Determination of Tariff for Generation and Distribution – Order dated 20-06-2013 Tamil Nadu Electricity Regulatory Commission Page 1 TAMIL NADU ELECTRICITY REGULATORY COMMISSION ---------------------------------------------------------------- Determination of Tariff for Generation and Distribution --------------------------------------------- T.P. No. 1 of 2013 Order dated: 20-06-2013 (effective from 21-06-2013)
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Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 1
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
TAMIL NADU ELECTRICITY REGULATORY COMMISSION
(Constituted under section 82 (1) of Electricity Act 2003)
(Central Act 36 of 2003)
PRESENT : Thiru. K.Venugopal – Member
Thiru. S.Nagalsamy – Member
T.P. No. 1 of 2013
Date of Order: 20-06-2013
In the matter of: Determination of Tariff for Generation and Distribution
In exercise of the powers conferred by clauses (a), (c),(d) of sub-section (1) of section 62 and
clause (a) of sub-section(1) of section 86 of the Electricity Act 2003, (Central Act 36 of 2003) and
all other powers hereunto enabling in that behalf and after considering the views of the State
Advisory Committee meeting held on 26.4.2013 and after considering suggestions and objections
received from the public during the Public hearings held on 03.05.2013, 08.05.2013, 10.05.2013,
and 17.05.2013, as per sub-section (3) of section 64 of the said Act, the Tamil Nadu Electricity
Regulatory Commission, hereby, passes this order for Generation and Distribution Tariff.
This Order shall take effect on and from the June 21, 2013.
Sd/- Sd/-
(S. Nagalsamy) (K.Venugopal)
Member Member
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TABLE OF CONTENTS
LIST OF ABBREVIATIONS ................................................................................................................................................... 6
PROCEDURE ADOPTED ......................................................................................................................................... 8 TRANSFER SCHEME ............................................................................................................................................ 10
BRIEF NOTE ON TARIFF FILING AND PUBLIC HEARING ............................................................................................... 13
APPLICABILITY OF ORDER .................................................................................................................................... 15 LAYOUT OF THE ORDER ...................................................................................................................................... 15
APPROACH OF THE ORDER ................................................................................................................................... 16
A2: STAKEHOLDERS’ COMMENTS, TANGEDCO’S REPLY AND COMMISSION’S VIEW ......................................................... 18
1. GENERAL ISSUES ..................................................................................................................................... 18
2. DELAY IN FILING ...................................................................................................................................... 25
4. FUEL COST AND FPAC ............................................................................................................................. 27 5. GENERATION AND POWER PURCHASE ......................................................................................................... 29
13. PEAK HOURS AND TIME SLOTS .................................................................................................................... 55
14. SOLAR PURCHASE OBLIGATION .................................................................................................................. 56
15. RENEWABLE POWER ................................................................................................................................ 56 16. EQUITABLE DISTRIBUTION OF POWER .......................................................................................................... 57
17. IMPACT OF THANE CYCLONE .................................................................................................................... 57 18. SALES ................................................................................................................................................... 58 19. TARIFF RELATED COMMENTS ..................................................................................................................... 58
a. Tariff for HT Industries ....................................................................................................................... 58
b. Tariff for HT Commercial .................................................................................................................... 59
c. Tariff for Agriculture and Hut services ............................................................................................... 59 d. Tariff for Streetlight and Water supply .............................................................................................. 61
e. Tariff for Domestic ............................................................................................................................. 61
f. Tariff for Tiny Industries ..................................................................................................................... 62
g. Tariff for LT Commercial ..................................................................................................................... 63 h. Tariff General ..................................................................................................................................... 63 i. Request for Separate Category .......................................................................................................... 65
20. CONSUMER ISSUES AND QUALITY OF SUPPLY ................................................................................................ 68 21. OBJECTIONS/SUGGESTIONS BY SOUTHERN RAILWAYS .................................................................................... 70
A3: FINAL TRUE-UP FOR FY 2010-11, PROVISIONAL TRUE-UP FOR FY 2011-12 AND ANNUAL PERFORMANCE REVIEW FOR
ENERGY SALES – FY11 AND FY12 ........................................................................................................................ 75
Impact of Wheeling units and Cost – FY 2010-11 and FY 2011-12 .............................................................. 77
ENERGY SALES – FY 2012-13 ............................................................................................................................. 80 ENERGY AVAILABILITY ........................................................................................................................................ 85
Own Generation .......................................................................................................................................... 86
Power Purchase from other sources ............................................................................................................ 94 ENERGY BALANCE AND DISTRIBUTION LOSS .......................................................................................................... 104 FIXED EXPENSES .............................................................................................................................................. 106
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Operation and Maintenance Expenses ...................................................................................................... 106
Segregation of accounts ............................................................................................................................ 119
Capital Expenditure and capitalization ...................................................................................................... 121 Depreciation .............................................................................................................................................. 124
Interest on long term loans and other financing charges .......................................................................... 126
Return on Equity ........................................................................................................................................ 132
Interest on Working Capital ....................................................................................................................... 135 Other Debits............................................................................................................................................... 138
Prior Period Expenses ................................................................................................................................ 140 Demand Side Management ....................................................................................................................... 141 Contribution for Contingency reserves ...................................................................................................... 141
Summary of fixed Cost approved for Distribution function ....................................................................... 142
EXPENSES ON ACCOUNT OF GENERATION ............................................................................................................. 142
Capacity charges for own generating stations .......................................................................................... 143 Variable cost for own generating stations ................................................................................................ 151
POWER PURCHASE FROM OTHER SOURCES ........................................................................................................... 166
Central generating stations ....................................................................................................................... 166
Independent Power Producers ................................................................................................................... 170 Non conventional energy sources and Captive power plants .................................................................... 172 Power purchase from traders and other sources ...................................................................................... 174
Power Grid Corporation of India Limited (PGCIL) Charges ........................................................................ 176 Intrastate Transmission Charges ............................................................................................................... 177
AGGREGATE REVENUE REQUIREMENT AND REVENUE GAP FOR THE FIRST CONTROL PERIOD ........................................... 178
Non Tariff and Other Income ..................................................................................................................... 179
Estimation of additional power purchase cost due to higher T&D loss ..................................................... 179 Revenue from Sale of Power – FY 2010-11 and FY 2011-12 ...................................................................... 181
Revenue from Sale of Power – FY 2012-13 ................................................................................................ 182
Low Power Factor Surcharge ..................................................................................................................... 183 Revenue Gap for the first control period ................................................................................................... 184
A4: AGGREGATE REVENUE REQUIREMENT FOR THE SECOND CONTROL PERIOD – FY 2013-14 TO FY 2015-16 ................ 185
ENERGY SALES ................................................................................................................................................ 185
ENERGY AVAILABILITY ...................................................................................................................................... 192 Own Generation ........................................................................................................................................ 192
Power Purchase from other sources .......................................................................................................... 200 ENERGY BALANCE AND DISTRIBUTION LOSS .......................................................................................................... 210 FIXED EXPENSES .............................................................................................................................................. 212
Operation and Maintenance Expenses ...................................................................................................... 212
Capital Expenditure and capitalization ...................................................................................................... 219
Depreciation .............................................................................................................................................. 223 Interest on long term loans and other financing charges .......................................................................... 226
Return on Equity ........................................................................................................................................ 231
Interest on Working Capital ....................................................................................................................... 232
Other Debits............................................................................................................................................... 235 Contribution for Contingency reserves ...................................................................................................... 236 Summary of fixed Cost approved for Distribution business ....................................................................... 237
EXPENSES ON ACCOUNT OF GENERATION ............................................................................................................. 237 Capacity charges for own generating stations .......................................................................................... 238
Variable cost for own generating stations ................................................................................................ 245
POWER PURCHASE FROM OTHER SOURCES ........................................................................................................... 259
Central generating stations ....................................................................................................................... 259 Independent Power Producers ................................................................................................................... 262
Non conventional energy sources and Captive power plants .................................................................... 264
Power purchase from traders and other sources ...................................................................................... 265 Power Grid Corporation of India Limited (PGCIL) Charges ........................................................................ 267 Intrastate Transmission Charges ............................................................................................................... 267
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Merit order Dispatch ................................................................................................................................. 268
Summary of power purchase costs ............................................................................................................ 273
AGGREGATE REVENUE REQUIREMENT FOR THE SECOND CONTROL PERIOD .................................................................. 281 Non Tariff Income (NTI) and Other Income ............................................................................................... 282
Higher interest expenses due to abnormal Capitalization ......................................................................... 282
A5: ESTIMATION OF REVENUE GAP AND TARIFF DETERMINATION FOR FY 2013-14 ....................................................... 284
Revenue from Sale of Power –FY 2013-14 ................................................................................................. 284
REVENUE GAP AND DETERMINATION OF REGULATORY ASSET ................................................................................... 289
REVENUE ACCOUNT AND AMORTIZATION OF REGULATORY ASSET ............................................................................ 290
VOLTAGE WISE COST TO SERVE, AVERAGE COST OF SUPPLY AND CROSS SUBSIDY REDUCTION......................................... 294 Voltage wise cost to serve for FY 2013-14 ................................................................................................. 294
Voltage wise cost to serve ......................................................................................................................... 304 Average Cost of Supply and Cross subsidy reduction ................................................................................ 306
OPEN ACCESS CHARGES ................................................................................................................................... 308 Wheeling Charges ...................................................................................................................................... 308
FUEL AND POWER PURCHASE COST ADJUSTMENT MECHANISM (FPCA) ...................................................................... 315 TARIFF RATIONALIZATION AND REVISION OF RETAIL SUPPLY TARIFFS ........................................................................... 317
TOD Tariff .................................................................................................................................................. 318
1.21 The lists of participants in each public hearing, is attached as Annexure V to this
Order. The views / comments / objections raised by the participants are discussed in
Chapter A2.
The Electricity Act, 2003, Tariff Policy (TP) and Regulations
1.22 Section-62 of the Act stipulates the guiding principles for determination of Tariff by
the Commission and mandates that the Tariff should ‘progressively reflect cost of
supply of electricity’, ‘reduce cross-subsidy’, ‘safeguard consumer interest’ and
‘recover the cost of electricity in a reasonable manner’.
Section-62 (1) of Act states as under:
“Section-62 (1):
1. The Appropriate Commission shall determine the tariff in accordance with provisions of this Act for
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a. supply of electricity by a generating company to a distribution licensee: Provided that the Appropriate Commission may, in case of shortage of supply of electricity,
fix the minimum and maximum ceiling of tariff for sale or purchase of electricity
in pursuance of an agreement, entered into between a generating company and a
licensee or between licensees, for a period not exceeding one year to ensure
reasonable prices of electricity;
b. transmission of electricity ;
c. wheeling of electricity;
d. retail sale of electricity.
Provided that in case of distribution of electricity in the same area by two or more
distribution licensees, the Appropriate Commission may, for promoting competition
among distribution licensees, fix only maximum ceiling of tariff for retail sale of
electricity.”
Similarly, the objectives stipulated in the Tariff Policy are as under:
“4.0 Objectives of the policy
The objectives of this tariff policy are to:
a. Ensure availability of electricity to consumers at reasonable and competitive rates;
b. Ensure financial viability of the sector and attract investments;
c. Promote transparency, consistency and predictability in regulatory approaches
across jurisdictions and minimise perceptions of regulatory risks;
d. Promote competition, efficiency in operations and improvement in quality of supply.”
1.23 In the State of Tamil Nadu, Tamil Nadu Electricity Regulatory Commission in
exercise of powers vested in it under the Electricity Act, 2003 (Act) passes the Tariff
Orders.
Transfer scheme
1.24 The proposal for Assets Transfer and Employee transfer called as Tamil Nadu
Electricity Board (Reorganization and Reforms) Transfer Scheme 2010 was notified
by the Government of Tamil Nadu vide G.O. (Ms).No.100 Energy (B2) Department
dated 19th Oct 2010 with the effective date of implementation as 1st Nov 2010. Based
on the above notification TNEB has been re-organized from 1st Nov 2010.
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1.25 This Transfer Scheme is provisional and addresses various issues like transfer of
assets, revaluation of assets and partly addresses the issue of accumulated losses. This
Transfer Scheme envisages deployment of staff of the erstwhile TNEB to
TANGEDCO and TANTRANSCO. The Commission in its earlier Tariff Order No. 3
of 2010 dated 31-07-2010 had suggested in line with the National Electricity Policy
(para 5.4.3) and Tariff Policy that the accumulated losses should not be passed on to
the successor entities and financial restructuring has to be resorted to clean up the
Balance Sheet of the successor companies and allow them to start on a clean slate so
that the successor entities could start performing better. The statutory advices that
have been sent to the Government of Tamil Nadu in this regard are appended as
Annexure VI. The Commission has also issued a statutory advice with regard to the
establishment of a separate Generating Company and establishment of four
Distribution Companies so that the performance of these companies can be improved
and efficiently monitored, which will enable proper investments and growth of the
individual company. This document is appended as Annexure VII.
1.26 Subsequently, as per the request of TNEB Limited, the second provisional transfer
scheme was notified by the State Government vide G.O. (Ms.) No.2, Energy (B2)
department, dated 2nd January 2012 with amendment in the restructuring of Balance
Sheet of TNEB for the successor entities i.e. TANGEDCO and TANTRANSCO,
considering the audited balance sheet of TNEB for FY 2009-10 and it had extended
the provisional time for final transfer of assets and liabilities to the successor entities
of erstwhile TNEB up to 31st October 2012. The same has been appended as
Annexure VIII.
1.27 This Transfer Scheme is also provisional and is subject to revision. The transactions
for 7 months i.e. from 1st April 2010 to 30th October, 2010 do not get reflected in the
opening balance sheet of the TANGEDCO as specified in the Transfer Scheme.
Impact of Provisional Balance Sheet:
a) According to Rule 9 (1) of Transfer Scheme, 2010 issued on 19th October 2010, the
transfer of assets and liabilities under the scheme is provisional and will be made final
upon the expiry of 12 months from the effective date of transfer.
b) The date was extended through notification dated 3rd January 2012 for additional 1
year i.e. upto 31st October 2012 for final transfer of assets and liabilities to successor
entities of erstwhile TNEB.
c) As on the date of filing of this petition, TANGEDCO and TANTRANSCO has sought
permission for extension of 6 months i.e. up to 30.04.2013 for final transfer of assets
and liabilities to successor entities of erstwhile TNEB and the same has been
approved by GoTN through G.O.Ms(23) dated 8th March 2013 (Annexure IX).
TANGEDCO and TANTRANSCO have now sought an extension for another six
months i.e. upto 31st October 2013 for final transfer of assets and liabilities to
successor entities of erstwhile TNEB and the same has been addressed to the GoTN
for approval and notification.
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d) In the absence of availability of opening balances based on the final Notification of
GoTN, as per transfer scheme, TANGEDCO has considered the opening balance as
per the provisional transfer scheme notified on 2nd January 2012.
1.28 Hence, Commission is of the view that once the final transfer scheme is notified by
the State Government, the impact due to revision in the opening balance of Fixed
Assets, Loan and Equity may have to be revisited and accounted during the tariff
determination process of the concerned year.
Unbundling of TNEB - 1st November 2010
1.29 TNEB was unbundled on 1.11.2010. Consequently it started functioning as two
separate entities namely TANGEDCO and TANTRANSCO. While TANGEDCO
was made responsible for generation and distribution, TANTRANSCO was made
responsible for transmission activities within the State.
1.30 The Commission in its Tariff Order issued on 31st July 2010 as well as 30th March
2012 had indicated that the accumulated losses upto the date of unbundling will have
to be dealt with in accordance with the National Electricity Policy and Tariff Policy.
The Commission had also clearly indicated that any losses incurred after 1.11.2010
only are being dealt with in various Tariff Orders subsequent to unbundling. In this
connection, the Commission would like to extract the following three paragraphs from
the Tariff Petition filed by TANGEDCO for the financial year 2013-14.
“10.19.6 As per the Tariff Order, the Hon’ble Commission had expressed a view that
the accumulated losses up to the date of unbundling will have to be dealt with in
accordance with Para 5.4.3 of the National Electricity Policy and Tariff Policy. The
provisions of the National Electricity Policy and Tariff Policy envisages that the gap
at the time of unbundling will have to be sorted out by financial restructuring and
support from the Government rather than passing on the accumulated losses to the
successor entities.
10.19.7 In line with the National Tariff Policy, National Electricity policy and as per
the Tariff Order dated 30th March 2012, TANGEDCO have not claimed any relief on
account of accumulated losses prior to unbundling on 1-11-2010 in the given petition.
The similar stand was taken in the earlier petition also.
10.19.8 The proposal of TANGEDCO is to create regulatory assets for the
unrecovered deficit post unbundling only. TANGEDCO would like to submit that even
though it has requested for creation of regulatory asset of the amount which is
unrecovered deficit after claiming part as a tariff hike, all efforts has been undertaken
to reduce such deficit and are under process to carry out Financial Restructuring
Plan under the guidance of State Government.”
1.31 The revenue gaps arising subsequent to unbundling were dealt with as Regulatory
Asset in the Order of the Commission dated 30th March 2012 and is being discussed
again in this Order.
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Brief Note on Tariff Filing and Public Hearing
1.32 In this Order Commission has dealt with important matters such as tariff schedule,
new capacity additions by TANGEDCO, Regulatory Asset Amortisation etc.
1.33 The Commission appreciates the concerns expressed by various stake holders both in
the written comments submitted by them to the Commission as well as the concerns
expressed during the Public Hearings held at Chennai on 3rd May 2013, Tiruchirapalli
on 8th May 2013, at Madurai on 10
th May 2013 and at Coimbatore on 17
th May 2013.
1.34 The Commission directs TANGEDCO to properly monitor the on-going projects so
that they get commissioned without further delay. The projects which were scheduled
to get commissioned last year have not been commissioned so far and have to be
commissioned at the earliest. TANGEDCO should also ensure that the
TANTRANSCO completes all the associated transmission system for evacuation of
power from the generating stations which are getting commissioned during the year
2013-14 so that power generated from the generating stations are transmitted up to the
load centres without any bottle necks. The TANGEDCO should ensure that the power
available at the sub-stations is taken up to the consumption points by way of
appropriate distribution system. All these capacity addition as well as system
strengthening plans will have to be carried out through a well structured business plan
and individual schemes catering to the need of the business plan. All such plans and
schemes shall be submitted in accordance with the Terms and Conditions of Tariff
Regulations 2005, MYT Regulations as well as Licensing Conditions to the
Commission.
1.35 The submission for approval in this regard so far has been unsatisfactory. The
Commission has been addressing the utilities by way of letters as well as by way of
directions. The compliance to such letters and directions will have to be taken
seriously and must be met without fail.
1.36 Further, list of correspondence with TANGEDCO in regard to data gaps and replies
furnished are given in Annexure X.
1.37 Various suggestions and objections that were raised on TANGEDCO’s Petition after
issuance of the Public Notice both in writing as well as during the Public Hearing,
along with TANGEDCO’s reply and the Commission's views have been detailed in
Chapter A2 of this Order.
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1.38 Unmetered supply in the State relates mainly to agriculture and hut consumption.
TANGEDCO has been assuming the AT&C loss level by arriving at the consumption
of agriculture and huts. This issue was also a subject matter of Appeal before the
Hon’ble Appellate Tribunal of Electricity. In its last two orders, the Commission has
estimated agricultural consumption based on the CEA formula. The Commission had
also directed TANGEDCO to furnish sample data of the metered connections for
agricultural supply for FY2012-13. The data so provided was analysed, and it was
observed that the average consumption per HP had increased by 9.2% over that of FY
2011-12. Based on this data the average hours of supply per day amounted to 3.67
hrs/day which is marginally higher than that for FY 2011-12. The Commission
recognizing the fact that FY2012-13 was a year of severe shortage of power along
with being a drought year, took the view that it is improbable that the agricultural
supply hours could have been higher than that of the previous year. Hence the
Commission has assumed the average consumption per HP at the same rate as in
FY2011-12. Based on the same data the energy requirement for agriculture has been
estimated for the second control period. Similarly, estimates have been made for
consumption by huts duly reflecting the number of huts with and without televisions
and also factoring in the consumption on account of distribution of free CFL lamps,
mixers, grinders and fans.
1.39 TANGEDCO in its petition this year has proposed tariff hike for two categories of
consumers namely Hut and Agriculture Category, tariff rates and conditions for all
other categories is proposed to be as per prevailing tariff order dated 30th March
2012.
• Fixed Charges for Tariff Category LT-1B for Hut Consumers to be increased
from Rs. 60/Month/Service to Rs. 125/Month/ Service.
• Fixed Charges for Tariff Category LT-IV for Agriculture Consumers to be
increased from Rs. 1750/HP/Annum to Rs. 2500/HP/Annum.
1.40 The cost of entire consumption on account of huts as well as on account of
agricultural consumption is being borne by the Government of Tamil Nadu by way of
subsidy under Section 65 of the Electricity Act 2003. In this matter, GoTN has given
commitment letter No. 2369/A1/2013 dated 10th June 2013 detailing provision of
tariff subsidy to LT IB and LT IV categories of electricity consumers. GoTN has also
stated that the budget provision for necessary additional expenditure has already been
made in the budget for the year FY 2013-14 and a formal order of GoTN in this
regard will be issued shortly. The commitment letter received from GoTN is placed at
Annexure XI. The GoTN has further clarified vide letter No. 2369/A1/2013 dated
10th June 2013 that the subsidy for other category of consumers as provided in FY
2012-13 would continue for FY 2013-14 and necessary G.O will be issued separately.
This letter has been appended as Annexure XII.
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Applicability of Order
1.41 This Order will come into effect from 21-06-2013. The Generation and Retail Tariff
contained in this order will be valid till 31-03-2014. TANGEDCO shall file necessary
petition in accordance with the Regulations in a timely manner to enable the
Commission to pass the next Tariff Order in time.
Layout of the Order
1.42 This Order is organised into seven Chapters:
• Chapter A1 provides details of the tariff setting process and the approach of
the Order;
• Chapter A2 provides a brief of the Public Hearing process, including the
details of comments of various stakeholders, the Petitioner’s response and
views of the Commission thereon;
• Chapter A3 provide details/ analysis of the final true up for FY 2010-11,
provisional true-up for FY 2011-12 and annual performance review for FY
2012-13;
• Chapter A4 provides analysis of the petition for determination of the
Aggregate Revenue Requirement for FY 2013-14 to FY 2015-16;
• Chapter A5 provides details of determination of Open access charges and
Retail Supply Tariff for all consumer categories, and the approach adopted by
the Commission in determining the tariff;
• Chapter A6 gives the tariff schedule applicable for the consumers; and
• Chapter A7 provides details of the Directives of the Commission for
compliance by TANGEDCO.
1.43 The Order contains the following Annexure, which are an integral part of the Tariff
Order.
• Annexure I – Copies of letters written to TANGEDCO directing them to file
the Tariff Petition for FY 2013-14
• Annexure II – Copy of the admission order
• Annexure III – The list of participants at the State Advisory Committee
meeting.
• Annexure IV – The list of stakeholders who have submitted
objections/suggestions/views regarding the petition in response to the public
notice.
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• Annexure V – The lists of participants at each public hearing.
• Annexure VI – Copy of the statutory advices given by the Commission sent to
the Government of Tamil Nadu.
• Annexure VII – Copy of statutory advice of the Commission regarding the
unbundling of TANGEDCO into a separate Generating Company and four
Distribution Companies.
• Annexure VIII – Copy of second provisional transfer scheme as notified by
the State Government vide G.O. (Ms.) No.2, Energy (B2) department, dated
2nd January 2012.
• Annexure IX – Copy of extension for finalization of transfer scheme upto 30th
April 2013 notified by the State Government vide G.O.Ms(23) dated 8th March
2013
• Annexure X – List of letters of TANGEDCO with regard to data gaps and
replies.
• Annexure XI – Copy of Commitment letter received from GoTN for providing
the tariff subsidy to Agriculture and Hut consumers.
• Annexure XII – Copy of Letter received from GoTN extending the subsidy for
other category consumers in FY 2013-14.
• Annexure XIII – Copy of Letter received from GoTN regarding amortization
of regulatory asset.
Approach of the order
1.44 Commission in its last order had stated that the Capital Account and the Revenue
Account has not been maintained separately in the course of operation of TNEB and
an attempt is being made in this order to segregate the same to bring financial
discipline in the successor entities.
The Commission has adopted the Multi Year Tariff (MYT) approach for tariff
determination since its tariff order in FY 2010-11. The first control period of 3 years
was upto FY 2012-13, during which time the Commission has issued two tariff orders
during FY 2010-11 and FY 2012-13. The second control period spanning 3 years
starts this year i.e. in FY 2013-14 and is upto FY 2015-16.
1.45 The extract from the relevant portion of the TNERC (Terms and Conditions for
Determination of Tariff for Intra state Transmission / Distribution of Electricity under
MYT Framework) Regulations, 2009 regarding control period is extracted below.
“3). Multi year Tariff framework
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i) Control Period
The control period under the MYT framework shall be for a duration of 3 years. The
year preceding the first year of the control period shall be the base year.”
1.46 The broad approach adopted in this order is given below:
• The Commission has taken into consideration the second provisional transfer
scheme as notified by the State Government vide G.O. (Ms.) No.2, Energy
(B2) department, dated 2nd January 2012 with amendment in the restructuring
of Balance Sheet of TNEB for the successor entities i.e. TANGEDCO and
TANTRANSCO.
• The Commission has referred to the audited accounts of TANGEDCO for FY
2010-11 (5 months) for truing up the expenses of the utility. The Commission
has undertaken a review of the various performance parameters as well as the
controllable cost factors. Based on the assessment the Commission have
arrived at the allowable ARR and revenue recovered by the utility. Also,
Commission for the comparison purposes arrived at the approved figures for
FY 2010-11 (5 months) in its last order on a pro-rata basis.
• The same exercise has been undertaken for the provisional true-up for FY
2011-12 based on the provisional accounts and the ARR and revenue
recovered for the year have been arrived at.
• For the FY 2012-13, Commission sought actual figures for the year from
TANGEDCO. Based on the information so obtained and based on provisions
of the Tariff regulation as well as trend in the approved costs in the previous
two years, the ARR and revenue recovered have been arrived at.
• For the Second control period between FY 2013-14 to FY 2015-16 the
Commission has extended the rationale adopted for allowing/ disallowing
various controllable components of the ARR for the first control period, to
project the ARR for the second control period and determine tariff for FY
2013-14.
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A2: STAKEHOLDERS’ COMMENTS, TANGEDCO’S REPLY AND
COMMISSION’S VIEW
2.1 The following section summarizes the views/ objections/ suggestions given by
stakeholders in writing as well as at the public hearings. TANGEDCO’s reply to these
views/ objections/ suggestions and the Commission’s view on the same.
1. General Issues
Stakeholder Comments
2.2 Commission is requested to appoint a consultant to study the entire operations and
finances of TANGEDCO to identify improvements that are needed to comply with the
Act & various policies and rules made there under.
2.3 Commission must direct Transfer of Assets & Liabilities to be completed by end of
June 2013 and Audited Accounts as on 31.3.2013 prepared and published by
31.08.2013
2.4 The impact of FRP on the tariff is to be spelt out and the said agreement must be
publicised.
2.5 Commission to engage a Cost Accountant to make inter firm comparisons. Request to
consider Pan India and Abroad firms for costs of TANGEDCO, fix benchmark cost
and performance standards.
2.6 Financial Accounting, Cost Accounting Code & systems of TANGEDCO should be
published so that it helps make meaningful comments on the petition.
2.7 Commission must reiterate that Generation and Distribution functions of
TANGEDCO should be separate. Unless this is done the costs of generation and
distribution cannot be accurately ascertained.
2.8 Commission to write to GoTN to drop Electricity tax as it distorts the tariff system.
2.9 Directives of Commission are not being adhered by TANGEDCO. TNERC is
requested to monitor the directives individually and intensively and make
TANGEDCO fall under the groove ‘measure, monitor and manage’ and understand
that such directives are only for the performance improvements. Commission to direct
TANGEDCO to give a time bound plan to implement directives of the Commission
over the years. The progress report should be publicized at the end of each calendar
quarter.
2.10 Power injected by OA consumers into the Grid to be deducted from their recorded
consumption when there is load shedding at the consumer end
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2.11 From the balance sheet of TANGEDCO it is noted that the current liabilities are more
than the current assets resulting in management of working capital requirement with
the current liabilities in which case inclusion of interest on working capital for the
total current assets is not correct and fair as no funds was actually deployed.
2.12 TNERC must also take strong action to curb tendency of non-performance both in the
technical and financial fronts, if necessary by levying a fine say Rs.500.00 millions
from TANGEDCO. There is precedence with MERC on this score, to bring about a
disciplined approach. TANGEDCO is trying to play the same game as it has done a
couple of years back – not asking for a tariff revision and requesting creation of
“Regulatory Assets”. TNERC may well earmark this fine from the revenues of 2013-
14 for certain specific purpose of improving normative parameters, which have
exceeded beyond limits.
2.13 TANGEDCO should have consumer representation within its organisation.
2.14 Commission to make a provision for instituting comprehensive and integrated
Information Management system within TANGEDCO
2.15 Commission to have a consumer advocacy cell based on KERC model.
2.16 Benefits of financial restructuring plan have not been furnished in the petition.
2.17 Tamil version of the Tariff Petition shall be made available.
2.18 Uninterrupted power supply shall be given in the night period.
2.19 TANGEDCO shall aggressively implement the demand side management.
2.20 Energy conservation shall be encouraged by using modern equipments. Renovation
and modernization shall be undertaken in distribution lines.
2.21 Uninterrupted power supply shall be given to the farmers.
2.22 This public hearing should be conducted in two ways by the Commission.
• To assess the performance and the ways to identify how to provide quality service
by the TANGEDCO to public.
• To increase the tariff.
2.23 White paper statement should be released about the TANGEDCO’s accumulated loss.
2.24 White paper statement should be released about the future generation plan and how to
mitigate this loss in future.
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June 2013
2.25 Privatization of distribution particularly distribution in the city is mandatory as per the
direction dated 05-10-2012 issued by the Ministry of Power. It seems that
restructuring plan for TANGEDCO’s accumulated loss has been announced and the
Government of Tamil Nadu has accepted the plan. This plan should be under
consideration.
2.26 Commission to pass an order to keep Deemed Demand concept in respect of third
party power.
2.27 Commission to insist on TANGEDCO to publicize the facts of agreement between
Government and TANGEDCO as far as restructuring the losses are concerned
2.28 Identify ways to compensate the loss of TANGEDCO, rather than transferring the
same to Government.
2.29 Vacancies of Wiremen and other subordinate employees of TANGEDCO should be
filled in all the TANGEDCO offices to provide good service to the public.
2.30 Smart meter system which is now used in foreign countries should be now
implemented in Tamil Nadu. The consumers who consume power during peak hour
should be charged more.
2.31 It is stated that power can be produced at a cost of Rs.2.14. However, high cost
power at the rate of Rs.17 to 18 is purchased from the private parties even after
restrictions by the Commission. The power purchase from high cost power stations
has been supplied to the MNC’s at a lower cost.
2.32 Uninterrupted power supply should be given to the agricultural services as given in
SEZ and in Chennai. All power generated at Neyveli, Kudankulam etc. to be given to
Agriculture in Tamil Nadu.
2.33 Uninterrupted power supply given to the MNCs shall be stopped.
2.34 Freebies were announced by the Government without considering the power shortage
and without proper planning. The Commission should have pointed out the issue.
2.35 LED Street lighting is important in system T & D loss reduction. Recognize clean
technologies like LED lighting and consider a preferential tariff
2.36 For energy conservation purpose LED lights may be fixed in all the streets of the
Villages, Towns, and cities instead of using tube lights.
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June 2013
TANGEDCO’s Reply
Appointment of consultant
2.37 The accounts of TANGEDCO are being audited by a firm of qualified chartered
accountants as per the requirements of the companies Act 1956.In addition to the
above, being a government company the functioning of TANGEDCO is also subject
to commercial and expenditure audit by the Accountant General. Moreover, the
Hon’ble TNERC is vetting the tariff petition filed by TANGEDCO by appointing a
reputed consultancy firm. Hence, the necessity to appoint a consultant to go into the
entire operations and finances of TANGEDCO does not arise.
Final Transfer Scheme
2.38 The Board has approved the proposal to seek extension of time by another six month
upto 30th October 2013 for final transfer of assets and liabilities to the successor
entities of erstwhile TNEB and the proposal is under the consideration of Government
of Tamil Nadu. Steps are being taken to complete the audit of annual accounts for the
FY 2012-13 and to place the same before the AGM of TANGEDCO on or before
30.09.2013 which is the time limit prescribed under the provisions of the companies
Act 1956.
Compliance of Directives
2.39 The status of progress on directives issued by Hon’ble TNERC in tariff order dated
30th March 2012 has been furnished in the tariff petition filed before the Hon’ble
TNERC on 19th February 2013. The details of these directives are available on the
TNERC website.
Financial Restructuring Plan
2.40 At the time of submission of tariff petition to the Hon’ble TNERC, the FRP process
was in its initial stage and hence the impact of the same could not be taken into
consideration in the tariff petition. The given details of the FRP are still being worked
out and if the same is finalised before the issuance of Tariff Order it will be submitted
to the Hon’ble TNERC for its consideration.
Cost Accounting system of TANGEDCO
2.41 Each generation and distribution utilities in India have their own power source owing
to their geographical location. Hence, comparing the cost of TANGEDCO with other
utilities may not by itself give the desired results. However, steps are being taken to
conduct the cost audit by a qualified cost Accountant as per the requirements of the
Companies Act,1956.
Comparison with Other Utilities
2.42 The contention of the stake holder that the cost needs to be compared with other state
requires consideration of the following issues:
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June 2013
(a) The difference in power generation mix and consumer mix
(b) Power purchase expenses considering the diversity in the sources.
(c) Geographical diversity in the state considering the key point that TANGEDCO is supplying electricity to wide spread area of Tamil Nadu as compared to
other states of India.
(d) Differential policies adopted by the State Government in relation to industrial,
economic and agricultural sector.
(e) Considering the above parameters the comparison should be made on common
parameters.
Bifurcation of Generation and Distribution Function
2.43 These are the suggestion from the stake holders to the Hon’ble Commission.
Electricity Tax
2.44 TANGEDCO submits that the issue relating to dropping of electricity tax does not
come within the purview of tariff revision exercise. It is a policy decision to be taken
by the Government of Tamil Nadu.
OA consumption to be deducted from recorded consumption
2.45 TANGEDCO submits that there is no such provision under the Act as well as in the
Regulations notified by the Commission.
Levy of Demand Charges
2.46 The demand charges are intended to cover the fixed cost of TANGEDCO including
interest, depreciation employee cost, repair and maintenance cost etc., and hence even
if there is no power supply the demand charges would be levied. The recovery of
fixed charges does not have any relevance to the hours of supply or the quantum of
energy supplied.
2.47 The Hon’ble APTEL in appeal No:257 of 2012 preferred by The Southern India Mills
Association (SIMA), Coimbatore against the Tariff Order No:1 of 2012
dated:30.03.2012 issued by the Hon’ble TNERC has upheld the order of TNERC
with regard to levy of demand charges.
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June 2013
Negative balance in Shareholder’s funds
2.48 As per the Tariff Order, the Hon’ble Commission had expressed a view that the
accumulated losses up to the date of unbundling will have to be dealt with in
accordance with Para 5.4.3 of the National Electricity Policy and Tariff Policy. The
provisions of the National Electricity Policy and Tariff Policy envisages that the gap
at the time of unbundling will have to be sorted out by financial restructuring and
support from the Government rather than passing on the accumulated losses to the
successor entities.
2.49 In line with the Tariff Policy, National Electricity policy and as per the Tariff Order
dated 30th March 2012, TANGEDCO have not claimed any relief on account of
accumulated losses prior to unbundling on 1-11-2010 in the given petition.
Supply of power to MNC’s
2.50 There is no concession in tariff for the MNCs. Only uninterrupted power supply with
the tariff on par with other consumers is given.
Energy Efficiency Measures
2.51 TANGEDCO is taking steps to replace incandescent bulbs with CFLs in Villupuram
and Kanyakumari districts. The same will be duplicated in other districts. Out of the
cost of Rs 60/- per CFL, TANGEDCO will pay Rs 45/- and consumer will pay Rs
15/-.
Commission’s View
2.52 The Commission appreciates the concerns expressed by various stake holders both in
the written comments submitted by them to the Commission as well as the concerns
expressed during the Public Hearings held at Chennai on 3rd May 2013, Tiruchirapalli
on 8th May 2013, Madurai on 10
th May 2013 and Coimbatore on 17
th May 2013.
Transfer of Assets & Liabilities
2.53 The Transfer of Assets & Liabilities was to be completed by 30th April 2013. But
TNEB has sought for another 6 months extension from the Govt. The Commission is
of the opinion that this has to be completed at the earliest. The Commission directed
the utility to complete it as soon as possible through GoTN.
Financial Restructuring Plan
2.54 Commission would like to clarify that this issue can be examined only when the final
FRP scheme is submitted to the Commission.
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June 2013
Segregation of Generation and Distribution business
2.55 Opinion of Commission on segregation of generation and distribution function was
conveyed as statutory advice on 27th October 2010 which is annexed in this tariff
order.
Tamil Version of Petition must also be available
2.56 Commission has already given a direction on this matter to TANGEDCO for making
the Tamil version of the Petition available.
Impact of freebies doled out by Government
2.57 Commission would like to reiterate that it functions within the powers derived from
the Electricity-Act 2003 and cannot interfere in the policies of GoTN
Energy Efficiency and Demand Side Management
2.58 Demand Side Management is an effective tool to meet the demand – supply position
in the short term. Being a cheaper option, it helps in meeting the demand as compared
to capacity addition. Also, it enables to reduce the carbon emission and defers the
investment to subsequent years.
2.59 It is necessary to create awareness among users for promoting Energy Conservation
and Demand Side Management.
2.60 TANGEDCO should motivate the domestic and agriculture sector to adopt DSM
measures. Awareness has to be created for using Star Labelled Appliances which may
cost more but would pay back by way of energy saving.
2.61 To facilitate DSM measures in the state, the Commission has notified the DSM
regulation on 26th February 2013. TANGEDCO is to submit relevant schemes for
implementing DSM and Energy Efficiency schemes to the Commission as specified
in the Regulation.
2.62 Use of CFLs should be encouraged with adequate arrangement for disposal of
unserviceable CFLs.
Restriction & Control
2.63 Various issues raised by stakeholders relating to Supply Code Regulations and R&C
Orders do not fall under the purview of present exercise of Tariff determination.
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June 2013
Working Capital
2.64 Current liabilities are due to non payment of dues by TANGEDCO. However
Commission cannot assume that TANGEDCO will default and accordingly not allow
for any working capital. For the purpose of this order Commission is allowing
working capital based on norms laid out after considering available consumer security
deposits.
Tax Exemption
2.65 On suggestions regarding waiving off electricity tax during the period of R&C
measures, the Commission would like to specify that Electricity Generation Tax or
Electricity Consumption Tax is in the domain of Government of Tamil Nadu.
Quality of Supply
2.66 As regards uninterrupted power supply, the Commission directs TANGEDCO to
maintain quality of supply as specified in Tamil Nadu Electricity Distribution
Standards of Performance Regulations, 2004 as amended in which it specifies that
“3. Quality of Service
Quality of service means providing uninterrupted, reliable electric supply at
stipulated voltage and frequency, which will be the end result of its planning,
designing of network, operation and service management to ensure stability in supply
and prompt compliance of consumers’ complaints on metering and billing. The supply
with frequent power failure, fuse of calls, voltage fluctuations will not ensure
continuity in supply. These factors determine the degree of satisfaction of the
consumers.”
2.67 Also, the Commission feels that if the capacity addition would be on time, as
discussed in later chapters, the power supply situation should improve in the second
control period leading to improved supply hours.
2.68 TANGEDCO is also required to take all necessary steps to ensure quality of service as
per regulations.
2. Delay in filing
Stakeholder Comments
2.69 The inordinate delay on the part of TANGEDCO had been condoned by the
Commission. We regret that this should not have been done and instead the
Commission could have suo motu revised the tariff. There is precedence of this type
in one of the orders of West Bengal Electricity Regulatory Commission.
2.70 The tariff petition which had to be filed in November 2012, has been filed only in
February 2013. The reason for the delay shall be informed to the public.
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June 2013
TANGEDCO’s Reply
2.71 The delay in filing of the tariff petition has been caused mainly because of the
following reasons.
• The Financial Restructuring Plan (FRP) which was notified by the
Government of India on 5th October, 2012 was in the process of being
finalized with multitude of meetings with various bankers during the months
of October, November and December of 2012.
• Thereafter the audit of accounts for the year FY 2011-12 was under process
and was completed by 31st January 2013.
Commission’s View
2.72 Commission had been monitoring the filing of the petition vis-à-vis the due date of
filing it i.e. 30th November 2012. The commission had through two letters to
TANGEDCO, called for immediate filing of the ARR and tariff petition. The petition
was eventually filed on 19th February 2013. After hearing the submissions made by
TANGEDCO, the Commission condoned the delay in filing this petition. The
Commission has directed TANGEDCO to file its petition for ARR and tariff for the
next year by the appointed date.
