before the maharashtra electricity regulatory commission … 58 42/order-4of2015-26062015.pdf ·...

Case No.4 of 2015 MERC Mid-Term Review Order for RInfra-D for FY 2012-13 to FY 2015-16

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Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

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

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

E-mail: [email protected]

Website: www.mercindia.org.in / www.merc.gov.in

Case No._4 of 2015

IN THE MATTER OF

Petition of Reliance Infrastructure Ltd. (Distribution Business) for Mid-Term

Review, including truing up for FY 2012-13 and FY 2013-14, provisional truing up

of FY 2014-15 and revised ARR and Tariff for FY 2015-16

Smt. Chandra Iyengar, Chairperson

Shri. Azeez M. Khan, Member

Shri. Deepak Lad, Member

Date: 26 June, 2015

ORDER

In accordance with Regulation 11 of the Maharashtra Electricity Regulatory Commission

(Multi Year Tariff) Regulations, 2011 (‘MYT Regulations’) and upon the Commission’s

directions in its Order dated 22 August, 2013 in Case No. 9 of 2013 (‘MYT Order’) on

RInfra-D’s MYT Petition for the Second Control Period from FY 2012-13 to FY 2015-16,

M/s Reliance Infrastructure Ltd. (Distribution Business) (RInfra-D), has submitted its

Petition for Mid-Term Review (MTR), including truing up of FY 2012-13 and FY 2013-

14, provisional truing up of 2014-15 and revised ARR and revised Tariff for FY 2015-16.

The original Petition was filed on 30 December, 2014, and RInfra-D submitted a revised

Petition on 13 February, 2015.

In exercise of its powers under Sections 86 and Section 62 (read with Section 61) of the

Electricity Act (EA), 2003 and all other powers enabling it in this behalf, and after taking

into consideration all the submissions made by RInfra-D, the public and stake-holders and

all other relevant material, the Commission issues the following Order.

mailto:[email protected]

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

http://www.merc.gov.in/


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TABLE OF CONTENTS

1 BACKGROUND AND BRIEF HISTORY ......................................................................................... 8

1.1 BACKGROUND .................................................................................................................................... 8

1.2 MYT REGULATIONS ........................................................................................................................... 8

1.3 DEFERMENT OF MYT CONTROL PERIOD.......................................................................................... 8

1.4 ORDER ON ARR FOR FY 2011-12 .................................................................................................. 9

1.5 BUSINESS PLAN ORDER FOR MYT CONTROL PERIOD ............................................................................ 9

1.6 MYT ORDER FOR FY 2012-13 TO 2015-16 ............................................................................................ 9

1.7 PETITION FOR MID-TERM REVIEW, ADMISSION OF THE PETITION AND PUBLIC PROCESS ... 9

1.8 ORGANISATION OF THE ORDER ......................................................................................................... 11

2 SUGGESTIONS/OBJECTIONS RECEIVED, RINFRA-D’S RESPONSES AND

COMMISSION’S RULINGS ...................................................................................................................... 12

2.1 RATIONALE OF MULTI-YEAR TARIFF.................................................................................................. 12

2.2 VENUE OF PUBLIC HEARING .................................................................................................... 13

2.3 INCREASE IN TARIFF .......................................................................................................................... 14

2.4 POWER PURCHASE COST ................................................................................................................... 16

2.5 WHEELING CHARGES AND CROSS-SUBSIDY SURCHARGE ................................................................ 19

2.6 INCREASE IN TRANSMISSION CHARGES ............................................................................................ 22

2.7 ENERGY BALANCE ........................................................................................................................... 23

2.8 CAPITAL EXPENDITURE ..................................................................................................................... 24

2.9 REGULATORY ASSET CHARGE ........................................................................................................... 25

2.10 NON-CONVERTIBLE DEBENTURES ............................................................................................... 25

2.11 CHANGE-OVER CONSUMERS ................................................................................................... 26

2.12 NON-CONSIDERATION OF REVERSE CHANGE-OVER SALES........................................................... 27

2.13 METERING ................................................................................................................................... 28

2.14 TAX ON SALE OF ELECTRICITY ..................................................................................................... 28

2.15 UNIVERSAL SUPPLY OBLIGATION ................................................................................................ 29

2.16 CONSUMER CATEGORIZATION AND TARIFF DESIGN ...................................................................... 29

2.17 SUBMISSION OF CAG AUDITED ACCOUNTS .................................................................................... 30

2.18 APPEALS BEFORE THE ATE ............................................................................................................ 31

2.19 COMPLIANCE OF ORDERS OF ATE AND SUPREME COURT ............................................................ 32

2.20 ROLE OF CONSUMER REPRESENTATIVES ..................................................................................... 32

2.21 TARIFF FOR MUMBAI METRO ONE PVT. LTD. ....................................................................... 33

3 IMPACT OF ATE JUDGMENTS .................................................................................................... 35

3.1 REASSESSMENT OF INCOME TAX FROM FY 2009-10 TO FY 2011-12 ............................................... 35

3.2 INTEREST ON LONG-TERM LOANS FOR FY 2011-12 ......................................................................... 39

3.3 INTEREST ON DELAYED PAYMENTS IN FY 2008-09 .......................................................................... 44

3.4 IMPACT, WITH CARRYING COST ....................................................................................................... 45

3.5 SUMMARY OF RECOVERABLE AMOUNTS ........................................................................................... 47

3.6 OTHER ISSUES AS PER ATE’S JUDGMENT DATED 8 APRIL, 2015 .......................................................... 48

4 TRUING UP OF FY 2012-13 ............................................................................................................. 53

4.1 OVERALL APPROACH ................................................................................................................. 53

4.2 SALES FOR FY 2012-13 .................................................................................................................... 54


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4.3 DEMAND SIDE MANAGEMENT MEASURES .......................................................................................... 56

4.4 DISTRIBUTION LOSSES AND ENERGY BALANCE ............................................................................... 56

4.5 POWER PROCUREMENT ...................................................................................................................... 62

4.6 OPERATION AND MAINTENANCE EXPENSES ....................................................................................... 81

4.7 CAPITAL EXPENDITURE AND CAPITALISATION .................................................................................. 86

4.8 DEPRECIATION ................................................................................................................................. 88

4.9 INTEREST ON LONG TERM LOAN CAPITAL ........................................................................... 91

4.10 RETURN ON EQUITY ...................................................................................................................... 97

4.11 INTEREST ON WORKING CAPITAL .................................................................................................. 99

4.12 INTEREST ON SECURITY DEPOSIT ............................................................................................... 102

4.13 PROVISION FOR BAD AND DOUBTFUL DEBTS ............................................................................... 103

4.14 CONTRIBUTION TO CONTINGENCY RESERVE .............................................................................. 105

4.15 INCOME TAX .............................................................................................................................. 106

4.16 NON-TARIFF INCOME ................................................................................................................. 109

4.17 INCOME FROM OTHER BUSINESS ............................................................................................... 115

4.18 EFFICIENCY GAIN/LOSS FOR FY 2012-13.................................................................................... 116

4.19 ADDITIONAL RETURNS ON ACCOUNT OF HIGHER WIRES AND SUPPLY AVAILABILITY .............. 119

4.20 SUPPLY AVAILABILITY ............................................................................................................... 120

4.21 SUMMARY OF AGGREGATE REVENUE REQUIREMENT .................................................................. 123

4.22 REVENUE.................................................................................................................................... 127

4.23 REVENUE GAP FOR FY 2012-13 ................................................................................................. 131

5 TRUING UP OF FY 2013-14 ........................................................................................................... 134

5.1 SALES FOR FY 2013-14 .................................................................................................................. 134

5.2 DEMAND SIDE MANAGEMENT (DSM) MEASURES.............................................................................. 136

5.3 DISTRIBUTION LOSSES AND ENERGY BALANCE ............................................................................. 136

5.4 POWER PROCUREMENT .................................................................................................................... 140

5.5 OPERATION AND MAINTENANCE EXPENSES ..................................................................................... 159

5.6 CAPITAL EXPENDITURE AND CAPITALISATION ................................................................................ 162

5.7 DEPRECIATION ............................................................................................................................... 164

5.8 FINANCING PLAN AND INTEREST EXPENSES ..................................................................................... 166

5.9 RETURN ON EQUITY ........................................................................................................................ 170

5.10 INTEREST ON WORKING CAPITAL ................................................................................................ 172

5.11 INTEREST ON CONSUMERS' SECURITY DEPOSIT ..................................................................... 175



5.14 INCOME TAX .............................................................................................................................. 179



5.17 EFFICIENCY GAIN/(LOSS) FOR FY 2013-14 ................................................................................. 189

5.18 ADDITIONAL RETURN FOR OVER-ACHIEVEMENT IN WIRES AND SUPPLY AVAILABILTY ............. 192

5.19 PAYMENT TO TPC-G ................................................................................................................... 195

5.20 INTEREST ON FUEL ADJUSTMENT CHARGES ................................................................................ 195

5.21 SUMMARY OF AGGREGATE REVENUE REQUIREMENT .................................................................. 196

5.22 REVENUE.................................................................................................................................... 201

5.23 REVENUE FROM WHEELING CHARGES FROM CHANGE-OVER AND OPEN ACCESS CONSUMERS

203


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5.24 REVENUE FROM CROSS SUBSIDY SURCHARGE ............................................................................ 204

5.25 REVENUE GAP OF WIRES AND RETAIL SUPPLY BUSINESSES ...................................................... 205

5.26 COMBINED REVENUE GAP/(SURPLUS) FOR FY 2013-14 ...................................................... 207

5.27 REGULATORY ASSETS RECOVERY IN FY 2013-14 ....................................................................... 209

6 PROVISIONAL TRUING UP OF FY 2014-15, REVISED ARR FOR FY 2015-16 AND

CUMULATIVE REVENUE GAP/(SURPLUS) FOR FY 2015-16 ........................................................ 211

6.1 SALES ............................................................................................................................................. 211

6.2 DISTRIBUTION LOSSES AND ENERGY BALANCE ............................................................................. 225

6.3 POWER PROCUREMENT .................................................................................................................... 229

6.4 OPERATION AND MAINTENANCE EXPENSES ..................................................................................... 259

6.5 CAPITAL EXPENDITURE AND CAPITALISATION ................................................................................ 264

6.6 DEPRECIATION ............................................................................................................................... 266

6.7 FINANCING PLAN AND INTEREST EXPENSES ..................................................................................... 269

6.8 RETURN ON EQUITY ........................................................................................................................ 271

6.9 INTEREST ON WORKING CAPITAL .................................................................................................... 275

6.10 INTEREST ON CONSUMERS' SECURITY DEPOSIT ..................................................................... 277



6.13 AMOUNT PAYABLE TOWARDS TPC-G'S PAST REVENUE GAPS ................................. 281

6.14 INCOME TAX .............................................................................................................................. 281



6.17 PROVISIONAL TRUING UP OF FY 2014-15 AND REVISED ARR FOR FY 2015-16 ............................ 289

6.18 REVENUE.................................................................................................................................... 296

6.19 REVENUE GAP FOR FY 2014-15 AND FY 2015-16 FOR THE WIRES BUSINESS AND SUPPLY

BUSINESS .................................................................................................................................................. 299

6.20 CUMULATIVE REVENUE GAP .................................................................................................... 301

7 TARIFF PHILOSOPHY AND CATEGORY-WISE TARIFFS FOR FY 2015-16 ..................... 315

7.1 TARIFF PHILOSOPHY OF THE COMMISSION ....................................................................... 315

7.2 TARIFF PROPOSAL SUBMITTED BY RINFRA-D ................................................................... 317

7.3 WHEELING CHARGES ..................................................................................................................... 319

7.4 RETAIL TARIFFS ............................................................................................................................. 324

7.5 TARIFF PROPOSAL FOR FY 2015-16 ............................................................................................... 330

7.6 REVISED TARIFFS WITH EFFECT FROM 1 JUNE, 2015 ........................................................ 341

7.7 CROSS-SUBSIDY SURCHARGE ......................................................................................................... 344

7.8 REGULATORY ASSET RECOVERY AND CHARGES ............................................................................ 354

7.9 SCHEDULE OF CHARGES ................................................................................................................. 356

7.10 APPLICABILITY OF REVISED TARIFFS ............................................................................. 356

8 RULINGS OF THE COMMISSION .............................................................................................. 357

8.1 IMPACT OF ATE JUDGMENTS ............................................................................................................ 357

8.2 TRUE UP FOR FY 2012-13 ........................................................................................................... 357

8.3 TRUE UP FOR FY 2013-14 ........................................................................................................... 359

8.4 PROVISIONAL TRUE UP FOR FY 2014-15 AND REVISED ARR FOR FY 2015-16 ............... 361

8.5 TARIFF PHILOSOPHY AND REVISED TARIFF FOR FY 2015-16 .......................................... 366


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List of Abbreviations

AAD Advance Against Depreciation

A&G Administrative and General

ABR Average Billing Rate

ACOS Average Cost of Supply

AMNEPL Abhijeet MADC Nagpur Energy Pvt. Ltd.

APR Annual Performance Review

ARR Aggregate Revenue Requirement

ASCI Administrative Staff College of India

ATE Appellate Tribunal for Electricity

BIS Bureau of Indian Standards

BPL Below Poverty Line

BPP Bilateral Power Purchase

BEST Brihanmumbai Electric Supply & Transport Undertaking

CAGR Compound Annual Growth Rate

Capex Capital Expenditure

CBA Cost Benefit Analysis

CERC Central Electricity Regulatory Commission

CPD Coincident Peak Demand

CSD Consumer Security Deposit

CSS Cross Subsidy Surcharge

CPI Consumer Price Index

DERC Delhi Electricity Regulatory Commission

DMRC Delhi Metro Rail Corporation

DPC Delayed Payment Charge

DPR Detailed Project Report

DSM Demand Side Management

DSS Distribution Sub-station

DTPS Dahanu Thermal Power Station

EA, 2003 Electricity Act, 2003

ECS Electronic Clearing System

EPA Energy Purchase Agreement

FAC Fuel Adjustment Cost

FBSM Final Balancing and Settlement Mechanism

FY Financial Year


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GoM Government of Maharashtra

GFA Gross Fixed Assets

G, T & D Generation, Transmission and Distribution

HT High Tension

IDC Interest During Construction

IDEMI Institute for Design of Electrical Measuring Instruments

IEX Indian Energy Exchange

IoWC Interest on Working Capital

InSTS Intra-State Transmission System

IT Income Tax

LMC Load Management Charges

LT Low Tension

kVA Kilo Volt Ampere

kW Kilo Watt

kWh Kilo Watt hour

LCC Load Control Centre

MAT Minimum Alternate Tax

MCGM Municipal Corporation of Greater Mumbai

MERC Maharashtra Electricity Regulatory Commission

MMOPL Mumbai Metro One Private Limited

MOD Merit Order Dispatch

MSEDCL Maharashtra State Electricity Distribution Company Ltd.

MSLDC Maharashtra State Load Despatch Centre

MTPR Mid-Term Performance Review

MTR Mid-Term Review

MU Million Units

MVA Mega-Volt Ampere

MW Mega Watt

MYT Multi Year Tariff

Tariff Regulations MERC (Terms and Conditions of Tariff) Regulations, 2005

MYT Regulations MERC (Multi Year Tariff) Regulations, 2011

NCD Non-convertible Debentures

NCPD Non-Coincident Peak Demand

NTI Non-Tariff Income

OA Open Access

O&M Operation and Maintenance

PBT Profit Before Tax


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PPA Power Purchase Agreement

R&M Repair and Maintenance

RE Renewable Energy

REC Renewable Energy Certificate

RInfra Reliance Infrastructure Limited

RInfra-G Reliance Infrastructure Limited- Generation Business

RInfra-T Reliance Infrastructure Limited- Transmission Business

RInfra-D Reliance Infrastructure Limited- Distribution Business

RoE Return on Equity

RPO Renewable Purchase Obligation

RPO Regulations MERC (Renewable Purchase Obligation, its Compliance and

implementation of REC framework) Regulations, 2010

RPS Renewable Purchase Specification

SAIDI System Average Interruption Duration Index

SBAR State Bank of India Advance Rate

SBI PLR State Bank of India Prime Lending Rate

SCADA Supervisory Control and Data Acquisition

SLDC State Load Despatch Centre

TBIA Thane Belapur Industries Association

TL Transmission Loss

TOD Time of Day

TOSE Tax on Sale of Electricity

TPC-D The Tata Power Company-Distribution

TVS Technical Validation Session

UI Unscheduled Interchange

WPI Wholesale Price Index

WPCL Wardha Power Company Limited

WL Wheeling Loss

VIPL Vidarbha Industries Private Limited

VCOS Voltage-wise Cost of Supply


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1 BACKGROUND AND BRIEF HISTORY

1.1 BACKGROUND

RInfra is an integrated Utility engaged in Generation, Transmission and Distribution of

electricity in and around the suburban areas of Mumbai. Earlier, RInfra-D was a deemed

Distribution Licensee under the EA, 2003 for distribution of electricity in the suburbs of

Mumbai.

RInfra-D has been granted a Distribution Licence by the Commission for the distribution

and supply of electricity in Mumbai, for a period of 25 years with effect from August 16,

2011. On the basis of this Licence, which is valid up to 15 August, 2036, RInfra-D is

entitled to distribute and supply electricity to the public for all purposes in accordance

with the provisions of the EA, 2003.

1.2 MYT REGULATIONS

The Commission notified the MYT Regulations on 4 February, 2011. These Regulations

are applicable for the second Control Period FY 2011-12 to FY 2015-16.

These Regulations were first amended vide notification dated 21 October, 2011, whereby

the Commission specified, inter alia, that, in case of a Distribution Licensee which has

not been exempted under Regulation 4.1, if there is a difficulty in determining tariff from

1 April, 2011 under the MYT Regulations and it is instead to be determined from 1 April,

2012 or any further period, the repealed Tariff Regulations, 2006 shall continue to be in

force, and the MYT Regulations shall not apply to the determination of tariff for such

period.

The MYT Regulations were further amended on 17 February, 2014 in respect of certain

Generation-related provisions, and on 8 May, 2014 with regard to the Fuel Adjustment

Cost (FAC) mechanism.

1.3 DEFERMENT OF MYT CONTROL PERIOD

Upon RInfra-D’s Petition in Case No. 45 of 2011, the Commission vide Order dated

September 2, 2011 allowed the deferment of the MYT Regulations one year, till March

31, 2012.


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1.4 ORDER ON ARR FOR FY 2011-12

The Commission directed RInfra-D to file its Petition for determination of tariff for FY

2011-12 under the Tariff Regulations, 2005 by October, 2011. RInfra-D accordingly,

submitted a Petition in Case No.180 of 2011, on which the Commission issued its Order

on 15 June, 2012.

1.5 BUSINESS PLAN ORDER FOR MYT CONTROL PERIOD

On RInfra-D’s Petition for approval of Multi-Year Business Plans for the Control Period

from FY 2012-13 to FY 2015-16 under the MYT Regulations in Case No. 158 of 2011,

the Commission issued its Order on 23 November 2012.

1.6 MYT ORDER FOR FY 2012-13 TO 2015-16

In its Order dated 22 August, 2013 in Case No. 9 of 2013 (“MYT Order’), the

Commission approved the ARR for FY 2012-13 to FY 2015-16 and retail tariffs and

Wheeling Charges for FY 2013-14 to FY 2015-16. The Commission also stated that it

would undertake the MTR of RInfra-D’s performance during the third quarter of FY

2014-15, and directed it-D to submit its MTR Petition by November 30, 2014.

1.7 PETITION FOR MID-TERM REVIEW, ADMISSION OF THE PETITION

AND PUBLIC PROCESS

In line with the MYT Regulations, 2011 and in compliance of the MYT Order, RInfra-D

filed its Petition for approval of MTR, including truing up of FY 2012-13 and FY 2013-

14, provisional truing up of FY 2014-15 and revised ARR and revised tariff for FY 2015-

16, in Case No. 4 of 2015, on 30 December, 2014.

The Commission directed RInfra-D to address the data gaps raised before the first

Technical Validation Session (TVS) held on 28 January, 2015, and to which the

authorised Institutional Consumer Representatives were invited. The list of persons who

attended the TVS is at Appendix-1.

During the TVS, the Commission directed RInfra-D to provide additional information and

clarifications on the issues raised, and to submit a revised Petition after incorporating all

the necessary data and changes. Subsequently, RInfra-D submitted its replies to the data

gaps and filed its revised Petition on 13 February, 2015, with the following prayers:

“


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Approve the tariff and charges as contained in this Petition.

Approve the amounts as a result of past impact (up to FY 2011-12) due to

judgment of ATE as contained in this Petition.

Approve the Revenue Gap for FY 2012-13 and FY 2013-14 as part of Truing

up as contained in this Petition.

Approve the provisional Revenue Gap for FY 2014-15 as part of the APR as

contained in this Petition.

Approve the revised forecast of ARR and revised Tariffs as proposed for FY

2015-16.

Provide clarity with respect to certain tariff related issues as brought out in

this Petition.

Allow additions / alterations / modifications / changes to the Petition at a

future date.

Allow any other relief, order or direction, which the Commission deems fit to

be issued.

Condone any inadvertent errors / inconsistencies / omissions / rounding off

differences, etc. as many be there in the Petition.”

The Commission admitted the Petition of RInfra-D on 13 February, 2015. In accordance

with Section 64 of the EA, 2003, the Commission directed RInfra-D to publish its Petition

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

to reply expeditiously to all the suggestions and objections received. RInfra-D issued a

Public Notice inviting suggestions and objections from stakeholders and the public on its

Petition. The Public Notice was published in the daily newspapers Hindustan Times and

Indian Express (both English), and Loksatta and Saamna (both Marathi) on 18 February,

2015. The copies of RInfra-D’s Petition and its summary were made available for

inspection/purchase at RInfra-D’s offices and on its website (www.rinfra.com). The

Public Notice and Executive Summary of the Petition were also available on the websites

of the Commission (www.merc.gov.in/www.mercindia.org.in) in downloadable format.

The Public Notice specified that the suggestions and objections, in English or Marathi,

may be filed with proof of service on RInfra-D.

The Commission received written suggestions and objections and oral submissions on

various issues. The Public Hearing was held on 16 March, 2015 at 11:30 hrs at Centrum

Hall, Centre No. 1, World Trade Centre, Cuffe Parade, Mumbai 400 005. The list of

persons who attended the Public Hearing is provided at Appendix-2.

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

transparency and public participation was followed at every stage and adequate

opportunity was given to all concerned to file their say.

http://www.rinfra.com/

http://www.merc.gov.in/

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


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The suggestions and objections made in writing as well as during the Public Hearing,

along with RInfra-D’s responses and the Commission’s rulings have been summarised in

Section 2 of this Order.

1.8 ORGANISATION OF THE ORDER

This Order is organised in the following nine Sections:

Section 1 provides a brief history of the regulatory process undertaken by the

Commission. A list of abbreviations with their expanded forms has been included.

Section 2 lists out the suggestions and objections received in writing as well as

during the Public Hearing. These have been summarized issue-wise, followed by

the response of RInfra-D and the rulings of the Commission.

Section 3 details the impact of the Judgments of the Appellate Tribunal for

Electricity (ATE).

Section 4 details the Truing-up of FY 2012-13.

Section 5 details the Truing up of FY 2013-14.

Section 6 details the Provisional Truing up of FY 2014-15, revised ARR for FY

2015-16 and Cumulative Revenue Gap.

Section 7 details the Tariff Philosophy adopted by the Commission and the

category-wise tariffs approved.

Section 8 sets out the Rulings of the Commission.


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2 SUGGESTIONS/OBJECTIONS RECEIVED, RINFRA-D’S

RESPONSES AND COMMISSION’S RULINGS

2.1 RATIONALE OF MULTI-YEAR TARIFF

Shri. Sandeep Ohri sought clarity on the rationale of Multi-Year Tariff, in view of RInfra-

D's proposal for tariff revision even though it has already been determined by the

Commission for FY 2015-16 in the MYT Order.

RInfra-D’s Response

RInfra-D submitted that the process of MTR, as envisaged in the MYT Regulations, 2011,

is meant for course corrections, so that significant variations from the forecast or material

change in any factors not considered at the time of the MYT Order can be built in by

revision of projections and future Tariff so that consumers are not burdened with

avoidable carrying cost. Even though the present MYT Control Period is for four years

(FY 2012-13 to FY 2015-16), and despite the delay in its commencement, the MYT Order

has still provided a stable and pre-defined tariff trajectory at least for the two years FY

2013-14 and FY 2014-15. Tariff revision has now become necessary because of various

factors explained in the Petition, including primarily the following:

ATE Judgment on Income Tax and interest on long-term loans, which has resulted

in additional allowance for the years prior to the MYT Period, and has affected the

Income Tax and interest computations for each year of the MYT Period. The

Judgment is subsequent to the MYT Order. Hence, its impact could not have been

factored into the MYT Tariff and has to be recovered through Tariff adjustment

now;

Increase in cost of power purchase from long-term sources of supply due to fuel

availability issues, purchase from TPC Unit-6, and additional purchase due to

addition of consumers, which were not envisaged at the time of the MYT Order;

Reduction in revenue due to lower actual sales than envisaged in the MYT Order,

and its applicability from September, 2013 instead of from April, 2013;

Increase in RI charges by MCGM, wage revision resulting in arrears, etc.


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Because of these uncontrollable factors and events subsequent to the MYT Order, RInfra-

D has sought recovery of the consequent cumulative Revenue Gap during the Control

Period.

Commission’s Ruling

In the MYT Order, the Commission had determined the tariffs for each of the three years

(FY 2013-14 to FY 2015-16) based on the sales and expenses projected over the

remaining years of the Control Period. However, the actual sales, expenses and revenue

have been different, for reasons explained in the relevant Sections of this Order. The

MYT Regulations specify as follows regarding the scope of the MTPR:

"11.3 The scope of the Mid-term Performance Review shall be a comparison of the actual

performance of the Generating Company or Transmission Licensee or Distribution

Licensee with the approved forecast of Aggregate Revenue Requirement and

expected revenue from tariff and charges and shall comprise of the following:

a) a comparison of the audited performance of the applicant for the previous two

financial years with the approved forecast for such previous financial year; and b) a comparison of the performance of the applicant for the first half of the current

financial year with the approved forecast for the current financial year. c) carrying cost on surplus/deficit amounts, if any, at the time of Mid-term

Performance review...

11.6 Upon completion of the Mid-term Performance Review, the Commission shall pass

an order recording-

a) the approved aggregate gain or loss to the Generating Company or Transmission

Licensee or Distribution Licensee on account of controllable factors and the

amount of such gains or such losses that may be shared in accordance with

Regulation 14.

b) the approved modifications to the forecast of the Generating Company or

Transmission Licensee or Distribution Licensee for the remainder of the Control

Period."

Thus, the MYT Regulations provide for tariff revision based on the MTPR. RInfra-D's

Petition is being entertained by the Commission accordingly.

2.2 VENUE OF PUBLIC HEARING

Shri. Sandeep Ohri submitted that, in the past, many of the Public Hearings concerning

Mumbai suburban consumers were held in the suburbs. However, this time, it is being


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held in south Mumbai, which is inconvenient to the consumers, thus reducing their

participation and feedback.


The venue of the Public Hearing is decided by the Commission.


The Commission notes that the Mumbai suburban area is not far from the venue of the

hearing in the island city, particularly considering transport arrangements in Mumbai.

Public Hearings relating to RInfra-D have been held at the same venue earlier also.

Importantly, the public has been given the opportunity and option to file suggestions and

objections in writing, and responders are not required to appear before the Commission in

person at the Public Hearing. All such suggestions and objections are considered by the

Commission before passing its Order.

2.3 INCREASE IN TARIFF

Shri. Mohammed Afzal submitted that the proposed increase in costs to consumers

contradicts RInfra-D’s media releases in January, 2014 and January, 2015 that they would

be reduced. As per the MYT Order, the tariff is to decrease from April, 2015 whereas, in

the Petition, RInfra-D has asked for tariff increases ranging from 10% to 46% for the

Residential category. Moreover, the tariff increase should be uniform across all categories

instead of the proposed increase of 66% for BPL, 10% to 46% for Residential category,

and 10% to 20% for Commercial and Industrial consumers. He also submitted that the

proposal would result in the tariffs increasing steeply in a short span of time.

Shri. Ashok Pendse of Thane-Belapur Industries Association, an Authorised Consumer

Representative Institution, submitted that consumers were hoping that, since power

purchase cost is coming down in FY 2015-16, there would be a reduction in the average

cost of supply and virtually no increase in tariff. However, for HT consumers, the

Wheeling Charges are proposed to be increased from Rs. 0.64/kWh to Rs. 1.42/kWh, and

for LT categories from Rs. 1.24/kWh to Rs. 1.73/kWh. Thus, the tariff for every category,

excluding the Residential category, will go up. Even in the Residential category, for

consumption exceeding 500 units, the ABR would be Rs. 14.41/kWh, which is equal to

the tariff of LT Commercial category of Rs.14.42/kWh and higher than that of the HT

Industry category of Rs. 11.47/kWh.


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Shri. Pendse submitted that the proposed Wheeling Charge of Rs. 2.75/kWh for LT

consumers and Rs. 1.43/kWh for HT consumers, along with increase in RAC of

Rs.0.56/kWh to almost Rs. 1.22/kWh, would be a dampener for competition with TPC-D,

particularly when CSS is added.

Mumbai Citizens’ Welfare Forum submitted that RInfra-D is indirectly charging the

consumers exorbitantly by wrong billing, which consumers pay immediately for fear of

disconnection. When they file complaints subsequently, RInfra-D does not return but

adjusts the excess amount in the next bill, thereby taking the benefit of large temporary

funds.

Shri. Sandeep Ohri submitted that the increase proposed will amount to tariff shock to

consumers.


RInfra-D submitted that its proposal is in line with the Tariff Policy, which requires cross-

subsidy to be gradually reduced. The percentage of tariff increase for any category is

decided by the targeted decline in cross-subsidy for such category which, in turn, is

dependent on the present level of cross-subsidy. Hence, tariff increases cannot be uniform

for all consumer categories.

The tariffs determined in the MYT Order were based on expenses and sales projected at

that time. However, because of various subsequent events, the costs have changed

significantly and additional claims of years prior to the MYT Period have also arisen.

Hence, there is a need to revise the tariffs.

Wheeling charges do not affect the choice of supply at all, as the same Wheeling Charges

are applicable to own as well as change-over consumers. Many events subsequent to the

MYT Order have caused the cumulative Revenue Gap till FY 2014-15, which has to be

recovered quickly as delay adds to interest cost. Much of the Revenue Gap pertains to the

Wires Business of RInfra-D, because of low recovery from Wheeling Charges in FY

2012-13 and FY 2013-14 (since Wheeling Charges approved in Tariff Order for FY 2009-

10 continued till they were revised in the MYT Order). In order to recover these past costs

pertaining to the Wires Business, the Wheeling Charges are proposed to be revised.

RInfra-D has proposed to recover its entire cumulative Revenue Gap within a year, i.e.,

FY 2015- 16, and hence there is an increase in tariff vis-à-vis the present tariff. In the

MYT Order, the tariff approved for FY 2015-16 was lower than for FY 2014-15. This was


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because the MYT Order assumed a revenue surplus at the existing tariff in FY 2013-14

and FY 2014-15, which was normalized with the small revenue deficit of FY 2015-16 so

as to have a smooth tariff trajectory over a three-year period. Thus, the earlier approved

tariff reduction for FY 2015-16 was due to the surplus of previous years as computed in

the MYT Order. However, this revenue surplus never materialized. Instead, there is a

revenue deficit in both FY 2013-14 and FY 2014-15, and its proposed recovery along

with previous years’ revenue deficit is resulting in the proposed tariff increase.


The cumulative Revenue Gap/(surplus) of previous years, after considering the impact of

various developments, including the ATE Judgments, have been discussed in Section 6 of

this Order. The Commission has sought to ensure that the Revenue Gap is recovered at

the earliest in order to reduce the carrying cost, and at the same time that no tariff

category is subjected to a tariff shock and that the cross-subsidies between consumer

categories is also reduced gradually. The Commission's Tariff Philosophy for recovery of

this Revenue Gap/ (surplus) has been elaborated in Section 7.

2.4 POWER PURCHASE COST

Urja Prabodhan Kendra enquired how RInfra-D plans to lower the increase in power

purchase cost of 46% for FY 2012-13 and 30 % for FY 2013-14 over that approved in the

MYT Order.

Mumbai Citizens’ Welfare Forum submitted that RInfra-D does not generate electricity

by itself, and instead purchases it from TPC for distribution to consumers at exorbitant

prices.

Shri. Mohammed Afzal and Shri. Sandeep Ohri sought justification for the increase in

cost of power purchase from Vidarbha Industries Power Limited (VIPL) at a time when

oil and coal prices are reducing. Shri. Afzal also enquired about the increase in the

Renewable Energy power purchase cost and Transmission Charges. He submitted that,

although the Commission had approved revised tariffs in the MYT Order w.e.f.

September, 2013, RInfra-D increased it in April 2014 by 20% through FAC, and

questioned how the cost had risen when the fuel cost had come down.

Shri Ashok Pendse, on behalf of Thane Belapur Industries Association (TBIA), an

authorised Consumer Representative, submitted that RInfra-D has projected that, in FY

2014-15 and FY 2015-16, short-term purchase and Surplus Sale would constitute 13-15%


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of total sales. This has serious implications, and RInfra-D should restrict it to between 5-

7%. Moreover, there is a large difference between the cost of power procurement from the

Dahanu Thermal Power Station (DTPS) and VIPL (projected as between Rs.4.40/kWh to

Rs.4.71/kWh in FY 2015-16) and the price (only Rs. 2.21/kWh) at which surplus power is

expected to be sold. This additional cost should be partially borne by RInfra-D, and the

Surplus Sale and additional power purchase cost should be limited.


RInfra-D submitted that, as a Distribution Licensee, the increase in power purchase cost

was an ‘uncontrollable’ element.

The power purchase cost has increased by 46% in FY 2014-15, mainly because of the

following:

Increase in power purchase cost from VIPL due to coal supply related issues

which are, however, settled to a large extent now; hence, the cost of purchase from

VIPL would be lower in FY 2015-16.

Power Purchase from TPC Unit-6 at very high rates, under the directions of the

Government of Maharashtra (GoM) and Maharashtra State Load Despatch Centre

(MSLDC) in order to avoid load shedding in Mumbai.

Additional payment to Wardha Power Co. Ltd. (WPCL), a medium-term generator

contracted with RInfra-D up to FY 2013-14, due to ‘Change in Law’ as per the

Order of the Commission and ATE.

Increase in short-term power purchase due to reverse migration of consumers back

from Tata Power Co. Ltd. – Distribution (TPC-D) to RInfra-D.

The power purchase cost for FY 2015-16 is projected to increase by 30%, mainly because

of the following:

Increase in power purchase cost from DTPS, due to pass through of DTPS’

Revenue Gap as a result of its true-up.

Increase in power purchase cost from VIPL as compared to that estimated in the

MYT Order. However, there would be a large reduction in FY 2015-16 as

compared to FY 2014-15 since most of VIPL’s coal related issues are now

resolved. The Commission has also now issued the final Tariff Order of VIPL,

which would be considered for the approval of cost of power purchase by RInfra-

D from VIPL in FY 2015-16.


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Increase in short term power purchase due to reverse migration of consumers from

TPC-D.

RInfra-G generates electricity from DTPS, which is entirely supplied in the Mumbai

Licence Area through RInfra-D. RInfra-D does not normally procure any power from

TPC. However, in FY 2014-15, all Mumbai Distribution Licensees, including RInfra-D,

were directed by the GoM and MSLDC to procure power from TPC’s Unit 6 to avoid

load shedding in Mumbai. RInfra-D denied the allegation of exorbitant pricing, and

submitted that its tariffs are fixed by the Commission after thorough scrutiny of its

Petition considering prudence and efficiency.

In RInfra-D’s MYT Order, the Commission had not allowed the additional power

purchase cost from Dhursar Solar Power Pvt. Ltd. (‘Dhursar Solar’) over and above the

purchase required for meeting the Solar Renewable Purchase Obligation (RPO) at the

generic tariff approved by the Commission. RInfra-D has appealed against this before

ATE, whose decision was pending at the time of filing of the Petition. RInfra-D submitted

that, since it had already entered into a Power Purchase Agreement (PPA) with Dhursar

Solar for buying its entire quantum of power that cost had to be accounted for by it.

RInfra-D has accordingly considered the entire power purchase cost from Dhursar Solar

in its MTPR Petition. A part of the Solar power purchase has been shown as being

towards meeting the Solar RPO, and the rest as normal power purchase. Therefore, the

purchase cost of Renewable Energy (RE) as per the MTPR Petition is higher than that

approved in the MYT Order.

The increase in short-term purchase in FY 2013-14 and FY 2014-15 is because of

migration of a large number of consumers back to RInfra-D after the MYT Order, which

increased power demand leading to purchase from short-term sources. The weighted

average rate of short-term power purchase for FY 2013-14 has been only Rs. 3.26 per

kWh, and the actual rate in the first half of FY 2014-15 was Rs. 3.85. Most of this

purchase is made through the Power Exchanges or from third parties with rates

benchmarked to the Exchange rates. The weighted average power purchase price of

RInfra-D for FY 2013-14 and FY 2014-15 has been Rs. 4.03 per kWh and Rs. 5.19 per

kWh, respectively. Thus, the rate of procurement of short-term power is much below the

average power purchase cost, and has not had any negative financial implications.

The cost of DTPS power is rising in FY 2015-16 only because of recovery of past

Revenue Gap of Rs. 155 crore, which has been merged with the fixed cost of FY 2015-16.

This has arisen mainly from the ATE Judgment on Income Tax and Interest on long-term

loans.


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The Commission has recently approved the final tariff of VIPL for FY 2014-15 and FY

2015-16. It has approved variable charges of Rs. 1.91 per unit and fixed cost of Rs. 907

crore. Using these approved figures, the VIPL purchase rate would be revised to Rs. 4.14

per unit in FY 2015-16. RInfra-D expects that the Commission would consider the revised

figures in its Tariff Order.

The rate of sale of surplus power is lower because it is mainly available during the night

in view of RInfra-D’s largely day-evening load. Additional surplus power is available at

night in the monsoon months and winter months. Generally, the demand for power at

night is very low in other States, because of which surplus power fetches a poor

realization.


The Commission has appropriately considered purchase from various sources of power

purchase, as well as the quantum and rate for sale of surplus power. The analysis and

prudence check of the power purchase expenses for FY 2012-13 to FY 2015-16, and the

approved power purchase expenses for each year, have been elaborated in the relevant

Sections of this Order.

2.5 WHEELING CHARGES AND CROSS-SUBSIDY SURCHARGE

The Lalit (Bharat Hotels) and Juhu Beach Resorts Ltd. submitted that RInfra-D has

sought increase in the Wheeling Charges and Cross-Subsidy Surcharge (CSS) ranging

from 18% to 426% for different consumer categories. This does not conform to the EA,

2003 and the Tariff Policy, which stipulate that the CSS should be brought down

progressively to 20%.

The Lalit also submitted that all the variables in the CSS formula are not under the control

of consumers. Any increase in CSS due to change in any variable in the CSS formula is

solely attributable to the inefficiency of the Distribution Licensee.

Urja Prabodhan Kendra contended that the proposed Wheeling Charges for HT and LT

consumers are the highest in the country, and Mumbai Citizens’ Welfare Forum also

stated that the Wheeling Charges proposed are exorbitant.

Shri. Ashok Pendse, TBIA submitted that subsidising consumers are price-sensitive and

consume about 200 MW, i.e., 300 to 400 MU of energy. According to the Petition, the

total sales have remained the same from FY 2012-13 to FY 2013-14. Due to reverse


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migration, change-over sales have reduced by 450 MU, which has increased own sales.

Hence, though revenue has increased by Rs.300 Crore due to increased sales, the revenue

from CSS has been lower by Rs.530 Crore. Although CSS has been calculated as per the

Tariff Policy, it is higher than the actual cross-subsidy, and the Commission should look

into this aspect. CSS cannot be used as a profit earning tool.

Shri. Pendse also submitted that Wheeling Charge of Rs.2.75/kWh for LT category and

Rs.1.43/kWh for HT category, along with RAC of Rs.0.56/kWh to Rs.1.22/kWh, is a

dampener for competition. Any further increase in CSS will completely eliminate

competition.

Nagari Nivara Parishad submitted that the Tariff Policy principle that the tariff should be

kept within +/- 20% of the Average Cost of Supply (ACOS) was not adhered to by

RInfra-D. Thus, RInfra-D got much higher CSS than what it should have. Further, the

tariff advantage due to change-over is only up to 300 units. The Commission should not

allow the proposed increase in Wheeling Charges and CSS.

Shri Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that the CSS

for change-over consumers with high consumption has already been collected by TPC-D

from consumers and has been paid to RInfra. He added that RInfra-D's proposal to

enhance the Wheeling Charges is not in line with the MYT Regulations, 2011.


RInfra-D submitted that in all its proposals – whether in the MYT Petition or in the

present MTPR Petition – it has adhered to the principle of rationalization of tariff and

consequent reduction in cross-subsidy. The tariffs are determined w.r.t. ACOS, while the

CSS is determined on the basis of marginal cost of avoided power purchase. The CSS

formula shows the true financial loss to the Licensee by capturing the lost revenue and the

savings in marginal cost of purchase, and adding to it the receipt from Wheeling Charges.

RInfra-D proposal does not change the present dynamics. Even at present, the advantage

of lower tariff in case of change-over exists only for residential consumers consuming 0-

300 units. RInfra-D has calculated category-wise CSS for FY 2015-16 as per the Tariff

Policy formula, which was also followed by the Commission in its previous Orders for

determination of CSS.

Various other elements of the ARR, i.e., the consumer services, including meters and

other retailing costs, which are incurred towards change-over/Open Access (OA)

consumers but do not form part of the Wheeling Charges, etc., are not included in the


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negative side of the CSS formula, but form a part of the ACOS. If these costs are included

in the computation by including them in the Wheeling Charges, the CSS would be much

lower than what is presently proposed. However, at the same time, the Wheeling Charges

would be much higher, and this is one of the main reasons for increase in CSS.

The tariff determination process ensures that only prudently incurred expenditure and

uncontrollable expenditure is passed through to the consumers, and the expenditure

approved after rigorous regulatory scrutiny forms the basis of tariff; therefore, the cost

and tariff elements of the CSS formula are as approved by the Commission.

At present, the CSS levied on consumers pertains to FY 2014-15, as approved in the MYT

Order. However, in its MTPR Petition, RInfra-D has sought revision in tariff for FY

2015-16. Accordingly, as per the ATE Judgment in Appeal No. 178 of 2011, the CSS will

also have to be revised along with the revision in tariff and other parameters of CSS

formula.

In its Petition, RInfra-D has sought revision in Wheeling Charges for FY 2015-16,

necessitated by accrual of Revenue Gaps of the past years due to:

ATE Judgment in Appeal No. 138/139 of 2011; and

Revenue Gap of Wires Business from FY 2012-13 to FY 2014-15 (provisional),

due to revision in projected cost on account of capex and opex revisions, and

impact on Income Tax and Interest on Term Loans due to the ATE Judgment.

If the Revenue Gap is not recovered at this stage, it would only amount to postponing of

the recovery, which would add to the carrying cost which is ultimately borne by the

consumers. The MYT Regulations, 2011 provide for MTR, wherein past Revenue Gaps

are assessed and revisions are made to the forecast for the ensuing year.

The increase in own sales of RInfra-D is lower than the corresponding reduction in

change-over sales due to reverse migration of consumers back to RInfra-D, which is

because of migration of low-end (0-300 unit) consumers to TPC-D. Because of migration

of these consumers, the net increase in RInfra-D’s own sales revenue is less.

The objector is not comparing the correct figures. While the increase in revenue of about

Rs. 300 crore is based on comparison of the actual revenue of FY 2013-14 with that of FY

2012-13, the reduction in CSS revenue of Rs. 530 crore is between the MYT Order and

actual CSS revenue, and not on comparison of actuals of FY 2012-13 and FY 2013-14.


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One of the main reasons for decline in CSS revenue w.r.t that approved in the MYT Order

and what was actually billed is the 7 month applicability of MYT Order. The MYT Order

revenue figures were estimated for the whole year, whereas the Order was effective only

from September, 2013. Thus, a much lower CSS prevailed for the first five months of FY

2013-14, causing significant reduction in the CSS revenue vis-à-vis that considered in the

MYT Order.

Another reason for reduction in CSS revenue is the applicability of CSS on metered sales

as against the grossed up sales assumed in the MYT Order. Therefore, the objector’s

proposition that the CSS formula yields higher cross-subsidy revenue than the required

cross-subsidy is based on incorrect comparisons and without proper understanding of the

figures presented in the Petition. RInfra-D submitted that there is no question of earning

any profit out of CSS. Any revenue from CSS - or any other regulated charges for that

matter - is reflected in the Regulatory Accounts and passed on entirely in the tariffs of

low-end consumers. The profit of a regulated Distribution Licensee is confined to the

Return on Equity plus any Efficiency Gains that can be made on controllable costs.


The Commission is of the view that, while the Wheeling Charges and CSS have to be

determined such that the Licensee recovers its costs, they should not be so high so as to

artificially block competition. The Commission's philosophy in this regard and

computation of Wheeling Charges based on the approved ARR of the Wires Business,

including the cumulative Revenue Gap/(surplus), in accordance with the MYT

Regulations, has been elaborated in Section 7 of this Order. The category-wise CSS has

been computed based on the tariffs determined by the Commission, as elaborated in

Section 7.

2.6 INCREASE IN TRANSMISSION CHARGES

Shri Mohammed Afzal enquired regarding the reasons for the projected increase of 10%

in Transmission Charges.

Shri Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh enquired whether the

Transmission Charges, as paid by the Distribution Licensee, is included in the Tariff

approved under Section 62(1) of the EA, 2003.


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RInfra-D submitted that the Commission had considered the Transmission Charges for

FY 2014-15 and FY 2015-16, in the MYT Order, based on the Order dated 13 May, 2013

in Case No. 56 of 2013 determining the transmission tariff for Intra State Transmission

System (InSTS) for FY 2013-14 to FY 2015-16. Subsequently, in its Order dated 14

August, 2014 in Case No. 123 of 2014, the Commission revised the Transmission

Charges payable by Distribution Licensees for FY 2014-15 and FY 2015-16. As per that

Order, RInfra-D's share of the Transmission Charges increased as compared to that

approved in the MYT Order. Accordingly, in its MTPR Petition, for FY 2014-15 and FY

2015-16 RInfra-D has considered Transmission Charges in accordance with that Order,

hence the increase.

The Transmission Charges paid by RInfra-D forms part of the ARR, and the tariffs have

been proposed to recover the ARR, including the Transmission Charges.


The Transmission Charges payable by RInfra-D for FY 2014-15 have been approved in

the InSTS Tariff Order dated 14 August, 2014. For FY 2015-16, the Transmission

Charges payable by RInfra-D have been approved in the InSTS Tariff Order dated 26

June, 2015 in Case No. 57 of 2015 and these have been considered while approving the

ARR for RInfra-D for FY 2015-16, as elaborated in Section 6 of this Order.

2.7 ENERGY BALANCE

Shri. Sandeep Ohri enquired whether the Commission has approved the new methodology

adopted by RInfra-D for computing the Energy Balance, in view of the higher energy

input requirement projected by it for its own sales in FY 2014-15 and FY 2015-16, while

at the same time reducing the energy input requirement for change-over sales.


RInfra-D submitted that it has not adopted any new methodology for computation of

Energy Balance for FY 2014-15 and FY 2015-16. The estimated increase in energy input

for own sales at G < > T interface in FY 2014-15 and FY 2015-16 is due to large scale

consumer movement of consumers from TPC-D to RInfra-D based on the tariffs approved

in the respective MYT Orders. As a result, RInfra-D’s own sales are significantly higher


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than approved in the MYT Order and actually sold in FY 2013-14, while the change-over

sales have reduced correspondingly.


The Commission has approved the Energy Balance for RInfra-D for FY 2014-15 and FY

2015-16, in accordance with the methodology in previous Orders, based on the projected

own sales and change-over sales and the approved trajectory of Distribution Losses, as

elaborated in Section 6 of this Order.

2.8 CAPITAL EXPENDITURE

Shri. Ashok Pendse, TBIA, submitted that the approved capitalisation is double the actual

capitalisation. This has an additional impact on account of higher RoE and interest on

debt, higher O&M Expenses and higher Depreciation, thereby increasing the tariff since

RInfra-D has taken higher amounts from the consumer on account of projected

capitalisation. The reduced expenses should have holding costs and, to that extent, the

ARR should be reduced.


RInfra-D submitted that the actual capitalisation is lower than the approved capitalisation,

for which it has set out the reasons in its Petition. The resulting reduction in Depreciation,

interest and RoE has been factored in the ARR of each year. Therefore, the Revenue Gap

of each year from FY 2012-13 to FY 2014-15 already reflects the reduction due to lower

actual capitalisation. Since the carrying cost has been worked out on the cumulative

Revenue Gap, the reduction in these costs has been passed on to the consumers along with

interest cost of intervening years.


It is true that RInfra-D had projected higher capitalisation over the Control Period, as a

result of which all related expenses, viz., Depreciation, interest on loan, and RoE, were

also higher in the MYT Order. The Commission has reduced the capitalisation for FY

2015-16, based on past trends. Further, the impact of reduction in capitalisation in FY

2012-13 and FY 2013-14, has been considered with carrying cost, as the net Revenue

Gap/(surplus) for FY 2012-13 and FY 2013-14 has been considered with carrying cost,

while computing the cumulative revenue requirement for FY 2015-16.


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2.9 REGULATORY ASSET CHARGE

Shri. Mohammed Afzal submitted that Regulatory Asset Charge (RAC) was to be

recovered in six years, but RInfra-D has proposed to recover it in one year. This is an

additional burden on consumers.

Shri. Ashok Pendse, TBIA submitted that the proposed ARR of Rs.6903 Crore for FY

2015-16 includes the past Revenue Gap of Rs.1618 Crore, which amounts to 23% of the

ARR. Since the Revenue Gap has been built up over the past four years, the recovery

should also be done in the next four years instead of one year, which would avoid a tariff

shock for consumers.


RInfra-D submitted that the Regulatory Asset approved by the Commission in RInfra-D’s

MYT Order is to be recovered over six years through the RAC approved in the MYT

Order, which is proposed to be continued in the same manner.

RInfra-D has proposed to recover the cumulative Revenue Gap in one year, i.e., in FY

2015-16, because deferment attracts additional carrying cost. RInfra-D has already

deferred its pre-MYT Regulatory Assets up to FY 2018-19. Deferment of further

Regulatory Assets would be undesirable. The Commission may consider the impact of

avoidable carrying cost burden on consumers while determining tariff.


The Commission's treatment of the cumulative Revenue Gap for FY 2015-16, after

including the past Gaps, is elaborated in Section 6 of this Order. The treatment of

recovery of the RAC approved by the Commission in the MYT Order is also elaborated in

Section 7.

2.10 NON-CONVERTIBLE DEBENTURES

Shri Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that the

Certificate dated January, 2015 of M/s Pathak H.D. Associates certifying the Financial

Statement for the years ending 31 March, 2012, 31 March, 2013 and 31 March, 2015,

cannot be relied upon since FY 2014-15 is not over and the Public Hearing is held on 16

March, 2015.


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RInfra-D submitted that the Certificate shows the opening balance of Non-Convertible

Debentures (NCDs) of FY 2012-13 to FY 2014-15, duly certified by RInfra’s Statutory

Auditor. Since it is the opening balance for FY 2014-15, i.e., as on 1 April, 2014, and not

the closing balance, there is no reason why it cannot be relied upon.


The Commission has relied upon the Certificate submitted by RInfra as it is for the

opening balance of FY 2014-15, which has already passed.

2.11 CHANGE-OVER CONSUMERS

Nagari Nivara Parishad submitted that the tariff proposed by RInfra-D is higher than

TPC-D’s proposed tariff for residential consumers in consumption slabs 101-300, 301-

500 and above 500 units per month, after adding Energy Charges, Wheeling Charges and

RAC for each. This shows that tariff advantage exists only for direct consumers of TPC-

D. Till TPC-D lays down cables in the entire area, RInfra-D consumers cannot become

direct consumers of TPC-D.

Shri. Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that the

change-over consumers are of the view that the present Petition should not be entertained,

and the rights of electricity consumers should be protected under the Consumer Protection

Act, 1986.

Shri. Sandeep Ohri enquired about the status of ATE’s direction to the Commission to

decide the detailed protocol for switch-over and change-over after hearing all concerned.


RInfra-D submitted that, as per the proposals of RInfra-D and TPC-D, tariff advantage

exists for change-over consumers for the first two slabs (0-100 and 101-300 units) of

residential category. Since change-over happens on the network of RInfra-D, the benefit

of tariff difference can be had even without the TPC-D network.

As per the ATE Judgment in Appeal No. 229/246 of 2012, the existing consumers

connected to the network of a Distribution Licensee are not permitted to switch over to

the network of the other Licensee. They can, however, change-over on payment of


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Wheeling Charges, CSS and other charges prescribed by the Commission. Further, as the

laying of network by TPC-D in the common Licence area is required to be approved by

the Commission in accordance with TPC-D’s Roll-out Plan of TPC, as per the directions

of ATE.

RInfra-D has submitted its Petition for revision of tariff and charges for FY 2015-16. The

final tariff for its own and change-over consumers shall be as approved by the

Commission. Separate proceedings would be initiated for approval of the roll-out plan of

TPC-D and the detailed protocol for switch-over and change-over in accordance with the

guidelines for network development laid down by the ATE.


While determining the revised tariffs for RInfra-D and TPC-D for FY 2015-16, the

Commission has kept in mind the economics of change-over, after considering all

applicable charges, and ensured that the choice to consumers to choose their electricity

supplier is available to most categories. As regards the final protocol for change-over and

switch-over of consumers from one Licensee to another, the Commission is initiating a

separate process during which the public and stakeholders would be consulted, in

accordance with the ATE directions in Appeal No. 246 of 2012 and related matters.

2.12 NON-CONSIDERATION OF REVERSE CHANGE-OVER SALES

Shri. Mohammed Afzal enquired regarding the non-consideration of reverse change-over

sales in the MYT Petition.


RInfra-D submitted that it could not have assumed the extent of reverse migration as that

is a function of the tariffs of both Licensees, which are determined by the Commission.


The Commission has incorporated the impact of expected migration and reverse migration

of consumers between RInfra-D and TPC-D while approving their sales and power

purchases for FY 2015-16, as elaborated in Section 6 of this Order.


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2.13 METERING

Mumbai Citizen’s Welfare Forum submitted that it is necessary to have a random

checking of RInfra-D’s meters without its knowledge to ascertain whether they show

actual consumption or there is any mistake.


RInfra-D submitted that its meters are compliant with the Bureau of Indian Standards

(BIS) benchmarks. In the past, the Commission had appointed an independent agency

(IDEMI - Institute for Design of Electrical Measuring Instruments) for testing of its

meters. IDEMI found less than 0.00414 % of its meters defective out of a sample of 1208,

and concluded that there is no irregularity in the meters installed by RInfra-D.


Any specific complaint regarding the accuracy of RInfra-D’s meters installed by RInfra-D

can be taken up by the aggrieved consumers in the appropriate forum for relief. The

Commission notes that the MERC (Electricity Supply Code and Other Conditions of

Supply) Regulations, 2005 (‘Supply Code Regulations’) specifies that the Distribution

Licensee shall be responsible for the periodic testing and maintenance of consumer

meters. The consumer may, upon payment of testing charges, request the Distribution

Licensee to test the accuracy of the meter. The Licensee has to provide a copy of the test

report to the consumer. If the meter is found to be beyond the limits of accuracy

prescribed, the Distribution Licensee must refund the testing charges and adjust his bill in

accordance with the test results.

