allocated to
MGVCL.
3.6.2. The actual power purchase from GUVNL is different from
allocation, because the
demand from MGVCL is not constant and it varies from time to
time.
3.6.3. The total power purchase cost of MGVCL for FY
2018-19consists of the basic power
purchase cost, transmission charges payable to GETCO and PGCIL,
SLDC
charges.Further, MGVCL has earned income on account of sale of
power to GUVNL
and from UI charges. The net power purchase cost has been
computed by deducting
the aforesaid income from total power purchase cost. Based on
above computation,
comparison of approved and actual cost of power purchase is as
shown in table
below:
S.No. Particulars UnitFY 2018-19
(Approved)
FY 2018-19
(Actual)
1 Energy Sales MUs 9900 10,004.36
MUs 1305 1,109.00
% 11.65% 9.98%
3 Energy Requirement MUs 11205 11,113.36
4 Local Power Purchase by Discom MUs 0 37.19
5 Power Purchase at TD periphery from GUVNL MUs 11,205
11,076.17
MUs 449 455.00
% 3.85% 3.9492%
7Total Energy to be input to Transmission
SystemMUs
1165411,531.17
8 Pooled Losses in PGCIL System MUs 213 225.142
9 Total Energy Requirement MUs 11867 11,793.50
Distribution Losses
Transmission Losses
2
6
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 18
TABLE 10: NET POWER PURCHASE COST
3.6.4. The variation in the approved and the actual power
purchase expenses is on account
of various reasons including change in approved cost of power,
change in quantum of
power purchased, and consequent changes in the transmission
charges payable.
3.6.5. The quantum of power purchase depends upon the sales
during the year as well as
the losses in the system. The actual sales are higher than that
of the approved sales
by the Hon’ble Commission.However, the actual distribution loss
ofMGVCL
distribution network has been lower than the approved level.
Therefore, the quantum
of power purchased is lower than the approved quantum of power
required.
3.6.6. As per the Regulation 22 of MYT regulations, 2016 the
Hon’ble Commission has
categorised the variation in the price of fuel and/or price of
power purchase
according to the FPPPA formula approved by the Hon’ble
Commission as an
uncontrollable factor. Further, the Hon’ble Commission has also
identified the
variation in the number or mix of consumers or quantity of
electricity sold to
consumers as an uncontrollable factor. Thus, the variation in
the above factors affects
the power purchase expenses and results into either a loss or
gain. Accordingly, any
gain or loss on this account is to be entirely passed on to the
consumers as per the
methodology approved by the Hon’ble Commission.
3.6.7. In addition to the above, there is an incidence of lower
power purchase cost on
account of the lower distribution loss as compared to the loss
approved by the
Hon’ble Commission. Accordingly, MGVCL has worked out gain
onpower purchase on
account of lower distribution losses as shownin table below:
Rs. Crore
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
A Cost
1 Power Purchased from GUVNL 5,340.20
2 Power purchase from Windfarm [Local purchase] 9.18
3 Power Purchased from Solar [Local purchase] 8.26
4 Unscheduled Interchange Charges/DSM Charges -
5 SLDC Charges0.52
5,358.16
B Income
1 Sale of Power to GUVNL -
2 Unscheduled Interchange 7.50
Net Power Purchase Cost 5,328.11 5,350.66
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 19
TABLE 11 : GAIN/ (LOSS) ON ACCOUNT OF DISTRIBUTION LOSSES FOR FY
2018-19
3.6.8. As can be seen from the above table, the total gain on
account of lower distribution
losses as compared to the approved distribution losses is Rs.
98.49Crore. This gain is
considered on account of controllable factors and the
appropriate treatment is given
below:
TABLE 12 : GAINS / (LOSS) - POWER PURCHASE EXPENSES
3.6.9. From the above table, the power purchase gain/(loss) due
to controllable &
uncontrollable factors are Rs. 95.58Crore and Rs. (118.13)Crore
respectively which
would have to be passed on to the consumers as per the
methodology approved by
the Hon’ble Commission.