3. O&M Expenses
Stakeholder Comments
2.73 Inter-firm comparison of costs especially O & M costs for TANGEDCO should be
done.
2.74 In the O & M expenses, the employee cost is projected to increase by 50% (Table 83).
The norm for the industry needs to be checked.
2.75 The Government of Tamil Nadu has accepted the loss of TANGEDCO of about
Rs.25,512 Crores as on 31.11.2010. But the Government has not agreed to take the
pension liability of the employees and termed it as employee expenses. If it is
considered as employee expenses the same can be passed on to the tariff which may
affect the public. Therefore, the Government shall take the pension contribution as a
liability. The Commission shall direct the TANGEDCO to implement the directions
given in 2010.
TANGEDCO’s Reply
2.76 The employee expenses submitted in the tariff petition for FY 2012-13 is based on the
actual expenses incurred. The Hon’ble Commission in its last tariff order had
approved the employee cost for TANGEDCO based on the apportioning of expenses
between TANGEDCO and TANTRANSCO. The industry norms cannot be compared
due to the geographical diversity in the state and for the reasons that electricity is
being supplied to widespread areas within the state of Tamil Nadu.
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Commission’s View
2.77 Commission is guided by following regulations
2.78 Regulation-25 of TNERC Tariff Regulations:
“25. Operation and Maintenance Expenses
The operation and maintenance expenses shall be derived on the basis of actual
operation and maintenance expenses for the past five years previous to current year
based on the audited Annual Accounts excluding abnormal operation and
maintenance expenses, if any, after prudence check by the Commission. The
Commission may, if considered necessary engage Consultant / Auditors in the process
of prudence check for correctness.
The average of such normative operation and maintenance expenses after prudence
check shall be escalated at the rate of 4% per annum to arrive at operation and
maintenance expenses for current year i.e. base year and ensuing year.
The base operation and maintenance expenses so determined shall be escalated
further at the rate of 4% per annum to arrive at permissible operation and
maintenance expenses for the relevant years of tariff period.
…”
2.79 However as submitted by TANGEDCO, Commission is of the view that it is not
appropriate to project the expenses for the next control period based on the actual
expenses incurred prior to unbundling of power utilities. Hence in this order
Commission projects the O&M expenses for next control period based on the audited
accounts for FY 2010-11 and provisional accounts for FY 2011-12.
2.80 Commission acknowledges the usefulness of benchmarking of O&M expenses and
comparison with other utilities, however considering the fact that the utilities in the
state are still in transition such comparison will not be of much help in the early stages
of restructuring.
4. Fuel Cost and FPAC
Stakeholder Comments
2.81 Increased use of oil by TANGEDCO is increasing the fuel cost and TNERC needs to
specifically pay attention. TANGEDCO should be asked to justify the fuel
consumption rates and costs by comparing with those of other similarly placed
utilities in India.
2.82 TANGEDCO should have submitted the Petition for Fuel Price Adjustment Charges
(FPCA). It is said that it has been granted an extension of time of four months. It has
not been complied with. The Commission has asked for its readiness to submit the
same.
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June 2013
2.83 TANGEDCO to justify the fuel consumption rates vis-a-vis other utilities in India and
compare costs of its coal thermal plants vis-a-vis Central Generating stations.
TANGEDCO’s Reply
2.84 The claim for FPCA will be filed once the power situation in the state improves and
R&C measures are lifted.
Commission’s View
2.85 Adjusting FPAC charges in the middle of the year has been allowed by the Electricity
Act 2003 under section 62 sub section 4, which states:
“No tariff or part of any tariff may ordinarily be amended, more frequently than once
in any financial year, except in respect of any changes expressly permitted under the
terms of any fuel surcharge formula as may be specified.”
2.86 Also, the APTEL in its Order O.P. 1 of 2011 dated 11-11-2011 under para 65 (vi) has
stated that
“(vi) Fuel and Power Purchase cost is a major expense of the distribution Company
which is uncontrollable. Every State Commission must have in place a mechanism for
Fuel and Power Purchase cost in terms of Section 62 (4) of the Act. The Fuel and
Power Purchase cost adjustment should preferably be on monthly basis on the lines of
the Central Commission’s Regulations for the generating companies but in no case
exceeding a quarter. Any State Commission which does not already have such
formula/mechanism in place must within 6 months of the date of this order must put in
place such formula/ mechanism.”
2.87 Hence in line with the in principle approval of the implementation of the FPCA
mechanism in the State, the Commission has decided not to allow the 4% escalation
in fuel price as sought for by TANGEDCO in its petition for the current MYT period.
TANGEDCO shall file quarterly FPCA petitions to the Commission to recover the
actual cost of fuel incurred and the actual cost of power purchase, if the same are in
variance from the figures approved in this Tariff Order.
2.88 Therefore, the Commission clarifies that FPAC exercise is important and should be
implemented and it is irrespective of annual tariff increase.
2.89 TANGEDCO was allowed to withdraw FPCA Petition for filing a corrected Petition.
However, they did not do it and filed the Tariff Petition beyond the due-date. After
the issue of this order, TANGEDCO shall file FPCA Petition every quarter as no
escalation has been considered for future power purchase and fuel price adjustment.
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June 2013
5. Generation and Power Purchase
Stakeholder Comments
2.90 TANGEDCO should explain how NLC’s 600 MW station of the same vintage as
Ennore is functioning well. In the context TANGEDCO should refer the coal handling
issues to NTPC. Cost from TANGEDCO plants is higher when compared to CGS i.e.
the cost of power purchase from TANGEDCO’s own power is Rs. 4.36 p.u where as
cost of power purchase from Central Generating stations is only Rs. 3.01 p.u. This
shows that TANGEDCO’s fuel management is inefficient.
2.91 TANGEDCO should be asked to give cost comparison of its coal based generating
stations with those of CGS to justify higher prices.
2.92 In estimating the Capital Costs, capitalization of the new plants shows great
divergence (Table 63). MTPS III has a cost of about Rs 6 Crores per MW while
NCTPS Stage II has a cost of Rs 4.85 Crores. The difference needs to be explained.
2.93 Power Generation in TANGEDCO’s own plants like Valathur and Mettur is getting
delayed. Action shall be taken to speed up the works.
2.94 Delay in starting generation in existing power generation stations like Mettur,
Valuthur, Kuthalam etc. should be explained.
2.95 TANGEDCO to present the actual conditions of Mettur 600 MW plant before the
public so as to know the status of money spent
2.96 There is no need for private power generation. Government should make
arrangements for own generation.
2.97 Power cut has been reduced due to 3000 MW generated by the Wind Mills. But wind
mills are not permitted to generate and due to that about 1000 MW is wasted. On the
other hand 40% power cut still exists. High frequency is stated to be the reason for not
permitting the wind mills to generate. Action should be taken to utilize the entire
power generated by the wind mills during May to September.
2.98 It has been announced that Sandynallah Hydro Electric Project will be completed in
10 years to meet the variations in the wind generation. The project shall be completed
within a short span of time.
2.99 The power generated by the wind mills is consumed by various consumers in different
districts. The wind energy has to be adjusted for peak hour, non peak hour and
normal hours. It is doubtful whether the accounting of wind energy is done properly
by the TANGEDCO. Since it is not possible to take readings in the large number of
wind mills, readings furnished by the consumers may be used for billing resulting in
huge loss to the TANGEDCO. The Commission shall form rules and regulations for
adjustment of generation from wind mills.
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2.100 Commission in the last tariff order directed TANGEDCO not to purchase power from
the four private parties GMR, PPN, Samalpatti and Madurai power corporation. But
TANGEDCO has purchased power from the four private parties. It may be clarified
whether the Commission is functioning as a spectator or regulator. Power was
purchased at a higher cost.
2.101 Automatic meter reading facility shall be provided in the wind mills to properly
account the wind generation.
2.102 The entire power i.e. 100% share from the Kudankulam, Kalpakkam and Neyveli has
to be allotted to Tamil Nadu. 2 Reactors are ready in Kudankulam and the total
capacity of 2000 MW of power can be generated. But only 950 MW was allotted for
Tamil Nadu.
2.103 New projects should be taken up to increase own generation and provide
uninterrupted power supply instead of purchasing costly power from private players.
2.104 In Tamil Nadu quality of coal is very bad. Purchasing this kind of bad quality coal is
the only the reason for less generation. This should be avoided.
TANGEDCO’s Reply
2.105 Till 2006, 2007 there was no shortage of power as there was no gap between the demand and supply. After 2006, 2007 the demand increased due to economic
development and boom in the IT sector. Power plants cannot be installed within a
few months. For installing a 1 MW plant, it costs Rs 5 to 5.5 Crores/MW and takes
minimum of 4 years after work is started. Therefore, plans were drawn to install
power plants. The NTPC Vallur plant and North Chennai plant will come up by next
month. The NLC JV plant of 1000 MW is underway and will come in by end of the
year. By then, the demand will be equal to supply.
2.106 In the year 2012-2013, own thermal power stations performed well. Due to failure of
monsoon, performance of hydro power stations were affected badly. Kuttalam gas
station has been put into service after attending the major repair work.
2.107 The coal prices in domestic and international market have witnessed hike during the
past and accordingly projection have been made in the tariff petition. The details of
fuel prices and cost have been submitted in the tariff petition.
2.108 About 4000 MW will be available as additional generation, power cut problem may
be resolved gradually and will be lifted by December 2013.
2.109 MTPS and NCTPS are allotted on the basis of EPC contract. The tenders were
selected on the basis of international competitive bidding. The foreign components
involved in MTPS (Rs.1914 Crores) is much more than the foreign component in
NCTPS projects (370.95 Crores) and hence, the cost per MW is higher.
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June 2013
2.110 Power purchase from the IPPs is resorted to only to meet the demand especially
during summer and examination time. Even this got approved from TNERC
subsequently.
Commission’s View
2.111 The Central Generating Stations viz. Kudankulam, Kalpakkam and NLC will not
come under the jurisdiction of the Tamil Nadu Regulatory Commission or under the
State Government. Hence, the views submitted in relation to these stations are not
within the purview of this State Commission.
2.112 The Commission directs the TANGEDCO to properly monitor the on- going projects
so that they are commissioned without further delay.
2.113 The TANGEDCO should also ensure that the TANTRANSCO completes all the
associated transmission system for evacuation of power from the generating stations
which are getting commissioned during the second control period, so that power
generated from the generating stations are transmitted up to the Load Centers without
any bottle necks. Necessary upgradation of the distribution system shall also be done
by TANGEDCO for effectively carrying power to the consumers
2.114 TANGEDCO has not provided necessary information for approving capital cost.
Commission is provisionally accepting the TANGEDCO submission.
2.115 As regards the generation cost of new capacity addition, the Commission directed
TANGEDCO to file separate petition for the approval of capital cost and tariff
determination of new power plants. However, the Commission in this Tariff Order for
the purpose of power purchase has provisionally considered the fixed and variable
charges for new power plants.
2.116 Commission’s Open Access Regulation 2005 specifies that open access customer
shall provide metering arrangement as per the applicable CEA regulation and meters
should have facility to communicate the readings to SLDC or as may be specified by
the Commission.
2.117 Cost comparison between ISGS and TANGEDCO generating stations has to be on
like to like basis. While most of the CGS are pit ahead stations, the generating stations
of TANGEDCO are load centre stations.
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June 2013
6. AT&C Losses
Stakeholder Comments
2.118 TANGEDCO’s argument in 3.29.8 in petition related to lesser computed Agricultural
consumption and revision of T&D loss trajectory is flawed. Neither a representative
study was done for establishing norms for agricultural consumption per HP of
connected load, nor any metering has been done to assess and a thumb rule was
adopted so far for this purpose. No serious study has been done by TANGEDCO to
identify the 11 KV/22 KV feeders and take corrective action. In this context
Commission should allow T & D loss at 18% as claimed by TANGEDCO in the past.
2.119 The average purchase cost of power for TANGEDCO is Rs.3.77 per unit inclusive of wheeling cost of 21.98 paisa per unit. The average tariff realized per unit from HT I
A Category consumers (Industries) is Rs 6.95 and that of HT III Category of
consumers (Commercial) is Rs 7.98. A huge burden is put on them destroying their
competitiveness and economic efficiency.
2.120 Committee should be formed to reduce the loss of TANGEDCO and limit should be
fixed in respect to the loss.
2.121 Efforts should be taken to reduce the T&D loss every year.
2.122 Misuse of tariff with dishonest intention is booked under theft of energy. Misuse of
energy shall be booked under section 126 and bypassing the meters shall be booked
under theft of energy.
2.123 Electricity theft should be curtailed.
2.124 Agricultural related activities like nursery is booked under theft. The Electricity Board is booking the farmers under theft and even when represented to the District
Collector, the District Collector was also not in a position to help.
2.125 Loss incurred by TANGEDCO is due to theft of electricity and not due to free electricity provided to the farmers.
TANGEDCO’s Reply
2.126 The agricultural consumption submitted in the tariff petition is based on 5% sample
meter reading as per the methodology adopted by the Hon’ble TNERC in its last tariff
order dated 30th March 2012.
2.127 Theft of power is least in Tamil Nadu. To reduce the theft of energy, at Regional level
17 enforcement squads under the control of the Inspector General of Police (IGP) is
operating and a Flying squad under the control of Chairman, TANGEDCO is
functioning. Squad comprising of Ex-servicemen are being utilized to detect the
power theft in the state.
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June 2013
2.128 Distribution loss cannot be avoided which is around 20% now. To reduce the
distribution loss improvement work such as establishment of substation and
strengthening of lines are being taken.
Commission’s View
2.129 The Commission initiated suo-motu proceedings against TANGEDCO for non
compliance in the matter of T&D loss determination as directed by it and the Hon’ble
APTEL. The Commission in the absence of scientific study for loss determination,
has fixed the T&D loss level at 16.4% for FY 2013-14 and has clarified that it shall
assume loss percentage at 16% and 15.6% for FY 2014-15 and FY 2015-16
respectively, if necessary scientific study is not done by TANGEDCO.
2.130 The Commission would also like to clarify that agriculture related and allied activities
viz. growing vegetables, fish culture, and poultry farming are recognized under
agriculture and they are permitted to use water pumped from wells located close to the
farmhouse as per the last tariff order and it will not amount to theft.
2.131 Licensee should note that wrong theft booking should be avoided.
7. Interest Expenses
Stakeholder Comments
2.132 Interest on borrowing from various financial institutions is on higher rate. The
payment of interest should be at nominal rate. No interest shall be allowed on
borrowings made to make up for losses. No return on shareholders’ funds should be
provided.
2.133 In providing interest on current assets, receivables at 2 months sale value is assumed.
This is over stated. From the Balance Sheet of TANGEDCO it can be ascertained that
the consumer’s deposits are more than cover the accounts receivables.
2.134 The High Tension consumers are provided only 7 days from the date of the bill for
payment of the consumption charges for the previous month. Further they are
required to keep a deposit equivalent to two month’s consumption charges. Therefore
the interest on the HT receivables should be totally disallowed.
2.135 In case of LT, domestic consumers the bill is made for once in two months. Which
means on the average there is an outstanding of one month. Hence for LT
Receivables, should be estimated on one month and interest should be allowed on that
quantum alone.
2.136 For inventory, stock of coal is assumed at 2 months value of consumption, but
actually the generating stations are maintaining fuel stock for not more than 10 days
consumption. Hence no interest need to be allowed.
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Tamil Nadu Electricity Regulatory Commission Page 34
June 2013
TANGEDCO’s Reply
2.137 The interest on the loan has been calculated considering the loans allocated to TANGEDCO at the time of segregation of erstwhile TNEB and based on such
notified transfer scheme, it is the obligation of TANGEDCO to service such debts and
repay them along with the interest. Hence, TANGEDCO has claimed the interest
amount on actual basis.
2.138 Return on Equity for TANGEDCO for the control period has been calculated based on the average equity for the corresponding year. This has been done in line with the
TNERC Regulations. The normative rate of return on equity has been taken at 14%.
Commission’s View
2.139 In the last tariff order Commission has approved the total interest expenses
corresponding to actual long term and short term loans borrowed by TANGEDCO. In
the current Petition TANGEDCO has claimed the interest expenses corresponding to
only long term loans and separately claimed the interest on working capital as per
norms specified by TNERC in its tariff regulations 2005.
2.140 TANGEDCO has adopted the following approach for segregation of interest to the generating plant / station and distribution function:
a. Project specific loans for generation and distribution is initially allotted to each of the respective project and considered as opening loan balance for that
particular project.
b. Large quantum of generic loans which cannot be differentiated into project
specific loans and interest paid on these loans is bifurcated as per opening
gross block of generation and distribution notified as per transfer scheme.
2.141 In response to Commission’s query, TANGEDCO has revised the long term loans and
segregated these loans among those borrowed for capital projects, repayment of
existing loans and funding the revenue expenditure.
2.142 In its last order Commission has stated that there is a lack of differentiation between
the capital account and the revenue account. In the revised submission TANGEDCO
has again included the borrowings corresponding to revenue account in capital
account. However, Commission is treating the revenue and capital account separately.
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Tamil Nadu Electricity Regulatory Commission Page 35
June 2013
8. Regulatory Asset
Stakeholder Comments
2.143 TANGEDCO has prayed for approving Regulatory asset. TANGEDCO’s proposal is also not in consonance with Regulation 13 of the Tariff Regulations. The
circumstances for treatment of regulatory asset would arise mostly during natural
causes or force majeure conditions and that it can be only for a limited period not
exceeding 3 years preferably within the control period. The reason given by
TANGEDCO is Para 6.3.3 that is “present critical power position” is not a force
majeure position.
2.144 The Regulatory Assets already created had been done for the same invalid reason.
Therefore, the Regulatory Asset already created should also be withdrawn.
TANGEDCO should be directed to take up the matter with Govt of Tamil Nadu as
part of the Financial Restructuring Plan it is implementing.
2.145 Creation of Regulatory Assets as per request of TANGEDCO is against the ATE Order of 28.7.2011 and also against the Tariff Policy. Therefore the Commission
should reject the plea.
2.146 Recovery of Regulatory Asset in future tariff petitions is not just as TANGEDCO is not supplying power equitably to all consumers. Selected consumers and Chennai
region have been exempted from Load shedding. The higher cost incurred for
purchase of power by TANGEDCO is for only these preferred consumers. The other
consumers who managed with costly Diesel Generators should not be burdened with
additional tariff.
2.147 No justifiable reasons have been attributed by TANGEDCO as to why it has not come
forward with a sizeable retail tariff revision in the petition. TANGEDCO’s reasoning
that the deficit can be treated as ‘Regulatory Assets’ – deferred expenditure – to be
made good in future from consumers should not be accepted by the Commission.
2.148 TANGEDCO has not made any road map for recovery of Regulatory Assets despite
approval from GoTN for amortization.
2.149 Regulatory Assets should be recouped slowly and incrementally. Clear road map to be
presented by the Commission to recoup the Regulatory Assets and introduce the
concept of Regulatory liabilities.
2.150 TANGEDCO should be directed to create special Regulatory Liability for which they should submit a strategic plan. Increase HT & LT tariff in all categories for assessing
the Regulated Liability for which no adjustment must be allowed
2.151 Commission not to accept treating the deficit of TANGEDCO as Regulatory Asset
2.152 TANGEDCO has not met the Performance Standards laid in TO 1 of 2013. Hence,
claim for Regulatory Assets should not be accepted.
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June 2013
2.153 Subsidy of 30% for Regulatory Assets accepted by GoTN for 2012-13 not shown in
Table 109. No justification given by TANGEDCO for converting losses into RA and
TANGEDCO request should be rejected.
2.154 Tariff Policy 5.3(h)(4) is against the proposal of TANGEDCO to burden future consumers with past losses with not seeking tariff increase for other categories for the
reasons in 6.3.2 of their petition.
2.155 Regulatory assets should not exceed than what is approved in the true up. Interest on this should also be waived
2.156 As per ATE Order, financial gap for any year should be considered for tariff revision and not passed on as Regulatory Asset
2.157 Requested not to permit the TANGEDCO to create Regulatory Asset as per
(OP1/2011, dt.11.11.11) of APTEL order and to pass on burden to consumer for the
ensuing year.
2.158 TNERC must determine the tariff for other categories, other than the one requested by
TANGEDCO, to the extent it can do reasonably on suo motu basis and create a
special “Regulatory Liability” of the likely revenue arising on such determination; the
extent of the ‘regulatory assets’ requested in this petition by TANGEDCO can be
reduced by this amount;
2.159 It is the responsibility of TANGEDCO to wipeout this liability first, before it can commence the recovery process on regulatory assets; TNERC must direct the
TANGEDCO to submit a strategic plan for wiping out the ‘Regulatory Liability’
created for its approval, measuring and monitoring.
2.160 Find out ways and means to recover the past losses from FY 2013-14 onwards instead
of postponing the recovery to ensuing years.
TANGEDCO’s Reply
2.161 TANGEDCO has proposed for the approval of Regulatory Asset based on the methodology adopted by the Hon’ble TNERC in tariff order dated 30th March 2012.
2.162 The Hon’ble Appellate Tribunal for Electricity in its order dated 09.04.2013 has upheld the creation of regulatory asset in Tariff Order No 1 of 2012 dated 30.03.2012,
in appeal No:257 of 2012 filed by the Southern India Mills Association, Coimbatore.
2.163 The creation of regulatory asset has been requested so as to recover the expenditure already incurred in a deferred manner in order to avoid tariff shock to consumers. If
the same is rejected there will be huge financial burden on the TANGEDCO and the
services to consumers will also be affected. This will cause irreparable loss to
TANGEDCO and consumers.
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Tamil Nadu Electricity Regulatory Commission Page 37
June 2013
Commission’s View
2.164 Commission does not agree with the proposition of creating regulatory liability as
none of its regulations allows for such creation.
2.165 The issue of Regulatory Asset is dealt with in Regulation of the TNERC (Terms and
Conditions of Tariff) Regulations 2005. This issue was also the subject matter of
appeal before the Hon’ble Appellate Tribunal for Electricity arising out of the
Commission’s Order No. 3 of 2010 dated 31-07-2010 and the decision of the
Appellate Tribunal for Electricity is extracted below:-
8.4. Let us first examine the provisions of the Tariff Policy in this regard. The relevant
extracts are as under:
“8.2.2. The facility of a regulatory asset has been adopted by some Regulatory
Commissions in the past to limit tariff impact in a particular year. This should
be done only as exception, and subject to the following guidelines:
a. The circumstances should be clearly defined through regulations, and should only include natural causes or force majeure conditions. Under
business as usual conditions, the opening balances of uncovered gap must
be covered through transition financing arrangement or capital
restructuring;
b. Carrying cost of Regulatory Asset should be allowed to the utilities;
c. Recovery of Regulatory Asset should be time-bound and within a period
not exceeding three years at the most and preferably within control
period;
d. The use of the facility of Regulatory Asset should not be repetitive.
e. In cases where regulatory asset is proposed to be adopted, it should be
ensured that the return on equity should not become unreasonably low in
any year so that the capability of the licensee to borrow is not adversely
affected”.
The Tariff Policy stipulates creation of the regulatory asset only as an
exception subject to the guidelines specified above. According to the
guidelines the circumstances under which the regulatory assets should be
created are under natural causes or force majeure conditions.
8.5. Let us now examine Regulation 13 of the 2005 Tariff Regulations of the State
Commission:
“13. Regulatory Asset:
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Tamil Nadu Electricity Regulatory Commission Page 38
June 2013
(1) Wherever the licensee could not fully recover the reasonably incurred cost at
the tariff allowed with his best effort after achieving the benchmark standards
for the reasons beyond his control under natural calamities and force majeure
conditions and consequently there is a revenue shortfall and if the
Commission is satisfied with such conditions, the Commission shall treat such
revenue shortfall as Regulatory Asset.
(2) The regulatory asset shall first be adjusted against the contingency reserve. The balance regulatory asset, if any, will be allowed to be recovered within a
period of three years as decided by the Commission.
(3) The licensee shall intimate the Commission then and there when such contingency arises.
(4) Any un-recovered gap at the beginning must be covered through transition financing arrangement or capital restructuring”.
(5) Under the State Commission’s Regulations also the regulatory asset is to be created when the licensee is not able to recover the reasonably incurred cost
for reasons beyond its control under natural calamities and force majeure
conditions. Further, the regulatory asset has to be recovered within a period
of three years. Admittedly, in the present case occurrence of natural
calamities and force majeure conditions did not arise.
8.6. Now we shall examine the findings of the State Commission in this regard. The
relevant extracts from the impugned order under paragraph 9.15.3 (9) are
reproduced in paragraph 7.4 above.
8.7. The State Commission has justified creation of the regulatory asset for the
anticipated revenue gap during the control period to prevent the tariff shock.
The order does not clearly state the total amount of the regulatory asset created but if
we add up the projected revenue gap of Rs. 7904.04 Cr., Rs. 6062.24 Cr. and Rs.
3489.18 Cr. for FY 2010-11, 2011-12 and 2012-13 respectively it totals upto Rs.
17445.46 Cr. It is also noticed that the State Commission has also not provided for
any carrying cost on the regulatory asset and the programme for recovery of the
amount to be taken as expenses in future tariff.
8.8. We are of the opinion that the regulatory asset created by the State Commission
is not in consonance with the Tariff Policy and its own Regulations. Moreover, the
impugned order does not provide for recovery of the regulatory assets with the
carrying cost as envisaged in the Regulations and the Tariff Policy.
8.9. The State Commission has justified creation of regulatory asset for avoiding tariff
shock. Now, let us examine the increase in tariff decided in the impugned order. We
reproduce below the response of TNEB (Respondent-1) recorded in the impugned
order regarding the tariff increase.
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Tamil Nadu Electricity Regulatory Commission Page 39
June 2013
“2.27.2 Domestic users consume 15 million units/ day. Individual consumption has
already crossed more than 1000 units, whereas the per capita consumption envisaged
in the 11th Plan is 1000 units only. Last year, the average cost of supply was
Rs.4.70/unit and it is expected to increase to Rs.4.90 / unit. Ason date, the average
recovery is Rs.2.60/unit. For every consumer, the average subsidy is Rs.2.30/unit. In
Tamil Nadu, except Commercial and Industry, other categories come under
subsidized tariff. Out of 2.09 crores consumers, no hike is proposed for 1.65 crores
consumers. Out of 1.50 crores domestic consumers, there is no hike for 1.40 crores
consumers. Hike is proposed for only 10 to 12 lakh domestic consumers. The average
increase is 65 ps. Only”.
Thus, despite huge gap between average cost of supply and average recovery, TNEB
had proposed no hike in tariff for 1.65 crores consumers out of total 2.09 crores
consumers i.e. tariff was not to be increased for about 79% of the consumers. Out of
1.5 Crores domestic consumers no hike was proposed for 1.4 Crores (93%)
consumers. In fact, the first respondent withdrew its own petition for tariff increase
for domestic consumers consuming from 201 units to 600 units biomonthly and the
State Commission permitted the same. In its response to the comments of the
stakeholder the State Commission has recorded in para 2.29.1(6) of the impugned
order that it had proposed to increase tariff only to certain categories of consumers.
We do not understand why no tariff was increased for majority of consumers even
though the Respondent no. 1 was facing huge revenue gap while it had proposed to
carry out a number of system improvement works for which funds were required and
considering that the tariff was being increased after a span of seven years. When the
tariff has not been increased for most of the consumers, how the creation of the
regulatory asset of such high magnitude, that too without any direction for its
amortization, can be justified on the pretext of avoiding tariff shock?
8.10. Now, the question arises whether the creation of the regulatory asset is in the
interest of the distribution company and the consumers. The respondent no. 1 will
have to raise debt to meet its revenue shortfall for meeting its O&M expenses, power
purchase costs and system augmentation works. It is not understood how the
respondent no. 1 will service its debts when no recovery of the regulatory asset and
carrying cost has been allowed in the ARR. Thus, the respondent no. 1 will suffer with
cash flow problem affecting its operations and power procurement which will also
have an adverse effect on maintaining a reliable power supply to the consumers.
Thus, creation of the regulatory asset will neither be in the interest of the respondent
no. 1 nor the consumers.”
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Tamil Nadu Electricity Regulatory Commission Page 40
June 2013
2.166 The Commission in Order No. 3 dated 31-07-2010 and Order No.1 dated 30-03-2012
had extensively discussed the reasons for the accumulated losses of the utility. The
losses of TNEB have accumulated over a period of more than ten years. While the
load has been growing continuously, the capacity addition has not kept pace with the
increasing demand. Consequently power was purchased from the market. The tariff
has not kept pace with the increase in costs with tariff revisions only in 2003 and then
in 2010. The gap up to the unbundling of the TNEB on 1-11-2010 is Rs. 17207.30
Crores. The Commission had expressed a view earlier that the accumulated losses up
to the date of unbundling will have to be dealt with in accordance with Para 5.4.3 of
the National Electricity Policy and Tariff Policy. The provisions of the National
Electricity Policy and Tariff Policy envisages that the gap at the time of unbundling
will have to be sorted out by financial restructuring and support from the Government
rather than passing on the accumulated losses to the successor entities. The intention
of the Tariff Policy is to allow the unbundled utilities to start on a clean slate.
Accordingly, this Commission leaves the matter of the accumulated losses up to the
date of unbundling for resolution by the Government of Tamil Nadu.
2.167 The Commission’s suggestion to Government of Tamil Nadu in this regard is that
such restructuring of successor entities should not result in increase in tariff to
consumers. The TANGEDCO and TANTRANSCO have also not claimed any relief
of account of accumulated losses prior to unbundling on 1-11-2010 in this tariff
petition.
2.168 In the previous tariff order Commission was concerned with creation of Rs. 24762 Crs
Regulatory Asset especially when the same was to be amortized in the next three to
five years. The Commission with a view that support of State/Central Government
will also be required to be assessed in dealing with such large Regulatory assets,
addressed a letter for obtaining the view of Government of Tamil Nadu in this matter.
Particularly the Commission requested if the Government could absorb the
Regulatory asset in its entirety or in part so as to reduce the burden on the consumers.
2.169 Government has informed that they have in-principle agreed with the request of the
Commission for amortization of regulatory asset. Government has also informed that
the exact details and mechanism will be worked out in conjunction with tariff revision
and TANGEDCOs improvement due to internal savings.
2.170 The issue of Regulatory Asset was again raised in Appeal No. 257 of 2012 by SIMA
and Hon’ble APTEL in its order dated 9th April 2013 did not find any infirmity in the
Tariff Order No. 1 of 2012 date 30th March 2012 issued by the Commission.
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Tamil Nadu Electricity Regulatory Commission Page 41
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2.171 However TANGEDCO in its petition has revised the Regulatory Asset from the date
of unbundling i.e., with effect from 01-11-2010 and up to the end of this financial
year i.e. upto 31-03-2013, the proposed revenue gap is Rs. 40,718 Crores. Of which
TANGEDCO proposes to recover Rs. 973 Crore through a nominal tariff hike.
TANGEDCO proposes in its petition that the remaining gap of Rs. 39,774 Crores may
be allowed to be recovered in the ensuing tariff petition, from the consumer in the
deferred years so that there is no tariff shock for the consumers. TANGEDCO
requested to approve the revised Regulatory Assets of Rs 39,744 Crores by treating
the present critical power position as force majeure position as per tariff regulation
and based on the revised gaps and after adjusting the tariff hike as proposed in the
given petition.
2.172 The ARR of TANGEDCO for the past years as well as the current years has been reviewed by the Commission and the revenue gap is reworked as detailed in Chapter
A3. The amount involved being significant in nature and if the same is amortized by
way of tariff hike the impact on the consumer would be huge resulting in a tariff
shock to almost all the consumers for the next five years.
2.173 Based on the provisional numbers of FY 12 and FY 13, Commission arrived at an
estimate for regulatory asset and the treatment for amortization of the Regulatory
Asset has been discussed in Chapter A5.
2.174 Commission has received the letter (Ms) No. 59/C2/2012 dated 7th June 2013 from
GoTN on amortization of regulatory asset and after reviewing the letter Commission
has worked out the amortization of regulatory asset.
9. Cross Subsidy, Cost to Serve and Average Cost of Supply
Stakeholder Comments
2.175 Tariff payable for BPL category to be atleast 50% of average cost of supply as per
NEP 2006. TNERC should ensure that even for subsidised category of consumers
atleast 50% of the supply should be recovered. Thus tariff for no category should be
less than 3.14Rs/unit.
2.176 Commission to notify road map for reduction of cross subsidy to be within + 20% of
average cost of supply
2.177 The guidelines issued by the GoI, Electricity Act 2003, and policy guidelines and directions given by Appellate Tribunal have not been taken into cognizance. While
the Average Cost of Supply is Rs 6.27 per kWhr, the average realization is only Rs
4.80 per kWhr. Only for 7 categories of consumers will pay more than the average
cost of supply. They would be consuming 19.7% of the energy sold and pay 30.7% of
the revenue earned
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2.178 It is obvious that these categories consume 12,601 MUs and pay Rs 9436 Crores,
which is an average of Rs 7.48 per kWhr. These are the subsidizing categories. The
realization from them is Rs 7.48 per unit while the Average Cost of Supply 6.27 per
unit and Average Realisation is only Rs 4.80 per unit. Consumers will be overly
burdened in this arrangement
2.179 Commission to reduce the cross subsidy element in existing tariff of all subsidizing
consumers
2.180 Cross subsidy treatment should be in consonance to provisions of EA 2003, NEP,
NTP and directives of ATE.
2.181 G.O. Ms. No.79 dt 11.7.2012 squashed by Single Judge. Appeal by TANGEDCO
before Division Bench. Appropriate forum to determine imposition of cross subsidy
surcharge is the Commission.
2.182 Cross Subsidy should be calculated on the marginal cost of power.
2.183 Commission should reduce the cross subsidy element in existing tariff of all
subsidizing consumers.
2.184 Cost to serve, cross subsidy surcharges, peak hour and off peak hour charges shall be fixed as per the Order of the APTEL.
2.185 TNERC has stipulated that the cross subsidy has to be computed as difference
between Cost to Serve a category of consumers and average tariff realization of that
category
2.186 The treatment of cross subsidies and options available to address the cross subsidy
reduction issue have to be in consonance with the provisions of the Electricity Act
2003, the National Electricity Policy (NEP), the National Tariff Policy (NTP) and the
decisions pronounced by Appellate Tribunal for Electricity (APTEL).
2.187 Based on the legal and policy frame work, applicable cross subsidy can be determined
and its reduction over a period should be indicated. TNERC has to notify a road map
along with intermediate milestones for reduction of cross subsidy to be within +20%
of the average cost of supply.
2.188 As per sec. 61 of the Electricity Act, 2003 and National Tariff Policy the tariff should be fixed at the rate of cost of supply.
TANGEDCO’s Reply
2.189 The cost to serve model with the detailed report has been submitted along with the
tariff petition for calculating voltage wise cost of supply and cross subsidy.
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Tamil Nadu Electricity Regulatory Commission Page 43
June 2013
Commission’s View
2.190 The three aspects are inter-related and have been dealt with in detail in tariff order No 1 of 2012. However Commission is reiterating the approach towards the three issues.
The provisions regarding these three issues are extensively covered in the Order of
Hon’ble Appellate Tribunal of Electricity dated 11th June 2012 in Appeal Nos. 57 of
2008, 155 of of 2007, 125 of 2008, 45 of 2010, 40 of 2010, 196 of 2009, 199 of 2009,
163 of 2010, 6 of 2011 and 144 of 2010. Para 40 of the said order is relevant and is
extracted below:
“17. Section 61(g) of the 2003 Act stipulates that the tariff should progressively
reflect the cost of supply and cross subsidies should be reduced within the time period
specified by the State Commission. The Tariff Policy stipulates the target for
achieving this objective latest by the end of year 2010-11, such that the tariffs are
within ± 20% of the average cost of supply. In this connection, it would be worthwhile
to examine the original provision of the Section 61(g). The original provision of
Section 61(g) “the tariff progressively reflects the cost of supply of electricity and
also, reduces and eliminates cross subsidies within the period to be specified by the
Appropriate Commission” was replaced by “the tariff progressively reflects the cost
of supply of electricity and also reduces cross subsidies in the manner specified by the
Appropriate Commission” by an amendment under Electricity (Amendment) Act,
2007 w.e.f. 15.6.2007. Thus the intention of the Parliament in amending the above
provisions of the Act by removing provision for elimination of cross subsidies appears
to be that the cross subsidies may be reduced but may not have to be eliminated. The
tariff should progressively reflect the cost of supply but at the same time the cross
subsidy, though may be reduced, may not be eliminated. If strict commercial
principles are followed, then the tariffs have to be based on the cost to supply a
consumer category. However, it is not the intent of the Act after the amendment in the
year 2007 (Act 26 of 2007) that the tariff should be the mirror image of the cost of
supply of electricity to a category of consumer.
18. Section 62(2) provides for the factors on which the tariffs of the various
consumers can be differentiated. Some of these factors like load factor, power factor,
voltage, total electricity consumption during any specified period or time or
geographical position also affects the cost of supply to the consumer. Due weightage
can be given in the tariffs to these factor to differentiate the tariffs.
19. The National Electricity Policy provides for reducing the cross subsidies
progressively and gradually. The gradual reduction is envisaged to avoid tariff shock
to the subsidized categories of consumers. It also provides for subsidized tariff for
consumers below poverty line for minimum level of support. Cross subsidy for such
categories of consumers has to be necessarily provided by the subsidizing consumers.
20. The Tariff Policy clearly stipulates that for achieving the objective, the State
Commission has not been able to establish that the tariff progressively reflects the
cost of supply of electricity, latest by the end of the year 2010-11, the tariffs should be
within ±20% of the average cost of supply, for which the State Commission would
notify a road-map. The road map would also have intermediate milestones for
reduction of cross subsidy.
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21. According to the Tariff Regulation 7 (c) (iii) of the State Commission the cross
subsidy has to be computed as difference between cost-to-serve a category of
consumer and average tariff realization of that category.
22. After cogent reading of all the above provisions of the Act, the Policy and the
Regulations we infer the following:
i) The cross subsidy for a consumer category is the difference between cost to
serve that category of consumers and average tariff realization of that
category of consumers. While the cross-subsidies have to be reduced
progressively and gradually to avoid tariff shock to the subsidized categories,
the cross-subsidies may not be eliminated.
ii) The tariff for different categories of consumer may progressively reflect the cost of electricity to the consumer category but may not be a mirror image of
cost to supply to the respective consumer categories.
iii) Tariff for consumers below the poverty line will be at least 50% of the average
cost of supply.
iv) The tariffs should be within ±20% of the average cost of supply by the end of
2010-11 to achieve the objective that the tariff progressively reflects the cost
of supply of electricity.
v) The cross subsidies may gradually be reduced but should not be increased for a category of subsidizing consumer.
vi) The tariffs can be differentiated according to the consumer’s load factor, power factor, voltage, total consumption of electricity during specified period
or the time or the geographical location, the nature of supply and the purpose
for which electricity is required.
Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer
category is not increased but reduced gradually, the tariff of consumer categories is
within ±20% of the average cost of supply except the consumers below the poverty
line, tariffs of different categories of consumers are differentiated only according to
the factors given in Section 62(3) and there is no tariff shock to any category of
consumer, no prejudice would have been caused to any category of consumers with
regard to the issues of cross subsidy and cost of supply raised in this appeal.”
“29. The State Commission has indicated in the impugned order that the voltagewise
cost determination is the first step in determining the consumer-wise cost of supply
but has expressed difficulties in determination of voltage-wise cost of supply due to
non-segregation of costs incurred by the licensee related to different voltage levels
and determination of technical and commercial losses at different voltage levels due
to non-availability of meters. The State Commission has also noted that the data
submitted by the distribution licensee does not have technical or commercial data
support.
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Tamil Nadu Electricity Regulatory Commission Page 45
June 2013
30. It is regretted that even after six years of formation of the Regulations data for the
distribution losses. The position of metering in the distribution system of respondent
no. 2 is pathetic. Only about 1/4th of 11 KV feeders have been metered and very small
numbers of transformers have been provided with meters.
Only 68% of the consumer meters are functional in the distribution system as
indicated in Table-37 of the impugned order. It is also noticed that a large number of
meters are old electro mechanical meter which are not functioning.
This is in contravention to Section 55 of the Act. Section 55(1) specifies that no
licensee shall supply electricity after the expiry of two years from the appointed data,
except through installation of a correct meter in accordance with the Regulations of
the Central Electricity Authority. According to Section 55(2) meters have to be
provided for the purpose of accounting and audit. According to Section 8.2.1 (2) of
the Tariff Policy, the State Commission has to undertake independent assessment of
baseline data for various parameters for every distribution circle of the licensee and
this exercise should be completed by March, 2007. In our opinion the State
Commission can not be a silent spectator to the violation of the provisions of the Act.