Moreover, Regulation 7.3 of the MERC (Standards of Performance of Distribution

Licensees, Period for Giving Supply and Determination of Compensation) Regulations,

2014 (‘SoP Regulations’) specifies that the Distribution Licensee shall carry out an

inspection in respect of alleged faulty / non working (stuck, running slow / fast or

creeping) meters within a stipulated time. In case the meter is found to be faulty, it has to

be replaced before the end of subsequent billing cycle.

2.14 TAX ON SALE OF ELECTRICITY

Shri Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that Tax on

Sale of Electricity (ToSE) of 19 paise/kWh for the Domestic category and 23 paise/kWh

for Non-Domestic category is collected in addition to Energy Charges and Fixed


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Charges/Demand Charges. He enquired whether there are any separate Collection

Charges for collection of Electricity Duty and ToSE.


RInfra-D submitted that the ToSE collected from consumers is passed on to the State

Government. Hence, it is not included in the revenue shown in the Petition. RInfra-D gets

collection charges of Rs. 45 per 100 consumers (for non-exempt consumers) for collection

of Electricity Duty and Tax. When the collection charges are remitted by the Government,

they are accounted for in the ‘Miscellaneous Charges’ head of Non-Tariff Income.


Collection of statutory Taxes, etc., do not form part of the revenue of the Licensee since it

is ultimately passed on to the State Government in accordance with the relevant statute.

2.15 UNIVERSAL SUPPLY OBLIGATION

Shri Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that RInfra-

D has violated the Universal Supply Obligation (USO) cast upon it under the erstwhile

Indian Electricity Act, 1910.


RInfra-D submitted that it has not violated its USO, and provides connections in

accordance with the Commission’s Supply Code and Standards of Performance

Regulations.


Shri Abrol’s point is not clear. Any specific complaint of violation by RInfra-D of the

provisions of the EA, 2003 or the Regulations may be taken up appropriately in the

relevant forum.

2.16 CONSUMER CATEGORIZATION AND TARIFF DESIGN

Shri Abrol of Bharatiya Udhami Evam Upbhokta Sangh enquired whether RInfra-D has

proposed any changes in the consumer categories and sub-categories in its Petition.


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RInfra-D submitted that consumer categorization and tariff design are a prerogative of the

Commission. RInfra-D has only proposed revision in tariff, without any change in the

present categories or sub-categories. The present tariff approvals are under the provisions

of MYT Regulations, 2011. RInfra has not sought any revision in the approved Schedule

of Charges for FY 2015-16.


The Commission's Tariff Philosophy and consumer categorisation approved for FY 2015-

16 are elaborated in Section 7 of this Order.

2.17 SUBMISSION OF CAG AUDITED ACCOUNTS

Shri. Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that RInfra-

D must submit Comptroller & Auditor General (CAG) audited data in its Petition.

Referring to Page 1168 of the Petition, he submitted that RInfra-D has not filed the

audited Balance Sheets for FY 2011-12 to FY 2014-15.


RInfra-D submitted that it has filed its MTPR Petition under the provisions of the MYT

Regulations, 2011 and has complied with their requirements. It has also gone through a

Technical Validation Session by the Commission. RInfra-D’s Accounts are audited by

Statutory Auditors, as required by the Companies Act. The Certificate at Page1168 refers

to the opening balance of NCDs of FY 2012-13 to FY 2014-15, certified by RInfra’s

Statutory Auditor. RInfra has submitted its audited annual accounts for FY 2012-13 and

FY 2013-14. Since FY 2014-15 was still ongoing when the Petition was filed, the

accounts for that year had not been finalized. For FY 2011-12, the audited accounts had

been filed with the True-up Petition in Case No. 124 of 2012.


In this Order, the Commission has undertaken final True-up for FY 2012-13 and FY

2013-14 based on the accounts and Reconciliation Statement submitted by RInfra-D, duly

certified by its Statutory Auditor.


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2.18 APPEALS BEFORE THE ATE

Shri. Sandeep Ohri submitted that the Commission should ask RInfra-D to bring out

clearly if any matters are pending before any Court (ATE and/or Supreme Court) which

may subsequently affect the tariff changes now proposed. Further, the items allowed by

the ATE should be allowed by the Commission only if they have actually been incurred.

Shri. Rakshpal Abrol of Bharatiya Udhami Evam Upbhokta Sangh submitted that RInfra-

D had challenged the Commission’s Orders in Case No. 9 of 2013 and Case No. 151 of

2011 in Appeal Nos. 278/2013 and. 246 /2012. These have been set aside by ATE on 28

and 29 November, 2014 along with Appeal Nos. 229/2012 and 36 of 2014 of TPC.

Shri. Abrol further submitted that the renewal of Distribution Licence of RInfra-D was

rejected by the ATE.


RInfra-D submitted that it has listed all matters pending before the ATE in Section 2.5 of

its Petition. RInfra-D has filed an Appeal (No. 274 of 2013) before the ATE against the

MYT Order in Case No. 9 of 2013, which was pending at the time of filing of the Petition.

Appeal Nos. 278 of 2013 and 36 of 2014 were filed by RInfra and TPC, respectively,

against the Commission’s Order dated 30 October, 2013 in Case No. 85 of 2013, and the

Judgment was issued on 29 November, 2014. Appeal Nos. 229 and 246 of 2012 were

filed by RInfra and TPC, respectively, against the Commission’s Order dated 28 August,

2012 in Case No. 151 of 2011.

RInfra was granted a Distribution Licence by the Commission on 11 August, 2011. That

was not rejected, as contended by Shri. Abrol.

RInfra-D has claimed the impact of Income Tax and Interest on Loans up to FY 2011-12

as per the methodology in the ATE Judgments. The Income Tax has been calculated

based on the regulatory profit before tax (PBT) method on stand-alone basis, as ruled by

ATE.

Similarly, interest on loans has been claimed for FY 2011-12, based on the ATE

Judgment, on the loans of regulatory business of RInfra-D and the methodology for

approving interest on long term loans as specified in the MYT Regulations.


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The Commission has considered the impact of the above ATE Judgments, as well as the

recent ATE Judgment dated 8 April, 2015 in Appeal Nos. 160 of 2012 & batch, which

includes the Appeal filed by RInfra-D against the MYT Order. The analysis of the impact

of the ATE Judgments is elaborated in Section 3 of this Order.

2.19 COMPLIANCE OF ORDERS OF ATE AND SUPREME COURT

Shri. Sandeep Ohri submitted that, before considering RInfra-D’s tariff proposals, the

Commission should first ensure that all existing Orders of the ATE and Supreme Court

are being followed by it. If any are not, RInfra-D should first be made to comply with

them before any tariff revision is considered.


RInfra-D submitted that it has followed the Orders and Judgments of all Courts, including

the ATE and the Supreme Court. RInfra-D complies with all directions of the

Commission and the ATE. Whenever any claim with respect to any ATE Judgment is

made, it is made entirely in accordance with the methodology/principle set out by the

ATE.


RInfra-D and the Commission are bound to implement the rulings of the ATE and

Supreme Court.

2.20 ROLE OF CONSUMER REPRESENTATIVES

Shri. Sandeep Ohri raised the issue of role of the Consumer Representatives in the TVS

process, and enquired whether the Petition that has been published for public comments

has the approval of the authorised Consumer Representatives. The Petition should not be

published for public comments in the absence of such approval.


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RInfra-D submitted that the extent of participation of Consumer Representatives during

ARR/APR/Tariff process is as facilitated by the Commission, and the actual participation

depends on the Representatives themselves.


The Consumer Representatives do not approve or adjudicate upon the Tariff Petition,

which is the function of the Commission. The Institutional Consumer Representatives

were invited to the TVS held by the Commission. The TVS is intended to weed out

discrepancies in the Petition and help ensure that adequate data, etc. are incorporated for

more informed public consultation and for consideration by Commission in the tariff

determination process. The proceedings subsequent to the TVS do not signify the

Commission’s approval or otherwise of RInfra-D’s proposals or contentions at the TVS,

or the concurrence of Consumer Representatives.

2.21 TARIFF FOR MUMBAI METRO ONE PVT. LTD.

Mumbai Metro One Private Ltd. (MMOPL) requested the Commission to consider it as an

EHV consumer as it is directly connected to the 220/33 kV GSS of RInfra-T without any

interface with RInfra-D’s distribution network. MMOPL should be considered as a 33 kV

consumer, and the distribution Wheeling Charges being levied on it should be waived.

Citing Section 62 (3) of the EA, 2003, MMOPL sought a distinct and separate electricity

tariff for Mumbai Metro Line-1, different from the Railways' tariff. The tariff should be

fixed at Cost to Serve, without any cross-subsidy or RAC. MMOPL referred to the

example of Delhi Metro Rail Corporation (DMRC), a similar infrastructure facility in

Delhi, which is in a separate category and electricity tariff.

MMOPL’s export of capacitive kVARh till February, 2015 is around 15.5 million

kVARh. That may be considered as co-generation of electricity, which needs to be

considered in the tariff determination, and RInfra-D should bill the net consumption only.

Referring to Regulation 70 of the MYT Regulations, MMOPL also submitted that it

should get compensation for the reactive energy injected since that enables RInfra-D to

improve the system Power Factor without providing any Power Factor compensation

arrangement.


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MMOPL should not be charged network costs and losses of the distribution system as it is

not connected to RInfra-D's distribution system. Its tariff should be determined using cost

of supply based on power purchase cost, Transmission Charges, and nominal cost of retail

business related to billing, etc.


RInfra-D submitted that the point of supply of MMOPL is at 33kV, which is operated and

maintained by RInfra-D. Hence, MMOPL is not an EHV customer. Accordingly, the

Wheeling Charges of RInfra-D are payable by MMOPL. The categorisation of MMOPL

into a separate tariff category, the method of tariff determination, including cross

subsidies, and manner of recovery of RAC, are the prerogative of the Commission.

At present there is no provision for netting off of energy fed back by the consumer to the

distribution system. However, the Commission may look into how to treat this and similar

situations that may arise in future.

RInfra-D provides Power Factor Incentive /penalty as per its approved Tariff Schedule, in

which there is no provision for compensation to any consumer for the reactive energy fed

back by it into the grid. Regulation 70 of the MERC MYT Regulations provides for

compensation for injection of Reactive Energy only in case of Generators, and that too if

made as per the directions of MSLDC. The case of a consumer injecting energy into the

transmission grid or distribution system is presently not envisaged.


The categorisation and tariff applicable to MMOPL are discussed in Section 7 of this

Order. The Commission has renamed the HT V: Railways category as HT V: Metro &

Monorail, and has reduced the cross-subsidy payable by this category in accordance with

the Tariff Policy.

The Power Factor incentive/disincentive is applicable to all eligible consumers, including

MMOPL. Regulation 70 of the MERC MYT Regulations specifies that Generating

Stations shall inject/absorb the reactive energy in to the grid as per the directions of State

Load Despatch Centre, and that Transmission System Users shall be subjected to the

specified incentive/disincentive for maintaining the reactive Energy Balance in the

transmission system, and is thus, not applicable to cases such as MMOPL’s.


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3 IMPACT OF ATE JUDGMENTS

In its MTR Petition, RInfra-D has submitted the impact of the ATE Judgments in Appeal

Nos. 138 and 139 of 2012, and the consequent amounts which it is entitled to recover,

with carrying cost, in FY 2015-16. However, during the present proceedings, the ATE has

issued its Judgment dated 8 April, 2015 on various Appeals of RInfra-G, RInfra-T and

RInfra-D (Nos. 160 of 2012; Nos. 211, 215, 3, 4, 57, 274, 164, 166 and 121 of 2013). The

Commission directed RInfra-D to submit the relevant issue-wise information on the

impact of this Judgment. Based on these submissions of RInfra-D and the rulings of the

ATE in its Judgments, the Commission has approved the amounts recoverable by RInfra-

D, as discussed in the subsequent paragraphs.

3.1 REASSESSMENT OF INCOME TAX FROM FY 2009-10 TO FY 2011-12

While approving its ARR for FY 2011-12 (Case No. 180 of 2011), the Commission had

approved the Income Tax for RInfra-D for FY 2009-10 and FY 2010-11 based on

segmental allocation of revenue and expenses. It had allocated the total Income Tax paid

by RInfra as a whole over the different segments in the proportion of taxable income

arrived at through segmental allocation. RInfra-D appealed (Appeal No. 160 of 2012)

against this method.

While truing up the ARR of RInfra-D for FY 2010-11 and FY 2011-12 (Case No. 124 of

2012), the Commission approved the Income Tax as “zero” based on the same approach,

and held that Income Tax would be allowed only after RInfra produces actual records of

taxable income on a segment-wise basis. RInfra-D appealed (Appeal No. 164 of 2013)

against this Order too, on similar grounds.

In its Petition, RInfra-D submitted that both the above Appeals were pending before the

ATE at the time of filing its MTPR Petition. It had, therefore, referred to the ATE

Judgments on Appeals filed by RInfra-G (No. 138 of 2012) and RInfra-T (No. 139 of

2012) on the same issue. In its Judgment dated 2 December, 2013, the ATE had and ruled

that Income Tax should be allowed by considering the PBT of each stand-alone regulated

business by considering the revenues and allowable expenses, as below:

“...58. The Tribunal in Appeal No. 251 of 2006 has laid down the ratio that the

Income Tax assessment of the licensee must be done on standalone basis. In

Appeal No. 173 of 2011 the Tribunal has provided the methodology for

assessing the Income Tax liability of the licensee. The State Commission did not


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follow these directions and got carried away with the observations that the utility

must not gain or lose on account of Income Tax made in the context of grossing up

of Income Tax. It simply allocated the actual tax paid by the RInfra-D, for the

company as a whole, in proportion to their respective book profit.”

15. The principle laid down by this Tribunal in Appeal No. 104 of 2012 would

apply to the present case as well. Hence, the State Commission is directed to

reassess the Income Tax liability of the RInfra-D in respect of FY 2009-10 and

2010-11 in terms of our above findings and pass the consequential orders.”

RInfra-D submitted that, consequently, it is entitled to recover Income Tax on stand-alone

basis for FY 2009-10 to FY 2011-12. RInfra-D added that the Commission, in its Counter

Affidavit in Appeal No. 274 of 2013 filed by RInfra-D against the MYT Order, had also

stated that it would consider the Income Tax issue at the time of MTPR, in accordance

with the ATE Judgment in Appeal Nos. 138 and 139 of 2012.

RInfra-D has claimed the difference between the Income Tax on stand-alone basis and

that allowed by the Commission in previous Orders for FY 2009-10 to FY 2011-12, to be

recovered with the ARR of FY 2015-16, as shown in the Table below:

Table 3-1: Reassessment of Income Tax from FY 2009-10 to FY 2011-12 (Rs. crore)

Particulars Approved by the

Commission

As per ATE

Judgment in Appeal

Nos. 138 & 139 of

2012

Difference

FY 2009-10

(Case No. 180 of 2011) (153.87) 0.00 153.87

FY 2010-11

(Case No. 180 of 2011) 53.87 0.00 (53.87)

FY 2011-12

(Case No. 124 of 2012) 0.00 0.00 0.00

Total

100.00

Commission's Analysis

During the present proceedings of this Order, the ATE issued its Judgment dated 8 April,

2015 on various Appeals of RInfra-G, RInfra-T and RInfra-D, including on Appeal No.

274 of 2013. The ATE has mentioned that its ruling on Income Tax issues in Appeal Nos.

138 and 139 of 2012 would be applicable to Appeal No. 274 of 2013 also.


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With its MTR Petition, RInfra-D submitted the calculation of Income Tax on PBT basis

and on stand-alone basis for the Distribution Business for FY 2012-13 and onwards.

Subsequently, as directed by the Commission, RInfra-D submitted the detailed

computation of Income Tax for all the years, i.e., FY 2009-10 to FY 2011-12. The

Commission has computed the allowable Income Tax for these 3 years considering its

submissions, and considering the approved revenue and expenses as approved in the True-

up Orders of the respective years. The Income Tax for all the three years works out to

zero. There is a cumulative loss in FY 2011-12, which needs to be carried forward to FY

2012-13. The computation of Income Tax submitted by RInfra-D and the Commission's

computation as well as loss to be carried forward to FY 2012-13, is as shown in the Table

below:

Table 3-2: Income Tax approved by the Commission for FY 2009-10, FY 2010-11 and

FY 2011-12 (Rs. Crore)

Particulars

FY 2009-10 FY 2010-11 FY 2011-12

RInfra-D

Petition

Approved

by the

Commission

RInfra-D

Petition

Approved

by the

Commission

RInfra-D

Petition

Approved by

the

Commission

Power Purchase

Expenses 4228.37 4228.37 3688.58 3688.58 3401.80 3401.80

O&M Expenses 626.21 626.21 705.99 705.99 734.01 734.01

Depreciation 125.14 125.14 136.66 136.66 129.73 129.73

Interest on Long

Term Loans 96.61 96.61 111.95 111.95 153.56 153.42

Int.on Wkg Cap. &

Int. on CSD 75.59 75.59 58.04 58.04 69.74 69.74

Provision for Bad

Debts 7.75 7.75 5.11 5.11 10.19 10.19

Transmission

Charges - intra State 183.73 183.73 214.13 214.13 241.27 241.27

Contribution to

Contingency Reserve 7.34 7.34 8.56 8.56 9.64 9.64

Total Expenditure -

A 5350.74 5350.74 4929.02 4929.02 4749.94 4749.80

Non-Tariff Income 128.72 128.72 178.41 178.41 226.95 226.95

Income from

Wheeling Charges 15.26 15.26 121.75 121.75 216.14 216.14

Income from other 0.00 0.00 0.15 0.15 0.25 0.25


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Particulars

FY 2009-10 FY 2010-11 FY 2011-12

RInfra-D

Petition

Approved

by the

Commission

RInfra-D

Petition

Approved

by the

Commission

RInfra-D

Petition

Approved by

the

Commission

businesses

Income on account

of CSS 0.00 0.00 0.00 0.00 49.74 49.74

Revenue from sale of

Electricity 5071.19 5071.19 4429.87 4429.87 4130.66 4130.66

Total Revenue – B 5215.17 5215.17 4730.18 4730.18 4623.74 4623.74

Profit Before Tax

(PBT) (B-A) (135.57) (135.57) (198.84) (198.84) (126.20) (126.06)

Add: Depreciation as

per ARR 125.14 125.14 136.66 136.66 129.73 129.73

Less: Depreciation as

per IT Act 191.62 191.62 214.07 214.07 224.46 224.46

Total Profit (202.05) (202.05) (276.25) (276.25) (220.93) (220.79)

Total PBT for the

year (202.05) (276.25) (220.79)

Loss carried forward

from previous years 0.00 (202.05) (478.30)

Net PBT for the year (202.05) (478.30) (699.09)

Income Tax Rate 33.99% 33.99% 32.445% 32.445% 32.445% 32.445%

Income Tax 0.00 0.00 0.00 0.00 0.00 0.00

Table 3-3: Impact on account of Income Tax from FY 2009-10 to FY 2011-12 (Rs.

crore)

Particulars

Originally

approved by the

Commission

RInfra-D

Petition

Approved

in this

Order

FY 2009-10 (153.87) 0.00 0.00

FY 2010-11 53.87 0.00 0.00

FY 2011-12 0.00 0.00 0.00

Total (100)

Thus, the additional impact to be allowed to RInfra-D on account of Income Tax of

previous years is Rs. 100 crore, as claimed by RInfra-D.


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3.2 INTEREST ON LONG-TERM LOANS FOR FY 2011-12

RInfra-D submitted that, in its ARR Petition for FY 2011-12 (Case No. 180 of 2011), it

had asked for approval of the interest expenses on existing normative loans considering an

interest rate of 11.50%, which reflected the prevailing cost of debt. However, the

Commission, while accepting the market reflective rate of 11.50% for new loans taken in

FY 2011-12, did not allow resetting of interest rate for the opening balance of loans as on

1 April, 2011.

RInfra-D appealed against this ruling (Appeal No. 160 of 2012), which was pending

decision at the time of filing of this MTPR Petition. RInfra-D has referred to the similar

issue of disallowing interest expenses on existing normative loans by considering

prevailing cost of debt in its Appeals Nos. 138 and 139 of 2012. On the basis of the ATE

Judgments on Appeals of RInfra-G and RInfra-T (Case No. 163 of 2011 and Case No.

167 of 2011, respectively), RInfra-D has claimed interest expenses on normative loans for

FY 2011-12 based on the prevailing cost of debt.

RInfra-D also submitted that, in FY 2011-12, it had raised Rs. 1000 crore by way of

NCD. It had also taken a loan of Rs. 350 crore from Central Bank of India against capital

expenditure incurred in the Mumbai Distribution Business. Accordingly, in the truing up

Petition for FY 2010-11 and FY 2011-12 (Case No. 124 of 2012), it had claimed interest

charges for FY 2011-12 considering the actual loans, which had replaced the opening

normative loans for FY 2011-12. However, the Commission did not allow the proposed

replacement of the normative loans. Instead, it had approved the interest expenses for FY

2011-12 by considering the opening normative loans of FY 2011-12 at interest rates

approved in earlier Orders. RInfra-D appealed against that Order before the ATE in

Appeal No. 164 of 2013, which was pending decision at the time of filing of its MTR

Petition.

Referring to the Judgment in Appeal Nos. 138 and 139 of 2012, wherein the ATE has

held that the cost of debt to be allowed to a Licensee should be reflective of prevailing

market cost of debt, RInfra-D submitted that, since it has already raised debt through the

issue of NCDs in FY 2011-12, its prevailing cost of debt during FY 2011-12 should be

considered as the actual weighted average interest rate of the NCDs itself.

RInfra-D submitted that it has considered the interest rate for all opening admitted loans

as well as loans corresponding to fresh capitalization in FY 2011-12 as 11.13%, which is

the weighted average interest rate of the term-loan and NCDs availed in FY 2011-12 from


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Central Bank of India, in line with the ATE Judgment. RInfra-D has accordingly

computed the interest expenses for FY 2011-12 as follows:

Table 3-4: Interest Expenses for FY 2011-12 as submitted by RInfra-D (Rs. crore)

Particulars Wires

Business Retail Supply

Business Total

Opening Balance 1,172.71 162.92 1,335.62

Addition of new loans 196.9 6.76 203.66

Repayment 106.73 23 129.73

Closing Balance 1,262.88 146.68 1,409.56

Interest 136.33 17.23 153.56

RInfra-D submitted the differential amount (additional impact vis-a-vis the Order of the

Commission) on account of interest on loans for FY 2011-12, as shown in the Table

below:

Table 3-5: Additional Interest Expenses for FY 2011-12 as submitted by RInfra-D (Rs.

crore)

Particulars Wires

Business

Retail Supply

Business Total

RInfra-D entitlement as per ATE Judgment 136.33 17.23 153.56

Allowed by the Commission in Order dated

4 April, 2013 110.86 14.71 125.56

Difference 25.47 2.52 27.99


In its Judgment dated 8 April, 2015, ATE has held that the Commission has to revise the

interest rate on the normative loans as on 1 April, 2011 in the light of its Judgment. The

interest on normative loans has to be compared with the revised interest rate on new loans

taken by RInfra, in compliance of the ATE Judgment in Appeal Nos. 138 and 139 of

2012. The ATE had ruled that there is no provision for replacement of outstanding

normative loan by actual loan. However, there is also no bar on replacing the outstanding

normative loan as on 1 April, 2011 by actual loan, provided the actual loan has been taken

for assets taken into service prior to 1 April, 2011 and RInfra-D can establish that no


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prejudice has been caused to consumers by arranging loans at better terms then the

prevailing market rates.

In view of the above, the Commission directed RInfra-D to submit the following with

regard to the replacement of opening balance of normative loans for FY 2011-12 with

actual loans:

a. To confirm whether loans taken by RInfra-D to replace the normative loans were

for assets created prior to 1 April, 2011:

RInfra-D submitted that it had availed a loan of Rs. 350 Crore from Central Bank of India

and had raised NCDs of Rs. 1000 Crore during FY 2011-12, for which assets of the

Distribution Business created before 1 April, 2011 were mortgaged. Details of assets

which were mortgaged against the loan of Rs. 350 Crore were provided in the Indenture

of Mortgage submitted by it. The details of assets on which charge was created for the

NCDs of Rs. 1000 Crore have been submitted by RInfra-D as part of the Debenture Trust

Deed. The utilisation of loans and NCDs, as submitted by RInfra-D, is given in the Table

below:

Table 3-6: Utilization of Loan and NCDs in RInfra-D’s ARR as submitted by RInfra-D

(Rs. crore)

Particulars Wires

Business

Retail

Supply

Business

Total

NCDs - Rs. 1000 Crore

Replacing the opening normative loans of FY 2011-12 878.02 121.98 1000.00

Loans pertaining to capitalization in FY 2011-12

Term Loan - Rs. 350 Crore

Replacing the opening normative loans of FY 2011- 12 294.69 40.94 350.00

Loans pertaining to capitalization in FY 2011-12 14.38

RInfra-D submitted that, in FY 2013-14, it had raised Rs. 500 Crore (from IDBI Bank)

and Rs. 650 Crore (from Axis Bank) by way of NCD for various purposes. The entire

NCD has been secured by a pari-passu charge on assets of RInfra across different

businesses. Certain fixed assets of the Mumbai Distribution Business are also securitized

against this NCD, of which RInfra-D submitted the details. Based on the book value of

assets of RInfra-D securitized, the part of NCD attributable to RInfra-D is Rs. 250 Crore.

RInfra-D further submitted that Rs. 500 Crore NCD from IDBI Bank has been secured by

a pari-passu charge on assets of the Mumbai Distribution Business as well as its wind


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mills outside Mumbai. Based on the book value of assets of RInfra-D securitized, the part

of NCD attributable to RInfra-D is Rs. 450 Crore. Thus, the total amount attributable to it

from these two NCDs is Rs. 700 Crore, which has been utilised for replacement of

opening normative debt as on 1 April, 2013.

b. To provide information on the market rates of loans prevailing at that time:

RInfra-D submitted that, in Case No. 167 of 2011 pertaining to RInfra-T’s ARR for FY

2011-12, the Commission had accepted RInfra-T’s computation of the interest rate on

normative loans in its Order dated 17 May, 2012, as below:

“The Commission has noted the submissions of RInfra-T for arriving at an interest

rate of 11.50% for the normative loan to be considered for FY 2011-12. The

effective rate of interest has been arrived by considering the average base rates of

few nationalised banks, i.e., State Bank of India, Punjab National Bank, Bank of

India & Bank of Baroda with addition of spread of 2.23% over and above the base

rate. The

Commission is of the view that the interest rate of 11.50% arrived from the

above method is reasonable.”

RInfra-D added that the Commission, in its Order in Case No. 180 of 2011 pertaining to

ARR of RInfra-D for FY 2011-12, had also allowed interest rate of 11.50% for loans

corresponding to capitalization in FY 2011-12, by considering the loans as normative.

RInfra-D has followed the same methodology for determining the market reflective rate,

wherein it has considered the Base rates of eight nationalized banks and added the actual

spread of Central Bank of India to determine the market reflective interest rates. Further,

RInfra-D has considered the actual spread of Central Bank of India, as the RInfra-D loan

portfolio includes only one term loan from that Bank and the others are NCDs, in which

case the interest rates do not vary.

c. To confirm that it has taken loans at better terms than the prevailing market

rates:

RInfra-D submitted the comparison of market reflective rate of interest and the weighted

average rate of interest claimed in the Petition based on actual loan and NCDs for FY

2012-13 to FY 2014-15, as shown in the Table below:


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Table 3-7: Comparison of Market Rate and Interest Rate claimed by RInfra-D, as

submitted by RInfra-D (Rs. crore)

Year Interest Rate claimed

in Petition

Market Reflective

Rate

FY 2012-13 10.95% 11.44%

FY 2013-14 10.77% 11.26%

FY 2014-15 10.70% 11.30%

The Commission has accepted RInfra-D's detailed submissions in this regard, and

considered the actual loans taken by it for replacement of the normative loans of previous

years, in accordance with the ATE Judgment dated 8 April, 2015.

Accordingly, the interest on long-term loans for FY 2011-12 approved by the

Commission is shown in the Table below:

Table 3-8: Interest on Long-term Loans for FY 2011-12 approved by the Commission

(Rs. crore)

Particulars

Approved

in Order

in Case

No. 124 of

2012

RInfra-D

Petition

Approved

in this

Order

Additional

Impact -

RInfra-D

Petition

Additional

Impact –

Approved

in this

Order

Wires Business

Opening Balance 1172.71 1172.71 1172.71

Additions of new loans 196.90 196.90 196.90

Repayments 106.73 106.73 106.73

Closing Balance 1262.88 1262.88 1262.88

Interest Rate 11.13% 11.13%

Interest 110.86 136.33 135.57 25.47 24.71

Retail Supply Business

Opening Balance 162.91 162.92 162.91


Repayments 11.73 23.00 11.73

Closing Balance 157.94 146.68 157.94

Interest Rate 11.13% 11.13%

Interest 14.71 17.23 17.86 2.52 3.15

Total


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Particulars

Approved

in Order

in Case

No. 124 of

2012

RInfra-D

Petition

Approved

in this

Order

Additional

Impact -

RInfra-D

Petition

Additional

Impact –

Approved

in this

Order

Opening Balance 1335.62 1335.63 1335.62


Repayments 118.46 129.73 118.46

Closing Balance 1420.82 1409.56 1420.82

Interest 125.57 153.56 153.42 27.99 27.85

3.3 INTEREST ON DELAYED PAYMENTS IN FY 2008-09

RInfra-D submitted that the Commission, in its Order dated 29 July, 2011 in Case No. 72

of 2010, while truing up its ARR for FY 2008-09, had double-counted the interest on

delayed payment of Rs. 6.68 crore in the Non-Tariff Income. On RInfra-D’s appeal, ATE

issued its Judgment on 14 November, 2013. During those proceedings, the Commission

had admitted that the amount has to be restated and added back to the ARR to undo the

effect of double-counting. The ATE Judgment states that:

“75. It is pointed out by the RInfra-D that the State Commission in its Affidavit in

reply has admitted that such amounts have to be restated and added back to the

ARRs of the respective years to undo the effect of double counting and the RInfra-

D may pray for the same while submitting its Petition for the next year and in that

event, the State Commission will make the necessary adjustments.

76. On the basis of the reply, the learned Counsel for the State Commission has

endorsed the statement found available in the reply made by the State

Commission.

77. In view of the reply of the State Commission, we are of the view that this issue

no longer survives.”

Based on the above, RInfra-D has claimed Rs. 6.68 crore on account of interest on

delayed payments for FY 2008-09. RInfra-D also submitted that it missed the opportunity

to claim this amount in its MYT Petition, which would have enabled it to recover this in

FY 2013-14 itself. Hence, RInfra-D has claimed carrying cost on this amount only up to

FY 2013-14 and not up to FY 2015-16.


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The Commission has accepted the above submission of RInfra-D, and accordingly

allowed Rs. 6.68 crore on account of interest on delayed payment for FY 2008-09.

3.4 IMPACT, WITH CARRYING COST

RInfra-D submitted that, in its Judgment in Appeal Nos. 202 & 203 of 2010 dated 13

September, 2012, the ATE has ruled as under:

“42. ..However, we would like to add that the RInfra-D is entitled to carrying cost

on its claim of legitimate expenditure if the expenditure is:

(a) Accepted but recovery is deferred, e.g. interest on regulatory assets;

(b) Claim not approved within a reasonable time; and

(c) Disallowed by the State Commission but subsequently allowed by the

superior authority.”

The claims of RInfra-D for carrying cost on each component of the additional impact,

considering the above ATE Judgments, are set out below.

RInfra-D has claimed interest on delayed payment pertaining to FY 2008-09, as

calculated up to FY 2013-14, by considering the SBI PLR as on 1 April of each of the

financial years. Its computation of interest on delayed payment along with carrying cost,

claimed in the ARR for FY 2015-16, is as under:

Table 3-9: Interest on Delayed Payment with Carrying Cost as submitted by RInfra-D

(Rs. crore)

Particulars FY 2008-

09

FY 2009-

10

FY 2010-

11

FY 2011-

12

FY 2012-

13

FY 2013-

14

SBI PLR 12.75% 13.00% 11.75% 14.75% 14.75% 14.45%

Opening Balance 0.00 7.11 8.03 8.97 10.30 11.82

Addition 6.68 0.00 0.00 0.00 0.00 0.00

Carrying Cost on

opening 0.00 0.92 0.94 1.32 1.52 0.85

Carrying Cost on

addition 0.43 0.00 0.00 0.00 0.00 0.00

Closing Balance 7.11 8.03 8.97 10.30 11.82 12.67


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As regards the other components of additional impact, RInfra-D submitted that, as the

recovery of these expenses can only happen during FY 2015-16, carrying cost has been

computed till the middle of the year, considering uniform distribution of carrying cost

during the year. Its computation of the total impact due to Income Tax of FY 2009-10 to

FY 2011-12 and due to interest on loans for FY 2011-12 along with carrying cost up to

FY 2015-16, is as under:

Table 3-10: Income Tax and Interest on Loans with Carrying Cost as submitted by

RInfra-D (Rs. crore)

Particulars FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

SBI PLR 13.00% 11.75% 14.75% 14.75% 14.45% 14.75% 14.75%

Opening Balance 0 163.87 126.09 174.75 200.52 229.50 263.35

Addition 153.87 (53.87) 27.99 0.00 0.00 0.00 0.00

Carrying Cost on

opening 0.00 19.25 18.60 25.78 28.98 33.85 19.42

Carrying Cost on

addition 10.00 (3.16) 2.06 0.00 0.00 0.00 0.00

Closing Balance 163.87 126.09 174.75 200.52 229.50 263.35 282.77


The ATE has laid down the principle of carrying cost in its Judgment dated February 15,

2011 in Appeal No. 173 of 2009, quoted earlier in this Section. The Commission had

allowed expenses or revenue based on certain principles, in respect of which the ATE has

now enunciated the methodology or principle to be adopted in order to assess the claims

of such expenses and revenue. Since the revised claim towards such items have been

worked out on the basis of the methodology or principles enunciated by ATE

subsequently, and there was no stay on the Commission's original Order, the Commission

has not considered the carrying cost on such claims since such amounts were not

disallowed earlier but had been assessed based on different principles. Hence, no carrying

cost on Income Tax and Interest on Loans for previous years has been considered by the

Commission as the methodology for calculation of Income Tax on PBT basis and for

determination of interest rate on replacement of normative loans has been enunciated by

ATE subsequently.

For computing the impact of carrying cost on Delayed Payment, the Commission has

considered the weighted average of SBI PLR for the corresponding years. The

Commission observes that RInfra-D has compounded the carrying cost over the years by


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adding the carrying cost of a particular year to the closing balance of actual amount

outstanding, and computing carrying cost on that higher amount. The Commission is of

the view that RInfra-D is entitled to carrying cost only on the basis of simple rather than

compound interest, for the following reasons:

a) The carrying cost is allowed to compensate for the delay in recovery of the principal

amount. In other words, it is akin to a loan having to be taken by the Licensee in order

to meet its expenses. On such loan, it is entitled to interest computed on simple

interest basis since the principal amount is being allowed separately.

b) A parallel that can be drawn is in the case of interest on delayed payment levied on

consumers in case of delayed payment, where the consumer is required to pay only

simple interest on the outstanding amount till it is cleared. The interest amount is,

thus, not added to the principal outstanding amount in case of delayed payment by

consumers, thereby ensuring that there is no compounding of the interest.

Accordingly, the Commission has approved the impact of Carrying Cost as shown in the

Table below:

Table 3-11: Carrying Cost on Delayed Payments approved by the Commission (Rs.

crore)

Particulars FY

2008-09

FY

2009-10

FY

2010-11

FY

2011- 12

FY 2012

13

FY

2013-14

SBI PLR 12.79% 11.87% 12.26% 14.40% 14.61% 14.58%

Opening Balance 0.00 6.68 6.68 6.68 6.68 6.68

Addition 6.68 0.00 0.00 0.00 0.00 0.00

Carrying cost on Opening

Balance 0.00 0.79 0.82 0.96 0.98 0.49

Carrying cost on

Addition 0.43 0.00 0.00 0.00 0.00 0.00

Closing Balance 6.68 6.68 6.68 6.68 6.68 6.68

Total Carrying Cost

4.46

3.5 SUMMARY OF RECOVERABLE AMOUNTS

RInfra-D has submitted that the total impact due to Income Tax for FY 2009-10 to FY

2011-12, interest on loans for FY 2011-12 and interest on delayed payments pertaining to


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FY 2008-09, along with carrying cost, works out to Rs. 295.42 crore (i.e. Rs. 282.77 crore

+ Rs. 12.67 crore).


The Commission has allocated the impact of the ATE Judgment on Income Tax for FY

2009-10 and FY 2010-11 to the Wires Business and Retail Business in the same ratio as

approved in its Order dated 15 June, 2012 in Case No. 180 of 2011.The Commission has

computed the interest on loans for FY 2011-12 separately for the Wires Business and

Retail Supply Business, and the interest on delayed payments for FY 2008-09 has been

computed only for the Retail Supply Business.

Accordingly, the Commission has approved the total impact of ATE Judgments along

with the carrying cost, as applicable, as shown in the Table below:

Table 3-12: Impact of ATE along with Carrying Cost approved by the Commission (Rs.

crore)

Particulars

RInfra-D Petition Approved in this Order

Total Wires

Business

Retail

Supply

Business

Total Wires

Business

Retail

Supply

Business

Income Tax for FY 2009-10 153.87 21.06 132.80 153.87 21.06 132.80

Income Tax for FY 2010-11 -53.87 -7.70 -46.17 -53.87 -7.70 -46.17

Interest on loans for FY 2011-12 27.99 25.47 2.52 27.85 24.71 3.15

Interest on delayed payments for

FY 2008-09 6.68 0.00 6.68 6.68 0.00 6.68

Total 134.67 38.83 95.83 134.53 38.07 96.46

Carrying Cost 160.75 36.83 123.93 4.46 0.00 4.46

Total ATE Impact with

Carrying Cost 295.41 75.66 219.76 139.00 38.07 100.92

3.6 OTHER ISSUES AS PER ATE’S JUDGMENT DATED 8 APRIL, 2015

The ATE Judgment dated 8 April, 2015 in Appeal Nos. 160 of 2012; and 211, 215, 3, 4,

57, 274, 164, 166 and 121 of 2013 sets out principles on several other issues, which the

Commission has duly considered and applied in this Order. These have been discussed in

the relevant subsequent Sections of this Order. These issues are summarised in the

following paragraphs


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3.6.1 DISALLOWANCE OF POWER PURCHASE COST ON ACCOUNT OF

BANKING

The ATE has held that, to demonstrate prudency of banking arrangements, RInfra-D must

submit a cost-benefit analysis, considering avoidable power purchase cost at the time of

forward banking, and saving accrued at the time of return banking. RInfra-D has to

exhibit prudent behaviour while selecting short-term bilateral Round the Clock (RTC)

contracts for the quantum, purchase rates, minimum off-take commitments, and penalty

provisions. The ATE has upheld the Commission’s view that, when surplus power was

being banked, the actual power purchase through the same firm contracts was higher than

the respective minimum off-take commitments or off-take required to meet the demand;

and that RInfra-D had purchased power from Day Ahead contracts which had no

minimum off-take commitments, which means that it had undertaken avoidable power

purchase when banking was active. The ATE also held that power banking was not an

expenditure which had been previously accepted but for which recovery was deferred, and

that the Distribution Licensee must negotiate for a competitive ‘return ratio’ and other

transaction costs while resorting to power banking, and avoid costlier purchases while

surplus power is banked.

Accordingly, the Commission directed RInfra-D to submit the necessary information, and

has approved the expenses in line with the above ATE Judgment, as discussed in

subsequent Sections of this Order.

3.6.2 DISALLOWANCE OF SOLAR POWER PURCHASE COST OVER AND

ABOVE RPO TARGET

The ATE has upheld the Commission’s decision not to allow the power purchase cost for

Solar energy purchased over and above the Solar Renewable Purchase Obligation (RPO)

in the ARR. The ATE has held that the energy to be procured to fulfil RPO is proposed on

the basis of the estimated consumption in the ARR approved by the Commission. If the

actual energy consumption is less and the Distribution Licensee has procured RPO

corresponding to the estimated consumption, then the power purchase cost of excess

energy over the RPO requirement at actual energy consumption has to be allowed. The

ATE also held that if RInfra-D wants to discharge Dahanu Solar, a group company of

RInfra, of part of the quantum contracted for in the PPA so that it can sell the balance

power to other Obligated Entities or through Renewable Energy Certificates (RECs),

subject to the Regulations in future, which may be permitted.


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The Commission has treated the Solar power purchase cost over and above RPO target

accordingly, as discussed in subsequent Sections.

3.6.3 POWER PURCHASE COST IN RESPECT OF DAY-AHEAD BILATERAL

TRANSACTION

The ATE has upheld the Commission’s ruling disallowing certain bilateral day-ahead

transactions at a price higher than the maximum Power Exchange price. Therefore, the

Commission sought justification for procurement of power under bilateral day-ahead

transactions from RInfra-D, and has approved the expenses after prudence check, as

discussed in subsequent Sections.

3.6.4 RENTAL INCOME FROM SANTA CRUZ LAND

In Order dated 15 June, 2012 in Case No. 180 of 2011, the Commission had determined a

sum of Rs. 256.06 crore to be treated as rental income from the Santa Cruz, Mumbai land

of RInfra-D to be considered as Non-Tariff Income.

In its Judgment dated 8 April, 2015 on RInfra-D’s Appeal, the ATE has laid down the

methodology for determining the notional rent from the Santa Cruz land and property

owned by RInfra-D. It has ruled that the rental income received/receivable from other

unregulated businesses on the Distribution Licensee’s asset is to be treated as ‘Income

from Other Business’; and that, hence, the rental income from the Santa Cruz land and

property of RInfra-D has to be treated as Income from Other Business rather than Non-

Tariff Income.

Accordingly, the Commission directed RInfra-D to confirm that the Santa Cruz property

has not been constructed out of the funds of the regulated business; that it has not received

any rental income for it from other regulated and/or non-regulated businesses; and to

submit computation of notional rental income from the property from FY 2003-04 to FY

2013-14, separately for the regulated and unregulated business, and in accordance with

the ATE methodology in its Judgment dated 8 April, 2015.

RInfra-D submitted that the total area of the plot at Santa Cruz is 15,198.9 sq. M, and that

it is an asset of the Distribution Business for regulatory purposes. At the relevant time,

there were five buildings on the land, of which one was also used as the Corporate Office

of RInfra. The Corporate Office building was constructed in 1999 through Corporate

funds. A major portion was permitted to be used for Distribution related activities of

RInfra-D. The four other buildings were exclusively used for the Distribution Business.


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RInfra-D further submitted that the Corporate Office was not constructed out of funds of

the regulated business and was, therefore, not included in the asset base of the

Distribution Business. RInfra-D also submitted details of the land foot-print of the

Corporate Office building and the proportionate use of the buildings by different

departments.

RInfra-D submitted that its computation is based on the principle for determination of

rental income set out by ATE. Accordingly, the notional rent to be considered by the

Commission as Income from Other Business works out to only Rs 0.128 crore, as

compared to the Non-Tariff Income of Rs. 256 crore considered by the Commission in the

earlier Order.

RInfra-D submitted that the Commission, in Order dated 15 June, 2012 in Case No. 180

of 2011, had considered Non-Tariff Income of Rs. 199.93 Crore, Rs.27.38 Crore and Rs.

28.75 Crore for FY 2009-10, FY 2010-11 and FY 2011-12, respectively, and computed

the revenue gap considering that income for the respective years. In view of the ATE

Judgment and applicable rent as computed above, the amounts of Rs. 199.84 Crore, Rs.

27.36 Crore and Rs. 28.73 Crore have to be reinstated to the ARRs of those 3 years, from

which they had been deducted. Hence, in order to recover these amounts from the tariff in

FY 2015-16, RInfra-D submitted the carrying cost from the middle of the respective years

of deduction to the middle of FY 2015-16. The total amount claimed by RInfra-D,

inclusive of carrying cost, for addition to the ARR of FY2015 -16 works out to Rs 545.34

Crore.

It is observed that the difference in the amount considered by the Commission as rental

income and that computed by RInfra-D is very large. The rental income considered by the

Commission in the MYT Order is around 2000 times higher than estimated by RInfra-D.

Hence, and considering the magnitude involved, the Commission is of the view that

further due diligence needs to be undertaken and the documents and computations

submitted by RInfra-D need to be scrutinized very carefully taking any view on the

matter. The ATE has also given time of three months for the implementation of its

Judgment dated April 8, 2015. Hence, for the purposes of this Order, the Commission has

not revised the amounts already considered for the previous years, and has also not

considered any amount against rental income from the Santa Cruz land for FY 2013-14

and onwards.


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3.6.5 RENTAL INCOME FROM DEVIDAS LANE OFFICE CONSIDERED AS

NON-TARIFF INCOME

In its Judgment dated 8 April, 2015, the ATE has held that the rental income from other

regulated business of RInfra has to be treated as Non-Tariff income. Thus, the portion of

rent recovered by RInfra-D from RInfra-T, which is ultimately passed on to the

consumers through the intra-State Transmission Charges, has to be treated as Non-Tariff

income, since it is derived from other regulated business of RInfra. However, the rental

income from accommodation in the Devidas Lane office given to RInfra’s Corporate

office, i.e., for other businesses of RInfra, should be considered as Income from Other

Business; and only one-third of such rental income should be deducted from the ARR in

determining the Wheeling Charges of the Wires Business of RInfra-D.

The Commission has accordingly treated the Rental Income from Devidas Lane Office, as

discussed in the subsequent Sections.


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4 TRUING UP OF FY 2012-13

4.1 OVERALL APPROACH

RInfra-D submitted that it has filed its MTR Petition for final truing up of expenditure and

revenue for FY 2012-13 based on actual expenditure and revenue as per the audited

accounts, in line with the directions in the MYT Order in Case No. 9 of 2013 wherein the

Commission had approved the ARR of RInfra-D for the MYT Control Period from FY

2012-13 to FY 2015-16.

RInfra-D has requested the Commission to separately true up the ARR of Supply

Business and Wires Business so that all consumers of its Wires Business (including

change-over consumers) proportionately share in the Revenue Gap of the Wires Business.

RInfra-D has submitted that otherwise consumers of its Supply Business alone would be

burdened with the entire Revenue Gap, which is neither fair nor justified.


The MYT Order was issued on 22 August, 2013, i.e., after FY 2012-13 was over. In that

Order, the Commission approved separate ARRs for the Wires Business and Supply

Business for each year from FY 2012-13 to FY 2015-16. However, since, FY 2012-13

was already over, the Commission determined separate Wheeling Charges for the Wires

Business from FY 2013-14 onwards.

Hence, the Commission has undertaken separate truing up and provisional truing up for

the Wires Business and Supply Business for FY 2013-14 and FY 2014-15, respectively.

However, for FY 2012-13, such separate truing up cannot be done, since the MYT Order

came into effect after FY 2012-13 was over and the actual revenue from Wheeling

Charges for FY 2012-13 is not separately available. Accordingly, the Commission has

approved the combined Revenue Gap/(Surplus) for FY 2012-13 for the Wires and Supply

Business, although truing up for all the components of expenses has been done separately

for the two Businesses. The combined Revenue Gap for FY 2012-13 has been considered

as the Gap for the Supply Business for FY 2012-13 for computing the cumulative

Revenue Gap.

In this Section, the Commission has analysed the elements of actual expenditure and

revenue of RInfra-D for FY 2012-13 and, after prudence check, has undertaken the truing

up of expenses and revenue.


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4.2 SALES FOR FY 2012-13

RInfra-D submitted that it sold 6,207.18 MU to its own consumers in FY 2012-13. The

Commission had approved sales of 6,192.31 MU in the MYT Order, based on RInfra-D’s

reply dated 28 May, 2013 to the Commission’s query regarding actual sales in that year.

However, in that reply, the figures of sales to some consumer categories were on

provisional basis. RInfra-D has submitted the final category-wise breakup of actual sales

in FY 2012-13 in its Petition.

RInfra-D submitted that the energy sold by TPC-D to change-over consumers in FY

2012-13 was 3,114.37 MU (metered), as against 3,328.14 MU (grossed up) approved by

the Commission in the MYT Order; and that the approved change-over sales (metered) by

grossing down 3,328.14 MU works out to 3,090.69 MU. RInfra-D has submitted the

category-wise comparison of own and change-over sales with that approved in the MYT

Order as in the Table below:

Table 4-1: Own Sales and Change-over Sales in FY 2012-13 as submitted by RInfra-D

(MU)

Consumer Category

Own Sales Change-over Sales

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

LT I- Below Poverty Line 0.04 0.04

942.45

0.00

LT-I Residential (Single Phase)

0-100 1830.72 1830.77 234.98

101-300 1062.35 1062.36 169.99

301-500 131.00 131.00 43.06

501 and above 43.94 43.94 40.92

LT-I Residential Three Phase

0-100 198.08 198.14 86.14

101-300 283.77 283.89 130.32

301-500 132.94 133.01 71.06

501 and above 215.19 215.19 176.86

LT II (A)- 0-20 kW 1255.41 1258.29

915.90

416.55

LT II (B) - 20-50 kW 129.94 131.77 109.77

LT II (C) - above 50 kW 210.63 220.17 388.16

LT III - LT Industry up to 20 kW 118.86 118.86 369.24

62.44

LT IV - LT Industry above 20 kW 179.16 179.16 310.37

LT-V : LT- Advertisements and 3.17 3.17 0.16 0.17


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Consumer Category


MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Hoardings

LT VI: LT -Street Lights 56.38 56.38 0.00 0.00

LT-VII (A): LT -Temporary Supply

Religious 1.66 1.66 0.00 0.00

LT-VII (B): LT -Temporary Supply

Others 91.03 91.36 0.80 0.79

LT VIII: LT - Crematorium & Burial

Grounds 0.83 0.83 0.00 0.32

LT IX: LT –Agriculture 0.05 0.05 0.00 0.00

LT X: LT -Public Service 0.00 0.00 0.00 0.00

Total- LT Sales 5945.15 5960.02 2228.55 2241.90

HT I: HT-Industry 83.31 83.31 281.66 278.96

HTII : HT- Commercial 136.83 136.83 563.51 576.70

HT III: HT-Group Housing Society 23.05 23.05 16.79 16.64

HTIV : HT - Temporary Supply 3.97 3.97 0.18 0.17

HT V – Railways 0.00 0.00 0.00 0.00

HT VI - Public Service 0.00 0.00 0.00 0.00

Total - HT Sales 247.16 247.16 862.13 872.47

Total 6192.32 6207.18 3090.69 3114.37

RInfra-D has referred to the ATE Judgment in Appeal No. 85 of 2012, which held that the

assessed sales should be considered for determination of Distribution Loss. RInfra-D has

submitted that the assessed sales in FY 2012-13 for its own consumers were 13.3 MU,

which it has accordingly included in the actual sales of own consumers.

RInfra-D has included revenue from such assessment in Non-Tariff Income, instead of

sales revenue, in accordance with the direction of the Commission in Case No. 126 of

2011.


The Commission has accepted RInfra-D’s submission, and has approved the actual sales

for FY 2012-13 as submitted by it, as follows:


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Table 4-2: Own Sales and Change-over Sales in FY 2012-13 approved by the

Commission (MU)

Particulars MYT Order RInfra-D Petition Approved in this Order

Own Sales 6192.32 6207.18 6207.18

Change-over Sales 3090.69 3114.37 3114.37

Total 9283.01 9321.55 9321.55

4.3 DEMAND SIDE MANAGEMENT MEASURES

RInfra-D submitted that it has continued its efforts to reduce the system demand and

energy consumption through Demand Side Management (DSM) initiatives. It carries out

detailed Load Research to design DSM programmes for different consumer categories.

DSM schemes are executed only after approval by the Commission. RInfra-D submitted

the total energy savings in FY 2012-13 from DSM activities as shown in the Table below:

Table 4-3: Energy Savings due to DSM Programmes as submitted by RInfra-D (MU)

Programme Consumer Category FY 2012-13

T5 FTL Residential 0.179

Five Star Fans-Ph I Residential (< 500 units ) 0.494

Five Star Split A/C-Ph I LT -II <20 kW 0.052

Solar PV Plant at MIDC LT-II <20 kW 0.0025

Five Star Refrigerators Residential 0.00

Five Star Fans -Ph II Residential (< 500 units ) 0.18

Five Star Split A/C-Ph II LT-II <20 kW and LT-III (<20kW) 0.00

Automation in Ac All Industrial & Commercial 0.00

Total

0.90


The sales figures submitted by RInfra-D for FY 2012-13 are inclusive of the impact of the

DSM activities. As the Commission has accepted the actual sales for FY 2012-13 as

submitted by RInfra-D, the reduction in sales due to DSM measures is also factored in.

4.4 DISTRIBUTION LOSSES AND ENERGY BALANCE

RInfra-D submitted that its Distribution Loss in FY 2012-13 was 9.49%, as against 9.46%

approved in the MYT Order. The process of energy balancing under the Final Balancing

& Settlement Mechanism (FBSM) has been held up on account of operational difficulties


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associated with FBSM, due to which it has not been possible to provide data of Energy

Balance from the MSLDC statements.

In the Petition, RInfra-D has considered the data available with it regarding energy input

into the distribution system, energy purchased by it at G<>T interface and Transmission

Losses. RInfra-D submitted that, after MSLDC finalises the energy balancing and

accounting statements for FY 2012-13, some of this data could undergo change.

Table 4-4: Distribution Loss for FY 2012-13 as submitted by RInfra-D

Particulars MYT Order RInfra-D Petition

Energy Sold by RInfra-D (MU) 6192.32 6207.18

Consumption by Change-over consumers (MU) 3090.69 3114.37

Consumption by OA consumers (MU) 0.00 13.58

Total 9283.01 9335.13

Distribution Loss (%) 9.46% 9.49%

Energy Input at T<>D (MU) 10252.94 10313.36

RInfra-D’s distribution system consists of retail supply consumers who are supplied by it

as well as by TPC-D. During FY 2012-13, the consumer and consumption mix of change-

over consumers as submitted by RInfra-D was as shown below:

Table 4-5: Own Sales & Change-over Sales comparison in FY 2012-13 as submitted by

RInfra-D

Particulars Own Sales Change-over Sales

No. of Consumers Sales (MU) No. of Consumers Sales (MU)

LT-Residential 2136599 3898.32 291801 953.33

LT-Others 405855 2061.70 42590 1288.57

HT 184 247.16 368 872.47

Total 2542638 6207.18 334759 3114.37

% of Total 88% 67% 12% 33%

RInfra-D submitted that, as seen from the above Table, 1/3rd of the total energy sold on

its system is not supplied by it. Hence, RInfra-D should not be made accountable for

much of the commercial losses in such energy supply to the extent that does not own the

energy. Since a significant proportion of energy is supplied by TPC-D, which largely uses

its own energy meters for such supply, the accountability for variation in losses should not

rest solely with RInfra-D.


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RInfra-D submitted that it has little control on the metering or billing issues of TPC-D.

RInfra-D has observed various instances of defects such as battery failure, blank display,

shifting of billing date, etc., in the meters installed by TPC-D for change-over consumers,

and has been coordinating with it for replacement of defective meters. RInfra-D had

highlighted the defects and abnormalities in TPC-D meters to the Commission in Case

No. 151 of 2011. It has pointed out anomalies and defects in of meters from two lots

supplied by L&T and Secure Meters (TAT series). In respect of the L&T meters, lower

recording due to lower current rating still continues to cause commercial losses to RInfra-

D, even though defective components have been replaced.

RInfra-D submitted that the estimated energy loss due to under-recording by defective

meters was 7.64 MU in FY 2012-13.

If metering of change-over consumers was done by RInfra-D, it would have had much

more control on the meter defects and consequent loss or under-recording of energy.