3.7. CAPITAL EXPENDITURE
3.7.1. Capital expenditure incurred by MGVCL in FY 2018-19 was
Rs. 417.51Crore. The actual
capital expenditure by MGVCL during the FY 2018-19 is lower than
that approved by
the Hon’ble Commission. The scheme-wise actual capital
expenditure incurred in FY
2018-19 against approved by the Hon’ble Commission is as shown
below:
S.No. Particulars Unit
FY 2018-19
(with Approved
Distribution
Losses)
FY 2018-19
(with Actual
Distribution
Losses)
1 Energy Sales MUs 10,004.36 10,004.36
2 Distribution Losses MUs 1,319.19 1,108.52
% 11.65% 9.98%
3 Energy Requirement MUs 11,323.56 11,112.88
4 Saving due to Distribution Losses MUs 210.68
5 Average Power Purchase Cost Rs./Unit 4.54
6 Gain/(Loss) due to Dist. Losses 95.58
Rs in Crore
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due to
Uncontrollable
Factor
1 Total Power Purchase Cost 5,328.11 5,350.66 95.58 (118.13)
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 20
TABLE 13 : CAPITAL EXPENDITURE
3.7.2. Scheme wise deviation in capital expenditure is explained
as under:
Normal Development Scheme:Expensesunder Normal Development
Scheme,
generally incurred to meet the Supply Obligation of utility.
Based on number of
application received, MGVCL had incurred Rs. 20.00Crore against
approved Rs.
26.31 Crore.
Distribution Infrastructure Shifting Scheme: It is essential to
get the proposal
from Nagar Palika,Municipal Corporation, etc.for shifting for
implementation
under this scheme as per the stipulations of the scheme.Based on
number of
proposalreceived from urban local bodies like
Nagarpalika,Municipal
Corporation, Gram Panchayat, etc. during FY 2018-19,work was
undertaken
under this scheme and capital expenditure wasincurred
accordingly.
Electrification of Hutments:Household connections were issued to
17437
hutments under this scheme during FY 2018-19. Capital
expenditure ofRs. 9.60
Crore was incurred for the same during FY 2018-19.
FY 2018-19 FY 2018-19
Approved Actual
A Distribution Schemes
Normal Development Scheme 26.31 20.00 6.31
Distribution Infra & Shifting Schemes(DISS) 26.31 16.01
10.30
Electrification of hutments 10.13 9.60 0.53
Kutir Jyoti Scheme 2.96 3.00 (0.04)
Others Harijan Basti – Petapara 0.92 0.30 0.62
Total 66.63 48.91 17.72
B Rural Electrification Schemes - Plan
TASP(Wells & Petapara) 146.78 38.09 108.69
Special Component plan 4.80 1.07 3.73
RE Wells(OA +SPA) 188.79 80.68 108.11
Dark Zone 72.82 13.68 59.14
Total 413.19 133.52 279.67
C Non Plan Schemes
Integrated Power Development Scheme (IPDS) 119.10 147.31
(28.21)
Din Dayal Upadhyay Gramin Jyoti Yojana (DDUGJY) 52.72 76.08
(23.36)
R-APDRP(Scada)-A 0.00 0.00 -
R-APDRP(Scada)-B 2.00 0.00 2.00
PSDF 0.00 0.00 -
RAPDRP (Part B) 5.00 0.00 5.00
Total 178.82 223.39 (44.57)
D Other Schemes
Sagar Khedu 1.50 1.51 (0.01)
Energy Conservation(HVDS) 5.00 5.38 (0.38)
Vehicle 0.99 0.19 0.80
Sardar Krushi Jyoti Yojna 0.00 3.79 (3.79)
Misc Civil + Electrical Works + Furniture 4.00 0.70 3.30
SKY 0.00 0.12 (0.12)
Total 11.49 11.69 (0.20)
F Capital Expenditure Total 670.13 417.51 252.62
DeviationParticulars
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 21
Kutir Jyoti Scheme [HH]:MGVCL has incurred Rs. 3.00 Crore of
capital
expenditure during FY 2018-19 for 8396 nos. of household
connections.
Harijan Basti [SCSP]:MGVCL hasincurred Rs. 0.30 Crore for
providing 674
household connections during FY 2018-19.