In view of large scale installation of meters, the State Commission should immediately
direct the distribution licensee to submit a capital scheme for installation of consumer
and energy audit meters including replacement of defective energy meters with the
correct meters within a reasonable time schedule to be decided by the State
Commission. The State Commission may ensure that the meters are installed by the
distribution licensee according to the approved metering scheme and the specified
schedule. In the meantime, the State Commission should institute system studies for
the distribution system with the available load data to assess the technical
distribution losses at different voltage levels.
31. We appreciate that the determination of cost of supply to different categories of
consumers is a difficult exercise in view of non-availability of metering data and
segregation of the network costs. However, it will not be prudent to wait indefinitely
for availability of the entire data and it would be advisable to initiate a simple
formulation which could take into account the major cost element to a great extent
reflect the cost of supply. There is no need to make distinction between the
distribution charges of identical consumers connected at different nodes in the
distribution network. It would be adequate to determine the voltagewise cost of supply
taking into account the major cost element which would be applicable to all the
categories of consumers connected to the same voltage level at different locations in
the distribution system. Since the State Commission has expressed difficulties in
determining voltage wise cost of supply, we would like to give necessary directions in
this regard.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 46
June 2013
32. Ideally, the network costs can be split into the partial costs of the different voltage
level and the cost of supply at a particular voltage level is the cost at that voltage
level and upstream network. However, in the absence of segregated network costs, it
would be prudent to work out the voltage-wise cost of supply taking into account the
distribution losses at different voltage levels as a first major step in the right
direction. As power purchase cost is a major component of the tariff, apportioning the
power purchase cost at different voltage levels taking into account the distribution
losses at the relevant voltage level and the upstream system will facilitate
determination of voltage wise cost of supply, though not very accurate, but a simple
and practical method to reflect the actual cost of supply.
33. The technical distribution system losses in the distribution network can be
assessed by carrying out system studies based on the available load data. Some
difficulty might be faced in reflecting the entire distribution system at 11 KV and 0.4
KV due to vastness of data. This could be simplified by carrying out field studies with
representative feeders of the various consumer mix prevailing in the distribution
system. However, the actual distribution losses allowed in the ARR which include the
commercial losses will be more than the technical losses determined by the system
studies. Therefore, the difference between the losses allowed in the ARR and that
determined by the system studies may have to be apportioned to different voltage
levels in proportion to the annual gross energy consumption at the respective voltage
level. The annual gross energy consumption at a voltage level will be the sum of
energy consumption of all consumer categories connected at that voltage plus the
technical distribution losses corresponding to that voltage level as worked out by
system studies. In this manner, the total losses allowed in the ARR can be apportioned
to different voltage levels including the EHT consumers directly connected to the
transmission system of GRIDCO. The cost of supply of the appellant’s category who
are connected to the 220/132 KV voltage may have zero technical losses but will have
a component of apportioned distribution losses due to difference between the loss
level allowed in ARR (which includes commercial losses) and the technical losses
determined by the system studies, which they have to bear as consumers of the
distribution licensee.
34. Thus Power Purchase Cost which is the major component of tariff can be
segregated for different voltage levels taking into account the transmission and
distribution losses, both commercial and technical, for the relevant voltage level and
upstream system. As segregated network costs are not available, all the other costs
such as Return on Equity, Interest on Loan, depreciation, interest on working capital
and O&M costs can be pooled and apportioned equitably, on pro-rata basis, to all the
voltage levels including the appellant’s category to determine the cost of supply.
Segregating Power Purchase cost taking into account voltage-wise transmission and
distribution losses will be a major step in the right direction for determining the
actual cost of supply to various consumer categories. All consumer categories
connected to the same voltage will have the same cost of supply. Further, refinements
in formulation for cost of supply can be done gradually when more data is available.”
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 47
June 2013
2.191 Cost to Serve, Average Cost of Supply and Cross Subsidy are also discussed extensively in the above referred Order of the Hon’ble Appellate Tribunal of
Electricity in paragraphs, 36, 37, 38 and 39. The Hon’ble Appellate Tribunal of
Electricity had expressed the opinion that consequent to the Electricity (Amendment)
Act 2003 with effect from 15-6-2007 elimination of cross subsidy has been omitted
which implies that the tariff for a particular category of consumers need not be the
mirror image of cost to serve.
2.192 Provisions of Tariff policy envisage that the tariff for various categories of consumers
shall be within +/- 20% of the average cost of service. A conjoint reading of the
Electricity Act 2003 after the amendment in the year 2007 with the other provisions of
the Act as well as the Tariff Policy, the intent of the Act seems to be that the tariff
need not be the mirror image of the cost of supply of electricity to a category of
consumers. From the applicable portion of the Judgment which is contained in para 22
of the decision of the Hon’ble Appellate Tribunal of Electricity in Appeals No. 102,
103 and 112 of 2010 rendered on 30th May 2011, it can be seen that the following are
the tests for deciding the tariff in compliance of the Electricity Act, Tariff Policy and
Regulations of the Commission.
(a) As a first major step in the right direction, the voltage wise cost of supply shall
be calculated based on the available data.
(b) The Cost of service for each category of consumer will have to be worked out
separately.
(c) The cross subsidy should be going down from year to year.
(d) The tariff fixed for various categories should be within +/- 20% of the average
cost of service.
(e) Tariff may not be a mirror image of cost to supply to the respective consumer
categories.
(f) Tariff for different categories of consumers are differentiated only according
to the factors given in Section 62(3).
(g) There is no tariff shock to any category of consumers.
2.193 If the above are carried out and the tariff decided accordingly, no prejudice would have been caused to any category of consumers with regard to the issues of cross-
subsidy and cost of supply.
2.194 Commission in its last tariff order has directed TANGEDCO to undertake data
collection for computing accurate cost of supply and submit a study report computing
the consumer category wise and voltage wise cost to serve.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 48
June 2013
2.195 TANGEDCO in compliance to the above directive has undertaken a technical study
and computed the category wise cost of service but has stated its inability to compute
voltage wise cost to serve as its accounting system are not robust enough to capture
cost details voltage wise.
2.196 The Commission would like to continue the procedure adopted last year recognising
the importance of carrying out such an exercise in detail which will enable to test the
retail tariff. Commission based on its view in the last tariff order, that it would be
advisable to initiate a simple formulation which could take into account the major cost
element to reflect the cost of supply, has estimated voltage wise cost to serve based
on the Embedded cost method, the details of which are elaborated in Chapter A5.
2.197 Even though TANGEDCO has attempted to calculate cost to serve, it has been
unsuccessful in doing so at various voltage classes. For arriving at realistic and
accurate costs an extensive data collection exercise has to be carried out by
TANGEDCO which will include a 12-month load profile study of each voltage wise
consumer category. Therefore the Commission once again directs TANGEDCO to
submit a revised and detailed study report on computation of voltage wise ‘cost to
serve’ (CoS) along with the basis of allocation of different costs and losses to various
voltage levels. This shall be examined by the Commission and approved with such
modifications as it may deem fit or consider a better alternate computation. The
Commission also directs TANGEDCO to submit the action taken report within 90
days of the issuance of this order.
10. Merit Order Despatch
Stakeholder Comments
2.198 SPCL and MPCL both have subsisting Power Purchase Agreements with
TANGEDCO for supply of power from their power plants which operate on Low
Sulphur Heavy Stock/Low Sulphur Furnace Oil.
2.199 SPCL and MPCL in their detailed comments mentioned that TANGEDCO has sought
for approval of only fixed costs of the respective plants which is contrary to the
provisions of PPAs in existence. They pointed out that TANGEDCO has to operate
the power plants in accordance with the Article 6.3 of PPA.
2.200 They have been cooperating with TANGEDCO in operating the plant at technically feasible minimum load of 13MW to keep the fuel warm.
2.201 SPCL is totally dependent on TANGEDCO as TANGEDCO is the sole purchaser of power and has referred to various clauses of PPA. TANGEDCO cannot issue zero
power instructions as per PPA provisions
2.202 Both have stated that both they have filed petitions DRP 26 and DRP 27 of 2012 seeking an order restraining TANGEDCO from issuing instructions to SPCL to back
down generation of SPCL and MPCL plants. The petition has been heard by the
Commission and pending for admission
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 49
June 2013
2.203 TANGEDCO has been dispatching the plant to meet its immediate requirements and
has at times issued zero dispatch instructions without regard to the technical
requirements of the plants.
2.204 SPCL and MPCL have requested the Commission to consider appropriate variable
cost for plants as per the PPAs. Order that the approved tariff is subject to the decision
of the Commission in DRP 27 of 2012 filed by MPC. Alternatively, if zero / part
power dispatch instructions is issued by TANGEDCO, it should be limited to max of
4 hrs of zero power followed by a minimum of 8 hrs of technical feasible load of 13
MW single engine operation.
TANGEDCO’s Reply
2.205 Hon’ble TNERC in accordance with above Terms and Conditions of Tariff
Regulations, has determined the power purchase cost and gave the Merit Order
Ranking for all available sources from which energy is available in FY 2012-13 under
Table 192 of Tariff order dated 30.03.2012. According to clause 7.1.2.f. of Tariff
order, Hon’ble TNERC listed M/s PPN, M/s SPCL, M/s MPCL & M/s GMR under
the plants which are not scheduled as per Merit Order Dispatch, with a liberty to
approach Commission in advance if they are dispatched outside Merit order.
2.206 Based on the above Tariff order and Grid Code of Hon’ble Commission, M/s SPC and
M/s MPC are being given zero dispatch instruction from 01.04.2012 till date, based
on the merit order dispatch by SLDC. During the zero dispatch period, M/s SPC and
M/s MPC are allowed fixed charges only, as directed by Commission.
2.207 Further, whenever there is a shortage of power, M/s SPC and M/s MPC are being
dispatched outside merit order by SLDC, and ratification / approval of this dispatch is
obtained from the Hon’ble Commission then and there by TANGEDCO.
2.208 Against the zero dispatch instructions issued by SLDC as per Hon’ble TNERC’s Tariff order, M/s SPC & M/s MPC have raised certain disputes such as directing
TANGEDCO to issue dispatch instructions based on the PPA, to pay the cost of
additional start –stop due to zero power generation, cost of additional fuel for start-up
boiler during zero dispatch etc and filed a DRP before the Hon’ble TNERC vide DRP
No.26 of 2012 and DRP No. 27 of 2012 and the DRPs are yet to be admitted by the
Commission. Preliminary objection has been filed by the TANGEDCO in the above
DRPs.
2.209 As per Article 12 of the PPA on Force Majeure and specified that directions of
Hon’ble Commission in Tariff Order No.1 dated 30.03.2012 vide para 7.1.20, fall
under the Direct Indian Political Event of Force majeure Clause of PPA and therefore
Zero dispatch of power from M/s SPC or M/s MPC is not in violation of the terms of
PPA, as explained above.
2.210 Having established the zero dispatch concept under Force Majeure, now the payment
obligation of TANGEDCO during such Force Majeure shall be dealt, which is as
follows:
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 50
June 2013
Article.12.4 Continuing Payment Obligation: Force Majeure of PPA provides as
below:
a) “Upon the occurrence and during the continuance of any event of force Majeure, the Tariff and all other payment obligations of the Parties hereunder
shall continue to be payable as set forth below:
i) for Direct Indian Political Event the project is deemed to be operating at
the NPLF and full Fixed Charge Payment shall be paid by TNEB”
2.211 In FY 2013-14 when compared to FY 2012-13, the variable costs of M/s SPC or M/s
MPC is not likely to come down, but it is likely to increase only, taking market trend
of liquid fuel into consideration.
2.212 In view of the reasons explained above, for this FY 13-14 also, TANGEDCO has filed Tariff Petition & ARR mentioning zero dispatch for the high cost IPPs namely MPC,
SPC, GMR & PPN.
Commission’s View
2.213 Regulation 75(1) of the TNERC (Terms and Condition for Determination of Tariff)
Regulation 2005, specify the following:
“The Distribution Licensee shall procure power on least cost basis and strictly on
Merit Order Despatch and shall have flexibility to procure power from any source in
the country”.
2.214 Similar provision exists in the Tamil Nadu Electricity Grid Code as well as in
Electricity Act 2003.
2.215 In line with the provisions mentioned above Commission adopted the same approach
to allow the costs in its Orders TO No 3 of 2010 and TO NO 1 of 2012. In the matter
of the above mentioned orders, neither TANGEDCO nor the petitioners have raised
any objections previously on the applicability of merit order principles to their plants.
2.216 Commission understands that the issue of finding alternative for meeting the heating
requirement of fuel pipes and tanks etc in the event of Nil generation, is being taken
up with the IPPs by TANGEDCO so as to strictly follow the Commission’s tariff
order No. 1 of 2012 dated 30-3-2012 as submitted by TANGEDCO in the matter of
petition MP No 23 of 2012.
2.217 In addition the matters concerned to payment obligations or applicability of Articles
of a bilateral PPA are outside the purview of this petition. Hence the Commission
decides that the power purchase quantum for the second control period from M/s
SPCL and M/s MPCL will continue to be governed by Merit Order Despatch
principles.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 51
June 2013
2.218 In cases where the Power Stations are to be despatched outside Merit Order,
TANGEDCO shall obtain approval of the Commission in advance by furnishing
reasons for such action. In case of emergencies TANGEDCO is permitted to resort to
such a practice but will approach the Commission within a week of such action along
with the reasons for such action.
2.219 MoD for the specific stakeholders viz M/s SPCL and M/s MPCL has been in vogue
from 1st April 2012. No specific violation of PPA has been cited by them and a
direction is being sought to follow the PPA. Alternatively a scheme of despatch is
proposed. Section 32(2)(a) of E-Act 2003 states that
“The State Load Despatch Centre shall - (a) be responsible for optimum scheduling
and despatch of electricity within a State, in accordance with the contracts entered
into with the licensees or the generating companies operating in that State;”
There is no merit for any direction from the Commission for following the provisions
of law. As and when there is a cause of action, the Petitioner may approach the
Commission for specific relief.
11. Cross Subsidy Surcharge
Stakeholder Comments
Average Billing Rate
2.220 TANGEDCO has proposed to maintain tariffs at the same levels for HT IA, HT IB,
HT IIB & HT III Consumers. Based on the Demand, Sales, Fixed charges and Energy
charges the average billing rate for these categories works out to Rs. 6.91, Rs. 6.34
Rs. 6.57 and Rs. 7.98 respectively.
2.221 These average billing rates have then been used by TANGEDCO in estimating the
cross subsidy surcharge applicable to consumer categories.
2.222 As per second proviso to Section 42(2) of the Electricity Act 2003, cross subsidy surcharge is to be utilised to meet the current level of cross subsidy meaning to
compensate the distribution licensee whose consumer moves to OA procurement for
the loss in revenue in excess of the cost of supply.
2.223 In Tamil Nadu, even when consumers in these categories move to procure power
through open access, demand charges are being paid by these consumers implying the
actual revenue loss to GEDCO is only on account of the energy charges.
2.224 Therefore, the applicable energy rate to the consumer is the appropriate value to use
in the formula specified in the Tariff Policy 2006 for calculation of CSS, as shown in
table above or revised energy tariff notified by the Hon’ble Commission.
2.225 The effective rate, which includes the demand charges as well, cannot be used, as
revenue on this account is NOT being lost to TANGEDCO due to consumers moving
to open access procurement of power.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 52
June 2013
Marginal Cost
2.226 Further, we request the Hon’ble Commission to verify the power procurement
schedule for FY14 and re-estimate the merit order stack, to ensure that the
disallowance is from appropriate stations at the margin. Therefore, in computing
marginal cost of power, the Hon’ble Commission needs to correctly estimate the
quantum of disallowance and ensure that the merit order stack is correctly represented
Wheeling charges in CSS
2.227 Wheeling is defined in the Section 2(76) of EA2003 as
“wheeling” means the operation whereby the distribution system and associated
facilities of a transmission licensee or distribution licensee, as the case may be, are
used by another person for the conveyance of electricity on payment of charges to be
determined under section 62;
2.228 Further, Tariff Policy 2006 specifies that CSS should be calculated as the difference between tariff applicable to relevant category of consumers & the cost of distribution
licensee to supply electricity to this class of consumers, which clearly includes the
transmission cost as well
2.229 Further, the NTPO6 states that the cost to be borne by OA consumer includes
transmission costs.
2.230 As precedent, the Kerala SERC in its Order on ARR, ERC & Tariff for FY13 of
KSEB, has used cost of transmission alone for EHT (transmission voltage) consumers
and aggregate of transmission & distribution cost for HT (distribution voltage)
consumers in estimating cost of distribution licensee.
2.231 Therefore, we submit that the wheeling charges used in the formula to estimate CSS
should include the transmission charges as well, since these form a part of the costs
that the distribution licensee incurs to serve a consumer.
2.232 TNERC should deny TANGEDCO Cross Subsidy Surcharge as long as it is not able to meet the consumers’ demand.
2.233 For calculating the Cross Subsidy surcharge, 3 power generators (Source Table 113) has been taken. The logic of choosing them is to be explained. It appears that they do
not meet the criterion stipulated by tariff policy for this purpose. Further the
calculations in table 114 need to be verified with the formula given in Para 7.3.3.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 53
June 2013
TANGEDCO’s Reply
Average Billing Rate
2.234 The cross subsidy proposed is being calculated on the basis of the formula laid down
by the Ministry of Power in Tariff Policy. As per the formula, the cross subsidy is the
difference between the tariff paid by the relevant category of consumers and the
average cost of supply including line loss and wheeling charges.
2.235 The tariff includes both energy and demand charges. Hence, the cross subsidy
surcharge is being calculated taking into account the demand charges payable by the
consumer also.
2.236 The Cross subsidy surcharge calculated by the TANGEDCO in its tariff petition filed before the Hon’ble TNERC is in line with the formula provided by the Ministry of
Power in Tariff Policy.
2.237 No Provisions are available in the Electricity Act 2003 and Rules and Regulations made there under to omit the demand charges while calculating the cross subsidy
surcharge.
Marginal Cost of Power
2.238 The Tariff Policy prescribed by the Ministry of power specifies the formula to
calculate Marginal cost/Variable cost to arrive at the Cross Subsidy Surcharges.
Accordingly, the Marginal cost/Variable costs are calculated.
Wheeling Charges
2.239 The cross subsidy is being calculated as per the formula notified by the Ministry of
Power in its Tariff Policy. In the Tariff Policy it has been specified to include only
power purchase cost, system loss and wheeling charges payable to distribution
licensee. Accordingly, the TANGEDCO has calculated the cross subsidy surcharge
considering the power purchase cost, system loss and wheeling charges. Hence, the
transmission charges could not be included in the cross subsidy surcharge calculation
as requested by the petitioner.
Non levy of CSS during R&C
2.240 The Government of Tamil Nadu has issued a government order vide G.O. No. 79
dated :11.07.2012 relating to levy of cross subsidy from the consumers who avail
supply from the generators other than TANGEDCO and from CPP without availing
the quota energy from TANGEDCO during the period when R & C measures are in
force. This levy of cross subsidy has been challenged by some of the consumers and
the matter is pending in the Hon’ble High court of Madras.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 54
June 2013
Commission’s View
2.241 The formula laid out in the Tariff Policy for calculating surcharge is as below:
S = T - [C (1+L/100) + D]
Where:
S is the surcharge
T is the Tariff payable by the relevant category of consumers;
C is the Weighted average cost of power purchase of top 5% at the margin
excluded liquid fuel based generation and renewable power
D is the Wheeling charge
L is the system Losses for the applicable voltage level, expressed as a
Percentage
2.242 The Commission is of the view that the policy does not differentiate between demand
charges or energy charges. For implementing tariff philosophy in letter and spirit, a
reasonable realisation rate from consumer category needs to be considered.
Accordingly, average billing rate for the category shall be used for computing the
cross subsidy surcharge.
2.243 The Commission has revised the power purchase quantum for TANGEDCO for the
second control period as outlined in the Chapter A4. Commission has applied the
merit order principles and arrived at power purchase from top 5% at the margin
excluding liquid fuel based and renewable generating stations for computation of
cross subsidy surcharge.
2.244 The Commission does not agree with the suggestion that CSS computation should
include the transmission charges as well. If one has to describe the formula prescribed
in the Tariff Policy for arriving at Surcharge, it will be as follows
a. The average realisation rate/average billing rate of a consumer category
minus the average cost of power purchase avoided due to consumer
opting for open access grossed up for system losses minus the wheeling
charges accrued to the distribution licensee for grant of open access to the
consumer.
2.245 Based on the explanation above, the distribution licensee will charge the consumer for
wheeling charges and revenue accrues to the account of distribution licensee i.e.
TANGEDCO whereas the transmission charges are charged by and accrued to
Transco i.e. TANTRANSCO. Hence the logic of including transmission charges in
the formula is not acceptable.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 55
June 2013
12. Subsidy
Stakeholder Comments
2.246 Last year the subsidy for agriculture and hut is Rs/5858 Crores. The TANGEDCO received only Rs.276 Crores. Govt. should give the full subsidy to the TANGEDCO.
2.247 The subsidy to be given by GoTN is projected as Rs. 1500 crores based on the number of Service Connections, whereas GoTN is giving a subsidy of only Rs 315
crores. Steps should be taken by TNERC to ensure that the right amount of subsidy is
released to TANGEDCO by GoTN.
Commission’s Response
2.248 Subsidy determined by the Commission has been fully given by GoTN.
13. Peak hours and time slots
Stakeholder Comments
2.249 Current peak hour in 6 am to 9 am and 6 pm to 9 pm. Commission directed
TANGEDCO to submit load pattern which is not yet submitted. In R&C measure
peak hour is 6 pm to 10 pm, however practically peak hours are from 6 pm to 9 pm.
2.250 Commission to redefine peak hour as 6 pm to 9 pm and remove morning peak hour
Commission’s View
2.251 Sufficient data is not available to assess the impact of the additional hour in Peak
hours, and hence the Commission is continuing with the existing TOD slots. The
TANGEDCO is directed to submit data on ToD consumption along with the next
Tariff Application with proper justification and consideration by the Commission.
Depending on the impact and response to the ToD tariffs, the Commission will take
view on ToD tariffs depending on data availability and viability in the next tariff
order.
2.252 The Commission is of the view that peak hour tariff and night hour rebate need not be
on equal footing. During the Peak hours, marginal cost of power procurement is very
high and being in revenue neutral regulated business, a pass through mechanism has
to be made available to the Utility to recover its cost and also to disincentivise the
avoidable consumption during the peak period. During the night off-peak hours the
Utility would be operating its base load plants to cater to the off peak load, which are
built in to the tariff of the consumer and there is no equitable avoidance of cost for the
Utility vis-à-vis peak hour consumption.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 56
June 2013
14. Solar Purchase Obligation
Stakeholder Comments
2.253 Solar purchase obligation for LT Commercial consumers should be abolished. For
others it shall start from the next year since sufficient solar power is not available.
2.254 Already LT commercial consumer is in higher tariff category this solar purchase
obligation for LT Commercial consumers should be abolished.
2.255 Solar purchase obligation of 3% within December shall be stopped.
2.256 TNERC has erred in imposing the SPO for LT (Commercial) consumers at 3% of the
total consumption even though many issued are yet to be finalized.
2.257 TNERC has ignored the fact that on account of R&C measures and unscheduled
power cuts which range from 0 to 14 hours, during which time the consumer will not
be able to draw and utilize power, it would be impossible for the obligated consumers
to meet their obligations.
2.258 TNERC by way of imposing SPO has imposed additional cost indirectly to the
obligated consumers, which is in the nature of an increase in tariff
2.259 Fixation of SPO quantum of 3% upto 31.12.2013 and 6% from 01.01.2014 would not
be appropriate and correct considering the non-availability of equivalent or sufficient
solar installation in the entire state.
2.260 TNERC is requested to provide ‘Net’ Metering facility / guidelines to adjust the
excess generation by Solar PV panels in billing.
Commission’s View
2.261 SPO is not relevant to the Tariff Petition.
15. Renewable Power
Stakeholder Comments
2.262 Upgradation should be done. Promote Solar power. Cochin Airport is operating
based on the Solar Power. The big projects like Railways, airports should energize
from the Solar Power.
2.263 Bio energy in Tamil Nadu is estimated as 6,15,800 kW whereas actual is 1,87,265 kW
which constitutes 27%. Bio energy in Tamil Nadu should be utilized effectively like
Maharashtra and Gujarat as Maharashtra uses 74% and Gujarat 62%.
2.264 Solar Power shall be used for street lights and drinking water overhead tanks.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 57
June 2013
Commission’s View
2.265 All suggestion for promoting renewable energy shall be examined separately.
16. Equitable distribution of power
Stakeholder Comments
2.266 What are the action taken by the Commission with respect to the directions given by
the Hon’ble High Court of Madras on Equitable distribution of power.
2.267 Representatives from small scale industries, industrial associations, consumer
associations and individual consumers have requested that the tariff should not be
hiked and have all spoken about equitable distribution to be implemented.
Commission’s View
2.268 Separate Petitions have been filed with the Commission and this issue will be dealt
separately.
17. Impact of THANE cyclone
Stakeholder Comments
2.269 TANGEDCO has faced “THANE” super cyclone during the last year and lost its assets worth more than Rs.500 Crores. Not even a single word is uttered about the
same in the petition. It is an extra-ordinary circumstance that TANGEDCO has faced,
though managed exceedingly well.
TANGEDCO’s Reply
2.270 The expenditure incurred towards restoring the power supply in the districts of Cuddalore on account of “THANE” cyclone has been taken into account in the
additional capital expenditure. The petition for additional capitalization was filed in
October 2012 before the Hon’ble Commission.
Commission’s View
2.271 The Commission has examined the capital expenditure and capitalisation in general
and has allowed all prudent expenditure on provisional basis subject to further
scrutiny.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 58
June 2013
18. Sales
Stakeholder Comments
2.272 TANGEDCO did not furnish the methodology for estimating the energy consumption
for the year 2013-14, excepting a run in between the lines that the demand is growing
at 8 % to 10% in the State. It appears that the figures it has furnished were pulled out
of thin air.
TANGEDCO’s Reply
2.273 TANGEDCO would like to submit that the overall growth in sales considered for the
FY 2013-14 is around 16% which is worked out based on 9% growth rate and around
7% increase in consumption due to additional availability of power. Based on the
above assumption most of the additional power that will be available in FY 2013-14
would go to LT consumers who are covered under load shedding. The domestic
consumers are major group of the consumer mix and hence have resulted into an
increase of 23% as compared to FY 2012-13.
Commission’s View
2.274 TANGEDCO has projected energy consumption, load and number of consumers for
the second control period using the historical trend method by applying the category-
wise Compounded Annual Growth Rate (3 years and 5 years CAGR) appropriately.
2.275 Commission after scrutiny of submissions made by TANGEDCO computed the sales
figures taking into account additional capacities coming online during the second
control period leading to improvement in the power supply position. The sales
estimates have been elaborated in Chapter A4.
2.276 Commission is of the view that in future TANGEDCO should come up with a robust
sales estimation technique that flows from a more scientific load growth study and
considers the impact of various factors such as changes in per capita consumption
pattern, sales mix, industrialization in the state etc.
19. Tariff related Comments
a. Tariff for HT Industries
Stakeholder Comments
2.277 Maximum demand charges should be modified from Rs 300 / KVA / month to Rs
2.40 / KVA/ hour i.e. it should be charged only for hours of grid supply. It should
have slab wise rates as in Gujarat. It should also be based on voltage at which power
is supplied i.e. Supply at higher voltages should have lower demand charges.
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Tamil Nadu Electricity Regulatory Commission Page 59
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2.278 Commission in its last tariff order fixed tariff for HT consumers at Rs 5.50 / unit as
against TANGEDCO proposal of Rs 5 / unit. Commission should consider reduction
of Rs 0.50/ unit for HT consumers.
2.279 Power factor incentive as prayed before APTEL should be approved and reintroduced by the Commission.
2.280 The tariff applicable during evening peak hours of 120% should be made applicable
for 8 hours instead of 6 hours and similarly the time slot for night consumption should
be reduced by one hour.
2.281 The Commission may restore rebate for maintaining high PF of above 0.90.
2.282 Currently, maximum demand charges for any month will be levied in the KVA
demand actually recorded in that month or 90% of sanctioned demand whichever is
higher. However in case of R&C measures its actual recorded maximum demand or
90% of demand quota, whichever is higher. The Commission may reduce the present
billing to 80% as prevailing in Andhra Pradesh.
2.283 Further for as long as R&C measures are in place, the demand charges be reduced
proportionately based on the hours of supply.
2.284 Service connection for gated community is given under domestic tariff 1A category at
present. Water connection, Cable TV connection etc are given as a single service to
the gated community. Only electricity is extended to individual houses. Therefore,
extension of single point of HT supply to the gated community may be considered.
b. Tariff for HT Commercial
Stakeholder Comments
2.285 Indian squash academy is currently being charged at commercial tariff. Request for
50% concession on the rates for the squash academy.
2.286 Treat power consumed for Dormitory facility to employees of mills as Domestic
under LT IC instead of being treated as Commercial
c. Tariff for Agriculture and Hut services
Stakeholder Comments
2.287 Creed Krishi Vigyan Kendra, which operates under Indian Council for Agricultural Research (ICAR), provides demonstration to small farmers with and without land in
the model farms developed within the organisation. Hence seek change in tariff from
LT IIB to LTIV
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Tamil Nadu Electricity Regulatory Commission Page 60
June 2013
2.288 The motor used for drawing water from the well is to be treated under the LT tariff IV
category as the same is to be treated as agriculture related allied activities. Extension
of LT Tariff IV to the Poultry farming which has a poultry population of 25000 nos.
of poultry in one farm.
2.289 Renew the free supply for jaggery production in the agricultural land (as the transportation of sugarcane is not possible) for 5 HP Motor for 40 days which was
previously charged at Rs.60/-.
2.290 For fish farming, free supply at LT IV is extended to some people and for other fish
farm owners the tariff is charged under LT IIIA(1)/IIIB or Tariff V. The disparity
should be removed. LT Tariff IV should be extended to all fish farmers. Request for
tariff change in respect of fish farming from IIIA to IV.
2.291 The name of the consumer who obtains service under LT IIIA(1)/III B or V for fish
farming should be included in the waiting list for LT IV and when the consumer
reaches the seniority from that date onwards he should be charged under LT IV.
2.292 Not to raise tariff for agricultural services due to drought in Kancheepuram.
2.293 The present practice of TANGEDCO for categorizing farmers/ farm holdings in
accordance with the usage of land/ occupation does not take into account the size of
the farm holding or the income. Categorize farm holdings based on income / size of
land so that subsidy is given to the needy farmers. Reasonable user charges are also to
be levied.
2.294 Isha Foundation grows plants and gifts them to children/public. Presently charged at
LT III A (1) in some places and LT V in some places. Request for considering the
activity as agriculture and charged appropriately.
2.295 Provide free service under tariff IV for the Poultry farms which have poultry upto
25,000 nos. Issue clear instructions to TANGEDCO to not levy charges under theft of
energy charges and compensation for the services who use agricultural pumpset for
feeding the poultry.
2.296 Free electricity shall be given to all the poultry farms under Tariff IV category.
2.297 Production of meat should be treated as an agriculture related work and free
electricity should be extended.
2.298 The basis on which the tariff of Rs.1750 / HP was fixed for agricultural services is unknown. Now the tariff is proposed to increased to Rs.2500 / HP. The Government
may give subsidy in view of the coming parliament elections, however if the
Government stops the subsidy in future the farmers will be forced to pay the charges.
Hence, a law may be enacted for providing free power to agriculture consumers in
future.
2.299 Farmers are working to provide food to the people and therefore supply of free
electricity to farmers is the duty of the Government.
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2.300 Free electricity should continue to the agricultural sector. Meter shall be provided in
the hut services and free supply can be given upto 500 units.
2.301 Free supply should be given to poultry farms below 25000 numbers.
2.302 In Tamil Nadu 24.48 Lakh acres of land was under cultivation. Due to failure of
monsoon, this year severe drought is prevailing in Tamil Nadu. 7 small hydro storage
units, 39,200 lakes,18.60 lakh wells are used for agriculture. Thousands of Crores of
rupees were already lost due to drought. So, there should not be any tariff hike in
agriculture and free electricity should be continued forever.
2.303 The proposed agricultural tariff hike to Rs.2500 per HP per annum may be reduced to
below Rs.2000 per HP.
2.304 The proposed tariff hike for hut services of Rs.120 p.m. may be reduced to Rs.75 p.m.
2.305 Huge increase was made to agricultural and hut services last year. This year also tariff
hike is proposed to agricultural and hut services. Even though subsidy is provided by
the Government, we oppose the tariff hike.
d. Tariff for Streetlight and Water supply
Stakeholder Comments
2.306 In Tariff Order of 30.7.10, NTADC (New Tirupur Area Development Corporation
Ltd.) was classified under II A similar to TWAD for both HT & LT categories which
has been discontinued in the latest Tariff Order. Classify HT Tariff for all 9 Nos New
Tiruppur Area Development Corporation Ltd under Tariff IIA on par with TWAD
Board
e. Tariff for Domestic
Stakeholder Comments
2.307 Maintain the unit rate as in the lower slabs and charge only the units consumed above
the slab in the higher slab instead of adopting different rates for different groups(0 to
100; 0 to 500; 500 and above) based on their consumption.
2.308 Increase in slab rate for more than 500 units at a flat rate of Rs 5.75/= as against Rs
3.75 causes hardship and hence increase slab from 500 units to 1000 units for subsidy
2.309 Fixed charges for LT CT services have been increased from Rs.60 to
Rs.240/KW/month which is 400% increase. Fixed charges should not be related to
MD and retained at the existing energy charges. Drop the fixed charges for LTCT
services as it has no relevance
2.310 Service oriented institutions should be charged at domestic tariff.
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Tamil Nadu Electricity Regulatory Commission Page 62
June 2013
2.311 Slab system in the domestic tariff should be revised like the slab system followed in
elimination of slab system for domestic consumption since most of their members are
dwelling in rented accommodation and paying one fourth of their earning as
electricity charges.
f. Tariff for Tiny Industries
Stakeholder Comments
2.313 LT III A may be made applicable for loads upto 20 HP.
2.314 The concessional tariff III A awarded to Jewellery making units should continue.
There should be no increase in tariff.
2.315 Request to increase connected load as 20 HP for LT III A (2) due to industrial growth.
2.316 Tariff for Power Loom increased by 110% while it was increased by 37% for other
categories. Due to power cuts an additional cost of Rs.10,000/- has to be incurred for
operating diesel engines. For power looms operating under payment of wages, tariff
has not been increased. On the same lines for Small Scale Power looms the tariff
revised during last year may be withdrawn.
2.317 Although Govt is paying the subsidy for consumption of 500 units for power looms,
the power looms are forced to pay the fixed charges. Hence, there is no meaning for
giving free electricity.
2.318 Slab system before the last tariff order is to be restored.
2.319 The capacity of the fodder, milking machine and pesticide sprayer varies from 0.5 HP
- 2 HP.
2.320 TANGEDCO is not taking action to change the tariff from Commercial to Tariff
IIIA1 to the horticulture. The Commission shall get the details of the services which
were converted from Commercial to Tariff IIIA1 from the TANGEDCO.
2.321 Extension of waiver of fixed charges under LT III-A(2) upto 500 units bi-monthly.
2.322 The tariff hike made during last year was very high and the tariff should not be
increased for the Small and Tiny industries. Until uninterrupted power supply is
implemented in Tamil Nadu, the tariff should not be increased for the Small and Tiny
industries.
2.323 The Power factor was increased and high power factor is maintained by educating the
workers and by installing the capacitors. Hence, the Power factor incentive should be
given. For power factor between 0.85 - 0.9, 1% rebate and for power factor between
0.95 -1, 2% rebate should be given.
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Tamil Nadu Electricity Regulatory Commission Page 63
June 2013
2.324 In respect of welding services, the 15 % surcharge should be removed.
2.325 Tariff for fish culture is now charged under IIIA1 category. The same should be
converted in to free supply.
g. Tariff for LT Commercial
Stakeholder Comments
2.326 Central Prison at Coimbatore was initially charged under HT and there after their
tariff has been changed to Tariff-V by the then TNEB. Since their usage is not in
commercial nature, AG audit objects their billing which is charged under Tariff-V.
2.327 Fixed charges for commercial consumers should be reduced from Rs.120 to Rs.60.
h. Tariff General
Stakeholder Comments
2.328 There should be a reduction in number of tariff categories for HT and LT by
combining certain categories such as HT IA and HT IB can be combined, Tariff IIA,
IIB (2) and IIC may be merged, LT Tariff IIA, IIB, IV can be combined, because the
quantum of energy consumed by some of these consumers is not large enough to
merit a separate category.
2.329 Tariff proposed for 2013-14 is not as per Electricity Act, directives of ATE etc. ATE’s directive on Regulatory Assets is not complied.
2.330 Commission should not fix tariff higher than what is asked for by TANGEDCO as
done last year. The rate asked for TANGEDCO should also be reversed as
TANGEDCO has made no improvements despite a 37% increase.
2.331 The tariff proposal for fixation of tariff for the financial year 2013-14 is not showing any indication that the legal and policy guidelines are followed. Some of the
assumptions made in calculating tariff of generating stations are not in accordance
with the basic accounting principles.
2.332 The tariff revision sought in this petition is a measly figure, not worth the petition and
leads to the situation of future hikes in the form of Regulatory Asset.
2.333 TNEB Pensioners Association suggested that TANGEDCO may file a tariff petition
for FY 2013-14 to 15-16 envisaging tariff plan to recover ARR from consumers /
GoTN with suitable higher subsidy, to avoid tariff shock to economically weaker
sections.
2.334 Reduce tariff for low income groups and take assessment every month instead of bi-
monthly.
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Tamil Nadu Electricity Regulatory Commission Page 64
June 2013
2.335 Provide government subsidy for senior citizens, students of Class X, XII and college
students.
2.336 Adjust the interest on Security Deposit in the CC bill in the year end.
2.337 Consumers to be permitted to pay their CC charges for additional 10 days after the
due date with BPSC after which they can be treated as defaulters.
2.338 Cost of electricity to be differentiated between rural and city consumers.
2.339 Due to inequitable supply of power, tariff for consumers other than Chennai should be
reduced by 20% from the existing levels.
2.340 Free electricity should be provided for Training Centre run by differently abled people, since they are running their centre for their daily livelihood.
2.341 Fixed Charges per KW should be equal for all type of consumers irrespective whether
they are industrial or commercial consumers.
2.342 Since the tariff is equal throughout the state power cut should also be equal in all the districts. Otherwise the tariff shall be reduced for the places where power cut is more.
2.343 TNERC shall not bench mark the tariff of other states while determining the industrial
and commercial tariffs in Tamil Nadu. These consumers cannot take on any further
burden.
2.344 Higher tariff shall be fixed to the lavish elimination to discourage it.
2.345 Calculate power consumption of commercial malls, cinema halls separately and fix
High cost slab system.
2.346 Big commercial organizations consume power heavily for the use of air conditioners
and decorative lights inside the buildings. Therefore the definition of the lavish
elimination should be modified to accommodate these types of consumers also.
2.347 As per the order of APTEL in Appeal No 257 of 2012, request the Commission to
reconsider and re-determine the differential tariff of electricity for peak and off-peak
hours.
2.348 Commission should device steps to recover the Regulatory Asset by way of increasing
the tariff step by step
2.349 Tariff may be hiked for the I.T industries, cinema hall and marriage hall, and for
Lavish Illumination but not for agricultural category.
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i. Request for Separate Category
Stakeholder Comments
2.350 Seeking separate classification for Textile industry as LF for textile industry is 95-98%. Also referred to Clause 2.1.46 of Issue 6 Cost of Supply where it is stated that
tariff may be fixed as per consumer load factor, power factor, voltage, total
consumption and reflect cost of supply.
2.351 Consider Chennai Metro Rail Limited under special category. MOU between GoI,
GoTN, and CMRL dt 15.2.2011 states that electric power is to be made available to
CMRL on a no-profit –no-loss basis, subject to approval of TNERC. Hence tariff
made applicable to CMRL to be on actual cost of supply at 110 kV level excluding
subsidy and cross-subsidy in line with National Tariff Policy and on par with the
tariffs for DMRC and BMRCL.
2.352 For Cold storage plants and food processing plants, Medium and Small scale
industries special tariff may be announced. Power Factor incentive should be
implemented for this category.
TANGEDCO’s Reply
Tariff Categorization
2.353 TANGEDCO would like to inform that as per Section 62 of the Electricity Act, 2003,
State Commission is vested with the powers to determine tariff for various categories
of consumers. The tariff is being fixed after taking into consideration of the
consumer’s load factor, power factor, voltage, total consumption of electricity etc,.
2.354 In the tariff petition for the year 2013-14, tariff revision has been proposed only for agriculture and hut services and there is no proposal to revise the tariff for other
categories of consumers.
Tariff Proposal
2.355 In the tariff petition for the year 2013-14, tariff revision has been proposed for agriculture and hut services and there is no proposal to revise the tariff for other
categories of consumers. Taking into consideration, the power crises in the State, the
TANGEDCO has filed the petition to revise the tariff only for the LT Agricultural and
LT Hut consumers.