RInfra-D has submitted that, even though meters of change-over consumers are installed

and monitored by TPC-D, yet the latter gets a guaranteed Distribution Loss equal to

technical loss only. The entire commercial loss is passed on to RInfra-D consumers, who

have to bear additional power purchase costs and also suffer a penalty if total losses

increase due to the increase in commercial losses. RInfra-D could be made accountable

for commercial losses in case of change-over consumers, in addition to its own

consumers, only when all meters installed at change-over consumer premises are owned

and monitored by it.

RInfra-D referred to its contentions in Case No. 50 of 2009, wherein it had suggested that

the metering responsibility should always be with the Wires Licensee, who is responsible

for controlling the Distribution Losses. RInfra-D also referred to the Distribution Licence

Regulations (which requires the Distribution Licensee (Wire Licensee) to undertake

metering for OA consumers), and the Electricity (Amendment) Bill, 2014 in which

Carriage and Content separation is proposed through separation of "Distribution" and

"Supply" functions of the existing Distribution Licensees. RInfra-D requested the

Commission to review its metering philosophy and related activities by Supply Licensees

stipulated in Case 50 of 2009, from the next Control Period onwards.

Considering the Commission’s directions in Case No. 180 of 2011, RInfra-D had

undertaken a study of technical losses in its system through the Administrative Staff

College of India (ASCI) and had submitted the Report on 29 May, 2013. However, the

Commission did not consider the findings of the Report in the MYT Order as it was not

available for public consultation during those proceedings. In line with the directions to


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submit the Report on study at the time of the MTR, RInfra-D has submitted it with this

Petition.

According to the Report, the losses for wheeling for HT and LT consumers were 1.88%

and 9.90%, respectively, for FY 2011-12. However, since FY 2012-13 is already over and

the pool settlement for FY 2012-13 has been carried out by MSLDC considering a loss of

1.94% and 9.90% for HT and LT change-over consumers, respectively, for truing up of

FY 2012-13 RInfra-D, has taken those figures for HT and LT change-over consumers for

the Energy Balance for FY 2012-13.

RInfra-D has submitted the Energy Balance for FY 2012-13 based on the actual

Distribution Losses of 9.49%, actual metered own sales, actual metered change-over

sales, and wheeling losses of 1.94% and 9.00% for HT and LT change-over consumers,

respectively, as shown in the Table below:

Table 4-6: Energy Balance for FY 2012-13 as submitted by RInfra-D

Particulars UoM MYT

Order

RInfra-D

Petition

Migrated HT Sales + OA consumption MU 862.13 886.05

HT Loss % 1.94% 1.94%

HT grossed up energy at T-D boundary MU 879.19 903.58

Migrated LT sale MU 2228.55 2241.90

LT loss % 9.00% 9.00%

LT grossed up energy at T-D boundary MU 2448.96 2463.62

Total T-D energy attributable to TPC-D sale & OA

consumption MU 3328.15 3367.20

Net T-D energy attributable to RInfra-D sale MU 6924.79 6946.15

InSTS losses % % 5.59% 5.18%

Total requirement of RInfra-D at G-T MU 7334.57 7325.95

Note: The InSTS loss for FY 2012-13 was not approved by the Commission in RInfra- D’s MYT

Order. RInfra-D has mentioned the derived InSTS loss of FY 2012-13 in the “Order” column

based on the approved sales and power procurement for FY 2012-13.

RInfra-D submitted that the intra-State Transmission Loss for FY 2012-13 works out to

5.18%, as against 4.17% approved by the Commission in the MYT Order. The

finalization of FBSM statements by MSLDC has been held up due to technical issues

since July, 2012 and, therefore, it has considered the energy quantum added by RInfra-D

into the State Imbalance Pool as per the provisional FBSM statements from April, 2012 to


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March, 2013. Since the energy quantum incremented by RInfra-D is not final, the exact

Transmission Loss could not be arrived at.

RInfra-D submitted that it has considered actual energy billed to it by the generators and

pool increment as per the FBSM provisional bills for truing up, because the revenue

received from the State Imbalance Pool due to the energy increment corresponds to an

energy quantum of 546.25 MU. When FBSM statements are finalized by MSLDC, all

source wise differences between actual energy billed to RInfra-D and energy as per

FBSM statements will be reconciled, and the derived Transmission Losses from RInfra-

D’s Energy Balance will undergo change and match with that of MSLDC.

RInfra-D submitted that the power purchase accounted for in its Petition is as per bills

raised by generators to RInfra-D, and the result of MSLDC’s reconciliation will only

affect pool increment / decrement and debit /credit thereon will be realized whenever such

reconciliation happens.

RInfra-D requested the Commission to approve the Energy Balance for FY 2012-13 based

on the above methodology.


The Commission has considered the actual Transmission Losses of 4.12% for FY 2012-13

based on MSLDC submissions. The energy quantum added by RInfra-D into the State

Imbalance Pool has been considered as per the actual Gross Energy consumption in the

suo- motu Order in Case No. 183 of 2013 on verification of RPO compliance by RInfra-D

cumulatively for FY 2010-11, FY 2011-12 and FY 2012-13.

As regards RInfra-D's request for review of the metering philosophy and related activities

by Supply Licensees from the next Control Period onwards, this may be considered

appropriately by the Commission in the final protocol for change-over and switch-over of

consumers from one Licensee to another in the context of ATE directions in Appeal No.

246 of 2012 and related matters.

The Commission has considered the losses for change-over HT and LT consumers as

1.94% and 9.00%, respectively, as considered by MSLDC for Pool settlement for FY

2012-13. The change-over sales have been considered as reported by RInfra-D.

Accordingly, the Distribution Losses and Energy Balance as approved by the Commission

for FY 2012-13 are given in the Tables below:


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Table 4-7: Energy Balance for FY 2012-13 approved by the Commission

Particulars UoM MYT Order RInfra-D

Petition

Approved in

this Order

Sales (Own) MU 6192.32 6,207.18 6,207.18

Sales (change-over) MU 3090.69 3,114.37 3,114.37

Consumption by OA

consumers MU 0.00 13.58 13.58

Total MU 9283.01 9,335.13 9,335.13

Distribution Loss % 9.46% 9.49% 10.24%

Energy Input to the

Distribution System MU 10252.94 10313.36 10,399.59

The higher Distribution Loss of 10.24% computed by the Commission, as compared to

9.49% computed by RInfra-D, is on account of the lower InSTS losses considered by the

Commission, as shown in the Table below:

Table 4-8: Energy Requirement for FY 2012-13 approved by the Commission

Particulars UoM MYT

Order

RInfra-D

Petition

Approved in

this Order

Migrated HT sales + OA consumption MU 862.13 886.05 886.05

HT Loss % 1.94% 1.94% 1.94%

HT grossed up energy at T-D boundary MU 879.19 903.58 903.58

Migrated LT sale MU 2228.55 2241.90 2241.90

LT loss % 9.00% 9.00% 9.00%

LT grossed up energy at T-D boundary MU 2448.96 2463.62 2463.62

Total T-D energy attributable to TPC-D

sale & OA consumption MU 3328.14 3367.20 3367.20

Net T-D energy attributable to RInfra-D

sale MU 6924.80 6946.15 7032.38

InSTS losses % % 5.59% 5.18% 4.12%

Total requirement of RInfra-D (MU)

at G-T MU 7334.57 7325.95 7334.57

It will be seen from the above Tables, the actual Distribution Loss of RInfra-D for FY

2012-13 works out to 10.24%, which is significantly higher than the target Distribution

Loss of 9.46%. The Commission has undertaken the sharing of efficiency losses on

account of higher Distribution Losses subsequently in this Section.


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4.5 POWER PROCUREMENT

RInfra-D submitted that, in FY 2012-13, it has procured power under its long-term

arrangement with RInfra-G (from DTPS) and medium-term contracts approved by the

Commission with Wardha Power Company Ltd. (WPCL), Abhijeet MADC Nagpur

Energy Private Limited (AMNEPL), and Vidarbha Industries Power Ltd. (VIPL). It has

also procured power from short-term sources for varying periods to meet its load

requirements, after considering availability from long-term sources. For meeting peak

loads, RInfra-D has also utilized energy banked during previous years. For meeting its

RPO, it has procured Renewable Energy from firm long-term contracts, and has

purchased non-Solar RECs in FY 2012-13 for the shortfall in that respect.

4.5.1 LONG TERM POWER PURCHASE CONTRACTS

4.5.1.1 RInfra-G (DTPS)

RInfra-D has entered into a 10-year PPA with RInfra-G, approved in Case No. 8 of 2008.

It is a long-term contract for delivery of all generated energy to RInfra-D from DTPS’ 2 x

250 MW Units at the tariff determined by the Commission for RInfra-G.

In the MYT Order, the Commission had considered RInfra-G’s fixed cost as Rs. 245.14

crore for FY 2012-13. RInfra-D has submitted that, while this was the approved fixed

cost, it cannot be considered as the Fixed Charge payable by RInfra-D to RInfra-G in FY

2012-13. Since the Commission has accepted revenue from Fixed Charges and Capacity

Charges for RInfra-G for FY 2012-13 in the MYT Order as Rs. 216.61 crore, which was

as per the tariff approved in Case No. 99 of 2009, RInfra-D has considered that amount

instead of Rs. 245.14 crore considered in the MYT Order. RInfra-D has considered the

actual variable cost (approved Energy Charges plus actual FAC) together with PLF

incentive, as computed by RInfra-G as per the MYT Regulations. RInfra-D has submitted

the summary of power purchase cost for purchase of power from RInfra-G in FY 2012-13

as shown in the Table below:

Table 4-9: Power Purchase from RInfra-G (DTPS) as submitted by RInfra-D

Source-DTPS Purchase

(MU)

Fixed Cost

(Rs. crore)

Variable

Cost

(Rs. crore)

Incentive

(Rs.

crore)

Total Cost

(Rs. crore)

Rate

(Rs./

kWh)

MYT Order 3994.95 245.14 1125.14 0.00 1370.28 3.43

RInfra-D Petition 3994.95 216.61 1127.46 17.59 1361.66 3.41

RInfra-D requested the Commission to approve the actual power purchase cost from

RInfra-G in FY 2012-13.


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Commission’s Analysis

The Commission has approved the actual cost of power purchase from RInfra-G for FY

2012-13. The summary of power purchase by RInfra-D from RInfra-G in FY 2012-13, as

approved by the Commission after truing up, is tabulated below:

Table 4-10: Power Purchase from RInfra-G (DTPS) approved by the Commission

Source

MYT Order RInfra-D Petition Approved in this Order

MU Rs.

crore

Rs/

kWh MU

Rs.

crore

Rs/

kWh MU

Rs.

crore

Rs/

kWh

DTPS 3994.95 1370.28 3.43 3994.95 1361.66 3.41 3994.95 1361.66 3.41

4.5.2 MEDIUM-TERM POWER PROCUREMENT CONTRACTS

RInfra-D submitted that it had Medium Term Power Procurement contracts with WPCL,

AMNEPL and VIPL for FY 2012-13. It has procured power from WPCL as approved in

the Order dated 1 July, 2011 (Case No. 85 of 2011). RInfra-D has procured power from

AMNEPL as per the quantum and rate approved by the Commission in Order dated 1

July, 2011 (Case No. 84 of 2011). It has procured power up to 134 MW from VIPL from

April, 2012 to March, 2014 in accordance with the ATE Judgment in Appeal No. 106 of

2011.

4.5.2.1 Additional impact due to Change in Law in case of WPCL Medium Term

Contract

RInfra-D submitted that it had executed the PPA with WPCL on 4 June, 2010 for the

period from April, 2011 to 31 March, 2014, with Contracted Capacity of 260 MW. As per

Articles 10.1.1 and 10.2 of PPA, WPCL is entitled to any additional recurring /non-

recurring expenditure arising from introduction of taxes which were not contemplated by

it at the time the Bid was submitted. WPCL had filed a Petition in Case No. 39 of 2012

claiming Rs 27.63 crore on account of Change in Law for the period from April, 2011 to

March, 2012 under the following heads:

Excise Duty on Coal consumed;

Clean Energy Cess on Domestic Coal consumed;

VAT on Domestic Coal consumed;

VAT on LDO and HFO consumed;

Customs duty on Generation using Imported Coal;

VAT on Spares consumed.


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RInfra-D had contended in that Case that Change in Law is not applicable with regard to

VAT on LDO and HFO and Customs duty on Generation using Imported Coal, since the

Bid was based on imported coal. During the hearing on 2 November, 2012, the

Commission had directed RInfra-D to immediately pay Rs. 10 crore, and subsequently

pay the undisputed amounts. RInfra-D had paid Rs. 19.12 crore, being undisputed, as

against the total claim of Rs. 27.63 crore for FY 2011-12. RInfra-D has considered this in

the power purchase cost for FY 2012-13 since the payment has been made in that year.

RInfra-D had also paid a part of the claim of WPCL, as undisputed amounts, as additional

expenses due to Change in Law for the subsequent periods. The amounts claimed by

WPCL and the amounts paid by RInfra-D for different periods, as submitted by RInfra-D,

are summarized in the Table below:

Table 4-11: Amounts paid by RInfra-D to WPCL towards Change in Law up to FY

2012-13, as submitted by RInfra-D (Rs. crore)

Period Amount Paid by RInfra-D upto FY 2012-13

Apr-11- Mar-12 19.12

Apr-12 - Sept-12 7.24

Oct-12 - Dec-12 3.62

Jan-13 1.32

Feb-13 1.19

Mar-13 Paid Rs. 1.17 crore in May, 2013

(hence not included in FY 2012-13)

Total 32.49

For March, 2013, WPCL claimed Rs. 2.53 crore towards Change in Law. RInfra-D has

made a provision of Rs. 1.5 crore against this claim in the annual accounts for FY 2012-

13. However, the actual payment made to WPCL was Rs. 1.17 crore in May, 2013 due to

Change in Law pertaining to March, 2013. Accordingly, for the purposes of ARR, it has

not included that amount in FY 2012-13, but has included Rs. 1.17 crore actually paid in

FY 2013-14 in the ARR of that year. The summary of power purchase from medium-term

contracts for FY 2012-13, as submitted by RInfra-D, is as under:

Table 4-12: Power Purchase from Medium-Term Sources in FY 2012-13 as submitted

by RInfra-D

Particulars

MYT Order RInfra-D Petition

Quantum Cost Rate per Unit Quantum Cost Rate per Unit

(MU) (Rs.

Crore) (Rs/kWh) (MU)

(Rs.

Crore) (Rs/kWh)

WPCL 2039.49 1001.85 4.91 2039.49 1000.36 4.90

Abhijeet MADC 441.97 204.27 4.62 441.97 204.25 4.62


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Particulars


Quantum Cost Rate per Unit Quantum Cost Rate per Unit

(MU) (Rs.


(Rs.

Crore) (Rs/kWh)

VIPL 1001.05 510.05 5.10 1001.05 510.05 5.10


The Commission has considered the above submissions of RInfra-D, and has approved

the actual power purchase from WPCL and AMNEPL for FY 2012-13 as summarised

below:

Table 4-13: Power Purchase from Medium Term Sources in FY 2012-13 approved by

the Commission

Source


Quantum Cost

Rate

per

Unit

Quantum Cost

Rate

per

Unit

Quantum Cost

Rate

per

Unit

(MU) (Rs.

Crore)

(Rs/

kWh) (MU)

(Rs.

Crore)

(Rs/

kWh) (MU)

(Rs.

Crore)

(Rs/

kWh)

WPCL 2039.49 1001.85 4.91 2039.49 1000.36 4.90 2039.49 1000.36 4.90

Abhijeet

MADC 441.97 204.27 4.62 441.97 204.25 4.62 441.97 204.25 4.62

VIPL 1001.05 510.05 5.10 1001.05 510.05 5.10 1001.05 510.05 5.10

4.5.3 RENEWABLE ENERGY PROCUREMENT

4.5.3.1 Solar Power Purchase

RInfra-D submitted that it had tied up Solar power to meet its Solar RPO for FY 2010-11

to FY 2012-13 cumulatively before the end of FY 2012-13, in accordance with the MERC

(Renewable Purchase Obligation, its compliance and implementation of REC framework)

2010 Regulations (‘RPO-REC Regulations’), and Daily Order dated 23 October, 2012 in

Case No. 101 of 2012 wherein the Commission had directed it to meet the cumulative

shortfall of RPO compliance for these 3 years by 31 March, 2013.

RInfra-D submitted that it has signed an Energy Purchase Agreement (EPA) dated 28

March, 2011 for the generation from the 40 MW Solar power (Photo Voltaic - PV) plant

of Dahanu Solar Power Private Ltd. (DSPPL) (renamed as Dhursar Solar Power Pvt. Ltd.

from September, 2013) located in Rajasthan, with delivery point at Maharashtra State

periphery. The quantum of Solar power purchased from the DSPPL in FY 2012-13 is

60.13 MU. RInfra-D submitted that the Commission, in its suo-motu Order dated 6

March, 2014 (Case No. 183 of 2013), on verification of compliance of RPO targets

cumulatively for the three years from FY 2010-11 to FY 2012-13, held that RInfra-D has


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fulfilled its Solar RPO. RInfra-D submitted the following details of Solar RPO

procurement:

Table 4-14: Solar RPO Achievement up to FY 2012-13 as submitted by RInfra-D

Particulars

FY 2010-11 FY 2011-12 FY 2012-13

Total

Achievement/

Shortfall

% MU % MU % MU MU

Gross Energy

Consumption 100% 8,600.18 100% 7,445.73 100% 7,334.57

Solar RPO target 0.25% 21.50 0.25% 18.61 0.25% 18.34 58.45

Solar RPO met 0.00% 0.00 0.01% 0.46 0.82% 60.13 60.58

Solar RPO

achievement 0.25% (21.50) 0.24% 18.15 (0.57)% (41.79) (2.13)

RInfra-D submitted that the actual gross energy input at G<>T interface from all sources

in FY 2012-13 is 7,325.95 MU. Considering this, the above Table is slightly modified, as

under:

Table 4-15: Revised Solar RPO Achievement up to FY 2012-13 as submitted by RInfra-

D

Particulars

FY 2010-11 FY 2011-12 FY 2012-13

Total

Achievement/

Shortfall

% MU % MU % MU MU

Gross Energy

Consumption 100% 8,600.18 100% 7,445.73 100% 7,325.95

Solar RPO target 0.25% 21.50 0.25% 18.61 0.25% 18.31 58.43

Solar RPO met 0.00% 0.00 0.01% 0.46 0.82% 60.13 60.59

Solar RPO achievement 0.25% (21.50) 0.25% 18.15 (0.57)% (41.81) (2.16)

RInfra-D submitted that the MYT Order had allowed the additional Solar power purchase

over and above the RPO, at the highest rate in the Merit Order stack at the short-term

purchase rates of respective years. RInfra-D had filed a Petition (Case No. 57 of 2011) in

March, 2011, for relaxation of its Solar RPO for the period FY 2010-11 to FY 2015-16 in

view of the difficulties faced in procurement of Solar power. It had stated that the DSPPL

Solar Project would be set up from 31 March, 2012 and it would thereby be able to meet

its RPO.


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RInfra-D, on the basis of the above, submitted that it had sought to comply with the

cumulative RPO target aggregating to 217 MU based on expected Solar RE availability of

238 MU at the preferential tariff determined by the Commission. RInfra-D submitted that

it had informed the Commission in March, 2011 that it has entered into an EPA for 40

MW from Dhursar Solar at preferential tariff. In its Order dated 1 December, 2011 in

Case No. 57 of 2011, the Commission had stated that decision on this issue would be

taken subsequently.

RInfra-D submitted that the Commission, in its Order dated 5 December, 2012 in Case

No. 101 of 2012, reiterated that the cumulative shortfall of RPO compliance for FY 2010-

11 to FY 2012-13 would have to be met by 31 March, 2013. The Table at page 7 of the

Order shows that the cumulative compliance for FY 2010-11 and FY 2011-12 of 39.58

MU has been permitted by the Commission from the EPA with Dhursar Solar. The

Commission did not question the EPA with Dhursar Solar, nor did it levy any regulatory

charges for non-fulfilment of RPO targets during FY 2010-11 and 2011-12, provided they

were fulfilled on a cumulative basis, in addition to the RPO target for FY 2012-13, by 31

March, 2013.

Thereafter, RInfra-D filed its Business Plan Petition for the MYT Period in Case No. 158

of 2011, being aware that there would be surplus power, after compliance of Solar RPO,

from the contract with Dhursar Solar. RInfra-D submitted that the surplus would be

banked each year, and would be utilized to meet the target in the subsequent year, and so

on. The Commission recorded RInfra-D’s submissions in its Order dated 23 November,

2012. It did not rule on banking, nor did it disallow the additional cost, but stated that the

impact of the directives in Order dated 5 December, 2012 should be incorporated by

RInfra-D in the MYT Petition for approval.

In its MYT Petition, RInfra-D had contended that, as a result of migration of consumers to

TPC-D, there would be a surplus, and also that over-contracting is prudent considering

uncontrollable events such as increase in sales, reduction in output due to bad weather or

malfunctioning of Solar panels, etc. However, the Commission did not consider these

submissions, and ruled that the Solar energy purchase beyond the RPO target would be

allowed at the highest rate in the Merit Order stack of power purchase at the short-term

purchase rates of respective years.

RInfra-D submitted that the entire power purchase cost from Dhursar Solar should be

allowed, as the Commission was informed of it in March, 2011 itself and had never

questioned the signing of the 40 MW EPA. RInfra-D’s Appeal No. 274 of 2013 against


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the MYT Order was pending for decision by ATE at the time of filing of the present

Petition.

Table 4-16: Power Procurement from Dhursar Solar in FY 2012-13 as submitted by

RInfra-D

Source-Dhursar Solar Purchase (MU) Cost (Rs. crore) Rate (Rs/kWh)

MYT Order 60.13 107.69 17.91

RInfra-D Petition 60.13 107.69 17.91


In the MYT Order, the Commission had disallowed the cost of Solar power purchase in

excess of the RPO because there was no requirement to procure such costlier Solar power

and unnecessarily burden consumers. Accordingly, the Commission had allowed the cost

of purchase of such Solar power in excess of RPO at the highest rate in the Merit Order

stack of short-term power purchase.

In its Judgment dated 8 April, 2015 on various Appeals of RInfra-G, RInfra-T and RInfra-

D, including Appeal No. 274 of 2013 which involved the disallowance of Solar power

purchase beyond the RPO, the ATE has upheld the ruling of the Commission disallow the

Solar power purchase by RInfra-D beyond its RPO requirement::

"103. We do not agree with the Appellant that over contracting for Solar energy

was prudent considering the possible increase in sales and reduction in Solar

generation. We feel that over contracting for Solar energy when the trend of

capital cost of Solar power is declining is not prudent. The Solar RPO have to be

tied up corresponding to the approved estimated sales in the ARR. Non- fulfilment

of RPO due to increase in RPO due to actual increase in sales over the estimated

sales approved by the State Commission in the ARR or due to reduction in Solar

generation due to reasons beyond the control of the Distribution Licensee can be

carried forward to the next year. Similarly if there is reduction in energy sales due

to migration of consumers to the other licensee and due to which the procurement

of Solar energy is more than the RPO at actual sales, the excess Solar energy

procured up to the RPO at the estimated sales has to be allowed as a pass through

in the Annual Revenue Requirement. The Solar energy against the Solar RPO for

a Financial Year has to be planned and procured corresponding to the estimated

sales as approved by the State Commission in the ARR. Therefore, there is no

issue regarding excess Solar energy due to reduction in sales due to migration of

consumers to the second licensee.

104. In view of above, we do not find any infirmity in the Commission’s

finding in not allowing entire power purchase cost for Solar energy over and

above the Solar RPO in the Annual Revenue Requirement. We want to make it

clear that the energy to be procured to fulfil RPO is proposed on the basis of the


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estimated consumption in the Annual Revenue Requirement as approved by the

State Commission. If the actual energy consumption is less and the Distribution

Licensee has procured RPO corresponding to the estimated consumption then the

Power Purchase Cost of excess energy over the RPO requirement at actual energy

consumption has to be allowed. We also want to add that if the Appellant wants to

discharge Dahanu Solar Power Co., the group company of the Appellant, of part

of the quantum contracted in the Power Purchase Agreement to be able to sell

balance power to other obligated entities or selling power in REC mode subject to

the Regulations, in future, the same shall be permitted.”

Accordingly, the Commission has treated the Solar power purchase beyond the RPO as

non-renewable power, and has approved its at the highest rate in the Merit Order stack,

i.e., short-term power purchase rate of FY 2012-13. As discussed in subsequent

paragraphs, the highest rate of power purchase in FY 2012-13 was at 4.72 Rs/kWh, which

the Commission has considered as the cost of the excess Solar power purchase beyond

RPO.

The Commission has computed the Solar RPO requirement at 0.25% (the Solar RPO

target for FY 2012-13) 0.25% (Solar RPO target for FY 2012-13) of the actual Gross

Energy consumption as specified in the Order on suo-motu Proceedings for Verification

and Compliance of Renewable Purchase Obligation targets by Reliance Infrastructure Ltd

– Distribution Business cumulatively for three years, i.e., FY 2010-11, FY 2011-12 and

FY 2012-13 in Case No. 183 of 2013.

The backlog of Solar RPO prior to FY 2012-13 submitted by RInfra-D is the same as

noted in the Order dated 6 March, 2014 in Case No. 183 of 2013 regarding compliance of

RPO targets cumulatively for the three years FY 2010-11 to FY 2012-13. Accordingly, for the

Solar RPO requirement for FY 2012-13, the Commission has also considered the Solar RPO

backlog as submitted by RInfra-D.

In view of the above, the Commission has approved the Solar power purchase for FY

2012-13 as tabulated below:

Table 4-17: Power Procurement from Dhursar Solar in FY 2012-13 as approved by the

Commission

Source


MU Rs.

Crore

Rs/

kWh MU

Rs.

crore

Rs/

kWh MU Rs. crore

Rs/

kWh

Renewable - Solar

(RPO) 60.13 107.69 17.91 57.96 103.82 17.91 58.45 104.68 17.91

Renewable – Solar 2.16 3.87 17.91 1.68 0.79 4.72


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Source


MU Rs.

Crore

Rs/

kWh MU

Rs.

crore

Rs/

kWh MU Rs. crore

Rs/

kWh

(Excess over

RPO)

Total 60.13 107.69 17.91 60.13 107.69 17.91 60.13 105.47 17.54

4.5.3.2 Non Solar RPO

RInfra-D submitted that it has procured non-Solar power from different sources for

meeting its non-Solar RPO in FY 2012-13, as shown in the Table below:

Table 4-18: Power Procurement from Non-Solar Renewable Sources in FY 2012-13 as

submitted by RInfra-D

Source Purchase (MU) Cost (Rs. crore) Rate (Rs./kWh)

MYT Order 136.09 55.79 4.10

RInfra-D Petition

Reliance Innoventures 69.72 27.56 3.95

AAA Sons Enterprise 3.57 1.39 3.90

Jindal Steel and Power Limited 54.83 23.08 4.21

Tembhu Power Private Limited 5.55 2.36 4.26

Reliance Clean Power Pvt. Ltd 2.43 1.38 5.67

Total 136.09 55.78 4.10

RInfra-D has purchased 504750 non-Solar RECs from Power Exchanges at a cost of Rs.

90.81 crore in FY 2012-13 to meet its Non-Solar RPO on a cumulative basis for FY 2010-

11 to FY 2012-13. In its suo-motu Order dated 6 March, 2014 (Case No. 183 of 2013), the

Commission has held that RInfra-D has fulfilled its non-Solar RPO. The Table regarding

non-Solar RPO as per that Order is reproduced below:

Table 4-19: Non-Solar RPO Achievement up to FY 2012-13 as submitted by RInfra-D

Particulars FY 2010-11 FY 2011-12 FY 2012-13

Total

Achievement

/ Shortfall

% MU % MU % MU MU

Gross Energy

Consumption in MU 100% 8600.18 100% 7445.73 100% 7334.57

Non-Solar RPO

target 5.75% 494.51 6.75% 502.59 7.75% 568.43 1565.53


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Total

Achievement

/ Shortfall

% MU % MU % MU MU

Non-Solar RPO met

(Energy + REC) 6.80% 584.51 4.69% 349.47 8.73% 640.84 1574.82

Non-Solar RPO

achievement (1.05)% (90.00) 2.06% 153.12 (0.99)% (72.41) (9.29)

RInfra-D has submitted that the actual gross energy input at G<>T interface from all

sources in FY 2012-13 was 7,325.95 MU. Considering this, the Table is slightly revised

as under:

Table 4-20: Modified Non-Solar RPO Achievement up to FY 2012-13 as submitted by

RInfra-D


Total/

Achievement/

Shortfall

% MU % MU % MU MU

Gross Energy

Consumption 100% 8600.18 100% 7445.73 100% 7325.95

Non-Solar RPO

target 5.75% 494.51 6.75% 502.59 7.75% 567.76 1565.53

Non-Solar RPO met

(Energy + REC) 6.80% 584.51 4.69% 349.47 8.75% 640.84 1574.82

Non-Solar RPO

achievement (1.05)% (90.00) 2.06% 153.12 (1.00)% (73.08) (9.29)

Based on the above, RInfra-D submitted that it has met its non-Solar RPO cumulatively

for the period FY 2010-11 to FY 2012-13, and sought that the cost of non-Solar RE power

procured during FY 2012-13 be allowed.


The Commission has computed the non-Solar RPO target for FY 2012-13 at 7.75% of the

actual gross energy consumption, as per its suo-motu Order dated 6 March, 2013 in Case

No. 183 of 2013 on the verification of RPO compliance by RInfra-D cumulatively for FY

2010-11 to FY 2012-13.

The backlog of non-Solar RPO prior to FY 2012-13 submitted by RInfra-D is the same as

noted by the Commission in the above Order. Accordingly, for the non-Solar RPO


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requirement for FY 2012-13, the Commission has considered the backlog as submitted by

RInfra-D.

The Commission has disallowed the cost of excess RECs procured by RInfra-D after

considering the cumulative shortfall till FY 2012-13, as it is a needless addition to power

purchase cost and consumers cannot be burdened with such cost beyond the RPO

requirement. As regards non-Solar RE purchase, the Commission approves the actual cost

of power procurement as submitted by RInfra-D.

As regards the cost of RECs, the Commission had observed in the MYT Order that

RInfra-D should have procured RECs from the Exchange and not through traders, since

the Exchange platform provides double-sided undisclosed bidding while a trader is not

expected to provide any additional benefit for REC procurement. However, the MYT

Order had considered the actual rate of Rs. 1.52/kWh for non-Solar RECs procured in FY

2012-13. Hence, the same is allowed in the truing up for FY 2012-13 also.

In view of the above, the Commission has approved the non-Solar power purchase for FY

2012-13 as tabulated below:

Table 4-21: Non-Solar RE power purchase for FY 2012-13 as approved by the

Commission

Source

MYT Order RInfra-D Petition Approved in this

Order

MU Rs.

crore

Rs/

kWh MU

Rs.

crore

Rs/

kWh MU

Rs.

crore

Rs/

kWh

Non-Solar

Power Purchase 136.09 55.79 4.10 136.09 55.78 4.10 136.09 55.78 4.10

Non-Solar REC

Purchase 90.81

90.81

75.31

Total 136.09 146.60 10.77 136.09 146.58 10.77 136.09 131.09 9.63

4.5.4 SHORT-TERM POWER PURCHASE

RInfra-D submitted that, in order to meet its peak load requirement and to manage

variations in load in FY 2012-13, it has procured power from short-term sources and

Power Exchanges on day-ahead basis, has utilized the energy banked in previous years,

and has procured power from MSEDCL under the Stand-by arrangement in case of

outages of the DTPS Units. RInfra-D has submitted the details of contracts relating to

power procurement from bilateral sources and Power Exchanges, and of banking. The


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summary of short-term power procurement as submitted by RInfra-D is shown in the

Table below:

Table 4-22: Power Procurement from Short-Term Sources in FY 2012-13 as submitted

by RInfra-D


MYT Order (Total) 503.24 194.42 3.86

RInfra-D Petition

Bilateral 8.05 3.50 4.34

Power Exchanges 439.40 164.98 3.75

Banking Return 29.68 15.06 5.07

Stand By 26.10 11.37 4.36

Total 503.24 194.91 3.87


From the time-slot wise demand-supply position in FY 2012-13 submitted by RInfra-D, it

is seen that in several time-slots RInfra-D has simultaneously procured as well as sold

energy on day-ahead basis. The Commission has categorised such simultaneous power

procurement/sales under four different scenarios, and asked RInfra-D to justify them.

RInfra-D’s response and the Commission’s views are summarised below.

a. Simultaneous purchase and sale on Indian Energy Exchange (IEX)

The Commission asked RInfra-D to justify the above considering

The technical requirement for simultaneous sale and purchase from IEX

The difference in rates for sale and purchase of power from IEX.

RInfra-D submitted that, in all the cases (except 19 May, 2014) of simultaneous purchase

and sale in IEX, surplus power was to be sold as per the declared schedule. However, on

the actual day of operation, there was reduction in availability of generation from

contracted sources and power was required to be arranged from the Contingency Market

(IEX) to avoid demand curtailment.

RInfra submitted that, although IEX is a common platform for purchase and sale, these

transactions have been carried out in different market segments of IEX, i.e., sale in Day-

ahead Market and purchase in Contingency Market. As the market segments are different,

the rates are also different. Further, even in the same market segment, purchase and sale


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rates vary because bidding on IEX happens at the Common Delivery point, i.e., Regional

Periphery, and for purchase Bids, Transmission Charges are added to the price discovered

on IEX; whereas for sale, realization would be lower than the IEX-discovered price

because of deduction of Transmission Charges.

b. Simultaneous sale on IEX and purchase from MSEDCL under Stand-by

Agreement

The Commission asked RInfra-D to justify the above in view of the difference in rates of

power purchase under the Stand-by Agreement and of sale on IEX.

RInfra-D submitted that the Stand-by Arrangement is available only for outage of DTPS

Unit(s). In all the instances, it had planned to sell surplus power on IEX as per the

declared schedule. However, DTPS availability reduced on account of unplanned tripping

or other technical reasons. To avoid any curtailment in demand, power was drawn under

the Stand-By Agreement.

As regards the difference in rates, RInfra-D submitted that the rates would vary because

energy sold on IEX is at the market-clearing price, whereas the power under the Stand-by

Agreement during outages of DTPS is drawn at the marginal cost of power contracts of

MSEDCL.

c. Simultaneous purchase under Banking and sale on IEX

The Commission asked RInfra-D to justify the above in view of:

Availability of surplus power during these time-slots

Cost of power purchase under Banking Arrangements.

RInfra-D submitted that, in view of projections of seasonal surplus power, it had entered

into a firm Banking arrangement under LOI 11R-GEPL (BANKING-MP)-Jan12-July12-

Sep12 dated 31 December, 2011. Under this agreement, power was supplied during

January, 2012 and return of power was scheduled on firm basis during day-time (9:00 to

18:00 Hrs) from 15 July to 15 September, 2012. RInfra-D submitted that, in banking

contracts, there are financial liabilities if a party deviates from the schedule of supply or

off-take, thereby making the return of power under the banking arrangement a must. In

order to avoid penalty, it had to schedule the return of power as per the contract dated 31

December, 2011. Since, at the time of return of power, surplus power was available due to


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lower demand, the surplus was sold in the Exchange. As regards the cost of power under

the Banking Arrangement, RInfra-D submitted as under:

Table 4-23: Cost of power in the Banking Arrangement as submitted by RInfra-D

Quantum

(MU)

Energy Cost (Rs. Crore)

OA Charges

(Rs. Crore)

Total Cost (Rs. Crore)

Cost of Power

(Rs./kWh)

29.68 14.58 0.48 15.06 5.07

d. Simultaneous purchase from IEX and sale on Imbalance Pool under

IBSM/FBSM mechanism

The Commission asked RInfra-D to justify the above in view of:

Availability of surplus power during these time-slots

Cost of power purchase under the Banking Arrangement.

RInfra-D submitted that the availability of surplus power during certain time-slots is a

result of the various factors that affect demand and generation, resulting in differences

between the forecast, which is made on a day-ahead basis, and the actuals. In case of

RInfra-D, the day-ahead forecast is made for the total system demand as a whole at T<>D

level. Thereafter, the change-over consumption estimate, as provided by TPC-D, is

subtracted from it to arrive at the net RInfra-D demand at T<>D level. The G<>T

interface level requirement of RInfra is arrived by grossing up this demand by the InSTS

Transmission Loss. Such demand is then mapped with the source-wise availability

forecast from the various contracted generation sources of RInfra-D, including RE

generation. Since RInfra-D has to provide a matched schedule to the MSLDC, the deficit,

if any, after considering the contracted sources, is shown as to be procured from the

Exchange. Accordingly, day-ahead Bids are placed on the Exchange.

RInfra-D submitted that various factors could affect each individual element of the

demand- supply schedule (both demand and generation side), resulting in the actual

surplus or deficit being very different from that estimated on a day-ahead basis. Such

factors include weather, variation in change-over sales, variation in InSTS loss, variation

in wind energy generation, scheduling of InSTS Generators under Merit Order Dispatch

(MOD) and Revision in Schedule by Generation. RInfra-D elaborated how each of these

factors contributes to large demand and supply side variations vis-a-vis the day-ahead

forecast. Since the projection of purchase of power from the Energy Exchange is based on

the day-ahead forecast of RInfra-D, it has to necessarily take the energy. This may result

in surplus, which is then injected into the State Pool. RInfra-D submitted that it constantly

attempts to improve its forecasting accuracy. However, these factors are largely


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uncontrollable and thus lead to situations where, in a given time slot, RInfra-D becomes

surplus, which results in incrementing into the Pool. RInfra-D submitted details of some

of representative cases showing demand and supply side variations and resultant injection

into the Pool.

As regards the purchase of power from bilateral sources, banking return and Stand-by

procurement from MSEDCL, the Commission has found power procurement from these

sources to have been prudent, from the analysis of time-slot wise demand-supply position

for FY 2012-13 submitted by RInfra-D. Accordingly, the Commission approves power

purchase from these sources.

The Commission has also considered the justification submitted by RInfra-D for power

procurement from Exchanges when surplus power was being sold. However, it cannot

accept the justification entirely, since power has been procured from Exchanges on day-

ahead basis during some time-slots when a very large quantum of power was also being

sold. The Commission appreciates that, due to various factors mentioned by RInfra-D,

there may be demand/supply variations vis-a-vis day-ahead forecasts, to some extent on

many occasions and to a large extent on some occasions. However, the Commission has

observed thousands of time-slots (of 15-minute each) in FY 2012-13 wherein purchase

from the Exchange was being undertaken at the same time as a significant quantum of

power was being sold in the Imbalance Pool. Therefore, the Commission has decided to

allow the simultaneous power procurement from Exchanges on day-ahead basis during

time-slots in which sale of power on Exchanges was upto 5% of the maximum demand of

FY 2012-13. From the time-slot wise demand-supply position in FY 2012-13 submitted

by RInfra-D, the Commission finds that the maximum demand of RInfra-D in FY 2012-

13 was 1675.72 MW.

The Commission has approved the power procurement from Exchanges on day-ahead

basis for all the time-slots in which there was either no surplus power sale in the

Imbalance Pool, or when the surplus power sale on the Imbalance Pool was up to 83.79

MW, i.e., 5% of 1675.72 MW. For all other time-slots, i.e., in which more than 83.79

MW of surplus power was being sold on the Imbalance pool, the Commission has not

approved part of the cost of power purchase from Exchanges on day-ahead basis, since

such power procurement at those times implies poor forecasting and imprudent power

procurement. The Commission notes that there were 3110 time-slots in FY 2012-13

during which the quantum sold in the Imbalance Pool was more than 83.79 MW and

power was procured from Exchanges on a day-ahead basis. For these time-slots, the

Commission has disallowed part of the cost of the excess power purchase, i.e., lower of

the purchase from Exchange and sale on Imbalance Pool. The quantum of such imprudent


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power procurement, assessed by the Commission from the time-slot wise demand/supply

position of FY 2012-13 submitted by RInfra-D, is 69.63 MU. The rate considered by the

Commission for disallowance of such imprudent power procurement is the difference

between the average rate of power purchase from Exchanges in FY 2012-13 submitted by

RInfra-D, i.e., 3.75 Rs/kWh, and the average rate of sale of power on Imbalance Pool as

submitted by RInfra-D, i.e., 1.87 Rs/kWh. Accordingly, the Commission has disapproved

the cost equivalent to 69.63 MU of power procurement at the rate of Rs. 1.89 per kWh.

The Commission accordingly approves power purchase from short-term sources as

summarised below:

Table 4-24: Short Term Power Procurement in FY 2012-13 as approved by the

Commission

Particulars


Quantum Cost Rate per

Unit Quantum Cost

Rate per

Unit Quantum Cost

Rate per

Unit

(MU) (Rs.


(Rs.


(Rs.

Crore) (Rs/kWh)

Short Term

Purchase 503.24 194.42 3.86 503.24 194.91 3.87 503.24 181.76 3.61

4.5.5 SALE OF SURPLUS POWER

RInfra-D submitted that, due to varying load pattern and migration of consumers, it has

sold surplus energy outside its Licence Area through Power Exchanges and through

bilateral contracts in FY 2012-13 during certain hours of the day. It has adjusted the

revenue from sale of such surplus power against the gross power purchase cost. RInfra-D

has incremented energy into the State Imbalance Pool, and has considered revenue

receipts from the same, based on the provisional Energy Balance statements from

MSLDC. The total realization from sale of surplus power as submitted by RInfra-D is as

under:

Table 4-25: Surplus Power Sale in FY 2012-13 as submitted by RInfra-D

Source Energy Sold

(MU)

Revenue

Realised

(Rs. crore)

Rate

(Rs./kWh)

MYT Order

Surplus Sale 842.34 197.70 2.35

RInfra-D Petition

Sale through Bilateral/Power Exchange 304.71 81.77 2.68


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Source Energy Sold

(MU)

Revenue

Realised

(Rs. crore)

Rate

(Rs./kWh)

Sale through Imbalance Pool 546.25 101.92 1.87

Total 850.97 183.69 2.16

RInfra-D submitted that the difference between the approved and actual MU and revenue

realized is only on account of difference in the Imbalance Pool increment. RInfra-D had

estimated the Pool increment and the income thereon in its MYT submissions. However,

in the present Petition, these are based on the provisional FBSM statements of MSLDC.


The Commission has accepted the submission of RInfra-D regarding the sale of surplus

power through Bilateral contracts/Power Exchanges, and approved it in truing up for FY

2012-13. As regards sale of surplus power through Imbalance Pool, the Commission has

derived the same from the Gross Energy consumption that has been considered in the suo-

moto Proceedings for Verification and Compliance of Renewable Purchase Obligation

targets by Reliance Infrastructure Ltd – Distribution Business cumulatively for three

years, i.e., FY 2010-11, FY 2011-12 and FY 2012-13 in Case No. 183 of 2013.

Accordingly, the Commission has approved the sale of surplus power in truing up of FY

2012-13 as given below:

Table 4-26: Surplus Power Sale in FY 2012-13 as approved by the Commission

Particulars


Quantum Cost Rate per

Unit Quantum Cost

Rate per

Unit Quantum Cost

Rate per

Unit

(MU) (Rs.


(Rs.


(Rs.

Crore) (Rs/kWh)

Surplus

Power 842.34 197.70 2.35 850.97 183.69 2.16 842.35 182.09 2.16

4.5.6 TRANSMISSION, STAND-BY AND MSLDC CHARGES

4.5.6.1 Transmission Charges

RInfra-D has submitted that the actual Transmission Charges paid in FY 2012-13 are Rs.

261.37 crore, as against Rs. 265.39 crore approved in the MYT Order. As per the InSTS

Tariff Order dated 21 May, 2012 (Case No. 51 of 2012), Transmission Charges payable


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by RInfra-D for FY 2012-13 were Rs. 265.39 crore, i.e. Rs. 22.12 crore monthly.

However, this Order was effective from June, 2013. RInfra-D submitted that it has,

therefore, paid monthly Transmission Charges of Rs. 22.12 crore from June, 2013

onwards. For April and May, 2013, it has made payments in accordance with the InSTS

Tariff Order dated 10 September, 2010 (Case No. 120 of 2009). The details are shown in

the Table below:

Table 4-27: Transmission Charges paid in FY 2012-13 as submitted by RInfra-D (Rs.

crore)

Particulars MYT

Order

RInfra-D Petition

Paid in April, and

May, 2012

Paid from June

2012 to March 2013 Total

Transmission Charges 265.39 40.21 221.16 261.37


The Commission has approved the actual Transmission Charges, as submitted by RInfra-

D for FY 2012-13, as shown in the Table below:

Table 4-28: Transmission Charges approved by the Commission for FY 2012-13 (Rs.

crore)

Particulars MYT

Order

RInfra-D Petition

Approved in

this Order

Paid in

April, and

May, 2012

Paid from

June 2012 to

March 2013

Total

Transmission

Charges 265.39 40.21 221.16 261.37 261.37

4.5.6.2 Stand-by Charges

RInfra-D submitted that the Commission determined the Stand-by Charges for FY 2012-

13 as Rs. 143.70 crore in its Order dated 23 November, 2012 in Case No. 158 of 2011 for

each year of the MYT Period. RInfra-D has actually paid Rs. 221.06 crore against Stand-

by Charges in FY 2012-13, which was considered in the MYT Order.


The Commission has approved the actual Stand-by Charges of Rs. 221.06 crore for FY

2012-13.


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4.5.6.3 MSLDC Charges

RInfra-D submitted that it has paid MSLDC Charges of Rs. 1.05 crore in FY 2012-13, in

accordance with the Commission’s Order dated 30 March, 2012 (Case No. 181 of 2011).


The Commission has approved the actual MSLDC Charges of Rs. 1.05 crore for FY

2012-13.

4.5.7 SUMMARY OF POWER PURCHASE COST FOR FY 2012-13

The summary of the power purchase quantum and cost for FY 2012-13 claimed by

RInfra-D as against that approved in the MYT Order is as under:

Table 4-29: Power Purchase in FY 2012-13 as submitted by RInfra-D

Source


Quantum

(MU)

Cost

(Rs. crore)

Quantum

(MU)

Cost

(Rs. crore)

DTPS 3,994.95 1,370.28 3,994.95 1,361.66

WPCL 2,039.49 1,001.85 2,039.49 1,000.36

AMNEPL 441.97 204.27 441.97 204.25

VIPL 1,001.05 510.05 1,001.05 510.05

Renewable 196.22 163.48 196.22 163.46

REC

90.81

90.81

Banking Return 55.79 26.44 29.68 15.06

Short Term

Purchase 447.45 167.98 473.55 179.85

Surplus Power (842.34) (197.70) (850.97) (183.69)

Stand-by Charges

221.06

221.06

MSLDC Charges

1.05

1.05

Transmission

Charges 265.39

261.37

Total 7,334.57 3,824.96 7,325.95 3,825.29


Based on the source-wise approval of power purchase detailed in the above paragraphs,

the power purchase quantum and cost for FY 2012-13 approved by the Commission is as

summarised below:


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Table 4-30: Power Purchase in FY 2012-13 approved by the Commission

Source


Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

DTPS 3994.95 1370.28 3.43 3994.95 1361.66 3.41 3994.95 1361.66 3.41

WPCL 2039.49 1001.85 4.91 2039.49 1000.36 4.90 2039.49 1000.36 4.90

AMNEPL 441.97 204.27 4.62 441.97 204.25 4.62 441.97 204.25 4.62

VIPL 1001.05 510.05 5.10 1001.05 510.05 5.10 1001.05 510.05 5.10

Solar Including REC 60.13 107.69 17.91 60.13 107.69 17.91 60.13 105.47 17.54

Total Non-Solar

including REC 136.09 146.60 10.77 136.09 146.58 10.77 136.09 131.09 9.63

Banking Return 55.79 26.44 4.74 29.68 15.06 5.07 29.68 15.06 5.07

Short Term Purchase 503.24 194.42 3.86 503.24 194.91 3.87 503.24 181.76 3.61

Surplus Power (842.34) (197.70) 2.35 (850.97) (183.69) 2.16 (842.35) (182.09) 2.16

Power Purchase

Cost 7334.57 3337.46 4.55 7325.95 3341.81 4.56 7344.57 3312.56 4.52

Transmission

Charges 265.39 261.37 261.37

MSLDC Charges 1.05 1.05 1.05

Stand-by Charges 221.06 221.06 221.06

TOTAL POWER

PURCHASE COST 7334.57 3824.96 5.21 7325.95 3825.29 5.22 7344.57 3796.03 5.18

4.6 OPERATION AND MAINTENANCE EXPENSES

RInfra-D submitted that, in its MYT submissions, it had presented its actual O&M

Expenses for FY 2012-13, which included the expenses for FY 2012-13 and wage

revision arrears of the previous two years, following a wage revision agreement with the

employees’ union. The wage revision arrears were included in the Employee Expenses

and R&M Expenses to the tune of Rs. 84.00 crore and Rs. 27.63 crore, respectively. In the

MYT Order, the Commission approved the actual employee and A&G Expenses,

invoking its powers to remove difficulties to allow relaxation in the O&M norms

specified in the MYT Regulations.

However, the Commission did not consider the wage revision arrears of Rs. 27.63 crore

claimed in the R&M Expenses, and approved the R&M Expenses without such arrears.

The Commission directed RInfra-D to justify the wage revision arrears included in R&M

Expenses in the next tariff determination process.

RInfra-D submitted details of the wages paid to unskilled and skilled labour prior to the

wage revision agreement (from July, 2010 to June, 2012), and the revised wages for such

labour as per the Memorandum of Agreement signed on 28 June, 2012 and effective from

July, 2010. RInfra-D also submitted the differences in daily wages payable to contract

labour from July, 2010 to March, 2012 as per the Agreement dated 28 June, 2012, and the


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wages paid at old rates during the same period accrued in the form of arrears, which were

paid in FY 2012-13. RInfra-D has also submitted the Memorandum of Agreement.

RInfra-D submitted that the contract labour is not employed by RInfra-D directly but by

the contractors engaged by it for R&M works, and that such employment is regulated by

the Contract Labour (Regulation and Abolition) Act, 1971. It has, therefore, included the

wages paid to contract labour in R&M Expenses and not in Employee Expenses since

such workers are not on its payroll of the Company and are exclusively used for R&M

works.

RInfra-D submitted that wages payable to contract labour have always been included in

R&M Expenses. RInfra-D has also submitted certain adjustments to the O&M Expenses

in its MYT Petition on account of:

Allocation of SCADA expenses to RInfra-T, since the latter is also using some

SCADA services installed by RInfra-D.

Land Usage Charges payable to RInfra-T on account of utilisation by RInfra-D of

land at some Receiving Stations belonging to the Transmission Business.

RInfra-D submitted that this additional expenditure was added to the A&G Expenses. The

operating costs of the Master Control Centre (SCADA) are apportioned between RInfra-T

and RInfra-D on the following basis:

Employee Expenses: The cost of the shift engineers is allocated based on the ratio

of desks allotted to Transmission and Distribution functions, i.e., 1:5.

Other Expenses: Other expenses are apportioned on the basis of actual data points

handled by the Control Centre for Transmission and Distribution System.

RInfra-D submitted the apportionment of SCADA charges with its Petition.

RInfra-D submitted that the rental cost of usage of RInfra-T owned land, as per the agreed

arrangement, is 5% of the value of the proportion of land used by RInfra-D. The capital

value of the land is estimated using ready reckoner rates for the relevant year. RInfra-D

submitted the Rental Arrangement (Minutes of the Meeting dated 15 March, 2013).

RInfra-D submitted that the O&M expenditure approved by the Commission for FY

2012-13 considered the additional information furnished by RInfra-D dated 15 June,

2013. It had submitted the audited actual expenses of FY 2012-13 for employee, A&G


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and R&M Expenses, totalling Rs. 971.50 crore. This amount was already post

adjustments related to SCADA and Land Usage rental. However, the Commission netted

off SCADA allocation to Transmission (as submitted by RInfra-D in its MYT Petition)

from the actual expenses to arrive at the approved amount (as stated in Para 3.12.5.8 of

the MYT Order), which resulted in double counting of the SCADA adjustment in the base

level of expenses of FY 2012-13.

RInfra-D requested the Commission to add back the SCADA adjustment subtracted

earlier to arrive at the correct level of target O&M Expenses for each year of the MYT

Control Period. RInfra-D has submitted the target level of expenses, if revised, to be as

follows:

Table 4-31: O&M Expenses after SCADA Adjustment as submitted by RInfra-D (Rs.

crore)


13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Net expenses approved by the

Commission 942.63 913.17 971.16 1032.86

SCADA netting off by Commission (to be

added back) 1.23 1.33 1.46 1.59

Correct level of approved O&M Expenses 943.87 914.50 972.62 1034.45

RInfra-D submitted that, since the actual O&M Expenses for FY 2012-13 of Rs. 971.50

crore includes the adjustments on account of SCADA charges attributable to RInfra-T and

the Land Usage Charges receivable from RInfra-T, and these adjustments are already

made in the individual heads of employee, A&G and R&M Expenses, they are not

separately shown in the expense sheets (Form 3.3, 3.4 & 3.5) of the Petition model.

According to RInfra-D, the difference between actual and approved level of O&M

Expenses (as per Table above) for FY 2012-13 is Rs. 971.50 crore minus Rs. 943.87

crore, i.e. Rs. 27.63 crore, which is equivalent to the wage revision arrears pertaining to

contract labour, approval of which was withheld by the Commission in the MYT Order.

RInfra-D requested that, in view of the justification provided, the actual expenses for FY

2012-13 be approved by the Commission.


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Table 4-32: O&M Expenses in FY 2012-13 as submitted by RInfra-D (Rs. crore)


O&M Expenses 942.60 971.50

RInfra-D submitted the actual O&M Expenses allocated to the wires and retail supply

businesses as shown below:

Table 4-33: Break-up of O&M Expenses in FY 2012-13 as submitted by RInfra-D (Rs.

crore)

Particulars Wires Supply Total

Employee Expenses 354.16 238.33 592.49

A&G Expenses 102.18 51.75 153.93

R&M Expenses 206.80 18.27 225.07

Total 663.15 308.35 971.50

RInfra-D submitted that it has not recognized any deviation between target and actual

O&M Expenses, and has accordingly not worked out any Efficiency Gains/losses.


In the MYT Order, the Commission had approved the actual employee and A&G

Expenses, invoking its powers to remove difficulties to relax the O&M norms specified in

the MYT Regulations. Hence, in truing up for FY 2012-13, the Commission has adopted

the same approach of allowing O&M Expenses based on the actuals.

Further, the Commission has considered the submission of RInfra-D with regard to

adjustments on account of SCADA charges attributable to RInfra-T and Land Usage

Charges receivable from RInfra-T. The Commission has approved the actual expenses

from the audited Reconciliation Statements submitted by RInfra-D showing allocation of

expenses and incomes between Generation, Transmission and Distribution Businesses.

The adjustments on account of SCADA charges attributable to RInfra-T and Land Usage

Charges receivable from RInfra-T have been covered in the approved O&M Expenses.

For approval of O&M Expenses for ensuing years, the Commission has considered the

approved O&M Expenses for FY 2012-13 in this Order as the base.

Employee Expenses

RInfra-D submitted the actual Employee Expenses incurred in FY 2012-13. The

Commission has verified them from the audited Reconciliation Statement showing


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allocation of expenses and income between Generation, Transmission and Distribution

Businesses. Accordingly, the Commission approves the actual Employee expenses as

submitted by RInfra-D. The Commission has accepted the submission of RInfra-D with

regard to allocation of Employee Expenses between Wires Business and Supply Business.

Administrative and General (A&G) Expenses

RInfra-D has submitted actual A&G Expenses incurred in FY 2012-13. The Commission

has verified these from the audited Reconciliation Statement, as for Employee Expenses.

Accordingly, the Commission approves the actual A&G Expenses submitted by RInfra-D.

The Commission has accepted the submission of RInfra-D with regard to allocation of

A&G Expenses between the Wires Business and Supply Business.