TASP Wells:Allocation of agriculture connection is a continuous
process.Itis
governed by Government of Gujarat by way of fund monitoring and
availability of
Energy & Infrastructure. MGVCLhas providedagriculture
category connections
under various schemes. Due to widespread electrification of
agricultural wells
and household connections, length of line per connection has
been decreasing.
As a result, average capital expenditure per connection has
beendecreasing.
Under TASP scheme, MGVCL has achieved 3,395 nos. of agriculture
wells against
target of 3,300 wells and incurred expenditure of Rs. 38.09
Crore in FY 2018-19.
Special Component Plan:Under this scheme, 93 nos. of
agricultural wells were
completed against the approved target of 150 nos. The total
expenditure of Rs.
1.07 Crore was incurred under this scheme during FY 2018-19.
Normal agriculturalwells SPA:Under SPA scheme, 5,987 nos. of
agriculturalwells
are electrified against approved target of 6000 nos. and company
has incurred
capital expenditure of Rs. 80.68 Crore.
Dark Zone:Under Dark Zone scheme, 1,070 agricultural wells are
electrified vis-à-
vis target of 800 nos.for capital expenditure of Rs. 13.68 Crore
during FY 2018-19.
IPDS& DDUGJY: MGVCL has completed physical progress in
March, 2019,i.e.,
before target date which was planned to be completed in
FY2019-20.Hence,
actual capital expenditure is more than the approved in MYT
Order.
SCADA/DMS:MGVCL has completedphysical works as per sanctioned
quantities
of SCADA PART-B project in March, 2018.Further, all expenses
were booked
under SCADA PART-B in FY2017-18.Therefore, there is no expense
in FY 2018-19
for this scheme.
3.8. FUNDING OF CAPITALISATION
3.8.1. Funding of actual capitalisation is done through various
sources categorised under
four headings namely: consumer contribution, grants, equity and
debt. The detailed
breakup of funding of capitalised asset during FY 2018-19 is
mentioned in the table
below.
Table 14 : Funding of Capitalisation
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 22
3.9. FIXED COST FOR FY 2018-19
3.9.1. The fixed cost of MGVCL for FY 2018-19has been determined
in accordance with the
MYT Regulations, 2016. As outlined under the regulations, the
fixed cost for MGVCL
has been determined under the following major heads:
Operation and Maintenance Expenses
Depreciation
Interest and Finance Charges
Interest on Working Capital
Income Tax
Return on Equity
3.9.2. Net Annual Revenue Requirement of MGVCL has been computed
after netting off
expenses capitalised and Non-Tariff Income.
3.9.3. For the purpose of True-Up, all the heads mentioned above
have been categorized
into controllable or uncontrollable in line with provisions of
MYT Regulations, 2016. A
head wise comparison of cost has been made between the values
approved by the
Hon’ble Commission vide MYT Order dated 31st March, 2017 and the
actual expenses
of MGVCL in FY 2017-18.
3.10. OPERATION & MAINTENANCE EXPENSES
3.10.1. Operations and Maintenance (O&M) Expenses of MGVCL
consists of the following
elements:
Employee expenses
Repairs and Maintenance expenses
Administrative and General expenses
3.10.2. MGVCLhas also shown expenses on account of the following
items of the ARR into
O&M expenses:
Other Debits
Extraordinary Items
Net Prior Period Expenses/(Income)
Other Expenses Capitalised
3.10.3. After the combination of all the above parameters for FY
2018-19, MGVCL’s actual
O&M expenseswere as shown in table below.
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Capitalization 670.13 411.86 258.27
2 Less : Consumer Contribution 26.31 102.87 (76.56)
3 Grants 123.6 80.77 42.83
4 Balance CAPEX 520.22 228.22 292.00
5 Debt @ 70% 364.15 159.76 204.39
6 Equity @ 30% 156.07 68.47 87.60
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 23
TABLE 15 : OPERATION & MAINTENANCE EXPENSES
Employee Cost
3.10.4. Employee expenses comprise of salaries, dearness
allowance, bonus, terminal benefits
in the form of pension & gratuity, leave encashment and
staff welfare expenses.