2.356 The Hon’ble TNERC has been vested with the powers to revise the tariff to other category of consumers either to increase or reduce without affecting the revenue of
the TANGEDCO to meet out its ARR. The tariff hike to HT consumers for 2012-13
was already upheld by the APTEL in appeal No.257 of 2012.
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Tamil Nadu Electricity Regulatory Commission Page 66
June 2013
Proportionate reduction in demand charges
2.357 Further also, in appeal No: 257 of 2012 filed by the M/s. Southern India Mills
Association, Coimbatore, against the Tariff Order No.1 of 2012 dated:30.03.2012
issued by the Hon’ble TNERC,the Hon’ble Appellate Tribunal for Electricity vide in
its order dated 09.04.2013 has upheld the levy of demand charges as stipulated in
Tariff Order No. 1 of 2012 dated 30.03.2012.
2.358 The Hon’ble TNERC vide its rulings has held that the demand charges are intended to
cover the fixed cost of TANGEDCO including interest, depreciation, employee cost,
repair and maintenance etc., and hence even if there is no power supply the demand
charges would be levied.
Separate Category for Textile Industry
2.359 If a separate tariff for textile industries is considered, then other industries coming
under industrial category may also request for a similar treatment and there will be no
tariff rationalization.
2.360 Further also, in appeal No:257 of 2012 filed by the M/s. Southern India Mills
Association, Coimbatore, against the Tariff Order No.1 of 2012 dated:30.0.03.2012
issued by the Hon’ble TNERC, the Hon’ble Appellate Tribunal for Electricity in its
order dated 09.04.2013 has upheld the non consideration of separate tariff for Textile
Industry.
Consideration of Dormitory facility as Domestic:
2.361 The Hon’ble TNERC in its Tariff Order dated 30.03.2012 has clearly stated that in case of supply under HT Tariff, except for HT Tariff III supply used for creating
facilities for the compliance of Acts/Laws or for the purpose incidental to the main
purpose of the establishment of the consumer such as facilities extended to the
employees/students/patients as the case may be within the premises of the consumer
shall be considered to be for the bonafide purpose. However, if such facilities are
extended to the public, such facilities shall be metered by the licensee separately and
charged under appropriate LT Tariff.
2.362 It has also been stated in the Tariff Order dated 30.03.2012 that in the case of supply under HT Tariff IA,IIA,IIB and HT Tariff III at the option of the consumer, the use
of electricity for the residential quarters within the premises shall be metered
separately by the licensee and charged under LT Tariff I C.
2.363 Hence, it is clear that in case of supply under I A, II A, II B and III the use of electricity for residential quarters within the premises can be charged under LT Tariff
I C at the option of the consumer.
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Tamil Nadu Electricity Regulatory Commission Page 67
June 2013
2.364 In case if the consumer does not wish to exercise any option under clause 10.1.1
under chapter 10 of the tariff Order dated 30.03.2012,then the supply of power can be
treated to be for the purpose of the establishment of the consumer such as facilities
extended to the employees/students/patients as the case may be within the premises of
the consumer and shall be considered to be for the bonafide purpose and charged
under HT Tariff I A without LT metering.
Commission’s View
2.365 Tariff categorization is dealt with in detail in the tariff schedule.
2.366 Request for a law to be enacted for providing free power to agriculture consumers will
be conveyed to GoTN.
Separate Category
2.367 In case the distribution licensee or a consumer feels the justification and necessity for
the creation of a new category, then it should submit the necessary data on consumer
and consumption pattern for the category and also ensure that the categorisation is in
accordance with the criteria for differentiation provided under Section 62(3) of the EA
2003, for the Commission's consideration.
Demand Charges
2.368 The demand charges are towards recovery of fixed charges of the distribution licensee
towards the cost of infrastructure provided to meet the maximum demand recorded by
a consumer and are not related to the hours of actual supply to the consumer. In any
case as highlighted by the consumer himself the State Commission has ordered to
collect the demand charges in relation to the quota demand instead of sanctioned
demand during the period the Restriction and Control measures are in force, which
means the consumer is not paying any excess demand charges if he restricts his
maximum demand to demand quota. The same is upheld by Hon’ble ATE in its order
on the same matter on 09.04.2013. Relevant para of the order is extracted below
10.7 Imposition of Demand charges is perfectly legal. The Demand charges are
imposed on the basis of maximum demand actually recorded or 90% of the demand
quota during the period of restriction and control. We do not find any illegality in the
impugned order in this regard.”
2.369 The Commission after carrying out a thorough review of the ARR and tariff filings
made by the utility to arrive at allowable pass through cost, based on which the tariff
applicable to each category is determined to enable recovery of the computed cost.
The determination of tariff is an exercise that factors in aspects such as prudence of
expenditure, efficiencies, cost of supply, cross subsidies etc., and put through
iterations to ensure the interests of the consumers are protected at the same time
allowing cost recoveries to happen in a reasonable manner.
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Power Factor Incentive
2.370 Power Factor (PF) disincentive and incentive should not be equated with each other. The Commission notes that PF disincentive mainly caters to passing the additional
cost of the grid imbalance settlement to the consumer. Whereas, maintaining high
power factor itself is an incentive to the consumer as it leads to stable voltage,
reduction of strain to consumer equipments and reduction of current consumption
charges to the consumer.
2.371 The Commission would like to state that power factor incentive is subjudice in
Supreme Court.
20. Consumer issues and Quality of Supply
Stakeholder Comments
2.372 Restoration of supply to Agriculture pumpsets in case of breakdown taken a long
time.
2.373 Low voltage problem exists and no quality supply is being given even during the
period where supply is available. On giving proper supply, if tariff is increased people
will be ready to pay now
2.374 As there is meter shortage, consumers purchase the meters to get new service
connections. However, the amount for cost of meters is not refunded to the
consumers. Government shall take action to manufacture the meters.
2.375 There are large numbers of applications pending before TANGEDCO for providing
agricultural service connections. The pending petitions should be disposed of on
timely basis.
2.376 Due to way leave problem agriculture service connection has not been effected even
after 7 years. Request the Commission to interfere to effect service connection to the
consumer.
2.377 R.A. No.4 of 2011 permitted refund of Power Factor incentive for 85 days frm
1.8.2010 to 25.10.2010, TANGEDCO is yet to refund the amount. Request specific
order for compliance.
2.378 Failure of distribution transformers and burning of motors are reported. To avoid this
3 phase supply should be given to agricultural consumers.
2.379 Conditions laid down by TANGEDCO for agricultural service connections are not acceptable.
2.380 Since there are no adequate employees at lower cadre, TANGEDCO’s staff is unable
to attend faults. Further, as the power is supplied at free of cost, the staff do not care
to attend the faults. The attitude of the staff of TANGEDCO should change and they
should attend the faults immediately and rectify the same.
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2.381 Shortage of employees is stated as the reason for delay in attending the faults. This
can be overcome by appointing contract labours.
2.382 Old distribution lines have to be replaced and maintenance should be done in the
distribution network.
2.383 Delay in giving agricultural connections should be avoided.
Commission’s View
2.384 The concern expressed by various consumers with regard to the quality of supply is
very relevant. The Commission has already notified the Standards of Performance
Regulations, which stipulate the quality of supply levels to be maintained by the
Utility. While overall standards may be maintained by the Utility, it is quite possible
that some chronic problems may exist in the system. TANGEDCO should take
adequate efforts to attend to these problems.
• The common problems expressed by the consumers include low voltage,
overloading and burning of transformers, cable failures, load shedding etc.
• While load shedding is directly related to the availability of power and the ability
of TANGEDCO to purchase power at high cost, the other issues are technical in
nature and will need investment in improving last mile connectivity.
• The distribution planning to be done by the TANGEDCO, duly taking into
account the requirements of Supply Code, Distribution Code etc. would go a long
way in improving the quality of supply.
• The Commission believes that TANGEDCO has its own in-house guidelines with
regard to operation and maintenance of distribution system. Adequate
transformation ratio will have to be created depending on the requirement.
• HT/LT ratio needs to be improved.
• The distribution transformers are to be metered to get the profile of the voltage,
down time as well as the energy. Normally load on transformers should be limited
to the extent of 80% of the rated capacity to prevent failures.
• The voltage at the tail end needs to be monitored at regular intervals. Proactive
action on the part of TANGEDCO will go a long way in reducing the consumers’
complaints and improving their satisfaction.
• Erection procedure and safety requirements as per section 53 of Electricity Act,
2003 should be followed in letter and spirit.
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2.385 As far as consumers are concerned, these complaints could be taken up with the
Utility directly and in the absence of corrective action by TANGEDCO, the issue
could be taken up with the Consumer Grievance Redressal Forum (CGRF) for
Redressal of grievances.
2.386 In case the consumer is not satisfied with the Order of CGRF, an appeal could be
preferred to the Ombudsman. The Regulations relating to CGRF and Ombudsman
could be referred from the website of the Commission
21. Objections/Suggestions by Southern Railways
2.387 Railway Traction should be exempt from Tax on electricity based on Article 287 of
the Constitution of India. Article 287 also embodies the fact that the tariff should be
reasonable and lower than tariffs charged to other bulk consumers.
2.388 Based on provisions of Section 62(3) of EAct 2003, the Commission may set different
tariffs according to purpose of supply. Railways are a public utility, have no profit
motive and are an essential part of the transport infrastructure of the Country.
Considering the purpose of supply the Traction category should not be burdened with
high level of cross subsidy.
2.389 Average cost / unit paid by Railways is higher than the Industries owing to the fact that while Load Factor at individual points is low due to the nature of Traction.
Considering the above in previous Tariff Orders, Commission fixed demand charges
lesser than the HT Industrial consumers, however energy charges are fixed on par
with other HT industries availing power at 11 KV without considering the fact that
voltage level for Traction is at 110 KV where transmission losses are lower.
2.390 Tariffs should reflect the cost to serve in line with Section 61 of Electricity Act 2003 and TNERC Terms and Conditions of Tariff Regulations 2005.
2.391 Category wise cost of service study carried out shows unrealistic apportionment of
costs for Railway Traction which is not based on facts.
2.392 It is submitted that coincident peak demand should be considered for allocation of
demand costs instead of non coincident peak demand. Southern Railway had
requested all SEs of TANGEDCO for load survey data downloaded during monthly
meter reading for computing coincident and non-coincident peak demands for
submitting the same to the Commission, but data from all circles is not received.
2.393 Commission should direct TANGEDCO to rework Cost to serve Railway Traction
based on coincident peak demand.
2.394 As Railways avails power supply at 110 kV directly from the 110 kV Grid of
TANTRANSCO, the demand related cost allocation should be based on Simultaneous
maximum demand as such demand related distribution costs should be zero for
Railway Traction.
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2.395 Since Railway Traction is a separate category, technical losses corresponding to the supply voltage of 110 kV should be 2.7% whereas losses upto 11 KV of 6.96% is
considered.
2.396 Commercial losses allocated to Railways is flawed, it should be zero since it is
connected to exclusive 110 KV feeders.
2.397 There are errors as far as energy consumption of Railway Traction is shown in the
petition.
2.398 Assumptions on allocation of customer related costs in the study report on Cost to
serve model in the petition is wrong and misleading. The report states that servicing
bulk consumers is costlier than retail consumers, the fact is the other way round and
hence the study needs a relook.
2.399 TANGEDCO’s proposal of imposing 15% surcharge for harmonics dumping lacks
clarity and is very high. Applicability of IEEE 519/1992 at user end in isolation for
imposing surcharge is questionable. Hence, Commission may defer implementing
surcharge for harmonics dumping until there is clarity in reckoning harmonics is
achieved.
2.400 TANGEDCO’s proposal for adopting 0.85 PF for LT consumers and 0.90 for HT
consumers is irrational. Minimum power factor stipulated for LT consumers should
atleast be equal to HT & EHT consumers.
2.401 Present low PF surcharge works out to 636.98 paise/kVARh whereas cost of reactive power due to the utility is only 10.5 paise/ kVARh. This anomaly is due to adoption
of lag + lead logic for computation of billing power factor. Imprudent implementation
of lag + lead logic of metering by TANGEDCO causes more inefficiency in the
system.
2.402 Also impact on system stability due to leading reactive power as contended by
TANGEDCO is exaggerated. While fixed capacitors gets incentives in Kerala and
Maharashtra, it is penalized in Tamil Nadu.
2.403 AP Discoms which are adopting kVAh billing also ignore leading PF for computing
kVAh consumption.
2.404 Leading PF in Railway Traction should be treated as unity PF.
2.405 Cushion of 20% over and above the Contracted Maximum Demand be allowed
without any surcharge for meeting exigencies. APERC granted such relaxation as per
their Order of 10-03-2011. Consider allowing Recorded Maximum Demand upto
120% of CMD without any penalty for occasional exceeding above CMD.
2.406 Commission to incorporate the agreed conditions between Railways and
TANGEDCO in the Terms and Conditions for Railway Traction to avoid confusion in
some circles in the matter of billing of recorded demand during feed extensions.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 72
June 2013
2.407 Recorded MD during feed extensions due to power failures attributable to
TANGEDCO/ TANTRANSCO can be ignored for billing purposes. Similarly
Recorded MD during failures of equipment or other reasons that are beyond the
control of Railways is allowed without any surcharge upto the sum of CMDs at the
failed and feed extending traction substations. APERC had allowed the same in their
Order dated 10-03-2011.
2.408 Grant suitable rebate on Demand and energy charges for a period of at least 5 years
from the date of commissioning for the new Traction subs stations. Other States are
giving similar benefits to encourage Railways. .
2.409 Commission to direct TANGEDCO to re-programme the existing energy meters to
record the export of energy as well and billed on net metering principles as adopted
for NCES sources. This is in view of Railways introducing a new generation 3 phase
electric locomotives type WAP7 and WAG9 which works on unity power factor for
all loads and has regenerative braking facility. Therefore, 14-18% of energy is
regenerated and fed back into the grid when there are no sufficient trains in the
section.
TANGEDCO’s Replies
Cost to serve Railway Traction at 110 kV
2.410 Taking into consideration the views and objections, the Hon’ble TNERC in its Tariff Orders dated: 31.07.2010 and 30.03.2012 have fixed the demand charges for Railway
traction as Rs.250/KVA i.e. less by Rs.50/KVA compared to HT Industrial
consumers. However, the energy Charges were fixed on par with the HT Industries.
TANGEDCO has not proposed any changes in all categories of HT consumers in the
tariff petition filed before the Hon’ble TNERC for determining tariff for the FY 2013-
14.
2.411 The Hon’ble commission is the competent authority to fix the tariff taking into
account the revenue requirement of TANGEDCO.
Surcharge for excess over CMD for traction
2.412 In any month if the recorded demand exceeds the contracted (sanctioned) demand, the
Tamil Nadu Electricity Supply Code permits the licensee to levy surcharge on the
excess over contracted maximum demand charges. Accordingly, the TANGEDCO
levies the surcharge for excess over contracted maximum demand.
2.413 The request of the Southern Railways not to levy any penalty for occasional exceeding above to the Contracted Maximum Demand is not related to the tariff order
and can be considered only by way of an amendment to the Tamil Nadu Electricity
Supply Code. Hence, the Southern Railways are requested to approach the TNERC
for making necessary amendment to the TNERC Supply Code.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 73
June 2013
Recorded Maximum Demand during feed extension:
2.414 The Consumer has to meet out their demand requirement within their sanctioned
demand. To maintain their recorded demand within the sanctioned demand they have
to create / develop adequate infrastructure within their premises / usage areas.
2.415 The Regulations of the Commission do not have any provision to provide rebate for
the development of infrastructure in the consumer area.
Levy of low power factor surcharge:
2.416 The Commission has ordered to maintain the power factor at the minimum level of
0.9 to the HT consumers and 0.85 to LT consumers. The request of the Southern
Railways to waive the levy of penalty to leading power factor has not been considered
by the commission and the same has also been upheld by the Hon’ble APTEL.
2.417 Hence, the request of the Southern Railways to consider the leading power factor as unity power factor is settled one.
Harmonic surcharge:
2.418 TANGEDCO submits that the harmonic surcharge was made applicable vide tariff
order dated 30th March 2012 and is within the purview of the Hon’ble Commission.
The detailed report on measurement of harmonics and methodology to be adopted for
the same are enclosed.
Metering to regeneration units
2.419 The generators are entitled to inject energy into the grid. Presently there is no provision in the Commission’s Regulations / orders which permits the consumer to
inject the energy into the grid as requested by the Southern Railways.
Commission’s View
2.420 Tax exemption for Railways is prerogative of the state Government.
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Tamil Nadu Electricity Regulatory Commission Page 74
June 2013
2.421 Regarding the low power factor surcharge, it is stated that the railways filed a petition MP. No. 5 of 2006 with the Commission for restoration of old system of computation
of power factor. The Commission did not accept the plea of the railways in its Order
dated 2-4-2007 and directed the railways to introduce the dynamic compensation
system within a period of three years. Two years later Railways filed another petition
MP No. 3 of 2009 pleading to permit them to adopt “Lag only” logic for metering and
to use only static capacitor compensation for their traction sub-stations. This petition
was dismissed by the Commission in its Order dated 29-6-2009. Against this Order,
the railways filed a review petition RP No. 2 of 2009. The review petition was
disposed of by a reasoned order on merits by the Commission in its Order dated 1-4-
2010. The Railways preferred an appeal against Commission’s Order on RP No. 2 of
2009 dated 1-4-2010. But the APTEL dismissed the Appeal No. 122 of 2010 by its
Order dated 4-11-2011. Raising of the same issue by the Railways again has no
meaning and serves no purpose.
2.422 The Railways have requested the Commission to defer charging of harmonics
surcharge since there is no standard procedure available for measurement of
harmonics. The harmonics norms have been fixed by the CEA in its Regulations
notified on 21-02-2007. The Regulation specifies that the norms shall be
implemented and complied with not later than 5 years from the date of publication of
the regulation. Accordingly, the Commission only implemented the provision in its
Order T.P. No. 1 of 2012. The measurement of harmonics has already been done
jointly by Salem Steel Plant and TANGEDCO as per the norms of the CEA and this
has been recognized by the Commission in its order on MP No. 22 of 2011 dated 28-
9-2012.
2.423 The Commission approved demand charges of Rs.250/- per kVA in its earlier tariff
order against Rs.300/- per kVA approved for other consumers considering the special
nature of the traction load. The Commission is of the view that the Railways, request
to permit 120% of the contracted demand is not supported by reasons and is not in
line with the Regulations.
2.424 Regarding the net metering facilities requested for accounting of power exported from
re-generative breaking, Southern Railways may approach the distribution licensee to
study the proposal for implementation. The TANGEDCO and the railways are
directed to assist each other and resolve the issue and this issue may be brought before
the Commission.
2.425 Regarding charging of tariff on the basis of voltage wise cost to serve it is stated that the issue has been dealt with in detail separately in this order.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 75
June 2013
A3: FINAL TRUE-UP FOR FY 2010-11, PROVISIONAL TRUE-UP FOR
FY 2011-12 AND ANNUAL PERFORMANCE REVIEW FOR FY
2012-13
3.1 TANGEDCO, in its Petition has, sought for Final Truing up of expenditure and
revenue for FY 2010-11 and Provisional Truing up for FY 2011-12 based on the
actual expenditure and revenue as per the Audited Accounts and Provisional Accounts
respectively. It has also sought for the Annual Performance Review for the year FY
2012-13 based on information furnished by it. In this Section, the Commission has
analysed all the elements of revenue and expenses for FY 2010-11, FY 2011-12 and
FY 2012-13, and has undertaken the Truing up of expenses and revenue after due
prudence check.
3.2 This chapter summarizes the highlights of the petitions filed by Tamil Nadu
Generation and Distribution Company Limited (TANGEDCO) for final true-up of
FY11, Provisional true-up of FY12 and Annual Performance Review for FY13.
Energy Sales – FY11 and FY12
3.3 Tamil Nadu Generation and Distribution Company Limited (TANGEDCO), in its
Petition submitted the actual energy sales to various consumer categories during FY
2010-11, FY 2011-12 and FY 2012-13. In this Section, the Commission has analysed
the sales and distribution loss trajectory from FY 2010-11 to FY 2012-13. On the
basis of approved Distribution Loss, the Commission has approved the energy
balance.
3.4 The Commission in its previous Tariff Order had approved the category-wise energy
sales after deducting the wheeled units and then considering the past trends in the
growth of category-wise sales. TANGEDCO in its current Petition has furnished
actual sales quantum for FY 2010-11 based on Audited accounts, for FY2011-12
based on Provisional accounts and for FY2012-13 based on actuals till February. The
category-wise energy sales (excluding wheeling units) as approved by the
Commission last year vis-à-vis the sales quantum filed by TANGEDCO this year for
FY 2010-11 and FY 2011-12 are tabulated below.
Table 1: Comparison of category-wise sales approved in the last Tariff Order and actual as filed in this
Petition (MUs)
Particulars
2010-11 2011-12
Approved
in the last
order
Actual
5 months
Actual
Approved
in the last
order
Actual
HT Consumer Category
I-A HT Industries 12,210 11,949 4,422 10,657 9,581
I-B Railway Traction 485 373 248 654 708
II-A Govt. Educational Inst. etc. 903 1,113 482 882 1,251
II-B Pvt. Educational Inst. etc. 148 87 53 222 227
II-C Places of Public Worship 3 36 10 5 28
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Tamil Nadu Electricity Regulatory Commission Page 76
June 2013
Particulars
2010-11 2011-12
Approved
in the last
order
Actual
5 months
Actual
Approved
in the last
order
Actual
III HT Commercial 1,763 1,821 789 1,651 1,856
IV Lift Irrigation 7 17 11 6 6
V Supply to Puducherry and Other States 0 412 174 0 400
Sub Total HT 15,520 15,808 6,187 14,078 14,057
LT Consumer Category
I-A Domestic 16,309 16,249 6,251 17,428 17,507
I-B Huts 355 355 148 462 395
I-C LT bulk supply 10 15 5 11 21
II-A Public Lighting and Water Supply 1,603 1,609 672 1,614 1,700
II-B-1 Govt. Educational Inst. etc. 84 501 202 127 574
II-B-2 Pvt. Educational Inst. etc. 150 9 8 254 247
North Chennai TPS 50.58 126.24 131.29 46.72 116.00 128.37
Total Thermal 169.41 422.85 439.76 196.44 518.66 572.20
Tirumakottai GTPS 3.10 7.74 8.05 2.73 10.06 10.95
Kuttalam GTPS 8.61 17.04 17.72 0.82 7.14 7.78
Basin Bridge GTPS 2.49 6.22 6.47 2.72 5.69 6.32
Valuthur GTPS 3.45 8.62 8.96 21.06 7.95 8.88
Total Gas 17.66 39.63 41.21 27.34 30.84 33.93
Erode HEP 14.34 35.79 37.22 11.10 26.52 29.83
Kadamparai HEP 8.03 20.03 20.83 10.88 22.05 24.32
Kundah HEP 16.13 37.34 38.83 15.18 35.91 39.86
Tirunelveli HEP 9.70 24.22 25.19 9.66 24.19 27.50
Total Hydro 48.19 117.38 122.07 46.83 108.67 121.50
Total Generation 235.26 579.86 603.04 270.60 658.16 727.63
Total Distribution 1092.94 2727.99 2837.11 1388.30 3652.49 3690.85
Total TANGEDCO 1328.20 3307.85 3440.15 1658.90 4310.66 4418.48
3.79 From the above table it can be observed that TANGEDCO in this true-up and
performance review exercise has sought for Commission’s approval for the increase
in O&M expenses ranging from 25% to 30% for the first control period.
3.80 In response to data gaps and during discussions held with TANGEDCO officials, it
was clarified that one of the reasons for this variation is due to segregation of
accounts between TANGEDCO and TANTRANSCO
3.81 It is pertinent to mention that GoTN vide G.O.(Ms) No 114 Energy Dept., dated 08-
10-2008 have accorded in principle approval for the reorganization of TNEB.
Pursuant to this G.O. TANGEDCO and TANTRANSCO were incorporated on 1st
December 2009 and started functioning as such w.e.f 1st November 2010. Hence,
TANGEDCO and TANTRANSCO have been maintaining separate accounts from
then onwards.
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Tamil Nadu Electricity Regulatory Commission Page 108
June 2013
3.82 Prior to this there were separate accounts for each generating station. However, for
transmission and distribution expenses consolidated accounts were maintained.
TANGEDCO in its last Petition had segregated the O&M expenses under
transmission and distribution heads with some assumptions. In previous Petition of
TN power utilities, Employee expenses and A&G expenses were bifurcated between
Distribution and Transmission business based on number of employees while R&M
expenses have been bifurcated based on GFA.
3.83 However TN Power utilities have clarified in their current MYT Petition that they
have submitted the actual expenses based on their audited accounts. Also,
TANGEDCO in its Petition has submitted that it was unbundled from the erstwhile
TNEB only on 31st Oct 2010 and it is difficult for it to derive the O&M expenses
pertaining to Transmission activities for the last 5 years. Hence, it has projected the
expenses from FY 2012-13 based on the expenses for the FY 2010-11 and FY 2011-
12
3.84 It is pertinent to mention that in the process of the approval of O&M expenses, the
Commission will be guided by the following regulations
Regulation – 14 of TNERC Tariff Regulations
“14. Multiyear tariff
(5) All the uncontrollable costs shall be allowed as pass through in tariff and
the uncontrollable costs will include the following:
(a) Cost of fuel;
(b) Costs on account of inflation;
(c) Taxes and duties; and
(d) Variation in power purchase unit cost from base line level
including on account of hydro-thermal mix in case of force majure and
adverse natural events like drought
(6) The Operation and Maintenance cost shall be controllable cost and be
based on escalation indices or other mode determined during determination
of tariff for the base year.
Regulation-25 of TNERC Tariff Regulations:
“25. Operation and Maintenance Expenses
1. The operation and maintenance expenses shall be derived on the basis of
actual operation and maintenance expenses for the past five years previous to
current year based on the audited Annual Accounts excluding abnormal
operation and maintenance expenses, if any, after prudence check by the
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Tamil Nadu Electricity Regulatory Commission Page 109
June 2013
Commission. The Commission may, if considered necessary engage
Consultant / Auditors in the process of prudence check for correctness.
2. The average of such normative operation and maintenance expenses after
prudence check shall be escalated at the rate of 4% per annum to arrive at
operation and maintenance expenses for current year i.e. base year and
ensuing year.
3. The base operation and maintenance expenses so determined shall be
escalated further at the rate of 4% per annum to arrive at permissible
operation and maintenance expenses for the relevant years of tariff period.
…”
3.85 In following para’s each component of O&M expenses will be discussed in detail and
Commission’s approval for the same is accorded.
Employee Expenses
3.86 TANGEDCO has filed the actual employee expenses based on audited accounts for
FY 2010-11 and based on provisional accounts for FY 2011-12. It has then projected
the employee costs based on the following assumptions:
i. Basic salary and grade pay have been considered with an escalation of 5% for
FY 2013-14 to FY 2014-15 and 10% for FY 2012-13 and FY 2015-16 due to
wage revision.
ii. Escalation of DA rate at 15% per annum
iii. Other expenses such as surrender leave, terminal benefits, pension schemes
etc. at 10%.
3.87 On preliminary scrutiny of employee expenses proposed by TANGEDCO it was
observed that there is significant increase in employee expenses corresponding to
TANGEDCO while there is decrease in employee costs pertaining to
TANTRANSCO. During the discussions with TANGEDCO officials it was
mentioned that in the last petition the employee expenses submitted under distribution
and transmission petition was based on certain assumptions due to unavailability of
separate accounts. However, they have clarified that all the employee expenses are
being currently accounted under respective audited accounts except for terminal
benefits. TANGEDCO has stated that entire pension payments are being made by
TANGEDCO on behalf of TNEB and hence the terminal benefits pertaining to
TANTRANSCO are also included in TANGEDCO audited accounts.
3.88 This fact was also mentioned in the audited accounts for FY 2011-12 of TANGEDCO
under point 9 of “Statement-5: Notes to Accounts” and is reproduced below:
“The pension payments of existing pensioners of erstwhile TNEB are being paid by
TANGEDCO since no segregation of pensioner’s liability has been finalized in the
provisional transfer scheme. The payments of pension to those who have retired from
01.10.2010 to 31.03.2013 are also made by TANGEDCO and out of it the
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 110
June 2013
TANTRANSCO’s share has not been determined so far. As and when it’s ascertained,
the company has to claim the payment from TANTRANSCO.”
3.89 Hence for regulatory accounting and approval, Commission in consultation with
TANGEDCO and TANTRANSCO officials have bifurcated the terminal benefits
based on the employee ratio of 6:1 (TANGEDCO to TANTRANSCO). In this true-up
Commission will approve the terminal benefits expenses for TANGEDCO only to the
extent of its liability.
Table 40: Re-estimation of terminal benefits of TANGEDCO and TANTRANSCO (Rs. Cr.)
Parameter
Actual figures as per Audited
Accounts
Commissions Re-Estimate –
(Based on 6:1 ratio)
FY 2011 FY 2012 FY 2011 FY 2012
Terminal Benefits –
TANGEDCO 601.50 1,591.55 523.97 1,383.09
Terminal Benefits –
TANTRANSCO 9.79 22.06 87.33 230.52
Total 611.29 1,613.61 611.29 1,613.61
Table 41: Segregation of Terminal benefits between generating stations and distribution business (Rs.
Cr.)
Year
TANGEDCO
Claimed for Own
Generation Stations in
MYT Petition
Approved for
Distribution Business
FY 2010-11 523.97 8.93 515.04
FY 2011-12 1,383.09 23.13 1,359.96
3.90 The employee expenses after accounting for terminal benefits have only increased
marginally for TANGEDCO except for MTPS and TTPS compared to Commission’s
approved employee expenses. For these two stations in the last order Commission has
approved the employee expenses based on five year average to arrive at the employee
expense for base year. Commission is of the view that averaging the last five years
(FY 2006 to FY 2010) expense had resulted in approving the employee expense for
these stations equivalent to the median year (i.e. for FY 2008).
3.91 Hence Commission is accepting the actual employee expenses for FY 2010-11 and
FY 2011-12 as submitted by TANGEDCO for all the generating stations and
distribution business for the reasons stated above.
3.92 Though TANGEDCO has proposed escalations of more than 4% for various
components of employee expenses for FY 2012-13, Commission in accordance with
its regulation has escalated the approved employee expenses of FY 2011-12 at 4% on
all components except for DA for arriving at the employee expenses for FY 2012-13.
However, if the proposed pay revision increase the employee expenses significantly,
as submitted by TANGEDCO, then TANGEDCO is required to quantify the impact
due to pay revision and submit to the Commission during the true-up exercise for FY
2012-13.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 111
June 2013
3.93 As per the TNERC Tariff Regulations increase in costs due to inflation is required to
be passed through in tariff. DA percentage notified by the GoTN is dependent on
inflation and hence increase in employee cost to the extent of DA variation will be
allowed as a pass through in tariff. Hence, the DA rates as notified by GoTN have
been used for estimating the dearness allowance instead of taking an escalation of 4%
as per TNERC Tariff Regulations.
3.94 The employee capitalization for FY 2012-13 of generating stations has been arrived
based on the percentage of employee expenses capitalized in FY 2010-11 and FY
2011-12. However, for distribution business the employee capitalization as per
audited accounts comes to 5%, which is on a lower side compared to historic trend.
Also, TANGEDCO has proposed a higher capitalization rate of 15% for FY 2012-13.
In view of these discrepancies Commission has relied on average employee
capitalization of 9% based on historical data.
Table 42: Estimation of average DA rate applicable for FY 2012-13
Year Eff. Date Rate of DA Months Avg Rate
2012-13
1/1/2012 65% 3
72.25% 1/7/2012 72% 6
1/1/2013 80% 3
3.95 Based on the above approach and methodology, the employee costs submitted by
TANGEDCO and approved by the Commssion is tabulated below:
Table 43: Approved employee expenses for FY 2010-11 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 22.55 24.97 24.97
Tuticorin TPS 23.28 32.42 32.42
Mettur TPS 18.99 30.39 30.39
North Chennai TPS 23.67 23.32 23.32
Total Coal 88.49 111.09 111.09
Tirumakottai GTPS 1.49 1.21 1.21
Kuttalam GTPS 1.33 0.00 0.00
Basin Bridge GTPS 1.53 1.38 1.38
Valuthur GTPS 0.54 2.21 2.21
Total Gas 4.90 4.80 4.80
Erode HEP 11.94 9.74 9.74
Kadamparai HEP 6.13 7.36 7.36
Kundah HEP 9.28 9.85 9.85
Tirunelveli HEP 7.64 7.85 7.85
Total Hydro 34.98 34.80 34.80
Total Generation 128.38 150.68 150.68
Distribution 1,052.15 1,305.27 1,228.75
TANGEDCO 1,180.53 1,455.95 1,379.43
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 112
June 2013
Table 44: Approved employee expenses for FY 2011-12 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 56.27 62.08 62.08
Tuticorin TPS 58.12 82.06 82.06
Mettur TPS 47.40 73.04 73.04
North Chennai TPS 59.09 50.49 50.49
Total Coal 220.88 267.67 267.67
Tirumakottai GTPS 3.73 3.91 3.90
Kuttalam GTPS 1.60 3.10 3.10
Basin Bridge GTPS 3.83 3.53 3.53
Valuthur GTPS 1.35 5.87 5.86
Total Gas 10.50 16.41 16.39
Erode HEP 29.79 22.88 22.88
Kadamparai HEP 15.29 15.08 15.08
Kundah HEP 19.96 24.50 24.50
Tirunelveli HEP 19.06 19.60 19.60
Total Hydro 84.10 82.06 82.06
Total Generation 315.48 366.13 366.12
Distribution 2626.16 3437.05 3206.77
TANGEDCO 2941.64 3803.19 3572.89
Table 45: Approved employee expenses for FY 2012-13 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 58.52 71.19 65.94
Tuticorin TPS 60.44 94.40 91.46
Mettur TPS 49.30 84.09 81.52
North Chennai TPS 61.45 59.02 59.41
Total Coal 229.71 308.71 298.33
Tirumakottai GTPS 3.88 4.52 4.33
Kuttalam GTPS 1.66 3.56 2.31
Basin Bridge GTPS 3.98 4.03 3.90
Valuthur GTPS 1.40 6.68 6.56
Total Gas 10.92 18.80 17.09
Erode HEP 30.99 26.01 28.84
Kadamparai HEP 15.90 17.17 16.79
Kundah HEP 20.75 28.00 26.85
Tirunelveli HEP 19.82 22.40 21.79
Total Hydro 87.47 93.59 94.27
Total Generation 328.09 421.09 409.70
Distribution 2,731.21
3,447.65
3,360.21
TANGEDCO 3059.30 3868.74 3769.90
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Tamil Nadu Electricity Regulatory Commission Page 113
June 2013
Repair and Maintenance Expenses
3.96 On preliminary scrutiny, Commission has found that R&M expenses for few stations
such as VGTPS, ETPS, TTPS and TGTPS have increased significantly. In response to
data gaps, TANGEDCO has replied in a generic manner without giving any specific
reasons for increase in these expenses. In this context it is pertinent to mention that
the Commission is already allowing 0.5% of capital cost of generating assets for self
insurance and any abnormal increase in R&M expenses due to unforeseen reasons can
be met through this fund.
3.97 R&M expenses being completely a controllable expense and since TANGEDCO
could not substantiate the abnormal increase in R&M expenses with appropriate
reasons, Commission in this order is approving the R&M expenses as approved in the
last order except for generating stations such as TTPS, MTPS and VGTPS..
3.98 In the last order for TTPS, MTPS and VGTPS generating stations, Commission had
approved the R&M expenses in accordance to its Tariff Regulation by taking the
average R&M expenses of last five financial years i.e. from FY 2005-06 to FY 2009-
10 in order to arrive at the R&M expenses for the base year. In this process of
averaging the R&M expenses arrived will correspond to the median year i.e. FY
2007-08 and hence average expenses must be escalated at 4% year on year for
arriving at the R&M expenses for the base year FY 2010-11. Hence in this order
Commission is approving additional R&M expenses to these stations to the extent of
this correction.
3.99 In the previous order, Commission had approved the R&M expenses as claimed by
TANGEDCO. Also, historically the R&M expenses were varying erratically and it
may not be appropriate to take the average R&M expenses for the last five years.
Hence, Commission has approved the R&M expenses for KGTPS as claimed by
TANGEDCO based on actual expenditure incurred.
3.100 As already mentioned earlier, in the last Petition TANGEDCO and TANTRANSCO
have segregated the R&M expenses between distribution and transmission business
based on certain assumptions. However during review of current audited accounts it
has been observed that R&M expenses of TANTRANSCO have decreased while
R&M expenses of TANGEDCO have increased. It was also confirmed by
TANGEDCO during the discussion that no part of R&M expenses on account of
TANTRANSCO are being booked in TANGEDCO accounts. Hence, the variation in
expenses is only due to proper accounting practices adopted after unbundling and that
approach will continue in future.
3.101 Commission is of the view that ratio of R&M expenses approved for transmission and
distribution business may change but the total expenses cannot increase. Hence while
approving the R&M expenses for the distribution business, increase in R&M expenses
only to the tune of decrease in R&M expenses of TANTRANSCO compared to that
approved in last order has been allowed.
3.102 Based on the above approach, the R&M expenses submitted by TANGEDCO and
approved by the Commission is tabulated below:
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Tamil Nadu Electricity Regulatory Commission Page 114
June 2013
Table 46: Approved R&M expenses for FY 2010-11 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 13.36 14.34 13.36
Tuticorin TPS 13.26 24.30 14.91
Mettur TPS 10.90 12.82 12.27
North Chennai TPS 22.58 20.36 22.58
Total Coal 60.10 71.82 63.12
Tirumakottai GTPS 0.64 1.23 0.64
Kuttalam GTPS 6.49 0.73 0.73
Basin Bridge GTPS 0.33 0.92 0.33
Valuthur GTPS 0.80 18.57 0.90
Total Gas 8.25 21.46 2.60
Erode HEP 0.43 0.37 0.43
Kadamparai HEP 0.76 0.68 0.76
Kundah HEP 1.32 0.79 1.32
Tirunelveli HEP 0.71 0.41 0.71
Total Hydro 3.23 2.26 3.23
Total Generation 71.59 95.54 68.95
Distribution 17.23 24.71 24.48
TANGEDCO 88.82 120.25 93.42
Table 47: Approved R&M expenses for FY 2011-12 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 33.36 40.83 33.36
Tuticorin TPS 33.09 98.16 37.23
Mettur TPS 27.22 22.03 30.62
North Chennai TPS 56.35 61.80 56.35
Total Coal 150.02 222.82 157.55
Tirumakottai GTPS 1.60 5.24 1.60
Kuttalam GTPS 12.29 3.57 3.57
Basin Bridge GTPS 0.82 1.19 0.82
Valuthur GTPS 2.00 1.33 2.25
Total Gas 16.71 11.32 8.23
Erode HEP 1.09 1.06 1.09
Kadamparai HEP 1.91 1.51 1.91
Kundah HEP 2.23 1.28 2.23
Tirunelveli HEP 1.78 1.57 1.78
Total Hydro 7.01 5.42 7.01
Total Generation 173.74 239.56 172.79
Distribution 43.01 63.88 58.80
TANGEDCO 216.75 303.44 231.59
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 115
June 2013
Table 48: Approved R&M expenses for FY 2012-13 (Rs. Cr.)
Plant
Last Tariff
Order Petition Commission
Ennore TPS 34.69 42.47 34.69
Tuticorin TPS 34.42 102.08 38.72
Mettur TPS 28.31 22.91 31.84
North Chennai TPS 58.61 64.28 58.61
Total Coal 156.02 231.74 163.85
Tirumakottai GTPS 1.66 5.45 1.66
Kuttalam GTPS 12.78 3.71 3.71
Basin Bridge GTPS 0.85 1.23 0.85
Valuthur GTPS 2.08 1.38 2.34
Total Gas 17.37 11.78 8.56
Erode HEP 1.13 1.10 1.13
Kadamparai HEP 1.98 1.57 1.98
Kundah HEP 2.32 1.33 2.32
Tirunelveli HEP 1.85 1.63 1.85
Total Hydro 7.29 5.64 7.29
Total Generation 180.69 249.15 179.70
Distribution 44.73 66.60 60.07
TANGEDCO 225.42 315.74 239.77
Administrative and General Expenses
3.103 On preliminary scrutiny, Commission has found that A&G expenses for generating
stations has decreased while that of distribution business has increased compared to
Commission approved A&G expenses. This is mainly due to accounting of self-
insurance charges pertaining to generating stations in distribution business.
3.104 Unlike employee expenses, A&G expenses are completely controllable. Hence,
Commission in this order is approving the A&G expenses as approved in the last
order except for few generating stations for which Commission feels that the
approved numbers in the last order are required to be revisited.