Repair and Maintenance (R&M) Expenses

RInfra-D has submitted the actual R&M Expenses incurred in FY 2012-13. In the MYT

Order, the Commission had not approved Rs. 27.63 crore claimed as wage revision

impact for contract workers, and had directed RInfra-D to submit justification at the time

of the MTR. Accordingly, RInfra-D has submitted the impact of the wage revision of

contract workers, based on the Memorandum of Agreement. Accordingly, after prudence

check, the Commission approves Rs. 27.63 crore towards the impact of wage revision of

contract workers.

The Commission has verified this from the audited Reconciliation Statement, as in the

case of Employee Expenses. Accordingly, the Commission approves the actual R&M

Expenses submitted by RInfra-D. The Commission has accepted its submission with

regard to allocation of R&M Expenses between the Wires Business and Supply Business.

In view of the above, the Commission has approved the actual O&M Expenses for FY

2012-13 as submitted by RInfra-D, as summarised below:

Table 4-34: O&M Expenses in FY 2012-13 approved by the Commission (Rs. crore)


Approved in this

Order

Wires Supply Total Wires Supply Total Wires Supply Total

Employee Expenses 354.16 238.33 592.49 354.16 238.33 592.49

A&G Expenses 102.18 51.75 153.93 102.18 51.75 153.93

R&M Expenses 206.80 18.27 225.07 206.80 18.27 225.07

Total O&M 942.63 663.15 308.35 971.50 663.14 308.35 971.49


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Approved in this

Order


Expenses 636.48

306.15

Since the Commission has approved the actual O&M Expenses, no sharing of Efficiency

Gains/loss has been applied to O&M Expenses.

4.7 CAPITAL EXPENDITURE AND CAPITALISATION

RInfra-D submitted that, during FY 2012-13, it has undertaken capital expenditure of Rs.

183.76 crore and has capitalised assets worth Rs. 199.47 crore. The Commission had

approved Rs. 362.96 crore towards capitalisation for FY 2012-13 in the MYT Order.

RInfra-D submitted that it has executed only those schemes for which in-principle

clearance has been obtained from the Commission, and has submitted a summary of DPR

and non-DPR wise capital expenditure incurred by it in FY 2012-13 as under:

Table 4-35: Capital Expenditure & Capitalisation in FY 2012-13 as submitted by


Business DPR

Schemes

Non-DPR

Schemes

Total Capital

Expenditure

Total

Capitalisation

Wires 149.73 24.67 174.40 189.77*

Supply 9.35 0.00 9.35 9.70*

Total 159.09 24.67 183.76 199.47

Note:* RInfra-D has mentioned Capitalisation as Rs. 190.12 crore and Rs. 9.35 crore for the

Wires Business and Supply Business, respectively, in the model

RInfra-D submitted that the above capitalisation amount includes Interest during

Construction (IDC). The DPR-wise capital expenditure and capitalisation, the asset wise

computation of IDC, and details of works carried out in FY 2012-13 have been submitted

with the Petition.

4.7.1 JUSTIFICATION FOR REDUCED CAPITAL EXPENDITURE FOR FY

2012-13

RInfra-D submitted that the MYT Order had approved capitalisation of Rs. 362.96 crore

for FY 2012-13, as against which it has been able to capitalize only Rs. 199.47 crore. The

shortfall in capitalisation is largely because of reduced fresh capital expenditure during

FY 2012-13. In its MYT Petition, RInfra-D had proposed capital expenditure of Rs.


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334.62 crore, as against which it incurred capex of only Rs. 183.76 crore. RInfra-D

submitted the following reasons for lower capital expenditure:

4.7.1.1 Change in Reinstatement policy of MCGM

RInfra-D submitted that the revised Trenching Policy of the Municipal Corporation of

Greater Mumbai (MCGM) resulted in lower expenditure for RInfra-D, since the rates at

which contracts were awarded to reinstatement contractors were 30% lower than the

earlier MCGM rates (effective saving of about 20% due to applicable service tax). It was

also difficult for RInfra-D to switch over to the new system immediately and award

contracts to good contractors, with the delay resulting in reduced capital expenditure due

to lower reinstatement costs and delay in excavation works.

4.7.1.2 Delay in Receiving Station Projects

As per the approved capital expenditure plan in the MYT Order, a number of 33/11kV

sub-station projects were proposed to be executed in a phased manner during the MYT

period. Capital expenditure was also planned on several 33/11kV sub-stations which were

to be started in the previous year, i.e., FY 2011-12, but did not proceed as envisaged.

RInfra-D submitted the list of the proposed projects and their status along with reasons for

delay. As a result of such delays, the capital expenditure incurred during FY 2012-13 on

these schemes was lower than planned.

4.7.1.3 Deferment of Capital Expenditure due to lower Peak Demand

RInfra-D submitted that, during preparation of the MYT DPRs (which formed the basis of

the capital expenditure plan submitted to and approved by the Commission), the peak

demand projection given by IIT-Bombay was considered as a base, i.e. a demand increase

of 4.3% for the period from 2011-12 to 2013-14. However, the actual realized peak

demand during this period has shown a CAGR of only 1.4%. Thus, as compared to FY

2011-12, the demand growth was only 2.8% till FY 2013-14 as against 8.8% growth

projected during MYT planning. This resulted in lower than anticipated peak demands in

various elements of the network. RInfra-D has, therefore, deferred some of its capex and

preferred to optimize the existing network instead.


The Commission has conducted scheme-wise prudence check, and has accordingly

approved the capital expenditure and capitalisation in the truing up for FY 2012-13. The

Commission has approved capitalisation only for those schemes that have been completed

and put to use.


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The Commission notes that there are several items for which IDC had been claimed for

FY 2012-13 for the first time but in respect of which there was no capitalisation in FY

2013-14. The Commission asked RInfra-D to clarify the position, with details. RInfra-D

conceded that, in its computations, it had inadvertently computed IDC even on those

assets which started during the year and were completed in the same year. Accordingly,

RInfra-D submitted the revised computation of scheme-wise IDC and capitalisation for

FY 2012-13.

Considering the above, the Capital Expenditure and Capitalisation approved by the

Commission for FY 2012-13 is as tabulated below:

Table 4-36: Capital Expenditure & Capitalisation in FY 2012-13 approved by the

Commission (Rs. crore)

Particular MYT Order RInfra-D Petition Approved in

this Order

Capital Expenditure

Wires Business 174.40 174.40

Supply Business 9.35 9.35

Total Capital Expenditure 183.75 183.75

Capitalisation

Wires Business 328.63 189.77* 189.09

Supply Business 34.33 9.70* 9.30

Total Capitalisation 362.99 199.47 198.40

Note:* RInfra-D has mentioned Capitalisation as Rs. 190.12 crore and Rs. 9.35 crore for the

Wires Business and Supply Business, respectively, in its model/submissions.

4.8 DEPRECIATION

RInfra-D submitted that it has calculated the Depreciation on assets in FY 2012-13

considering the rates specified in the MYT Regulations. However, since these rates for

different asset classes can be used to depreciate the assets up to 70% of their value,

RInfra-D has determined the effective rate of Depreciation after accumulated

Depreciation reaches the 70% threshold. It has considered the useful life of assets as

defined in the Regulations. In respect of assets for which the useful life is not specified in

the Regulations, it has been considered as per the Companies Act, 1956.

RInfra-D has considered the assets comprising the Opening GFA as on 1 April, 2012 and

their corresponding accumulated Depreciation, and has calculated the Depreciation based

on query run in the SAP system on the asset database with conditions in line with the


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MYT Regulations. It has codified a methodology in line with the Regulations in its SAP

system, which computes the Depreciation on each asset item through a built in logic. That

ensures that no asset is depreciated beyond 90% of the GFA, in accordance with the

Regulations.

RInfra-D submitted that it has considered the effect of retirement of assets and withdrawal

of corresponding accumulated Depreciation while computing Depreciation in FY 2012-

13. The Tables below show the Depreciation calculation for Wires and Retail Business for

FY 2012-13, as submitted by RInfra-D.

Table 4-37: Depreciation in Wires Business in FY 2012-13 as submitted by RInfra-D

(Rs. crore)


Opening GFA 3,636.75 3,636.74

Addition 328.63 189.77

Retirement 6.97 14.51

Closing GFA 3,958.41 3,812.00

Depreciation 165.73 156.75

Depreciation (as % average balance) 4.36% 4.21%

Table 4-38: Depreciation in Supply Business in FY 2012-13 as submitted by RInfra-D

(Rs. crore)


Opening GFA 506.55 506.56

Addition 34.33 9.70


Closing GFA 534.49 495.66


Depreciation (as % of average balance) 3.21% 4.16%


The Commission asked RInfra-D to submit computation of asset-wise Depreciation for

prudence check. RInfra-D responded that this would involve lakhs of assets. It submitted

that it has, instead, submitted a Certificate of Chartered Accountant as independent, third

party validation that the Depreciation computed by the SAP system is in accordance with

the said methodology, and has submitted it with its Petition.

For computation of Depreciation for FY 2012-13, the Commission has considered the

opening balance of GFA for Wires Business and Supply Business, as approved in the final


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truing up of FY 2011-12 in Order dated 4 April, 2013 in Case No. 124 of 2012. The

Commission has considered asset addition for FY 2012-13 in line with the approved

capitalisation for FY 2012-13. As regards the asset retirement, the Commission has

accepted the submission of RInfra-D. From the approved Opening GFA, asset addition

and asset retirement, the Commission has approved the closing GFA for FY 2012-13 for

the Wires and Supply Businesses.

From RInfra-D’s submission in Form F5 regarding asset type-wise Depreciation, the

Commission observed that, for some asset groups, the Depreciation considered by RInfra-

D is higher than that derived on the average value of assets at the Depreciation rates

specified in the MYT Regulations. Since RInfra-D could not submit the asset-wise

computation of the Depreciation, the Commission cannot fully rely on its submission and

could not undertake a prudence check. Therefore, for those asset groups for which the

Depreciation submitted by RInfra-D is higher than that derived by the Commission on

average asset values of the year, the Commission has considered the latter as the approved

Depreciation for that asset group.

In view of the above, the Commission has approved Depreciation for the Wires Business

and Supply Business for FY 2012-13 as tabulated below:

Table 4-39: Depreciation in Wires Business in FY 2012-13 as approved by the


Particulars MYT Order RInfra-D

Petition

Approved in

this Order

Opening GFA 3636.75 3636.74 3636.75

Addition 328.63 189.77 189.09

Retirement 6.97 14.51 14.51

Closing GFA 3958.41 3812.00 3811.34

Depreciation 165.73 156.75 155.75

Depreciation (as% of GFA) 4.36% 4.21% 4.18%

Table 4-40: Depreciation in Supply Business in FY 2012-13 as approved by the



Petition

Approved in

this Order

Opening GFA 506.55 506.56 506.55

Addition 34.33 9.70 9.30

Retirement 6.39 20.60 20.60

Closing GFA 534.49 495.66 495.25


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Petition

Approved in

this Order

Depreciation 16.69 20.85 20.83

Depreciation (as% of GFA) 3.21% 4.16% 4.16%

4.9 INTEREST ON LONG TERM LOAN CAPITAL

RInfra-D submitted that it has been incurring capital expenditure for various schemes

approved by the Commission, and that it's funding till FY 2010-11 has been done through

internal accruals. RInfra-D has been considering a debt: equity ratio of 70:30 for assets

capitalised in each year till FY 2010-11, in accordance with the provisions of the Tariff

Regulations, where 70% of assets capitalised are considered to be funded by way of

normative debt.

During FY 2011-12, RInfra-D had raised Rs. 1000 crore by way of Non-Convertible

Debentures (NCD) and had taken a loan of Rs. 350 crore from Central Bank of India, for

which it had offered for security the assets created and capitalised before the disbursement

of loans. RInfra-D submitted that, in the truing-up Petition for FY 2010-11 and FY 2011-

12 (Case No. 124 of 2012), it had claimed interest charges for FY 2011-12 considering

the actual loans which had replaced the opening normative loans for FY 2011-12.

However, the Commission did not accept such replacement of opening balance of

normative loans for FY 2011-12 with the actual loans. Instead, it approved the interest

expenses on the opening balance of admitted loans for FY 2011-12 by considering only

normative interest rates, as in previous Tariff Orders. RInfra-D’s Appeal No. 164 of 2013

was pending before ATE at the time of filing of the Petition.

RInfra-D submitted that, in the MYT Petition, it had claimed interest expenses on existing

loans from FY 2012-13 to FY 2015-16 based on the actual cost of debt realised during FY

2011-12. However, the Commission had approved the interest expenses on all loans by

considering the cost of debt worked out for the RInfra Company as a whole, considering

the loans as per the audited annual accounts of RInfra.

RInfra-D submitted that RInfra as a Company has both regulated and non-regulated

businesses and considering the interest rate of loans sanctioned for un-regulated

businesses would not be a correct interpretation of Regulation 33.5 of the MYT

Regulations.


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RInfra-D submitted that the Commission, in the MYT Order, has worked out the weighted

average rate of interest for RInfra as a whole after disregarding certain loans taken by the

Company exclusively for capital expenditure in the licensed businesses, i.e., considering

only those loans which pertain to other businesses which are not regulated by the

Commission, for determining the weighted average rate of interest allowable for the MYT

Period.

RInfra-D submitted that this approach of the Commission contravenes various ATE

Judgments which hold that the regulated businesses should be treated as stand-alone

businesses to avoid the risk and return of the regulated business being shared with the un-

regulated ones and vice-versa.

RInfra-D submitted that the term “actual loan” in the MYT Regulations implies an actual

borrowing by any regulated business, irrespective of whether it is approved by the

Commission or not. These actual loans should have been considered for determining the

weighted average rate of interest.

RInfra-D contended that, in view of the above, since the MYT Regulations deal only with

regulated businesses under the jurisdiction of the Commission, the weighted average rate

of interest for the MYT Period should be determined either by considering the actual

borrowings of RInfra-D or, if the Commission disapproves of capex loans of RInfra-D,

then all its loan capital should be considered normative, and a market-reflective rate of

interest for the Distribution Business should be determined, in accordance with the ATE

Judgments. For the purposes of truing-up, RInfra-D has taken the former approach, and

computed a weighted average rate of interest of all its actual capex loans. RInfra-D

submitted the details of computation of weighted average rate of interest of actual loans

with its Petition.

RInfra-D submitted that, since no fresh debt is actually drawn during FY 2012-13, the

70% portion of asset capitalisation (after netting of consumer contribution) is considered

as normative debt for the purpose of ARR. RInfra-D has considered the repayments for all

debt equivalent to the Depreciation available in FY 2012-13, in line with the Regulations.

RInfra-D’s submissions regarding interest on loan are without prejudice to its pending

Appeal No. 274 of 2013. Based on the above submissions and considering the loan

addition during FY 2012-13 as 70% of net capitalisation (capitalisation net of consumers

contribution), it has worked out the interest charges claimed for true-up of FY 2012-13 as

given below:


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Table 4-41: Interest Expenses for FY 2012-13 as submitted by RInfra-D (Rs. crore)

Particulars Supply Wires Total

MYT Order 14.19 113.70 127.89

RInfra-D Petition

Opening Balance 146.68 1262.88 1409.56


Repayment 20.85 156.75 177.60

Closing Balance 132.62 1227.12 1359.74

Interest 15.29 136.29 151.58


During the present proceedings, the ATE has issued its Judgment dated 8 April, 2015 on

various Appeals of RInfra-G, RInfra-T and RInfra-D, including Appeal No. 274 of 2013

in which the issue of weighted average interest rate on loans was raised by RInfra-D. The

ATE has ruled that the interest rate for the actual loans taken by RInfra to replace the

normative loans and loans taken for new capital works should be considered by the

Commission for the ensuing years and re-determined for the previous years. The ATE has

clarified the meaning of Regulation 33.5 of the MYT Regulations, 2011, and directed that

the interest on loans has to be taken as per the weighted average rate of interest on the

actual loan portfolios at the beginning of each year. Further, although there is no provision

for replacement of outstanding normative loan by actual loan, there is no bar on replacing

the outstanding normative loans as on 1 April, 2011 by actual loan, provided that the

actual loan has been taken for assets taken into service prior to 1 April, 2011 and RInfra-

D can establish that no prejudice has been caused to the consumers by arranging loans at

better terms than the prevailing market interest rates.

In view of the ATE’s rulings, the Commission asked RInfra-D to establish, with

documentary evidence, that the actual loans taken by it to refinance the normative loan

have been used for assets created prior to 1 April, 2011; and also to establish that it has

taken loans at better terms than the prevailing market interest rates at that time, thereby

causing no prejudice to the consumers.

In its response, RInfra-D submitted documentary evidence to the effect that these loans

replaced the outstanding normative loans as on 1 April, 2011, and have been taken to

replace debt associated with assets created prior to that date. RInfra-D further submitted

the Debenture Trust Deed for the Rs. 1000 crore NCDs and the Indenture of Mortgage for

the loan from Central Bank of India. These show that the debt so raised was secured by


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creating charge on assets created prior to 1 April, 2011 and, hence, has replaced the

normative debt associated with such capital works.

RInfra-D submitted that the Commission has, in its Order in Case No. 180 of 2011,

permitted 11.50% as the market reflective rate of interest for FY 2011-12, whereas the

actual weighted average rate of interest of the NCDs and Term Loan from Central Bank

for FY 2011-12 works out to a lower rate of 11.13%. Thus, it can be said that the

replacement of normative debt as on 1 April, 2011 by actual debt has not caused any

prejudice to consumers. RInfra-D submitted that, accordingly, the replacement of

normative debt as on that date by actual debt meets the criteria set out by the ATE for

such replacement.

According to the ATE, the interest rate on the actual loans taken by RInfra-D for new

capital works should be decided taking into account market interest rates of loans and

actual loans availed, and considering that the tenure of long-term loans can be from 3 to

10 years and the interest rate thereon depends on the Base Rate of the bank and the risk

spread. Thus, the actual loans taken by RInfra-D will have to be compared with the

market interest rate for determining the allowable weighted average interest rate, as per

Regulation 33.5 of the MYT Regulations.

RInfra-D submitted that the actual loans taken by it for its capital expenditure or

replacement of its normative debt carry an interest rate which reflects the market interest

rate for such borrowings at that given point of time. RInfra has conducted an analysis of

the Base Rate of various scheduled commercial banks prevailing at times when actual

loans were drawn by it, in order to determine the average market rate of interest for

comparison with its actual borrowings. It submitted a copy of its analysis along with its

reply.

RInfra-D contended that, based on the above and the analysis of market rates of interest,

the actual loans taken for replacing normative debt at various times as well as for fresh

capital expenditure during the MYT Period meet the criteria set by the ATE, since their

interest rates are well within the market rate of interest. The replacement of normative

debt does not cause any prejudice to the consumers, nor is the cost of debt of fresh loans

inferior to the market rate of interest. RInfra-D submitted that, in its Petition, in order to

determine the allowable interest on long term loans, it has worked out the weighted

average rate of interest for each financial year based on its actual loan portfolio. It has

also considered the normative loan capital, if any, admitted as per the capitalisation plan

at that interest rate. This weighted average interest rate is worked out from a loan portfolio

whose individual rates of interest are well within the market reflective rates. Accordingly,


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interest has been determined for each financial year in accordance with the Regulation

33.5. RInfra-D submitted that the Petition, even in its present form, captures the findings

of the ATE Judgment, and no further impact is required to be determined.

RInfra-D submitted the utilization of the loan and NCDs in RInfra-D’s ARR as under:

Table 4-42: Utilization of loan and NCDs in RInfra-D’s ARR as submitted by RInfra-D

(Rs. crore)


NCDs - Rs. 1000 Crore Replacing the opening normative loans of FY 2011-12 878.02 121.98

1000.00 Loans pertaining to capitalisation in FY 2011-12 Term Loan - Rs. 350 Crore

Replacing the opening normative loans of FY 2011- 12 294.69 40.94 350.00

Loans pertaining to capitalisation in FY 2011-12 14.38

RInfra-D submitted that, in FY 2013-14, it has raised Rs. 500 Crore (from IDBI Bank)

and Rs. 650 Crore (from Axis Bank) by way of NCDs for various purposes. The NCD has

been secured by a pari-passu charge on the assets of RInfra spread across different

businesses. Certain fixed assets of the Mumbai Distribution Business are also securitized

against the NCDs, details of which have been provided in the Debenture Trust Deeds.

RInfra-D submitted that, based on the book value of assets of the Mumbai Distribution

Business securitized, the part of NCD attributable to RInfra-D is Rs. 250 Crore. Further,

Rs. 500 Crore NCD from IDBI Bank has been secured by a pari-passu charge on the

assets of Mumbai Distribution Business as well as the windmills located outside Mumbai.

Based on the book value of assets of Mumbai Distribution Business securitized, the part

of NCD attributable to RInfra-D is Rs. 450 Crore. Thus, the total amount attributable to

RInfra-D from these two NCDs is Rs. 700 Crore, which has been utilised for replacement

of opening normative debt as on 1 April, 2013 as well as further capital expenditure.

Table 4-43: Utilization of loan and NCDs in RInfra-D’s ARR as submitted by RInfra-D

(Rs. crore)

Particulars Interest Rate claimed in Petition Market Reflective rate

FY 2012-13 10.95% 11.44% FY 2013-14 10.77% 11.26% FY 2014-15 10.70% 11.30%

RInfra-D submitted that, in view of all the above points, no prejudice has been caused to

its consumers.


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Considering the ATE Judgment, the Commission has accepted RInfra-D's detailed

submissions, and considered the actual loans taken by it for replacement of the normative

loans of previous years. Accordingly, computation of interest rate on debt for FY 2012-13

has been done by considering the actual loan portfolio of RInfra-D as on 1 April, 2012.

The Commission asked RInfra-D to submit documentary proof from the opening balance

of loans and interest rates as on 1 April, 2012. RInfra-D submitted certificates from all the

banks regarding outstanding amounts and applicable interest rate as on 1 April, 2012.

Accordingly, the rate of interest on long term loans computed by the Commission is as

tabulated below:

Table 4-44: Loan Portfolio of RInfra-D as on 1 April, 2012 and Computation of

applicable Interest Rate for FY 2012-13

Source of Loan

Amount outstanding

as on 1 April, 2012

(Rs. crore)

Applicable interest

rate as on 1 April,

2012

LIC & others (Series 5) 585.00 10.72% NIACL (Series 6) 50.00 10.72%

YES Bank (Series 8,9&10) 365.00 10.72%

Loan - Central Bank of India 350.00 11.80%

Total 1,350.00 11.00%

Accordingly, the Commission has approved the rate for computation of interest on long-

term loans for FY 2012-13 as 11.00%. In its submissions, RInfra-D has allocated these

loans to the Wires Business and Supply Business, and computed the interest accordingly.

Further, as the ratio of allocation of various loans to the Wires Business and Supply

Business is different, the interest rate considered by RInfra-D for each is also different.

However, since the Commission does not have any basis for such allocation of loans, it

has considered the same interest rate on long-term loans for both the Wires Business and

the Supply Business.

As regards the amount of loan, the Commission has considered the opening balance of the

loan for FY 2012-13 to be the same as the closing balance approved by it for FY 2011-12

in the final truing up in Order dated 4 April, 2013 in Case No. 124 of 2012. For assets

capitalised in FY 2012-13, the Commission has considered 70% of the additional asset

value as normative debt, in accordance with the MYT Regulations.

Accordingly, the Commission approves interest on loan for FY 2012-13 as given in the

following Table:


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Table 4-45: Interest Expenses for FY 2012-13 as approved by the Commission (Rs.

crore)

Particulars MYT Order RInfra-D Petition Approved in this

Order

Wires Business

Opening Balance 1262.87 1262.88 1262.88


Repayment 165.73 156.75 155.75

Closing Balance 1327.19 1227.12 1227.65

Interest 113.70 136.29 137.02

Supply Business

Opening Balance 157.94 146.68 146.68


Repayment 16.69 20.85 20.83

Closing Balance 165.29 132.62 132.36

Interest 14.19 15.29 15.35

4.10 RETURN ON EQUITY

RInfra-D submitted that it has worked out the RoE by considering the opening equity

balance and equity portion of new capitalisation.

RInfra-D has reduced the Consumer Contribution of Rs. 16.91 crore during FY 2012-13

from the capitalisation for determining the equity eligible for return, and the opening

equity as on 1 April, 2012 is based on the True-Up Order for FY 2011-12. RInfra-D has

considered equity addition during the year based on 30% of net capitalisation. It has

subtracted equity @ 30% corresponding to assets retired from the total equity to arrive at

the closing regulatory equity for the year. RInfra-D submitted that it has computed the

RoE on the average regulatory equity balance (average of opening and closing values) at

the rates prescribed in the MYT Regulations for Wires and Retail Supply Businesses. The

details of the regulatory equity calculations for Wires and Supply Business as submitted

by RInfra-D are given in the tables below:

Table 4-46: Return on Equity for FY 2012-13 as submitted by RInfra-D (Rs. crore)

Particulars Wires Business Supply

Business

Regulatory Equity at the beginning of the year 1418.44 156.29

Capitalisation during the year 189.77 9.70

Consumer Contribution and Grants 16.92 0.00


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Particulars Wires Business Supply

Business

Capitalisation net of Consumer Contribution 172.85 9.70

Equity portion of capitalisation during the year 51.86 2.91

Equity portion of asset retired during the year 4.35 6.18

Regulatory Equity at the end of the year 1465.94 153.02

Rate of Return (%) 15.50% 17.50%

Total RoE 223.54 27.06

RInfra-D requested the Commission to approve the RoE in truing up for FY 2012-13 as

Rs. 250.60 crore.


To determine the equity eligible for returns as per the Regulations, the Commission has

considered opening for FY 2012-13 as the same as the closing equity of FY 2011-12, as

approved in final truing up for FY 2011-12. Additional equity has been approved as 30%

of the approved capitalisation for the year, after reducing the consumer contribution.

Further, 30% of asset retirement approved is reduced from it to arrive at the equity

eligible for returns as per the MYT Regulations.

The Commission has considered the rate of RoE as 15.5% for the Supply Business and

17.5% for Wires Business, in accordance with the Regulations. Accordingly, the RoE

approved by the Commission for FY 2012-13 is as given in the Table below:

Table 4-47: Return on Equity approved by the Commission for FY 2012-13 (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved

in this

Order

Wires Business

Regulatory equity at the beginning of the year 1418.44 1418.44 1418.44

Capitalisation during the year 328.63 189.77 189.09

Equity portion of capitalisation during the year 90.90 51.86 51.65

Consumer Contribution and grants used during

the year for capitalisation 18.65 16.92 16.92

Reduction in equity capital on account of

retirement/replacement of assets 6.97 4.35 4.35

Regulatory equity at the end on the year 1509.34 1465.94 1465.74

Rate of return on equity 15.50% 15.50% 15.50%

Return on equity 226.90 223.54 223.52

Supply Business


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Particulars MYT

Order

RInfra-D

Petition

Approved

in this

Order








Return on Equity 28.08 27.06 27.05

4.11 INTEREST ON WORKING CAPITAL

RInfra-D submitted that it has calculated Interest on Working Capital (IoWC) for its

Wires Business and Retail Business in accordance with Regulations 35.3 and 35.4 of the

MYT Regulations. It has considered the interest rate as 14.75% for calculating IoWC,

which was the State Bank Advance Rate (SBAR) prevailing on 1 April, 2012.

RInfra-D submitted that one of the components for determining Working Capital for

Wires Business is one sixth of the expected revenue from “charges for use of distribution

wires” at prevailing tariffs. In its MYT Petition, it had considered Wheeling Charges only

from change-over consumers for determining one sixth of such revenue. However, since

the distribution wires are being used by both change-over consumers and its own

consumers, in this Petition RInfra-D has considered Wheeling Charges from change-over

consumers as well for computing one sixth of the revenue from charges for use of

distribution wires at prevailing tariffs.

RInfra-D submitted that, in FY 2012-13, Wheeling Charges for its own consumers were

bundled in the Energy Charges, and were thus not separately available. RInfra-D has

calculated the total Wheeling Charges collected from own consumers by applying the then

prevailing Wheeling Charges (Rs. 0.46 for HT and Rs. 0.88 for LT) on energy sales to

determine one sixth of the revenue from charges for use of distribution wires at prevailing

tariffs for FY 2012- 13.

RInfra-D submitted the IoWC for Wires and Supply Business as given below:


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Table 4-48: Interest on Working Capital for Wires Business for FY 2012-13 as


Particulars Amount

One Twelfth of O&M Expenses 55.24

One Twelfth of the sum of book value of stores, materials and supplies 53.55

One Sixth of the expected Revenue from charges for use of

Distribution Wires at prevailing tariffs 132.44

Less:

Amount of Security Deposit from Distribution System Users 0.00

Total Working Capital 241.22

Rate of Interest 14.75%

Interest on Working Capital 35.58

Table 4-49: Interest on Working Capital for Supply Business for FY 2012-13 as


Particulars Amount

One Twelfth of O&M Expenses 25.70

One Twelfth of the sum of book value of stores, materials and supplies 0.00

One Sixth of the expected Revenue from sale of electricity at prevailing tariffs 667.69

Less:

Amount of Security Deposit from Supply Consumers 292.76

One month equivalent of cost of power purchased 203.82





The Commission has approved IoWC for RInfra-D’s Wires Business and Retail Business

in accordance with Regulations 35.3 and 35.4 of the MYT Regulations.

The Commission finds reasonable the submission of RInfra-D that since the distribution

wires are being used by both change-over consumers and own consumers, Wheeling

Charges received from both should be considered to determine one sixth of the revenue

from charges for use of distribution wires at prevailing tariffs.

Since the revenue from Wheeling Charges from own consumers were bundled in the

Energy Charges, the Commission has accepted RInfra-D’s computation of Wheeling


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Charges collected from own consumers by applying the then prevailing Charges (Rs. 0.46

per kWh for HT and Rs. 0.88 per kWh for LT) on energy sales. One-sixth of the revenue

from charges for use of distribution wires at prevailing tariffs for FY 2012-13 has been

considered accordingly.

RInfra-D has submitted that it has considered the interest rate of 14.75% for IoWC

considering the State Bank Advance Rate (SBAR) prevailing on 1 April, 2012. In this

regard, Regulation 35.4 (b) of the MYT Regulations specifies as under:

“(b) Rate of interest on working capital shall be on normative basis and shall be

equal to the State Bank Advance Rate (SBAR) of State Bank of India as on the

date on which the application for determination of tariff is made.”

Hence, since the truing up for FY 2012-13 is being undertaken of the ARR approved for

FY 2012-13 in the MYT Order, the interest rate for computation of IoWC for that year

should be the rate approved in the MYT Order, which was based on the SBAR prevailing

at the time of filing of the MYT Petition. Accordingly, the Commission has considered

14.50 % as the rate for computation for IoWC for FY 2012-13.

Accordingly, the IoWC for FY 2012-13 approved by the Commission is as given below:

Table 4-50: Interest on Working Capital for Wires Business in FY 2012-13 approved by

the Commission (Rs. crore)

Particular MYT

Order

RInfra-D

Petition

Approved in

this Order

One-twelfth of the amount of O&M Expenses

55.26 55.26

One-twelfth of the sum of the book value of

stores, materials and supplies

53.55 53.55

One Sixth of the expected Revenue from charges

for use of Distribution Wires at prevailing tariffs

132.44 132.44

Less:

Amount of Security Deposit From Distribution

System users

0.00 0.00

Total Working Capital

241.25 241.25

Rate of Interest (% p.a.)

14.75% 14.50%

Interest on Working Capital 21.54 35.58 34.98


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Table 4-51: Interest on Working Capital for Supply Business in FY 2012-13 approved

by the Commission

Particular MYT

Order

RInfra-D

Petition

Approved in

this Order

One-twelfth of the amount of Operations and

Maintenance Expenses 25.70 25.70

One-twelfth of the sum of the book value of

stores, materials and supplies 0.00 0.00

Two months of the expected revenue from sale

of electricity at the prevailing tariffs 667.69 667.69

Less: 0.00 0.00

Amount of Security Deposit from retail supply

consumers 292.76 292.76

One month equivalent of cost of power

purchased 203.82 201.38

Total Working Capital 196.81 199.25

Rate of Interest (% p.a.) 14.75% 14.50%

Interest on Working Capital 70.26* 29.03 28.89

*Including Interest on Consumer Security Deposit, which has been considered separately

in this Order

4.12 INTEREST ON SECURITY DEPOSIT

RInfra-D submitted that the Security Deposits from its own consumers as on 31 March,

2013 amount to Rs. 292.76 crore. It has provided interest on these Deposits by

considering the Bank Rate as the interest rate, as per Regulation 35.4(c), which has varied

from 8.5% to 9.5% in FY 2012-13.

Table 4-52: Interest on Security Deposit for FY 2012-13 as submitted by RInfra-D (Rs.

crore)

Interest on Security Deposit Amount

Value of Consumer Security Deposit 292.76

Interest Rate (%) 8.5%-9.5%

Interest on Consumer Security Deposit 20.47

RInfra-D requested the Commission to approve the interest on CSD for FY 2012-13 as

submitted by it.


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The interest on CSDs has been considered by the Commission as approved for FY 2012-

13 in the MYT Order, in accordance with Regulation 35.4 (c) of the MYT Regulations,

2011, which reads as follows:

“Interest shall be allowed on the amount held as Security Deposit from retail

supply consumers at the Bank Rate as on the date on which the application for

determination of tariff is made.”.

Since the truing up for FY 2012-13 is being carried out with respect to the ARR approved

for FY 2012-13 in the MYT Order, the interest rate for computation of interest on CSD

for FY 2012-13 should be the rate approved in that Order, which was based on the Bank

Rate prevailing at the time of filing of the MYT Petition. Accordingly, the Commission

has considered 9.0% as the rate for computation for IoWC for FY 2012-13.

Accordingly, the interest on CSD approved by the Commission for FY 2012-13 is as

given below:

Table 4-53: Interest on Consumer Security Deposit for FY 2012-13 approved by the


Particular MYT Order RInfra-D

Petition

Approved in

this order

Interest on Consumer Security

Deposit

Included along

with IoWC 20.47 20.47

4.13 PROVISION FOR BAD AND DOUBTFUL DEBTS

RInfra-D submitted that it has made a provision of Rs. 12.13 crore towards bad and

doubtful debts for FY 2012- 13. Since the actual provision is more than the allowable

amount, it has restricted its claim to the maximum allowed by the Regulations. Since no

actual segregation of Debtors exists as between the Wires Business and Supply

Businesses, RInfra-D has considered 1.5% of total debtors of the Distribution Business as

allowable receivables, and then segregated the allowable provision between the two

segments based on their total revenue. RInfra-D submitted the computation as below:

Table 4-54: Provision for Bad and Doubtful Debts for FY 2012-13 as submitted by

RInfra-D (Rs. Crore)

Particulars

RInfra-D

Petition

Receivables (As per URIM Statement for Q4 of FY 2012-13) 621.98


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Particulars

RInfra-D

Petition

% of Receivables 1.50%

Provision for Bad Debts –Total 9.33

Total Revenue – Wires 794.65

Total Revenue – Retail 3983.85

Provision for Bad Debts –Wires 1.55

Provision for Bad Debts –Retail 7.78

RInfra-D requested the Commission to approve the provision for bad debts in the trued up

ARR for FY 2012-13 accordingly.


In accordance with Regulations 78.6 and 92.9, the maximum provision for bad and

doubtful debts for a year can be 1.5% of the receivables for the Wires and Supply

Businesses of the Distribution Licensee, subject to a cumulative limit of provisioning for

bad and doubtful debts being within 5% of the receivables. For applying this provision,

the Commission has allocated the total value of receivables submitted by RInfra-D in the

ratio of the respective ARRs of the Wires Business and Supply Business as the revenue

from the Wires Business is not available for FY 2012-13, and the same principle has been

adopted for FY 2013-14 and subsequent years also.

The Commission has approved provision for bad and doubtful debts for FY 2012-13 at

1.5% of the receivables of the respective businesses. The Commission has also verified

that the cumulative provisions for bad and doubtful debts for Wires Business and Supply

Business have not exceeded 5% of the receivables of the respective businesses.

Accordingly, the Commission has approved the provision for bad and doubtful debts for

FY 2012-13 as shown in the following Table:

Table 4-55: Provision for Bad and Doubtful Debts for FY 2012-13 approved by the


Particulars MYT Order

RInfra-D

Petition

Approved in

this Order

Provision for Bad Debts and doubtful debts

for Wires Business 0.00 1.55 2.07

Provision for Bad Debts and Doubtful 0.00 7.78 7.26


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Particulars MYT Order

RInfra-D

Petition

Approved in

this Order

debts for Supply Business

Total 0.00 9.33 9.33

4.14 CONTRIBUTION TO CONTINGENCY RESERVE

RInfra-D submitted that, in accordance with Regulation 36.1 of the MYT Regulations, it

has contributed Rs. 1.27 crore and Rs. 9.09 crore towards the Contingency Reserve for

Supply Business and Wires Business, respectively, in FY 2012-13, which amount to

0.25% of their opening GFAs. The Tables below give the summary of contribution to

Contingency Reserve for Supply and Wires Businesses for FY 2012-13, as submitted by

RInfra-D.

Table 4-56: Contribution to Contingency Reserve for Wires Business in FY 2012-13 as



Opening Balance of GFA 3636.75 3636.74

% Contribution 0.25% 0.25%

Contribution to Contingency Reserve 9.09 9.09

Table 4-57: Contribution to Contingency Reserve for Supply Business in FY 2012-13 as



Opening Balance of GFA 506.55 506.56

% Contribution 0.25% 0.25%


RInfra-D requested the Commission to approve the actual contribution to Contingency

Reserve for FY 2012-13 as above.


The Commission has approved the provision for Contingency Reserves for Wires

Business and Supply Business for FY 2012-13 at 0.25% of the approved value of the

opening GFA for the respective Businesses, in accordance with the Regulations.


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The Commission has also verified that the contribution to Contingency Reserve for FY

2012-13 has been invested in the approved securities. In reply to a query by the

Commission, RInfra-D has submitted the opening balance of Contingency Reserve as on

1 April, 2012, along with the interest rates of the securities, as below:

Table 4-58: Opening balance of Contingency Reserve as on 1 April, 2012 as submitted

by RInfra-D

Security Opening Balance of CR

for RInfra-D (Rs. crore) Interest Rate (%)

CGI, 2017 5.21 7.46%

IIFCL, 2014 48.13 6.85%

Total 53.34 -

Accordingly, the Commission approves the contribution to Contingency Reserves for FY

2012-13 as shown in the following Table:

Table 4-59: Contribution to Contingency Reserves for FY 2012-13 approved by the



Wires Supply Wires Supply Wires Supply

Opening Balance of GFA 3636.75 506.55 3636.74 506.56 3636.75 506.55

% Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%

Contribution to CR 9.09 1.27 9.09 1.27 9.09 1.27

4.15 INCOME TAX

RInfra-D submitted that, in its MYT Petition, it had claimed Income Tax for each year of

the Control Period as approved in its Business Plan Order (Case No. 158 of 2011).

However, in the MYT Order (Case No. 9 of 2013), the Commission had approved ‘zero’

Income Tax for all the years of the Control Period, on the basis that the Income Tax for

FY 2011-12 was nil. In its counter-affidavit in RInfra-D’s Appeal No. 274 of 2013 before

the ATE, the Commission submitted that it would consider the matter of Income Tax in

accordance with the ATE Judgment in Appeal Nos. 138 & 139 of 2012.

RInfra-D submitted that, accordingly, it has calculated Income Tax on a stand-alone basis

for the Distribution Business as per the methodology laid down by ATE in its Judgments

dated 15 February, 2011 (Appeal Nos. 173 and 174 of 2009), i.e., income minus expenses

for calculation of PBT and Income Tax thereon.


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The Income Tax on stand-alone basis as submitted by RInfra-D is shown in the Table

below:

Table 4-60: Income Tax for FY 2012-13 as submitted by RInfra-D (Rs. crore)

Particulars Amount

Power Purchase Expenses 3,563.92

O&M Expenses 9,711.50

Depreciation 177.60

Interest on Long Term Loans 151.58

IoWC & CSD 85.08

Provision for Bad Debts 9.33

Transmission Charges - Intra State 261.37

Contribution to Contingency Reserve 10.36

Total Expenditure – A 5,230.74

Non-Tariff Income 172.12

Income from Wheeling Charges 258.79

Income on account of CSS 99.20

Revenue from sale of Electricity 4,421.69

Total Revenue – B 4,951.80

Profit Before Tax (PBT) (B-A) (278.94)

Add: Depreciation as per ARR 177.60

Less: Depreciation as per IT Act 236.46

Total Profit (337.80)

Income Tax Rate 32.45%

Income Tax on Total -


In the MYT Order, the Commission had considered the Income Tax for FY 2012-13 as

nil. During the present proceedings, the ATE has issued its Order dated 8 April, 2015 on

various Appeals of RInfra-G, RInfra-T and RInfra-D, including Appeal No. 274 of 2013.

The ATE has stated that its ruling on the issue of Income Tax in Judgment dated 2

February, 2013 in Appeal No. 138 and 139 of 2012 would be applicable in that Appeal

also.

In accordance with the ATE ruling, RInfra-D has submitted the Income Tax on PBT basis

and stand-alone basis for the Distribution Business. Since a loss has been computed for

FY 2012-13, such loss has been carried forward to FY 2013-14. However, the


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Commission observed that RInfra-D did not mention any profit or loss made in previous

years, and whether the loss, if any, of FY 2011-12 had been carried forward to FY 2012-

13 for computation of Income Tax for that year. Hence, RInfra-D was directed to submit

the Income Tax computed similarly for the years since FY 2009-10. From RInfra-D’s

reply, the Commission has worked out the Income Tax for FY 2009-10 to FY 2011-12, as

detailed in Section 3, where the issues relating to ATE Judgments have been addressed.

As elaborated in Section 3, the Commission has worked out an accumulated loss of Rs.

699 crore in FY 2011-12, which needs to be carried forward to FY 2012-13 for

computation of Income Tax for that year.

The Commission has accordingly carried forward the loss of FY 2011-12 to FY 2012-13

and computed the Income Tax for FY 2012-13. The computation of Income Tax for FY

2012-13 as submitted by RInfra-D and as approved by the Commission is given below:

Table 4-61: Income Tax for FY 2012-13 approved by the Commission (Rs. crore)

Particulars

FY 2012-13

RInfra-D

Petition

Approved in

this Order

Power Purchase Expenses 3563.92 3534.66

O&M Expenses 971.50 971.49

Depreciation 177.60 176.58 Interest on Long Term Loans 151.58 152.37 IoWC & CSD 85.08 84.34

Provision for Bad Debts 9.33 9.33

Transmission Charges - intra State 261.37 261.37


Total Expenditure – A 5230.74 5200.51 Non-Tariff Income 172.12 164.69

Income from Wheeling Charges 258.79 258.79

Revenue from RAC from C/O consumers 0.00 0.00

Income on account of CSS 99.20 99.20

Revenue from sale of Electricity 4421.69 4421.69

Total Revenue – B 4951.80 4944.37

Profit Before Tax (PBT) (B-A) (278.94) (256.15) Add: Depreciation as per ARR 177.60 176.58 Less: Depreciation as per IT Act 236.46 236.46

Total Profit (337.80) (316.02) Total PBT for the Year (316.02) Total loss carried forward from previous year (699.09)

Net PBT for FY 2013-14 (1015.12) Income Tax Rate 32.45% 32.45%


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Particulars

FY 2012-13

RInfra-D

Petition

Approved in

this Order

Income Tax 0.00 0.00

The Income Tax for FY 2012-13 computed on PBT basis works out to zero. There is a

carry-forward loss of Rs. 1015.12 crore, which has been carried forward to FY 2013-14

for computation of Income Tax, as discussed in Section 4.

4.16 NON-TARIFF INCOME

RInfra-D submitted that, in its MYT Petition, it had estimated the Non-Tariff Income for

FY 2012-13 as Rs. 168.55 crore. In its Order, the Commission approved the Non-Tariff

Income at Rs. 183.17 crore, treating Land Usage Charges from RInfra-T and rental

income from the Devidas Lane office as Non-Tariff Income instead of as Income from

Other Business as claimed by RInfra-D. RInfra-D has appealed against this before the

ATE (Appeal No. 274 of 2013), which is pending.

In the MYT Order, the Commission had stated that these are costs arising between the

regulated businesses of the same Company in the same State. RInfra-D has submitted that

rent receivable from the Company for use of the Devidas Lane Office is not a transaction

between two regulated businesses of RInfra, as the Corporate Division of RInfra is not

regulated. RInfra-D submitted that the utilization of spare space at RInfra-D’s office

premises by an un-regulated entity amounts to optimum utilisation of a regulated asset by

the Distribution Licensee. The income accrued thereon should, therefore, be considered as

Income from Other Business under the terms of the EA, 2003. While Land Usage Charges

receivable from RInfra-T can be considered as Non Tariff Income, rental income from the

Devidas Lane Office should not. RInfra-D submitted that, without prejudice to its

contentions raised in Appeal No. 274 of 2013, it has included the Land Usage Charges

receivable as Non Tariff Income, in accordance with the MYT Order.

RInfra-D submitted that the rebate on Power Purchase Cost availed by it in FY 2012-13

has been included in the Non-Tariff Income for FY 2012-13, as directed in Order dated 15

June, 2012 (Case No. 180 of 2011).

RInfra-D has invested the Contingency Reserve funds in approved securities, as presented

in the Notes to the Annual Accounts of FY 2012-13 (Sections 13 (c) to 16 (a)). It has

applied the weighted average rate of interest for the investments as per the Annual

Accounts of FY 2012-13 on the average balance of Contingency Reserve to determine the

interest.


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RInfra-D submitted that, as a part of Mumbai System Strengthening schemes, RInfra-T

has commissioned 5 EHV stations at Goregaon, Gorai, Saki, Borivali and Chembur on the

existing Receiving Stations plots of RInfra-D, by re-arranging the existing installations.

Similarly, there are a few installations of RInfra-D on the Aarey, Versova and

Ghodbunder EHV station plots which are part of RInfra-T’s asset base.

During the proceedings on the MYT Petition of RInfra-T in Case No. 141 of 2012, the

Commission had raised queries regarding the lands leased / owned by RInfra-T. RInfra-D

submitted that, vide letter dated 19 January, 2013, RInfra-T had informed that it is in the

process of formalizing a Memorandum of Understanding (MoU) and Minutes of Meeting

(MoM) for Land Usage Charges between RInfra-T and RInfra-D, which would be

submitted after finalization. RInfra-D submitted that MoM was signed on 15 March,

2013, wherein the Land Usage Charges would be payable by RInfra-T to RInfra-D for the

EHV Stations located on RInfra-D land. Similarly, such Charges would also be payable

by RInfra-D to RInfra-T for the installations located on RInfra-T land. RInfra-T had

submitted the MoM to the Commission earlier, and RInfra-D has done so along with its

present Petition.

In view of the above, RInfra-D has considered the rent receivable from RInfra-T in FY

2012-13 as Income from Other Business, while the rent payable by RInfra-D to RInfra-T

for its installations on RInfra-T land has been considered in the A&G Expenses. Since the

Land Usage Charges receivable from RInfra-T have been included in the A&G Expenses,

this line item does not appear separately in the A&G Expense sheet of the financial

model.

RInfra-D submitted that, since the above arrangement between RInfra-D and RInfra-T had

not been finalised by that time, in its MYT Petition it had estimated the Land Usage

Charges from FY 2012-13 to FY 2015-16 based on the following assumptions:

The Ready Reckoner Rates for valuation of properties were assumed.

Rent of 12% of the market value of land was considered for determination of Land

Usage Charges.

NA Tax and property tax attributable to RInfra-T were considered.

The Land Usage Charges receivable from RInfra-T, as submitted by RInfra-D in its MYT

Petition, are as shown below:


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Table 4-62: Land Usage Charges Receivable from RInfra-T as submitted by RInfra-D

(Rs. crore) in MYT Petition

Particulars FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Land Usage Charges 6.67 6.67 6.67 6.67

NA Tax & Property Tax 0.24 0.24 0.24 0.24

Total 6.91 6.91 6.91 6.91

RInfra-D submitted that the actual Land Usage Charges receivable by RInfra-D from

RInfra-T from FY 2012-13 to FY 2015-16 as per the MoM are as under:

Table 4-63: Land Usage Charges as per MoM from FY 2012-13 to FY 2015-16 as



Land Usage Charges 3.34 3.50 3.68 3.86

The reasons for the difference between the Land Usage Charges as submitted in the MYT

Petition and as per the MoM dated 15 March, 2013 are as follows:

The Ready Reckoner rates (in Rs./Sq. M) for valuation of properties have

undergone changes.

RInfra-D had considered rent at 12% of market value of land (as per ready

reckoner) for determination of Land Usage Charges in its MYT Petition, while as

per the MoM dated 15 March, 2013, annual rent of 5% of market value of land has

been considered, as being realistic rentals received by properties in the areas

concerned.

RInfra-D had considered constant rent from FY 2012-13 to FY 2015-16 in its

Petition, while as per the MoM dated 15 March, 2013, there is an annual

escalation of rent of 5%.

NA tax and Property Tax attributable to RInfra-D and RInfra-T are accounted for

in their respective A&G Expenses, and are not considered as part of the Land

Usage Charges as per the MoM.

RInfra-D submitted that this has also been considered as Non-Tariff Income, without

prejudice to its contentions in Appeal No. 274 of 2013. The rental income from the

Devidas Lane Office is derived as per the MoM dated 25 October, 2011, which is

submitted along with its Petition. RInfra-D submitted that the rental income from Devidas

Lane Office for FY 2012-13 is Rs. 7.43 crore.

RInfra-D submitted details of Non-Tariff Income for its Wires Business and Supply

Business for FY 2012-13 as shown in the Tables below.


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Table 4-64: Non Tariff Income for Wires Business in FY 2012-13 as submitted by

RInfra-D

Particulars Rs. crore

Rents 1.09

Interest on Contingency Reserve Investments 3.45

Interest on Other Investments 0.10

Interest on staff loans & Advances 0.84

Sale of Scrap 0.31

Liabilities no longer required written off 14.57

Profit on Sale of Assets 3.65

Land Usage Charges 3.34

Rent from Devidas Lane Office 7.43

Total 34.77

Table 4-65: Non Tariff Income for Supply Business in FY 2012-13 as submitted by

RInfra-D

Particulars RInfra-D Petition

Customer Charges 1.20

Rents 0.00

Other/Miscellaneous Receipts 49.30


Delayed Payment Charges 29.34

Interest on Delayed Payment 9.66

Recovery from theft of power 21.11

Interest on staff loans & Advances 0.71

Sale of Scrap 0.78

Rebate on power purchase 17.84


Connection / Reconnection Fees 2.56

Burnt Meter Recovery 0.94

Bad Debts Recovered 3.06

Total 137.35

RInfra-D submitted the summary of Non-Tariff Income for its Supply Business and Wires

Business for FY 2012-13 and Non-Tariff Income approved by the Commission in the

MYT Order as under:


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Table 4-66: Non Tariff Income for FY 2012-13 as submitted by RInfra-D (Rs. crore)

Non-Tariff Income MYT Order

RInfra-D Petition



Total 183.17 172.12

RInfra-D requested the Commission to approve the Non-Tariff Income for FY 2012-13,

as submitted by it.


In the MYT Order, the Commission had considered the Land Usage Charges from RInfra-

T and rental income from Devidas Lane Office as part of Non-Tariff Income.

During the proceedings of this Order, the ATE issued its Judgment dated 8 April, 2015 on

various Appeals of RInfra-G, RInfra-T and RInfra-D, including in Appeal No. 274 of

2013, wherein the issue of consideration of income from these sources in the Non-Tariff

Income had been raised by RInfra-D. The ATE has ruled as under:

“55. The basic difference between the Non-Tariff Income and Income from

Other Business is that the former is income relating to the regulated business

which in this case is distribution and retail supply of electricity, and the latter is

not relating to the regulated business but by some other business by optimally

utilizing the assets of the distribution company. The examples of Non-Tariff

Income are service line charges and deposit works charges recovered from the

consumers relating to supply of electricity. The undisputed examples of other

business are telecommunication business utilizing the transmission infrastructure,

consultancy services utilizing the existing resources of the Distribution Company,

hoarding or billboard for advertisement utilizing the distribution infrastructure,

etc. The income from leasing out space in building owned by the distribution

company will fall under Income from Other Business as it is not a regulated

business and is optimum utilisation of the assets of the distribution company.

However, the rental income from other regulated business of the Appellant has

to be treated as Non-Tariff Income. Thus, the portion of rent recovered by

RInfra-D from RInfra-T which is passed on the RInfra-D and ultimately to the

consumer in the form of intra-State transmission has to be treated as Non-Tariff

Income as it is derived from other regulated business of the Appellant and is an

expense to be passed on in tariff in that regulated business.

56. It is argued by the Learned Counsel for the Appellant that the

income from letting out space for telecommunication towers and income from

advertisement kiosks are considered by the State Commission under Income from

Other Businesses. By the same logic and as per the explanation given by us above,


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the income from rental income from accommodation in Devidas Lane office of the

Appellant given to RInfra’s corporate office i.e. employees of other group

companies of RInfra, should be considered as Income from Other Business. Thus

only one third of the rental income shall be deducted from the ARR in determining

the Wheeling Charges of the wires business of the Distribution Licensee.

However, the rental income from RInfra-T recovered by RInfra-D which is

again passed on as an expense of R-Infra-T to the consumers in the form of

intra-State transmission tariff has to be treated as Non-Tariff Income. Accordingly decided.”(emphasis added)

Hence, it is clear that the rental income received from RInfra-T will be a part of Non-

Tariff Income, but the income from the Devidas Lane Office has to be considered as

Income from Other Business.

Accordingly, in truing up for FY 2012-13, the Commission has considered the rental

income from RInfra-T as Non-Tariff Income. RInfra-D has submitted its working of the

income from the Devidas Lane building by removing it from Non-Tariff Income and

considering one third of it as Income from Other Business in the Wires ARR.

In its Order dated 15 June, 2012 in Case No. 180 of 2011, the Commission had

determined a sum of Rs. 256.06 crore as rental income from the Santa Cruz land and

property of RInfra-D to be considered as Non-Tariff Income, against which RInfra-D had

preferred an Appeal before the ATE. In its Judgment dated 4 April, 2015, the ATE has

laid down the methodology for computing the notional rent income from the Santa Cruz

land. In Appeal Nos. 160 of 2012 and 164 of 2013, the ATE has also ruled that the rental

income of the Distribution Licensee’s asset is to be treated as Income from Other

Business and, accordingly, the rental income from the Santa Cruz property of RInfra-D

has to be treated as Income from Other Business.

The Commission directed RInfra-D to confirm that the Santa Cruz property has not been

constructed out of the funds of the regulated business; that it has not received any actual

rental income for that property from other regulated and/or non-regulated businesses; and

to submit computation of notional rental income from it from FY 2003-04 to FY 2013-14,

separately from regulated business and unregulated business, and in accordance with the

methodology in the ATE Judgment dated 8 April, 2015.

RInfra-D submitted that the rent from the Santa Cruz land works out to only Rs. 0.13

crore, as against Rs. 256 crore considered under Non-Tariff Income in the MYT Order.

As the difference in the amount considered by the Commission as rental income and the

amount computed by RInfra-D is very large (around around 2000 times higher than that

estimated by RInfra-D), the Commission is of the view that further due diligence needs to


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be undertaken and the documents and RInfra-D’s computations need to be scrutinized

very carefully before a final view is taken. Moreover, the ATE has also given a period of

three months for the implementation of its Judgment dated April 8, 2015. For the purpose

of the present Order, the Commission has not revised the amounts already considered for

the previous years.

The Commission has approved the actual income in FY 2012-13 as submitted by RInfra-

D. It has considered the rental income from RInfra-T as Non-tariff income, whereas the

income from the Devidas Lane office has been considered as Income from Other

Business.