3.10.5. The Hon’ble Commission in its previous Orders had not
approved the provision made
for respective years towards impact of 7th Pay Commission
considering that actual
payment is not made and had ruled that as and when the actual
expenses are incurred,
the Commission would consider such claims, which would be
accounted for during the
true up of annual account of the respective year as
uncontrollable factor. Therefore, in
line with the approach adopted by the Hon’ble Commission, MGVCL
has not
considered the provisions made towards 7th Pay.
3.10.6. Accordingly, the actual employee expensefor FY
2018-19wasRs. 481.30Crore which
excludes the provision made towards 7th Pay Commission of Rs.
35.59 Crore but
includes the actual amount of Rs. 64.51 Crorepaid during FY
2018-19 as arrears
towards 7th Pay Commission.
3.10.7. The Hon’ble Commission in the MTR Order dated 24th
April, 2019 the
Hon’blecommission had ruled as follows:
“MGVCL has compared the actual employee cost of Rs. 478.30 Crore
incurred during FY 2017-18 with Rs. 374.82 Crore approved in the
MYT Order dated 31st March, 2017. The actual employee cost, as per
the audited annual accounts for FY 2017-18, is Rs. 469.73 Crore
before capitalization of Rs. 40.99 Crore. Further, the Petitioner
has submitted that the aforesaid employee cost excludes Rs. 73.37
Crore towards Provision for 7th Pay Commission but includes Rs.
27.14 Crore towards the actual payout on account of wage revision.
The Petitioner has added the Re-measurement of the Defined Benefit
Plans of Rs. 54.80 Crore as appearing in the Statement of P&L
for the year ended 31st March, 2018 being the component of employee
cost to arrive at claimed figure of Rs. 478.30 Crore. Therefore,
the Commission considers Rs. 478.30 Crore as employee expenses for
the purpose of true up of FY 2017-18.”
3.10.8. Accordingly, MGVCL has worked out a gain/ (loss) of Rs.
(20.52) Crore on account of
controllable employee cost and Rs. (64.51) Crore of actual
payment towards 7th Pay
Commission towards the uncontrollable employee cost.
3.10.9. The summary of the comparison of the actual employee
expenses for FY 2018-19vis-
à-vis the expenses approved by the Hon’ble Commission is given
in the table below:
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Employee Cost 396.26 481.30 (85.04)
2 Repair & Maintenance 59.83 41.69 18.14
3 Administration & General Charges 74.23 79.28 (5.04)
4 Other Debits - - -
5 Extraordinary Items - - -
6 Net Prior Period Expenses / (Income) - - -
7 Other Expenses Capitalised (102.51) (58.20) (44.31)
8 Operation & Maintenance Expenses 427.81 544.06
(116.25)
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Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 24
TABLE 16 : EMPLOYEE COST FOR FY 2018-19
Repair & Maintenance Cost
3.10.10. Repairs and Maintenance expenses are incurred towards
the day to day upkeep of
the distribution network and form an integral part of the
efforts towards reliable and
quality power supply as also in the reduction of losses in the
distribution system.
3.10.11. Repair and Maintenance expenditure is dependent on
various factors. The assets of
MGVCL are old and require regular maintenance to ensure
uninterrupted operations.
MGVCL has been trying its best to ensure uninterrupted
operations of the system
and accordingly has been undertaking necessary expenditure for
R&M activities. The
MYT Regulations, 2016 provide for R&M expenditure as a
controllable expenditure.
The actual R&M cost for FY 2018-19 is Rs.41.69Crore.
Accordingly, based on
comparison of actual R&M expenditure of MGVCL with the
values approved by the
Hon’ble Commission, there is a gain/(loss) of Rs. 18.14Crore as
indicated in the table
below:
TABLE 17 : REPAIR & MAINTENANCE COST FOR FY 2018-19
Administration & General Expenses
3.10.1. Administration & General expenses mainly comprise of
rents, telephone and other
communication expenses, professional charges, conveyance and
travelling allowances,
etc.
3.10.2. The actual A&G expense for FY 2018-19 were
Rs.79.28Crore. As per the provisions of
the MYT Regulations, 2016, A&G expenses are categorised as
controllable expenses
and accordingly, the comparison of value approved by the Hon’ble
Commission with
the actual A&G expenses of MGVCL shows a gain/(loss) of Rs.