3.105 In the last order for TTPS, MTPS and VGTPS generating stations, Commission has
approved the A&G expenses in accordance to its Tariff Regulation by taking the
average A&G expenses of last five financial years i.e. from FY 2005-06 to FY 2009-
10 in order to arrive at the A&G expenses for the base year. In this process of
averaging the A&G expenses arrived will correspond to the median year i.e. FY 2007-
08 and hence average expenses must be escalated at 4% year on year for arriving at
the A&G expenses for the base year FY 2010-11. Hence in this order Commission has
approved additional A&G expenses of these stations to the extent of this correction.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 116
June 2013
3.106 Similar to R&M expenses, in its last Petition TANGEDCO and TANTRANSCO have
segregated the A&G expenses between distribution and transmission business based
on certain assumptions. However during review of audited accounts it has been
observed that A&G expenses of TANTRANSCO have decreased while A&G
expenses of TANGEDCO have increased. It was also confirmed by TANGEDCO
during the discussion that no part of A&G expenses on account of TANTRANSCO
are being booked in TANGEDCO accounts. Hence, the variation in expenses is only
due to change in accounting methodology adopted and that approach will continue in
future.
3.107 Commission is of the view that ratio of A&G expenses approved for transmission and
distribution business may change but A&G expense being a controllable expense, the
total A&G expenses cannot increase more than that approved by the Commission.
Hence while approving the A&G expenses for the distribution business, increase in
A&G expenses only to the tune of decrease in A&G expenses of TANTRANSCO
compared to that approved in last order has been allowed.
3.108 Based on the above approach, the A&G expenses submitted by TANGEDCO and
approved by the Commission is tabulated below:
Table 49: Approved A&G expenses for FY 2010-11 (Rs. Cr.)
Plant
Last Tariff
Order Petition Commission
Ennore TPS 3.72 1.42 3.72
Tuticorin TPS 8.16 4.20 9.18
Mettur TPS 4.61 4.88 5.19
North Chennai TPS 4.33 3.04 4.33
Total Coal 20.81 13.53 22.41
Tirumakottai GTPS 0.97 0.29 0.97
Kuttalam GTPS 0.79 0.09 0.79
Basin Bridge GTPS 0.63 0.41 0.63
Valuthur GTPS 2.11 0.29 2.37
Total Gas 4.50 1.08 4.76
Erode HEP 1.97 0.99 1.97
Kadamparai HEP 1.13 2.84 1.13
Kundah HEP 5.53 4.54 5.53
Tirunelveli HEP 1.35 1.40 1.35
Total Hydro 9.98 9.77 9.98
Total Generation 35.29 24.38 37.15
Distribution 23.56 58.32 28.48
TANGEDCO 58.85 82.70 65.63
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 117
June 2013
Table 50: Approved A&G expenses for FY 2011-12 (Rs. Cr.)
Plant
Last Tariff
Order Petition Commission
Ennore TPS 9.28 6.43 9.28
Tuticorin TPS 20.36 10.51 22.90
Mettur TPS 11.51 7.53 12.95
North Chennai TPS 10.80 3.70 10.80
Total Coal 51.96 28.17 55.93
Tirumakottai GTPS 2.42 0.90 2.42
Kuttalam GTPS 3.15 0.47 3.15
Basin Bridge GTPS 1.58 0.98 1.58
Valuthur GTPS 5.27 0.76 5.93
Total Gas 12.42 3.11 13.08
Erode HEP 4.91 2.58 4.91
Kadamparai HEP 2.83 5.46 2.83
Kundah HEP 15.15 10.13 15.15
Tirunelveli HEP 3.38 3.02 3.38
Total Hydro 26.27 21.19 26.27
Total Generation 90.64 52.46 95.28
Distribution 58.81 151.56 61.79
TANGEDCO 149.45 204.02 157.07
Table 51: Approved A&G expenses for FY 2012-13 (Rs. Cr.)
Plant
Last Tariff
Order Petition Commission
Ennore TPS 9.65 6.83 9.65
Tuticorin TPS 21.18 11.81 23.82
Mettur TPS 11.97 8.05 13.46
North Chennai TPS 11.24 5.07 11.24
Total Coal 54.03 31.76 58.17
Tirumakottai GTPS 2.51 0.98 2.51
Kuttalam GTPS 3.28 0.51 3.28
Basin Bridge GTPS 1.64 1.06 1.64
Valuthur GTPS 5.48 0.81 6.16
Total Gas 12.91 3.36 13.60
Erode HEP 5.10 2.71 5.10
Kadamparai HEP 2.95 5.58 2.95
Kundah HEP 15.76 10.52 15.76
Tirunelveli HEP 3.51 3.46 3.51
Total Hydro 27.32 22.28 27.32
Total Generation 94.26 57.39 99.09
Distribution 61.17 176.61 57.14
TANGEDCO 155.43 234.00 156.23
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 118
June 2013
3.109 Based on the above approach, the O&M expenses submitted by TANGEDCO and
approved by the Commission is tabulated below:
Table 52: Approved O&M expenses for FY 2010-11 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 39.63 40.73 42.05
Tuticorin TPS 44.70 60.92 56.51
Mettur TPS 34.50 48.09 47.85
North Chennai TPS 50.58 46.72 50.23
Total Coal 169.41 196.46 196.64
Tirumakottai GTPS 3.10 2.73 2.82
Kuttalam GTPS 8.61 0.82 1.52
Basin Bridge GTPS 2.49 2.71 2.34
Valuthur GTPS 3.45 21.07 5.48
Total Gas 17.65 27.33 12.16
Erode HEP 14.34 11.10 12.14
Kadamparai HEP 8.02 10.88 9.25
Kundah HEP 16.13 15.18 16.70
Tirunelveli HEP 9.70 9.66 9.91
Total Hydro 48.19 46.82 48.00
Total Generation 235.25 270.61 256.80
Distribution 1092.94 1388.3 1281.71
TANGEDCO 1328.19 1658.91 1538.51
Table 53: Approved O&M expenses for FY 2011-12 (Rs. Cr.)
Plant Last Tariff Order Petition Commission
Ennore TPS 98.91 109.34 104.72
Tuticorin TPS 111.57 190.73 142.19
Mettur TPS 86.13 102.60 116.61
North Chennai TPS 126.24 115.99 117.64
Total Coal 422.85 518.66 481.16
Tirumakottai GTPS 7.75 10.05 7.92
Kuttalam GTPS 17.04 7.14 9.82
Basin Bridge GTPS 6.23 5.70 5.93
Valuthur GTPS 8.62 7.96 14.04
Total Gas 39.64 30.85 37.71
Erode HEP 35.79 26.52 28.88
Kadamparai HEP 20.03 22.05 19.82
Kundah HEP 37.34 35.91 41.88
Tirunelveli HEP 24.22 24.19 24.76
Total Hydro 117.38 108.67 115.34
Total Generation 579.87 658.18 634.21
Distribution 2727.98 3652.49 3327.36
TANGEDCO 3307.85 4310.67 3961.57
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 119
June 2013
Table 54: Approved O&M expenses for FY 2012-13 (Rs. Cr.)
Plant
Last Tariff
Order Petition Commission
Ennore TPS 102.86 120.49 110.28
Tuticorin TPS 116.04 208.29 154.00
Mettur TPS 89.58 115.05 126.82
North Chennai TPS 131.30 128.37 129.26
Total Coal 439.78 572.20 520.36
Tirumakottai GTPS 8.05 10.95 8.50
Kuttalam GTPS 17.72 7.78 9.30
Basin Bridge GTPS 6.47 6.32 6.39
Valuthur GTPS 8.96 8.87 15.06
Total Gas 41.20 33.92 39.25
Erode HEP 37.22 29.82 35.07
Kadamparai HEP 20.83 24.32 21.72
Kundah HEP 38.83 39.85 44.93
Tirunelveli HEP 25.18 27.49 27.15
Total Hydro 122.06 121.48 128.87
Total Generation 603.04 727.60 688.48
Distribution 2837.11 3690.86 3477.42
TANGEDCO 3440.15 4418.46 4165.90
Segregation of accounts
3.110 In terms of the Transfer Scheme notification dated 02nd January 2012, the
Government of Tamil Nadu had assigned the Assets and Liabilities (as on 31.03.2010)
to TANGEDCO on a Provisional basis and hence the transaction for 7 months i.e.
from 1st April 2010 to 30th October 2010, does not get reflected in the opening
balance sheet of the TANGEDCO as specified in the Transfer Scheme.
3.111 TANGEDCO has filed the Petition in accordance with the provisional transfer scheme
and hence the opening GFA as on November 2010 is considered equal to the closing
GFA as on March 2010.
3.112 In addition, the opening GFA as on November 2010 includes the revaluation reserve
of Rs. 5579.40 Crs. The summary of opening GFA as per provisional transfer scheme
dated 2nd January 2012 is tabulated below:
Table 55: TANGEDCO GFA as on Nov 2010 - based on provisional transfer scheme (Rs. Cr)
Particulars Generation Distribution Total G&D
Before Revaluation 10,558.49 7,668.03 18,226.52
Revaluation Reserve as on Nov 2010 1889.76 3689.64 5,579.40
Including Revaluation 12,448.25 11,357.67 23,805.92
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 120
June 2013
3.113 During the discussion, TANGEDCO has informed that revaluation of assets is still
underway and the GFA as on Nov 2010 will be only finalized in the final transfer
scheme. The GFA in the TANGEDCO Petition was inclusive of this revaluation
reserve as per provisional transfer scheme. However, in reply to data gaps,
TANGEDCO has revised the GFA excluding the revaluation reserve and segregated
the loans and other expenses between generation business and distribution business
based on the GFA prior to revaluation reserve. TANGEDCO also clarified that
revaluation reserve will not have any major impact in depreciation calculations as the
increase in GFA was majorly due to revaluation of land.
3.114 Commission is of the view that revaluation of assets is just a book adjustment that
neither requires any fund nor generates additional cash flow. Also as revaluation of
assets being not finalized, Commission in this order is accepting TANGEDCO’s
revised submission and based its calculations on GFA without revaluation reserve.
The opening GFA as on November 2010 considered by the Commission is tabulated
below:
Table 56: Opening GFA as on November 2010 (Rs. Cr)
Power Station
Revised Submission
GFA
(W/o Revaluation Reserve)
Ennore TPS 1,056.84
Tuticorin TPS 1,853.70
Mettur TPS 1,049.19
North Chennai TPS 1,987.19
Total Thermal 5,946.92
Tirumakottai GTPS 450.75
Kuttalam GTPS 351.05
Basin Bridge GTPS 549.01
Valuthur GTPS 540.82
Total Gas 1,891.63
Erode HEP 672.31
Kadamparai HEP 363.48
Kundah HEP 953.74
Tirunelveli HEP 330.58
New Hydro Addition
Bhavani Barrage 6.92
Bhavani Katlai 16.28
Periyar 33.75
Total Hydro 2,377.07
Tirunelveli 206.45
Udumalpet 136.41
Total Wind 342.86
Total Generation 10,558.49
Total Distribution 7668.03
Total G&D – without
revaluation reserve 18,226.52
Revaluation reserve 5579.40
Total G&D – inclusive of
revaluation reserve 23805.92
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 121
June 2013
Capital Expenditure and capitalization
3.115 Regulation 17 (5) of the Tariff Regulations, 2005 and Regulation 3 (v)of the Tariff Regulation under MYT framework specifies that the licensee shall get the capital
investment plan approved by the Commission before filing ARR and Application for
determination of Tariff. However, TANGEDCO has not complied with this provision.
3.116 TANGEDCO has filed the capital expenditure for the first control period along with the Petition and also revised the capitalization initially filed in its capitalization
Petition dated 5th October 2012.
3.117 There were many discrepancies in the capital expenditure and capitalization
information filed in the Petition. The capital expenditure filed by TANGEDCO was
without any cost benefit analysis. In addition, TANGEDCO has also not provided any
information of sources of funding, broad details and physical quantum for the
proposed capital expenditure.
3.118 In response to data-gaps and clarifications sought by the Commission, TANGEDCO
has provided some information and revised the capital expenditure and capitalization
proposed. In order to verify the prudency of capital expenditure, Commission has
developed suitable formats and has directed TANGEDCO to submit the capital
expenditure information in those formats. However, the utility was able to provide
only partial information in the required formats.
3.119 Even after repeated directions, Commission has observed that TANGEDCO has not
submitted the capital expenditure and capitalization information to the satisfaction of
the Commission.
3.120 In the revised capital expenditure, capitalization and capital works in progress (CWIP)
submitted by TANGEDCO, Commission observed that the closing CWIP for some of
the generating stations for FY 2011-12 and FY 2012-13 was negative. During
discussions, TANGEDCO has clarified that this was due to non consideration of
capital expenditure and capitalization during the first seven months of the FY 2010-
11. Later, TANGEDCO has revised the capital expenditure, capitalization and CWIP
statement after considering actual expenses during the first seven months.
3.121 Commission reiterates that the data quality and iteration that went through the capital
expenditure and capitalization schedule along with its GFA schedule needed to be
substantially improved. Commission directs TANGEDCO to reconcile its accounts
with respect to capital expenditure and prepare the scheme wise data as per the
formats specified by the Commission. Commission also directs TANGEDCO to
file the progress of the capital expenditure and capitalization on quarterly basis.
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Tamil Nadu Electricity Regulatory Commission Page 122
June 2013
3.122 It is also pertinent to mention that TANGEDCO has finalized its audited accounts
based on the provisional transfer scheme and the opening CWIP and GFA does take
into consideration the actual capital expenditure and expenses incurred during the first
seven months of FY 2010-11. Hence, this mismatch and ambiguity in the capital
expenditure and capitalization is majorly due to non finalization of transfer scheme
and hence Commission directs the power utilities to get the transfer scheme finalized
through GoTN at the earliest.
3.123 On scrutiny of audited accounts it was observed that the capitalization indicated for FY 2010-11 and FY 2011-12 has resulted in increase in fixed assets to that extent.
Hence, Commission is provisionally accepting the capital expenditure and
capitalization schedule as proposed by TANGEDCO.
3.124 The Commission observed that there are number of new generating stations for which
TANGEDCO had neither sought prior approval of their capital investment plan nor
applied for determination of tariff in advance for the new generating stations.
3.125 TANGEDCO is required file separate Petitions for approval of the tariff for the new generating stations along with accounts for these generating stations duly certified by
statutory auditor. On Commissions directive, TANGEDCO has submitted partial
information for new thermal stations as per the formats prescribed by TNERC Tariff
Regulations. However, the information is not certified by statutory auditor. With
respect to new hydro stations TANGEDCO has not provided any information.
3.126 Regulation 6 (7) (i) (a) of the TNERC Tariff Regulations, 2005 specifies the following:
“A generation company or a licensee may make an application as per Appendix – I to
these Regulations, for determination of provisional tariff in advance of the anticipated
date of completion of the project, based on the capital expenditure actually incurred
upto the date of making of the application or a date prior to making of the
application, duly audited and certified by the statutory auditors, and the provisional
tariff shall be charged from the date of commercial operation of the respective units
of the generation station or the line or sub-station of the transmission system.”
3.127 Hence, the Commission directs TANGEDCO to file the separate petitions based on TNERC Regulations, within 90 days of issuance of this Order. In failure of
this compliance, Commission may approve the capital cost based on industry
norms and may disallow all expenses allowed due to provisionally approved
capital cost in its next tariff order.
3.128 The capital expenditure and capitalization considered in this order is tabulated below. Any variation in capital expenditure and capitalization due to prudence verification
based on the data submitted by the TANGEDCO and finalization of transfer scheme
will be addressed during the next tariff order.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 123
June 2013
Table 57: Capital expenditure and capitalization provisionally accepted by the Commission (Rs. Cr)
Interest on long term loans and other financing charges
3.137 In the last tariff order, Commission has approved the total interest expenses
corresponding to actual long term and short term loans borrowed by TANGEDCO.
For wind generating assets Commission in its last tariff order has not approved any
interest expenses as the loan borrowing, if any towards these assets would already be
over.The interest expenses approved in the last tariff order are tabulated below:
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 127
June 2013
Table 60: Interest expenses approved by the Commission in its last tariff order (Rs. Cr)
Stations
Commission
FY 11 FY 12 FY 13
ETPS 3 9 8
NCTPS 6 16 16
MTPS 3 9 9
TTPS 6 15 16
NCTPS II 0 0 174
MTPS II 0 0 293
Total Thermal 19 49 516
BBGTPS 2 4 4
Kuttalam 1 3 3
Kovilkalappal 1 4 4
Valuthur 2 7 7
Total Gas 6 18 18
Erode 2 5 9
Kadamparai 1 3 3
Kundah 3 8 8
Tirunelveli 1 3 4
Total Hydro 7 19 24
Total Generation 32 86 558
Distribution 688 3150 3355
TANGEDCO 720 3236 3913
3.138 In the current Petition, TANGEDCO has claimed the interest expenses corresponding
to only long term loans and separately claimed the interest on working capital as per
norms specified by TNERC in its Tariff Regulations 2005.
3.139 The opening balance of loans as on 1st November 2010 for TANGEDCO considered
in its Petition is based on the provisional transfer scheme notified as on 2nd January
2012. TANGEDCO in its Petition has submitted that the loan of a financial
institution is not linked with any particular generating plant or the CAPEX schemes as
erstwhile TNEB used to have a basket of loan which was used to meet the total capital
expenditure of erstwhile TNEB. Therefore it is difficult to identify the debt / interest
and equity of the generating plant or station wise or distribution function wise.
3.140 Hence TANGEDCO has adopted the following approach for segregation of interest to the generating plant / station and distribution function
i. Project specific loans for generation and distribution is initially
allotted to each of the respective project and considered as opening
loan balance for that particular project.
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Tamil Nadu Electricity Regulatory Commission Page 128
June 2013
ii. Large quantum of generic loans which cannot be differentiated into
project specific loans and interest paid on these loans is bifurcated as
per opening gross block of generation and distribution notified as per
transfer scheme.
3.141 Commission has observed discrepancies in the TANGEDCO’s submission of loan and
its bifurcation based on gross fixed assets. In response to Commission’s observation
TANGEDCO has revised the allocation of loans based on net fixed assets without
revaluation reserve and also segregated the long term loans borrowed for capital
projects, repayment of existing loans and funding the revenue expenditure. The
summary of revised submission of TANGEDCO is tabulated below:
Table 61: Revised interest expenses submitted by TANGEDCO (Rs. Cr)
Particulars 2010-11 2011-12 2012-13
Loan Profile
Op. Balance 15,065 19,412 29,594
Add: Addition for CAPEX 2,226 4,924 2,571
Add: Addition for Loan Repayment 1,754 4,921 7,621
Add: For Revenue Expenditure 2,374 5,876 6,305
Less: Loan Repayment 2,008 5,538 8,270
Closing Balance 19,412 29,594 37,821
Gross Interest Expenses 1155.66 3017.95 4268.91
IDC 282.43 664.19 1443.51
Net Interest Expenses 873.23 2353.76 2825.40
3.142 In its last order Commission has stated that there is a mix up between the capital
account and the revenue account. In the revised submission TANGEDCO has again
included the borrowings corresponding to revenue account in capital account. Based
on the revised submission Commission has made the following observations:
i. The average interest rate for FY 11 is higher than the rate at which the long
term loans are procured.
ii. The loan repayment submitted by TANGEDCO includes the repayment of
loans that have been borrowed for revenue expenditure during the control
period.
3.143 TANGEDCO has clarified that higher interest rate is due to the fact that the loans borrowed during the first seven months of FY 11 are not accounted in audited
accounts that were finalized based on provisional transfer scheme dated 2nd January
2012. However, debt obligations corresponding to those additional loans were met by
TANGEDCO and the impact to that extent has been included in its audited accounts.
3.144 Also, Commission is of the view that it needs to treat the capital account and revenue
account separately atleast since TANGEDCO started working independently. Based
on the above submissions, Commission for the determination of interest expenses on
long term loans has considered following assumptions:
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Tamil Nadu Electricity Regulatory Commission Page 129
June 2013
i. Revised opening loans as on 1st November 2010 has been arrived considering the
net addition during first seven months of FY 11 based on information provided by
TANGEDCO.
ii. The repayment of existing loans as per audited accounts also includes the
repayment of loans borrowed for revenue account. Commission is treating the
revenue account separately and also allowing the interest expenses on account of
regulatory asset approved in its last tariff order. Hence, allowing the borrowings
and interest expenses corresponding to the repayment of loans borrowed for
funding of revenue account will result in double accounting of the interest
expenses allowed for funding the revenue gap. In view of this, Commission is
accepting the opening loans as on 1st November 2010 and is assuming a
repayment period of 10 years.
iii. The repayment period of new loans borrowed during the control period is assumed
to be 10 years
iv. The borrowings required for loan repayment will be estimated after taking into
account the depreciation allowed during the year.
v. Loans required for the capital works will be arrived after considering the approved
capital expenditure and available grants and consumer contribution during the
control period. Equity required for funding the capital expenditure is assumed to
be nil as Commission is not allowing any return on equity.
vi. The consumer contribution and grants for FY 11 and FY 12 has been considered
as per audited accounts while for FY 13 they are approved based on historical
data.
vii. Interest expenses on account of capital works for wind assets has not been
considered as borrowings on account of wind assets cannot be loaded on tariff for
other generating stations and distribution business. Commission has already
approved generation cost for wind assets based on transfer price mechanism.
viii. Interest on cogeneration sugar mills is also not considered as the tariff for these
generating stations is taken as per Commission’s tariff order for procurement of
power from cogeneration.
ix. Average interest rate for FY 11 and FY 12 is estimated based on interest expenses
as per audited accounts and revised loan profile considering the borrowings during
the first seven months of FY 11. Interest rate for FY 13 is assumed as 11.98% i.e.
the average interest rate of FY 11 and FY 12.
x. Interest during construction (IDC) is approved based on capital works in progress.
3.145 The details of borrowings and interest expenses approved by the Commission
corresponding to capital expenditure and repayment of loans are given below.
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Tamil Nadu Electricity Regulatory Commission Page 130
June 2013
Table 62: Revised opening of loans as on Nov 2010 - (Rs. Cr.)
Particulars Amount
Opening of loans as on November 2010
– As per provisional transfer scheme 15064.97
Net additions in loans during the first
seven months of FY 11 3682.25
Revised opening loans as on 1st
November 2010. 18747.22
Table 63: Borrowings considered for funding capital expenditure (Rs. Cr)
Particulars 2010-11 2011-12 2012-13
Capital Expenditure 2,439.49 6,634.03 3,634.77
Less: Consumer Contribution 212.89 394.42 477.54
Less: Grants 0.00 312.62 104.94
Loans required for funding
capital expenditure 2,226.60 5,927.00 3,052.29
Table 64: Borrowings approved for repayment of loans (Rs. Cr)
Particulars 2010-11 2011-12 2012-13
Repayment of Existing
loans (Revised opening as
on Nov 2010)
781.13 1,874.72 1,874.72
Repayment of new loans 306.68 1140.13 1743.41
Less: Depreciation 247.44 606.32 637.62
Loans required for
repayment of loans 840.37 2,408.53 2,980.51
Table 65: Interest expenses approved by the Commission for the first control period (Rs. Cr)
3.166 TANGEDCO in its Petition has included the other fuel costs, lubricants and consumable and water costs in other debits for generating stations. In response to
Commissions query regarding this discrepancy, TANGEDCO has made the following
submissions
i. Cost of water, other fuel costs and lubricants and consumables are
part of operating expenses of power stations of TANGEDCO and
these expenses were not claimed under fuel expenses or repairs and
maintenance expenses, and therefore have been included in other
debits. TANGEDCO requested the Commission to allow these
expenses as they are operating expenses for generation of power.
ii. The cost of Rs. 68.17 Crs and Rs. 20.60 Crs towards other debits for
Kuttalam GTPS and VGTPS is due to minimum guarantee off take of
natural gas and transmission charges for supply of gas. TANGEDCO
confirmed that these expenses were not claimed in the fuel costs as a
part of variable costs.
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Tamil Nadu Electricity Regulatory Commission Page 139
June 2013
3.167 However, Commission is not considering the submission of TANGEDCO due to
following reasons:
i. Commission is of the view that though TANGEDCO has not included
the operating expenses claimed in other debits in its O&M expenses,
these expenses cannot be allowed as Commission has already approved
the O&M expenses, which are controllable expenses, in its last order in
accordance to its Regulations. Hence, approving additional operating
expenses under other debits is not appropriate and the increased
expenses on account of controllable parameters will be inaptly passed
on to the consumers.
ii. Based on the prior period expenses submitted by TANGEDCO,
Commission has observed that minimum guarantee charges were
reversed and has been accounted as prior period income in FY 12.
Hence, Commission is not allowing the expenses due to minimum
guarantee off take charges in other debits.
3.168 Based on above submissions, Commission has considered other debits for generating
stations as approved in last order and has not allowed increase in other debits due to
minimum guarantee off take of natural gas and other operational charges. The
approved other debits in this order by the Commission is tabulated below.
Table 74: Other debits approved by the Commission for generating stations (Rs. Cr)
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 140
June 2013
3.169 For distribution business, TANGEDCO has included extraordinary debits and DSM
under other debits. However TANGEDCO in its Petition has not provided any
adequate information pertaining to these expenses.
3.170 On review of audited accounts it was observed that there was extraordinary credit corresponding to extraordinary debits and TANGEDCO has claimed the expenses
under other debits without considering this credit. Hence, Commission is not allowing
this expense in other debits and directs TANGEDCO to reconcile expenses pertaining
to extraordinary items appropriately.
3.171 For DSM, TANGEDCO has claimed Rs. 10 Cr in FY 2012-13 as expense under other
debits. Commission is approving expenses for DSM under separate head and it is
inappropriate to include the expenses on this account in other debits. Also,
TANGEDCO has not provided any information regarding DSM measures taken by it
and how this provision of Rs. 10 Cr was utilized and further keeping in view that FY
2012-13 is already over, Commission is not allowing any DSM expenses.
3.172 Based on the above submissions, the other debits approved by the Commission are
tabulated below.
Table 75: Other Debits approved by the Commission (Rs. Cr)
Parameter FY 2010-11 FY 2011-12 FY 2012-13
Last
Order Petition Comm.
Last
Order Petition Comm.
Last
Order Petition Comm.
Distribution 11.68 10.76 10.76 28.57 37.97 14.26 29.14 26.90 16.90
Prior Period Expenses
3.173 TANGEDCO in its Petition has claimed for net prior period expenses of Rs. 1052 Crs
in FY 12. TANGEDCO has further submitted that these expenses pertaining to prior
period for power purchase, revision in tariff payments and fuel price adjustment to
central generating stations, employee cost, interest and finance charges and other
charges.
3.174 However on review of audited accounts for FY 12, it was observed that net prior period expenses were only Rs. 576.81 Crs. In response to data gaps, TANGEDCO has
revised the prior period expenses as per audited accounts and submitted the detailed
break-up for Rs. 576.81 Crs.
3.175 In the last order Commission has not allowed any prior period expenses as these were
charges corresponding prior to functioning of TANGEDCO and was of the opinion
prior period charges should be addressed in the financial restructuring plan by
TANGEDCO.
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Tamil Nadu Electricity Regulatory Commission Page 141
June 2013
3.176 On review of prior period expenses data submitted by TANGEDCO and during the
discussions with TANGEDCO officials it was inferred that entire net prior period
expenses was due to expenses corresponding prior to FY 11. Hence in this order
Commission is truing up the expenses after formation of TANGEDCO, and is not
allowing the net prior period expenses that have been sought by TANGEDCO.
Demand Side Management
3.177 The Commission in its last tariff order has provisionally allowed Rs.10 Crores in the
ARR for the purpose of carrying out the activities of Energy Conservation and
Demand Side Management (DSM) in FY 13.
3.178 TANGEDCO in its Petition has claimed expenses towards DSM during FY 13 under
other debits. However, it has not provided any justification or details of DSM
measures carried out due to which it has incurred Rs. 10 Cr of expenditure. Hence,
Commission is not allowing the DSM expenses of Rs. 10 Cr in FY 13
Contribution for Contingency reserves
3.179 TANGEDCO has claimed contingency reserve at 0.25% of GFA in FY 13 in
accordance to TNERC MYT Regulations.
“Regulation 35 of the MYT Regulations 2009,
To meet out any contingent liability or unforeseen revenue losses, the Distribution licensees
shall maintain a contingency reserve. The Distribution Licensees shall estimate the
contingency reserve on the value of Assets for each year of the control period.
Regulation 31 of the Tariff Regulations 2005,
The Generating Companies and the licensees shall provide and maintain a
contingency reserve upto 0.5% of the value of assets at the beginning of the year and
the provision made for the year will be allowed in their Revenue Requirement. This
reserve will be utilised to meet any contingent liability or unforeseen revenue losses.”
3.180 It is pertinent to mention that provision for contingency reserve is appropriate when
utility is in revenue surplus and some portion of this surplus revenue can be
contributed for contingency reserve. However, in the current petition, TANGEDCO
has shown a revenue gap of Rs. 9719 Crs in FY 13 and in this situation it is inapt to
allow the expenses on account of contingency reserve. Hence, Commission disallows
the contingency reserve as claimed by TANGEDCO.
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Tamil Nadu Electricity Regulatory Commission Page 142
June 2013
Summary of fixed Cost approved for Distribution function
3.181 Based on above submissions, the summary of fixed cost approved for distribution
function is tabulated below:
Table 76: Summary of fixed costs for Distribution business approved by the Commission for the first
Total 658.10 1547.19 1679.59 568.39 1365.98 1409.84
Variable cost for own generating stations
3.194 The Commission has worked out the variable cost for various generating stations on
the basis of data submitted in the petition and the subsequent submission of
TANGEDCO vide replies to the data gaps raised by the Commission. The variable
cost as determined by the Commission in respect of various generating stations of
TANGEDCO is detailed as under:
Coal based generating stations
3.195 As per Regulation 43 (ii) of the Tarff Regulation, the Energy (Variable) charges shall be worked out on the basis of ex-bus energy delivered / sent out from the generating
station. Rate of energy charges is based on the following elements:
a) Price of primary fuel
b) Quantum of primary fuel (coal) in kg required for generation of one kWh of
electricity at generator terminals, which shall be computed on the basis of Gross
Station Heat Rate (less heat contributed by secondary fuel oil) and gross calorific
value of coal.
c) Price of secondary fuel oil
d) Normative quantity of secondary fuel
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Tamil Nadu Electricity Regulatory Commission Page 152
June 2013
e) Normative auxiliary consumption
The above elements have been discussed in detail as under:
Price of primary fuel
3.196 Commission in its last order has approved the fuel cost for FY 2010-11 based on
actual landed cost submitted in the Petition and for FY 2011-12 and FY 2012-13
based on monthly coal prices submitted by TANGEDCO upto November 2011.
3.197 TANGEDCO in its Petition has submitted the station wise actual cost of fuel for FY
2010-11 and FY 2011-12 while estimated the fuel cost for FY 2012-13. The prices of
primary fuel approved by the Commission in its last tariff order and filed by
TANGEDCO in its current MYT Petition are tabulated below:
Table 91: Coal price in Rs./Tonne approved by the Commission in last order and filed by TANGEDCO in
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Tamil Nadu Electricity Regulatory Commission Page 156
June 2013
Price of secondary fuel
3.207 TANGEDCO in its Petition has given the price of secondary fuel as per actual costs incurred during for FY 2010-11 and FY 2011-12 and estimated the secondary fuel oil
price for FY 2012-13. In response to additional information sought by the
Commission, TANGEDCO has submitted month wise actual cost of secondary fuel
oil upto February 2013. The weighted average cost of secondary fuel for FY 2012-13
(Upto Feb 13) estimated by the Commission based on TANGEDCO’s submission is
tabulated below:
Table 99: Weighted average price of secondary fuel estimated by the Commission for FY 2012-13
(Rs./kL)
Power Plant Cost of secondary
fuel
ETPS 49112
TTPS 47916
MTPS 47417
NCTPS 47346
3.208 Commission is accepting the TANGEDCO submission of actual cost of secondary
fuel for FY 2010-11 and FY 2011-12 while approving the cost of secondary fuel for
FY 2012-13 based on the weighted average cost estimated by the Commission. The
cost of secondary fuel approved by the Commission is tabulated below:
Table 100: Cost of secondary fuel approved by the Commission (Rs./kL)
3.219 TANGEDCO in its Petition sought relaxation in station heat rate (SHR) for BBGTPS. Commission has already relaxed the SHR norms for BBGTPS in its tariff order dated
31st July 2010. For remaining stations, the SHR proposed by the Petitioner are in line
with Commission’s approval. SHR being a controllable parameter, Commission is
considering the SHR for gas based stations as approved in its last tariff order.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 162
June 2013
Table 112: Station heat rate approved by the Commission for gas based stations
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June 2013
Wind Generating Stations
3.223 The Commission in Tariff Order dated 31st July 2010 ruled that in the order No.3
dated 15-05-2006, the Commission has determined a tariff of Rs.2.75 / unit for the
wind power projects commissioned, and to be commissioned based on agreements
executed prior to May 15, 2006. Accordingly the Commission allowed the rate of Rs.
2.75/ Unit in 31st July 2010 order.
3.224 In its Petition TANGEDCO has considered the transfer price of Rs. 2.75 per unit as cost of generation from its wind mills in accordance to Commission’s order. Hence
Commission is accepting the TANGEDCO submission and is approving the cost of
wind generation from its own wind mills at Rs. 2.75 per unit.
Power Purchase from other sources
3.225 Commission in its last order has approved the power purchase for FY 2010-11
considering the actual purchase, for FY 2011-12 based on revised submission of
TANGEDCO and for FY 2012-13 using merit order dispatch principle.
3.226 In this Petition TANGEDCO has claimed the power purchase expenses for FY 2010-
11 (for five months) based on audited accounts, for FY 2011-12 based on provisional
accounts and for FY 2012-13 estimated based on actual power purchase during the
previous two financial years. However, while considering the power purchase in its
Petition, TANGEDCO has excluded the wheeling units in accordance to the approach
adopted by the Commission in its last tariff order.
3.227 This section details out the approach adopted by the Commission in this true-up and
review exercise for the first control period.
Central generating stations
3.228 Commission in its last order has approved the power purchase quantum based on the
submissions of TANGEDCO, CERC provisional and final orders and considering a
5% escalation in variable cost. The power purchase expenses allowed by the
Commission in its last tariff order have been tabulated below.
Table 120: Power purchase expenses approved from central generating stations in last tariff order
Particulars
2010-11 2011-12 2012-13
Quantum Total Cost Quantum Total Cost Quantum Total Cost
MU Rs. Crore MU Rs. Crore MU Rs. Crore
NLC-TS-I 3066 630 3066 655 3066 658
NLC-TS-II (Stage-I) 3042 532 3242 769 3272 812
NLC-TS-II (Stage-II)
NLC-TS-I Expansion 1509 453 1609 505 1624 516
NTPC SR (I & II) 4039 806 4139 504 4164 909
NTPC SR (III) 1024 262 1105 862 1125 305
NTPC ER 735 224 885 291
52
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Tamil Nadu Electricity Regulatory Commission Page 167
June 2013
Particulars
2010-11 2011-12 2012-13
Quantum Total Cost Quantum Total Cost Quantum Total Cost
MU Rs. Crore MU Rs. Crore MU Rs. Crore
NTPC - Talcher II 3664 909 3690 324 3705 1127
Kayankulam 854 786 205 1082 0 0
MAPS 1399 277 1499 267 1508 321
KAIGA 860 263 1107 304 1178 390
Simahadri 328 349 1415 330
Kudankulam 0 106 1716 540
NLC-TS-
IIExpansion 0 0 1318 264
MAPS (Addl.) 518 155
NTPC-TNEB (JV) 2029 588
UI 1441 472 750 0 0 4
Total 21633 5613 21625 5784 26638 7473
3.229 TANGEDCO in its Petition has filed the power purchase expenses from CGS based
on audited accounts for FY 2010-11 and provisional accounts for FY 2011-12. For FY
2012-13, TANGEDCO has estimated the power purchase cost considered an
escalation of 5% on fixed charges and 4% on per unit variable charges and taking the
power purchase expenses for FY 2012-13 as a base.
3.230 In response to additional information sought by the Commission, TANGEDCO has
provided a provisional estimate for actual power purchase expenses incurred during
FY 2012-13. The provisional estimate of actual power purchase expenses with respect
to CGS plants submitted by TANGEDCO is given below.
Table 121: Provisional estimate of actual power purchase from CGS for FY 2012-13 submitted by
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Tamil Nadu Electricity Regulatory Commission Page 175
June 2013
3.241 The power procurement filed by TANGEDCO from bilateral sources and exchange is
within the limits of the Commission’s approval for FY 2010-11 and FY 2011-12.
However, Commission has observed some discrepancies in the per unit rate of power
procured from traders. In response to this query TANGEDCO has revised the power
purchase expenses and units after properly adjusting the wheeling units. In addition,
TANGEDCO has submitted the actual purchase from these sources in FY 2012-13.
3.242 Apart from these sources, TANGEDCO has also procured power from UI and NTPC
NVVN. In response to Commission’s query TANGEDCO has revised the average UI
rate submitted for FY 2010-11 and FY 2011-12 and also submitted the revised power
purchase expenses from these sources. The revised power purchase expenses
submitted by TANGEDCO for procurement of power from traders, NTPC NVVN and
UI are tabulated below.
Table 136: Revised power purchase expenses submitted by TANGEDCO from traders and other sources
Particulars
2010-11 2011-12 2012-13
Quantum Total Cost Quantum Total
Cost Quantum
Total
Cost
MU Rs. Crore MU Rs.
Crore MU
Rs.
Crore
Traders - Bilateral and
Exchange 3085 1701 7395 3838 6,575 3,347
Traders - Exchange 1618 963 1032 360 213
UI 759 230 718 327 81 49
NTPC NVVN 181 91 694 262 35 16
Total 5643 2985 9838 3763 7051 3625
3.243 Commission is of the view that though UI is not a scheduled and an approved power,
TANGEDCO was required to over draw from the grid in cases where it was not able
to match the demand and supply. Also, the UI quantum has progressively decreased
indicating the better management of demand-supply. For FY 2010-11 and FY 2011-
12, the total expenses and quantum of power procured from traders and UI are within
the total approved quantum and expenses for FY 2010-11 and FY 2011-12. For FY
2012-13, though TANGEDCO has exceeded the quantum of power approved by the
Commission, there has been a decrease in purchase compared to FY 2011-12.
Commission is provisionally accepting the submission of TANGEDCO especially
when CoD of new plants is getting delayed. The power purchase expenses from these
sources approved for the control period are tabulated below.
Table 137: Power purchases expenses from other sources approved by the Commission for FY 2010-11
Particulars
Petition Commission
Quantum Cost Cost Quantum Total Cost Cost
MU Rs.
Crore Rs./Unit MU Rs. Crore Rs./Unit
Traders - Bilateral &
Exchange 4703 1897 4.03 4703 2664 5.66
UI 759 340 4.48 759 230 3.03
NTPC NVVN 181 91 5.03 181 91 5.01
Total 5,643 2,328 4.13 5643 2985 5.29
*Approved based on revised submission
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Tamil Nadu Electricity Regulatory Commission Page 176
June 2013
Table 138: Power purchases expenses from other sources approved by the Commission for FY 2011-12
Particulars
Petition Commission*
Quantum Cost Cost Quantum Total Cost Cost
MU Rs. Crore Rs./Unit MU Rs. Crore Rs./Unit
Traders - Bilateral &
Exchange 6206 1686 2.72 8427 3838 4.55
UI 718 403 5.61 718 327 4.56
NTPC NVVN 694 262 3.78 694 262 3.78
Total 7,617 2,351 3.09 9838 4427 4.50
*Approved based on revised submission
Table 139: Power purchases expenses from other sources approved by the Commission for FY 2012-13
Particulars
Petition Commission*
Quantum Cost Cost Quantum Total Cost Cost
MU Rs. Crore Rs./Unit MU Rs. Crore Rs./Unit
Traders - Bilateral &
Exchange 9,816 3,066 3.12 6935 3560 5.13
UI
81 49 6.09
NTPC NVVN 694 275.62 3.97 35 16 4.45
Total 10,510 3,342 3.18 7051 3625 5.14
*Approved based on revised submission
3.244 With respect to power purchase expenses, Commission gives following directives:
a) Considering the iterations that went in reconciling the power purchase expenses pertaining to wheeling units, Commission directs TANGEDCO to properly maintain
the power purchase expenses with and without wheeling units.
b) Commission has observed various discrepancies in power purchase expenses filing of
TANGEDCO. In response to Commission’s query, TANGEDCO has revised the
expenses after correcting the mistakes. Commission is taking a serious note of this
casual attitude in filing the power purchase expenses and directs TANGEDCO to file
its Petition properly from next tariff filling.
Power Grid Corporation of India Limited (PGCIL) Charges
3.245 TANGEDCO has proposed PGCIL charges as per audited accounts for FY 2010-11 and provisional accounts for FY 2011-12. Also, TANGEDCO has proposed
ABTPGCIL charges under PGCIL charges. In response to Commission’s query,
TANGEDCO has replied that they have inadvertently claimed ABTPGCIL charges
under PGCIL charges and these correspond to UI. Hence, Commission is not
approving these charges claimed by TANGEDCO.