Accordingly, the Commission has approved the Non-Tariff Income for FY 2012-13 as

summarised in the Table below:

Table 4-67: Non Tariff Income for FY 2012-13 approved by the Commission (Rs. crore)

Non-Tariff Income MYT

Order

RInfra-D

Petition

Approved in

this Order

Wires Business 20.67 34.77 27.34

Supply Business 162.51 137.35 137.35

Total 183.17 172.12 164.69

4.17 INCOME FROM OTHER BUSINESS

RInfra-D submitted that, in its MYT Petition, it had estimated Income from Other

Business at Rs. 5.03 crore for FY 2012-13. The Commission approved Income from

Other Business at Rs. 0.25 crore, after considering Land Usage Charges and rent from the

Devidas Lane office entirely in Non-Tariff Income. RInfra-D has appealed against this in

Appeal No. 274 of 2013. RInfra-D has submitted that, without prejudice to its contentions

of RInfra-D in that Appeal, it has considered Land Usage Charges and rent from the

Devidas Lane office in Non-Tariff Income. The utilization of Receiving Station rooftops

for BTS Towers of M/s Reliance Communication Ltd. (RCom) and the pole monetization

by using advertisement kiosks in the Mira Bhayander area are the other two businesses

which it has considered as Other Business. RInfra-D contended that the income from such

other businesses should be considered net of tax, and one third of such net income should

be reduced from the ARR. The calculation of Income from Other Business as submitted

by RInfra-D for FY 2012-13 is as below:


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Table 4-68: Income from Other Business in FY 2012-13 as submitted by RInfra-D (Rs.

crore)

Particulars Income from Other

Business (net of tax)

1/3rd considered

in ARR

Rental Income from RCom 0.40 0.13

Income from Advertisement of Kiosks 0.10 0.03

Total 0.51 0.17


As mentioned in the above paragraphs, for truing up of Non-Tariff Income for FY 2012-

13, the Commission has not considered the income from the Devidas Lane Office as Non-

Tariff Income, as one-third of it has to be considered as Income from Other Businesses, in

accordance with the ATE Judgment.

As regards the rental income from RCom towers and from advertisement kiosks, the

Commission has accepted the submission of RInfra-D and approved the same in the truing

up for FY 2012-13.

Accordingly, the Income from Other Business for FY 2012-13 approved by the

Commission is as given below:

Table 4-69: Income from Other Business in FY 2012-13 approved by the Commission

(Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

Income from Other Business 0.25 0.17 2.65

4.18 EFFICIENCY GAIN/LOSS FOR FY 2012-13

4.18.1 EFFICIENCY GAIN/LOSS ON ACCOUNT OF DEVIATION IN

DISTRIBUTION LOSSES

RInfra-D submitted that the Distribution Loss approved for FY 2012-13 in the MYT

Order was 9.46%. However, the actual Distribution Loss for the RInfra-D system was

9.49%. The sharing of efficiency loss calculated as per the Commission’s approach in past

Tariff Orders, as submitted by RInfra-D, is as under:


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Table 4-70: Efficiency Loss due to deviation in Distribution Losses in FY 2012-13 as


Particulars UoM FY 2012-13

Energy Input at T<>D MU 10313.36

Distribution Loss- Target % 9.46%

Distribution Loss % 9.49%

Total Energy Sales - with Target Loss MU 9337.71

Less : Change-over and OA Sales MU 3127.95

Net Energy Sales - with Target Loss MU 6209.77

Sales - Own Consumers and Own Consumption MU 6207.18

Reduction in Sales MU 2.58

ABR Rs/kWh 7.14

Efficiency Gain /(Loss) Rs. crore (1.84)

Passed on to consumers Rs. crore 0.61

To be absorbed by RInfra-D Rs. crore (1.23)

RInfra-D submitted that, in a system where two retailers supply power over the same

network, RInfra-D alone should not be held accountable for the commercial losses

relating to metering, delayed billing, meter errors, theft and pilferage, etc., particularly

when most of the consumers taking power from the other Licensee are supplied power

using the latter’s meters and not those of RInfra-D. Hence, RInfra-D sought treatment of

Distribution Losses under such conditions as an uncontrollable parameter, and has

therefore not included the impact of sharing of efficiency loss on account of higher

Distribution Loss. RInfra-D requested the Commission to allow deviation from the MYT

Regulations in this regard by invoking its power to remove difficulties under Regulation

100.


The Commission has not accepted the proposal to consider Distribution Loss as an

uncontrollable parameter, as RInfra-D has not been able to establish the precise

contribution of the defective meters installed by TPC-D to the total Distribution Loss in

RInfra-D's system.

The Commission has accordingly considered the Distribution Loss for RInfra-D for FY

2012-13 as a controllable parameter, in accordance with the provisions of the MYT

Regulations, and has computed efficiency loss on that account as against the target

Distribution Loss approved in the MYT Order. The Commission has computed the

sharing of efficiency loss on account of higher Distribution Loss in accordance with the


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approved Energy Balance, sales and revenue. The Average Billing Rate (ABR) has been

computed by the Commission by dividing the actual total revenue from RInfra-D’s own

consumers by the quantum of sale to such consumers. Accordingly, the Commission

approves the sharing of efficiency loss on account of higher than target Distribution Loss

as shown in the following Table:

Table 4-71: Sharing of efficiency loss on account of higher Distribution Loss as

compared to target Distribution Loss for FY 2012-13 approved by the Commission

Particulars RInfra-D

Petition

Approved in

this Order

Energy Input at T<>D (MU) 10313.36 10399.59

Distribution Loss target (%) 9.46% 9.46%

Distribution Loss – Actual (%) 9.49% 10.24%

Total energy sales with target loss (MU) 9337.71 9415.79

Less: Change-over and OA sales (MU) 3127.95 3127.95

Net energy sales with target loss (MU) 6209.77 6287.84

Sales to own consumers (MU) 6207.18 6207.18

Reduction in sales (MU) 2.58 80.66

Average Billing Rate (Rs/kWh) 7.14 7.12

Efficiency Gains/(Loss) (Rs. crore) (1.85) (57.46)

Efficiency Gain/(loss) to be passed on to the consumers

(1/3rd

of total Efficiency Gain/(loss)) (Rs. Crore) (0.62) (19.15)

Efficiency Gain/(loss) to be absorbed by RInfra-D

(2/3rd

of total Efficiency Gain/(loss)) (Rs. Crore) (1.23) (38.30)

4.18.2 EFFICIENCY GAIN/(LOSS) ON ACCOUNT OF DEVIATION IN O&M

EXPENDITURE

RInfra-D submitted that the entire difference is arising only on account of wage revision

arrears in R&M Expenses, and that it has not considered any Efficiency Gains or losses

out of O&M Expenses in FY 2012-13.


As mentioned earlier regarding approval of O&M Expenses for truing up for FY 2012-13,

since the Commission has approved the actual O&M Expenses for FY 2012-13, no

sharing of Efficiency Gain/loss has been done on account of these Expenses.


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4.19 ADDITIONAL RETURNS ON ACCOUNT OF HIGHER WIRES AND

SUPPLY AVAILABILITY

4.19.1 WIRES AVAILABILTY

RInfra-D submitted that the actual Wires Availability in FY 2012-13 is 99.98%, as against

the target Wires Availability of 95% for full recovery of RoE for town and city areas as

per the MYT Regulations. In its MYT Business Plan Order dated 23 November, 2012

(Case No. 158 of 2011), the Commission had approved target Wires Availability of 95%

for each year of the Control Period for full recovery of RoE. However, in the MYT Order,

the Commission had stipulated a Wires Availability target of 99.98%. RInfra-D submitted

that achieving Wires Availability close to 100% requires effective operation and

maintenance of the distribution network and prompt fault detection and clearing. Hence, it

should be entitled to additional returns for higher Wires Availability in FY 2012-13 as

compared to the target availability of 95% specified in the Regulations and approved in

the Business Plan Order. RInfra-D submitted that, as per the MYT Regulations, it is

entitled to additional RoE of 0.5% for the Wires Business, as under:

Table 4-72: Additional Returns for higher Wires Availability as submitted by RInfra-D

(Rs. crore)

Particulars

RInfra-D

Petition

Regulatory Equity at the beginning of the year 1418.44

Capitalisation during the year 189.77

Consumer Contribution and Grants 16.92

Equity portion of capitalisation during the year 51.86

Equity portion of asset retired during the year 4.35

Regulatory Equity at the end of the year 1465.94

Additional Return on Regulatory Equity 7.18


Regulation 84 of the MYT Regulations specifies a target Wires Availability of 95%.

However, the MYT Order had stipulated a Wires Availability target of 99.98% for the

Control Period. However, the MYT Order was issued on 22 August, 2013, and FY 2012-

13 had already passed by the time the target Wires Availability was revised by the

Commission to 99.98%. Hence, it would not be appropriate to compute additional returns

on account of over-achievement in Wires Availability by considering the revised target

retrospectively from FY 2012-13. Accordingly, for the truing up of FY 2012-13, the


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Commission has considered the target Wires Availability of 95%, in accordance with the

MYT Regulations, for computation of additional returns on account of higher

Availability. However, for FY 2013-14 and subsequent years of the Control Period, the

target Wires Availability for computation of additional returns shall be considered as

99.98%, as stipulated by the Commission in the MYT Order.

As regards the actual Wires Availability achieved, the Commission has accepted the

submission of RInfra-D of SAIDI (in hours) in FY 2012-13 of 2.110, and has accordingly

computed Availability of 99.98% in that year.

Accordingly, the additional RoE for Wires Business for FY 2012-13, as approved by the

Commission in accordance with Regulation 84 of the MYT Regulations, is summarised as

follows:

Table 4-73 : Additional Returns due to higher Wires Availability, approved by the



Petition

Approved in

this Order

Wires Availability 99.98% 99.98%

Target Availability 95.00% 95.00%

Additional Return 0.50% 0.50%







Additional Return on Regulatory Equity 7.18 7.18

4.20 SUPPLY AVAILABILITY

RInfra-D submitted that the actual Base Load Supply Availability achieved by RInfra-D

for FY 2012-13 is 115%, and the Peak Load Supply Availability achieved is 100%.

Hence, the actual Supply Availability of RInfra-D, considering 75% of Base Load Supply

Availability and 25% of Peak Load Supply Availability, works out to 111%.

RInfra-D submitted that, as per the MYT Regulations, the target Supply Availability for

full recovery of RoE is in the range of 85% to 95%, as may be determined by the


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Commission in the Business Plan Order. The target Supply Availability considered by the

Commission in the MYT Business Plan Order dated 23 November, 2012 (Case No. 158 of

2011) was 95% for each year of the Control Period. However, in the MYT Order, the

Availability for RInfra-D was stipulated as 100%.

RInfra-D submitted that, in order to ensure 24x7 power supply, RInfra-D has to contract

adequate power from different sources efficiently. Hence, RInfra-D should be entitled to

additional returns for achieving higher Supply Availability in FY 2012-13 as compared to

the target Availability specified in the MYT Regulations and approved in the Business

Plan Order. RInfra-D submitted that, as per the MYT Regulations, RInfra-D is entitled to

additional RoE of 1.6% for the Supply Business, as under:

Table 4-74: Additional Returns due to higher Supply Availability, as claimed by RInfra-

D (Rs. Crore)

Particulars

RInfra-D

Petition









While Regulation 97 of the MYT Regulations specifies a target Supply Availability of

95%, the MYT Order stipulated a target of 100% for the Control Period. However, the

MYT Order was issued on 22 August, 2013, and FY 2012-13 had already passed by the

time the target Supply Availability was revised by the Commission to 100%. Hence, it

would not be appropriate to compute additional returns on account of over-achievement in

Supply Availability by considering the revised target retrospectively from FY 2012-13.

Accordingly, for the truing up of FY 2012-13, the Commission has considered the target

Supply Availability of 95%, in accordance with the MYT Regulations, for computation of

additional returns on account of higher Supply Availability. However, for FY 2013-14

and subsequent years of the Control Period, the target Supply Availability for

computation of additional returns shall be considered as 100%, as stipulated in the MYT

Order.


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The Commission has approved the achieved Base Load Supply Availability in accordance

with the approved Energy Balance for FY 2012-13. It has accepted the submission of

RInfra-D regarding actual peak demand and met peak demand of FY 2012-13, and

accordingly computed the Peak Load Supply Availability achieved.

Table 4-75: Supply Availability for FY 2012-13 approved by the Commission


Petition

Approved in

this Order

Energy Requirement at T<>D Interface (MU) 6946.15 7032.38

Intra-State Transmission Loss (%) 5.18% 4.12%

Energy Requirement at G<>T Interface (MU) 7325.95 7334.57

Average Demand (MW) 836.30 837.28

Base Load (MW) 836.30 837.28

Actual Contracted Base Load (MW) 960.00 960.00

Base Load Supply Availability (%) 114.79% 114.66%

Peak Demand (MW) 1333 1333

Peak Demand met (MW) 1333 1333

Peak Load Supply Availability (%) 100% 100%

Accordingly, the additional RoE for Supply Business for FY 2012-13 as approved by the

Commission in accordance with Regulation 97 is summarised as follows:

Table 4-76: Additional Returns due to higher Supply Availability approved by the



Petition

Approved in

this Order

Base Load Supply Availability 114.79% 114.66%

Peak Load Supply Availability 100.00% 100.00%

Supply Availability 111.09% 110.99%

Target Supply Availability 95.00% 95.00%









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Petition

Approved in

this Order


4.21 SUMMARY OF AGGREGATE REVENUE REQUIREMENT

RInfra-D submitted the summary of the ARR for the Wires Business for FY 2012-13 as

shown in the Table below:

Table 4-77: ARR for Wires Business for FY 2012-13 as submitted by RInfra-D (Rs.

crore)

Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition-MYT

Order)

Operation & Maintenance Expenses 636.48 663.15 26.67

Depreciation 165.73 156.75 (8.98)

Interest on Long-term Loan Capital 113.70 136.29 22.59

IoWC and on consumer Security Deposits 21.54 35.58 14.04

Provisioning for Bad & Doubtful Debts 0.00 1.55 1.55

Other Expenses 0.00 0.00 0.00

Income Tax 0.00 0.00 0.00

Contribution to Contingency Reserves 9.09 9.09 0.00

Total Revenue Expenditure 946.50 1002.42 55.88

Return on Equity Capital 226.90 223.54 (3.36)

Aggregate Revenue Requirement 1173.44 1225.96 52.52

Less: Non Tariff Income 20.67 34.77 14.10

Less: Income from Other Business 0.25 0.17 (0.08)

Additional Returns due to Wires

Availability 0.00 7.18 7.18

Net Aggregate Revenue Requirement 1152.52 1198.19 45.67

RInfra-D submitted the summary of the ARR for the Supply Business for FY 2012-13 as



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Table 4-78: ARR for Supply Business for FY 2012-13 as submitted by RInfra-D (Rs.

crore)

Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition-MYT

Order)

Power Purchase Expenses 3559.57 3563.92 4.35




IoWC and on consumer Security Deposits 70.26 49.49 (20.77)



Income Tax 0.00 0.00 0.00

Transmission Charges- intra- State 265.39 261.37 (4.02)


Total Revenue Expenditure 4233.52 4228.32 (5.20)


Aggregate Revenue Requirement 4261.60 4255.38 (6.22)

Less: Non Tariff Income 162.51 137.35 (25.16)

Additional Returns due to Supply Availability 0.00 2.49 2.49


RInfra-D has submitted the following Table summarising the ARR for its Wires Business

and Retail Business for FY 2012-13.

Table 4-79: Combined ARR for Wires Business and Supply Business for FY 2012-13 as


Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)



Depreciation 182.41 177.60 (4.81)


IoWC and on consumer Security Deposits 91.80 85.08 (6.72)


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Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)



Income Tax 0.00 0.00 0.00

Transmission Charges - intra- State 265.39 261.37 (4.02)






Less: Income from Other Business 0.25 0.17 (0.08)

Additional Returns due to Wires/Supply




Based on the components of the ARR approved in the above paragraphs, the Commission

has approved the ARR for Wires Business and Supply Business for FY 2012-13 as

follows:

Table 4-80: ARR for Wires Business for FY 2012-13 approved by the Commission (Rs.

crore)

Particulars

FY 2012-13

MYT

Order

RInfra-D

Petition

Approved in

this Order


Depreciation 165.73 156.75 155.75




Income Tax 0.00 0.00 0.00


Sharing of gains/(losses)

(38.30)



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Particulars

FY 2012-13

MYT

Order

RInfra-D

Petition

Approved in

this Order

Return on Equity Capital 226.90 223.54 223.52



Less: Income from Other Business 0.25 0.17 2.65

Additional Returns due to Wires Availability

7.18 7.18

Aggregate Revenue Requirement (Net) 1152.52 1198.19 1164.47

Table 4-81: ARR for Supply Business for FY 2012-13 approved by the Commission (Rs.

crore)

Particulars

FY 2012-13

MYT

Order

RInfra-D

Petition

Approved in

this Order

Power Purchase Expenses (including inter-

State Transmission Charges) 3559.57 3563.92 3534.66






Transmission Charges - intra-State 265.39 261.37 261.37






Additional Returns due to Supply

Availability 2.49 2.47



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Table 4-82: Combined ARR for Wires Business and Supply Business for FY 2012-13

approved by the Commission (Rs. crore)

Particulars

FY 12-13

MYT

Order

RInfra-D

Petition

Approved in

this Order

Power Purchase Expenses (including inter-State

Transmission Charges) 3,559.57 3,563.92 3534.66


Depreciation 182.41 177.60 176.58


IoWC and Interest on Consumer Security Deposits 91.80 85.08 84.34

Provisioning for Bad & Doubtful Debts - 9.33 9.33

Transmission Charges - Intra-State 265.39 261.37 261.37


Sharing of gains/(losses)

(38.30)

Total Revenue Expenditure 5,180.05 5,230.74 5,162.21


Aggregate Revenue Requirement 5,435.04 5,481.34 5,412.79



Additional Returns due to Wires/Supply Availability - 9.67 9.65

Aggregate Revenue Requirement (Net) 5,251.62 5,318.72 5,255.10

4.22 REVENUE

4.22.1 REVENUE FROM SALE OF POWER TO OWN CONSUMERS

RInfra-D submitted that, for FY 2012-13, it has charged tariff rates as approved in the

Tariff Order dated 15 June, 2009 (Case No. 121 of 2008). It has not considered the

revenue from assessed sales in FY 2012-13 in the sales revenue of that year, and has

considered it as part of Non-Tariff Income. It has not netted off discounts offered on

internet and Electronic Clearing System (ECS) payments by consumers from the sales

revenue for FY 2012-13, in accordance with the ATE Judgment in Appeal No. 85 of

2012. RInfra-D submitted that the revenue from sales of energy and FAC charged to the

consumers in FY 2012-13 is Rs. 4,421.69 crore. This does not include revenue from

assessment on account of theft of power of Rs. 21.11 crore, as it is included in the Non-

Tariff Income.

RInfra-D submitted that the Commission had approved Rs. 4441.62 crore as revenue from

sales for FY 2012-13 in the MYT Order. This included the revenue from assessment of


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theft of power of Rs. 21.11 crore since, in its submission during the MYT proceedings,

RInfra-D inadvertently did not subtract this amount from revenue from sales.

Consequently, the MYT submissions of RInfra-D and the Order thereon actually

considered revenue from theft of power twice, both in revenue from sales as well as in

Non-Tariff Income. RInfra-D submitted that it has now rectified this error in its Petition.

RInfra-D submitted that the revenue approved in the MYT Order also did not consider

revenue of Rs. 1.19 crore recovered from OA consumers, as RInfra-D had inadvertently

not considered it in its submissions during those proceedings. RInfra-D submitted that the

ABR for FY 2012-13 based on sales of 6193.88 (6207.18 – 13.30) MU, works out to Rs.

7.14 per kWh. The comparison of actual revenue with that approved in the MYT Order, as

submitted by RInfra-D, is shown in the Table below:

Table 4-83: Revenue and ABR for FY 2012-13 as submitted by RInfra-D


Revenue (Rs. crore) 4441.62 4421.69

Own Sales (MU) 6192.32 6193.88

ABR (Rs/kWh) 7.17 7.14


The Commission had directed RInfra-D to submit the audited Reconciliation Statement

showing income and expenses as per its audited accounts, and their allocation to RInfra’s

Generation, Transmission and Distribution Businesses. The Reconciliation Statement was

submitted by RInfra-D, from which the Commission has verified the revenue from sale of

power.

The Commission has accepted the submission of RInfra-D with regard to revenue from

assessed sales. Accordingly, it has not been considered as part of revenue as it is included

in the Non-Tariff Income. The Commission has also accepted the submission of RInfra-D

regarding discounts on internet and ECS payments, and has therefore approved the

revenue without netting off such discounts from the sales revenue for FY 2012-13 in

accordance with the ATE Judgment in Appeal No. 85 of 2012.

Accordingly, the Commission approves revenue from sale of power to own consumers as

Rs. 4,421.69 crore. This amount does not include the revenue from assessment on account

of theft of power of Rs. 21.11 crore, since it is included in the Non-Tariff Income.


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Table 4-84: Revenue and ABR for FY 2012-13 approved by the Commission

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

Revenue (Rs. crore) 4441.62 4421.69 4421.69*

Own Sales (MU) 6192.32 6193.88 6193.88**

ABR (Rs. kWh) 7.17 7.14 7.14

Notes: * After deducting revenue of Rs. 21.11 crore recovered for power theft.

** After deducting assessed sales of 13.30 MU on account of power theft

4.22.2 REVENUE FROM WHEELING CHARGES FROM CHANGE-OVER AND

OA CONSUMERS

RInfra-D submitted that the revenue from Wheeling Charges in FY 2012-13 paid by

change-over and OA consumers was Rs. 258.79 crore, against Rs. 256.00 crore approved

in the MYT Order. The Wheeling Charges paid by these consumers are as approved by

the Commission in the Order dated 15 June, 2009 (Case No. 121 of 2008). A comparison

of actual and approved Wheeling Charges, as submitted by RInfra-D, is shown in the

Table below:

Table 4-85: Wheeling Revenue from Change-over & OA Consumers in FY 2012-13 as



OA Consumers (HT) 256.00 0.48

Change-over Consumers (HT)

40.92

Change-over Consumers (LT) 217.39

Total 256.00 258.79

RInfra-D submitted that the Wheeling Charges from change-over consumers are

accounted for as remitted by TPC-D, while Wheeling Charges from other OA consumers

are accounted for as billed by RInfra-D.


The Commission has considered the actual revenue from Wheeling Charges from change-

over and OA consumers as submitted by RInfra-D. Accordingly, the Commission


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approves Revenue from Wheeling Charges from such consumers as shown in the

following Table:

Table 4-86: Wheeling Revenue from Change-over & OA Consumers in FY 2012-13


Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

OA Consumers (HT) 256.00 0.48 0.48

Change-over Consumers (HT) 40.92 40.92

Change-over Consumers (LT) 217.39 217.39

Total 256.00 258.79 258.79

4.22.3 REVENUE FROM CROSS-SUBSIDY SURCHARGE

RInfra-D submitted that, in FY 2012-13, the CSS charged to change-over consumers is as

approved by the Commission in its Order dated 9 September, 2011 (Case No. 43 of 2010).

The actual revenue from CSS from such consumers was Rs. 99.20 crore, as against Rs.

98.70 crore approved in the MYT Order.

Table 4-87: Revenue from CSS in FY 2012-13 as submitted by RInfra-D (Rs. crore)



Change-over Consumers (LT)

84.31

Total 98.70 99.20


The Commission has considered the actual revenue from CSS as submitted by RInfra-D,

which has been verified from the audited Reconciliation Statement. Accordingly, the

Commission approves the revenue from CSS for FY 2012-13 as shown in the following

Table:

Table 4-88: Revenue from CSS in FY 2012-13 approved by the Commission (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order



Total 98.70 99.20 99.20


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4.23 REVENUE GAP FOR FY 2012-13

RInfra-D submitted that, in FY 2012-13, Wheeling Charges for its own consumers were

bundled in the Energy Charges. Hence, Wheeling Charges collected from them were not

separately available. Therefore, for determining recovery of Wheeling Charges from own

consumers, it has applied Wheeling Charges prevailing in FY 2012-13 (Rs. 0.46 per kWh

for HT and Rs. 0.88 per kWh for LT) to the HT and LT sales, and has considered the

balance revenue (total revenue minus recovery from wheeling from own consumers, as

explained above) to be the revenue from the retail supply tariff.

RInfra-D submitted the Revenue Gap for FY 2012-13 for its Wires Business as under:

Table 4-89: Revenue Gap for Wires Business in FY 2012-13 as submitted by RInfra-D

(Rs. Crore)

Particulars Amount

Revenue Requirement 1198.19

Less: Recovery from Wheeling Charges from own consumers 258.79

Net Revenue Requirement 939.40

Revenue from Wheeling Charges from own consumers 535.85

Revenue Gap/(Surplus) 403.55

RInfra-D submitted the Revenue Gap for FY 2012-13 for its Supply Business as under:

Table 4-90: Revenue Gap for Supply Business in FY 2012-13 as submitted by RInfra-D

(Rs. Crore)

Particulars Amount

Revenue Requirement 4120.52

Less: Recovery from CSS 99.20

Net Revenue Requirement 4021.32

Revenue from Retail Tariff 3885.83


RInfra-D submitted that the Revenue Gap for FY 2012-13, after considering the revised

ARR for FY 2012-13, actual recovery from Wheeling Charges and CSS from change-over

and OA consumers, and revenue from its own consumers, works out to Rs. 539.04 crore,

as against Rs. 455.40 crore approved in the MYT Order, and sought that it be approved

accordingly.


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Table 4-91: Total Revenue Gap for FY 2012-13 as submitted by RInfra-D (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D Petition

– MYT Order)

Revenue Requirement (Wires+ Supply) 5251.62 5318.72 67.10

Less: Recovery from wheeling 256.00 258.79 2.79

Less: recovery from CSS 98.70 99.20 0.50

Net Revenue Requirement from tariff 4897.02 4960.72 63.70

Revenue from sales 4441.62 4421.69 (19.93)

Revenue Gap (Surplus) 455.40 539.04 83.64


As stated at the beginning of this Section, the Commission has approved the combined

Revenue Gap/(Surplus) for FY 2012-13 for RInfra-D’s Wires and Supply Business,

although truing up for all the components of expenses has been done separately for each

Business. The combined Revenue Gap for the Wires Business and the Supply Business

for FY 2012-13 has been considered as the Revenue Gap for the Supply Business for FY

2012-13 for computation of the cumulative Revenue Gap.

Accordingly, after the final true-up, the Commission has approved the combined Revenue

Gap/(surplus) for FY 2012-13 as follows:

Table 4-92: Total Revenue Gap/ (Surplus) for FY 2012-13 approved by the Commission

(Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved

in this

Order

Net Aggregate Revenue Requirement 5251.62 5318.72 5255.10 Less: Revenue from CSS 98.70 99.20 99.20

Less: Revenue from Wheeling Charges from

Change-over and OA Consumers 256.00 258.79 258.79

Net ARR 4896.92 4960.72 4897.11 Revenue from sale of power 4441.62 4421.69 4421.69

Revenue Gap/(Surplus) 455.30 539.03 475.43

The ARR approved for FY 2012-13 is different from that claimed by RInfra-D primarily

due to the following reasons:


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a) Reduction in Power Purchase Expenses, as the Commission has not allowed the

purchase of non-Solar RECs beyond the RPO requirement, and has considered the

rate of Solar power purchase beyond such requirement at the highest rate in Merit

Order Stack for Short Term power purchase.

b) Sharing of efficiency loss has been considered on account of higher Distribution

Loss as compared to target Loss.

c) The Non-Tariff Income is lower than that submitted by RInfra-D, on account

exclusion of the income from the Devidas Lane building, in accordance with the

ATE Judgment.

d) The Income from Other Business is higher than that considered by RInfra-D, as

the Commission has considered 1/3rd of the income from the Devidas Lane

building under that head, in accordance with the ATE Judgment.


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5 TRUING UP OF FY 2013-14

RInfra-D submitted that it has filed its MTR Petition seeking approval for the final truing

up of expenditure and revenue for FY 2013-14 based on actual expenditure and revenue

as per the audited accounts in line with the directions of the Commission in the MYT

Order for RInfra-D dated 22 August, 2013 wherein the Commission had approved the

ARR of RInfra-D for the MYT Control Period from FY 2012-13 to FY 2015-16.

Accordingly, in this Section, the Commission has analysed all the elements of actual

expenditure and revenue for RInfra-D for FY 2013-14 as well as scrutinized the

deviations from the MYT Order in Case No. 9 of 2013 and has accordingly undertaken

the truing up of expenses and revenue after prudence check.

5.1 SALES FOR FY 2013-14

RInfra-D submitted that the actual energy sold to its own consumers in FY 2013-14 was

6,467.96 MU against 6,593.68 MU approved by the Commission in RInfra-D’s MYT

Order. RInfra-D submitted the category-wise breakup of actual sales in FY 2013-14 as

shown in the Table below.

RInfra-D submitted that the actual energy sold by TPC-D to change-over consumers in

FY 2013-14 is 2,843.37 MU (metered) against 3,547.07 MU (grossed up) approved by the

Commission in the MYT Order. RInfra-D submitted that the approved change-over sales

(metered) for FY 2013-14 by grossing down 3,547.07 MU works out to 3,293.49 MU.

RInfra-D submitted a comparison of actual own sales and change-over sales with the sales

approved in the MYT Order as given in the Table below:

Table 5-1: Own sales and Change-over sales for FY 2013-14 as submitted by RInfra-D

(MU)

Consumer Category


MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

LT I- Below Poverty Line 0.04 0.03

1034.18

0.00


0-100 1,788.26 1,736.99 347.31

101-300 1,116.92 993.61 237.12

301-500 173.65 119.69 43.53

501 and above 61.79 39.53 32.45


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Consumer Category


MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition


0-100 195.17 200.46 94.35

101-300 286.17 286.85 142.76

301-500 151.06 132.65

72.23

501 and above 246.92 219.36 172.59

LT II (A)- 0-20 kW 1,343.51 1,276.92

974.33

403.36

LT II (B) - > 20-50 kW 141.20 146.14 96.10

LT II (C) - above 50 kW 233.99 278.61 326.22

LT III - LT Industry up to 20 kW 123.65 121.09 372.13

60.57


LT-V : LT- Advertisements and

Hoardings 3.23 3.14 0.16 0.13



Religious 1.04 1.71 0.00 0.00


Others 94.93 85.66 0.80 0.40

LT VIII: LT - Crematorium and Burial

Grounds 0.88 0.82 0.00 0.36



Total- LT Sales 6,211.67 5,930.66 2,381.60 2,268.52

HT I: HT-Industry 83.30 181.59 301.12 163.31




HT V – Railways 57.80 5.87 0.00 0.00


Total - HT Sales 382.01 537.30 911.89 574.85

Total 6,593.68 6,467.96 3,293.49 2,843.37

RInfra-D submitted that the assessed sales in FY 2013-14 for its own consumers are 11.01

MU. RInfra-D referred to the ATE Judgment in Appeal No. 85 of 2012, which holds that

assessed sales should be considered in actual sales for determination of Distribution Loss.

RInfra-D submitted that it has accordingly included assessed sales of 11.01 MU in the


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actual sales to own consumers in FY 2013-14; however, revenue from such assessment is

included in Non-Tariff Income, instead of sales revenue in accordance with the direction

of the Commission in its Order in Case No. 126 of 2011.


The Commission has accepted RInfra-D’s submission in this regard and has approved the

actual sales for FY 2013-14 as submitted by RInfra-D in its Petition under the truing up

process. The sales approved by the Commission for FY 2013-14 are summarised in the

Table below:

Table 5-2: Own Sales and Change-over Sales in FY 2013-14 approved by the

Commission (MU)


Own Sales 6,593.68 6,467.96 6,467.96

Change-over Sales 3,293.49 2,843.37 2,843.37

Total 9,886.98 9,311.33 9,311.33

5.2 DEMAND SIDE MANAGEMENT (DSM) MEASURES

RInfra-D submitted that it carries out various DSM schemes for reduction of system

demand and energy consumption after getting approval of the schemes from the

Commission. RInfra-D submitted the status of various DSM programmes along with the

approximate reduction in sales in FY 2013-14. RInfra-D submitted that the figures for

own sales in MU as submitted by it are net of reduction through DSM measures.


The sales submitted by RInfra-D for FY 2013-14 are inclusive of reduction in sales due to

DSM activities.


RInfra-D submitted that the Distribution Losses of RInfra-D for FY 2013-14 have been

9.50% as presented in the Table below, against 9.46% approved by the Commission in

RInfra-D’s MYT Order. RInfra-D submitted that the process of energy balancing under

FBSM had been held up on account of operational difficulties associated with FBSM and

therefore, it was not possible to provide data of Energy Balance from Energy Balance


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statements of MSLDC. RInfra-D submitted that in its Petition, it has provided data

available with it with regard to energy input into the distribution system, energy

purchased by RInfra-D at G<>T interface and transmission losses thereon. RInfra-D

submitted that it is possible that after energy balancing and accounting statements are

finalized by MSLDC for FY 2013-14, some of this data may undergo a change.

Table 5-3: Distribution Loss for FY 2013-14 as submitted by RInfra-D

Particulars MYT

Order

RInfra-D

Petition

Energy Sold (MU) by RInfra-D 6,593.68 6,467.96

Consumption (MU) by Change-over consumers 3,293.49 2,843.37

Consumption (MU) by OA consumers 0.00 9.92

Total 9,887.17 9,321.25

Distribution Loss (%) 9.46% 9.50%

Energy Input (MU) at T<>D 10,920.22 10,299.44

As discussed in the earlier Section, RInfra-D has submitted that it should not be held

entirely responsible for higher actual Distribution Losses as compared to the approved

Distribution Losses as it has limited control on the commercial losses arising due to meter

related issues of TPC-D for change-over consumers and has requested the Commission to

consider the submissions in respect of assessment of Distribution Losses for FY 2013-14

as well. RInfra-D submitted that at the close of FY 2013-14, almost 90% of Secure (TAT

series) faulty meters were still installed on RInfra-D’s network and had not been replaced,

which would continue to contribute to commercial loss in RInfra-D system even in FY

2014-15. RInfra-D submitted the data of defective meters for both makes separately and

the computation of MU loss therein with its Petition. RInfra-D submitted that the

estimated energy loss due to under recording of defective meters was 3.89 MU in FY

2013-14.

RInfra-D submitted that the pool settlement for FY 2013-14 has been carried out by

MSLDC by considering a loss of 1.94% for HT change-over consumers and 9.00% for LT

change-over consumers and therefore, for the purpose of truing up of FY 2013-14, RInfra-

D has considered the loss of 1.94% and 9.00% for HT change-over consumers and LT

change-over consumers, respectively, for the Energy Balance for FY 2013-14. Based on

the actual Distribution Losses of 9.50%, actual sales and approved wheeling losses for HT

and LT customers, the Energy Balance for FY 2013-14 as submitted by RInfra-D is as

under:


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Table 5-4: Energy Balance for FY 2013-14 as submitted by RInfra-D

Particulars UoM MYT

Order

RInfra-D

Petition

Migrated HT Sales + OA consumption MU 911.89 584.77

HT Loss % 1.94% 1.94%

HT grossed up energy at T<>D boundary MU 929.93 596.34

Migrated LT sale MU 2,381.60 2,268.52

LT loss % 9.00% 9.00%

LT grossed up energy at T<>D boundary MU 2,617.14 2,492.88

Total T<>D energy attributable to TPC-D sale

and OA consumption MU 3,547.07 3,089.21

Net T<>D energy attributable to RInfra-D

sale MU 7,373.15 7,210.22

InSTS losses % % 4.17% 4.09%

Total requirement of RInfra-D at G<>T MU 7,693.99 7,517.52

RInfra-D submitted that the intra-State Transmission Loss for FY 2013-14 works out to

4.09%, as against 4.17% approved by the Commission for FY 2013-14 in RInfra-D’s

MYT Order. RInfra-D submitted that it has considered the energy quantum incremented

by RInfra-D into the State Imbalance Pool as per the provisional FBSM statements from

April 2013 to March 2014, but since the source-wise energy in the provisional FBSM

statements differ from the actual energy bills of the generators, RInfra-D has considered

source-wise energy as per the actual bills received by it, for the purpose of Energy

Balance.

RInfra-D submitted that as a result of the aforesaid, Energy Balance figures and the

Transmission Losses consequently derived would be different from the Transmission

Losses as per the provisional FBSM statements. RInfra-D submitted that for the purpose

of truing up, it has considered actual energy billed to it by the generators and the pool

increment is also considered as per the FBSM provisional bills, because the revenue

received from State Imbalance Pool due to energy increment to State Imbalance Pool

corresponds to the energy quantum of 185.30 MU. RInfra-D submitted that when FBSM

statements will get finalized by MSLDC, all source-wise differences between actual

energy billed to RInfra-D and energy as per FBSM statements will be reconciled.

RInfra-D submitted that the derived Transmission Losses from RInfra-D’s Energy

Balance will undergo change and match with the Energy Balance of MSLDC, when the


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numbers are reconciled and final FBSM statements are prepared by MSLDC. RInfra-D

submitted that the power purchase by RInfra-D as accounted and considered in its Petition

is as per bills raised by generators to RInfra-D and the result of MSLDC’s reconciliation

will only affect pool increment/decrement and debit/credit thereon will be realized

whenever such reconciliation happens and will accordingly be accounted by RInfra-D in

the financial year(s) when such debit/credit is advised by MSLDC.

RInfra-D requested the Commission to approve the Energy Balance of RInfra-D for FY

2013-14 based on the above methodology.


The Commission has considered the actual Transmission Losses of 4.09% for FY 2013-14

based on MSLDC submissions. Further, the energy quantum incremented by RInfra-D

into the Imbalance Pool has been considered as per the actual Gross Energy consumption

considered in the Order on Verification of compliance of Renewable Purchase Obligation

targets by Reliance Infrastructure Ltd. for FY 2013-14 in Case No. 193 of 2013.The

change-over sales have been considered as submitted by RInfra-D. The Commission has

considered the losses for HT and LT consumers as 1.94% and 9.00% respectively, as

considered by MSLDC for conducting pool settlement for FY 2013-14. Accordingly, the

Distribution Losses and energy requirement as approved by the Commission for FY 2013-

14 are given in the tables below:

Table 5-5: Energy Balance for FY 2013-14 approved by the Commission

Particulars UoM MYT

Order

RInfra-D

Petition

Approved

in this

Order

Sales (Own) MU 6593.68 6467.96 6467.96

Sales (change-over) MU 3293.49 2843.37 2843.37

Consumption by OA consumers MU 0.00 9.92 9.92

Total MU 9887.17 9321.25 9321.25

Distribution Loss % 9.46% 9.50% 9.50%

Energy Input to the Distribution

System MU 10920.22 10299.44 10299.27


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Table 5-6: Energy Requirement for FY 2013-14 approved by the Commission

Particulars UoM MYT

Order

RInfra-D

Petition

Approved

in this

Order

Migrated HT sales + OA consumption MU 911.89 584.77 584.77

HT Loss % 1.94% 1.94% 1.94%

HT grossed up energy at T-D boundary MU 929.93 596.34 596.34

Migrated LT sale MU 2381.60 2268.52 2268.52

LT loss % 9.00% 9.00% 9.00%

LT grossed up energy at T-D boundary MU 2617.14 2492.88 2492.88

Total T-D energy attributable to TPC-D sale

and OA consumption MU 3547.07 3089.21 3089.22

Net T-D energy attributable to RInfra-D sale MU 7373.15 7210.22 7210.05

InSTS losses % % 4.17% 4.09% 4.09%

Total energy requirement of RInfra-D

(MU) at G-T MU 7693.99 7517.52 7517.52


RInfra-D submitted that during FY 2013-14, it has procured power under its long term

arrangement with RInfra-Generation (DTPS) and medium-term contracts approved by the

Commission with Wardha Power Company Ltd. (WPCL), AMNEPL and Vidarbha

Industries Power Ltd. (VIPL). RInfra-D submitted that after taking into account the

availability from long-term and medium-term sources, the shortfall in power requirement

was met through purchase from contracted short-term sources and from the Power

Exchange. RInfra-D submitted that it has also contracted renewable power from different

sources for meeting the Renewable Power Obligation (RPO) set by the Commission for

Distribution Licensees for FY 2013-14. RInfra-D submitted that the surplus power

available at different times was sold outside the licence area through the Power Exchange

and through increments to the Intra-State pool.

5.4.1 LONG/MEDIUM-TERM CONTRACTS

5.4.1.1 RInfra-G (DTPS)

RInfra-D submitted that it has considered Fixed Charges of Rs. 217.66 crore payable to

RInfra-G for FY 2013-14, as approved by the Commission in RInfra-G’s MYT Order


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dated 13 June, 2013 (Case No. 1 of 2013). RInfra-D submitted that the actual variable cost

(approved Energy Charges plus actual FAC) has been considered and PLF incentive has

been computed as per the MYT Regulations.

RInfra-D submitted that under instructions from the STU, all distribution licensees were

requested to pay Long-Term OA Application processing fee to the STU for their existing

generators, which enjoyed deemed OA status under the Distribution OA Regulations,

2005 or for those generators for which no OA application fee was earlier paid. RInfra-D

submitted that it has paid an application processing fee of Rs. 10000 to the STU for DTPS

in FY 2013-14 and the same has been added in the power purchase cost from RInfra-G in

FY 2013-14. The total power purchase cost considered for RInfra-G in FY 2013-14 as

submitted by RInfra-D, has been summarized in the Table below:

Table 5-7: Power Purchase for DTPS in FY 2013-14 as submitted by RInfra-D

Source-

DTPS

Purchase

(MU)

Fixed

Cost

(Rs.

crore)

Variable

Cost (Rs.

crore)

Incentive

(Rs.

crore)

Application

Processing

fee to

MSLDC

(Rs. crore)

Total

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

MYT Order 3,787.60 217.66 1,092.02 0.00 0.00 1,309.68 3.46

RInfra-D

Petition 3,738.81 217.66 1,090.43 17.31 0.001 1,325.41 3.54


The Commission has accepted the submission of RInfra-D and accordingly approved the

actual quantum and cost of power purchase from RInfra-G for FY 2013-14, as follows:

Table 5-8: Power Purchase from RInfra-G (DTPS) approved by the Commission

Source


MU Rs.

crore

Rate

(Rs./

kWh)

MU Rs.

crore

Rate

(Rs./

kWh)

MU Rs.

crore

Rate

(Rs./

kWh)

DTPS 3787.60 1309.68 3.46 3,738.81 1,325.41 3.54 3,738.81 1325.41 3.54


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5.4.2 MEDIUM TERM POWER PROCUREMENT CONTRACTS

RInfra-D submitted that it had entered into medium-term power procurement contracts

with WPCL, AMNEPL, and VIPL for FY 2013-14.

5.4.2.1 Power Procurement from WPCL

RInfra-D submitted that it has procured power from WPCL in accordance with the

quantum and rate specified in the PPA signed with WPCL, which has been approved by

the Commission in its Order (Case No. 85 of 2011).

Deductions/Payments towards Change in Law

RInfra-D submitted that as mentioned earlier, it has made a payment of Rs. 32.49 crore to

WPCL towards Change in Law as a result of the interim directions of the Commission

during hearings in Case No. 39 of 2012. In its Order dated 13 August, 2013 in Case No.

39 of 2012, the Commission disposed of the Petition filed by WPCL and upheld the

contention of RInfra-D that Change in Law is not applicable with respect to customs duty

on generation using imported coal; however, the Commission allowed the contention of

WPCL with respect to VAT on secondary fuel (LDO and HFO).

RInfra-D submitted that in accordance with the aforesaid, it has paid to WPCL an amount

of Rs. 0.26 crore for the period April 2011 to May 2013 on account of VAT on secondary

fuel and the same has been included in the power purchase cost for FY 2013-14.

RInfra-D submitted that WPCL has raised the bill on account of Change in Law up to

September 2013 only and RInfra-D has made payments to WPCL, which was undisputed

as per RInfra-D up to September 2013 and WPCL has not raised any bill after September

2013, on account of Change in Law. RInfra-D submitted that it has made provisions

towards the liability that may accrue for payment to WPCL on account of Change in Law

from October 2013 to March 2014 in the annual accounts for FY 2013-14 but has not

considered the same in the ARR for FY 2013-14 and that if and when any amount is

actually paid to WPCL towards Change in Law, it would consider the same in the ARR

for such financial year.

The month-wise amounts paid to WPCL by RInfra-D on account of Change in Law along

with the amount paid on account of VAT on secondary fuel pursuant to Order in Case No.

39 of 2012, as submitted by RInfra-D, are shown in the Table below:


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Table 5-9: Month wise amounts towards Change in Law paid to / provisioned for

WPCL in FY 2013-14 as submitted by RInfra-D (Rs. crore)

Month RInfra-D Petition /Provision Amount

Apr-13 Actual 1.05

May-13 Actual 0.37

Jun-13 Actual 0.15

Jul-13 Actual 0.15

Aug-13 Actual 0.15

Sep-13 Actual 0.12

Mar 14 amount paid in May 14 1.17

Payment made on account of VAT on

secondary fuel as per Order in Case No. 39

of 2012 (April 2011 to May 2013)

0.26

Total 3.41

Deductions / Additional Payments towards Capacity Charges related to Availability

RInfra-D submitted that as per the said PPA, WPCL was required to supply an Aggregate

Contracted Capacity of 260 MW of power to RInfra-D for a period of three years starting

from 1 April, 2011, but in the month of October 2011, WPCL reduced the availability to

RInfra-D vis-a-vis the aggregate contracted capacity of 260 MW, for which RInfra-D had

deducted Rs. 3.16 crore from the monthly capacity charges bill of WPCL for the same

month.

RInfra-D submitted that WPCL had filed a Petition in Case No. 38 of 2012, wherein

WPCL, inter alia, prayed to the Commission to direct RInfra-D to pay a sum of Rs. 3.16

crore deducted from the monthly bill of WPCL for October 2011 along with interest of

24% per annum. The Commission in its Order dated 5 June, 2013 in Case No. 38 of 2012

rejected the contentions of WPCL and upheld the methodology of calculation of capacity

charges payable by RInfra-D to WPCL. RInfra-D submitted that this deduction of Rs.

3.16 crore by RInfra-D pertains to FY 2011-12 and is thus not considered in its present

Petition. RInfra-D submitted that WPCL has appealed against the Order of the

Commission in Case No. 38 of 2012 before ATE in Appeal No. 202 of 2012, which is

pending decision.

RInfra-D submitted that while the proceedings in the above matter in Case No. 38 of 2012

were ongoing, WPCL continued to reduce availability to RInfra-D vis-a-vis the Aggregate

Contracted Capacity of 260 MW from April 2012 onwards and in view of the reduced


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availability, RInfra-D was deducting the capacity charges from the monthly bills of

WPCL in accordance with the PPA. RInfra-D submitted that in the month of December

2012 and January 2013, WPCL invoked the Letter of Credit (LC) established by RInfra-D

in terms of PPA in respect of the amounts deducted by RInfra-D up to November 2012.

RInfra-D had filed a Petition before the Commission being Case No. 8 of 2013, for

adjudication of dispute under Section 86(1) (f) of the Act, against the said action of

WPCL. The Commission, in its Order dated 15 January, 2014 in Case No. 8 of 2013

upheld the contentions of RInfra-D and held that WPCL had incorrectly invoked the LC.

The Commission held that Clause 4.1(v) of the schedule 4 of the PPA provides that the

payment of capacity charges can be proportionately reduced in case the availability of the

plant is less than normative availability and the said reduction would be in addition to

penalty provided under Clause 4.4.1 of schedule 4 to the PPA. The Commission directed

that the amounts already credited by WPCL from the LC will be adjusted in the next

monthly bills of WPCL. The Commission also held that RInfra-D is entitled for interest at

SBI Base Rate applicable on 31 December, 2013.

RInfra-D submitted that in accordance with the aforesaid, it has deducted a total amount

of Rs. 89.15 crore from the monthly bills of WPCL for the period April 2012 to March

2014 and this deduction has been entirely considered in the ARR of FY 2013-14.

RInfra-D submitted that WPCL has filed Appeal No. 101 of 2013 before ATE against the

Order of the Commission in Case No. 8 of 2013 and subsequently, filed a Petition with

the Commission (Case No. 52 of 2014), where WPCL has claimed that RInfra-D has not

deducted capacity charges as prescribed by the Commission. The Commission has given

its ruling on the said Petition on 6 May, 2014, where the Commission has prescribed a

formula for arriving at the deductible amount and directed RInfra-D and WPCL to

mutually decide on the amount of penalty. The Commission also directed that in the

meantime, RInfra-D should refund the amount of Rs.89.15 crore deducted from the

monthly bills of WPCL. This Order of the Commission has been challenged by both

RInfra-D and WPCL in ATE in their respective Appeals (No. 123 of 2014 and No. 141 of

2014).

RInfra-D submitted that it has not refunded the amount of Rs. 89.15 crore to WPCL and

has instead extended the Letter of Credit. RInfra-D submitted that for the purpose of ARR

of FY 2013-14, it has considered a deduction of Rs.89.15 crore in the power purchase cost

from WPCL. Further, RInfra-D submitted that it has adjusted (deducted) the prior period

adjustments of Rs.0.31 crore pertaining to power procurement from WPCL in FY 2013-

14. The summary of power purchase cost for procurement of power from WPCL for FY

2013-14 as submitted by RInfra-D is shown in the Table below.


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Table 5-10: Power Purchase from WPCL in FY 2013-14 as submitted by RInfra-D

Source -

WPCL

Purchase

(MU)

Fixed Cost

(Rs. crore)

Variable

Cost (Rs.

crore)

Cost due to

Change in Law

and prior period

adjustments (Rs.

crore)

Total

(Rs. crore)

Rate

(Rs./kWh)

MYT Order 1935.96 595.25 198.43 0.00 793.68 4.10

RInfra-D

Petition 1489.99 352.83* 152.72 3.10 508.65 3.41

*Net of Rs. 89.15 crore deducted towards capacity charges

5.4.2.2 Power Procurement from AMNEPL

RInfra-D submitted that it has procured power from AMNEPL in accordance with the

quantum and rate specified in the PPA signed with AMNEPL, which has been approved

by the Commission in its Order (Case No. 84 of 2011). RInfra-D submitted that it has also

paid Rs.0.34 crore to AMNEPL as incentive for achieving availability of more than 85%,

in accordance with the PPA. Further, RInfra-D submitted that AMNEPL has raised a bill

of Rs.24.05 crore in March 2014 on account of Change in Law for the period July 2011 to

October 2013, for which RInfra-D has sought details from AMNEPL, which have not

been submitted so far.

RInfra-D submitted that in view of the aforesaid, it is not including any amount towards

Change in Law for AMNEPL in the ARR for FY 2013-14 and if any payment is made

towards the same in future, it will be claimed for recovery in such financial year. The

summary of power purchase cost for procurement of power from AMNEPL in FY 2013-

14 as submitted by RInfra-D is shown in the Table below.

Table 5-11: Power Purchase from AMNEPL for FY 2013-14 as submitted by RInfra-D

Source -

AMNEP

L

Purchase

(MU)

Fixed Cost

(Rs. crore)

Variable

Cost

(Rs. crore)

Incentive

(Rs.

crore)

Total

Cost (Rs.

crore)

Rate

(Rs./kWh)

MYT

Order 409.53 101.15 76.79 0.00 177.94 4.34

RInfra-D

Petition 420.91 101.15 78.92 0.34 180.41 4.29


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5.4.2.3 Power Procurement from VIPL

RInfra-D submitted that it has procured power from VIPL in FY 2013-14 in accordance

with its PPA and the total Fixed Charges paid to VIPL in FY 2013-14 was Rs. 368.48

crore. In addition, RInfra-D submitted that it has paid incentive of Rs. 0.16 crore for

achievement of more than 85% availability and deducted liquidated damages of Rs. 0.67

crore for not supplying power as per PPA during the period 1 April, 2013 to 5 April,

2013. RInfra-D submitted that it had paid an application processing fee of Rs.20,000 in

FY 2013-14 to STU for the 2 Units of VIPL for getting Long Term OA and the same has

been added to the power purchase cost from VIPL. The summary of power purchase cost

for procurement of power from VIPL in FY 2013-14 as submitted by RInfra-D is as


Table 5-12: Power Purchase from VIPL for FY 2013-14 as submitted by RInfra-D

Source -VIPL Purchase

(MU)

Fixed

Cost

(Rs.

crore)

Variable

Cost (Rs.

crore)

Incentive

(Rs. crore)

Liquidated

damages and

other costs

(Rs. crore)

Total

Cost (Rs.

crore)

Rate

(Rs./

kWh)

MYT Order 997.76 368.27 143.48 0.00 0.00 511.75 5.13

RInfra-D

Petition 994.82 368.48 138.74 0.16 (0.67) 506.71 5.09


The Commission asked RInfra-D to submit the details of the adjustments/deductions of

Rs. 0.31 crore pertaining to power procurement from WPCL in FY 2013-14. In response,

RInfra-D submitted that the total amount paid to WPCL in FY 2013-14 on account of

Change in Law (including Rs. 1.17 crore for March 2013 and Rs.0.26 crore as per Order

in Case No. 39 of 2012) is Rs. 3.41 crore. RInfra-D further submitted that it has deducted

Rs. 0.31 crore, which pertains to past period, from the amount of Rs. 3.41 crore, as shown

in the Table below:

Table 5-13: Amount deducted from the total amount paid to WPCL in FY 2013-14 on

account of Change in Law as submitted by RInfra-D

Particulars Amount (Rs.)

Recovery of Excess VAT for the period (April 2012-Sep 2012) 28,99,622

Adjustment in the bill for October 2011 1,57,009

Total 30,56,631


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The Commission has considered the above submissions of RInfra-D and has accordingly

approved the power purchase from WPCL, AMNEPL and VIPL for FY 2013-14 as

follows:

Table 5-14: Power Purchase from Medium-Term Sources in FY 2013-14 approved by

the Commission

Source


MU Rs.

crore

Rate

(Rs./

kWh)

MU Rs.

crore

Rate

(Rs./

kWh)

MU Rs.

crore

Rate

(Rs./

kWh)

WPCL 1935.96 793.68 4.10 1489.99 508.65 3.41 1489.99 508.65 3.41

AMNE

PL 409.53 177.94 4.35 420.91 180.41 4.29 420.91 180.41 4.29

VIPL 997.76 511.75 5.13 994.82 506.71 5.09 994.82 506.71 5.09


5.4.3.1 Solar RPO

RInfra-D submitted that it has signed an Energy Purchase Agreement (EPA) dated 28

March, 2011 for purchase of energy generated from the 40 MW Solar power (PV) plant of

Dahanu Solar Power Private Limited (DSPPL), located in Rajasthan with delivery point at

Maharashtra State periphery, which has been renamed as Dhursar Solar Power Pvt. Ltd.

with effect from 2 September, 2013.

RInfra-D submitted that in its MYT Petition, it had submitted that there will be some

surplus in Solar power purchase with respect to the Solar power obligation from FY 2012-

13 to FY 2015-16, which arose as a result of migration of consumers. RInfra-D submitted

that its own sales and power purchase requirement was lower than estimated at the time of

contracting with Dhursar Solar Power Ltd., which was done by considering the gross

energy purchase for FY 2010-11.

RInfra-D submitted that the Commission has allowed the Solar power purchase cost

corresponding to the minimum quantum of Solar purchase required as per MERC

(Renewable Purchase Obligation, its Compliance and Implementation of REC

Framework) Regulations, 2011 for the period FY 2013-14 to FY 2015-16 and the

Commission had also allowed the additional quantum of Solar power purchase at highest

rate in the Merit Order stack of power purchase at short-term purchase rates of respective


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years. RInfra-D has appealed against this issue before ATE vide Appeal No. 274 of 2013,

which was pending during the filing of its Petition. RInfra-D again requested the

Commission to allow the entire power purchase cost from Dhursar Solar.