(5.04) Crore as shown
in the table below:
TABLE 18 : ADMINISTRATION & GENERAL EXPENSES FOR FY
2018-19
Other Debits
3.10.3. MGVCLhas not claimed any expense as other debit in
tariff petition.
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due to
Controllable
Factor
Gain/(Loss) due to
Uncontrollable
Factor
1 Employee Cost 396.26 481.30 (20.52) (64.51)
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Repair & Maintenance Cost 59.83 41.69 18.14 -
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Administration & General Charges 74.23 79.28 (5.04) -
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 25
TABLE 19 : OTHER DEBITS FOR FY 2018-19
Extraordinary Items
3.10.4. No extraordinary items are claimed in ARR by MGVCL as
shown in the table below:
TABLE 20: EXTRAORDINARY ITEMS
Net prior period expense/ (income)
3.10.5. As per Regulation 49 of GERC MYT Regulations, 2016;
prior period income/expenses
shall be allowed by the Hon’bleCommission at the time of truing
up based on
audited accounts, on a case to case basis, subject to prudence
check.
3.10.6. However, MGVCL has not claimed any prior period expense/
(income) in this
TariffPetition.
TABLE 21: NET PRIOR PERIOD EXPENSE/(INCOME)
3.10.7. The comparison of actual O&M expenses by MGVCL
during FY 2018-19with the value
approved by the Hon’ble Commission shows net gain/(loss) on
account of
controllable factors of Rs. (7.43) Crore and gain/(loss) of Rs.
(108.82) Crore on
account of uncontrollable factors to MGVCL.
TABLE 22: TOTAL O&M EXPENSES
Rs in Crore
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due to
Uncontrollable
Factor
1 Other Debits - - - -
Rs in Crore
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due to
Uncontrollable
Factor
1 Extra Ordinary Items - - - -
Rs in Crore
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due to
Uncontrollable
Factor
1 Net prior Period Expenses/(Income) - - - -
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Employee Expenses 396.26 481.30 (20.52) (64.51)
2 Repair & Maintenance Cost 59.83 41.69 18.14 -
3 Administration & General Charges 74.23 79.28 (5.04) -
4 Other Debits - - - -
5 Extraordinary Items - - - -
6 Net Prior Period Expenses / (Income) - - - -
7 Other Expenses Capitalised (102.51) (58.20) - (44.31)
8 Total O&M Expenses 427.81 544.06 (7.43) (108.82)
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 26
3.11. DEPRECIATION
3.11.1. In case of Depreciation, the regulation 39.2 of GERC MYT
Regulations, 2016 provides
that-
“Depreciation shall be computed annually based on the straight
line method at the
rates specified in the Annexure I to these Regulations:
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:
Provided further that for a Generating Company or a Transmission
Licensee or SLDC or
a Distribution Licensee formed as a result of a Transfer Scheme,
the depreciation on
assets transferred under the Transfer Scheme shall be charged as
per rates specified in
these Regulations for a period of 12 years from the date of
Transfer Scheme, and
thereafter depreciation will be spread over the balance useful
life of the assets”
3.11.2. The Hon’ble Commission in the MYT Order dated 31st
March, 2017 has directed
MGVCL to book depreciation charges in accordance with the MYT
Regulations.
3.11.3. Accordingly, MGVCL has calculated the Depreciation for
FY 2018-19 in accordance
with the provisions of the MYT Regulations, 2016 and the
directives of the Hon’ble
Commission.
3.11.4. The actual and approved depreciation for FY 2018-19is as
shown below:
TABLE 23 : FIXED ASSET AND DEPRECIATION FOR FY 2018-19
3.11.5. The actual depreciation for FY 2018-19as against the
value approved by the Hon’ble
Commission results into an uncontrollable gain/(loss) of Rs.