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Tamil Nadu Electricity Regulatory Commission Page 177
June 2013
3.246 For FY 2012-13, TANGEDCO has revised the PGCIL charges considering the provisional estimates of actual transmission charges incurred. Due to the fact that FY
2010-11, FY 2011-12 and FY 2012-13 are already over and as TANGEDCO has
provided the actual expenses incurred, Commission is accepting the submission of
TANGEDCO for PGCIL wheeling and reactive energy charges.
Table 140: PGCIL charges approved by the Commission for the first control period (Rs. Cr.)
Parameter
2010-11 2011-12 2012-13
Last
Order Petition Comm.
Last
Order Petition Comm.
Last
Order Petition Comm.
PGCIL - SR
and ER
wheeling 190 204 204 480 524 524 504 550 540
PGCIL -
Reactive
energy 5 5 17 17 18 15
ABTPGCIL 230 313 329
Total 190 438 208 480 854 541 504 897 555
Intrastate Transmission Charges
3.247 For FY 2010-11 and FY 2011-12, TANGEDCO has claimed actual intrastate
transmission charges paid to TANTRANSCO. For FY 2012-13, TANGEDCO has
estimated the transmission charges based on Commission’s tariff order on
“Determination of Intra-State Transmission Tariff and other related charges” dated
March 30, 2012.
3.248 Commission has considered the TANGEDCO’s submission for FY 2010-11 and FY
2011-12 as TANGEDCO has submitted the actual transmission expenses incurred.
However for FY 2012-13, considering the allotted capacity of TANGEDCO,
Commission has provisionally determined the transmission charges required to be
paid for FY 2012-13.
3.249 The intrastate transmission charges approved by the Commission for the first control
period are given below.
Table 141: Transmission Charges payable to TANTRANSCO for the first control period (Rs. Cr.)
Note: Transmission charges may undergo a change upon implementation of APTEL Order in
Appeal No. 102 of 2012.
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June 2013
Aggregate Revenue Requirement and Revenue Gap for the first control
period
3.250 Regulation 70 of the Tariff Regulations 2005 specifies the following:
“70. The Aggregate Revenue Requirement of Distribution licensee
The Aggregate Revenue Requirement of Distribution licensee consists of
thefollowing:-
(i) Cost of Power Purchase
(ii) Operation and Maintenance expenses
(iii) Depreciation
(iv) Interest and cost of finance
(v) Income Tax
(vi) Provision for Bad and Doubtful Debts
(vii) Provision for Insurance
(viii) Provision for contingency reserve
(ix) other expenses
(x) Return on equity / Reasonable rate of return”
3.251 Based on the approved expenses in the above sections of this Chapter, the Aggregate Revenue Requirement approved by the Commission for the first control period is
tabulated below:
Table 142: ARR approved by the Commission for the first control period (Rs. Cr.)
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Tamil Nadu Electricity Regulatory Commission Page 182
June 2013
Consumer Category
FY 2010-11 FY 2011-12
Revenue Revenue
IIC Actual places of public worship 22 25
IIIA 1 Cottage and Tiny Industries, 75 152
IIIA 2 Power Looms 38 121
IIIB Coffee grinding and Ice factories etc. and Industries not
covered under LT Tariff IIIA 786 1,968
IV Agriculture and Govt. seed farms - -
V Commercial and all categories of Consumers not covered under IA,
IB,IC, IIA, IIB, IIIA, III B and IV 1,156 3,035
VI Temporary supply: (a) Lighting and combined installation, (b) Lavish
illuminations 10 25
Sub Total LT 3,448 9,165
Total HT and LT 7,160 17,404
3.260 The Commission has accepted the actual revenue earned but has not allowed the
revenue corresponding to sale of power to Puducherry and wheeled units.
TANGEDCO has also filed revenue of Rs. 26 Crores and Rs. 219 Crores from SWAP
arrangements for the above two years respectively. The same has also been
considered by the Commission as part of revenue for TANGEDCO.
3.261 Commission has also considered the actual subsidy received by TANGEDCO in FY
2010-11 and FY 2011-12 during the true-up exercise. The total revenue approved by
the Commission is given below.
Table 147: Revenue approved by the Commission for FY 2010-11 and FY 2011-12 (Rs. Cr)
Parameter 2010-11 2011-12
Revenue from Sale of Power 7,159 17,404
Govt. Subsidy 689 2,071
Total 7,848 19,475
Revenue from Sale of Power – FY 2012-13
3.262 The following table shows the total HT and LT revenue for FY 2012-13 as per the petition and as revised and filed by TANGEDCO in its reply to data gaps.
Table 148: Revised revenue filed by TANGEDCO for FY 2012-13 (Rs. Crores)
Sl.
No. Particulars
As filed in the
petition Revised Filing
1 Total HT Revenue 8,689 7,768
2 Total LT Revenue 17,020 15,847
3 Total Revenue HT+LT 25,709 23,615
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Tamil Nadu Electricity Regulatory Commission Page 183
June 2013
3.263 The following table shows the category-wise revenue as filed by TANGEDCO in its reply to data gaps and as approved by the Commission for FY 2012-13 based on
revised sales estimates. The revenue has been calculated based on the approved tariff
for FY 2012-13. The revenue so projected is inclusive of subsidy from the GoTN.
Table 149: Revenue for FY 2012-13 as per the petition and as approved by the Commission (Rs. Cr)
Particulars Revised filing Approved
HT Consumer Category
I-A HT Industries 4,988 5,105
I-B Railway Traction 458 458
II-A Govt. Educational Inst. etc. 496 496
II-B Pvt. Educational Inst. etc. 155 155
III HT Commercial 1,155 1155
IV Lift Irrigation 1 1
V Temporary supply 176 176
Others (Sale to Puducherry) 338 0
Total HT 7,768 7,547
LT Consumer Category
I-A Domestic 5,848 5,962
I-B Huts 103 105
I-C LT bulk supply 4 4
II-A Public Lighting and Water Supply 908 908
II-B-1 Govt. Educational Inst. etc. 66 66
II-B-2 Pvt. Educational Inst. etc. 144 144
IIC Places of Public Worship 57 57
IIIA 1 Cottage and Tiny Industries 50 50
IIIA 2 Power Looms 384 384
IIIB L.T. Industries 2,674 2,674
IV L.T. Agriculture 1,940 1,940
V L.T. Commercial 3,627 3,627
VI Temporary supply 42 42
Total LT 15,847 15,963
Total HT + LT 23,615 23,510
3.264 Therefore the Revenue from sales for FY 2012-13 as approved by the Commission is
Rs. 23,510 Crores. This revenue is inclusive of the subsidy component.
Low Power Factor Surcharge
3.265 TANGEDCO in its reply to data gaps submitted collection made with respect to Low
power factor surcharge of Rs. 51.03 Crores for FY 2012-13. The Commission has
accepted the same and considered this revenue while computing the revenue gap for
the year.
3.266 The total revenue approved by the Commission including revenue from low power
factor surcharge for FY 2012-13 is Rs. 23561 Crs.
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June 2013
Revenue Gap for the first control period
3.267 On the basis of net revenue requirement and revenue approved by the Commission,
the Revenue Gap approved by the Commission for the first control period is tabulated
below.
Table 150: Revenue gap approved by the Commission (Rs. Cr.)
MTPS Stage – III 88.20 26.63 92.61 36.92 97.24 38.40
NCTPS Stage II –
Unit 1 168.00 43.61 176.40 60.47 185.22 62.88
NCTPS Stage III –
Unit 2
Ennore Expansion
23.10 10.03
Capital Expenditure and capitalization
4.104 Regulation 17 (5) of the Tariff Regulations, 2005 and Regulation 3 (v)of the Tariff Regulation under MYT framework specifies that the licensee shall get the capital
investment plan approved by the Commission before filing ARR and Application for
determination of Tariff. However, TANGEDCO has not complied with this provision.
4.105 TANGEDCO has filed the capital expenditure and capitalization schedule for the second control period along with its MYT Petition. There were many discrepancies in
the capital expenditure and capitalization information filed in the Petition. The capital
expenditure filed by TANGEDCO was without any cost benefit analysis. In addition,
TANGEDCO has also not provided any information of sources of funding, broad
details and physical quantum for the proposed capital expenditure.
4.106 The observations and issues pertaining to capital expenditure and capitalization schedule for second control period are same as those discussed in Chapter -A3 under
capital expenditure section.
4.107 Commission reiterates the following directions and observations made in Chapter -A3
i. The information submitted pertaining to the capital expenditure and
capitalization information submitted by TANGEDCO is not satisfactory
ii. The data quality and iteration that went through the capital expenditure and
capitalization schedule along with its GFA schedule needed to be substantially
improved.
iii. Commission directs TANGEDCO to
a) Reconcile its accounts with respect to capital expenditure and
prepare the scheme wise data as per the formats specified by the
Commission.
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Tamil Nadu Electricity Regulatory Commission Page 220
June 2013
b) File the progress of the capital expenditure and capitalization on
quarterly basis.
c) Finalize its transfer scheme through GoTN at the earliest and
reconcile the GFA, CWIP and capitalization schedules
4.108 In ChapterA3 Commission has expressed its opinion regarding capital expenditure
and is provisionally accepting the capital expenditure and capitalization schedule as
proposed by TANGEDCO for the second control period.
4.109 The actual capital expenditure for the second control period will be reviewed based on audited accounts and the impact of final transfer scheme, prudence verification based
on scheme wise data to be submitted by TANGEDCO will be done during the truing-
up process.
4.110 As mentioned earlier, Commission observed that there are number of new generating
stations for which TANGEDCO had neither sought prior approval of their capital
investment plan nor applied for determination of tariff in advance for the new
generating stations.
4.111 Regulation 6 (7) (i) (a) of the TNERC Tariff Regulations, 2005 specifies the following:
“A generation company or a licensee may make an application as per Appendix – I to these
Regulations, for determination of provisional tariff in advance of the anticipated date of
completion of the project, based on the capital expenditure actually incurred upto the date of
making of the application or a date prior to making of the application, duly audited and
certified by the statutory auditors, and the provisional tariff shall be charged from the date of
commercial operation of the respective units of the generation station or the line or sub-
station of the transmission system.”
4.112 TANGEDCO is required to file separate Petitions for approval of the tariff for the new generating stations along with accounts for these generating stations duly
certified by statutory auditor. On Commissions directive, TANGEDCO has submitted
partial information for new thermal stations as per the formats prescribed in TNERC
Tariff Regulations. However, the information is not certified by statutory auditor.
With respect to new hydro stations TANGEDCO has not provided any information.
4.113 Commission directs the TANGEDCO to file the separate petitions based on TNERC Regulations duly certified by the statutory auditor along with relevant
generating station accounts within 90 days of issuance of this Order.
4.114 While reviewing the revised capital expenditure proposed for the second control
period it was observed that TANGEDCO has also included the capital expenditure for
Udangudi TPS. This power plant is not likely to be commissioned during the control
period and hence Commission is not considering the capital expenditure for this
power plant in this order. Commission directs TANGEDCO to file a separate
Petition as mentioned above for the approval of capital cost and tariff for this
power plant.
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Tamil Nadu Electricity Regulatory Commission Page 221
June 2013
4.115 The capital expenditure and capitalization provisionally approved in this order is tabulated below.
Table 195: Capital expenditure and capitalization for generating stations (Rs. Crore)
Other LT Lines 27.94 32.13 38.56 21.95 31.71 37.91
Other Construction
Schemes 717.70 825.35 990.42 563.94 824.44 991.01
General
Improvement
Schemes
355.58 408.91 490.69 279.40 403.58 482.52
Distribution Transformers
Failure/Replacement
100 KVA 10.98 12.63 13.89 10.98 12.63 13.89
250 KVA 18.30 21.05 23.15 18.30 21.05 23.15
500 KVA 13.80 15.87 17.46 13.80 15.87 17.46
New/Additional
with Structure
100 KVA 11.53 13.26 14.58 11.53 13.26 14.58
250 KVA 19.22 22.10 24.31 19.22 22.10 24.31
500 KVA 14.49 16.66 18.33 14.49 16.66 18.33
Extension of Service connections
HT Industry 26.54 30.53 33.58 26.54 30.53 33.58
LT Industries 14.70 16.91 18.60 14.70 16.91 18.60
LT Domestic 16.62 19.11 21.02 16.62 19.11 21.02
LT Commercial 11.82 13.59 14.95 11.82 13.59 14.95
Other categories 22.20 25.53 28.08 22.20 25.53 28.08
Deposit
Contribution Works
(DCW)
57.70 64.90 72.50 57.70 64.90 72.50
Rural Electrification
Works 49.78 57.24 68.69 39.11 56.49 67.54
Agricultural
Services 49.72 57.18 68.61 39.07 56.43 67.47
Segregation of
Feeders 2.48 2.85 3.42 1.94 2.81 3.36
Hut Electrification 0.99 1.14 1.37 0.78 1.12 1.34
RAPDRP - PART B
Schemes - Erection
of new SS, RMU,
Meters,
Sectionalisation, etc
916.46 752.05 484.67 916.46 752.05 484.67
RGGVY 1.25
1.25 - -
Survey,
investigation,
computerisation
2.35 2.75 2.95 2.35 2.75 2.95
Others if any 6.30 7.25 7.97 6.30 7.25 7.97
Total 2,449.59 2,512.30 2,569.79 2,174.23 2,502.88 2,557.33
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 223
June 2013
Depreciation
4.116 In its Petition, TANGEDCO has submitted the opening gross block for each of the
generating plant and for distribution function for FY 2010-11 (5 months) in line with
the provisional transfer scheme notified by the Government of Tamil Nadu vide
notification dated 2nd January 2012.
4.117 Later in response to Commissions query regarding revaluation reserve, TANGEDCO
revised the opening GFA based on provisional accounts and without considering the
revaluation reserve.
4.118 In another query raised by the Commission regarding the depreciation rates used by
TANGEDCO, it has submitted that TANGEDCO has used the weighted average
depreciation rate for the particular group of asset arrived based on depreciation rates
specified in the Tariff Regulation. Hence, Commission is accepting the depreciation
rates as proposed by TANGEDCO.
4.119 TNERC Tariff Regulations 2005 specifies following guidelines for calculation of depreciation:
24. Depreciation
For the purpose of tariff, depreciation shall be computed in the following manners:
i. The value base for the purpose of depreciation shall be historical cost
of the asset.
ii. The depreciation shall be calculated at the rates as per the Annexure
to these Regulations.
iii. The residual value of assets shall be considered as 10% and
depreciation shall be allowed upto maximum of 90% of the estimated
cost of the Asset.
iv. 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.
v. The historical cost of the asset shall include additional capitalisation.
vi. Depreciation 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.
vii. After the assets are fully depreciated the benefit of reduced tariff shall
be made available to the consumer.
4.120 Commission has calculated depreciation considering the revised opening GFA
without revaluation reserve, weighted average depreciation rates and deductions
submitted by TANGEDCO, and capitalization approved by the Commission in this
order. The GFA considered and depreciation rates considered for estimation of
depreciation is tabulated below:
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 224
June 2013
Table 197: Opening GFA considered for calculation of depreciation (Rs. Crore)
Power Station
As on April
2013
As on April
2014
As on April
2015
Ennore TPS 1059.48 1116.51 1126.05
Tuticorin TPS 1925.06 2021.67 2127.08
Mettur TPS 1147.29 1245.59 1346.35
North Chennai TPS 2038.57 2087.73 2145.28
NCTPS Stage-II** 5814.04 5826.29
MTPS Stage-III** 3550.00 3556.25
Ennore Expansion
Total Thermal 6,170.40 15,835.53 16,127.30
Tirumakottai GTPS 457.79 463.39 469.56
Kuttalam GTPS 503.27 505.57 509.64
Basin Bridge GTPS 551.33 553.05 554.01
Valuthur GTPS 622.73 631.53 637.27
Total Gas 2,135.12 2,153.54 2,170.48
Erode HEP - (incl. Bhavani
Barrage and Bhavani Khattai) 733.21 2003.28 2109.56
Kadamparai HEP 366.04 366.69 367.78
Kundah HEP 957.72 959.11 959.97
Tirunelveli HEP (incl -
Periyar) 420.34 431.94 450.65
Total Hydro 2,477.31 3,761.02 3,887.96
Tirunelveli 206.45 206.45 206.45
Udumalpet 136.41 136.41 136.41
Total Wind 342.86 342.86 342.86
Cogeneration Plants
711.46 1097.19
Generation 11,125.68 22,804.41 23,625.80
Distribution 10,595.12 12,769.34 15,272.22
TANGEDCO 21,720.80 35,573.75 38,898.02
4.121 For new generating stations, TANGEDCO has not considered depreciation during the year of commissioning. However as per TNERC Tariff Regulations 2005 clause
24(vi) depreciation for generating stations 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. Accordingly, Commission has allowed the
depreciation for new generating stations on pro-rata based on CoD during the first
year of operation.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 225
June 2013
4.122 Based on the above approach, Commission approves depreciation for all the
generating stations and distribution business except for wind stations and
cogeneration plants. In the last tariff order Commission has approved a transfer price
of Rs. 2.75 per unit own wind mills while for cogeneration plants in this order
Commission is considering the tariff based on its cogeneration tariff order dated 31st
July 2012. Hence, in this order Commission is not determining fixed expenses on
account of the own wind mills and cogeneration plants.
Table 198: Depreciation approved by the Commission for the second control period (Rs. Crore)
Distribution 808.09 0.00 1236.73 0.00 1386.90 0.00
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 235
June 2013
Other Debits
4.147 TANGEDCO in its Petition has included the other fuel costs, lubricants and consumable and water costs in other debits for generating stations. In response to
Commissions query regarding this discrepancy, TANGEDCO has made the following
submissions
i. Cost of water, other fuel costs and lubricants and consumables are
part of operating expenses of power stations of TANGEDCO and
these expenses were not claimed under fuel expenses or repairs and
maintenance expenses, and therefore have been included in other
debits. TANGEDCO requested the Commission to allow these
expenses as they are operating expenses for generation of power.
4.148 Commission is of the view that though TANGEDCO has not included the operating
expenses claimed in other debits in its O&M expenses, these expenses cannot be
allowed as Commission has already approved the O&M expenses in this order and all
the operating expenses must be met through approved O&M expenses
4.149 Hence Commission is not approving the operating expenses claimed in other debits.
Commission is allowing other debits during the second control period for the
generating stations equivalent to that approved for FY 2012-13 in this order.
Table 211: Other debits approved by the Commission for generating stations (Rs. Cr)
Interest on Loan Capital 317.60 279.92 242.02 173.48 373.76 359.75
Return on Equity 149.37 149.88 150.42 0.00 0.00 0.00
Operation and maintenance exp 88.20 92.61 97.24 26.63 36.92 38.40
Interest on Working Capital 91.63 102.25 110.65 56.55 58.62 58.38
Other Debit 0.00 0.00 0.00 0.00 0.00 0.00
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 0.00 0.00 0.00 0.00 0.00 0.00
Net Fixed Costs 773.41 751.70 727.82 343.03 596.34 584.02
Ennore Expansion
Table 221: Capacity charges approved for Ennore Expansion (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 0.00
36.58
Interest on Loan Capital 215.37
67.02
Return on Equity 67.63 0.00
Operation and maintenance exp 23.10 10.03
Interest on Working Capital 26.58
10.53
Other Debit 0.00 0.00
Net Prior Period Expenses 0.00 0.00
Less: other income
0.00
0.00
Net Fixed Costs
332.67
124.16
BBGTPS
Table 222: Capacity charges approved for BBGTPS (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 19.81 20.04 20.17 19.81 19.87 19.91
Interest on Loan Capital 63.30 64.31 60.32 16.27 14.05 11.79
Return on Equity 17.14 17.34 17.43 0.00 0.00 0.00
Operation and maintenance exp 6.89 7.54 8.28 7.95 8.51 9.14
Interest on Working Capital 8.52 7.45 7.57 4.75 4.72 4.69
Other Debit 0.05 0.05 0.06 0.10 0.10 0.10
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 0.21 0.22 0.23 0.21 0.22 0.23
Net Fixed Costs 115.51 116.51 113.59 48.66 47.03 45.39
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 242
June 2013
KGTPS
Table 223: Capacity charges approved for KGTPS (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 12.86 13.22 13.49 17.63 17.71 17.86
Interest on Loan Capital 49.69 48.47 44.53 55.73 53.99 52.37
Return on Equity 11.72 12.09 12.42 0.00 0.00 0.00
Operation and maintence exp 8.36 9.00 9.94 8.11 8.59 9.12
Interest on Working Capital 7.54 7.80 7.85 7.45 7.43 7.44
Other Debit 0.14 0.15 0.15 0.06 0.06 0.06
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 0.01 0.01 0.01 0.01 0.01 0.01
Net Fixed Costs 90.29 90.72 88.37 88.96 87.77 86.83
TGTPS
Table 224: Capacity charges approved for TGTPS (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 15.90 16.99 17.39 16.14 16.34 16.55
Interest on Loan Capital 66.21 63.87 58.30 45.60 44.36 43.17
Return on Equity 14.74 15.63 16.07 0.00 0.00 0.00
Operation and maintenance exp 11.74 12.64 13.91 11.75 12.51 13.36
Interest on Working Capital 9.14 9.62 9.88 7.50 7.51 7.55
Other Debit 0.51 0.53 0.55 0.10 0.10 0.10
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 1.67 1.74 1.81 1.67 1.74 1.81
Net Fixed Costs 116.57 117.54 114.30 79.42 79.08 78.91
VGTPS
Table 225: Capacity charges approved for VGTPS (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 19.11 19.68 20.43 21.99 22.30 22.50
Interest on Loan Capital 87.51 81.81 73.43 109.76 107.98 106.02
Return on Equity 17.66 18.44 19.38 0.00 0.00 0.00
Operation and maintenance exp 9.69 10.61 12.01 12.60 13.50 14.51
Interest on Working Capital 19.88 20.05 21.01 12.51 12.52 12.55
Other Debit 0.00 0.00 0.00 0.20 0.20 0.20
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 0.05 0.05 0.05 0.05 0.05 0.05
Net Fixed Costs 153.80 150.55 146.20 157.02 156.45 155.72
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 243
June 2013
Erode Hydro generation Circle (including Bhavani Barrage and Bhavani Kattalai)
Table 226: Capacity charges approved for Erode Hydro Generation Circle (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 35.90 35.92 35.96 21.45 58.62 61.73
Interest on Loan Capital 162.59 158.36 144.76 152.03 220.59 218.29
Return on Equity 44.60 44.65 44.70 0.00 0.00 0.00
Operation and maintenance exp 32.52 35.58 40.51 38.25 41.76 45.80
Interest on Working Capital 9.33 9.33 9.18 6.78 11.40 11.72
Other Debit 0.10 0.11 0.11 0.12 0.12 0.12
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 0.28 0.29 0.30 0.28 0.29 0.30
Net Fixed Costs 284.77 283.66 274.92 218.36 332.20 337.37
Kundah Hydro generation Circle
Table 227: Capacity charges approved for Kundah Hydro Generation Circle (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 25.39 25.49 26.10 25.19 25.23 25.25
Interest on Loan Capital 68.50 81.99 84.00 123.90 121.01 118.10
Return on Equity 29.97 30.53 31.54 0.00 0.00 0.00
Operation and maintenance exp 43.36 47.35 53.39 46.86 50.35 54.28
Interest on Working Capital 6.32 6.83 7.19 6.81 6.87 6.94
Other Debit 0.17 0.17 0.18 0.20 0.20 0.20
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 1.17 1.22 1.26 1.17 1.22 1.26
Net Fixed Costs 172.53 191.16 201.13 201.80 202.44 203.51
Tirunelveli Hydro generation Circle
Table 228: Capacity charges approved for Tirunelveli Hydro generation circle (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 14.36 14.99 16.44 12.19 12.53 13.07
Interest on Loan Capital 86.85 80.03 71.87 59.42 68.86 70.12
Return on Equity 15.55 17.06 19.27 0.00 0.00 0.00
Operation and maintenance exp 30.27 33.44 38.26 30.28 32.78 35.64
Interest on Working Capital 5.00 4.97 5.13 3.41 3.76 3.93
Other Debit 3.07 3.19 3.32 0.10 0.10 0.10
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 4.10 4.27 4.44 4.10 4.27 4.44
Net Fixed Costs 150.99 149.43 149.86 101.31 113.76 118.42
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 244
June 2013
Kadamparai Hydro generation Circle
Table 229: Capacity charges approved for Kadamparai Hydro Generation Circle (Rs. Cr)
Parameter Petition Commission
FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016
Depreciation 10.53 12.26 14.31 10.58 10.60 10.63
Interest on Loan Capital 29.86 35.75 38.14 34.59 33.43 32.29
Return on Equity 12.53 15.27 18.39 0.00 0.00 0.00
Operation and maintenance exp 26.42 28.81 32.39 28.04 30.16 32.55
Interest on Working Capital 3.01 3.46 3.91 2.69 2.74 2.80
Other Debit 0.00 0.00 0.00 0.10 0.10 0.10
Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00
Less: other income 0.33 0.34 0.35 0.33 0.34 0.35
Net Fixed Costs 82.02 95.21 106.79 75.68 76.68 78.02
4.163 The recovery of capacity charges are governed by Regulation-42 of TNERC Tariff Regulations, 2005 which states as under:
“42. Recovery of Capacity Charges
3. Full capacity charges (Fixed Charges) shall be recoverable at target availability
specified in clause (1) of Regulation 37.
4. Recovery of capacity charges below the level of target availability will be on pro rata
basis. At zero availability, no capacity charges shall be payable.…”
4.164 The above capacity charges as determined by the Commission are to be recovered
when TANGEDCO is able to meet the target in terms of norms set by the
Commission. The norms specified for recovery of fixed charges as per TNERC
regulation are stipulated below:
“37. Norms of Operation
The norms of operation for the Thermal Generating Stations shall be as
under:
(i) Target availability for recovery of full capacity (fixed) charges
(a) All Thermal Generating stations in Tamil Nadu except Ennore
Thermal Power Generating Station 80%
(b) Ennore Thermal Power Generating Station 50% (Till Renovation
and Modernization works in all units are completed)
.........”
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 245
June 2013
4.165 In this order Commission has approved higher PLFs based on historical performance
for few own generating stations for estimating energy availability. However, in line
with Commission’s regulations the recovery of capacity charges will be guided by the
norms mentioned above.
Variable cost for own generating stations
4.166 The Commission has worked out the variable cost for various generating stations on
the basis of data approved fuel parameters for FY 2012-13 and considering the norms
specified in the regulation.
4.167 The variable cost as determined by the Commission in respect of various generating
stations of TANGEDCO is detailed as under:
Thermal Stations
4.168 As per Regulation 43 (ii) of the Tarff Regulation, the Energy (Variable) charges shall be worked out on the basis of ex-bus energy delivered / sent out from the generating
station. Rate of energy charges is based on the following elements:
a) Price of primary fuel
b) Quantum of primary fuel (coal) in kg required for generation of one kWh of
electricity at generator terminals, which shall be computed on the basis of
Gross Station Heat Rate (less heat contributed by secondary fuel oil) and gross
calorific value of coal.
c) Price of secondary fuel oil
d) Normative quantity of secondary fuel
e) Normative auxiliary consumption
The above elements have been discussed in detail as under:
Price of primary and secondary fuel
4.169 TANGEDCO in its Petition has estimated the fuel cost for the control period by
considering an escalation of 5% over its FY 2012-13 TANGEDCO has submitted that
it has considered 5% escalation for fuel costs in order to take care of fuel cost
adjustments for the purpose of estimating power cost.
4.170 It is pertinent to mention that with regards the escalation fuel costs , the Commission
has already approved Fuel Price Cost Adjustment (FPCA) Formulae in Page number
294 of its last tariff order dated March 30, 2012 which is reproduced below:
“…
9.4.6 The Commission is of the opinion that the Fuel Price Adjustment charge
formula would enable the TANGEDCO to recover the actual cost of the fuel
incurred and the actual cost of the power purchase, if the same is at variance
from the figures approved by the Commission in this Tariff Order.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 246
June 2013
Section 62 (4) of the Electricity Act 2003 also mandates that the Commission
to provide for mechanism to pass through of variation of Fuel and Power
Purchase cost by specifying the Fuel surcharge formula
9.4.6.6. In most of the comparable States like Maharashtra, Gujarat, Andhra
Pradesh, Kerala, etc, FPCA mechanism is in place.
9.4.6.7. The Commission in this Order is approving FPAC formulae to reflect
change in fuel cost for TANGEDCO’s own Thermal Stations and Power
Purchase from other sources which are due to reasons beyond the control of
TANGEDCO,...”
4.171 Hence, Commission is consciously not considering any escalation over the fuel price.
Commission has considered the fuel price for the second control period as that
approved for FY 2012-13 in this order. If there is variation of actual cost of fuel as
compared to what has been approved by the Commission, TANGEDCO can claim the
differential amount of power purchase cost through FPCA mechanism. The fuel cost
filed by TANGEDCO and approved by the Commission for second control period is
tabulated below.
4.172 For new generating stations, TANGEDCO has proposed a higher fuel cost compared
to existing thermal stations. In response to Commission’s query, TANGEDCO has
submitted that keeping in view fuel supply constraints it has considered a blending
ratio of 58:42 (Domestic:Imported). Commission is of the view that the boilers are
designed to operate efficiently at a particular GCV of coal and any abnormal variation
in this mix can make the plant operate inefficiently. In view of this Commission has
considered the fuel cost for the new generating stations equal to that approved for
existing stations and directs TANGEDCO to make appropriate arrangements for fuel
supply.
Table 230: Cost of primary fuel approved by the Commission for second control period
4.173 For the second control period, TANGEDCO in its Petition for thermal stations except
for ETPS and NCTPS has considered the gross calorific value of primary and
secondary fuel equal to its estimated gross calorific value of primary and secondary
fuels for FY 2012-13. TANGEDCO has not provided adequate reasons for its
consideration of varying calorific value for ETPS and NCTPS.
4.174 For new generating stations, TANGEDCO has considered GCV of fuels equivalent to that of existing generating stations. However, there was marked difference in price of
fuel claimed for new generating stations and existing generating stations. In response
to Commission’s query TANGEDCO has revised the GCV of the fuel for new
generating stations corresponding to the blending ratio of 58:42.
4.175 Commission has considered the gross calorific value of primary and secondary fuels
for the second control period as that approved for FY 2012-13. For new generating
stations, the Commission has considered the gross calorific value of fuels equivalent
to that of the existing thermal stations. The gross calorific value filed by TANGEDCO
and approved by the Commission for the second control period is given below.
Table 232: GCV of primary fuel approved by the Commission
4.177 Commission in accordance to its regulations has considered the station heat rate for
thermal stations except of BBGTPS. The generation from BBGTPS station is very
limited. This station is being operated as synchronous condenser as facility was
available for operating the gas turbines as synchronous condenser. The gas turbines is
started and brought upto full speed after which the unit is synchronized with the grid.
Thereafter the fuel supply is cut off and the gas turbine slows down and finally gets
decoupled from the generator through the operation of a clutch. The generator
continues to be in synchronism with the grid but operates as synchronized condenser.
In this process it supplies VAR to system for compensation. It is understood that this
kind of operation of Basin Bridge Gas Turbine Station has resulted in improving the
voltage profile in the surrounding area and also improved the real power generation of
North Chennai TPS. Hence, Commission approves a relaxed SHR during the second
control period for BBGTPS as that approved for FY 2012-13.
4.178 For new generating stations considering stabilization period in accordance to its regulation, Commission has approved a relaxed SHR during the year of
commissioning. The SHR for thermal stations filed by the Petitioner and approved by
the Commission is given below.
Table 234: Station heat rate (kCal/kWh) approved by the Commission
Name of the Power Station
Petition Commission
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Ennore TPS 3906 3858 3822 3200 3200 3200
Tuticorin TPS 2705 2705 2705 2453 2453 2453
Mettur TPS 2500 2500 2500 2500 2500 2500
North Chennai TPS 2485 2487 2489 2393 2393 2393
Tirumakottai GTPS 1850 1850 1850 1850 1850 1850
Kuttalum GTPS 1850 1850 1850 1850 1850 1850
Basin Bridge GTPS 3219 3219 3219 3219 3219 3219
Valathur - Unit 1 1850 1850 1850 1850 1850 1850
Valathur - Unit 2 1850 1850 1850 1850 1850 1850
NCTPS - Stage II 2450 2450 2450 2500 2450 2450
Mettur Stage III 2450 2450 2450 2500 2450 2450
Ennore Expansion 2450 2550
Auxiliary consumption and Secondary fuel oil consumption
4.179 In chapter 4, Commission has approved auxiliary consumption for arriving at the
energy availability. Commission has considered the same auxiliary consumption for
estimating the energy charges. The auxiliary consumption filed and approved by the
Commission is tabulated below.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 250
June 2013
Table 235: Auxiliary consumption approved by the Commission for estimating energy charges
4.185 The Commission in tariff order date 31st July 2010 ruled that in the order No.3 dated
15-05-2006, the Commission has determined a tariff of Rs.2.75 / unit for the wind
power projects commissioned, and to be commissioned based on agreements executed
prior to May 15, 2006. Accordingly the Commission allowed the rate of Rs. 2.75/
Unit in 31st July 2010 order.
4.186 In its Petition TANGEDCO has considered the transfer price of Rs. 2.75 per unit as cost of generation from its wind mills in accordance to Commission’s order. Hence
Commission is accepting the TANGEDCO submission and is approving the cost of
wind generation from its own wind mills at Rs. 2.75 per unit during the second
control period.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 259
June 2013
Power Purchase from other sources
4.187 In its Petition TANGEDCO has estimated the energy availability considering the
actual procurement during the first half of FY 2012-13 and using merit order dispatch
principle.
4.188 Apart from own generating stations, TANGEDCO procures power from CGS, IPPs,
renewable energy sources, captive power plants and traders
4.189 This section details out the approach adopted by the Commission in approving the
power purchase expenses for second control period.
Central generating stations
4.190 TANGEDCO in its Petition has projected the power purchase expenses considering a 5% escalation in fixed costs and 4% escalation in per unit variable cost. For the new
generating stations, TANGEDCO has assumed a single part tariff of Rs. 3.50 per unit
during the year of commissioning and escalated it by 4% for arriving at the per unit
variable costs for other years of the control period.
4.191 CERC has issued provisional orders and final orders for approving the capacity charges with respect to central generating stations for the period FY 2009-10 to FY
2013-14. The relevant details from the latest Order from FY 2009-10 to FY 2013-14
available on the website of CERC are tabulated below:
Table 251: Capacity charges approved by CERC for CGS (FY 2013-14)
*TN share including unallocated power based on March 2013 SRPC report
4.192 Commission has considered the capacity charges for all the years of the second
control period equivalent to those estimated for FY 2013-14 after taking into account
TN share and approved capacity charges for CGS by CERC for FY 2013-14.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 260
June 2013
4.193 As regards variable charges, the Commission has considered the per unit variable
charges for all years of the control period to be equivalent to that approved for FY
2012-13 in this order. Commission has not considered any escalation in the energy
charges and directs TANGEDCO to file a FPCA Petition for any variation in actual
energy charges compared to energy charges approved in this order.
4.194 For new coal based CGS, TANGEDCO has considered a single part tariff of Rs. 3.50 per unit. However, Commission is of the view that it is not appropriate to consider
single part tariff as TANGEDCO will be required to pay fixed charges in cases where
the energy is not getting scheduled under MoD. Hence, Commission has provisionally
considered a fixed cost of Rs. 1.50 per unit and variable cost of Rs. 2.00 per unit for
all coal based new CGS. For new nuclear CGS, Commission has considered the single
part tariff equivalent to that of KAIGA. The power purchase expenses approved by
the Commission in its order with respect to CGS have been tabulated below.
Table 252: Power purchase from CGS approved by the Commission in FY 2013-14
4.195 TANGEDCO in its Petition has projected the power purchase expenses considering a 5% escalation in fixed costs and 4% escalation in per unit variable cost. Although the
liquid fuel IPPs do not fall under MoD. In response to Commission’s query on PPA’s
with respect to IPPs, TANGEDCO has replied that PPA’s with M/s GMR and M/s
SPC are expiring on 15th Feb 2014 and 29
th Feb 2016 respectively in this control
period.
4.196 Commission has considered the capacity charges for all the years of the second
control period equivalent to those estimated for FY 2012-13 after taking into actual
capacity charges paid by TANGEDCO. However with respect to IPPs whose PPA is
expiring in the control period, Commission has not allowed any capacity charges after
the expiry of PPA.
4.197 As regards variable charges, the Commission has considered the per unit variable
charges for all years of the control period to be equivalent to that approved for FY
2012-13 in this order. Commission has not considered any escalation in the energy
charges and directs TANGEDCO to file a FPCA Petition for any variation in actual
energy charges compared to energy charges approved in this order.
4.198 The capacity charges and variable energy charges approved for IPPs by the Commission for the second control period are tabulated below. However, the despatch
of energy from IPPs will be governed by MoD principle.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 263
June 2013
Table 255: Power purchase from IPPs approved by the Commission in FY 2013-14
Grand Total 93052 8057 3.14 29245 38340 78870 9385 2.26 17812 27834
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 281
June 2013
Aggregate Revenue Requirement for the second control period
4.225 Regulation 70 of the Tariff Regulations 2005 specifies the following:
“70. The Aggregate Revenue Requirement of Distribution licensee
The Aggregate Revenue Requirement of Distribution licensee consists of
thefollowing:-
(i) Cost of Power Purchase
(ii) Operation and Maintenance expenses
(iii) Depreciation
(iv) Interest and cost of finance
(v) Income Tax
(vi) Provision for Bad and Doubtful Debts
(vii) Provision for Insurance
(viii) Provision for contingency reserve
(ix) other expenses
(x) Return on equity / Reasonable rate of return”
4.226 Based on the approved expenses in the above sections of this Chapter, the Aggregate Revenue Requirement approved by the Commission for the second control period is
tabulated below:
Table 277: ARR approved by the Commission for the second control period (Rs. Cr.)
Parameter Petition Commission
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Expenses in respect of own
Generation 14324 15923 17317 9401 8851 9931
Power Purchase Cost 16442 19499 21023 14324 17949 17903
Annual Transmission
Charges payable to
TANTRANSCO
2329 2888 3629 1533 2850 3632
Operation and Maintenance
Expenses 4100 4582 5276 3779 4068 4396
Depreciation 328 388 530 362 435 519
Interest on Long term loan 2238 2376 2495 1525 1740 1938
Other Debits 30 36 38 20 26 28
Prior Period Expenses 0 0 0 0 0 0
Return on Equity 405 601 966 0 0 0
Interest on Working Capital 808 1237 1387 0 0 0
Contribution to
Contingency Reserves 75 89 122 0 0 0
ARR 41079 47618 52784 30945 35918 38347
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Tamil Nadu Electricity Regulatory Commission Page 282
June 2013
Non Tariff Income (NTI) and Other Income
4.227 The NTI has been approved by the Commission based on the same methodology as
done for FY 2012-13. The Commission has used the same year on year escalation rate
and based on its estimates for FY 2012-13, approved NTI for the second control
period.
4.228 TANGEDCO in its petition has filed Other Income for FY 2013-14 to FY 2015-16
separately for Generation and Distribution business. The Commission based on its
approach followed for the first control period has approved the Other Income as filed
by TANGEDCO for the said years. The non tariff income and other income approved
by the Commission for the distribution business is tabulated below.
Table 278: Non Tariff and Other Income approved by the Commission for the second control period (Rs.
Cr)
Particulars Petition Approved
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Non Tariff Income 737.23 789.14 844.82 634.61 679.98 728.70
Other Income 303.47 341.00 363.54 303.47 341.00 363.54
Total 1040.70 1130.14 1208.36 938.08 1020.98 1092.24
Higher interest expenses due to abnormal Capitalization
4.229 In its Petition, TANGEDCO has proposed capital expenditure of around Rs. 16 Cr/MW – Rs. 18 Cr/MW for its new hydro stations.
Table 279: Capital expenditure for new hydro stations as per TANGEDCO MYT Petition (Rs. Cr)
Name of Power Plant Installed Capacity (in MW) Cost as on COD
Bhavani Barrage II 2 x 5 MW = 10 MW 187.61 Crores
Bhavani Kattalai
Barrage II
2 x 15 MW = 30 MW 497.46 Crores
Periyar Vaigai I 2 x 2 MW = 4 MW 62.00 Crores
Periyar Vaigai II 2 x 1.25 MW = 2.5 MW 48.29 Crores
4.230 In the revised capital expenditure and capitalization information submitted by
TANGEDCO, the capitalization of these hydro generating stations is shown around
Rs. 23Cr/MW to Rs. 33 Cr/MW. Commission is of the view that the proposed capital
cost is extremely high compared to industry norms. Inspite of repeated directions,
TANGEDCO has not filed any Petition for the approval of the capital cost of new
hydro stations. In view of this, Commission has disallowed the interest expenses on
higher capitalization considering the capital cost of Rs. 5.50 Crs/MW for small hydro
plants in accordance with CERC RE Tariff regulations. The disallowed capitalization
and interest expenses for the second control period are given below.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 283
June 2013
Table 280: Capital cost as per revised filing and CERC norms
Total Revenue including Subsidy 7,332 18763 25,707 29,695
Revenue Gap at Existing Tariff 5,773 14,882 9,719 10,344
Table 288: Additional revenue gap arrived by TANGEDCO in its petition (Rs. Crores)
Year Gap Approved
by Commission last year
Gap Arrived in
this Petition
2010-11 4,187 5,773
2011-12 13,409 14,882
2012-13 -6 9,719
2013-14 0 10,344
Total 17,590 40,718
5.7 TANGEDCO has submitted a total revenue gap of Rs. 40,718 Cr upto FY 2013-14 in
its petition for the post unbundling period.