RInfra-D submitted that even if the Commission permits the additional procurement from

Solar at the highest rate in the Merit Order stack of power purchase, the same should be

allowed at the maximum rate of power procurement from any short-term source for any

time period during FY 2013-14, which works out to Rs. 4.61/kWh. RInfra-D submitted

that notwithstanding the approach followed by the Commission for allowing power

purchase cost from DSPPL in the MYT Order, the contract with Dhursar Solar has

already been entered into by RInfra-D considering its present and future requirements.

RInfra-D submitted that the purchase of power under the said contract should therefore be

accounted for by RInfra-D, being actual purchase of energy for which price of

Rs.17.91/kWh is actually paid to DSPPL. RInfra-D submitted that the same is accordingly

reflected as actual cost (for FY 2012-13 and FY 2013-14) and anticipated cost (for FY

2014-15 and FY 2015-16) in its Petition ; hence, RInfra-D has shown a part of the power

purchase from Dhursar Solar limited to the target energy (Solar RPO) at Rs. 17.91/kWh

towards RPO fulfilment; for energy purchase beyond the RPO requirement, the same has

not been shown towards RPO fulfilment but as normal power purchase from Solar source

at Rs. 17.91/kWh. Considering the gross purchase of 7,517.52 MU, the Solar RPO target

vis-à-vis the actual purchase as submitted by RInfra-D is as shown in the Table below.

Table 5-15: Solar RPO Target Vs Achievement in FY 2013-14 as submitted by RInfra-

D (MU)


Gross Power Purchase 7517.52

% Solar RPO 0.50%

Solar RPO 37.59

Solar Power Purchase 69.60

Additional Solar Power Purchase 32.01

The summary of Solar power purchase for FY 2013-14 as submitted by RInfra-D is as

shown in Table below.

Table 5-16: Solar Power Purchase in FY 2013-14 as submitted by RInfra-D

Source-Dhursar Solar Purchase (MU) Cost (Rs. crore) Rate (Rs./kWh)

MYT Order 38.47 68.90 17.91

Solar Purchase towards RPO 37.59 67.32 17.91


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Source-Dhursar Solar Purchase (MU) Cost (Rs. crore) Rate (Rs./kWh)

Additional Solar Purchase 32.01 57.33 17.91

Total Solar Purchase 69.60 124.65 17.91


In the MYT Order, the Commission disallowed the cost of Solar Power Purchase in

excess of the RPO in view of the fact there was no requirement of procurement of such

costlier Solar power in excess, which would un-necessarily burden the consumers and

accordingly; in the MYT Order, the Commission had allowed the cost of purchase of such

Solar power in excess of RPO at the highest rate in the Merit Order stack of short-term

power purchase. The ATE, in its Judgment dated 8 April, 2015 (on various Appeals of

RInfra including the Appeal No. 274 of 2013 wherein the issue of disallowance of Solar

power purchase beyond RPO of RInfra-D had been raised by RInfra-D) has upheld the

ruling of the Commission to disallow the Solar power purchase by RInfra-D beyond its

RPO requirement.

Accordingly, the Commission has treated the excess Solar power purchase beyond the

requirement of RPO, as non-renewable power and has approved the cost of the same at

highest rate in the Merit Order Stack of the power purchase at the short-term power

purchase rate of FY 2013-14. As covered in the following paragraphs of this Order, the

highest rate of short-term power purchase in FY 2013-14 was Rs. 3.82 /kWh, and

accordingly, the Commission has considered cost of the excess Solar power purchase

beyond RPO for FY 2013-14 as Rs. 3.82 /kWh. As regards the quantum of Solar RPO, the

Commission has computed the Solar RPO requirement at 0.50% (Solar RPO target for FY

2013-14 as per MERC Renewable Purchase Obligation, its Compliance and

Implementation of REC Framework Regulations, 2011) of the actual Gross Energy

consumption considered in the Order on Verification of compliance of Renewable

Purchase Obligation targets by Reliance Infrastructure Ltd. for FY 2013-14 in Case No.

193 of 2013.


2013-14 as tabulated below.


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Table 5-17: Solar Power Procurement for FY 2013-14 approved by the Commission

Source


MU Rs.

crore

Rs./

kWh MU

Rs.

crore

Rs./

kWh MU

Rs.

crore

Rs./

kWh

Renewable -

Solar (RPO) 37.59 67.32 17.91 37.59 67.32 17.91

Renewable -

Solar (Excess

over RPO)

32.01 57.33 17.91 32.01 12.22 3.82

Total 38.47 68.90 17.91 69.60 124.65 17.91 69.60 79.54 11.43

5.4.3.2 Non-Solar RPO

RInfra-D submitted the summary of power procured by it from different sources for

meeting its non-Solar RPO in FY 2013-14, as shown in the Table below:

Table 5-18: Actual Non Solar RE Purchase in FY 2013-14 as submitted by RInfra-D


Approved in MYT Order 226.35 106.33 4.70

RInfra-D Petition

Reliance Innoventures 87.02 35.64 4.10

AAA Sons Enterprise 3.82 1.58 4.15



Tembhu Power Pvt. Limited 7.59 3.23 4.26

Reliance Clean Power Pvt. Ltd 67.22 39.05 5.81

Total 219.29 102.76 4.69

RInfra-D submitted that in FY 2013-14, it had paid Rs. 10,000 to MSLDC for each of the

above sources as application processing fees for obtaining long term OA. The cost of

application processing fees has been included in the total cost for each of the above

sources. RInfra-D has also purchased 424200 RECs in FY 2013-14 for meeting its non-

Solar RPO at a total cost of Rs. 63.66 crore. The actual purchase vis-a-vis the non-Solar

RPO requirement as submitted by RInfra-D is shown below:


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Table 5-19: Non Solar RPO Target Vs Achievement in FY 2013-14 as submitted by

RInfra-D (MU)

Particulars Quantum

Gross Power Purchase 7,517.52

% Non Solar RPO 8.50%

Non-Solar RPO 638.99

Non-Solar Power Purchase 219.29

Non-Solar REC (equivalent MU) 424.20

Total of Non Solar Power Purchase and Non Solar REC 643.49

Surplus (4.50 )

RInfra-D requested the Commission to approve the actual non-Solar power purchase cost

for FY 2013-14. The Commission, during the proceedings on RInfra-D's MYT Petition,

had observed that the trading margin shown in the power purchase from IEX was towards

the trading margin of trader, and had directed RInfra-D to ensure that only the cost

associated with market clearing price at the Exchange and Exchange related fees and

charges should be considered in the future and not the trading margin paid to the trader for

procurement of RECs. RInfra-D submitted that it has complied with the direction and has

procured RECs directly from the Exchange at the price of Rs. 1.50/kWh in FY 2013-14,

without paying trading margin to the trader.


The Commission has computed the quantum of non-Solar RPO for FY 2013-14 at 8.50%

(non-Solar RPO target for FY 2013-14 as per MERC Renewable Purchase Obligation, its

Compliance and Implementation of REC Framework Regulations, 2011) of the Gross

Energy consumption considered in the Order on Verification of compliance of Renewable

Purchase Obligation targets by Reliance Infrastructure Ltd. for FY 2013-14 in Case No.

193 of 2013,

The Commission has disallowed the cost of excess non-Solar RECs procured by RInfra-

D, as it is a needless addition to the power purchase cost and the consumers cannot be

burdened with the cost of the REC purchase beyond the requirement of RPO. As regards

the cost of non-Solar renewable power purchase, the Commission has approved the actual

cost of power procurement as submitted by RInfra-D. As regards the cost of RECs,

RInfra-D has complied with the Commission's directive and has procured RECs directly

from the Exchange at the price of Rs. 1.50/kWh in FY 2013-14, without paying trading

margin to the trader, and the Commission has considered the same for truing up of FY


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2013-14. In view of the above, the Commission has approved the non-Solar power

purchase for FY 2013-14 as tabulated below:

Table 5-20: Non-Solar RE power purchase for FY 2013-14 approved by the

Commission

Source

MYT Order RInfra-D Petition Approved in this

Order

MU Rs.

crore

Rs./

kWh MU

Rs.

crore

Rs./

kWh MU

Rs.

crore

Rs./

kWh

Non-Solar

Power Purchase 226.35 106.33 4.70 219.29 102.76 4.69 219.29 102.76 4.69

Non-Solar REC

Purchase 65.00 63.66 62.98

Total 226.35 171.33 7.57 219.29 166.42 7.59 219.29 165.74 7.56

5.4.4 SHORT-TERM POWER PURCHASE

RInfra-D submitted that in order to meet its peak load requirements and to manage the

variations in load, it has procured power from short-term sources, Power Exchanges and

MSEDCL in FY 2013-14. RInfra-D submitted the details of contracts relating to power

procurement from bilateral sources and Power Exchanges with its Petition. The summary

of short-term power procurement as submitted by RInfra-D is as shown in the Table

below:

Table 5-21: Short-Term Power Purchase in FY 2013-14 as submitted by RInfra-D



True-up Petition

Bilateral 136.52 47.45 3.48

Power Exchange 710.62 229.14 3.22

Stand-by Arrangement 33.15 12.70 3.83

VIPL Infirm Power 3.49

Payment made in May 2014,

hence, cost is considered in ARR of

FY 2014-15

Total 883.82 289.29 3.27


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RInfra-D submitted that it has paid Rs. 90,000 to MSLDC in FY 2013-14 for securing OA

for transactions on day-ahead basis from Power Exchange, and has included it in the total

cost of power purchase from Power Exchanges.


From the time-slot wise demand-supply position in FY 2013-14 submitted by RInfra-D,

the Commission has observed that, during several time-slots, RInfra-D has simultaneously

procured as well as sold energy on day-ahead basis. The Commission considered such

simultaneous power procurement/sale under four different scenarios, i.e. simultaneous

purchase and sale on IEX; simultaneous purchase from MSEDCL under Stand-by

agreement and sale on IEX; simultaneous purchase under Banking and sale on IEX; and

simultaneous purchase from IEX and sale on Imbalance Pool under the IBSM/FBSM

mechanism. The Commission directed RInfra-D to justify these. RInfra-D’s responses and

the Commission’s observations have been discussed in the previous Section on truing up

of FY 2012-13, and are not repeated here.

As regards the purchase of power from bilateral sources, banking return and Stand-by

procurement from MSEDCL, the Commission has found power procurement from these

sources prudent from the analysis of time-slot wise demand-supply position for FY 2013-

14 as submitted by RInfra-D. Accordingly, the Commission approves power purchase

from these sources.

The Commission has also considered the justification submitted by RInfra-D in support of

the power procurement from Exchanges when surplus power was also being sold through

them. However, the Commission cannot entirely accept the justification in view of the

fact that there are several instances of procurement from Exchanges on day-ahead basis

during some time-slots when a large quantum of power was also being sold on the

Exchanges. The Commission appreciates that, due to various factors mentioned by

RInfra-D, there may be demand/supply variations vis-a-vis day-ahead forecasts to some

extent on many occasions and to a considerable extent on some. However, the

Commission has observed thousands of (15 minute) time-slots in FY 2013-14 in which

power was purchased from the Exchange at the same time as a significant quantum was

being sold in the Imbalance Pool.

Therefore, the Commission has decided to allow the simultaneous power procurement and

sale from Exchanges on day-ahead basis during time-slots in which the power sold

through the Exchanges was upto 5% of the maximum demand of FY 2013-14.


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From the time-slot wise demand-supply position in FY 2013-14 submitted by RInfra-D,

the Commission has observed that the maximum demand of RInfra-D in FY 2013-14 was

1697.16 MW. The Commission has approved the power procurement from Exchanges on

day-ahead basis for all the time-slots in which there was no surplus power sales on

Imbalance Pool, or in which the surplus power sale on Imbalance Pool was up to 84.86

MW, i.e., 5% of the maximum demand of 1697.16 MW.

For all other time-slots, i.e., those during which more than 84.86 MW of surplus power

was being sold on Imbalance Pool, the Commission has not approved part of the power

purchase cost from Exchanges on day-ahead basis, since it implies poor forecasting and

imprudent power procurement by RInfra-D.

There were 2218 time-slots in FY 2013-14 during which more than 84.86 MW of power

was sold on the Imbalance Pool and during which power was simultaneously procured

from Exchanges on day-ahead basis. For these time-slots, the Commission has disallowed

part of the cost of excess power purchase, i.e., the lower of the purchase from Exchange

and sale on Imbalance Pool.

The quantum of such imprudent power procurement, as assessed by the Commission from

the time-slot wise demand/supply position of FY 2013-14 submitted by RInfra-D, is 57.81

MU. The rate considered by the Commission for such disallowance is the difference

between the average rate of power purchase from Exchanges in FY 2013-14 submitted by

RInfra-D, i.e., Rs. 3.22 per kWh, and the average rate of sale of power on Imbalance Pool

in FY 2012-13 submitted by RInfra-D, i.e., Rs. 2.77 per kWh. Accordingly, the

Commission has disapproved the cost equivalent to 57.81 MU of power procurement at

the rate of Rs. 0.46 per kWh.

In view of the above, the Commission approves the power purchase from short-term

sources as summarised below:

Table 5-22: Power Procurement from Short-Term Sources in FY 2013-14 approved by

the Commission

Particulars MYT Order RInfra-D Petition Approved in this

Order

Purchase (MU) 746.44 883.82 883.82

Cost (Rs. crore) 280.22 289.29 286.66

Rate per unit (Rs./kWh) 3.75 3.27 3.24


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5.4.5 SALE OF SURPLUS POWER

RInfra-D submitted that surplus energy in FY 2013-14 during certain hours of the day,

resulting from varying load patterns and migration of consumers, has been sold outside

the Licence Area through the Power Exchanges and through bilateral contracts. RInfra-D

has also incremented energy into the State Imbalance Pool and received revenue from it,

based on the provisional Energy Balance statements from MSLDC. The summary of

revenue realized from such sale of surplus power, as submitted by RInfra-D is as under:

Table 5-23: Sale of Surplus Power in FY 2013-14 as submitted by RInfra-D

Source Purchase

(MU)

Revenue

(Rs. crore)

Rate

(Rs./kWh)


True-up Petition

Sale through Power Exchange 114.42 22.13 1.93

Sale through Imbalance Pool 185.30 51.31 2.77

Total 299.72 73.44 2.45

RInfra-D submitted that finalization of FBSM statements by MSLDC had been held up

due to technical issues. Hence, energy incremented into the State Imbalance Pool in FY

2013-14 has been considered as per the provisional FBSM statements. The figures may

undergo change after finalization of FBSM statements for FY 2013-14, and any financial

implications shall be considered in the year in which any such additional payment/receipt

is advised by MSLDC.


The Commission has accepted the submission of RInfra-D regarding the sale of surplus

power through bilateral contracts/Power Exchanges. The energy quantum incremented by

RInfra-D into the State Imbalance Pool has been derived based on the actual Gross

Energy consumption considered in the RPO verification Order for FY 2013-14 in Case

No. 193 of 2013. Accordingly, the Commission has approved the actual revenue from sale

of surplus power in the truing up process for FY 2013-14 as given below:

Table 5-24: Sale of Surplus Power in FY 2013-14 approved by the Commission


Petition

Approved in

this Order

Surplus Energy Sold (MU) 448.13 299.72 299.72


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Petition

Approved in

this Order

Revenue Realised (Rs. crore) 111.88 73.44 73.44

Rate per unit (Rs./kWh) 2.50 2.45 2.45

5.4.6 TRANSMISSION CHARGES, STAND-BY CHARGES AND MSLDC

CHARGES


RInfra-D submitted that the actual Transmission Charges paid in FY 2013-14 are Rs.

428.16 crore, as against Rs. 428.11 crore approved in the MYT Order. RInfra-D has paid

excess Transmission Charges of Rs. 0.05 crore in FY 2013-14, which has been

acknowledged by MSETCL and will be adjusted in the Transmission Charges payable in

FY 2014-15. RInfra-D has sought approval of Transmission Charges of Rs. 428.16 crore

paid in FY 2013-14.


The Commission has approved the actual Transmission Charges paid by RInfra-D for FY

2013-14, as shown in the Table below:

Table 5-25: Transmission Charges for FY 2013-14 approved by the Commission (Rs.

crore)


Petition

Approved in this

Order

Transmission Charges 428.11 428.16 428.16


RInfra-D submitted that the actual Stand-by Charges paid in FY 2013-14 are Rs. 59.64

crore, as approved in the MYT Order, which was after adjustment of over-payment in FY

2012-13, and sought approval accordingly.


The Commission has approved the actual Stand-by Charges of Rs. 59.64 crore for FY

2013-14.


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RInfra-D submitted that the actual MSLDC charges paid by it in FY 2013-14 are Rs. 1.64

crore. In its MYT Petition, RInfra-D had projected MSLDC charges of Rs. 1.10 crore.

Relying on its MSLDC Budget Order dated 22 March, 2013 in Case No. 133 of 2012, the

Commission had approved MSLDC charges for payment by RInfra-D each year from FY

2013-14 to FY 2015-16 as Rs. 1.64 crore. However, while allowing the total power

purchase cost (in Table No. 59 of the MYT Order), the Commission instead approved

only Rs. 1.10 crore towards MSLDC charges in its ARR. RInfra-D requested the

Commission to approve the MSLDC charges of Rs. 1.64 crore paid in FY 2013-14.


The Commission has approved the actual MSLDC charges of Rs. 1.64 crore for FY 2013-

14.

5.4.7 SUMMARY OF POWER PURCHASE COST FOR FY 2013-14

The actual power purchase quantum and cost for FY 2013-14 submitted by RInfra-D, as

against that approved in the MYT Order, is summarised in the Table below:

Table 5-26: Power Purchase Quantum and Cost for FY 2013-14 as submitted by

RInfra-D

Source


Quantum

(MU)

Cost (Rs.

crore)

Quantum

(MU)

Cost (Rs.

crore)

DTPS 3,787.60 1,309.68 3,738.81 1,325.41

WPCL 1,935.96 793.68 1,489.99 508.65

AMNEPL 409.53 177.94 420.91 180.41

VIPL 997.76 511.75 994.82 506.71

Renewable 264.82 175.23 288.89 227.41

REC

65.00

63.66

Short Term Purchase 746.44 280.22 883.82 289.29

Surplus Power (448.13) (111.88) (299.72) (73.44)

Stand-by Charges

59.64

59.64

MSLDC Charges

1.10

1.64

Transmission Charges

428.11

428.11

Total 7,693.98 3,690.48 7,517.52 3,517.53


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RInfra-D requested the Commission to approve the actual power purchase quantum and

cost for FY 2013-14.


Based on the source-wise approval set out in the above paragraphs, the power purchase

quantum and cost for FY 2013-14 approved by the Commission after truing up is as

summarised below:

Table 5-27: Power Purchase in FY 2013-14 approved by the Commission

Particulars


Quantu

m Cost

Per

Unit

Rate

Quantu

m Cost

Per

Unit

Rate

Quantu

m Cost

Per

Unit

Rate

(MU) (Rs.

crore)

(Rs./

kWh) (MU)

(Rs.

crore)

(Rs./

kWh) (MU)

(Rs.

crore)

(Rs./

kWh)

DTPS 3787.60 1309.68 3.46 3738.81 1325.41 3.54 3738.81 1325.41 3.54

WPCL 1935.96 793.68 4.10 1489.99 508.65 3.41 1489.99 508.65 3.41

AMNEPL 409.53 177.94 4.34 420.91 180.41 4.29 420.91 180.41 4.29

VIPL 997.76 511.75 5.13 994.82 506.71 5.09 994.82 506.71 5.09

Total Solar RE

Purchase incl.

REC

38.47 68.90 17.91 69.60 124.65 17.91 69.60 79.54 11.43

Non-Solar RE

Power Purchase

incl REC

226.35 106.33 4.70 219.29 166.42 4.69 219.29 165.74 7.56

Short Term

Purchase 746.44 280.22 3.75 883.82 289.29 3.27 883.82 286.66 3.24

Surplus Power (448.13) (111.88) 2.50 (299.72) (73.44)

(299.72) (73.44) 2.45

Power Purchase

Cost 7693.98 3201.62 4.16 7517.52 3028.09 4.03 7517.52 2979.67 3.96

Stand-by Charges

59.64

59.64

59.64

MSLDC Charges

1.10

1.64

1.64

Transmission

Charges 428.11

428.16

428.16

Total Power

Purchase Cost 7693.98 3690.48 4.80 7517.52 3517.53 4.68 7517.52 3469.12 4.61


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5.5.1 EMPLOYEE EXPENSES

RInfra-D submitted that the actual Employee Expenses of RInfra-D during FY 2013-14

were Rs. 554.50 crore, after adjustment of SCADA expenses allocated to RInfra-T. The

MYT Order had considered an escalation rate of 6.15% over FY 2012-13 for the

Employee Expenses for FY 2013-14. Considering the escalation of 9.68% in the average

Consumer Price Index (CPI) in FY 2013-14 over FY 2012-13, RInfra-D submitted that

the allowable Employee Expenses for FY 2013-14 works out to Rs. 564.35 crore. The

actual Employee Expenses, being less than the allowable limit considering the escalation

in CPI, may be approved.


On a query of the Commission, RInfra-D clarified that salaries of employees are not

linked to any MYT specified performance parameters for incentives.

The Commission has verified the actual Employee Expenses in FY 2013-14 from the

audited Reconciliation Statement showing allocation of expenses and income between

Generation, Transmission and Distribution businesses. The Commission has approved the

actual Employee Expenses as submitted by RInfra-D as they are lower than in 2012-13

and as approved in the MYT Order. The Commission has accepted the submission of

RInfra-D with regard to allocation of Employee Expenses between Wires Business and

Supply Business.

5.5.2 ADMINISTRATIVE AND GENERAL EXPENSES

RInfra-D submitted that the actual A&G Expenses of RInfra-D during FY 2013-14 were

Rs. 166.94 crore, after adjustment of SCADA expenses allocated to RInfra-T and Land

Usage Charges payable to RInfra-T. For the A&G Expenses in FY 2013-14, the MYT

Order had considered an escalation rate of 6.42% over FY 2012-13. RInfra-D submitted

that the escalation factor for A&G Expenses in FY 2013-14 over FY 2012-13 considering

60% and 40% weightage for CPI and Wholesale Price Index (WPI), respectively, works

out to 8.20%. On this basis, the allowable A&G Expenses for FY 2013-14 work out to Rs.

166.56 crore. The actual A&G Expenses for FY 2013-14 may be approved, being almost

the same as the allowable A&G Expenses.


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The Commission has verified the actual A&G Expenses in FY 2013-14 from the audited

Reconciliation Statement showing allocation of expenses and income between

Generation, Transmission and Distribution businesses. The actual A&G Expenses are

8.45% higher than those approved for FY 2012-13 after truing up, as compared to the

growth rate of 6.42% considered in the MYT Order. The Commission has considered

RInfra-D's submission, and approves the actual A&G Expenses for FY 2013-14 as

submitted by it. The Commission has also accepted the submission of RInfra-D with

regard to allocation of A&G Expenses between Wires Business and Supply Business.

5.5.3 REPAIR AND MAINTENANCE EXPENSES

RInfra-D submitted that the actual R&M Expenses in FY 2013-14 were Rs.203.66 crore,

after adjustment of SCADA expenses allocated to RInfra-T. The Commission had

considered an escalation factor of 6.83% over FY 2012-13 for approving the R&M

Expenses for FY 2013-14. RInfra-D submitted that it has been able to limit the R&M

Expenses to Rs. 203.66 crore in FY 2013-14. This is 3% higher than the R&M Expenses

for FY 2012-13 (without arrears), which were Rs. 197.44 crore, and sought approval

accordingly.


The Commission has verified the actual R&M Expense for FY 2013-14 from the audited

Reconciliation Statement showing allocation of expenses and income between

Generation, Transmission and Distribution business. The Commission has approved the

actual R&M Expenses as submitted by RInfra-D, as these are lower than in FY 2012-13,

after considering escalation of 6.83% approved in the MYT Order. The Commission has

also accepted the submission of RInfra-D with regard to allocation of R&M Expenses

between Wires Business and Supply Business.

5.5.4 SUMMARY OF O&M EXPENSES FOR FY 2013-14

RInfra-D submitted that the Commission had approved Rs. 913.17 crore as O&M

Expenses for FY 2013-14. The Commission had considered the actual O&M Expenses for

FY 2012-13 (which was already net of adjustments due to SCADA allocation to RInfra-T

and Land Usage Charges payable to RInfra-T), and netted off SCADA allocation to

Transmission for FY 2012-13 (as submitted by RInfra-D in its MYT Petition) from the

actual expenses to arrive at the approved amount for FY 2012-13.


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RInfra-D submitted that the Commission had applied escalation factors of 6.15% on

Employee Expenses, 6.83% on R&M Expenses and 6.42% on A&G Expenses on the base

levels of FY 2012-13 to arrive at the figures for FY 2013-14. The SCADA allocation to

RInfra-T for FY 2013-14 (as submitted by RInfra-D in its MYT Petition) was deducted to

arrive at the approved expenses for FY 2013-14. RInfra-D submitted that, since the base

level of expense was already net of the SCADA adjustment, netting off SCADA from it

amounted to double deduction, and requested the Commission to add it back in order to

arrive at the correct level of target O&M Expenses for each year of the MYT Control

Period. The comparison of actual O&M Expenses for FY 2013-14 with the MYT Order

O&M Expenses for FY 2013-14, as submitted by RInfra-D, is shown below:

Table 5-28: O&M Expenses in FY 2013-14 as submitted by RInfra-D (Rs. crore)


Wires Supply Total Wires Supply Total

Employee Expenses

328.43 226.07 554.50

A&G Expenses

99.69 67.25 166.94

R&M Expenses

189.27 14.39 203.66

Total O&M Expenses 611.41 301.77 913.17 617.38 307.71 925.09


In the MYT Order, the Commission had approved the actual Employee and A&G

Expenses of RInfra-D, invoking its powers to remove difficulties to relax the O&M norms

specified in the MYT Regulations. Hence, in the truing up for FY 2013-14, the

Commission has adopted the same approach of allowing O&M Expenses based on the

actuals.

The Commission has also considered RInfra-D’s submission regarding adjustments on

account of SCADA charges attributable to RInfra-T and Land Usage Charges receivable

from it. The Commission has approved the actual expenses from the audited

Reconciliation Statements showing allocation of expenses and incomes between

Generation, Transmission and Distribution businesses. The adjustments on account of

SCADA charges and Land Usage Charges have been included in the approved O&M

Expenses. Since the Commission has approved actual O&M Expenses, no sharing of

Efficiency Gains/loss has been undertaken for O&M Expenses.

In view of the above, the Commission has approved the actual O&M Expenses for FY

2013-14 as summarised in the Table below:


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Table 5-29: O&M Expenses in FY 2013-14 approved by the Commission (Rs. crore)



Employee

Expenses 328.43 226.07 554.50 328.43 226.07 554.50

A&G Expenses

99.69 67.25 166.94 99.69 67.25 166.94

R&M Expenses

189.27 14.39 203.66 189.27 14.39 203.66

Total O&M

Expenses 611.41 301.77 913.17 617.38 307.71 925.09 617.39 307.71 925.10


RInfra-D submitted that, during FY 2013-14, total capital expenditure of Rs. 252.92 crore

has been incurred and capitalisation of Rs.303.45 crore has been carried out. The MYT

Order had approved Rs. 361.45 crore towards capitalisation for FY 2013-14. RInfra-D

submitted that it has carried out only those schemes for which in-principle clearance has

been obtained from the Commission. The summary of DPR and non-DPR scheme-wise

capital expenditure in FY 2013-14, as submitted by RInfra-D, is as under:

Table 5-30: Capital Expenditure and Capitalisation in FY 2013-14 as submitted by


Business DPR

Schemes

Non-DPR

Schemes

Total Capital

Expenditure

Total

Capitalisation

Wires Business 237.55 4.79 242.34 292.87

Supply Business 10.58 0.00 10.58 10.58

Total 248.14 4.79 252.92 303.45

According to RInfra-D, the DPR scheme-wise capital expenditure and capitalisation in FY

2013-14 submitted with the Petition includes IDC, considering the interest rate as

approved by the Commission till FY 2011-12. For FY 2012-13 onwards, the interest rate

is based on the actual loan portfolio of RInfra-D. RInfra-D also submitted the asset-wise

computation of IDC for FY 2013-14.

5.6.1 LOWER CAPITAL EXPENDITURE IN FY 2013-14

RInfra-D submitted that, in its MYT Petition, it had proposed capital expenditure of

Rs.506.19 crore for FY 2013-14. However, the actual expenditure in FY 2013-14 was


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only Rs. 252.92 crore. The capital expenditure was lower for the same reasons as in FY

2012-13, elaborated earlier. Although the Road Reinstatement Policy of MCGM reverted

to its original form in October, 2013, the resultant change and subsequent restoration

caused delays in execution of works. RInfra-D requested the Commission to consider the

reasons for lower capital expenditure than projected, and approve the actual expenditure

for FY 2013-14.


The Commission has conducted a scheme-wise prudence check, and has accordingly

approved the capital expenditure and capitalisation in the truing up of FY 2013-14. The

Commission has approved capitalisation only for those schemes that have been completed

and put to use.

The Commission observed that there were several items for which IDC had been claimed

for FY 2013-14 for the first time, and in respect of which there was no capitalisation in

FY 2014-15. The Commission asked RInfra-D to clarify whether it had included IDC on

the capital expenditure on assets which started and were completed during the year, and to

submit the revised IDC computation sheets. In response, RInfra-D conceded that it had

inadvertently computed IDC even on those assets which started and were completed

during the same year. It submitted the revised computation, which has been considered by

the Commission for approval of capitalisation.

The Capital Expenditure and Capitalisation approved by the Commission for FY 2013-14

is as tabulated below:

Table 5-31: Capital Expenditure and Capitalisation in FY 2013-14 approved by the


Particular MYT Order RInfra-D Petition Approved in this

Order

Capital Expenditure

Wires Business

242.34 242.34

Supply Business

10.58 10.58

Total Capital Expenditure

252.92 252.92

Capitalisation

Wires Business 325.11 292.87 288.00

Supply Business 36.34 10.58 10.40

Total Capitalisation 361.45 303.45 298.41


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5.7 DEPRECIATION

RInfra-D submitted that Depreciation on assets for FY 2013-14 has been calculated in

accordance with the rates specified in the MYT Regulations and as per the methodology

explained in the Section on truing-up for FY 2012-13. It has considered the effect of

retirement of assets and withdrawal of corresponding accumulated Depreciation while

computing Depreciation in FY 2013-14. The Table below shows the Depreciation

calculation for Wires Business for FY 2013-14 as submitted by RInfra-D.

Table 5-32: Depreciation for Wires Business for FY 2013-14 as submitted by RInfra-D

(Rs. crore)


Opening GFA 3,958.41 3,812.00

Addition 325.11 292.87


Closing GFA 4,277.03 4,095.64


Depreciation (as % average

balance) 4.40% 4.23%

The Table below shows the Depreciation calculation for Supply Business for FY 2013-14

as submitted by RInfra-D.

Table 5-33: Depreciation for Supply Business for FY 2013-14 as submitted by RInfra-D

(Rs. crore)


Opening GFA 534.50 495.66

Addition 36.34 10.58


Closing GFA 564.75 494.56


Depreciation (as % of average balance) 3.36% 3.76%


As sought by the Commission, RInfra-D confirmed that no asset has been depreciated

beyond 90% of its gross value, and that this is ensured through the built-in logic of its

SAP system.


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opening balance of GFA for Wires Business and Supply Business as equal to the closing

balance of GFA of FY 2012-13 approved after truing-up for FY 2012-13. The addition to

assets has been discussed in earlier paragraphs. As regards asset retirement, the

Commission has accepted the submission of RInfra-D. From the approved opening GFA,

asset addition and asset retirement, the Commission has approved the closing GFA for FY

2013-14 for the Wires Business and Supply Business.

From RInfra-D’s submission of asset type-wise Depreciation in Form F5, the Commission

observed that, for some asset groups, the Depreciation considered by RInfra-D was higher

than that derived from the average value of assets at the rates specified in the MYT

Regulations. Since RInfra-D could not submit the asset-wise Depreciation computation,

the Commission cannot fully rely on its submission and could not undertake a prudence

check. Therefore, for those asset groups for which the Depreciation submitted by RInfra-

D is higher than that derived by the Commission on average asset values of the year, the

Commission has considered the latter as the approved Depreciation for that asset group.

In view of the above, the Commission has approved Depreciation for Wires Business and

Supply Business for FY 2013-14 as tabulated below:

Table 5-34: Depreciation for Wires Business for FY 2013-14 approved by the



Petition

Approved in

this Order

Opening GFA 3958.41 3812.00 3811.34

Addition 325.11 292.87 288.00

Retirement 6.49 9.23 9.23

Closing GFA 4277.03 4095.64 4090.11

Depreciation 181.24 167.38 166.58

Depreciation (as% of GFA)

4.23% 4.22%

Table 5-35: Depreciation for Supply Business for FY 2013-14 approved by the


Particulars MYT Order RInfra-D Petition Approved in

this Order

Opening GFA 534.49 495.66 495.25

Addition 36.34 10.58 10.40

Retirement 6.09 11.68 11.68


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Particulars MYT Order RInfra-D Petition Approved in

this Order

Closing GFA 564.74 494.56 493.98


Depreciation (as% of GFA)

3.76% 3.76%

5.8 FINANCING PLAN AND INTEREST EXPENSES

RInfra-D submitted that, in FY 2013-14, it has raised Rs. 500 crore from IDBI Bank and

Rs. 650 crore from Axis Bank by way of NCDs, for various purposes. The NCD of Rs.

650 crore from Axis Bank has been secured by creating a pari-passu charge on the assets

of RInfra across different businesses. Certain fixed assets of the Mumbai Distribution

Business are also securitized against this NCD. Based on the book value of assets of

RInfra-D so securitized, the NCD portion attributable to it is Rs. 250 crore. NCD of Rs.

500 crore from IDBI Bank has been secured by a pari-passu charge on the assets of

RInfra-D as well as the windmills located outside the Mumbai area. Based on the book

value of assets of RInfra-D so securitized, the portion of this NCD attributable to RInfra-

D is Rs. 450 crore.

RInfra-D submitted that its actual loan portfolio in FY 2013-14 consists of:

NCDs (from LIC, NACIL and YES Bank)

Term Loan (from Central Bank of India)

NCDs (from IDBI Bank and Axis Bank)

RInfra-D has utilized the capital raised through the new NCDs issued in FY 2013-14 by:

Refinancing the normative debt corresponding to capitalisation in FY 2011-12 and

FY 2012-13,

Financing 70% of the opening CWIP of FY 2013-14, and

Financing 70% of capital expenditure of FY 2013-14.

RInfra-D submitted the details of utilization of NCDs in the opening CWIP of FY 2013-

14 and capital expenditure of FY 2013-14 with its Petition.

RInfra-D submitted that it has computed the weighted average interest rate of its actual

loan portfolio by considering all the actual loans used for capital expenditure, in

accordance with the MYT Regulations and the ATE Judgment holding that the interest


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rate on long-term loan capital should be market reflective, as the cost of debt considering

actual loan portfolio is a fair representation of the market interest rates and borrowing

capacity. RInfra-D submitted that it has accordingly determined the weighted average

interest rate using actual NCDs and Term Loans and interest accrued/paid thereon, which

is applied on the normative average loan balance (after considering Depreciation

equivalent repayment) to determine the interest chargeable to ARR.

RInfra-D submitted the calculation of interest expenses for FY 2013-14 as tabulated

below.

Table 5-36: Interest on Loans for FY 2013-14 as submitted by RInfra-D (Rs. Crore)

Particulars Wires Business Supply Wires + Supply

Opening Balance 1227.12 132.62 1359.74


Repayment 167.38 18.63 186.01

Closing Balance 1257.04 121.39 1378.43

Interest 133.79 13.68 147.47

RInfra-D submitted the summary of allowable interest on loans for Wires Business and

Supply Business for FY 2013-14 and that approved by the Commission in the MYT Order

as under:

Table 5-37: Interest on Loans for Wires Business and Supply Business as submitted by


Interest on Loans MYT Order RInfra-D Petition



Total 133.38 147.47

RInfra-D requested the Commission to approve the interest on loans as claimed for FY

2013-14.


During the present proceedings, the ATE issued its Judgment dated 8 April, 2015 in

various Appeals of RInfra-G, RInfra-T and RInfra-D, including in Appeal No. 274 of

2013 in which RInfra-D had raised the issue of weighted average interest rate on loans.

ATE has ruled that the interest rates of the loans taken by RInfra to refinance normative

loans and loans taken for new capital works should be considered by the Commission for


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the ensuing years and re-determined for the previous years. ATE has clarified its

interpretation of Regulation 33.5 of the MYT Regulations, and directed that the interest

on loans has to be considered as per the weighted average rate of interest on the actual

loan portfolios at the beginning of each year applicable to RInfra-D. ATE has also ruled

that, although there is no provision for replacement of outstanding normative loan by the

actual loan, there is no bar to re-financing the outstanding normative loans as on 1 April,

2011 by actual loans, provided that such loans have been taken for the assets brought into

service prior to 1 April, 2011 and RInfra-D can establish that no prejudice has been

caused to consumers since these loans were arranged at terms better than the prevailing

market interest rates.

The Commission directed RInfra-D to confirm, with documentary evidence, that the terms

set out by the ATE have been met. RInfra-D’s replies have been discussed in detail in

Section 4 of this Order. RInfra-D submitted that, based on analysis of market interest

rates, the actual loans taken for replacement of normative debt and for fresh capital

expenditure during the MYT Period meet the criteria ATE criteria since their interest rates

are well within the market rates. RInfra-D submitted that the re-financing of normative

debt has not caused any prejudice to consumers, nor was the cost of debt of fresh loans

higher than the market rate of interest.

RInfra-D further submitted that, in order to determine the allowable interest on long-term

loans, it has worked out the weighted average rate of interest for each financial year based

on its actual loan portfolio. It has also considered the normative loan capital, if any, as per

the capitalisation plan at that weighted average rate, and this rate is based on a loan

portfolio whose individual rates of interest are well within market reflective rates of

interest. Accordingly, interest has been determined for each financial year in accordance

with Regulation 33.5 of the MYT Regulations. RInfra-D submitted that its Petition

adequately addresses the findings of the ATE Judgment and no further impact is required

to be determined.

The Commission has verified, from the documentary evidence submitted by RInfra-D,

that the loans taken by it to refinance normative loans relate to assets created before FY

2010-11; and that their interest rates are not inferior to the prevailing market interest rates.

Accordingly, the Commission has considered the refinancing of the actual loans taken by

RInfra-D for the refinancing of the normative loans of previous years. For computation of

the interest rate on debt for FY 2013-14, the Commission has considered the actual loan

portfolio of RInfra-D as on 1 April, 2013.


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The Commission directed RInfra-D to submit documentary proof of the opening balance

of loans and interest rates as on 1 April, 2013. RInfra-D has submitted certificates of the

banks whose loans were outstanding, wherein outstanding amounts and applicable interest

rates as on 1 April, 2013 have been certified. Regarding NCDs from IDBI (Rs. 450 crore)

and Axis Bank (Rs. 250 crore), RInfra-D submitted that these NCDs were raised during

FY 2013-14. Hence, there is no documentary evidence of opening balance as on 1 April,

2013 in case of these NCDs. In the MTR Petition, they have been shown as funds which

refinanced the normative closing loans of FY 2012-13 along with funding of 70% of the

opening CWIP and 70% of fresh capital expenditure during FY 2013-14. In view of the

above, the rate of interest on long-term loans, as computed by the Commission, is given

below:

Table 5-38: Loan Portfolio of RInfra-D as on 1 April, 2013, and applicable Interest

Rate for FY 2013-14 (Rs. Crore)

Source of loan Amount outstanding

as on 1 April, 2013

Applicable interest rate

as on 1 April, 2013

LIC and Others 1000.00 10.72%

Loan-Central Bank of India 335.98 11.30%

Total 1335.98 10.87%

Accordingly, the Commission has considered the rate for computation of interest on long

term loans for FY 2013-14 as 10.87%. In its submissions, RInfra-D has allocated these

loans to the Wires Business and Supply Business, and has accordingly computed the

interest. Further, as the ratio of allocation of various loans to the Wires Business and

Supply Business by RInfra-D is different, the interest rate considered by RInfra-D for

each of these segments is also different. However, since the Commission does not have

any basis for allocation of loans to the Wires Business and Supply Business, the

Commission has considered that the interest rate on long-term loan for both Businesses is

the same.

The Commission has considered the opening balance of the loan for FY 2013-14 to be the

same as the closing balance of FY 2012-13 as approved by the Commission after truing

up of FY 2012-13. For assets capitalised in FY 2013-14, the Commission has considered

70% of the additional asset value as normative debt in accordance with the MYT

Regulations. Accordingly, the Commission approves the interest on loan for FY 2013-14

as in the following Table:


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Table 5-39: Interest Expenses for FY 2013-14 approved by the Commission (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved

in this

Order

Wires Business

Opening Balance 1327.19 1227.12 1227.65


Repayment 181.25 167.38 166.58

Closing Balance 1373.52 1257.04 1254.96

Interest 118.56 133.79 134.92

Supply Business

Opening Balance 165.29 132.62 132.36


Repayment 18.45 18.63 18.62

Closing Balance 172.27 121.39 121.02

Interest 14.82 13.68 13.77

Supply Business + Wires Business

Opening Balance 1492.48 1359.74 1360.00


Repayment 199.70 186.01 185.20

Closing Balance 1545.79 1378.43 1375.98

Interest 133.38 147.47 148.69


RInfra-D submitted that it has computed RoE by applying the rates for Wires and Retail

Supply Businesses as specified in the MYT Regulations, and has considered the equity

portion of new capitalisation in FY 2013-14 as 30% of the capitalisation in FY 2013-14.

Consumer Contribution of Rs. 11.02 crore received in FY 2013-14 has been reduced from

the capitalisation to determine the equity portion of new capitalisation in FY 2013-14.

RInfra-D has claimed total RoE of Rs. 260.31 crore, as compared to Rs. 270.49 crore

approved in the MYT Order. The Regulatory Equity calculations for the Wires Business

and Supply Business as submitted by RInfra-D are given in the Table below:


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Table 5-40: Return on Equity for Wires Business & Supply Business for FY 2013-14 as


Particulars Wires

Business

Supply

Business

MYT Order 240.88 29.61

RInfra-D Petition




Capitalisation net of Consumer Contribution 281.85 10.58




Rate of Return (%) 15.50% 17.50%

Total RoE 233.56 26.75

RInfra-D requested the Commission to approve the RoE for FY 2013-14 as claimed by it.


To determine the equity eligible for returns as per the MYT Regulations, the Commission

has considered the opening equity for FY 2013-14 as the closing equity of FY 2012-13

approved Commission in the truing up of FY 2012-13. Additional equity has been

approved as 30% of the approved capitalisation in the year, after deducting the Consumer

Contribution. Further, 30% of the cost of assets retired during the year has been reduced

to arrive at the amount of equity eligible for returns as per the MYT Regulations.

The Commission has considered the rate of RoE as 17.5% for the Supply Business and

15.5% for the Wires Business, in accordance with the MYT Regulations. Accordingly, the

RoE approved by the Commission for FY 2013-14 is as given below:

Table 5-41: Return on Equity approved by the Commission for FY 2013-14 (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved

in this

Order

Wires Business




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Particulars MYT

Order

RInfra-D

Petition

Approved

in this

Order


Consumer Contribution and grants used during

the year for capitalisation 20.52 11.02 11.02





Return on equity 240.88 233.56 233.42

Supply Business








Return on equity 29.61 26.75 26.72


RInfra-D submitted that the SBAR prevailing on April 1, 2013 was 14.45%, which it has

considered for calculating the IoWC. One of the components of Working Capital for the

Wires Business is one-sixth of the expected revenue from “charges for use of distribution

wires” at prevailing tariffs. RInfra-D submitted that, in its MYT Petition, it had

considered only Wheeling Charges from change-over consumers in one sixth of the

revenue. However, distribution wires are being used by both change-over consumers and

its own consumers. Therefore, RInfra-D has considered Wheeling Charges

received/receivable from both change-over and own consumers to determine one-sixth of

the revenue from charges for use of distribution wires at prevailing tariffs. Wheeling

revenue from own consumers is separately available from September, 2013 to March,

2014, as the MYT Order had approved separate Wheeling Charges in the tariffs for

RInfra-D’s own consumers. However, for the period from April to August, 2013, RInfra-

D had charged tariffs approved in the Order dated 15 June, 2009. In those tariffs,

Wheeling Charges were bundled in Energy Charges. For determining wheeling revenue


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from RInfra- D’s own consumers for this period, RInfra-D has applied the prevailing

Wheeling Charges (Rs.0.46 per kWh for HT and Rs. 0.88 per kWh for LT) to the monthly

consumption for these five months. The computation of IoWC for Wires Business as

submitted by RInfra-D is given below:

Table 5-42: Interest on Working Capital for Wires Business for FY 2013-14 as

submitted by RInfra-D (Rs. Crore)


One-twelfth of O&M Expenses 51.45

One-twelfth of the sum of book value of stores, materials and supplies 65.00

One-sixth of the expected revenue from charges for use of Distribution

Wires at prevailing tariffs 160.02

Less:

Amount of Security Deposit from Distribution System Users 0.00




The computation of interest on working capital for the Supply Business as submitted by

RInfra-D is shown below:

Table 5-43: Interest on Working Capital for Supply Business for FY 2013-14 as



One-twelfth of O&M Expenses 25.64

One-twelfth of the sum of book value of stores, materials and supplies 0.00

One-sixth of the expected revenue from sale of electricity at prevailing

tariffs 731.94

Less:

Amount of Security Deposit from Supply Consumers 353.65

One month equivalent of cost of power purchased 181.48





The Commission has approved IoWC for RInfra-D's Wires Business and Supply Business

in accordance with Regulation 35.3 and 35.4 of the MYT Regulations.


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The Commission finds reasonable the contention of RInfra-D that, since the distribution

wires are being used by both change-over and own consumers, Wheeling Charges

received from both should be considered to determine one-sixth of the revenue from

charges for use of distribution wires at prevailing tariffs.

However, for the period from April to August 2013, when the revenue from Wheeling

Charges from own consumers were bundled in the Energy Charges, the Commission has

accepted RInfra-D’s proposal of computing wheeling revenue from own consumers by

applying the then prevailing Wheeling Charges (Rs.0.46 per kWh for HT and Rs. 0.88 per

kWh for LT) on energy sales. Accordingly, one-sixth of the revenue from charges for use

of distribution wires at prevailing tariffs for FY 2013-14 has been considered.

RInfra-D submitted that it has applied 14.45% as the rate for calculating IoWC since it

was the SBAR prevailing on 1 April, 2013. Regulation 35.4 (b) of the MYT Regulations

specifies that:

“(b) Rate of interest on working capital shall be on normative basis and shall be

equal to the State Bank Advance Rate (SBAR) of State Bank of India as on the

date on which the application for determination of Tariff is made.” (Emphasis

added)

Therefore, since the truing up of FY 2013-14 is being carried out with respect to the ARR

approved for FY 2013-14 in the MYT Order, the rate applicable for computation of IoWC

should be that rate, which was based on the SBAR prevailing at the time of filing of the

MYT Petition. Accordingly, the Commission has considered 14.50% as the rate of interest

for computation of IoWC for FY 2013-14:

Table 5-44: Interest on Working Capital for Wires Business for FY 2013-14 approved

by the Commission (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

One-twelfth of the amount of O&M

Expenses 51.45 51.45

One-twelfth of the sum of the book value

of stores, materials and supplies 65.00 65.00

One-sixth of the expected Revenue from

charges for use of Distribution Wires at

prevailing tariffs

160.02 160.02

Less:


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Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

Amount of Security Deposit From

Distribution System users 0.00 0.00


276.48 276.47


14.45% 14.50%

Interest on Working Capital 24.91 39.95 40.09

Table 5-45: Interest on Working Capital for Supply Business for FY 2013-14 approved

by the Commission


Petition

Approved in

this Order

One-twelfth of the amount of Operations

and Maintenance Expenses 25.64 25.64

One-twelfth of the sum of the book value

of stores, materials and supplies 0.00 0.00

Two months of the expected revenue

from sale of electricity at the prevailing

tariffs

731.94 731.94

Less:

Amount of Security Deposit from retail

supply consumers 353.65 353.65

One month equivalent of cost of power

purchased 181.48 177.44


222.46 226.49


14.45% 14.50%

Interest on Working Capital 72.65* 32.15 32.84

*Including Interest on Consumer Security Deposit

5.11 INTEREST ON CONSUMERS' SECURITY DEPOSIT

RInfra-D submitted that the Security Deposit from its own consumers as on 31 March,

2014 was Rs. 353.65 crore. RInfra-D has considered interest on such Security Deposits at

the Bank Rate, as per Regulation 35.4 (c) of the MYT Regulations. The Bank Rate in FY

2013-14 has varied from 8.50% to 10.25%, and RInfra-D has provided interest to

consumers accordingly.


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Table 5-46: Interest on Consumer Security Deposit for FY 2013-14 as submitted by



Consumer Security Deposit 353.65

Interest Rate (%) 8.5%-10.25%

Interest on Security Deposit 22.79

RInfra-D requested the Commission to approve the actual interest on Consumer Security

Deposit (CSD) for FY 2013-14.


The Commission asked RInfra-D to submit the details of opening and closing balance of

CSD for FY 2013-14, and the actual interest paid on it. RInfra-D submitted as under:

Table 5-47: Opening and closing balance of Consumer Security Deposit for FY 2013-

14 as submitted by RInfra-D (Rs. crore)


Opening CSD 292.76

Closing CSD 353.65

Interest paid on CSD 22.79

The interest rate on CSD has been considered by the Commission as approved for FY

2013-14 in the MYT Order, i.e. 9.0%, in accordance with Regulation 35.4(c).

Accordingly, the Interest on CSD approved by the Commission for FY 2013-14 is as

given below:

Table 5-48: Interest on Consumer Security Deposit for FY 2013-14 approved by the


Particular MYT

Order

RInfra-D

Petition

Approved in

this Order

Amount of CSD Included

along with

IoWC

353.65 353.65

Rate of Interest (%) 8.5%-10.25% 9.00%

Interest on CSD 22.79 22.79


RInfra-D submitted that it has made a provision of Rs. 14.42 crore towards bad and

doubtful debts for FY 2013-14 in its accounts. As per the MYT Regulations, a provision


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of up to 1.5% of receivables (as per the Audited Accounts, allocated to Wires and Retail

Supply Businesses) is allowable as provision for bad debts. Since actual provision made is

higher than the allowable amount, RInfra-D has restricted its claim to the maximum

allowed by the Regulations. Since no actual segregation of debtors exists between Wires

Business and Supply Business, RInfra-D submitted that it has considered 1.5% of the total

debts of the Distribution Business as allowable receivables, and then segregated the

allowable provision between Wires Business and the Supply business based on their

respective revenues. RInfra-D’s computation is as shown in the Table below:

Table 5-49: Provision for Bad and Doubtful Debts for FY 2013-14 as submitted by



Receivables (As per URIM Statement for Q4 of FY 2012-13) 830.17

% of Receivables 1.50%

Provision for Bad Debts –Total 12.45

Provision for Bad Debts –Wires Business 2.37

Provision for Bad Debts –Supply Business 10.08

RInfra-D requested the Commission to approve the above provision for bad debts in the

ARR for FY 2013-14.


According to Regulations 78.6 and 92.9 of the MYT Regulations for Wires Business and

Retail Supply Business, respectively, the maximum provision for bad and doubtful debts

for a year can be 1.5% of the receivables of the respective businesses, provided that such

provisioning is within 5% of the receivables. For applying these provisions, the

Commission has allocated the total value of receivables in the ratio of the respective ARR

of the Wires Business and the Retail Supply Business.

The Commission directed RInfra-D to submit the opening and closing values of the

receivables for FY 2013-14. From the response of RInfra-D, the Commission has

observed that the actual provision or Rs. 14.42 crore made towards bad and doubtful debts

for FY 2013-14 is higher than the maximum allowable amount (i.e., 1.5% of receivables)

permitted under the MYT Regulations. Therefore, the Commission has approved the

provision for bad and doubtful debts for FY 2013-14 for the Wires Business and the

Supply Business at 1.5% of the receivables of the respective businesses. The Commission

has also verified that the total provision for bad and doubtful debts for each of the two

Businesses have not been higher than 5% of their respective receivables.


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Accordingly, the Commission has approved the provision for bad and doubtful debts for

FY 2013-14 as shown in the following Table:

Table 5-50: Provision for Bad and Doubtful Debts for FY 2013-14 approved by the


Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order


Supply Business 0.00 10.09 9.56

Total 0.00 12.45 12.45


RInfra-D submitted that, in accordance with Regulation 36.1, it has created a Contingency

Reserve of Rs. 1.24 crore for the Supply Business and Rs. 9.53 crore for the Wires

Business, respectively, in FY 2013-14, at the rate of 0.25% of the opening GFA of each.

RInfra-D submitted the summary of contribution to Contingency Reserve for Wires

Business and Supply Business for FY 2013-14 as shown in the Table below.

Table 5-51: Contribution to Contingency Reserve for Wires Business & Supply

Business for FY 2013-14 as submitted by RInfra-D (Rs. crore)

Particulars

Wires Business Supply Business

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Opening Balance of GFA 3958.41 3812.46 534.50 495.66

% Contribution 0.25% 0.25% 0.25% 0.25%

Contribution to CR 9.90 9.53 1.34 1.24

RInfra-D requested the Commission to approve the contribution to Contingency Reserve

for FY 2013-14 as shown above.


Regulation 36 of the MYT Regulations provides that the provision for Contingency

Reserves for a year can be between 0.25% and 0.50% of the original cost of fixed assets.

In the MYT Order, the Commission had considered a provision of 0.25%. Accordingly,

the Commission has approved the provision for Contingency Reserves for Wires Business

and Supply Business for FY 2013-14 at 0.25% of the approved value of their respective

opening GFAs.


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The Commission has verified that the contribution to Contingency Reserve for FY 2013-

14 has been invested in approved securities. As sought by the Commission, RInfra-D has

submitted the opening balance of Contingency Reserve as on 1 April, 2013, along with

the interest rates of the securities, as below:

Table 5-52: Opening balance of Contingency Reserve as on 1 April, 2013 as submitted

by RInfra-D

Security Opening Balance of CR

for RInfra-D (Rs. crore)

Interest

Rate (%)

CGI, 2017 5.16 7.46%

IIFCL, 2014 58.53 6.85%

Total 63.69

Accordingly, the Commission approves the contribution to Contingency Reserves for FY


Table 5-53: Contribution to Contingency Reserve (CR) for Wires Business & Supply

Business for FY 2013-14 approved by the Commission (Rs. crore)

Particulars


MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Opening Balance of GFA 3958.41 3812.00 3811.34 534.50 495.66 495.25

% Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%


5.14 INCOME TAX

RInfra-D submitted that the Commission, in the MYT Order, had approved ‘zero’ Income

Tax for all the years of the Control Period, on the basis of its approval for FY 2011-12.

RInfra-D has appealed before ATE in Appeal No. 274 of 2013. In its counter affidavit in

that Appeal, the Commission has submitted that, during the MTR, it would allow Income

Tax in accordance with the ATE Judgment in Appeal Nos. 138 and 139 of 2012.

RInfra-D submitted that the ATE, in its Judgment dated 2 December, 2013 in Appeal Nos.

138 and 139 of 2013, has reiterated that the Income Tax assessment of the Licensee must

be done on stand-alone basis, and this has been concurred with by the Commission as

well. Accordingly, RInfra-D has calculated Income Tax on a stand-alone basis for the


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Distribution business, as per the methodology laid down by ATE in its Judgments dated

14 and 15 February, 2011 (Appeal Nos. 173 and 174 of 2009). RInfra-D has adopted the

methodology of income minus expenses for calculation of PBT and Income Tax thereon.

In FY 2012-13, for Income Tax computation, it has shown a net loss, which has been

carried forward and adjusted against the profit for FY 2013-14, and then Income Tax has

been computed at the applicable rate on the differential profit.