51.35Crore as indicated
below:
TABLE 24 : TREATMENT OF DEPRECIATION
3.12. INTEREST & FINANCIAL CHARGES
3.12.1. For assessing actual Interest charges on loans in FY
2018-19, MGVCL has considered
the opening balance of loans for FY 2018-19 same as the closing
loan approved by the
Hon’ble Commission for FY 2017-18in the True up Order dated 24th
April, 2019. The
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Gross Block in Beginning of the year 5,377.90 5,016.71
2 Additions during the Year (Net) 670.13 412.89
3 Depreciation for the Year 304.84 253.49 51.35
4 Average Rate of Depreciation 5.34% 4.85%
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Depreciation 304.84 253.49 - 51.35
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 27
loan addition in FY 2018-19 is computed at Rs.159.76Crore which
consists of loans for
funding capitalisation.
3.12.2. In line with the approach adopted by the Hon’ble
Commission and as prescribed in
MYT Regulations, 2016; repayment during the year has been
considered equal to the
depreciation for the financial year.
3.12.3. Based on provisions of the MYT Regulations, 2016, the
weighted average rate of
interest during the year for Truing up of FY 2018-19 is
6.13%vis-a-vis9.46% as
approved by the Hon’ble Commission.
3.12.4. MGVCL submits that it had been allocatedguarantees of
Govt. of Gujarat, for which it
is required to pay the guarantee charges. These are the legacy
loans which have come
from the erstwhile GEB. These charges are, thus, beyond control
of MGVCL and hence
are required to be considered in the total financial cost. MGVCL
had considered these
guarantee charges in True-up of FY 2017-18 as uncontrollable.The
Hon’ble
Commission had approved these charges as submitted by MGVCL in
True-up of FY
2017-18.The Hon’bleCommission has ruled as follows in the Order
for True-up of FY
2017-18 while approving finance charges:
“As per the GERC (MYT) Regulations, 2016, the Commission is of
the view that the parameters which impact interest and finance
charges should be treated as uncontrollable.”
3.12.5. The total Interest & Financial charges for FY
2018-19are soughed by MGVCL as shown
in table below vis-à-vis that approvedby the Hon’ble
Commission:
TABLE 25 : INTEREST & FINANCE CHARGES
3.12.6. As per Regulation 22.1 of MYT Tariff Regulations,
2016;variation in market interest
rates is uncontrollable factor. Further, the Hon’bleCommission
in MTR Order dated 24
April, 2019 for True-up of FY 2017-18 has ruled that interest
and finance charges are
to be treated as uncontrollable. Accordingly, MGVCL has worked
outsharing of
gain/(loss) of interest and finance charges as shown in the
table below:
TABLE 26 : TREATMENT OF INTEREST & FINANCE CHARGES
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Opening Loans 476.31 136.97
2 Loan Additions during the Year 364.15 159.76
3 Repayment during the Year 304.84 253.49
4 Closing Loans 535.63 43.23
5 Average Loans 505.97 90.10
6 Interest on Loan 47.86 5.53 42.33
7 Interest in Security Deposit 65.05 47.97 17.08
8 Guarantee Charges 1.25 0.68 0.57
9 Total Interest & Financial Charges 114.17 54.17 59.99
10 Weighted Average Rate of Interest 9.46% 6.13%
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 28
3.13. INTEREST ON WORKING CAPITAL
3.13.1. The interest on working capital has been calculated
based onthe provisions of theMYT
Regulations, 2016.
3.13.2. In line with the first amendment to the MYT Regulations,
2016 dated 2nd December,
2016, the rate of interest considered is the weighted average of
the 1-year MCLR of
the State Bank of India during the year plus 250 basis points.
This rate works out to
10.89%.
3.13.3. As per these regulations, one month of
receivables,O&M expense for one monthand
maintenance spares equal to 1% of GFAare to be considered for
calculation of interest
on working capital.Further, receivables are equal to one month
of the annual
revenue. Amount held as security deposit from consumers under
clause (a) and
clause (b) of sub-section (1) of Section 47 of the Electricity
Act 2003 except the
security deposit held in the form of Bank Guarantees is deducted
from it. As per this
approach, the working capital requiredbyFY 2018-19 by MGVCL is
nilas shown in table
below:
TABLE 27 : INTEREST ON WORKING CAPITAL
3.14. PROVISION FOR BAD DEBTS
3.14.1. As per Regulation 94.9.1 of MYT Regulations, 2016; the
Hon’bleCommission shall true
up the bad debts written off in the Aggregate Revenue
Requirement, based on the
actual write off of bad debts during the year.