5.8 Commission has arrived at the revised revenue gap considering the approved net
revenue requirement and revenue at existing tariffs from FY 2010-11 to FY 2013-14.
For FY 2013-14, Commission has arrived at the revised revenue gap after considering
the additional revenue estimated to accrue to TANGEDCO through tariff hike. The
revenue gap determined by the Commission from FY 2010-11 to FY 2013-14 is
tabulated below.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 290
June 2013
Table 289: Revenue Gap re-estimated by the Commission for the period FY 2010-11 to FY 2013-14 (Rs.
Cr)
Particulars 2010-11 2011-12 2012-13 2013-14 Total
Net Revenue Requirement 11898 28953 30472 29946 101269
Less: Revenue from Sale of
Power at Existing Tariff
including Tariff Subsidy
7848 19475 23561 27014 77898
Revenue Gap at existing
tariff 4050 9478 6911 2932 23371
Less: Additional revenue
through tariff increase 964 964
Revenue Gap at revised
tariff 1,968 22407
Revenue Account and Amortization of Regulatory Asset
5.9 TANGEDCO in its petition has revised its total outstanding Regulatory Asset based
on the total gap arrived in its petition, which is cumulative of gap for FY 2010-11
(true-up for 5 months), FY 2011-12 (on provisional true-up), FY 2012-13 (Estimated
for current year) and FY 2013-14 (gap for ensuing year), It has submitted that the
revised calculation of Regulatory Assets may kindly be approved.
5.10 It is also to be noted that the current tariff hike as estimated by TANGEDCO will
result in additional revenue to the tune of Rs 973 Crores, which would be met through
Government subsidy.
Table 290: Regulatory Assets as claimed by TANGEDCO
Particulars Rs. Crores
Loss for the year
FY 2010-11 5,773
FY 2011-12 14,882
FY 2012-13 9,719
FY 2013-14 10,344
Total Gap arrived in this Petition 40,718
Total Regulatory Asset approved by Commission 19,571
Less : Tariff hike proposed 973
Additional Regulatory Asset Proposed 20,173
Total Regulatory Asset Proposed 39,744
5.11 In the last order Commission has directed TANGEDCO not to mix up the capital
accounts and revenue accounts. Hence, Commission in line with its direction is
treating the revenue account separately. Commission has arrived at the consolidated
revenue gap of Rs. 23677 Cr as on March 2013 by considering the approved revenue
gap for each year of the first control period in this order and allowing interest
expenses at 11%. The consolidated revenue gap arrived at closing of FY 2013 is given
below.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 291
June 2013
Table 291: Revenue account for the first control period (Rs. Cr)
Parameter FY 2010-11 FY 2011-12 FY 2012-13
Opening 0 4145 14657
Additions (Revenue gap approved
by the Commission) 4050 9478 6912
Add: Interest Expenses 95 1034 2108
Closing 4145 14657 23677
Average 2073 9401 19167
5.12 Considering the approved revenue gap of Rs. 1967 Crs for FY 2013-14, Commission
has arrived at the net regulatory asset of Rs. 25644 Crs for FY 2013-14.
Table 292: Regulatory Asset arrived by the Commission (Rs. Cr)
Parameter Amount (Rs. Cr.)
Revenue Gap - Ending March 2013 23677
Revenue Gap - FY 2013-14 1967
Regulatory Asset 25644
5.13 In the Tariff Order No. 1 dated 30th March 2012, the proposed methodology for
Amortization of the Regulatory Asset had been laid down as follows.
“Para 9.8.2: The Regulatory Asset is proposed to be amortized over a period of 5
years commencing from the year 2013-14 onwards. Once the Regulatory Asset is
arrived at, 1/5th of the Regulatory Asset would be amortized along with the carrying
cost. When the tariff order for 2014 – 15 is done, the Regulatory Asset would be re-
worked out and 1/4th of such Regulatory Asset would be amortized in that tariff order
along with that cost and so on until the entire Regulatory Asset is amortized. The
carrying cost would correspond to the weighted average rate of interest for medium
/long term loans of TANGEDCO in the corresponding year in which the amortization
of the Regulatory Asset is done. The amortization is in-principle approved to be met
by Government of Tamil Nadu as per their letter (Ms.) No. 32 dated 25-03-2012 as
enclosed in Annexure IX. The Commission is of the view that creation of Regulatory
Asset could not be avoided in view of the accumulation of Regulatory Asset over a
period due to phenomenal load growth, less addition to the generating capacity, high
power purchase costs, increase in costs and non filing of tariff petition.”
5.14 The Regulatory Asset determined in Table 292 shall be taken into consideration while
amortization the outstanding regulatory asset for this year.
5.15 In response to TANGEDCO’s letter on amortization of regulatory asset, GoTN has
agreed for amortization of regulatory asset through Letter(Ms.) No. 59/C2/2012 dated
7th June 2013. The relevant extracts of the letter received from GoTN are reproduced
below:
a) GoTN has agreed to the financial restructuring of the state Discoms
announced by GoI on 5th October 2012. Accordingly, GoTN will take over
50% of TANGEDCOs short term liabilities to the tune of Rs. 6382.68 Crs in a
phased manner.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 292
June 2013
b) In GoTN annual budget for FY 2013-14, Rs. 3000 Cr has been provided for the takeover during the current financial year. The remaining liabilities would
continue to be in books of TANGEDCO till the time of eventual takeover.
However, the interest on these liabilities will be paid by the GoTN.
c) Keeping in view, the financial restructuring plan and available audited accounts GoTN has proposed following approach for amortization of
Regulatory Asset.
i. As the audited accounts are available only for the year FY 2010-11, the
amortization may be carried out for the regulatory assets of the year for
which audited accounts are available. For subsequent years, the
regulatory assets would be reassessed for amortization as soon as
audited accounts are available.
ii. The carrying cost of the Regulatory Assets can be linked to the actual
cost of cash loss financing after the financial restructuring. At present
it is 11%. Hence, the same interest rate may be taken as carrying cost.
iii. Since the GoTN is already taking over Rs. 6382.68 Cr of short term
liabilities of TANGEDCO, part of this amount may be accounted for
amortization to the extent of 1/5th of the regulatory assets as per the
audited accounts of FY 2010-11
iv. The balance amount can be adjusted towards amortization of the
regulatory assets in subsequent years.
v. Since the GoTN is also paying interest on the balance amount, the
carrying cost of such amount can be discounted in arriving at the
regulatory assets in subsequent years.
vi. The GoTN has in-principle agreed to amortisation of Regulatory
Assets. The details are to be worked out in conjunction with tariff
revision.
5.16 Commission considering the letter received from GoTN has estimated the Regulatory
Asset pertaining to FY 2010-11 at a carrying cost of 11%. Commission has then
amortized 1/5 of the estimated Regulatory Asset pertaining to FY 2010-11.
Table 293: Regulatory Asset amortized during FY 2013-14 (Rs. Cr)
Parameter FY 2011 FY 2012 FY 2013
Opening 0 4145 4628
Additions 4050 0 0
Interest Expenses 95 482 539
Closing 4145 4628 5166
Regulatory Asset to be Amortized
(1/5 of the RA as on March 2013) 1033
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 293
June 2013
5.17 Commission approves Regulatory Asset of Rs. 24611 Crs after the considering the
amortized regulatory asset.
Table 294: Regulatory Asset approved by the Commission (Rs. Cr)
Parameter Amount (Rs. Cr.)
Regulatory Asset (Initial Estimate) 25644
Amortized Regulatory Asset 1033
Revised Regulatory Asset 24611
5.18 It is pertinent to mention that Commission still have an approval of GoTN for
amortization of Rs. 5350 Crs, which will be adjusted towards amortization in the
subsequent years. In addition, Commission will not consider interest expenses on this
amount while calculating the regulatory asset for subsequent years.
5.19 In this order Commission has increased tariff only for two cagetories i.e Agriculture
and Huts. With new capacities getting added this year after considerable delay,
Commission expects the average power purchase cost to reduce with increase in
regulated power purchase besides improving the power supply position. Further in FY
2012-13 tariffs were increased to all LT consumers by a big margin. Also, GoTN has
in principle agreed for amortisation of Regulatory Asset in conjunction with tariff
revision.
“Point 4(f) of Letter (Ms) No. 59/C2/2012 dated 7th June 2013
The Government in its letter cited first above has agreed in-principle with a request of
amortisation of regulatory assets. The details are to be worked out in conjuction with
tariff revision.”
5.20 Based on above submissions, Commission is of the view that tariffs can be reviewed
later along with the amortisation of balance regulatory asset. Also, TANGEDCO is in
the process of finalization of its Financial Restructuring Plan (FRP) scheme and once
the scheme is finalized, the amortization of balance regulatory asset can be worked
out considering GoTN support, FRP scheme etc.
5.21 Commission wants to reiterate its view regarding opening loans allocated to
TANGEDCO through provisional transfer scheme. TANGEDCO is borrowing new
loans for repayment the loans allocated and these borrowings can only be reduced by:
a) Additional cash infusion into the business
b) Revision of transfer scheme through which the opening loans
allocated to TANGEDCO gets reduced.
These issued need to be kept in view by TANGEDCO and GoTN while
finalizing the Transfer Scheme and the opening balance sheet as on 1st
November 2010.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 294
June 2013
Voltage wise Cost to Serve, Average Cost of Supply and Cross subsidy
reduction
Voltage wise cost to serve for FY 2013-14
5.22 Pursuant to the directives of the Hon’ble Appellate Tribunal in its judgement dated
28.7.2011 in Appeal no. 192 & 206 of 2010 in which the Tariff Order dated 31.7.2010
was challenged, the Commission had estimated the voltage wise cost to serve in its
tariff order dated 30.3.2012, but had not determined the cross subsidy based on it.
5.23 The Commission has also very clearly stated its views in the same order as its
response to stakeholder comments in Para 2.1.461:
“………..
i. The cross subsidy for a consumer category is the difference between cost to serve
that category of consumers and average tariff realization of that category of
consumers. While the cross-subsidies have to be reduced progressively and
gradually to avoid tariff shock to the subsidized categories, the cross-subsidies
may not be eliminated.
ii. The tariff for different categories of consumer may progressively reflect the cost of
electricity to the consumer category but may not be a mirror image of cost to
supply to the respective consumer categories.
iii. Tariff for consumers below the poverty line will be at least 50% of the average cost
of supply.
iv. The tariffs should be within ±20% of the average cost of supply by the end of 2010-
11 to achieve the objective that the tariff progressively reflects the cost of supply of
electricity.
v. The cross subsidies may gradually be reduced but should not be increased for a
category of subsidizing consumer.
vi. The tariffs can be differentiated according to the consumer’s load factor, power
factor, voltage, total consumption of electricity during specified period or the time
or the geographical location, the nature of supply and the purpose for which
electricity is required.
vii. Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer
category is not increased but reduced gradually, the tariff of consumer categories
is within ±20% of the average cost of supply except the consumers below the
poverty line, tariffs of different categories of consumers are differentiated only
according to the factors given in Section 62(3) and there is no tariff shock to any
category of consumer, no prejudice would have been caused to any category of
consumers with regard to the issues of cross subsidy and cost of supply raised in
this appeal.”
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 295
June 2013
5.24 Further the Commission in line with the directives of the Hon’ble Appellate Tribunal
had also directed TANGEDCO to undertake data collection for computing accurate
cost of supply and submit a study report computing the consumer category wise and
voltage wise cost to serve. TANGEDCO in partial compliance to the above directive
has undertaken a technical study and computed the category wise cost of service but
has stated its inability to compute voltage wise cost to serve as its accounting system
are not robust enough to capture cost details voltage wise.
5.25 Consequently in the Order of Hon’ble Appellate Tribunal of Electricity dated 9th April
2013 in Appeal Nos. 257 of 2012 in which the the Commissions tariff order dated
30.3.2012 was challenged, the Appellate Tribunal’s opinion on this issue of cross
subsidy reduction is extracted below:
“13. The fifth issue is regarding increase in cross subsidy.
13.1 According to the Appellant the cross subsidy for HT consumers has been
increased from 17% to 47% and the State Commission has also failed to
comply with the directions given by the Tribunal regarding determination of
voltage wise cost of supply in Appeal no. 192 of 2010.
13.2 According to learned counsel for the State Commission, the cross subsidy with
respect to average cost of supply for Industries was 122% for the FY 2010-11
as per the tariff order dated 31.7.2010 which has been increased to 147% in
the impugned order. However, the Tariff Order dated 31.7.2010 for FY 2010-
11 was not a matching Tariff Order in which large gap was left between the
revenue requirement and ARR allowed whereas the impugned order was
issued for the entire ARR without leaving any revenue gap. However, in the
impugned order while the tariff of Appellant was increased by 19%, the
increase in tariff to some of the subsidized categories was Domestic 42%,
Huts 400%, Power looms 130% and Agriculture 589%. Further increase to
subsidized categories would give great tariff shock to these categories. The
contribution of major LT consumers towards cost was also raised from 54% to
80%. Further, the voltage wise cost of supply could not be determined as the
distribution licensee could not supply the requisite data. The essential
requirement laid down in Section 61(g) of the Act in regard to tariff being
progressively reflecting the cost of supply and also reduction in cross subsidy
could be verified only from the next tariff order of the State Commission.
13.3 We notice that the first tariff order was given by the State Commission on
15.3.2003. Thereafter, the tariff was determined only by order dated 31.7.2010
for FY 2010-11 after a lapse of seven years. During these seven years, the
accumulated losses of the distribution licensee increased manifold. However,
the State Commission did not allow recovery of the accumulated losses of the
previous years in the tariff and decided that the financial losses of the
previous years would have to be addressed by restructuring with intervention
of the State Government. The State Commission decided to leave revenue gap
and create regulatory assets in the anticipated revenue during the control
period 2010-11 to 2012-13. For the years 2010-11 and 2011-12, the State
Commission had left revenue gap of Rs. 7904.04 crores and Rs. 6062.24
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 296
June 2013
crores respectively. Thus, the tariff for FY 2010-11 was fixed after leaving
huge revenue gap which was uncovered by tariff even though the tariff was
determined after a lapse of seven years.
13.4 Let us now examine the directions of the Tribunal in judgment dated 28.7.2011
in Appeal no. 192 of 2010 in which the tariff order dated 31.7.2010 was
challenged.
"13.4. The fourth issue is regarding cost to serve each category of consumer.
We have noticed that the State Commission has not determined the cost of
supply according to its Regulations as also the variation in tariff of different
categories of consumers with reference to average cost of supply. In the
absence of this information, we are not able to verify that the tariff of
categories of consumers is within ± 20% of the average cost of supply and
whether the cross subsidy has been reduced or increased with respect to the
previous year. The issue regarding cost of supply has been dealt with in this
Tribunal's Judgment dated 30th May, 2011 in Appeal Nos. 102, 103 and 112
of 2010 in the matter of Tata Steel Limited vs. Orissa Electricity Regulatory
Commission, etc. Accordingly, the State Commission is directed to determine
the voltage wise cost of supply within six months from the date of this
Judgment to ensure that in the future tariff orders cross subsidies for different
categories of consumers are determined according to the Regulations and the
cross subsidies are reduced as per the provisions of the Act. The State
Commission is also directed to determine the variation of tariff of different
categories of consumers with respect to average cost of supply and provide
consequential relief, if any, to the appellant's consumer category in terms
with our findings after hearing all concerned."
13.5 We notice that that State Commission has estimated the voltage wise cost to
serve in the impugned order but has not determined the cross subsidy with
respect to voltage wise cost to serve and has directed the distribution licensee
to carry out some data collection exercise for computing accurate cost of
supply and submit a study report on computation of consumer category wise
and voltage wise cost to serve.
13.6 It is noticed that the State Commission has increased the tariff of the
subsidized categories considerably. The increase in the tariff of various
subsidized categories as given in Table 227 of the impugned order is as under:
LT Domestic 40%
Hut 755%
Power Looms 143%
LT Agriculture 593%
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Tamil Nadu Electricity Regulatory Commission Page 297
June 2013
LT Total 48%
Thus, we agree with the contention of the State Commission that the State
Commission has increased the tariff of the subsidized categories considerably
and further increase would have caused greater tariff shock to these
categories.
13.7 We find that if the tariff of Appellant's category is kept within plus 20% of the
average cost of supply it may require increase in tariff of subsidized LT
consumers by 110% of the pre-revised tariff causing greater tariff shock to
them. This would be evident by following:
i)Consumption of industries category IA 13545 MU
ii)Revenue at the revised tariff of Rs. 7.32 per kWh 9914 crores
iii)Tariff at + 20% of average cost of supply (Rs.4.99 per kWh) Rs. 6 per kWh
iv)Revenue at Rs. 6 per kWh 8127 crores
v)Loss of revenue from industries category IA 1787 crores
vi)Consumption of LT subsidized consumers 29709 MU
vii)Increase in average tariff to recover loss of revenue from industrial category
IA
(v)
( ______x 10)
(vi)
Rs. 0.60 per
kWh
viii)Average tariff of subsidized LT consumers after tariff increase Rs. 2.86
ix)Increased average tariff required to cover the loss of revenue Rs.3.46 per
kWh
x)Average tariff of subsidized LT consumers prior to revision Rs.1.65 per
kWh
xi)Desired average increase in LT tariff to cover loss of revenue %age About 110%
xii)Average increase allowed to LT subsidized category About 73%
Thus, against present average increase of about 73% allowed to the
subsidized LT categories, the increase required to bring the HT, IA category
alone to + 20% of average cost of supply would be about 110%. If other
subsidizing consumers had to be brought within +20% or average cost of
supply, the required increase in tariff in the subsidized categories would have
been much higher.
13.9 Let us now examine the findings of the State Commission in the impugned order
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 298
June 2013
"9.7.2 The Commission notes that the present level of cross subsidisation of
LT category consumers has been brought down from 46% to 20%, which is a
huge shift towards the final goal of +20% of Average Cost of Supply.
9.7.3 Retail Tariff in State of Tamil Nadu was not revised for a period from
FY 2003-04 to FY 2009-10, on account of non filing of the tariff petition by
erstwhile TNEB. Increase in average cost of supply has been sought by
TANGEDCO, in this Tariff Petition. Cross-subsidy has been in existence
historically even in the period where there was no tariff revision. The
Commission also observes that tariff that was charged to most of the
categories of consumers was below average cost of supply. Hence, now when
the TANGEDCO has sought actual pass through of revenue gap in the form
of Tariff Increase and Regulatory Asset, the impact on each category of
consumers is significant. The Commission has attempted to reduce the cross-
subsidy between the consumer categories in this Order, by rationalising the
tariff for subsidised categories and suitably adjusting the tariff for
subsidising categories, vis-à-vis the prevailing average cost of supply, while
at the same time, trying to ensure that there is no tariff shock to any
consumer category. However, since the average cost of supply has been
increasing steadily, the average tariff increase required to meet the revenue
gap is also increasing, and hence, the subsidising consumers have not been
able to experience tariff reduction in absolute terms.”
13.10 In the circumstances of the case, we feel that the State commission has tried to
increase the tariff of the subsidized categories substantially so as to reduce the
component of cross subsidy. The comparison of charge in cross subsidy with
the previous tariff order for FY 2010-11 may not give correct picture as in the
previous tariff order the tariffs were not increased adequately to meet the
revenue gap and a huge revenue gap was left uncovered. The State
Commission has already increased the tariff of subsidized categories
substantially and further increase would have caused greater tariff shock to
them which may not be desirable.
13.11 Accordingly, we are not inclined to interfere in the tariff determined by the
State Commission. However, the State Commission is directed to determine
the voltage-wise cost of supply and corresponding cross subsidy for each
category of consumer in the future tariff order.”
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Tamil Nadu Electricity Regulatory Commission Page 299
June 2013
5.26 The Commission has noted that sufficient data is not available for metering and
segregation of the network costs for determination of cost of supply for different
categories of consumers. To undertake an accurate and logically sound voltage wise
cost of supply study, TANGEDCO should select sample feeders/ consumers for load
research study. The selected sample should be statistically verified to be
representative of the population. Hourly load data and energy consumption should be
collected from selected feeders/ consumers for each voltage category of consumers.
From the data so collected TANGEDCO should undertake a load research study to
determine the contribution to Coincident Factor and Class Load Factor for each
voltage category. Further TANGEDCO should have accurately classified voltage wise
losses, voltage wise number of consumers and their load. Based on such a study a
representative cost to serve various voltage classes can be arrived at. TANGEDCO
has so far not conducted such a study and gathered the required information.
5.27 The Commission would also like to note that the year FY2012-13 has seen severe
shortage of power due to which more stringent R&C measures as well as load
shedding was unavoidable. Given such a situation where cyclical load shedding was
adopted, the voltage wise consumer contribution to peak would have been misleading.
Considering the peculiar difficulties in this specific situation as well as the fact that
sufficient data is unavailable, the Commission has resorted to estimate the voltage
wise cost to serve based on the data made available.
Embedded cost method
5.28 The annual revenue requirement has been allocated to consumers connected at
different voltage levels based on a combination of allocation factors. The factors are:
contribution of a voltage class to the power purchase, voltage wise cost contribution
to network assets, contribution of a voltage class to T&D losses, number of
consumers in a voltage class and connected load of consumers in a voltage class.
5.29 The Commission has calculated the voltage wise cost to serve using three steps
namely functionalisation, classification and allocation of costs to various voltage
classes.
A. Functionalisation:
5.30 Firstly the total costs have been segregated according to the major operating functions
of the utility, such as generation, transmission or distribution.
Table 295: Functionalisation of costs of TANGEDCO for FY 14 (Crs)
Sl. No Cost Heads Generation Transmission Distribution
1 Power Purchase Cost 23,726
2 Transmission Cost 1,533
3 Distribution Cost
Employees costs 3,610
Repair & Maintenance 68
Administration & General expenses
101
Depreciation
362
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June 2013
Sl. No Cost Heads Generation Transmission Distribution
Interest on Long term loan* 1,464
Other Debits & extra ordinary items 20
Prior Period Debit/(Credit) Charges
-
Reasonable Return / Return on Equity
-
Interest on Working Capital -
Contribution to Contingency Reserves -
Total expenditure 5,625
Less Other Income and Non tariff income 938
Total Distribution cost 4,687
*After deducting the interest expenses disallowed for new hydro stations
B. Classification of costs:
5.31 The objective of cost classification is to arrange costs into groups that bear a
relationship to a measurable cost-defining characteristic of the service being rendered.
Functionalized costs are classified as:
• Demand related
• Energy related and
• Customer related
5.32 The Demand classification relates to costs expended for providing capacity to serve
system load requirements. The Energy related classification consists of those
expenses that vary with any change in the consumption, such as energy component of
power purchase cost. The Customer related classification is related to expenses linked
directly to and varies by the number and type of customers served.
a. Classification of Generation Expenses:
Power is procured from both own generating stations of TANGEDCO as well as
purchased from various allocated CGS stations, IPPs, NCES and Other short term
sources.
The power procurement cost has both fixed and variable component and hence
ideally the total fixed cost of own generation and power purchase should be
classified as demand related and the total variable cost of own generation and
power purchase as energy related costs.
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June 2013
The Commission observes that the Power purchase costs are identified as both
demand and energy related as TANGEDCO should not only be able to supply
adequate energy for sale to consumers but also have sufficient installed capacity
or purchase capacity to satisfy the system peak demand. For this segregation
TANGEDCO would have to provide information pertaining to contribution of
individual class to coincidental peak demand. It has been observed from the
Technical Paper on Cost to Serve submitted by TANGEDCO that the above
information is not available with them. Thus the Commission has treated the
entire own generation as well as power purchase cost as energy related costs, so as
to have a logical basis for apportioning the cost as an approximation. As and when
the required details become available calculations will have to be made by
dividing the power procurement costs with demand related and energy related
costs.
b. Classification of Transmission Expenses:
Usually the entire transmission costs are classified as demand related. However, a
minor portion of transmission investment is utilised for reducing the energy losses
in the transmission system. Hence 2% of transmission charges are classified as
energy related costs and 98% as demand related.
c. Classification of Distribution Expenses:
A large quantum of the distribution costs are related to the creation and
maintenance of the network. This cost is classified as being demand related. The
Distribution utility also incurs expenses to provide service to customers and is also
required to meet customer peak demand requirements. This component of expense
varies with the number of customers to be served, like providing connections to
new consumers which in turn also adds to the utilities system capacity to meet
peak demand. Thus they exhibit attributes of both demand and customer charges
and have been apportioned thus.
Table 296: Classification of functional costs
Cost Heads Demand Energy Customer Total
Power Purchase Cost 0% 100% 0% 100%
Transmission Cost 98% 2% 0% 100%
Employees costs 60% 0% 40% 100%
Repair & Maintenance 50% 5% 45% 100%
Administration & General expenses 75% 5% 20% 100%
Depreciation 95% 5% 0% 100%
Interest on Long term loan 95% 5% 0% 100%
Other Debits & extra ordinary items 95% 5% 0% 100%
Prior Period Debit/(Credit) Charges 95% 5% 0% 100%
Reasonable Return / Return on Equity 95% 5% 0% 100%
Interest on Working Capital 95% 5% 0% 100%
Contribution to Contingency Reserves 95% 5% 0% 100%
Less Other Income and Non tariff income 95% 5% 0% 100%
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C. Allocation of costs:
5.33 The last step is the process of apportioning the classified costs to each voltage class
on the basis of an appropriate methodology apt for that class of cost. The Commission
has used the following apportioning methodology for the three heads of cost.
a. Demand cost allocation
5.34 Transmission and Distribution demand cost – The costs incurred under these heads
have been allocated by the Commission to voltage classes based on the proportion of
network assets utilised to serve the consumers at specific voltages. These ratios have
been arrived at by first arriving at the total value of voltage wise assets at the end of
FY2012-13 as follows.
5.35 The Commission has based its estimations, on the voltage wise per unit cost and asset
quantum and has arrived at the proportion of asset at each voltage level as follows.
Table 297: Total Line cost as at end of FY 2012-13
Voltage Total cost proportion
>230 kV 17%
110 kV 23%
33 kV 4%
22 kV 5%
11 kV 12%
LT 38%
Total 100%
5.36 On arriving at this preliminary voltage wise cost proportion, a further reclassification
of the same has been done based on the voltage wise sales and wheeled energy
grossed up for losses. This has been done in light of the fact that the higher voltage
systems act as the backbone network for lower voltage systems and hence its full cost
cannot be allocated only to the voltage class it pertains to but also to lower voltage
systems in the proportion of its utilisation i.e. energy requirement at the specific
voltage periphery.
5.37 Explaining further, the reclassification ratios as applied by the Commission are as
follows. The proportion of energy requirement at a particular voltage to total energy
requirement has been calculated and progressively the same logic has been extended
to arrive at the proportion by limiting total requirement upto a lower voltage level.
These ratios are then used to allocate the voltage wise costs arrived at each voltage
level to all lower voltages also.
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Table 298: Reclassification ratios based on voltage wise energy requirement
Voltage
Energy at
Voltage
Periphery
(MU)*
Total
sales
Upto 110
kV
Upto 33
KV
Upto 22
kV
Upto 11
kV
Only LT
kV
>230
KV 1,044 1.4%
110 KV 4,770 6.2% 6.3%
33 KV 2,145 2.8% 2.8% 3.0%
22 KV 4,116 5.3% 5.4% 5.8% 7.2%
11 KV 11,849 15.3% 15.6% 16.6% 0.0% 18.2%
LT 53,311 69.0% 70.0% 74.6% 92.8% 81.8% 100%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
*Wheeling units at different voltages have been arrived by certain assumptions
Table 299: Voltage wise demand cost allocation factor
Voltage Total cost proportion Reclassification proportion
>230 kV 17% 0.2%
110 kV 23% 2.5%
33 kV 4% 1.3%
22 kV 5% 2.8%
11 kV 12% 9.2%
LT 38% 84.1%
Total 100% 100.0%
b. Energy cost allocation
5.38 Total energy cost – The total cost classified by the Commission as energy related
costs are allocated in the ratio of energy requirement for consumers of a specific
voltage class. The energy requirement includes voltage wise sales and voltage level
losses.
Voltage wise Energy Related Cost = Total Energy Cost x (Voltage wise Sales +
Voltage wise Energy Losses) / Total energy
requirement at transmission periphery
5.39 The power purchase at transmission periphery has been arrived at considering a total
loss of 16.4%. The table below captures the sales, losses and energy requirement for
each voltage class.
5.40 The Commission has based its estimations, on the energy balance data and voltage
wise losses data furnished by TANGEDCO.
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Table 300: Voltage wise energy cost allocation factor
Sl. No Voltage
Energy
cost
allocation
factor
1 >230 kV 1.1%
2 110 kV 4.8%
4 33 kV 1.6%
5 22 kV 3.1%
6 11 kV 8.9%
7 LT 80.6%
Total 100.0%
c. Customer cost allocation
5.41 Total customer related cost - The costs incurred under this head have been allocated
by the Commission to voltage classes based on the number of consumers in each
voltage class. However, the number of consumers in each class has been weighted to
reflect the appropriate cost causation aspects of the voltage class. The weights are a
function of two parameters namely sales per consumer and load per consumer.
5.42 Allocation of customer related costs are illustrated below in which sales per consumer
and load per consumer has been taken on a weight scale of 1-200 to enable a
meaningful comparison.
Table 301: Voltage wise customer cost allocation factor
5.63 At the outset the Commission notes that there has been a marked shift in HT
consumers opting for open access, which has lead to the average billing rate to
increase substantially. The Commission has tabulated below the increase in wheeling
units over the last three years, representing the number of units sourced through other
sources apart from the utility.
Table 312: Wheeled energy over the last there years from FY 2010-11 to FY 2012-13
Particulars FY 2010-11 FY 2011-12 FY 2012-13
MU's MU's MU's
Sale to HT Industrial, HT
Commercial and Educational
Institutions
13,857 11,664 8,646
Wheeling for HT Industries 4,716 6,750 7,871
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Particulars FY 2010-11 FY 2011-12 FY 2012-13
MU's MU's MU's
Wheeling for HT Commercial 155 289 318
Wheeling for Educational Institutions 7 10 11
Total Wheeling Units 4,878 7,049 8,200
Total Sales (Including Wheeling) 18,735 18,713 16,846
Percentage of Wheeling Units 26.04% 37.67% 48.67%
5.64 It can be inferred from above table that percentage of wheeling units from 26.04% in
FY 2010-11 increased to 48.67% in FY 2012-13. The R&C measures in place are
making the consumers to depend on other available options for power procurement.
The utility is losing significant revenue due to reduced HT sales. Hence, the per unit
cross subsidy surcharge has marginally increased due to higher ABR due to loss of
revenue with HT consumers moving out of the system.However, due to better energy
availability in FY 2013-14 the number of consumers, other than those consumers who
have permanently left the system due to captive wheeling, opting to source power
through open access is expected to reduce and cause the average billing rate to reduce.
Grid Availability Charges
5.65 TANGEDCO in its petition has requested the Commission for approval of energy
charges plus the energy equated demand charges applicable to HT Temporary supply
tariff as Grid Availability Charges.
5.66 TANGEDCO submitted that the Grid Availability Charges are for providing standby
arrangements to Open Access customers in the following cases:
• In case of outages of Generator supplying to an open access consumer.
• For start up power by generator.
• When the generation as per schedule is not maintained and when the drawal by the open
access consumer is in excess of the schedule.
5.67 The tariff applicable to start-up power has been dealt in Tariff schedule of this Order
5.68 With regards grid availability charges for open access consumers, Commission
approves following norms
1) Scheduling of all transactions pursuant to grant of long-term open access or
medium-term open access or short-term open access shall be carried out on
day-ahead basis in accordance with the relevant provisions of IEGC/CERC
Open Access Regulations for inter-State transactions and in accordance with
State Grid Code/Commission’s Regulations / orders for intra-State
transactions.
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2) Deviations between the schedule and the actual injection/drawal in respect of a open access customer who is not a consumer of the distribution licensee and
the Generating Stations, shall come under the purview of the intra-state ABT,
as notified by the Commission and shall be settled based on the composite
accounts for imbalance transactions issued by SLDC on a weekly cycle in
accordance with the UI charges specified by the Commission. Billing,
collection and disbursement of any amounts under the above transactions shall
be in accordance with the Commission’s orders on Intra-state ABT, as may be
applicable from time to time. Till the implementation of Intra-State ABT, the
imbalance charge shall be at the rate of applicable temporary supply tariff.
3) In case of deviation by Open Access Customer who is also a consumer of
distribution licensee, the difference between the applicable scheduled open
access load and actual drawl shall be accounted Block wise and shall be
settled in accordance with the following:
a) The energy consumption of such customer shall be recorded in 15 minutes
time block.
b) Deviations between the schedule and the actual injection/drawal shall come under the purview of the intra-state ABT, as notified by the
Commission and shall be settled based on the composite accounts for
imbalance transactions issued by SLDC on a weekly cycle in accordance
with the UI charges specified by the Commission. Billing, collection and
disbursement of any amounts under the above transactions shall be in
accordance with the Commission’s orders on Intra-state ABT, as may be
applicable from time to time. Till the implementation of Intra-State ABT,
the imbalance charge shall be regulated as below:
i. In case of actual energy/demand drawl is more than the scheduled
energy/demand but within the permitted energy/demand (based on
contracted load and energy or quota demand and energy as applicable),
customer shall be liable to pay for such over drawl at the applicable
tariff rates of that category of consumer as determined by the
Commission from time to time.
ii. In case of actual energy/demand drawl is more than the scheduled
energy/demand drawl and also more than the permitted energy/demand
(based on contracted load and energy or quota demand and energy as
applicable), payment for the capacity above the contract demand shall
have to be made at the excess demand/energy charges as specified by
the Commission for such categories of customers in the
regulation/order.
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Additional Surcharge
5.69 TANGEDCO has in its petition clearly stated that Additional Surcharge will not be
charged by it as there is shortage of available capacity. It has further elaborated that
the Additional surcharge will become applicable only if it is conclusively
demonstrated that its obligation as a licensee in terms of existing power purchase
commitments, has been and will continue to be stranded, or there is an unavoidable
obligation and incidence to bear fixed costs consequent to such a contract.
5.70 Hence the Commission accepts the proposal of TANGEDCO that Additional
Surcharge will be levied on the Open access consumers if and only if stranded
capacity costs are established by TANGEDCO
Restoration Charges
5.71 Any default in payment of the various OA charges specified in the regulations, within
the time stipulated by the Commission will result in the discontinuance of the open
access to the consumer. Restoration of such discontinued open access shall be subject
to the payment of reconnection charges applicable to that voltage level of the
customer as approved by the Commission in the Order on “Non-tariff related
Miscellaneous charges” issued from time to time.
Fuel and power purchase cost adjustment mechanism (FPCA)
5.72 Electricity Act 2003 under section 62 sub section 4, states
“No tariff or part of any tariff may ordinarily be amended more frequently, than once
in a financial year, except in respect of any changes expressly permitted under the
terms of any fuel surcharge formula as may be specified.”
The National Tariff Policy under provision 5.3(h) (4)
“Uncontrollable costs should be recovered speedily to ensure that future consumers
are not burdened with past costs. Uncontrollable costs would include (but not limited
to) fuel costs, costs on account of inflation, taxes and cess, variations in power
purchase unit costs including on account of hydro thermal mix in case of adverse
natural events,”
The APTEL in its Order O.P. 1 of 2011 dated 11-11-2011 under para 65 (vi) has
stated that:
“(vi) Fuel and Power Purchase cost is a major expense of the distribution Company
which is uncontrollable. Every State Commission must have in place a mechanism for
Fuel and Power Purchase cost in terms of Section 62 (4) of the Act. The Fuel and
Power Purchase cost adjustment should preferably be on monthly basis on the lines of
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the Central Commission’s Regulations for the generating companies but in no case
exceeding a quarter. Any State Commission which does not already have such
formula/mechanism in place must within 6 months of the date of this order must put in
place such formula/ mechanism.”
5.73 TANGEDCO in its current petition has not proposed the recovery of actual fuel price
through the Fuel and power purchase cost adjustment mechanism. The Commission
had proposed the below formula to enable TANGEDCO to recover the fuel price
variations in its tariff order dated 30th March 2012.
(1) Adjustment Amount
A= CVC.GEN + CVC.pp
A= Adjustment Amount (during this quarter)
CVC.GEN = Change in Variable Cost of TANGEDCO’s thermal stations.
CVC.pp = Change in Power Purchase cost from other sources excluding own
generation.
(2) Chargeable FPCA from the consumers
Metered Category
FPCAM= AM / UM
Un-Metered Category
FPCAHP= AHP / LHP
AM and AHP are to be arrived at by apportioning A on the basis of consumption of
metered and un-metered category.
UM is the number of units billed to metered consumers during quarter under
consideration
LHP is sum of the connected load of un-metered consumers at the end of each month
for the quarter under consideration.
(3) The approved formula is subject to the following:
i. Commission can review the formula at any stage.
ii. For levy of FPCA surcharge, petition containing the basis of
calculations/authenticated data shall be submitted by TANGEDCO by
August, November, February and May end each year for the FCA increases
for the 1st,2
nd, 3
rd and 4
th quarter, respectively, of each year.
iii. The FPCA amount shall be calculated on the basis of norms fixed by the
Commission for various parameters including SHR, Transit loss of coal,
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Auxiliary consumption at the thermal plants, T&D losses or any other
parameter as may be specified by the Commission.
iv. The FPCA for the first quarter of a financial year, i.e., from April to June shall
be worked out by TANGEDCO and submitted to the Commission by end of
August of the year and approved by the Commission by the end of September
of the same year so that FPCA is charged from October onwards. Similarly,
FPCA for 2nd quarter of a financial year, i.e., from July to September shall be
worked out by TANGEDCO and submitted to the Commission by November
of that year and approved by the Commission by December of the same year,
so that Fuel and Power Purchase Cost Adjustment is charged from January
onwards. Similar schedule shall be followed for charging FCA for third and
fourth quarters.
v. Any under recovery/over recovery in cost pertaining to FPCA would be trued
up based on the Audited accounts as a part of truing up exercise in the tariff
determination process.
5.74 The Commission had in principle approved the implementation of FPCA mechanism,
and also directed TANGEDCO to submit its preparedness, implementation plan and
sample FPCA calculations for the last quarter, to the Commission for approval, within
30 days of issuance of last year’s Order.
5.75 In line with the above directive TANGEDCO had submitted sample calculations for
the last quarter for which data was available to the Commission, the same was
withdrawn on 18th October 2012 and no further petition for recovery of actual fuel
cost was filed. The Commission opines that this mechanism has been designed to
benefit TANGEDCO by allowing it to recover its actual fuel cost, subject to prudence
check in a speedy manner.
5.76 Hence in line with the in principle approval of the implementation of the FPCA
mechanism in the State, the Commission has decided not to allow the 4% escalation
in fuel price as sought for by TANGEDCO in its petition for the current MYT period.
TANGEDCO shall file quarterly FPCA petitions to the Commission to recover the
actual cost of fuel incurred and the actual cost of power purchase, if the same are in
variance from the figures approved in this Tariff Order.
5.77 TANGEDCO is directed to file its FPCA petitions to the Commission starting
this October 2013 as outlined in the formula and filing mechanism for
calculating the FPAC.
Tariff rationalization and revision of retail supply tariffs
PF Incentive
5.78 The Commission has received comments from industrial consumers to reinstate the
incentive for maintaining near about unity power factor.
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June 2013
Regulation 12 of TNERC Tariff Regulations states as under:
“12. Power Factor
The Commission may direct certain categories of consumers to maintain power factor
at a prescribed level and allow incentive / disincentive for maintaining above / below
the prescribed level”
5.79 The amendment to the Supply Code Regulation introduced in Nov 2010 clearly brings
out the reasons for removing the power factor incentive. The Commission is
following same regulation for disincentive in PF below the prescribed level. Hence all
the consumers are required to maintain the PF at the minimum prescribed levels in the
regulation.
TOD Tariff
5.80 The Appellate Tribunal’s directive on peak hour charges in the Appeal No. 257 of
2012 dated 9th April, 2013, has been extracted below.