RInfra-D submitted that this methodology is consistent with the determination of

allowable Income Tax on a stand-alone basis for each regulated business as per the ATE

Judgments. RInfra-D has not included Income from Other Business in revenue for FY

2013-14 for calculation of Income Tax on stand-alone basis, as per the MYT Regulations.

Table 5-54: Income Tax Computation for FY 2013-14 as submitted by RInfra-D (Rs.

crore)


Power Purchase Expenses 3255.05

O&M Expenses 925.09

Depreciation 186.01

Interest on Long Term Loans 147.47

Interest on Working Capital and CSD 94.89

Provision for Bad Debts 12.45

Transmission Charges - Intra State 428.16

Contribution to Contingency Reserve 10.77

Total Expenditure – A 5059.89

Non-Tariff Income 175.96

Income from Wheeling Charges from Change-over and OA consumers 296.15

Income on account of CSS 288.74

Revenue from sale of Electricity including RAC from own consumers 5097.66

Revenue from RAC from Change-over consumers 147.66

Total Revenue – B 6006.17

Profit Before Tax (PBT) (B-A) 946.28

Add: Depreciation as per ARR 186.01

Less: Depreciation as per IT Act 233.80

Total PBT for FY 2013-14 898.49

Loss carried forward from FY 2012-13 (337.80)

Net PBT for FY 2013-14 560.69

Income Tax Rate 20.96%

Income Tax 117.52


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RInfra-D submitted that the Distribution division has, in FY 2013-14, claimed for the first

time deduction under Section 80IA of the Income Tax Act, due to which RInfra-D is

subject to Income Tax at the applicable Minimum Alternate Tax (MAT) rates. The benefit

of MAT credit can be taken only when RInfra-D is liable to tax under normal tax liability,

i.e., after the tax holiday under Section 80IA. As and when RInfra-D pays tax under its

normal tax liability, it would claim MAT tax credit as applicable. As of now, it has only

claimed deduction under Section 80IA. That is subject to assessment, which is ongoing. If

RInfra’s claim is not accepted, it would be subject to payment of Income Tax at the

normal Corporate Tax rate. RInfra-D submitted that, in such a case, it would approach the

Commission in future Petitions for claim of additional Income Tax. RInfra-D submitted

that the Income Tax as computed above has been allocated to the Wires and Retail

Business based on their respective revenues, as summarized below:

Table 5-55: Income Tax for Wires Business and Supply Business for FY 2013-14 as


Particulars Amount

Income Tax - Wires 29.39

Income Tax - Retail 88.14

Total 117.52


RInfra-D submitted that its Distribution division has, in FY 2013-14, claimed, for the first

time, deduction under Section 80IA, due to which it is subject to Income Tax at the MAT

rate. In this regard, the Commission asked RInfra-D to submit the quantum of deduction

available to it under Section 80 IA for FY 2013-14, and the nature of investments against

which the deduction was availed in FY 2013-14, including the year in which such

investment was made. The Commission also asked RInfra-D to confirm whether it has

claimed deduction under Section 80 IA towards investment in new distribution lines and

sub-stations, for FY 2013-14, and to provide the amount of capitalisation against new

distribution lines and sub-stations for the period from FY 2003-04 to FY 2013-14.

In response, RInfra-D submitted that the deduction available to it under Section 80 IA of

Income Tax Act, 1961 for FY 2013-14 is Rs. 505.47 crore. RInfra-D further submitted

that the nature of investments are assets covered under the head ‘Plant and Machinery’,

which includes distribution network, cables, sub-stations, Receiving Stations, etc. It

confirmed that the deduction under Section 80 IA has been claimed from FY 2013-14.


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The capitalisation in Plant and Machinery from FY 2003-04 to FY 2013-14 as submitted

by RInfra-D is as given below:

Table 5-56: Capitalisation in Plant and Machinery from FY 2003-04 to FY 2013-14 as


Particulars FY

2003-

04

FY

2004-

05

FY

2005-

06

FY

2006-

07

FY

2007-

08

FY

2008-

09

FY

2009-

10

FY

2010-

11

FY

2011-

12

FY

2012-

13

FY

2013-

14 Plant and

Machinery 96.98 143.98 305.63 414.4 257.03 390.94 382.28 363.7 247.44 165.02 248.72

To a query of the Commission, RInfra-D responded that the Company has started

claiming deduction under S.80 IA only from FY 2013-14 since there were no profits

available to claim under that provision in earlier years.

In the MYT Order, the Commission had approved Income Tax for FY 2013-14 as nil.

During the present proceedings, ATE has issued its Judgment dated 8 April, 2015 on

various Appeals of RInfra-G, RInfra-T and RInfra-D, including Appeal No. 274 of 2013,

and mentioned that its ruling regarding Income Tax in Judgment dated 2 February, 2013

in Appeal Nos. 138 and 139 of 2012 would be applicable in Appeal No. 274 of 2013 also.

In accordance with the ATE ruling, RInfra-D has submitted the computations of Income

Tax on PBT basis and stand-alone basis for the Distribution Business. Since a loss has

been worked out for FY 2012-13, that loss has been carried forward to FY 2013-14 by

RInfra-D. The Commission has accordingly computed the Income Tax for FY 2013-14 by

carrying forward the loss for FY 2012-13 as set out in Section 4 of this Order. The

computation of Income Tax for FY 2013-14 submitted by RInfra-D and as approved by

the Commission is given below:

Table 5-57: Income Tax for FY 2013-14 approved by the Commission (Rs. crore)


Petition

Approved in this

Order

Power Purchase Expenses 3,255.05 3,206.64

O&M Expenses 925.09 925.10


Interest on Long Term Loans 147.47 148.69

Interest on Working Capital and CSD 94.89 95.72

Provision for Bad Debts 12.45 12.45

Transmission Charges - intra State 428.16 428.16


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Petition

Approved in this

Order


Total Expenditure – A 5,059.89 5,012.73

Non-Tariff Income 175.96 167.79

Income from Wheeling Charges 296.15 296.15

Revenue from RAC from Change-over

Consumers 147.66 147.66

Income on account of CSS 288.74 288.74

Revenue from sale of Electricity 5,097.66 5,097.66

Total Revenue – B 6006.17 5998.00

Profit Before Tax (PBT) (B-A) 946.28 985.26

Add: Depreciation as per ARR 186.01 185.20

Less: Depreciation as per IT Act 233.80 233.80

Total Profit 898.49 936.66

Total PBT for the Year 898.49 936.66

Total loss carried forward from

previous year (337.80) (1015.12)

Net PBT for FY 2013-14 560.69 (78.46)

Income Tax Rate 20.96% 20.96%

Income Tax 117.52 0.00

The Income Tax for FY 2013-14 computed on PBT basis works out to zero, and there is a

loss of Rs. 78.46 crore, which would be carried forward to FY 2014-15 for computation

of Income Tax.


RInfra-D submitted that the MYT Order had approved the Non-Tariff Income after

considering Land Usage Charges receivable from RInfra-T and rent income from the

Devidas Lane office as Non Tariff Income. While Land Usage Charges receivable from

RInfra-T can be considered as Non Tariff Income, rent from the Devidas Lane Office

should not be considered as Non Tariff Income for the reasons mentioned in the Section

on truing up of FY 2012-13. RInfra-D has raised this issue in its Appeal No. 274 of 2013,

which was pending before ATE at the time of filing of the present Petition. RInfra-D

submitted that, without prejudice to its contentions in that Appeal, it has considered rent

from the Devidas Lane Office in Non-Tariff Income, in accordance with the approach in

the MYT Order.


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5.15.1 REBATE ON POWER PURCHASE COST

RInfra-D submitted that rebate on power purchase cost availed in FY 2013-14 has been

included in the Non-Tariff Income for FY 2013-14, as per the directions of the

Commission in its Order dated 15 June, 2012 (Case No. 180 of 2011).

5.15.2 INTEREST ON CONTINGENCY RESERVE INVESTMENTS

RInfra-D submitted that it has invested the Contingency Reserve funds in the approved

securities, as presented in Section 12(A) (d) of the Notes to Accounts of the Annual

Accounts of FY 2013-14. The weighted average rate of interest for the investments as per

the Annual Accounts of FY 2013-14 has been considered for calculation of interest on

Contingency Reserves, and forms part of Non-Tariff Income.

5.15.3 LAND USAGE CHARGES

RInfra-D submitted that, as stated earlier, RInfra-T has commissioned 5 EHV stations at

Goregaon, Gorai, Saki, Borivali and Chembur on the Receiving Station plots of RInfra-D.

Similarly, RInfra-D has some installations on RInfra-T’s Aarey, Versova and Ghodbunder

EHV Station plots. Rentals payable and receivable between RInfra-D and RInfra-T are

accounted for as per the arrangement formalised under the Minutes of Meeting (MoM)

dated 15 March, 2013. According to the terms of the MoM, the Land Usage Charges

receivable from RInfra-T by RInfra- D for FY 2013-14 is shown in the Table below:

Table 5-58: Land Usage Charges Receivable from RInfra-T by RInfra-D in FY 2013-14

as submitted by RInfra-D (Rs. crore)



RInfra-D submitted that it has considered the rental income from usage of sub-station land

as Non-Tariff Income of only the Wires Business.

5.15.4 RENT FROM DEVIDAS LANE OFFICE

RInfra-D submitted that this has been considered as Non-Tariff Income instead of Other

Business Income, without prejudice to its contentions in Appeal No. 274 of 2013. The

rental income from the Devidas Lane Office is derived as per the Minutes of Meeting

dated 25 October, 2011. It amounts to Rs. 8.18 crore for FY 2013-14, and is considered as

Non-Tariff Income of the Wires Business.


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The Table below shows the details of Non-Tariff Income for Wires Business for FY

2013-14 as submitted by RInfra-D.

Table 5-59: Non Tariff Income for Wires Business for FY 2013-14 as submitted by



Rents 0.92


Interest on Other Investments 0.09

Interest on staff loans and Advances 0.93

Sale of Scrap 1.19




Rent from Devidas Lane Office 8.18

Total 21.67

The Table below shows the details of Non-Tariff Income for Supply Business for FY

2013-14, as submitted by RInfra-D.

Table 5-60: Non Tariff Income for Supply Business for FY 2013-14 as submitted by



Customer Charges 1.39

Other/Miscellaneous Receipts 54.10


Delayed Payment Charges 33.74

Interest on Delayed Payment 13.63

Recovery from theft of power 19.29

Interest on staff loans and Advances 0.91

Rebate on power purchase 14.42

Connection / Reconnection Fees 4.26

Burnt Meter Recovery 1.51

Bad Debts Recovered 8.58


Total 154.29

RInfra-D submitted the summary of Non-Tariff Income for the Supply Business and

Wires Business as under:


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Table 5-61: Non Tariff Income for FY 2013-14 as submitted by RInfra-D (Rs. crore)

Non-Tariff Income MYT Order RInfra-D Petition



Total 195.00 175.96

RInfra-D requested the Commission to approve the actual Non-Tariff Income for FY

2013-14 as above.



T and rental income from Devidas Lane Office as part of Non-Tariff Income, against

which RInfra-D filed Appeal No. 274 of 2013. In its present Petition, without prejudice to

its submissions in that Appeal, has included the Land Usage Charges and rental income

from the Devidas Lane Office as part of Non-Tariff Income.

As discussed in the previous Section, ATE has issued its Judgment dated 8 April, 2015

during the proceedings of this Order, on various Appeals of RInfra, including Appeal No.

274 of 2013, wherein the issue of consideration of income from such sources in Non-

Tariff Income was raised by RInfra-D. ATE has ruled that the rental income received

from RInfra-T shall be a part of Non-Tariff Income; however, rental income from the

Devidas Lane Office has to be considered as Income from Other Business. The part of

income from Devidas Lane Office which is raised from regulated business shall be

considered a part of Non-Tariff Income, whereas that raised from non-regulated business

shall be included in Income from Other Business.

Accordingly, in the truing up of FY 2013-14, the Commission has considered the rental

income from RInfra-T as Non-Tariff Income. RInfra-D submitted its working of the

income from the Devidas Lane building by removing it from Non-Tariff Income, and

instead considering one third of it as Income from Other Business in the Wires ARR.

In Order dated 15 June, 2012 in Case No. 180 of 2011, the Commission had determined a

sum of Rs. 256.06 crore as rental income from the Santa Cruz land and property of

RInfra-D to be considered as Non-Tariff Income, against which RInfra-D had preferred an

Appeal before ATE. In its Judgment dated 4 April, 2015, ATE has laid down the

methodology for computing the notional rental income from the Santa Cruz land, and also

ruled in Appeal Nos. 160 of 2012 and 164 of 2013 that the rental income of the


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Distribution Licensee’s asset is to be treated as Income from Other Business and,

accordingly, the rental income from the Santa Cruz land and property has to be treated as

Income from Other Business.

Accordingly, the Commission directed RInfra-D to confirm that the Santa Cruz property

has not been constructed out of funds of the regulated business; that it has not received

any actual rental income for it from other regulated and/or non-regulated businesses; and

to submit computation of notional rental income from it from FY 2003-04 to FY 2013-14,

separately from regulated and unregulated business, and in accordance with the

methodology in ATE’s Judgment dated 8 April, 2015.

As discussed in Section 3 of this Order, RInfra-D has submitted that the rent from the

Santa Cruz land works out to only Rs. 0.13 crore, as against Rs. 256 crore considered

under Non-Tariff Income in the MYT Order. The Commission notes that the difference in

the amount considered by it as rental income and that computed by RInfra-D is very large.

The rental income considered in the MYT Order is around 2000 times higher than that

estimated by RInfra-D. Hence, considering the magnitude involved, the Commission is of

the view that further due diligence needs to be undertaken and the documents and

computations submitted need to be scrutinized very carefully before taking any view on

the matter. The ATE has also given time of three months for the implementation of its

Judgment dated April 8, 2015. Hence, for the purposes of this Order, the Commission has

not revised the amounts already considered for the previous years, and has also not

considered any amount against rental income from the Santa Cruz land for FY 2013-14

and onwards.

The Commission has approved the actual income in FY 2013-14 as submitted by RInfra-

D, and has considered the rental income from RInfra-T under Non-Tariff Income, whereas

the income from Devidas Lane office has been considered as Income from Other

Business. Accordingly, the Commission has approved the Non-Tariff Income for FY

2013-14 as summarised in the Table below:

Table 5-62: Non Tariff Income for FY 2013-14 approved by the Commission (Rs. crore)

Non-Tariff Income MYT Order RInfra-D

Petition

Approved in this

Order


Supply Business 172.65 154.29 154.29

Total 195.00 175.96 167.79


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RInfra-D submitted that, in its MYT Petition, it had estimated Income from Other

Business at Rs. 5.28 crore for FY 2013-14. The Commission had approved Rs. 0.25 crore

under this head, considering Land Usage Charges and rent from Devidas Lane office

entirely under Non-Tariff Income. RInfra-D submitted that, without prejudice to its

contentions raised in Appeal, it has also considered rent from the Devidas Lane Office

entirely in Non Tariff Income. The utilization of Receiving Station rooftops for the BTS

Towers of RCom and the pole monetization by using advertisement kiosks in Mira

Bhayander area are the other two businesses which RInfra-D has considered as ‘Other

Business’.

RInfra-D submitted that, so far, the income from BTS tower rentals was considered as

Income from Other Business in the Distribution Business. However, pursuant to

separation of accounting heads and activities between RInfra-T and RInfra-D, it has found

that some portion of the area let-out to RCom actually forms part of RInfra-T’s asset base.

Hence, for proper and separate accounting, income received pertaining to that portion is

now accounted as Income from Other Business in respect of RInfra-T from FY 2013-14

onwards. Hence, the balance income from BTS tower rental, after deducting the income

booked in RInfra-T, is being considered in RInfra-D.

RInfra-D submitted that one-third of the income derived from Other Businesses net of tax

should be considered for reduction in ARR, due to the reasons mentioned in the Section

on truing up of FY 2012-13.

RInfra-D has submitted the details of calculation of Income from Other Business, and the

summary as submitted by RInfra-D is shown in the Table below:

Table 5-63: Income from Other Business for FY 2013-14 as submitted by RInfra-D (Rs.

crore)

Particulars Income from Other

Business (net of tax)

1/3rd considered

in ARR

Rental Income from RCom 1.35 0.45

Income from Advertisement

of Kiosks 0.10 0.03

Total 1.46 0.49


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As stated in the above paragraphs, for truing up of Non-Tariff Income for FY 2013-14,

the Commission has considered the income from the Devidas Lane Office and the Santa

Cruz property attributable to non-regulated business as Income from Other Businesses.

As regards the rental income from the RCom towers and income from advertisement

Kiosks, the Commission has accepted the submission of RInfra-D and approved it in the

truing up of FY 2013-14.

The Commission has multiplied the aforementioned approvals in Income from Other

Businesses in accordance to the MYT Regulations, to be added into ARR of FY 2013-14.

Accordingly, the Income from Other Business as approved by the Commission is given

below:

Table 5-64: Income from Other Business for FY 2013-14 approved by the Commission

(Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

Rental Income from RCom

& advertisement kiosks 0.25 0.49 0.49

1/3rd of Rent of Devidas

Lane office 2.73

Total 0.25 0.49 3.21

5.17 EFFICIENCY GAIN/ (LOSS) FOR FY 2013-14

5.17.1 DEVIATION IN DISTRIBUTION LOSSES

RInfra-D submitted that the Distribution Loss as approved in the MYT Order for FY

2013-14 was 9.46%, but the actual Distribution Loss was 9.50%. RInfra-D submitted that

the Efficiency Loss calculated as per the Commission’s approach in past Tariff Orders is

as under:

Table 5-65: Efficiency Loss due to deviation in Distribution Losses for FY 2013-14 as



Energy Input at T<>D MU 10299.44

Distribution Loss- Target % 9.46%


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Distribution Loss- Actual % 9.50%

Total Energy Sales - with Target Loss MU 9325.11

Less : Change-over and OA Sales MU 2853.29

Net Energy Sales - with Target Loss MU 6471.82

Sales - Own Consumers and Own Consumption MU 6467.96

Reduction in Sales MU 3.86

ABR Rs./kWh 7.35

Efficiency Gain /(Loss) Rs. crore (2.84)

Passed on to consumers Rs. crore (0.95)

To be absorbed by RInfra-D Rs. crore (1.89)

RInfra-D submitted that it should not be held entirely accountable for the commercial

losses in the system. It requested the Commission to treat Distribution Losses as

uncontrollable, and therefore has not included the Efficiency Loss to be absorbed by it in

the ARR. Since this would be a deviation from the MYT Regulations, RInfra-D requested

the Commission to invoke its powers under Regulation 100 to remove difficulties, and

waive the efficiency loss in this regard.


The Commission has not considered RInfra-D’s submission to consider Distribution Loss

as an uncontrollable parameter, as it has not been able to establish the exact contribution

of the defective meters installed by TPC-D to the total Distribution Loss in RInfra-D's

system.

The Commission has accordingly considered the Distribution Loss for RInfra-D for FY

2013-14 as a controllable parameter, in accordance with the MYT Regulations. As the

revised computation of Distribution Losses for FY 2013-14 shows that the actual losses

are lower than normative losses, the Commission has computed Efficiency Gains on this

account considering the target Distribution Loss in the MYT Order. The Commission has

computed the sharing of Efficiency Gains on account of lower Distribution Loss in

accordance with the approved Energy Balance, sales and revenue. The ABR has been

computed by dividing the actual total revenue from own consumers of RInfra-D by the

quantum of sale to them. Accordingly, the Commission approves the sharing of

Efficiency Gains on account of lower than target Distribution Loss as shown in the

following Table:


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Table 5-66: Sharing of Efficiency Gain on account of lower than target Distribution

Loss for FY 2013-14 approved by the Commission

Particulars UoM RInfra-D

Petition

Approved in

this Order

Energy Input at T<>D MU 10,299.44 10299.27

Distribution Loss target % 9.46% 9.46%

Distribution Loss – actual % 9.50% 9.50%

Total energy sales with target loss MU 9,325.11 9,324.96

Less: Change-over and OA sales MU 2,853.29 2,853.29

Net energy sales with target loss MU 6,471.82 6,471.67

Sales to own consumers MU 6,467.96 6,467.96

Reduction in sales MU 3.86 3.71

Average Billing Rate (ABR) Rs./kWh 7.35 7.34

Efficiency gains/(Loss) Rs.

crore (2.84) (2.72)

Efficiency Gain/(loss) to be

passed on to the consumers (1/3rd

of total Efficiency Gain/(loss))

Rs.

crore (0.95) (0.91)

Efficiency Gain/(loss) to be

absorbed by RInfra-D (2/3rd

of

total Efficiency Gain/(loss))

Rs.

crore (1.89) (1.81)

5.17.2 EFFICIENCY GAIN/LOSS ON ACCOUNT OF DEVIATION IN

OPERATION AND MAINTENANCE EXPENDITURE

RInfra-D submitted that the actual O&M Expenses in FY 2013-14 are higher than

approved in the MYT Order. However, the O&M Expenses are within the allowable limit

if escalation CPI and WPI escalation factors are applied to the actual O&M Expenses for

FY 2012-13. RInfra-D further submitted that, since inflation is an uncontrollable factor,

the actual O&M Expenses may be allowed and no efficiency loss considered. Since this

would be a deviation from the MYT Regulations, RInfra-D requested that the

Commission to invoke its powers under Regulation 100 to remove difficulties and waive

the efficiency loss.


As mentioned earlier, since the Commission has approved the actual O&M Expenses for

FY 2013-14, no sharing of Efficiency Gain/loss has been done on account of O&M

Expenses.


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5.18 ADDITIONAL RETURN FOR OVER-ACHIEVEMENT IN WIRES AND

SUPPLY AVAILABILTY

5.18.1 WIRES AVAILABILITY

RInfra-D submitted that the actual Wires Availability achieved in FY 2013-14 was

99.97%. As per the MYT Regulations, the target Wires Availability for full recovery of

RoE for town and city areas is 95%. The MYT Order had stipulated Wires Availability of

99.98% for FY 2013-14. RInfra-D submitted that it should be entitled to additional RoE

on Wires Business considering target Wires Availability of 95% as per the MYT

Regulations and the Business Plan Order, for the reasons explained in the Section on

truing up of FY 2012-13.

RInfra-D submitted that, as per the MYT Regulations, it is entitled for additional RoE of

0.5% in Wires Business for the above over-achievement, as follows:

Table 5-67: Additional Return due to Wires Availability for FY 2013-14 as submitted by











Regulation 84 of the MYT Regulations specifies target Wires Availability of 95%.

However, the MYT Order had stipulated a Wires Availability target of 99.98% for the

Control Period. As discussed in Section 4 of this Order, for the truing up of FY 2012-13,

the Commission has considered the target Wires Availability of 95%, in accordance with

the MYT Regulations, for computation of additional returns on account of over-

achievement in Wires Availability. However, for FY 2013-14, the target Wires

Availability for computation of additional returns has been considered as 99.98% as

stipulated in the MYT Order.


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As regards the Wires Availability achieved by RInfra-D, the Commission has accepted its

submission of SAIDI (in hours) in FY 2013-14 of 2.523, and has accordingly computed

Wires Availability of 99.97% in that year.

The additional RoE for Wires Business for FY 2013-14 approved by the Commission in

accordance with Regulation 84 of the MYT Regulations is summarised as follows:

Table 5-68 : Additional Returns due to Wires Availability for Wires Business for FY

2013-14 approved by the Commission (Rs. crore)


Petition

Approved in

this Order

Wires Availability 99.97% 99.97%

Target Availability 95.00% 99.98%

Additional Return 0.50% (0.001)%







Additional Return on Regulatory Equity 7.49 (0.01)

5.18.2 SUPPLY AVAILABILITY

RInfra-D submitted that the actual Base Load Supply Availability achieved by RInfra-D

in FY 2013-14 was 112%. The actual Peak Load Supply Availability achieved in FY

2013-14 was 100%. Hence, the actual Supply Availability of RInfra-D considering 75%

of Base Load Supply Availability and 25% of Peak Load Supply Availability works out to

109%. In the MYT Order, the Supply Availability for RInfra-D was stipulated as 100%.

RInfra-D submitted that should be entitled to additional RoE on Supply Business

considering target Supply Availability of 95% as per the MYT Regulations and the

Business Plan Order.

RInfra-D submitted that as per the MYT Regulations, it is entitled for additional RoE of

1.4% in the Supply Business, as under:


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Table 5-69: Additional Returns due to Supply Availability for FY 2013-14 as submitted

by RInfra-D (Rs. crore)










Regulation 97 of the MYT Regulations stipulates target Supply Availability of 95%.

However, in the MYT Order, the Commission had revised the Supply Availability target

to 100% for the Control Period. As discussed in Section 4 of this Order, for the truing up

of FY 2012-13, the Commission has considered target Supply Availability of 95%, in

accordance with the MYT Regulations, for computation of additional returns for over-

achievement in Supply Availability. However, for FY 2013-14, the target Supply

Availability for computation of additional returns has been considered as 100% as

stipulated in the MYT Order.

Accordingly, the additional RoE for Supply Business for FY 2013-14 approved by the

Commission is summarised as follows:

Table 5-70: Additional Returns due to Supply Availability for Supply Business for FY



Petition

Approved in this

Order

Base Load Supply Availability 111.87% 111.87%

Peak Load Supply Availability 100.02% 100.02%

Supply Availability 108.90% 108.90%

Target Supply Availability 95.00% 100.00%








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Petition

Approved in this

Order



5.19 PAYMENT TO TPC-G

RInfra-D submitted that the Commission had approved Rs. 165.68 crore as payment to

TPC-G in its Order dated 5 June, 2013 (Case No. 177 of 2011), and had considered this in

the ARR for FY 2013-14 in the MYT Order. RInfra-D has accordingly made the payment

in FY 2013-14, and this cost is included in the ARR of that year.


The Commission has approved Rs 165.68 crore paid to TPC-G in the truing-up for FY

2013-14, as it is in accordance with the Commission's earlier Orders.

5.20 INTEREST ON FUEL ADJUSTMENT CHARGES

RInfra-D submitted that the Commission had considered Rs. 2.96 crore interest on FAC

(up to FY 2012-13) in the ARR for FY 2013-14 in the MYT Order. The amount pertains

to interest on FAC for FY 2008-09 to FY 2012-13, and the interest on additional working

capital recovered through FAC in H1 of FY 2013-14 is Rs. 0.84 crore, which has been

added to the amount of Rs. 2.96 crore claimed in MYT Petition. RInfra-D has provided

the details of the interest on FAC claimed in the MYT Petition and the additional interest

claimed now.


The MYT Order had considered interest on FAC charges of Rs. 2.96 crore as part of the

ARR:

"3.18.1.5 The Commission has also considered interest on FAC charges that is passed

on to consumers of Rs 2.96 Crore, as FAC charged to the consumers

includes this amount and since same is considered in the revenue side,

hence, the Commission has also allowed Rs 2.96 Crore as an expense item

in ARR."


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The Commission is of the view that the FAC formula already provides for interest due to

delayed recovery. The Commission has already allowed the normative interest on working

capital, which is RInfra-D's legitimate claim. Hence, the Commission has disallowed the

interest of Rs. 3.81 Crore on FAC recovery claimed by RInfra-D in this truing up

exercise.

5.21 SUMMARY OF AGGREGATE REVENUE REQUIREMENT

RInfra-D submitted the following Table giving the summary of the ARR for its Wires

Business for FY 2013-14.

Table 5-71: ARR for Wires Business in FY 2013-14 as submitted by RInfra-D (Rs.

crore)

Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -Order)

O&M Expenses 611.41 617.38 5.97

Depreciation 181.25 167.38 (13.87)


Interest on Working Capital and on

consumer Security Deposits 24.91 39.95 15.04

Provisioning for Bad and Doubtful Debts 0.00 2.37 2.37


Income Tax 0.00 29.39 29.39

Contribution to Contingency Reserves 9.90 9.53 (0.37)






Additional Returns due to Wires Availability 0.00 7.49 7.49


RInfra-D submitted that all the reasons for variations in expenses and revenue are

uncontrollable, and requested the Commission to approve the ARR for Wires Business for

FY 2013- 14.


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The following Table gives the summary of the ARR for the Supply Business as submitted

by RInfra-D for FY 2013-14.

Table 5-72: ARR for Supply Business in FY 2013-14 as submitted by RInfra-D (Rs.

crore)

Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -Order)

Power Purchase Expenses 3262.37 3089.37 (173.00)

O&M Expenses 301.77 307.71 5.94


Interest on Long-term Loan Capital 14.82 13.68 (1.14)


consumer Security Deposits 72.64 54.94 (17.70)



Income Tax 0.00 88.14 88.14

Transmission Charges- intra-State 428.11 428.16 0.05






Add: TPC-G Charge 165.68 165.68 0.00

Add: Interest on FAC 2.96 3.81 0.85

Additional returns due to Supply


Net Aggregate Revenue Requirement 4125.10 4056.03 (69.07)

RInfra-D submitted that the variations in expenses and revenue were uncontrollable or

the outcome of ATE Judgments, and requested the Commission to approve the ARR

for Supply Business for FY 2013-14.

The following Table gives the summary of the ARR for both Wires Business and

Supply Business as submitted by RInfra-D for FY 2013-14.


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Table 5-73: Combined ARR for Wires Business and Supply Business in FY 2013-14 as


Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -Order)

Power Purchase Expenses 3262.37 3089.37 (173.00)

O&M Expenses 913.18 925.09 11.91

Depreciation 199.70 186.01 (13.69)



consumer Security Deposits 97.54 94.89 (2.65)



Income Tax 0.00 117.52 117.52

Transmission Charges - intra-State 428.11 428.16 0.05







Add: TPC-G Charge 165.68 165.68 0.00


Additional returns due to Supply


Net Aggregate Revenue Requirement 5289.39 5274.71 (14.68)


Based on the components of the ARR approved in the above paragraphs, the Commission

has approved the ARR for Wires Business and Supply Business for FY 2013-14 as

follows:

Table 5-74: ARR for Wires Business for FY 2013-14 approved by the Commission (Rs.

crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order


Depreciation 181.25 167.38 166.58


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Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order


Interest on Working Capital and on consumer

Security Deposits 24.91 39.95 40.09

Provisioning for Bad & Doubtful Debts

2.37 2.90

Income Tax

29.39 0.00


Sharing of Efficiency Gains/losses

(1.81)







Availability 7.49 (0.01)


Table 5-75: ARR for Supply Business for FY 2013-14 approved by the Commission (Rs.

crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order


O&M Expenses 301.77 307.71 307.71



Interest on Working Capital and on consumer

Security Deposits 72.64 54.94 55.64


Income Tax 0.00 88.14 0.00







Add: TPC-G Charge 165.68 165.68 165.68


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Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order





Table 5-76: Combined ARR for Wires and Supply Business for FY 2013-14 approved by



Petition

Approved in this

Order


O&M Expenses 913.18 925.09 925.10

Depreciation 199.70 186.01 185.20



consumer Security Deposits 97.54 94.89 95.72


Income Tax 0.00 117.52 0.00



Sharing of Efficiency Gains/losses 0.00 0.00 (1.81)






Add: TPC-G Charge 165.68 165.68 165.68






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5.22 REVENUE

RInfra-D submitted that, from April to August, 2013, it charged tariffs approved by the

Commission in Tariff Order dated 15 June, 2009 (Case No. 121 of 2008). From

September, 2013 to March, 2014, it charged tariffs as per the MYT Order. From April to

August, 2013, RInfra-D provided discounts to consumers on internet and ECS payments.

From September, 2013 onwards, it has stopped doing so. In accordance with the ATE

Judgment in Appeal No. 85 of 2012, the internet and ECS discounts that were offered

have not been netted off in the sales revenue for FY 2013-14. RInfra-D submitted that the

revenue (excluding Regulatory Asset (RA) recovery) earned from sale of energy and FAC

charged to consumers in FY 2013-14 is Rs. 4,747.59 crore. The Commission had

approved Rs. 4,663.85 crore as revenue from sales for FY 2013-14 in the MYT Order,

excluding RA recovery of Rs. 601.33 crore from RInfra-D’s own consumers. RInfra-D

submitted that the ABR for FY 2013-14, based on sales of 6,456.95 (6,467.96 – 11.01)

MU, works out to Rs. 7.35/kWh.

Table 5-77: Average Billing Rate for FY 2013-14 as submitted by RInfra-D



Own Sales (MU) 6593.68 6456.95

ABR (Rs. /kWh) 7.07 7.35

RInfra-D submitted that since the MYT Order had directed it to separately account for RA

recovery, the revenue received though RAC from own consumers is not included in the

revenue shown in the above Table.

RInfra-D submitted that the Commission had approved own sales of 6,593.68 MU for FY

2013-14 in the MYT Order, without considering any shifting back of change-over

consumers to RInfra-D from TPC-D. After the issuance of the MYT Orders of RInfra-D,

some change-over consumers have shifted back to RInfra-D since September, 2013 to

take advantage of the difference between the RInfra-D tariff and the change-over tariff.

Therefore, actual RInfra-D sales includes sales to those consumers who have shifted back

to RInfra-D, However, the actual sales of RInfra-D in FY 2013-14 are still lower than

approved because of over-projection of RInfra-D sales and change-over sales in the MYT

Order. The reasons submitted by RInfra-D have been elaborated in Section 6 of this

Order.


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RInfra-D submitted that the Commission had approved revenue of Rs. 4,663.85 crore for

FY 2013-14 considering that the MYT Order tariffs for FY 2013-14 would be applicable

from the start of FY 2013-14. However, the revised tariffs were applied only from

September, 2013 onwards. For the first 5 months of FY 2013-14, the old tariffs were

being levied. RInfra-D submitted that all these factors, which have impacted revenue from

own sales, are uncontrollable, and requested the Commission to approve the actual

revenue from own sales in FY 2013-14.


The Commission directed RInfra-D to submit the audited Reconciliation Statement

showing income and expenses and their allocation to generation, transmission and

distribution businesses of RInfra. From the Reconciliation Statement submitted, the

Commission has verified the revenue from sale of power.

The Commission has accepted the submission of RInfra-D regarding revenue from

assessed sales. Accordingly, the same has not been considered as part of revenue as it is

included in Non-Tariff Income.

The Commission has also accepted the submission of RInfra-D regarding the discount

offered on internet and ECS payments, and approved the revenue without netting them off

from sales revenue for FY 2013-14, in accordance with the ATE Judgment in Appeal No.

85 of 2012.

Accordingly, the Commission approves revenue from sale of power to own consumers as

Rs. 4747.59 crore. This amount does not include the revenue from assessment on account

of theft of power of Rs. 19.29 crore since it is included in the Non-Tariff Income.

Table 5-78: Revenue and Average Billing Rate for FY 2013-14 approved by the

Commission


Petition

Approved in

this Order

Revenue (Rs. crore) 4663.85 4747.59* 4747.59*

Own Sales (MU) 6593.68 6456.95** 6456.95**

ABR (Rs./ kWh) 7.07 7.35 7.35

Note: * After deducting revenue of Rs. 19.29 crore recovered for power theft.

** After deducting assessed sales of 11.01 MU on account of power theft


of 399

5.23 REVENUE FROM WHEELING CHARGES FROM CHANGE-OVER AND

OPEN ACCESS CONSUMERS

RInfra-D submitted that the revenue from Wheeling Charges in FY 2013-14, paid by

change-over and OA consumers, is Rs. 296.15 crore, against Rs. 377.90 crore approved in

the MYT Order. The details of revenue from Wheeling Charges as submitted by RInfra-D

are as under:

Table 5-79: Wheeling Revenue from Change-over Consumers in FY 2013-14 as



Petition

OA Consumers (HT)

377.90

0.54

Change-over Consumers (HT) 30.52


Total 377.90 296.15

RInfra-D submitted that Wheeling Charges from change-over consumers are accounted

for as remitted by TPC-D. Wheeling Charges from other OA consumers are accounted for

as billed to them by RInfra-D. The Commission had approved change-over sales of

3,547.07 MU (grossed up) for FY 2013-14 in TPC-D's MYT Order (Case No. 179 of

2011) without considering any shifting back of change-over consumers to RInfra-D. The

metered change-over sales (considering technical loss of 9.00% for LT and 1.94% for HT)

considered by the Commission in the MYT Order for FY 2013-14 works out to 3,293.49

MU.

RInfra-D submitted that the change-over sales projection in TPC-D’s MYT Order was on

the higher side, the detailed explanation for which is discussed in Section 6 of this Order.

Some change-over consumers have shifted back to RInfra-D since September, 2013 to

take advantage of the differentials between the RInfra-D tariff and change-over tariff, due

to which wheeling revenue from change-over consumers has also reduced. In addition,

revised Wheeling Charges as per the MYT Order have only been applied from September,

2013 onwards, whereas the MYT Order computations considered their application for the

full year.

RInfra-D submitted that all these factors have resulted in drastic reduction in Wheeling

Charges from change-over consumers in FY 2013-14, and that these factors are

uncontrollable. RInfra-D requested the Commission to approve the actual wheeling

revenue from change-over consumers in FY 2013-14.


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The Commission asked RInfra-D for detailed computation for the lower Wheeling

Charges from change-over and OA consumers in FY 2013-14, which had been submitted

as Rs. 296.15 crore as compared to Rs. 377.90 crore in the MYT Order.

RInfra-D submitted that it has shown the actual revenue of Rs. 296.15 Core from

Wheeling Charges from change-over consumers, as remitted by TPC-D in FY 2013-14.

There being several causes for reduction in revenue from wheeling, it cannot isolate the

amount pertaining to each cause. RInfra-D submitted that the Wheeling Charges are only

remitted for HT and LT as a whole (the variation in charges is limited to voltage-level;

they do not vary based on consumer category), and since these are actual remittances from

TPC-D, there cannot be any formulaic computation of the same.

The Commission has considered the actual revenue from Wheeling Charges from change-

over and OA consumers as submitted by RInfra-D. Accordingly, the Commission

approves Revenue from wheeling Charges from change-over and OA Consumers for FY


Table 5-80: Wheeling Revenue from Change-over and OA Consumers in FY 2013-14


Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

OA Consumers (HT)

377.90 31.06 31.06

Change-over Consumers (HT)


Total 377.90 296.15 296.15

5.24 REVENUE FROM CROSS SUBSIDY SURCHARGE

RInfra-D submitted that the revenue from CSS from change-over consumers is Rs. 288.74

crore, as against Rs. 818.80 crore approved in the MYT Order.




71.62



of 399


Total 818.80 288.74

RInfra-D submitted that there is a huge difference of Rs. 530.06 crore between the

revenue from CSS for FY 2013-14 approved in the MYT Order and the actual revenue

realized, for the following reasons:

Over-projection of change-over sales in the MYT Order;

Reduction in change-over sales on account of consumers shifting back to RInfra-D

after the MYT Order; and

Applicability of revised CSS from September, instead of from April, 2013

onwards as considered in the MYT Order.

RInfra-D submitted that all these factors, which have contributed to reduction of CSS

revenue, are uncontrollable, and requested the Commission to approve the actual revenue

from CSS in FY 2013-14.


The Commission has verified the revenue from CSS submitted by RInfra-D from the

audited Reconciliation Statement, and approves it as shown in the following Table:

Table 5-82: Revenue from CSS in FY 2013-14 approved by the Commission (Rs. crore)


Petition

Approved in this

Order


71.62 71.62


Total 818.80 288.74 288.74

5.25 REVENUE GAP OF WIRES AND RETAIL SUPPLY BUSINESSES

RInfra-D submitted that, as stated in the truing up of FY 2012-13 Section of its Petition, it

has requested the Commission to carry out separate truing up of Wires Business and

Supply Business, and that the gaps should be carried forward to the respective ARRs in

the subsequent years for recovery. Wheeling revenue from own consumers is separately

available from September, 2013 to March, 2014 as the MYT Order had approved separate

Wheeling Charges in the tariffs for RInfra-D’s own consumers. However, for the period

April to August, 2013, RInfra-D had charged the earlier tariffs as per Order dated 15 June,


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2009 (Case No. 121 of 2008). In those tariffs, Wheeling Charges were bundled in Energy

Charges and, therefore, wheeling revenue from own consumers are not separately

available for that 5-month period. For determining wheeling revenue from its own

consumers for that period, RInfra-D has applied the then prevailing Wheeling Charges

(Rs. 0.46 per kWh for HT and Rs. 0.88 per kWh for LT) to the monthly consumption of

HT and LT consumers, respectively, for these five months. The Revenue Gap/ (surplus)

for FY 2013-14 for Wires Business as submitted by RInfra-D is as under:

Table 5-83: Revenue Gap/ (Surplus) for Wires Business in FY 2013-14 as submitted by

RInfra-D


Expenditure in Wires Business 1218.68

Less: Recovery from Wheeling Charges from change-over consumers 296.15

Net Expenditure 922.52

Wires Revenue Gap for FY 2012-13 (as approved in MYT Order) 360.67

Total 1283.19



The Revenue Gap/ (Surplus) for FY 2013-14 for Supply Business as submitted by RInfra-

D is as under:

Table 5-84: Revenue Gap/ (Surplus) for Supply Business in FY 2013-14 as submitted by

RInfra-D


Expenditure in Retail Business 4056.03

Less: Recovery from CSS 288.74

Net Expenditure 3767.30

Retail Revenue Gap for FY 2012-13 (as approved in MYT Order) 94.72

Total 3862.02

Revenue from Retail Tariff 4083.61

Revenue Gap/(Surplus) (221.59)


Based on the approved ARR and Revenue as discussed in the previous paragraphs, the

Commission has approved the Revenue Gap/(Surplus) for the Wires Business and Supply

Business of RInfra-D for FY 2013-14, as follows:


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Table 5-85: Revenue Gap/ (Surplus) for Wires Business in FY 2013-14 approved by the

Commission

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order


Recovery of Wheeling charges from Change-

over and OA consumers 377.90 296.15 296.15

Net Revenue requirement 786.41 922.52 890.13

Revenue from Wheeling Charges from own

consumers 663.98 663.98

Revenue Gap/(Surplus) 258.54 226.15

Table 5-86: Revenue Gap/ (Surplus) for Supply Business in FY 2013-14 approved by

the Commission

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

Aggregate Revenue Requirement from Retail

Tariff 4,125.10 4,056.03 3915.12

Less: Revenue from CSS 818.80 288.74 288.74

Net Revenue Requirement 3,306.30 3,767.30 3626.38

Revenue from existing Tariff 4,663.85 4,083.61 4,083.61

Revenue Gap (1,357.55) (316.31) (457.22)

5.26 COMBINED REVENUE GAP/ (SURPLUS) FOR FY 2013-14

RInfra-D submitted that the stand-alone Revenue Gap for FY 2013-14, considering the

ARR for FY 2013-14, actual recovery from Wheeling Charges and CSS from change-over

and OA consumers and the revenue from own consumers, works out to Rs. 397.63 crore,

after adding the provisional Revenue Gap of Rs. 455.40 crore of FY 2012-13 as approved

in the MYT Order to the cost side of FY 2013-14. RInfra-D has not considered revenue

from RAC from RInfra’s own consumers in the revenue from such sales for working out

the stand-alone Revenue Gap for FY 2013-14, since the recovery of Regulatory Asset

from own and change-over consumers through RAC is to be separately accounted as per

the directions of the Commission. The calculation of Revenue Gap/ (surplus) for FY

2013-14 as submitted by RInfra-D is as under:


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Table 5-87: Combined Revenue Gap for Wires Business and Supply Business in FY

2013-14 as submitted by RInfra-D (Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

Total Revenue Requirement (Wires+ Supply) 5289.39 5274.71 (14.68)

Less: Recovery from wheeling 377.90 296.15 (81.75)

Less: Recovery from CSS 818.80 288.74 (530.06)

Net Revenue Requirement from Tariff 4092.79 4689.82 597.13

Revenue Gap for FY 2012-13 (approved in

MYT Order) 455.40 455.40 0.00

Revised Revenue Requirement from Tariff 4548.00 5145.22 597.13

Revenue from Sales 4663.85 4747.59 83.74

Revenue Gap/(Surplus) (115.76) 397.63 513.39

RInfra-D submitted that there has been a reduction in net ARR (Rs. 14.68 crore), whereas

there has been a large decrease in Wheeling Revenue from change-over consumers and

CSS revenue. The reasons therefor being uncontrollable, RInfra-D requested the

Commission to approve the Revenue Gap for FY 2013-14.


The Commission has not considered revenue from RAC from RInfra-D’s own consumers

in the revenue from sales to such consumers for working out the stand-alone Revenue Gap

for FY 2013-14, as the recovery of Regulatory Assets from own and change-over

consumers through RAC has been considered separately. As discussed in the earlier

paragraphs, after the final true-up, the Commission has approved the combined Revenue

Gap/(Surplus) for the Wires Business and Supply Business of RInfra-D for FY 2013-14 as

follows:

Table 5-88: Total Revenue Gap/ (Surplus) for FY 2013-14 approved by the Commission

(Rs. crore)

Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order


Less: Revenue from CSS 818.80 288.74 288.74

Less: Revenue from Wheeling charges from

Change-over and OA Consumers 377.90 296.15 296.15


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Particulars MYT

Order

RInfra-D

Petition

Approved in

this Order

Net ARR 4092.69 4689.82 4516.51

Revenue from sale of power 4663.85 4747.59 4747.59

Revenue Gap /(Surplus) (571.16) (57.77) (231.08)

The Aggregate Revenue Requirement approved for FY 2013-14 is different from that

submitted by RInfra-D primarily due to the following reasons:

e) Reduction in Power Purchase Expenses as the Commission has not allowed the

purchase of non-Solar RECs beyond the RPO compliance requirement, and has

considered the rate of Solar power purchase beyond RPO requirement at the rate

of highest rate in the Merit Order Stack for Short Term power purchase.

f) The Income Tax has been considered as zero, based on PBT computation, in

accordance with the ATE Judgement.

5.27 REGULATORY ASSETS RECOVERY IN FY 2013-14

RInfra-D submitted that, in the MYT Order, the Commission had approved the RAC for

own and change-over consumers for recovery of Regulatory Assets from September, 2013

onwards. RInfra-D has accordingly charged the RAC to its own consumers from

September, 2013 onwards and RAC from change-over consumers is accounted for as

remitted by TPC-D. The Regulatory Assets recovered from own consumers in FY 2013-

14 is Rs. 350.07 crore, and that recovered from change-over consumers is Rs. 147.66

crore. The Commission had approved recovery of Rs. 924.82 crore of Regulatory Assets

in FY 2013-14, as against which RInfra-D submitted that the actual recovery is Rs. 497.73

crore, as shown in the Table below:

Table 5-89: Actual Regulatory Assets Recovery in FY 2013-14 as submitted by RInfra-

D


RA Recovery as approved by the Commission 924.82

Actual RA Recovery 497.73

Under-recovery 427.09

RInfra-D submitted that the under-recovery of Rs. 427.09 crore is because the

Commission had approved Rs. 924.82 crore considering that RAC will be charged to


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consumers for the entire year, while actually RAC could be charged only from September,

2013 onwards.


The treatment proposed by RInfra-D for the under-recovery of RAC in FY 2013-14 and

the Commission's views on the same are discussed in Section 7 of this Order.


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6 PROVISIONAL TRUING UP OF FY 2014-15, REVISED

ARR FOR FY 2015-16 AND CUMULATIVE REVENUE

GAP/(SURPLUS) FOR FY 2015-16

In accordance with Regulation 11 of the MYT Regulations, RInfra-D has submitted the

actuals of H1 of FY 2014-15, the revisions in the forecast for the remainder of the Control

Period, i.e., H2 of FY 2014-15 and FY 2015-16, and the cumulative Revenue Gap on

account of impact of ATE Judgments and carrying cost.

The Commission has analysed the expenses and estimates under each head and has

approved the total expenditure of RInfra-D for FY 2014-15 and FY 2015-16 after

prudence check. The expenditure allowed and the projections under each of the expense

and revenue heads are discussed in the subsequent paragraphs.

6.1 SALES

6.1.1 BACKGROUND

RInfra-D submitted that change-over of consumers from RInfra-D to TPC-D was a

consequence of the Judgment of the Supreme Court dated 8 July, 2008, which clarified

that TPC-D is entitled to supply electricity to all retail consumers in its Licensed area of

supply, which includes the whole of RInfra-D’s and BEST’s areas of supply.

Subsequently, TPC-D filed a Petition for operating procedures for change-over of

consumers from RInfra-D to TPC-D. The Commission issued an Interim Order in Case

No. 50 of 2009 dated 15 October, 2009 regarding such procedures. Consequently,

consumers of RInfra-D wanting supply from TPC-D started migrating to it while

remaining connected to RInfra-D’s network.

RInfra-D had filed Appeal No. 278 of 2013 against the Commission's Order in Case No.

85 of 2013 along with an Interim Application (No. 377 of 2013) seeking stay on its

operation. In its Judgment dated 29 November, 2014, the ATE has set aside the Order in

Case No. 85 of 2013. RInfra-D submitted that in view of this, for the purposes of sales

forecast, it has considered historical trend-based change-over for the 0-300 units bracket

of residential consumers only.

RInfra-D submitted that vide Order dated 14 August, 2014 in Case No. 90 of 2014, the

Commission granted a Distribution Licence to TPC-D for 25 years. However, the

Commission commented on inadequate network development by TPC-D in the past and


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on the inadequate network roll-out plan submitted by TPC-D for the future. The

Commission also revoked the restrictions on TPC-D’s network expansion and supply to

identified categories. RInfra-D filed Appeal No. 201 of 2014 before the ATE, which is

pending, and an interim Application (IA No. 314 of 2014) for stay of the Order in Case

No. 90 of 2014. Subsequently, RInfra-D filed an interim Application (IA No. 316 of

2014) for the stay of the part of directions which revoked all restrictions and conditions

imposed on network expansion and supply to consumers by TPC-D in the Order in Case

No. 151 of 2011. The ATE granted stay on operation of Para 7.1.7 (d) of the Order

accordingly in Case No. 90 of 2014, in its Judgment dated 4 September, 2014, till the

outcome of Appeal No. 201 of 2014.

RInfra-D submitted that the ATE issued its Judgment in Appeal No. 229 of 2012 on 28

November, 2014. It held that there is no illegality in consumers changing over from

RInfra-D to TPC-D, provided RInfra-D recovers Wheeling Charges and other

compensatory charges as decided by the Commission. The Commission also ruled that the

interest of RInfra-D had to be safeguarded to avert any cherry picking by TPC-D of

switch-over consumers.

RInfra-D submitted that the ATE also held that there is no need for TPC-D to lay a

separate distribution network in view of the congestion the Licence area of Mumbai,

especially when a reliable distribution network of RInfra-D already exists. The ATE has

ruled that TPC-D should lay its network only in those areas where such parallel network

would improve the reliability of supply and benefit consumers, and for extending supply

to new consumers who seek connection from TPC-D.

The ATE directed TPC-D to submit a network roll-out plan which the Commission would

approve after hearing all stake-holders, including RInfra-D. TPC-D can roll out its

network for supplying power to new consumers as well. TPC-D has been constrained

from laying its network in the distribution area common to RInfra-D till further orders of

the Commission on its roll-out plan. The ATE Judgment deals with issues which have a

potential impact on customer movement and choice within RInfra-D’s area of supply.

RInfra-D submitted that, after analysing the above Judgment and considering the present

network development and restrictions placed by the ATE, it has arrived at the following

conclusions relevant for the remaining part of the Control Period:

The roll-out plan of TPC-D will take at least a few months to get approved.

Thereafter, network expansion of TPC-D will be primarily for supply of power to

new connections. Hence, RInfra-D has assumed that TPC-D’s network


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development is not likely to have any notable impact on its sales at least, in the

present Control Period.

The ATE Judgment removes all restrictions placed on change-over of consumers

between RInfra-D and TPC-D. However, its effect on the change-over of

consumers between the two Licensees is to be assessed along with the existing and

likely category-wise tariff differentials.

6.1.2 SALES FORECAST FOR FY 2014-15 AND FY 2015-16

RInfra-D submitted that it has forecast the sales for FY 2014-15 and FY 2015-16 without

considering any notable impact of supply to potential new connections by TPC-D, both

due to procedural time lags in approval of the network development plan as well as the

likely gestation period for developing network to reach out to potential new consumers. It

has only considered the effect of change-over of consumers in the sales forecast for FY

2014-15 and FY 2015-16.

The Commission had approved the tariff for the consumers of RInfra-D and TPC-D

through the respective MYT Orders. Through the MYT Order, the Commission has

revised the CSS payable by consumers connected to RInfra-D’s network but taking

supply from TPC-D. The Commission also approved levy of RAC on all consumers

connected to RInfra-D’s network, in order to recover the past un-recovered Revenue Gaps

of RInfra-D.

RInfra-D further submitted that, due to the lower tariffs of RInfra-D as compared to the

change-over tariff subsequent to the MYT Order of RInfra-D, some change-over

consumers have shifted back to RInfra-D to take advantage of the tariff differentials.

RInfra-D believes this migration of consumers back to RInfra-D is likely to continue in

future as well, now that the issues of CSS and RAC are settled. However, the change-over

tariff for residential consumers (in 0-300 units per month category) is still cheaper as

compared to the RInfra-D tariff for such consumers. RInfra-D submitted that, therefore, it

expects that change-over of such residential consumers to TPC-D would continue in

future.

Further, RInfra-D submitted that, even though the ATE Judgment in Appeal Nos. 229 and

246 of 2012 removes the restrictions on change-over of consumers other than those

consuming 0-300 units, no notable impact is likely in the remaining Control Period. It has

therefore projected sales to own consumers and change-over consumers in H2 of FY

2014-15 and in FY 2015-16 by considering change-over of residential consumers


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consuming up to 300 units per month, and the reverse migration of other change-over

consumers back to RInfra-D. Based on the above, the broad approach adopted for

estimation of sales in H2 of FY 2014-15 and in FY 2015-16 as submitted by RInfra-D is

as under:

For FY 2014-15

Step 1: Consider actual total sales (own plus change-over) for first half of FY 2014-15;

Step 2: Using actual monthly co-relation factors of total sales from historical data and

determine projected total sales for each month from October 2014 to March 2015;

Step 3: Consider actual change-over sales for first half of FY 2014-15 and project for

second half in similar manner (i.e. by applying co-relation factors) as explained in Step 2

above;

Step 4: Estimation of sales (category-wise monthly sales) contribution of change-over

consumers shifting back to RInfra-D for the period October, 2014 to March, 2015, by

considering the trend of reverse migration from April to September 2014;

Step 5: Estimation of incremental depletion of sales (category-wise monthly sales) of 0-

300 units consumers, for the period October, 2014 to March, 2015, by considering the

trend of migration of 0-300 units consumers from April to September 2014;

Step 6: Subtraction of sales of consumers shifting back to RInfra-D and addition of sales

of migrating 0-300 units consumers to base change-over sales to arrive at projected

change-over sales in H2 of FY 2014-15 and in FY 2015-16;

Step 7: Deduction of projected change-over sales arrived at in Step 6 above from the

projected total sales arrived at in Step 2 above, to arrive at projected own sales in H2 of

FY 2014-15.