3.14.2. As per audited accounts for FY 2018-19, bad and doubtful
debts written off in FY
2018-19 are Rs. 18.59Crore. However, Rs. 12.52 Crore is
written-off towards Amnesty
scheme. As ruled by the Hon’ble Commissionvide order dated 18
June, 2018, the
impact of bad debts written off under the amnesty scheme needs
to be absorbed by
the Discoms. Therefore, only Rs. 6.07 Crore (i.e. Rs. 18.59
Crore - Rs. 12.52 Crore) bad
debts written off are considered for True-up of FY 2018-19:
TABLE 28: BAD & DOUBTFUL DEBTS WRITTEN OFF
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due to
Controllable
Factor
Gain/(Loss) due to
Uncontrollable
Factor
1 Interest & Finance Charges 114.17 54.17 - 60.00
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 O & M expenses 35.65 45.34
2 Maintenance Spares 53.78 50.17
3 Receivables 511.78 509.12
4 Amount held as security deposit from consumers 839.42
841.57
5 Total Working Capital (238.21) (236.94)
6 Rate of Interest on Working Capital 11.70% 10.89%
7 Interest on Working Capital - - -
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 29
3.14.3. The Hon’bleCommission has consideredthe gain/ (loss) due
to provision for bad debts
as controllable in previous Orders. Accordingly, MGVCL has
computed controllable
gain/(loss) of Rs. (6.07)Crore as shown in the table below:
TABLE 29 : TREATMENT OF BAD & DOUBTFUL DEBTS
3.15. RETURN ON EQUITY
3.15.1. As per the Regulation 37.1 of MYT Regulations, 2016, a
return @ 14% on the equity
base is considered for truing-up. As per Regulation 37.1, this
rate of return is applied
on equity at the commencement of each financial year and on 50%
of equity capital
portion of the allowable capital cost during the financial
year.
3.15.2. For assessing actual return on equity for FY 2018-19,
MGVCL has considered the
opening balance of equity of FY 2018-19as the closing balance of
equity of FY 2017-18
approved by the Hon’bleCommission in the True up Order dated 24
April, 2019.
Further, the equity additions during the year based on actual
capitalisation as already
discussed in the above paragraphs have been considered.
Accordingly, the return on
equity for FY 2018-19has been worked out as shown below:
TABLE 30 : RETURN ON EQUITY
3.15.3. As ruled by theHon’ble Commission in MTR Order dated 24
April, 2019; deviation in
RoE is due to uncontrollable factors as the return on equity is
being allowed on a
normative basis and the quantum of equity addition in the year
depends upon the
capital expenditure and the capitalization achieved during the
year. The
Hon’bleCommission has considered these factors impacting RoE as
uncontrollable.
Accordingly, MGVCL has claimed uncontrollable gain/(loss) on
Return on Equity for FY
2018-19vis-à-vis the amount approved by the Hon’ble Commission
as shown intable
below.
TABLE 31 : TREATMENT OF RETURN ON EQUITY
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Provision for Bad and Doubtful Debts - 6.07 (6.07)
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Provision for Bad Debts - 6.07 (6.07) -
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Opening Equity Capital 1,124.57 963.04 161.53
2 Equity Additions during the Year 156.07 68.47 87.60
3 Closing Equity 1,280.63 1,031.50 249.13
-
4 Average Equity 1,202.60 997.27 205.33
5 Rate of Return on the Equity 14% 14% -
6 Return on Equity 168.36 139.62 28.74
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 30
3.16. TAXES
3.16.1. As per Regulation 41.2 of MYT Regulations, 2016;
variation between Income Tax
actually paid and approved shall be reimbursed to/recovered from
based on the
documentary evidence submitted at the time of truing up subject
to prudence check.
3.16.2. As per audited annual account of FY 2018-19, the actual
tax in FY 2018-19 was Rs.
4.44Crore as against Rs. 17.59Crore approved by the Hon’ble
Commission as shown
below:
TABLE 32 : INCOME TAX
3.16.3. It is submitted that Income Tax being a statutory
expense, any variation on this
account is uncontrollable. Accordingly, Regulation 22.1 has
considered income taxes
as uncontrollable. Therefore,MGVCL requests the Hon’ble
Commission to consider
the gain/ (loss)on income tax as an uncontrollable.