“14.4 We notice that the State Commission has provided for 20% extra charge on
energy charges for the energy consumed during peak hours i.e. 6:00 AM to 9:00 AM
and 6:00 PM to 9:00 PM for the HT industrial consumers. On the other hand the HT
industrial consumers are allowed a reduction of 5% in the energy charges for the
consumption during off-peak hours i.e. from 10:00 PM to 5:00 AM, as an incentive
for night hours consumption. These charges/incentive have been continuing from the
past. However, the State Commission has decided to maintain the rates which were
prevailing earlier and has not decided the rates based on some study. We find that the
State Commission has provided disincentive for peak hours drawal in view of high
cost of procurement of expensive power during peak hours and balance demand.
However, incentive for off-peak hours has been continued despite shortage during the
off-peak hours.
14.5 The aim of providing differential tariff for peak and off-peak hours is to shift
load from peak to off-peak hours with a view to optimize the generation capacity and
minimize the cost of power procurement for the distribution licensee. However, in the
absence of a specific study for pricing of electricity at off-peak and peak hours, the
weighted average of energy rates for the peak,off-peak and normal hours (other than
peak and off-peaks) should be equal to the average energy rate decided for a
particular category of consumer. In the present case when no specific study for
peak/off-peak pricing has been carried out, the energy rate of the tariff decided by the
Commission for the Appellant's category is lower than the weighted average rate of
energy for peak, off-peak and the normal hours.
14.6 We also notice that the Restriction and Control Measures are also in vogue in
the State and the HT industrial consumers are allowed a small quota of demand and
energy during the peak hours. The drawal in excess of the specified quota results in
imposition of penal rates at substantially higher rate than the normal rates. The State
Commission may also consider whether in view of the Restriction and Control
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June 2013
Measures and penal rates of excess drawal over the peak hours demand and energy
quota whether there is any purpose of having a differential energy tariff ff-peak hours.
14.7 We, therefore, direct the State Commission to reconsider and re-determine the
differential pricing of energy during peak and off-peak hours. Accordingly, the matter
is remanded back to the State Commission.”
5.81 The Commission feels that a detailed study pertaining to load pattern needs to be done
by TANGEDCO. Hence Commission pending a detailed study, proposes to retain the
peak hour charges and off peak rebate at the exiting levels. Commission directs
TANGEDCO in this order to carry out a detail study on this regard and furnish the
same to the Commission. Accordingly after reviewing the report furnished by
TANGEDCO, Commission will address this issue in the next tariff order.
Continuation of ToD peak charge
5.82 The Commission has sought and analysed the system load curve data from July 2012
to May 2013. It can be inferred from the load data that there is no surplus even in the
off- peak hours, even in the month of May to September when wind energy is
available. Similarly in the peak hour, it is only the restricted demand under R&C that
is being met. Hence it can be concluded that there is a shortage in the peak hours and
no surplus power available in the off peak hours.
5.83 Also with respect to the question of discontinuing the peak hour charge when R&C is
being imposed, the Commission would like state that R&C by design enforces
demand cut, in a situation of shortage. This mechanism unlike peak hour charge is not
aimed at shifting load to other time slabs, as this mechanism ensures reduction in
demand across all time slabs. Hence when even in the case of reduced demand the
utility is procuring costly power to supply to its consumers, the question of
disallowing that as a pass through does not arise.
5.84 Various legislative and legal frameworks existing in the country which promote
implementation of TOD as an important DSM tool are:
Electricity Act
The relevant provision of Section 62(3) of the Act which guides the SERCs to
incorporate TOD tariff is:
“The Appropriate Commission shall not, while determining the tariff under this Act,
show undue preference to any consumer of electricity but may differentiate according
to the consumer's load factor, power factor, voltage, total consumption of electricity
during any specified period or the time at which the supply is required or the
geographical position of any area, the nature of supply and the purpose for which the
supply is required.”
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June 2013
Tariff Policy
The relevant provisions of the Tariff Policy, which define the tariff components and
their applicability states as under:
“8.4 Definition of tariff components and their applicability
1. Two-part tariffs featuring separate fixed and variable charges and Time
differentiated tariff shall be introduced on priority for large consumers (say,
consumers with demand exceeding 1 MW) within one year. This would also help in
flattening the peak and implementing various energy conservation measures.”
National Electricity Policy
Clause: 5.9.6
In order to reduce the requirements for capacity additions, the difference between
electrical power demand during peak periods and off-peak periods would have to be reduced.
Suitable load management techniques should be adopted for this purpose. Differential tariff
structure for peak and off peak supply and metering arrangements (Time of Day metering)
should be conducive to load management objectives. Regulatory Commissions should ensure
adherence to energy efficiency standards by utilities.
5.85 Thus the Commission will maintain status quo for applying the time of day charges to
prescribed consumers till the time the issue remanded by APTEL recently in Appeal
No. 257 of 2012 is decided.
5.86 The Commission further directs TANGEDCO to conduct a study of power purchase
for consumption during peak hours and also take into cognisance the time slots during
which the R&C is imposed. This will help in obtaining a clear understanding of the
additional costly power purchase on one hand as well as relief availed under R&C and
its impact on power purchase on the other.
Applicability of Revised Tariffs
5.87 The revised tariffs will be applicable from 21.06.2013. For cases where there is a
billing cycle difference for a consumer with respect to the date of applicability of the
revised tariff, the revised tariff should be made applicable on a pro-rata basis for the
consumption. The bills for the respective periods as per existing tariff and revised
tariffs shall be calculated based on the pro-rata consumption during each of these
periods (units consumed during respective period arrived at on the basis of average
unit consumption per day multiplied by number of days in the respective period
falling under the billing cycle).
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A6: TARIFF SCHEDULE
TARIFF FOR HIGH TENSION SUPPLY CONSUMERS
6.1 General Provisions applicable for High Tension Supply
i. Categories of supply: The categories of supply are as specified in the Tamil Nadu
Electricity Distribution Code and Tamil Nadu Electricity Supply Code. The HT
tariff specified for different categories of HT consumers are also applicable to the
consumers who are supplied at EHT level in accordance with above said Codes.
ii. Harmonics: As specified in the Supply Code, when the consumer fails to provide
adequate harmonic filtering equipment to avoid dumping of harmonics into
Licensee’s network beyond the permissible limits as specified by CEA regulations,
the consumer is liable to pay compensation at 15% of the respective tariff. As and
when the consumer brings down the harmonics within the limit, compensation
charges shall be withdrawn. The measurement of harmonics shall be done by the
Distribution Licensee using standard meters/equipment in the presence of
consumers or their representatives. This compensation charges is applicable to HT-I
& HT-III category of consumers. TANGEDCO shall give three months clear notice
to all consumers under these categories stating that they shall pay 15%
compensation charges if the harmonics introduced by their load is not within the
limits set by CEA. The TANGEDCO shall implement the compensation provision
after three months period from the date of measurement if the harmonics measured
is more than the permissible limits.
iii. In case of supply under HT Tariff, except for HT tariff-IV and V, supply used for
creating facilities for the compliance of Acts/Laws or for the facilities incidental to
the main purpose of the establishment of the consumer, such as facilities extended
to their employees/students/patients/residents as the case may be, within the
premises of the consumer, shall be considered to be bonafide purpose. However, if
such facilities are extended to the public, the energy consumption to such facilities
shall be metered by the licensee separately and only the energy charged under
appropriate LT tariff. Such metered energy consumption shall be deducted from the
total energy consumption registered in the main meter of the HT/EHT supply for
billing.
iv. In case of supply under HT Tariff IA, IIA, II B and III, the use of electricity for
residential quarters, within the premises, shall be metered separately by the licensee
if opted by the consumer and only the energy shall be charged under LT Tariff IC.
Such metered consumption shall be deducted from the total consumption registered
in the main meter of the HT/EHT supply for billing.
v. In case of HT supply under IA, IIA, IIB, III, the supply used for any additional
construction of building within the consumer’s premises not exceeding 2000 square
feet may be allowed from the existing service and charged under the existing tariff.
The use of electricity for the additional construction beyond 2000 square feet and
lavish illumination (as defined under LT tariff VI) shall be metered separately by
the licensee and only the energy shall be charged under LT Tariff VI. Such metered
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Tamil Nadu Electricity Regulatory Commission Page 322
June 2013
energy consumption shall be deducted from the total consumption registered in the
main meter of the HT/EHT supply for billing.
vi. Low Power Factor Compensation: In respect of High Tension service
connections the average power factor of the consumers installation shall not be less
than 0.90. Where the average power factor of High Tension service connection is
less than the stipulated limit of 0.90 the following compensation charges will be
levied.
Particulars Dispensation of Power Factor compensation
Below 0.90 and
up to 0.85
One per cent of the current consumption charges for every reduction
of 0.01 in power factor from 0.90
Below 0.85 to
0.75
One and half per cent of the current consumption charges for every
reduction of 0.01 in power factor from 0.90
Below 0.75 Two per cent of the current consumption charges for every reduction
of 0.01 in power factor from 0.90
vii. Billable Demand: In case of HT Consumers, maximum Demand Charges for any
month will be levied on the kVA demand actually recorded in that month or 90% of
the contracted demand whichever is higher.
Provided, that whenever the restriction and control measures are in force, the
billable demand in case of two part tariff for any month will be the actual recorded
maximum demand or 90% of demand quota, as fixed from time to time through
restriction and control measures, whichever is higher.
6.2 High Tension Tariff I A:
Tariff category
Tariff
Demand Charge
in Rs/kVA/
month
Energy charge
in Paise per kWh
(Unit)
High Tension
Tariff I A 300 550
i. This Tariff is applicable to:
a) All manufacturing and industrial establishments and registered factories
including Tea Estates, Textiles, Fertilizer Plants, Steel Plants, Heavy Water
Plants, Chemical plants,
b) Common effluent treatment plants, Industrial estate’s water treatment/supply
works,
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Tamil Nadu Electricity Regulatory Commission Page 323
June 2013
c) Cold storage units
ii. This tariff is also applicable to Information Technology services as defined
in the ICT Policy 2008 of Government of Tamil Nadu. The definition is
reproduced below:
“IT services are broadly defined as systems integration, processing services,
information services outsourcing, packaged software support and
installation, hardware support and installation.”
Information Technology Services includes:
a) Systems integration includes:
1) Network Management Services
2) Applications Integration
b) Processing services includes:
1) Outsourced Services in Banking, HR, finance, Technology and other areas
2) Outsourced Bank office support or Business transformation and
Process Consulting Services.
c) Information Services Outsourcing includes:
1) Outsourced Global Information Support Services
2) Knowledge Process Outsourcing
3) Outsourced Global Contact Centre Operations
4) Outsourced Process Consulting Services.
d) Packaged Software Support and Installation includes:
1) Software Design and Development, Support and Maintenance
2) Application installation, support and maintenance
3) Application testing.
e) Hardware Support and Installation includes:
1) Technical and network operations support
2) Hardware installation, administration and management
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Tamil Nadu Electricity Regulatory Commission Page 324
June 2013
3) Hardware infrastructure maintenance and support
iii. The HT Industrial consumers (HT IA) shall be billed at 20% extra on the
energy charges for the energy recorded during peak hours. The duration of
peak hours shall be 6.00 A.M to 9.00 A.M and 6.00 P.M to 9.00 P.M.
iv. The HT Industrial Consumers (HT I A) shall be allowed a reduction of 5%
on the energy charges for the consumption recorded during 10.00 P.M to
5.00 A.M as an incentive for night consumption.
v. High Tension Industries under Tariff I-A having arc, induction furnaces or
steel rolling process the integration period for arriving at the maximum
demand in a month will be fifteen minutes.
6.3 High Tension Tariff I B:
Tariff
category
Tariff
Demand
Charge
in Rs/kVA/
month
Energy charge
in Paise per kWh (Unit)
High
Tension
Tariff I B
250 550
i. This tariff is applicable to Railway traction.
6.4 High Tension Tariff II-A
Tariff category
Tariff
Demand Charge
in Rs/kVA/ month
Energy charge
in Paise per kWh
(Unit)
High Tension
Tariff II A 300 450
i. This tariff is applicable for the following services under the control of
a) Educational institutions including government aided educational institutions
and Hostels.
b) Teaching and Training institutions of Ministry of Defence and CRPF
establishments,
c) Hospitals, Primary Health Centres and Health Sub-Centres, Veterinary
Hospitals, Leprosy Centres and Sub-Centres.
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Tamil Nadu Electricity Regulatory Commission Page 325
June 2013
d) Public Water works and sewerage works and Desalination plants,
e) Residential colonies and Housing complexes, Senior citizen communities,
Old age Homes and Orphanages,
f) Public Lighting and Electric crematorium.
g) Public Libraries and Art Galleries,
h) Research Laboratories and institutions
i) Dairy units
ii. This tariff is also applicable to the following
a) Hospitals and Rehabilitation centres, Training & Rehabilitation centres, Old
Age Homes and Orphanages run by charitable trusts which offer totally free
treatment/services for all categories of patients/inmates on par with
government hospitals and institutions.
b) Desalination plant at Kudankulam Nuclear Power Plant and Minjur
Desalination plant of Chennai Water Desalination Ltd. Water Supply Works
by new Tirupur Area Development Corporation as long as they supply
drinking water predominantly to local bodies/public.
c) Single point supply to Cooperative group housing society and for the residential purpose of the employees as specified in “The Electricity
(Removal of difficulties) Eighth Order 2005”.
d) Actual places of public worship.
6.5 High Tension Tariff II – B :
Tariff category
Tariff
Demand Charge in
Rs/kVA/ month
Energy charge in
Paise per kWh
(Unit)
High Tension
Tariff II B 300 550
i. The tariff is applicable to all Private educational institutions and hostels run
by them.
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Tamil Nadu Electricity Regulatory Commission Page 326
June 2013
6.6 High Tension Tariff III :
Tariff category
Tariff
Demand Charge
in Rs/kVA/ month
Energy charge
in Paise per kWh
(Unit)
High Tension Tariff
III 300 700
i. This tariff is applicable to all other categories of consumers not covered
under High Tension Tariff IA, IB, IIA, IIB, IV and V.
6.7 High Tension Tariff IV :
Tariff
category
Approved Tariff rate Subsidy
for
Energy
Charges
in Paise
per kWh
Tariff rate payable by
Consumer
Demand
Charge
in
Rs/kVA/
month
Energy
charge
in Paise
per kWh
Demand Charge
in Rs/kVA/
month
Energy
charge
in Paise
per kWh
High
Tension
Tariff IV
Nil 350 350 Nil Nil
i. This tariff is applicable to the Lift Irrigation Societies for Agriculture
registered under Co-operative Societies or under any other Act.
6.8 High Tension Tariff V
Tariff category
Tariff
Demand Charge
in Rs/kVA/ month
Energy charge in
Paise per kWh
(Unit)
High Tension
Tariff V 300 950
i. This tariff is applicable to Temporary supply for construction and for other
temporary purposes.
a) For this category of supply, the initial/in-principle approval for such construction or to conduct such temporary activity obtained by the applicant
from the appropriate authority, wherever necessary, is adequate to effect the
supply.
b) In case of conversion of temporary supply into applicable permanent supply,
the same shall be done subject to compliance of codes/regulations/orders.
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Tamil Nadu Electricity Regulatory Commission Page 327
June 2013
c) This tariff is also applicable to start-up power provided to generators. The generators are eligible to get start-up power under this tariff after declaration
of CoD. The demand shall be limited to 10% of the highest capacity of the
generating unit of the generating station or the percentage auxiliary
consumption as specified in the regulation, whichever is less. The supply
shall be restricted to 42 days in a year. Drawal of power for a day or part
thereof shall be accounted as a day for this purpose. Power factor
compensation charges are not applicable for start-up power.
TARIFF FOR LOW TENSION SUPPLY CONSUMERS
6.9 General Provisions applicable for Low Tension Supply
i. All motors/pump sets connected in this category of supply shall be certified /
approved by BIS/BEE and motors/pump sets of 3 HP and above shall be
provided with adequate BIS certified capacitors. Non compliance shall invite
compensation charges as specified in the Codes/regulations.
ii. In case of LT Tariff III-B and LT Tariff V, all services with a connected load
of 18.6 kW (25 HP) and above should maintain a power factor of not less
than 0.85. Where the average power factor of Low Tension Service
connection is less than the stipulated limit of 0.85 the following
compensation charges will be levied.
Power Factor Dispensation of Power Factor compensation
Below 0.85 and upto
0.75
One per cent of the current consumption charges for
every reduction of 0.01 in power factor from 0.85.
Below 0.75 One and half per cent of the current consumption
charges for every reduction of 0.01 in power factor
from 0.85
iii. In the event of disconnection of services, the consumers shall be liable to pay
the fixed charges applicable for the respective category during the
disconnection period.
iv. In case of LT Tariff IIB 1, II B2, IIC, IIIA 1, IIIA2, IIIB, V and VI, the fixed
charges shall be calculated based on the contracted demand.
v. Supply used for any additional construction of building not exceeding 2000
square feet within the consumer’s premises shall be charged under the
respective existing tariff except in case of LT tariff I-B and IV. The use of
electricity for the additional construction purposes beyond 2000 square feet
shall be provided with a separate service connection by the licensee and
charged under LT Tariff VI.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 328
June 2013
6.10 Low Tension Tariff 1-A :
Tariff
Consumption slabs –
Range in kWh(units)
and billing period
(one or two months)
Approved Tariff rate Subsidy
for
Energy
Charges
in paise /
kWh
Tariff rate payable by
consumer
Fixed charges
(Rupees per
month)
Energy
charges
in paise /
kWh
Fixed
charges
(Rupees per
month)
Energy
Charges in
paise / kWh
Low
Tension
Tariff I-A
For consumers who consume upto 50 units per month or 100 units for two months
From 0 to 50 units per
month (or) 0 to 100
units for two months
10
260
160 10
100
For consumers who consume from 51 units to 100 units per month (or) 101 to 200 units for two
months
From 0 to 100 units
per month (or) 0 to
200 units for two
months
10
280
130 10
150
For consumers who consume from 101 units to 250 units per month (or) 201 units to 500 units for
two months
From 0 to 100 units
per month (or) 0 to
200 units for two
months 15
300 100
15
200
From 101 to 250 units
per month (or) 201 to
500 units for two
months
400 100 300
For consumers who consume 251 units and above per month (or) 501 units and above for two months
From 0 to 100 units
per month (or) 0 to
200 units for two
months
20
300 Nil
20
300
From 101 to 250 units
per month (or) 201 to
500 units for two
months
400 Nil 400
From 251units and
above per month (or)
501 units and above
for two months
575 Nil 575
On account of Government subsidy, there will be no fixed and energy charges for Handloom
consumers consuming up to 100 units for two months and if consumption exceeds 100 units for 2
months they will be charged as per slab mentioned above and Rs. 100 will be deducted from the bill
amount.
i. This tariff is applicable to the following:
a) Domestic/Residential purposes of lights, fans, Air conditioners, radio/TV
and all other home appliances.
b) Supply used in the house/residence/premises for the following purpose with
a total connected load not exceeding 2 kW.
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Tamil Nadu Electricity Regulatory Commission Page 329
June 2013
1. To provide lighting, water and other facilities to domestic animals/pets
including chaff cutting, milking etc.
2. Watering for gardening including growing of trees in and around
residential houses/buildings.
c) Handlooms in residences of handloom weavers and handlooms in sheds
regardless of use of outside labour and where energy is availed of only for
lighting, fans and all other residential uses.
d) Public conveniences and Integrated woman sanitary Complexes.
e) Community Nutrition Centres, Anganwadi Centres and Nutritious Meal
Centers.
f) Old Age Homes, Leprosy Centers and sub centres. Orphanages, Homes for
destitute run by Government/Local bodies/Charitable Institutions rendering
totally free services.
g) Consulting rooms of size limited to 200 square feet of any professionals
attached to the residence of such professionals. This facility is extended
exclusively to take advantage of using the residence by the professionals.
h) In respect of multi tenements/residential complexes supply used for common
lighting, water supply, lift and such other facilities provided only to the
residents alone may be given a separate connection and charged under this
tariff. Only one service connection shall be given for the premises for all
common facilities.
i) In respect of multi tenements/multistory flats/residential complexes having
both domestic and non-domestic utilities, common facilities such as common
lighting, common water supply, lift and such other facilities will be charged
under this tariff only if the non-residential built up area does not exceed
25% of the total built up area.
j) In multi tenements residential buildings/Group Houses the additional service
connections requested by the owners/tenants shall be given. If only a meter is
required to effect the additional service connection, service line charges shall
not be collected.
k) Electric crematorium of local bodies.
l) Handicraft/Artisan works carried out by Potters, Goldsmiths etc. attached to
the residence, done predominantly by self or family members using a
connected load not exceeding 1 kW. This facility is extended exclusively to
take advantage of utilizing the space in and around the residence and
participation of family members in the small scale production.
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Tamil Nadu Electricity Regulatory Commission Page 330
June 2013
m) Any additional lights, serial lights etc. used in the pandals/shamiana and in
the premises of the existing domestic/residential service connection of the
consumer for a period not exceeding one week at a time, with a connected
load not exceeding 3 kW for the family functions/occasions.
6.11 Low Tension Tariff I-B:
Tariff Description
Approved Tariff Rate
Subsidy for
Fixed
Charges/
Energy
Charge
Tariff Rate payable by
Consumer
Energy
charges
in Paise /
kWh
Fixed
charges
(Rupees /
Month)
Fixed
Charges
(Rupees /
Month)
Energy
charges in
Paise / kWh
Low
Tension
Tariff
I-B
Till
installation of
Energy Meter
Nil 125
125 Rupees
/service/
Month
Nil Nil
On Installation
of Energy
Meter
430 Nil 430
Paise/kWh Nil Nil
i. This tariff is applicable to huts in Village Panchayats and special grade
panchayats, houses constructed under Jawahar Velai Vaiippu Thittam,
TAHDCO Kamarajar Adi Dravidar housing schemes, huts in Nilgiris District
and hut with concrete wall in the schemes of state and central Governments.
This tariff is applicable subject to following conditions:
a) Hut means a living place not exceeding 250 square feet area with mud wall
and the thatched roof / tiles / asbestos / metal sheets like corrugated G.I.
sheets for roofing/ concrete Roof and concrete wall with specification of
square feet as approved in the schemes of State/ Central Government.
b) Only one light not exceeding 40 watts shall be permitted per hut.
c) As and when the government provides other appliances such as Colour TV,
fan, Mixie, Grinder and Laptops to these hut dwellers, the usage of
appropriate additional load may be permitted.
ii. Whenever the norms prescribed in (a) to (c) above is violated, the service
category shall be immediately brought under Low Tension Tariff I-A and
billed accordingly
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Tamil Nadu Electricity Regulatory Commission Page 331
June 2013
6.12 Low Tension Tariff I-C:
Tariff
Tariff
Energy charges in
paise / kWh
Fixed charges (Rupees
/ Month)
Low Tension Tariff I-C
400
50
i. This tariff is applicable to LT bulk supply for residential colonies of
employees such as railway colonies, plantation worker colonies, defence
colonies, Police Quarters, Residential quarters of Koodankulum Nuclear
power project etc.
ii. The energy charge of this tariff is also applicable for the HT/EHT consumers
who opt for extending supply under this category for their residential
colonies / quarters.
iii. Single point supply to Cooperative group housing society and for the
residential purpose of the employees as specified in “The Electricity
(Removal of difficulties) Eighth Order 2005”.
6.13 Low Tension Tariff II-A:
Tariff Energy Charges in paise/KWh fixed charges
(Rupees /Month)
Low Tension
Tariff II-A
550 Nil
i. This tariff is applicable to Public Lighting by Government/Local Bodies and
Public Water Supply & Public Sewerage System by Government/Local
Bodies /TWAD Board/CMWSSB.
ii. Private agriculture wells/private wells hired by Government/Local
bodies/CMWSSB/TWAD Board/ to draw water for public distribution.
iii. Public Water Supply by New Tirupur Area Development Corporation as
long as they supply drinking water predominantly to local bodies/public and
Public Water Supply in plantation colonies.
iv. Separate service connections for street lights for SIDCO and other industrial
estates.
v. Supply to Railway level crossings.
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Tamil Nadu Electricity Regulatory Commission Page 332
June 2013
6.14 Low Tension Tariff II-B (1)
Tariff
Tariff
Energy charges in
paise / kWh
Fixed charges
(in Rupees per kW
per month)
Low Tension Tariff II-B
(1)
500 50
i. This tariff is applicable to the following entities owned or aided by the
Government/Government Agencies/Local Bodies:
a) Educational/Welfare Institutions and Hostels run by such institutions, Other
Hostels, Youth/Student Hostels and Scouts camps.
b) Hospitals, Dispensaries, Primary Health Centers & sub-centers and
Veterinary Hospitals.
c) Research Laboratories/Institutes,
d) Elephant Health camp
e) State Legal Udhavi Maiyam.
f) Art Galleries and Museums
g) Public libraries
ii. This tariff is applicable to the following entities which offer totally free
services.
a) Dispensaries, Creches and Recreation centers.
b) Libraries.
c) Emergency accident relief centers on highways, Hospitals and Rehabilitation
Centres for mentally ill & blind and others, Terminal cancer care centre and
Hospital in Tribal areas.
d) Institutes run for /by the physically challenged.
e) Training & Rehabilitation centres.
f) Student Hostel.
iii. This tariff is also applicable to Private Art Galleries and Museums run with
service motive.
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Tamil Nadu Electricity Regulatory Commission Page 333
June 2013
6.15 Low Tension Tariff II-B (2)
Tariff
Tariff
Energy charges
in paise / kWh
Fixed charges
(in Rupees per kW
per month)
Low Tension Tariff II-B (2) 650 50
i. This tariff is applicable to Private educational institutions and hostels run by
them.
6.16 Low Tension Tariff II-C:
Tariff
Consumption
slabs – Range in
kWh and billing
period
Approved Tariff Rate Subsidy
for
Energy
Charges
in Paise
per kWh
Tariff Rate Payable by
the Consumer
Fixed
Charges
(Rupees
per kW
per
month)
Energy
Charges in
Paise per
kWh
Fixed
Charges
(Rupees
per kW
per
month)
Energy
Charges in
Paise per
kWh
Low
Tension
Tariff II-C
0 to 60 units per
month or 0 to
120 units
bimonthly 50
500 250
50
250
Above 60 units
per month or
above 120 units
bimonthly
500 Nil 500
i. This tariff is applicable to actual places of public worship including Trichy
Rockfort temple, its environs and for the road and path ways leading to the
temple.
ii. The existing concessions to the actual places of worship as already notified
by GoTN having annual income less than Rs. 1000 shall be continued under
the same terms and conditions, until further Order of the Commission.
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Tamil Nadu Electricity Regulatory Commission Page 334
June 2013
6.17 Low Tension Tariff III-A (1):
Tariff Consumption slabs –
Range in kWh and
billing period
Tariff
Fixed Charges (Rupees
per kW per month)
Energy Charges in
Paise per kWh
Low Tension Tariff
III-A(1)
0 to 250 units per month
or
0 to 500 units bimonthly
15
350
From 251 units and
above units per month or
501 units and above
bimonthly
400
i. The connected load for supply under this tariff category shall not exceed 10
HP.
ii. This tariff is applicable to Cottage and tiny industries, Micro enterprises
engaged in the manufacture or production of goods pertaining to any
industries specified in the first schedule to Industries (Development and
Regulations) Act 1951 (Central Act 65 of 1951).
iii. The intending consumers applying for service connection under LT Tariff III
A (1) claiming to have established the micro enterprise engaged in the
manufacture or production of goods shall produce the cottage industries
certificates from the industrial department /acknowledgement issued by the
District Industries Centre under the Micro Small and Medium Enterprises
Development Act, 2006 (Act 27 of 2006 ) as proof for having filed
Entrepreneurs Memorandum for setting up of Micro Enterprises for
manufacture or production of goods with District Industries Centre under
whose jurisdiction the Enterprise is located.
iv. The existing consumers who are classified under LT Tariff III A (1) based on
the SSI / Tiny Industries Certificate may be continued to be charged under
the same tariff
v. This tariff is applicable to Small Gem cutting units, Waste land development,
laundry works and Common effluent treatment plants.
vi. This tariff is also applicable to Coffee grinding, Ice factory, Vehicle Body
building units, saw mills, rice mills, flour Mills, battery charging units and
Dairy units.
vii. This tariff is also applicable for sericulture, floriculture, horticulture,
mushroom cultivation, cattle farming, poultry & bird farming and fish/prawn
culture.
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Tamil Nadu Electricity Regulatory Commission Page 335
June 2013
viii. This tariff is also applicable for pumping of water/supply of water for the
purpose of “agriculture and allied activities” as specified in LT Tariff IV
provided that the applicant is unable to get supply under LT tariff IV as per
the seniority maintained specifically for the purpose of providing supply to
Agriculture under LT tariff IV. Such LT Tariff III-A(1) consumer is eligible
to apply for LT Tariff IV. As and when such applicant becomes eligible to
get regular supply under LT Tariff IV as per the specific seniority maintained
for that purpose by the licensee, the supply obtained under LT Tariff III-A(1)
for the specific purpose mentioned in this sub clause shall be converted into
LT tariff IV. Thereafter, the terms and conditions of LT Tariff IV only will
apply.
6.18 Low Tension Tariff III-A (2):
Tariff
Consumption
slabs – Range in
kWh and billing
period
Approved Tariff Rate Subsidy for
energy in
Paise/kWh
and fixed
charges in
Rs/kW per
month
Tariff Rate payable by
consumer
Fixed
Charges
(Rupees per
kW per
month)
Energy
Charges in
Paise per
kWh
Fixed
Charges
(Rupees per
kW per
month)
Energy
Charges in
Paise per kWh
(i) For consumer who consume up to 250 units per month (or) 500 units for two months
Low
Tension
Tariff
III-A (2)
0 to 250 units per
month or 0 to
500 units
bimonthly
50 450 450/kWh
Rs.50/kW/pm Nil Nil
ii) For consumers who consume 251 units and above per month (or) 501 units and above for two
months
0 to 250 units per
month or 0 to 500
units bimonthly
50
450 450/kWh
Rs.20/kW/pm
30
Nil
251 to 500 units
per month or
501 to 1000 units
bimonthly
500 300/kWh
Rs.20/kW/pm 200
501 to 750 units
per month or
1001 to 1500
units bimonthly
500 200/kWh
Rs.20/kW/pm 300
From 751 units
and above per
month or 1501
units and above
bimonthly
500 100/kWh
Rs.20/kW/pm 400
i. The connected load shall not exceed 10 HP under this category.
ii. The tariff is applicable to Power looms, Braided Cords Manufacturing and
related ancillary tiny industries engaged in warping, twisting, and winding.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 336
June 2013
6.19 Low Tension Tariff III-B:
Tariff Fixed Charges
(Rupees per kW per
month)
Energy Charges in Paise per
kWh
Low Tension Tariff III-B 30 550
i. This tariff is applicable to all industries not covered under LT Tariff III A (1)
and III-A (2). All industries covered under LT Tariff III A (1) and III A (2)
shall also fall under this tariff category if the connected load of such
industries exceeds 10 HP.
ii. This tariff is also applicable to Welding sets irrespective of its capacity.
Supply to welding sets shall be charged 15% extra.
iii. This tariff is applicable to Information Technology services as defined in the
ICT Policy 2008 of Government of Tamil Nadu and amended from time to
time. The definition is reproduced below:
“IT services are broadly defined as systems integration, processing services,
information services outsourcing, packaged software support and
installation, hardware support and installation.”
Information Technology Services includes:
a) Systems integration includes :
1) Network Management Services
2) Applications Integration
b) Processing services includes:
1) Outsourced Services in Banking, HR, finance, Technology and
other areas
2) Outsourced Bank office support or Business transformation and
Process Consulting Services.
c) Information Services Outsourcing includes:
1) Outsourced Global Information Support Services
2) Knowledge Process Outsourcing
3) Outsourced Global Contact Centre Operations
4) Outsourced Process Consulting Services.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 337
June 2013
d) Packaged Software Support and Installation includes:
1) Software Design and Development, Support and Maintenance
2) Application installation, support and maintenance
3) Application testing.
e) Hardware Support and Installation includes:
1) Technical and network operations support
2) Hardware installation, administration and management
3) Hardware infrastructure maintenance and support.
iv. The intending consumers applying for service connection under LT Tariff III
B claiming to have established the industries engaged in the manufacture or
production of goods shall produce certificate from the District Industries
centre.
6.20 Low Tension Tariff IV:
Tariff Description
Approved Tariff rate
Subsidy for Fixed
Charges / Energy
Charge
Tariff rate payable by consumer
Energy
charges in
Paise / kWh
Fixed
charges
(Rupees per
HP per
annum)
Fixed
Charges
(Rupees per
HP per
annum
Energy charges in
Paise / kWh
Low
Tension
Tariff IV
Till installation of
Energy Meter Nil 2500
Rs. 2500 per HP
per annum Nil Nil
On Installation of
Energy Meter 280 Nil 280 paise/kWh Nil Nil
i. This tariff is applicable for pumping of water/supply of water to all
agricultural and allied activities such as cultivation of food crops, vegetables,
seeds, trees and other plants. Sericulture, floriculture, horticulture,
mushroom cultivation, cattle farming, poultry and other bird farming,
fish/prawn culture carried out as allied activities of agriculture shall be
construed as agricultural activities.
ii. The services under this tariff shall be permitted to have lighting loads up to
50 watts per 1000 watts of contracted load subject to a maximum of 150
watts inclusive of wattage of pilot lamps for bonafide use .
iii. Subject to the limit of contracted load, the supply under this category can be
utilised for milking, sugar cane crushing, harvesting, stalk/chaff cutting,
thrashing and cleaning of agricultural produces, crane used for lifting
mud/silt from well by having a change over switch as approved and sealed
by the licensee. The change over switch is meant for using the supply either
to the pump set or to any one or more of the purposes mentioned in this
clause. Using supply both to the pump sets and to the other purpose(s) at the
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 338
June 2013
same time is strictly prohibited. The consumer shall abide by the safety
norms for any additional wiring for this purpose.
iv. This tariff is applicable irrespective of owner ship of land if the usage of
electricity is for agriculture and its allied activities.
v. Agricultural consumers shall be permitted to use the water pumped from the
well for bonafide domestic purposes in the farmhouse including for
construction of farm house and sheds for allied works.
vi. Supply for other purpose exceeding the limit permitted for lighting purpose
shall be provided only by separate service connections under appropriate LT
Tariff. Service connections for water pumping for non agricultural purpose
under appropriate tariff is permitted in the same well.
vii. This Tariff is applicable to pump sets of Tamil Nadu Agriculture university
and Research centres, Government Seed Farms, pump sets of Tamil Nadu
Forest department, Pump sets of Government coconut nurseries, Pump sets
of Government oil seed farms.
viii. Pumping and purifying of drainage water for the purpose of agriculture use.
6.21 Low Tension Tariff V:
Tariff Consumption slabs – Range in kWh
and billing period
Fixed Charges
(Rupees per kW
per month)
Energy
Charges
in Paise per
kWh
Low Tension
Tariff V
For consumer with consumption 50
units per month or 100 units bimonthly 60 430
For consumer with consumption above
50 units per month or above 100 units
bimonthly (For all units)
60 700
i. This tariff is applicable to consumers not categorized under LT IA, IB, IC,
IIA, IIB (1), II B (2), IIC, IIIA (I), III A (2), IIIB, IV and VI
ii. In respect of multi tenements/multi-storeyed buildings/residential complexes
where the number of flats/Tenements utilized for commercial and other
purposes exceeds 25% of the total built up area, the LT services relating to
common utilities such as common lighting, water supply, lift and other
facilities shall be charged under this tariff.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 339
June 2013
6.22 Low Tension Tariff VI:
Tariff Fixed Charges (Rupees per
kW per month) Energy charges in paise/kWh
Low Tension
Tariff VI
300
1050
i. This tariff is applicable for supply of power for temporary activities,
construction of buildings and lavish illumination.
ii. The electricity supply for the additional construction beyond 2000 square
feet in the premises of an existing consumer shall be provided only through a
separate service connection and charged under this tariff.
iii. For temporary supply, the initial/in-principle approval for such construction
or to conduct such temporary activity obtained by the applicant from the
appropriate authority, wherever necessary, is adequate to effect the supply.
iv. In case of conversion of temporary supply into applicable permanent supply,
the same shall be done subject to compliance of codes/regulations/orders.
v. In case of lavish illumination, if the illumination is done frequently or
permanently, separate regular service connection shall be provided for lavish
illumination and charged under this tariff.
vi. If the supply is availed for short duration for the temporary
activity/illumination from an existing metered service connection, the
computation of energy/fixed charges for temporary illumination/activity
shall be done based on the connected load and duration of temporary supply.
Connected load shall be accounted in kW or part thereof. Fixed charges shall
be for a month or part thereof. Due credit for such computed energy, limited
to the meter consumption of the respective billing period, shall be given in
the energy recorded by the meter during the respective billing period for the
purpose of regular billing of the existing service connection. The consumer
shall abide by the safety norms for wiring.
vii. The following are considered as Lavish Illumination.
a) Illumination done for hoardings & advertisement boards.
b) Extra/additional illumination done outside the building and in the open areas
for parties/functions/occasions.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 340
June 2013
c) Illumination done in the outer surface/outside the buildings/shops by display
lights, serial lamps, decorative lights, special effect lamps, neon lamps,
ornamental lamps, flood lights etc.
d) Temporary Illumination done for public meetings in pandals/shamianas, path
ways, streets and roads.
Explanation: The supply used for the purpose of indicating/displaying the name and
other details of the shop/buildings shall not be considered as lavish illumination.
6.23 Applicability of the Tariff Schedule
i. The above tariff schedule shall be read with the General Terms and
Conditions of Supply Code and Distribution code specified by the
Commission.
ii. Effecting change in tariff category for a consumer in accordance with this
order shall be the responsibility of TANGEDCO.
iii. The tariff schedule of this order shall be displayed prominently by the
licensee in all section and other offices of TANGEDCO.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 341
June 2013
A7: SUMMARY OF DIRECTIVES
7.1 The Commission directs TANGEDCO
a) To file their Tariff Petition on a timely basis every year, as per the TNERC
Tariff Regulations.
b) To maintain quality of supply as specified in Tamil Nadu Electricity
Distribution Standards of Performance Regulations dated 21-07-2004.
c) To effectively monitor the on-going projects so that they are commissioned
without further delay. The projects which were scheduled to get commissioned
last year but have not been so far have to be commissioned at the earliest.
TANGEDCO should also ensure that the TANTRANSCO also simultaneously
completes all the associated transmission system for evacuation of power from
the generating stations which are getting commissioned during the year 2013-
14, so that power generated is transmitted up to the load centres without any
bottle necks. TANGEDCO should also ensure that the power should be
delivered to the consumption points by way of appropriate distribution
network. All these capacity addition as well as system strengthening plans will
have to be carried out through a well structured cohesive business plan and
detailed individual schemes catering to the need of the business plan. All such
plans and schemes shall be submitted to the Commission in accordance with
the Terms and Conditions of Tariff Regulations 2005, MYT Tariff
Regulations 2009, as well as Licensing Regulations 2005. The submission for
approval in this regard so far has been highly unsatisfactory. The Commission
has been addressing the utilities by way of letters as well as by way of
directions. The compliance to such letters and directions will have to be
serious and without fail.
d) To file separate petition for the approval of capital cost and tariff
determination of new power plants including hydro stations, within 90 days of
issuance of this Order.
e) To file the progress of the capital expenditure and capitalization on a quarterly basis.
f) The amount approved for R&M expenses should not be diverted for any other
purpose.
g) To comply with the Order on SMP 3 dated 4th June 2013 for accurate
measurement of T&D Loss and unmetered consumption.
h) To submit a time bound program for 100% metering at feeder level and at
distribution transformer level.
Determination of Tariff for Generation and Distribution – Order dated 20-06-2013
Tamil Nadu Electricity Regulatory Commission Page 342
June 2013
i) To submit data on ToD consumption along with the subsequent Tariff
Application for all consumers where ToD meters have been installed. The
power purchase for meeting this demand should also be studied by
TANGEDCO, while taking into consideration the R&C measures in vogue.
j) To introduce kVAh billing for LT and HT consumers.
k) To provide the monthly energy demand and availability and its plan of
scheduling power in accordance to MoD on quarterly basis.
l) To take prior approval for purchasing energy from unapproved sources for
quantum and rate than that specified by the Commission in this Tariff Order.
m) To take prior approval for power procurement with variable cost more than
Rs. 3.50 from unapproved sources and sources not getting dispatched under
MoD, before purchasing energy.
n) To pay transmission charges determined by the Commission to
TANTRANSCO based on the allotted transmission capacity for FY 2013-14.
o) To file to the Commission its quarterly FPCA petitions starting this October,
to recover the actual cost of fuel incurred and the actual cost of power
purchase.
p) To start maintaining regulatory accounts for the purpose of ARR.
q) To comply with various provision of Energy Conservation Act 2001
pertaining to energy audit.
r) To submit a study report on computation of voltage wise ‘cost to serve’ (CoS)
along with the basis of allocation of different costs and losses to various
voltage levels. The Commission also directs TANGEDCO to submit the action
taken report within 90 days of the issuance of this order.