3.16.4. A comparison of actual taxes for FY 2018-19with the
amount approved by the Hon’ble
Commission shows an uncontrollable gain/(loss) as indicated in
the table below:
TABLE 33 : TREATMENT OF INCOME TAX
3.17. NON-TARIFF INCOME FOR FY 2018-19
3.17.1. The actual non-tariff income as peraudited accounts is
Rs. 145.43 Crorewith
includesinterest on staff loans and advances (Rs. 3.02 Crore).
MGVCL has excluded
interest income on staff loan from non-tariff income.
Accordingly, nom-tariff income
claimed by MGVCL in FY 2018-19is Rs. 142.42Crore (i.e. Rs.
145.43 Crore – Rs. 3.02
Crore)vis-a-vis Rs. 137.11Crore as approved by the Hon’ble
Commission.This has
resulted in an uncontrollable gain/(loss) of Rs.
(5.31)Crore.
3.17.2. The Hon’bleCommission has been considering deviation in
non-tariff income as
uncontrollable in Tariff Orders during this control period.
Accordingly, MGVCL has
done sharing of gain considering non-tariff income as
uncontrollable as shown in
table below.
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Return on Equity 168.36 139.62 - 28.74
Rs in Crores
ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
Normative ROE 168.36 -
Income Tax (MAT) 17.59 4.44 13.15
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Provision for Tax / Tax Paid 17.59 4.44 - 13.15
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 31
TABLE 34 : TREATMENT OF NON-TARIFF INCOME
3.18. AGGREGATE REVENUE REQUIREMENT FOR FY 2018-19
3.18.1. Based on above, the table below summarises the actual
Aggregate Revenue
Requirement of MGVCL for FY 2018-19as against the value approved
by the Hon’ble
Commission.
TABLE 35 : AGGREGATE REVENUE REQUIREMENT FOR FY 2018-19
3.19. SHARING OF GAINS & LOSSES
3.19.1. MYT Regulations, 2016 specifies the Mechanism for
treatment of Gains and Losses on
account of Uncontrollable and Controllable expenses. The
methodology approved by
the Hon’ble Commission for sharing of such gains/ losses is as
follows.
Mechanism for sharing of gains or losses on account of
Un-controllable factors
Rs in Crores
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)
Gain/(Loss) due
to Controllable
Factor
Gain/(Loss) due
to
Uncontrollable
Factor
1 Total Non-Tariff Income 137.11 142.42 - (5.31)
Sr. No. ParticularsFY 2018-19
(Approved)
FY 2018-19
(Actual)Deviation
1 Cost of Power Purchase 5,328.11 5,350.66 (22.55)
2 Operation & Maintenance Expenses 427.81 544.06
(116.25)
2.1 Employee Cost 396.26 481.30 (85.04)
2.2 Repair & Maintenance 59.83 41.69 18.14
2.3 Administration & General Charges 74.23 79.28 (5.04)
2.4 Other Debits - -
2.5 Extraordinary Items - -
2.6 Net Prior Period Expenses / (Income) - -
2.7 Other Expenses Capitalised (102.51) (58.20) (44.31)
3 Depreciation 304.84 253.49 51.35
4 Interest & Finance Charges 114.17 54.17 60.00
5 Interest on Working Capital - -
6 Provision for Bad Debts - 6.07 (6.07)
7 Sub-Total [1 to 6] 6,174.93 6,208.45 (33.52)
8 Return on Equity 168.36 139.62 28.74
9 Provision for Tax / Tax Paid 17.59 4.44 13.15
10 Total Expenditure (7 to 9) 6,360.89 6,352.51 8.37
11 Less: Non-Tariff Income 137.11 142.42 (5.31)
12 Aggregate Revenue Requirement (10 - 11) 6,223.77 6,210.10
13.67
Rs in Crores
-
Petition for True Up for FY 2018-19
and Tariff for FY 2020-21
Madhya Gujarat Vij Company Limited 32
“23.1 The approved aggregate gain or loss to the Generating
Company or