The details of sales estimates for own and change-over consumers, along with the sales

approved in the MYT Order, as submitted by RInfra-D are given in the Table below:

Table 6-1: Category-wise Estimated Sales for FY 2014-15 as submitted by RInfra-D

(MU)

Consumer Category

Change-over Sales Own Sales

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

LT I- Below Poverty Line

1,217.63

0.00 0.05 0.02


0-100 405.27 1,817.57 1,605.72

101-300 384.92 1,077.43 1,017.17

301-500 68.80 179.99 154.55


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Consumer Category


MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

501 and above 26.07 64.71 52.28


0-100 90.66 200.36 198.22

101-300 147.92 287.09 296.06

301-500 83.35 156.39 151.90

501 and above 150.23 257.60 270.16

LT II (A) Commercial - Upto 20 kW

1,036.50

244.92 1,412.06 1,457.44

LT II (B) Commercial - > 20 kW & ≤ 50kW 49.50 150.00 202.09

LT II (C) Commercial - > 50kW 146.16 253.45 453.48

LT III - Industry ≤ 20 kW 375.03

45.03 127.36 138.48


LT-V : LT- Advertisements and Hoardings 0.16 0.02 3.40 3.20


LT-VII (A): LT -Temporary Supply Religious 0.00 0.00 1.08 2.56

LT-VII (B): LT -Temporary Supply Others 0.80 0.15 98.26 83.58

LT VIII: LT – Crematorium and Burial

Grounds 0.00 0.30 0.90 0.57



Total- LT Sales 2,630.13 1,922.12 6,345.36 6,551.57

HT I: HT-Industry 321.94 12.57 85.37 312.82




HT V – Railways 0.00 0.00 57.80 17.42


Total - HT Sales 964.63 40.82 444.97 1,067.22

Total 3,594.75 1,962.94 6,790.34 7,618.79

Note: The Change-over sales for FY 2014-15 approved in the MYT Order was 3,873.95

MU (grossed up). Metered change-over sales by grossing down 3,873.95 MU, becomes

3594.75 MU.


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For FY 2015-16

Step 1: Use category-wise CAGR of growth in sales and estimate total sales (own plus

change-over sales) for FY 2015-16, by applying CAGR on the estimated total sales of FY

2014-15 as determined above;

Step 2: Apply nominal escalation rate (to account only for specific consumption increase)

on the base change-over sales for FY 2014-15, to arrive at the base change-over sales for

FY 2015-16;

Step 3: Subtraction of sales of consumers shifting back to RInfra-D and addition of sales

of migrating 0-300 units consumers to base change-over sales, to arrive at projected net

change-over sales in FY 2015-16.

Step 4: Deduction of projected change-over sales arrived at in Step 3 above from the

projected total sales arrived at in Step 1 above, to arrive at projected own sales in FY

2015-16.

A comparison of projected own and change-over sales with the projections approved in

the MYT Order for FY 2015-16, as submitted by RInfra-D, is shown in Table below:

Table 6-2: Category-wise projected sales for FY 2015-16 as submitted by RInfra-D

(MU)

Consumer Category


MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition


1,401.09

0.00 0.05 0.02


0-100 526.84 1,847.94 1,542.18

101-300 434.18 1,036.34 1,008.37

301-500 52.57 186.59 177.23

501 and above 16.03 67.74 64.58

LT-I Residential (Three Phase)

0-100 98.80 205.75 198.42

101-300 153.52 288.04 303.27

301-500 76.12 161.93 165.92

501 and above 128.70 268.66 303.82

LT II (A) Commercial - Upto 20 kW

1,102.64

195.56 1,483.80 1,577.40

LT II (B) Commercial - > 20 kW & ≤

50 kW 29.66 159.23 226.80

LT II (C) Commercial - > 50kW 75.02 274.34 544.38


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Consumer Category


MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition


33.19 131.18 155.13



Hoardings 0.16 0.01 3.59 3.35



Religious 0.00 0.00 1.12 2.63


Others 0.80 0.12 101.70 86.12

LT VIII: LT – Crematorium and

Burial Grounds 0.00 0.33 0.94 0.59



Total- LT Sales 2,882.65 1,858.58 6,485.03 6,890.38

HT I: HT-Industry 344.19 10.22 87.49 318.61




HT V – Railways 0.00 0.00 78.40 18.31


Total - HT Sales 1,020.51 23.19 534.89 1,128.79

Total 3,903.16 1,881.77 7,019.92 8,019.17

Note: The Change-over sales for FY 2015-16 approved in the MYT Order was 4,208.44

MU (grossed up). Metered change-over sales by grossing down 4,208.44 MU, becomes

3903.16 MU

6.1.3 REDUCTION OF SALES DUE TO DEMAND-SIDE MANAGEMENT

The estimated reduction in sales in H2 of FY 2014-15 and in FY 2015-16 due to the

running DSM programmes, as submitted by RInfra-D, is as under:

Table 6-3: Estimated Reduction in Sales due to DSM Activities in H2 of FY 2014-15

and in FY 2015-16 as submitted by RInfra-D (MU)

Programme Consumer Category FY 2014-15 (H2) FY 2015-16

5 Star Fans - Ph 1 Residential (<500 units) 0.27 0.51

Solar PV plant at MIDC LT - II (a) 0.01 0.01


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Programme Consumer Category FY 2014-15 (H2) FY 2015-16

5 Star Refrigerators Residential 1.19 2.55

5 Star Fans - Ph II Residential (<500 units) 0.81 1.69

Automation in AC LT - II, LT III, LT IV 0.12 0.25

Total

2.40 5.01

RInfra-D submitted that the T5 FTL programme carried out in FY 2012-13 and FY 2013-

14 has been closed in FY 2014-15. Also, two other programmes, namely the 5-star split

AC Ph I (for LT II (a) consumers) and Ph II (for LT II (a) and LT III consumers) have

been discontinued due to poor response from consumers. A new 5 star split AC

programme (for residential consumers) is currently underway, as approved by the

Commission. RInfra-D submitted that since there has not been any progress in the

programme, it has not considered any reduction in sales in future. Further, RInfra-D has

submitted 2 DSM programmes (5 Star Ceiling Fan programme and 5 Star Refrigerator

programme) on 13 November, 2014, which are awaiting the Commission’s approval.

RInfra-D submitted that, till now, all the expenses relating to DSM programmes were

being met out of the funds available under the Load Management Charge (LMC).

However, the remaining LMC funds are only sufficient to cater to the existing schemes

which are currently underway. The expenses for these two new schemes, if approved by

the Commission, will have to be provided for in the ARR. Since no expenditure towards

DSM schemes was included in the past O&M Expenses (as they were met out of the

LMC), the actual O&M Expenses, if any, during the Control Period towards these DSM

schemes will have to be recognised as over and above the target Expenses as approved.

The estimated cost of these 2 programmes in FY 2015-16 is Rs. 3 crore.

RInfra-D requested the Commission to allow this estimated expense over and above the

O&M Expense to be approved for FY 2015-16 in case these 2 programmes are approved

before the issuance of MTR Order. If they are approved subsequently, the expenses may

be recovered through the ZOthers charge as per MYT Regulations.

6.1.3.1 Automatic Demand Response Programme

RInfra-D submitted that it intends to actively introduce Automatic Demand Response

(ADR) system in its area. This would enable consumers to modify their consumption

pattern in response to economic signals provided through tariff by allowing the system

operators to manage consumption quickly, reliably, and for the same hours as would be

served by a peaking generator. ADR includes several technology elements: two-way


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communication, real-time sensing and control of demand side resources, dispatch of

resources by utility operators, and verification of event results.

RInfra-D submitted that it is preparing a DPR for implementing a 10 MW ADR in

Mumbai during FY 2015-16, and would submit it to the Commission for its approval. If

approved, the capex and opex would be claimed on actual basis in future.

6.1.3.2 Own Sales, after reduction of Sales due to DSM

RInfra-D submitted that the estimated own sales in H2 of FY 2014-15 and projected own

sales in FY 2015-16, after considering the effect of reverse migration and low-end

migration, and reduction of sales due to DSM activities, are as under:

Table 6-4: Own Sales after considering reduction due to DSM Activities in FY 2014-15

and in FY 2015-16 as submitted by RInfra-D (MU)

Consumer Category

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

LT I- Below Poverty Line 0.05 0.02 0.05 0.02


0-100 1,817.57 1,604.73 1,847.94 1,539.99

101-300 1,077.43 1,016.51 1,036.34 1,007.06

301-500 179.99 154.44 186.59 177.07

501 and above 64.71 52.26 67.74 64.56


0-100 200.36 198.10 205.75 198.14

101-300 287.09 295.88 288.04 302.87

301-500 156.39 151.80 161.93 165.72

501 and above 257.60 270.07 268.66 303.64

LT II (A) Commercial - Upto 20 kW 1,412.06 1,457.36 1,483.80 1,577.25

LT II (B) Commercial - > 20 kW & ≤

50kW 150.00 202.08 159.23 226.78

LT II (C) Commercial - > 50kW 253.45 453.46 274.34 544.34

LT III - Industry ≤ 20 kW 127.36 138.47 131.18 155.12

LT IV - LT Industry above 20 kW 198.44 367.94 205.81 431.09

LT-V : LT- Advertisements and Hoardings 3.40 3.20 3.59 3.35


LT-VII (A): LT -Temporary Supply 1.08 2.56 1.12 2.63


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Consumer Category

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Religious

LT-VII (B): LT -Temporary Supply Others 98.26 83.58 101.70 86.12

LT VIII: LT - Crematorium and Burial

Grounds 0.90 0.57 0.94 0.59



Total- LT Sales 6,345.36 6,549.17 6,485.03 6,885.37

HT I: HT-Industry 85.37 312.82 87.49 318.61




HT V – Railways 57.80 17.42 78.40 18.31


Total - HT Sales 444.97 1,067.22 534.89 1,128.79

Total 6,790.34 7,616.39 7,019.92 8,014.16

RInfra-D submitted that there is a considerable difference between the total sales

approved by the Commission for FY 2013-14 and the actual sales of FY 2013-14. Going

forward into FY 2014-15 and FY 2015-16, the difference only multiplies. RInfra-D

submitted the following reasons for such significant differences:

The Commission issued the MYT Order for TPC-D in June, 2013, in which

change-over sales were approved. The change-over sales approved were based on

historical growth factors (CAGR) for individual categories.

Since RInfra-D’s MYT Order was issued in August, 2013, the change-over sales

as approved in the TPC-D Order were adopted in RInfra-D’s Order as well.

The change-over sales estimated by RInfra-D in its MYT Petition were much

lower than those approved by the Commission in the TPC-D MYT Order.

RInfra-D submitted that, in its MYT Order, while the Commission adopted the change-

over sales as already approved by it in TPC-D’s MYT Order, it also considered the own

sales as forecast by RInfra-D in its MYT Petition. RInfra-D submitted that this is an

anomaly, since own and change-over sales are interlinked due to movement of consumers

from own to change-over or vice-versa. Therefore, if the Commission had approved

higher change-over sales than projected by RInfra-D, then there should also have been


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proportionate reduction in RInfra-D’s own sales from what was projected by it. If that is

not done, it would amount to double counting of the same energy sales – both as own and

change-over. RInfra-D submitted that this is the primary reason for the huge difference

between approved Total Network Sales (own + change-over) and Actual Total Network

Sales.

RInfra-D submitted that projection of change-over sales based on historical trends is itself

not a correct approach, because the historical growth would reflect the accelerated

migration in the past years, which will not sustain in future since future migration only

depends on the remaining potential to migrate.

RInfra-D further submitted that, after the restriction on high-end consumers changing over

to TPC-D vide Order dated 22 August, 2012 in Case No. 151 of 2011, there was no

incremental high-end migration, leaving the number of such high-end change-over

consumers unchanged from September, 2012 onwards. The growth in consumption could

only be very nominal for such consumers (i.e. specific consumption growth only),

therefore, historical growth could not be considered since it is a reflection of both

increasing number of consumers as well as specific consumption growth.

RInfra-D submitted that, during the proceedings of the MYT Petition, it had submitted

actual sales of FY 2012-13 as 6192.31 MU, which was approved by the Commission.

However, the original sales forecast of RInfra-D for FY 2013-14 and beyond was based

on estimated sales of FY 2012-13, which were 6346.36 MU, i.e., 150 MU higher than

actual. While the Commission accepted the actual sales of FY 2012-13, no corresponding

downward revision was made to the sales forecast of FY 2013-14 and beyond.

RInfra-D submitted that the Wheeling Charges and retail tariffs for the MYT Control

Period are based on the approved volume of own and change-over sales. The significant

reduction in sales has negatively impacted the revenue recovery of RInfra-D in all the

years of the Control Period, and that is the main reason for accretion of Revenue Gaps

during the years under review.


As FY 2014-15 was already over, the Commission directed RInfra-D to submit the figure

of actual Direct Sales for FY 2014-15, which was submitted as shown in the Table below:


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Table 6-5: Category-wise actual Own sales for FY 2014-15 as submitted by RInfra-D

(MU)

Consumer Category & Consumption Slab Actual Own sales

LT I - Below Poverty Line 0.02

LT -I Residential 3794.25

0-100 1842.88

101-300 1309.31

301-500 308.73

501 and above 333.33

LT Commercial 2138.37

LT II (A) Commercial - Upto 20 kW 1494.20

LT II (C) Commercial - > 50kW 198.86


LT IV - LT Industry above 20 kW 146.31

LT II (A) Commercial - Upto 20 kW 360.45

LT-V : LT- Advertisements and Hoardings 3.23

LT VI: LT -Street Lights 58.44

LT-VII (A): LT -Temporary Supply Religious 1.80

LT-VII (B): LT -Temporary Supply Others 86.42

LT VIII: LT - Crematorium & Burial Grounds 0.61

LT IX: LT –Agriculture 0.10

LT X: LT -Public Service 43.20

Total- LT Sales 6633.19

HT I: HT-Industry 299.63

HTII : HT- Commercial 578.49

HT III: HT-Group Housing Society 41.07

HTIV : HT - Temporary Supply 6.85

HT V - Railways 16.17

HT VI - Public Service 99.67

Total - HT Sales 1041.88

Total 7675.06

The Commission has accepted the actual category-wise sales for FY 2014-15 as submitted

by RInfra-D.

The Commission observed differences in the actual category-wise change-over sales

submitted by TPC-D and RInfra-D. Such differences persisted even after considering the


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grossing up of the category-wise change-over sales submitted by RInfra-D with the

approved wheeling losses for the HT and LT categories. The Commission directed TPC-D

and RInfra-D to reconcile the category-wise actual change-over sales for FY 2012-13 to

FY 2014-15.

In response, TPC-D submitted that the difference between the sales of RInfra-D and TPC-

D billed sales is because the energy billed by TPC-D is for cyclic consumption, i.e., for

low-end consumers, the billing period is from the 15th

day of the month to the 15th

day of

the next month; while the reconciled figure with RInfra-D is on a monthly basis, i.e., the

actual energy consumption from the 1st day of the month to the last day of that month.

In its response, RInfra-D submitted that the difference between the sales reconciled with

RInfra-D and TPC-D billed sale is on account of differences in their respective meter

reading cycles. For the purpose of energy accounting in FBSM, change-over consumption

is required for a calendar month. RInfra-D submitted that, as per the Order in Case No. 50

of 2009, metering is the responsibility of the Supply Distribution Licensee, i.e., TPC-D in

this case; accordingly, RInfra-D gives its concurrence to the readings of TPC-D subject to

various corrections as may be required. The readings are modified only to the extent

agreed between RInfra-D and TPC-D, with the rider that any adjustments due to

remaining issues will be effected in future months. The modified readings to the extent

agreed upon between RInfra-D and TPC-D are provided to MSLDC for FBSM

accounting after applying the pro-ration by each Utility for arriving at the consumption

value for the respective calendar months.

Based on the above replies, the Commission has accepted the change-over sales figures

submitted by RInfra-D and TPC-D.

While projecting the sales for FY 2015-16 for RInfra-D, the Commission appreciates that

the sales situation is very fluid. Due to the migration and reverse migration of consumers

in some categories from RInfra-D to TPC-D and back over the past 2-3 years, it is

difficult to establish any trend in growth rates for specific consumer categories.

Hence, for projecting sales in FY 2015-16 in this Order, the Commission has adopted a

holistic approach. It has considered the total category-wise sales, as the summation of the

sales of TPC-D, sales of RInfra-D and the change-over sales. The Commission has

considered the actual category-wise Direct Sales and Change-over sales for FY 2014-15,

as submitted by TPC-D and RInfra-D as the base data, for projecting the sales for FY

2015-16.


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The Commission has considered the change-over sales as submitted by TPC-D after

grossing down considering HT and LT losses of 1.94% and 9.0%, respectively. The

overall trend of growth in consolidated sales gives the realistic picture of category-wise

trends, which have been used to project the overall category-wise sales for TPC-D and

RInfra-D combined.

From this consolidated sales projection, the category-wise Direct Sales of TPC-D have

been deducted, by projecting them based on their past trends. This projection is not

affected by migration or reverse migration, since these are sales on TPC-Ds' own

distribution network. The Commission has also considered the additional sales projected

by TPC-D in the suburban area due to the network roll-out plan, and deducted them from

the overall sales projection. Also, the additional sales projected by TPC-D in the island

city area of Mumbai (BEST area of supply) due to the network roll-out plan, has been

added to the TPC-D Direct Sales figure.

The category-wise change-over sales have been projected based on past trends. The sales

of RInfra-D have, thus, been derived as the difference between the overall sales projected

for FY 2015-16 and the sum of Direct Sales and Change-over Sales of TPC-D.

The category-wise sales approved by the Commission for RInfra-D for FY 2014-15 and

FY 2015-16 are given in the Table below:

Table 6-6: Category-wise own sales for FY 2014-15 and FY 2015-16 approved by the

Commission (MU)

Consumer Category &

Consumption Slab

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

LT I - Below Poverty Line 0.05 0.02 0.02 0.05 0.02 0.02

LT -I Residential

0-100 1817.57 1604.73 1842.88 1847.94 1539.99 1856.75

101-300 1077.43 1016.51 1309.31 1036.34 1007.06 1275.46

301-500 179.99 154.44 308.73 186.59 177.07 348.40

501 and above 64.71 52.26 333.33 67.74 64.56 349.47

LT Commercial

LT II (A) Commercial -

Upto 20 kW 1412.06 1457.36 1494.20 1483.80 1577.25 1553.89

LT II (B) Commercial - >

20 kW & ≤ 50kW 150.00 202.08 198.86 159.23 226.78 202.45

LT II (C) Commercial - > 253.45 453.46 445.31 274.34 544.34 445.20


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Consumer Category &

Consumption Slab

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

50kW

LT III - Industry ≤ 20 kW 127.36 138.47 146.31 131.38 155.12 151.84

LT IV - LT Industry

above 20 kW 198.44 367.94 360.45 205.81 431.09 361.98

LT-V : LT- Advertisements

and Hoardings 3.40 3.20 3.23 3.59 3.35 3.25

LT VI: LT -Street Lights 58.96 55.89 58.44 60.23 56.83 59.60

LT-VII (A): LT -Temporary

Supply Religious 1.08 2.56 1.80 1.12 2.63 1.86

LT-VII (B): LT -Temporary

Supply Others 98.26 83.58 86.42 101.70 86.12 85.24

LT VIII: LT - Crematorium

& Burial Grounds 0.90 0.57 0.61 0.94 0.59 0.62

LT IX: LT -Agriculture 0.04 0.10 0.10 0.05 0.10 0.12

LT X: LT -Public Service 0.00 40.14 43.20 0.00 42.11 57.11

Total- LT Sales 6345.36 6549.17 6633.19 6485.03 6885.37 6753.24

HT I: HT-Industry 85.37 312.82 299.63 87.49 318.61 284.08

HTII : HT- Commercial 274.59 586.62 578.49 341.21 630.95 582.63

HT III: HT-Group Housing

Society 22.96 41.56 41.07 23.45 46.65 43.67

HTIV : HT - Temporary

Supply 4.25 6.09 6.85 4.34 6.28 5.97

HT V - Railways 57.80 17.42 16.17 78.40 18.31 25.38

HT VI - Public Service 0.00 102.71 99.67 0.00 107.98 72.05

Total - HT Sales 444.97 1067.22 1041.88 534.89 1128.79 1013.77

Total 6790.34 7616.39 7675.06 7019.92 8014.16 7767.01


The Commission had approved a Distribution Loss of 9.41% for FY 2014-15 and 9.36%

for FY 2015-16 in the MYT Order, and RInfra-D has considered the same level for

projecting the Energy Balance for FY 2014-15 and in FY 2015-16 in its Petition. The

energy requirement at T<>D periphery for FY 2014-15 and FY 2015-16 considering the

above Distribution Losses, as submitted by RInfra-D, is shown in the Table below:


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Table 6-7: Energy Requirement at T<>D for FY 2014-15 and FY 2015-16 as submitted

by RInfra-D

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Energy sales by RInfra-D (MU) 6,790.34 7,616.39 7,020.09 8,014.16

Consumption (MU) by Change-over

Consumers 3,594.75 1,962.95 3,903.16 1,881.77

Consumption (MU) by OA consumers 0.00 11.64 0.00 11.64

Total (MU) 10,385.09 9,590.98 10,923.25 9,907.58

Distribution Loss (%) 9.41% 9.41% 9.36% 9.36%

Energy Input (MU) at T<>D 11,463.84 10,587.24 12,051.25 10,930.69

RInfra-D submitted that it has taken the consumption by OA consumers in H2 of FY

2014-15 at the same level as that of H1, and the consumption of such consumers for FY

2015-16 as estimated for FY 2014-15 in its Petition. RInfra-D has used loss figures as per

the technical assessment report of 2011-12 conducted by ASCI, i.e., 1.88% for HT

network and 9.90% for LT network, to determine the Energy Balance for FY 2015-16.

RInfra-D requested the Commission to approve the same. RInfra-D submitted that, as the

Pool settlement in FY 2014-15 is being carried out by considering loss of 1.94% for HT

change-over consumers and 9.00% for LT change-over consumers, it has determined the

Energy Balance for FY 2014-15 by considering that loss level. RInfra-D has considered

the Transmission Losses for H2 of FY 2014-15 and FY 2015-16 as 4.08%, as approved by

in Order dated 14 August, 2014 in Case No. 123 of 2014. Based on these assumptions, the

energy purchase requirement, as submitted by RInfra-D, for FY 2014-15 and FY 2015-16

is as shown below:

Table 6-8: Energy Balance for FY 2014-15 and FY 2015-16 as submitted by RInfra-D

Particulars UoM

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Migrated HT Sales + OA

consumption MU 964.63 52.47 1,020.51 34.83

HT Loss % 1.94% 1.94% 1.94% 1.88%

HT grossed up energy at T-D

boundary MU 983.71 53.51 1,040.70 35.50

Migrated LT sale MU 2,630.13 1,922.12 2,882.65 1,858.58

LT loss % 9.00% 9.00% 9.00% 9.90%


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Particulars UoM

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

LT grossed up energy at T-D

boundary MU 2,890.25 2,112.22 3,167.75 2,062.80

Total T-D energy attributable to

TPCD sale and OA consumption MU 3,873.96 2,165.73 4,208.45 2,098.30

Net T-D energy attributable to

RInfra-D sale MU 7,589.88 8,421.51 7,842.80 8,832.39

InSTS losses % % 4.17% 3.94% 4.17% 4.08%

Total requirement of RInfra-D

at G-T MU 7,920.15 8,767.22 8,184.08 9,208.08

RInfra-D submitted that the Transmission Loss for FY 2014-15 is derived as 3.94%,

because it has considered the energy decrement to the State Imbalance Pool as per

provisional FBSM Statements in H1 of FY 2014-15. As and when the FBSM statements

are finalized by MSLDC, all source-wise differences between actual energy billed to

RInfra-D and energy as per FBSM statements will be reconciled, and then only will it be

possible to ascertain actual Transmission Losses.


The Commission asked RInfra-D to justify the consideration of HT and LT loss for FY

2015-16 as 1.88% and 9.90%, respectively, based on the ASCI Report for FY 2011-12,

when there is a reduction in losses during this period.

In response, RInfra-D submitted that the Commission had directed it in the MYT Order to

submit the ASCI Report on technical loss assessment for consideration at the time of the

Mid-Term provisional Truing up. Accordingly, RInfra-D has submitted the Report, and

has taken the percentage loss for working out the Energy Balance for FY 2015-16.

Technical losses do not alter much unless there is major deterioration/ reconfiguration of

the network. The technical loss assessment study by ASCI in FY 2011-12 is the latest

available study report, and it has been done by an independent third party agency upon

direction of the Commission. RInfra-D further submitted that it is better than the study

conducted a few years earlier on which the present loss levels are based. RInfra-D

submitted that there is always a lag of a few years in implementation of the results of such

a study.


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In this background, the Commission is of the view that it would not be appropriate to

modify the HT and LT losses to be considered for change-over transactions in the last

year of the Control Period, that too based on a loss assessment study conducted in FY

2011-12, i.e., more than two years ago, when the overall losses are reducing. Hence, for

FY 2015-16, the Commission has considered the HT and LT loss as 1.94% and 9.00%,

respectively, as for the previous years of the Control Period.

The Commission has considered the Distribution Losses for FY 2014-15 and FY 2015-16

as approved in the MYT Order. The Commission has considered the Transmission Losses

for FY 2014-15 as 3.89% based on MSLDC submissions. For FY 2015-16, the

Transmission Losses are considered as 3.89%, as approved by the Commission in the suo-

motu InSTS Tariff Order dated 26 June, 2015 in Case No. 57 of 2015. The Commission

has considered the OA sales for FY 2014-15 and FY 2015-16 as submitted by the RInfra-

D.

For computation of Energy Balance and energy requirement of FY 2014-15 and FY 2015-

16, the Commission has considered the own sales and change-over sales as approved by it

in this Order.

In view of the above, the Distribution Losses and Energy Balance as approved by the

Commission for FY 2014-15 and FY 2015-16 are given in the Tables below:

Table 6-9: Energy Balance for FY 2014-15 and FY 2015-16 approved by the

Commission

Particulars UoM

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Sales (Own) MU 6,790.34 7,616.39 7,675.06 7,020.09 8,014.16 7,767.01

Sales (Change-over) MU 3,594.75 1,962.95 1,950.04 3903.16 1,881.77 2,174.76

Consumption by

OA consumers MU

11.64 11.64

11.64 11.64

Total MU 10,385.09 9,590.98 9,636.74 10,923.25 9,907.58 9,953.40

Distribution Loss % 9.41% 9.41% 9.41% 9.36% 9.36% 9.36%

Energy Input to the

Distribution System MU 11,463.84 10,587.24 10,637.76 12,051.25 10,930.69 10,981.25


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Table 6-10: Energy Requirement for FY 2014-15 & FY 2015-16 approved by the

Commission

Particulars UoM

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Migrated HT sales +

OA consumption MU 964.63 52.47 48.96 1,020.51 34.83 50.26

HT Loss % 1.94% 1.94% 1.94% 1.94% 1.88% 1.94%

HT grossed up

energy at T-D

boundary

MU 983.71 53.51 49.93 1,040.70 35.50 51.25

Migrated LT sale MU 2,630.12 1,922.12 1,912.72 2,882.65 1,858.58 2,136.14

LT loss % 9.00% 9.00% 9.00% 9.00% 9.90% 9.00%

LT grossed up

energy at T-D

boundary

MU 2,890.24 2,112.22 2,101.89 3,167.75 2,062.80 2,347.41

Total T-D energy

attributable to TPC-

D sale & OA

consumption

MU 3,873.96 2,165.73 2,151.82 4,208.45 2,098.30 2,398.66

Net T-D energy

attributable to

RInfra-D sale

MU 7,589.88 8,421.51 8,485.94 7,842.80 8,832.39 8,582.59

InSTS losses % % 4.17% 3.94% 3.89% 4.17% 4.08% 3.89%

Total requirement

of RInfra-D (MU)

at G-T

MU 7,920.15 8,767.22 8,829.40 8,184.08 9,208.08 8,929.97


6.3.1 RINFRA-G (DAHANU TPS)

RInfra-D submitted that it has entered into a 10-year PPA with RInfra-G, which has been

approved by the Commission in Case No. 8 of 2008. For the first half of FY 2014-15, the

energy availability and the cost thereon from RInfra-G is as per actuals. For the second

half, RInfra-D has considered the projections of energy availability as per the MTR

Petition filed by RInfra-G before the Commission. RInfra-D has considered the variable


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cost for H2 of FY 2014-15 and Fixed Charges for FY 2014-15 as approved by the

Commission in RInfra-G’s MYT Order dated 13 June, 2013 (Case No. 1 of 2013). It has

considered the projections made by RInfra-G in its MTR Petition for the energy

availability and fixed and variable charges payable in FY 2015-16 to RInfra-G, as shown

in the Tables below:

Table 6-11: Power Procurement from DTPS for FY 2014-15 and FY 2015-16 as


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Capacity Available (MW) 500.00 500.00 500.00 500.00

Availability (%) 95.90% 102.02% 95.90% 95.90%

Auxiliary Consumption (%) 9.83% 8.94% 9.82% 9.71%

Energy Availability (MU) 3,787.60 4,032.51 3,798.13 3,802.80

Table 6-12: Power Procurement Cost for DTPS for FY 2014-15 and FY 2015-16 as


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Fixed Charge (Rs. crore) 288.01 288.01 311.97 464.77

Rate of energy (Rs./kWh) 2.94 2.92 2.99 3.05

Variable Charge (Rs. crore) 1,112.65 1,176.86 1,137.30 1,161.25

Total Cost (Rs. crore) 1,400.66 1,464.87 1,449.27 1,626.02

RInfra-D submitted that the significant difference between the costs approved by the

Commission for purchase of power from DTPS vis-à-vis the anticipated cost in FY 2015-

16 is mainly because of past cost recovery as claimed by RInfra-G in its MTR Petition,

arising on account of the ATE Judgment in Appeal No. 138 of 2012 and the Revenue

Gaps of FY 2012-13 and FY 2013-14.


As sought by the Commission, RInfra-D submitted the source-wise quantum and cost of

power purchase for FY 2014-15.

The Commission has considered the actual cost of power purchase from RInfra-G in the

provisional true-up for FY 2014-15, as submitted by RInfra-D. For FY 2015-16, the


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Commission has considered the cost of power purchase from RInfra-G as approved in its

Order dated 26 June,2015 in Case No. 222 of 2014. Accordingly, the Commission has

approved the power purchase from RInfra-G for FY 2014-15 and FY 2015-16 as tabulated

below:

Table 6-13: Quantum & Cost of Power Purchase from RInfra-G for FY 2014-15 and

FY 2015-16 approved by the Commission

DTPS


Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

FY 2014-15 3787.

60 1400.66 3.70 4032.51 1464.87 3.63

3642.2

6 1371.20 3.76

FY 2015-16 3798.

13 1449.27 3.82 3802.80 1626.02 4.28

3802.8

0 1442.26 3.79

6.3.2 VIDARBHA INDUSTRIES POWER LTD.

RInfra-D submitted that it has signed a long term PPA with Unit 2 of VIPL, which was

approved by the Commission vide Order dated 20 February, 2013 (Case No. 2 of 2013),

and with Unit 1 of VIPL approved vide Order dated 20 July, 2013 (Case No. 76 of 2013).

The actual energy purchased from VIPL and the total cost of power (including fuel

surcharge paid) from VIPL in H1 of FY 2014-15, as submitted by RInfra-D, is as shown

in the Table below.

Table 6-14: Power Purchase from VIPL in H1 of FY 2014-15 as submitted by RInfra-D

(Rs. crore)

Particulars H1 of FY 2014-15

Energy Availability (MU) 1,492.56

Fixed Charge (Rs. crore) 341.22

Rate of Energy charge (Rs./kWh) 3.68

Variable Cost (Rs. crore) 549.12

Total Cost (Rs. crore) 890.34

RInfra-D submitted that the Commission had approved the Fixed Charges of Rs. 823.89

crore for VIPL for FY 2014-15 in its Order dated 17 January, 2014 in Case No. 91 of

2013. Accordingly, it has worked out the monthly Fixed Charges payable to VIPL as Rs.

68.66 crore, subject to VIPL achieving cumulative Availability of 85%. RInfra-D has,


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however, deducted the Fixed Charges in the six months of H1 of FY 2014-15 since the

monthly Availability was lower than 85%. RInfra-D submitted that the actual Fixed

Charge paid to VIPL in H1 of FY 2014-15 is Rs. 341.22 crore.

RInfra-D had sought information from VIPL about the likely energy availability and the

variable charges for the remaining part of FY 2014-15 and thereafter for FY 2015-16, in

order to make projections, which have been provided by VIPL vide its letter dated 10

November, 2014.

In order to estimate the Energy Charges from VIPL for H2 of FY 2014-15, RInfra-D has

considered the actuals for October, 2014, and thereafter considered the projections made

by VIPL. RInfra-D has, in H1 of FY 2014-15, made deductions in provisionally approved

Fixed Charges of VIPL based on cumulative Availability computations in accordance

with the PPA terms and conditions. RInfra-D submitted that the cumulative Availability

for VIPL for FY 2014-15 has been considered as 85%, based on the Availability

projections made by VIPL for the remaining part of FY 2014-15, supported by feedback

from the OEM. RInfra-D has accordingly considered that full Fixed Charges of Rs.

823.89 crore would be payable to VIPL in FY 2014-15. For H2 of FY 2014-15, it has

considered the fixed cost payable to VIPL as Rs. 482.67 crore (823.89 – 341.22). The

energy availability from VIPL in FY 2014-15 and in FY 2015-16 and the Energy and

Fixed Charges thereon, as submitted by RInfra-D, are shown in the Table below:

Table 6-15: Power Purchase from VIPL for FY 2014-15 and FY 2015-16 as submitted

by RInfra-D

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Energy Availability (MU) 4,047.82 3,445.69 4,058.91 4,070.83

Fixed Charge (Rs. crore) 891.04 823.89 876.92 810.95

Rate of Energy charge (Rs./kWh) 1.22 3.55 1.30 2.41

Variable Cost (Rs. crore) 493.83 1,224.17 527.66 982.38

Total Cost (Rs. crore) 1,384.87 2,048.06 1,404.58 1,793.33

RInfra-D submitted that the large difference between the power purchase costs approved

in respect of VIPL purchase in the MYT Order vis-à-vis the estimated power purchase

cost is only due to the increase in variable charges, as the estimates assume the same fixed

cost payments as approved in the provisional Tariff Order for VIPL, which are lower than

in the MYT Order of RInfra-D. RInfra-D submitted that the final tariff as approved by the

Commission for VIPL will form the basis of payments to VIPL, after that Order is issued.


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RInfra-D has estimated the variable charges of power procurement from VIPL for FY

2014-15 and FY 2015-16 at Rs. 3.58/kWh and Rs. 2.41/kWh respectively, as against

Rs.1.22/kWh and Rs.1.30/kWh, respectively, approved in the MYT Order. RInfra-D

submitted that these higher projections are based on actual variable charges of

Rs.3.58/kWh incurred in FY 2014-15. It also submitted the actual quantum and cost of

power purchase from VIPL for FY 2014-15, with Fixed Charges of Rs. 821.53 crore and

Variable Charges of Rs. 1167.36 crore, at a variable charge of Rs. 3.54 per kWh and total

effective rate of Rs. 6.07 per kWh.

During the present proceedings, the Commission issued its Order dated 9 March, 2015 in

Case No. 115 of 2014 in respect of VIPL. In that Order, the Commission has approved

Fixed Charge for VIPL as Rs. 814.91 crore and Rs. 904.47 crore for FY 2014-15 and FY

2015-16, respectively; and Variable Charge of Rs. 1.91 per kWh for both years.

The Commission notes that there is a large difference between the actual Variable

Charges of VIPL and those approved in the final as well as provisional Orders in respect

of VIPL. For the cost of power purchase from VIPL for FY 2015-16, the Commission has

considered the Fixed and Variable Charges approved in the final Order for VIPL in Case

No. 115 of 2014. For FY 2014-15 also, the Commission has considered the Fixed and

Variable Charges approved in the final Order for VIPL in Case No. 115 of 2014, rather

than the actual costs submitted by RInfra-D.

In this regard, the MYT Regulations specify as under:

"26 Additional Short-term power procurement

26.2 Where there has been a shortfall or failure in the supply of electricity from

any approved source of supply during the financial year, the Distribution

Licensee may enter into additional short-term arrangement or agreement for

procurement of power (short-term means upto period of one year):

Provided that if the total power purchase cost for any block of six months including such short-term power procurement exceeds 105% of the power

purchase cost approved by the Commission for the respective block of six

months, the Distribution Licensee shall have to obtain prior approval of the

Commission; and

Provided that the proposed short-term power procurement shall be in

accordance with Regulation 13 of these Regulations.


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26.3 Where the Distribution Licensee has identified a new short-term source of

supply from which power can be procured at a tariff that reduces its

approved total power procurement cost, the Distribution Licensee may enter

into a short-term power procurement agreement or arrangement with such

supplier without the prior approval of the Commission.

26.4 The Distribution Licensee may enter into a short-term arrangement or

agreement for procurement of power without the prior approval of the

Commission when faced with emergency conditions that threaten the stability

of the distribution system or when directed to do so by the State Load

Despatch Centre to prevent grid failure.

26.5 Within fifteen (15) days from the date of entering into an agreement or

arrangement for short-term power procurement for which prior approval is

not required, the Distribution Licensee shall provide the Commission, full

details of such agreement or arrangement, including quantum, tariff

calculations, duration, supplier details, method for supplier selection and

such other details as the Commission may require with regard to such

agreement/arrangement to assess that the conditions specified in this

Regulation 26 have been complied with:

Provided that where the Commission has reasonable grounds to believe

that the arrangement or agreement entered into by the Distribution Licensee

does not meet the criteria specified in Regulation 26.2 to Regulation 26.4

above, the Commission may disallow any increase in the total cost of power

procurement (net of additional revenue) over the approved level arising

therefrom or any loss incurred by the Distribution Licensee as a result, from

being passed through to consumers.

26.6 Subject to the cases specified in Regulation 26.2 to Regulation 26.4 above,

where the Distribution Licensee enters into any agreement or arrangement

for short-term power procurement without the approval of the Commission,

any increase in the total cost of power procurement (net of additional

revenue) over the approved level arising there from shall be deemed to be a

variation in performance attributable entirely to controllable factors."

In the context of these Regulations, there is no doubt that there was a shortfall in the

supply of electricity vis-a-vis the increased demand arising from the reverse migration of

consumers from TPC-D to RInfra-D. The cost of power purchase in FY 2014-15, as

reported by RInfra-D, has also exceeded 105% of the power purchase cost approved by

the Commission for the entire year. The actual power purchase cost in FY 2014-15 as

reported by RInfra-D (Rs. 5159.07 crore) was 144% of that approved (Rs. 3587.95 crore).

Further, since the trend of reverse migration had been going on from September, 2013,

RInfra-D could well have anticipated in April, 2014 itself that the power purchase cost in

FY 2014-15 would be likely to exceed 105% of the approved cost.


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Under these circumstances, the Regulations require the Distribution Licensee to obtain

prior approval of the Commission before incurring such additional power purchase cost.

However, RInfra-D did not approach the Commission for such approval.

The Commission notes that, in another instance, however, RInfra-D had filed a Petition in

Case No. 89 of 2014 on 7 April, 2014 under Regulations 25 and 26 of the MYT

Regulations seeking prior approval for short-term power procurement from Unit 6 of

TPC-G based on MSLDC's directions. In its Order dated 20 March, 2015, the

Commission observed as follows:

"3. In its Petition, RInfra-D has submitted that:

...3.8. Regulation 25 and 26 of the MYT Regulations require that the Commission’s

prior approval be taken for power procurement, and also for additional short-term

procurement exceeding 105% of the total power purchase cost as approved by the

Commission for any block of 6 months.

3.9. However, Regulation 26.4 provides that the Distribution Licensee can enter into

short-term power purchase contracts when directed to do so by MSLDC in order to

prevent grid failure. While this exemption applies in the present case, RInfra-D has

filed the present Petition as a matter of abundant caution since the rate of Unit-6

power and consequent impact on the total cost of power purchase is likely to be

more than 5% for a block of 6 months in FY 2014-15...

3.12. The Commission has approved Rs. 3059 Cr. as power procurement cost for FY

2014-15. There would be an additional burden of Rs. 146 Cr. for the period from

April to June, 2014 (Rs. 48.6 Cr. per month) from procurement from Unit-6. This

would be more than 105 % of approved power purchase cost for the block of 6

months for FY 2014-15..."

Thus, RInfra-D has, in that instance, been (rightly) diligent in approaching the

Commission for prior approval for additional power purchase cost likely to exceed 105%

of the approved power purchase cost for FY 2014-15, at around the time when the actual

energy flow from Unit 6 of TPC-G started.

However, it appears that RInfra-D has been selectively diligent in such cases, since it did

not find it necessary to approach the Commission for its prior approval even when the

power purchase costs were around 144% of the approved power purchase costs, as set out

earlier.

The actual power purchase cost amounting to 144% of that approved is on account of

power purchase from Unit 6 of TPC-G, the higher cost of power purchase from VIPL, and


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the additional power purchase from short-term sources resorted to in order to meet the

shortfall in the energy requirement. If the differential cost of power purchase from Unit 6

of TPC-G is excluded, the actual power purchase still works out to 139% of the approved

power purchase expenses. The Commission has allowed the short-term power purchase

undertaken by RInfra-D, as discussed subsequently, as its cost is lower than that of

purchase from VIPL. However, the high cost of power purchase from VIPL cannot be

allowed due to the reasons stated above.

Further, as regards the high cost of power purchase from VIPL, the Commission also

notes that:

a) The Commission approved the PPA between RInfra-D and VIPL considering

RInfra-D’s submissions regarding the competitiveness of VIPL as a source of

power.

b) In its Order in Case No. 2 of 2013 approving the PPA, the Commission noted the

competitiveness of VIPL’s tariff in comparison with the tariffs observed in Case 1

competitive Bids, as presented by RInfra-D, and also observed that VIPL’s tariff

was computed considering the Coal India Limited (CIL) notified price, escalated

at the CERC rate for domestic coal linkage. In that Order, the Commission

recorded VIPL's submission that the new standard Fuel Supply Agreements

(FSAs) of CIL were under revision; that the Cabinet Committee on Economic

Affairs (CCEA) had given in-principle approval for pooling of coal prices; and

that, as VIPL had more than one year before starting supply to RInfra-D, the price

pooling mechanism would be implemented by then and VIPL would be able to

meet its coal requirements from CIL.

c) VIPL had submitted that, even in the pessimistic scenario of CIL supplying only

65% of the committed coal in FY 2014-15 and 70% in FY 2015-16, and VIPL

having to arrange the balance from market sources such as e-auction/imports, the

Variable Charges would be Rs. 1.74 per kWh. However, instead, RInfra-D has

now submitted very high variable charges of Rs.3.54/kWh for FY 2014-15.

d) The Commission also noted RInfra-D's submission in that Petition that it has

indirect ownership control of VIPL, which gives it greater control to manage or

avoid any unprecedented circumstances leading to increase in Energy Charges.

e) Clause 3.1.2 (a) of the approved PPA stipulates that VIPL has to enter into FSA

within 10 months of entering into the PPA, i.e., VIPL should have entered into the


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FSA latest by 3 April, 2014. However, VIPL is yet to do so, even a year after the

specified date.

Thus, it is evident that RInfra-D has completely miscalculated the cost of power purchase

from VIPL for FY 2014-15 and FY 2015-16. In the Petition for approval of the PPA

between RInfra-D and VIPL, RInfra-D had submitted that VIPL would source lower cost

coal under the FSA, however, in reality, VIPL has not entered into the FSA and has

procured expensive coal from other sources, which has resulted in steep increase in the

generation cost, which RInfra-D has proposed to pass on to the consumers. This is a total

deviation from the PPA approved by the Commission, both in physical terms and in

financial terms. RInfra-D was required to have obtained the Commission's prior approval

for this deviation much earlier, in accordance with Regulation 26 of the MERC MYT

Regulations, 2011. However, RInfra-D has failed to do so. RInfra-D was also aware that

as per the MERC MYT Regulations, 2011, power purchase expenses in excess of 105%

of the approved power purchase cost should have been submitted to the Commission for

prior approval, as is evident from the fact that it had submitted a Petition for increase in

power purchase cost on account of the purchase from TPC-G's Unit 6, under SLDC

directions. Hence, the Commission is left with no option but to restrict the cost of power

purchase from VIPL to the tariff approved for VIPL, in the Order dated 9 March, 2015 in

Case No. 115 of 2014, for FY 2014-15 and FY 2015-16, as shown in the Table below:

Table 6-16: Power Purchase from VIPL for FY 2014-15 and FY 2015-16 approved by

the Commission

VIPL


Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

FY 2014-15 4047.82 1384.87 3.42 3445.69 2048.06 5.94 3297.70 1444.77 4.38

FY 2015-16 4058.91 1404.58 3.46 4070.83 1793.33 4.41 4070.83 1678.86 4.12

6.3.3 POWER PURCHASE FROM TATA POWER COMPANY UNIT 6

RInfra-D submitted that, as per the meeting held on 24 March, 2014 between the Principal

Secretary (Energy), Government of Maharashtra, RInfra-D, TPC-D, BEST and MSEDCL,

it was decided that the three Distribution Licensees in Mumbai will purchase power from

TPC-G’s Unit 6 in the ratio agreed between the Licensees, in view of the constraints in

the available transmission capacity for bringing power to Mumbai during summer months

(April to June, 2014). RInfra-D submitted that, thereafter, upon the direction of MSLDC


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dated 26 March, 2014, it has procured power from TPC-G Unit 6 from April, 2014

onwards. RInfra-D has filed a Petition in Case No. 89 of 2014 for approval of the

resultant power purchase cost, the proceedings of which are ongoing. The actual energy

purchased from Unit 6 and the actual cost paid to TPC-G for such energy purchase in H1

of FY 2014-15, as submitted by RInfra-D, are shown in the Table below:

Table 6-17: Power Purchase from TPC Unit 6 in H1 of FY 2014-15 as submitted by

RInfra-D


Energy Availability (MU) 121.36

Rate of Energy (Rs./kWh) 13.38

Power Purchase Cost (Rs. crore) 162.38

RInfra-D submitted that 67.05 MU of energy has been purchased from TPC-G Unit 6 up

to of November, 2014, for which the actual cost has been considered. RInfra-D has

deducted Rs. 22.09 crore from the bills of TPC-G, against which TPC-G has filed a

Petition, the proceedings of which are ongoing.

No projection of energy purchase from TPC-G Unit 6 has been made from December,

2014 onwards in FY 2014-15, nor in FY 2015-16, since RInfra-D expects that all its

balance energy requirement will be met from short-term contracts (bilateral or Power

Exchange). The cost of power purchase from TPC-G Unit 6 during H2 of FY 2014-15 as

submitted by RInfra-D is shown in the Table below:

Table 6-18: Power Purchase from TPC Unit 6 in H2 of FY 2014-15 as submitted by

RInfra-D


Energy Availability (MU) 67.05

Rate of Energy (Rs./kWh) 13.39

Power Purchase Cost (Rs. crore) 89.79

RInfra-D submitted that, in the MYT Order, purchase of power from TPC-G Unit 6 was

not envisaged and the same has resulted purely on account of the inability to bring in

power from outside Mumbai in the peaking months due to the transmission constraints.

RInfra-D submitted that purchase from Unit 6 and the consequent increase in power

purchase cost of more than Rs. 250 crore is on account of force majeure conditions, which

it could not possibly have subverted.


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As regards the operation of TPC-G Unit 6 during occasions of transmission system

constraints, increased demand or outage of other embedded generation in Mumbai, and

the sharing of the generation costs at such times, the Commission, vide its Order dated 19

March, 2015 in Case No. 172 of 2014 (and similarly in Case No. 89 of 2014), has directed

as follows:

"19. The Commission directs all the concerned constituent Licensees to comply

with the methodology, scheduling and other directions given by MSLDC from time

to time for sharing of TPC-G Unit 6 generation and its subsequent commercial

settlement.

20. As regards Energy Charges of TPC-G Unit 6, the Commission directs that the

Energy Charges shall be as approved by the Commission in its Tariff Order dated

5 June, 2013 in Case No. 177 of 2011, with any change on account of revision in

fuel cost recoverable through the Fuel Adjustment Cost mechanism if applicable.

Bills may be revised accordingly. Cost implications on account of changes, if any,

in performance parameters such as Station Heat Rate, auxiliary consumption, etc.

shall be considered by the Commission during the final truing-up process for

TPC-G.

21. The Commission directs that a Committee make recommendations for such a

protocol, which may include resort to idle capacity and on related issues of

apportionment and commercial settlement. The Committee shall be chaired by the

Chairman-cum-Managing Director of the MSETCL as STU, and include

empowered representatives of MSLDC, MSEDCL, BEST, RInfra-D, TPC-D and

TPC-G. The Committee shall submit its report within 3 weeks, following which the

Commission will decide the further course of action.”

During the present proceedings, RInfra-D submitted details of the actual power purchase

from TPC-G Unit-6 for FY 2014-15. The Commission has considered the cost of power

purchase from TPC-G Unit 6 for FY 2014-15, as elaborated in the MTR Order for TPC-G

dated 26 June, 2015 in Case No. 6 of 2015, as shown in the Table below:

Table 6-19: Power Purchase from TPC-G Unit 6 in FY 2014-15 approved by the

Commission

Particulars


Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./kWh)

TPC Unit-6 188.41 252.18 13.38 198.04 266.23 13.44


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6.3.4 WARDHA POWER COMPANY LTD.

RInfra-D submitted that WPCL had filed a Petition in Case No. 39 of 2012 claiming

certain amounts as additional expenses due to ‘Change in Law’. In its Order dated 13

August, 2013, the Commission upheld the contention of RInfra-D that Change in Law is

not applicable with respect to Customs Duty on generation using imported coal. However,

the Commission allowed WPCL’s contention with respect to VAT on secondary fuel

(LDO and HFO).

On its Appeal No. 288 of 2013, the ATE upheld the contention of WPCL that

compensation should be calculated based on the prevalent price of coal. RInfra-D

submitted that the impact of this Judgment, as per WPCL’s submissions to RInfra-D, from

April, 2011 to March, 2014, is Rs. 73.19 crore. However, it is RInfra-D’s contention that

the amount arising from Change in Law as per the ATE Judgment is only Rs. 24 crore.

Accordingly, RInfra-D has paid Rs. 24 crore to WPCL as the additional amount towards

Change in Law, and has included it in the power purchase cost of FY 2014-15. RInfra-D

has deducted capacity charges of Rs. 89.15 crore for the period from April, 2012 to

March, 2014. In its Order dated 6 May, 2014 in Case No. 52 of 2014, the Commission

had prescribed a formula for arriving at the deductible amount, and had directed RInfra-D

and WPCL to mutually decide on the amount of penalty. The Commission also directed

RInfra-D to refund Rs. 89.15 crore in the meantime. RInfra-D submitted that, as per the

Order of the Commission, it has paid Rs. 71 crore to WPCL, after deducting the penalty

of Rs. 15 crore.

RInfra-D submitted that, in view of the above, it has included Rs. 95 crore in the power

purchase cost of FY 2014-15, being the additional payment to WPCL towards Change in

Law and capacity charges (Rs. 24 crore and Rs. 71 crore, respectively), in accordance

with the directions of the ATE and the Commission.


RInfra-D and WPCL have signed Consent Terms before the ATE on 30 December, 2014,

agreeing to the following settlement:

a) Out of the deduction of Rs. 86 crore made by RInfra-D against Capacity Charges,

RInfra-D shall retain Rs. 15 crore and refund the remaining Rs. 71 crore before 15

January, 2015

b) RInfra-D shall pay Rs. 24 crore to WPCL towards Change in Law.


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Hence, the Commission has approved Rs. 95 crore in the power purchase cost of FY

2014-15 as additional payment to WPCL towards Capacity Charges (Rs. 71 crore) and

Change in Law (Rs. 24 crore).


6.3.5.1 Solar Power Procurement

RInfra-D submitted that it has signed an EPA dated 28 March, 2011 for purchase of

energy generated from the 40 MW Solar Power (PV) plant of Dhursar Solar. For

projections for FY 2014-15, RInfra-D has considered actual energy purchase and cost

thereon for the first half of FY 2014-15. For H2 of FY 2014-15, it has considered the

energy availability from Dhursar Solar at the same level as in H2 of FY 2013-14. The

energy availability from Dhursar Solar in FY 2015-16 has been considered at the same

level as that of FY 2014-15.

The Commission has allowed the excess purchase from Dhursar Solar at the highest rate

of Merit Order stack of short-term power purchase, instead of at the preferential tariff.

RInfra-D’s Appeal No. 274 of 2013 on this issue was pending at the time of filing of the

MTR Petition. RInfra-D submitted that, since the contract has already been entered into,

the actual cost thereon is required to be accounted for in power purchase. RInfra-D has

shown power purchase from Dhursar Solar to the extent of meeting the Solar RPO for FY

2014-15 and FY 2015-16 @ Rs. 17.91/kWh, and the additional power as normal power

purchase @ Rs. 17.91 /kWh. The details of estimated purchase of Solar power as

submitted by RInfra-D are as in the Table below:

Table 6-20: Solar RPO Target Vs Estimated Purchase for FY 2014-15 and FY 2015-16

as submitted by RInfra-D

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Power Purchase at G-T (MU) 7,920.15 8,767.22 8,184.07 9,208.08

% Solar RPO 0.50% 0.50% 0.50% 0.50%

Solar RPO (MU) 39.60 43.84 40.92 46.04

Estimated Solar purchase (MU) 39.60 69.61 40.92 69.61

The cost of Solar power purchase for FY 2014-15 as submitted by RInfra-D is

summarized below:


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Table 6-21: Estimated Cost of Solar Power Purchase in FY 2014-15 as submitted by

RInfra-D

Particulars Quantum (MU) Cost (Rs. crore) Rate (Rs./kWh)





The projected cost of Solar power purchase for FY 2015-16 as submitted by RInfra-D is

summarized below:

Table 6-22: Projected Cost of Solar Power Purchase in FY 2015-16 as submitted by

RInfra-D

Particulars Quantum (MU) Cost (Rs. crore) Rate (Rs./kWh)





RInfra-D submitted that, without prejudice to its contentions in Appeal No. 274 of 2013,

even if the Commission permits the additional procurement from Solar sources at the

highest rate in the Merit Order stack of power purchase, the same should be allowed at the

maximum rate of power procurement from any short-term source during the financial

year. For H1 of FY 2014-15, this rate works out to Rs. 7.62/kWh.


During the present proceedings, RInfra-D submitted the quantum of actual Solar power

purchase in FY 2014-15, and that has been considered by the Commission in this Order.

In the MYT Order, the Commission disallowed the cost of Solar Power Purchase in

excess of the RPO since there was no need to procure such costlier Solar power in excess,

which would unnecessarily burden consumers. Accordingly, the Commission had allowed

the cost of purchase of such Solar power in excess of RPO at the highest rate in the Merit

Order stack of short-term power purchase.

As discussed in the previous Sections, the ATE, in its Judgment dated 8 April, 2015, has

upheld the ruling of the Commission disallowing the Solar power purchase by RInfra-D

beyond its RPO requirement.


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As regards the quantum of Solar RPO, the Commission has computed the Solar RPO

requirement at 0.50% of the power purchase approved by the Commission for FY 2014-

15 and FY 2015-16 in this Order.

Accordingly, the Commission has treated the excess Solar power purchase beyond the

requirement of RPO as non-renewable power, and approved its cost at the highest rate in

the Merit Order stack at the short-term power purchase rate of FY 2014-15 and FY 2015-

16. As discussed subsequently in this Order, the highest rate of short-term power purchase

in FY 2014-15 was Rs.3.88 /kWh. Accordingly, the Commission has considered the cost

of the excess Solar power purchase beyond RPO for FY 2014-15 and FY 2015-16 as

Rs.3.88/kWh.


2014-15 and FY 2015-16 as tabulated below:

Table 6-23: Power Procurement from Dhursar Solar in FY 2014-15 approved by the

Commission

Particulars


Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Renewable Solar

(RPO) 39.60 70.91 17.91 43.84 78.51 17.91 44.15 79.07 17.91

Renewable Solar

(Excess over

RPO)

25.78 46.17 17.91 24.37 9.19 3.77

Table 6-24: Power Procurement from Dhursar Solar in FY 2015-16 approved by the

Commission

Particulars


Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Renewable

Solar (RPO) 40.92 73.29 17.91 46.04 82.46 17.91 44.65 79.97 17.91

Renewable

Solar (Excess

over RPO)

23.57 42.22 17.91 23.87 9.00 3.77


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6.3.5.2 Non-Solar Power Procurement

The estimated power purchase quantum from non-Solar sources in FY 2014-15 and in FY

2015-16 as per existing contracts as submitted by RInfra-D is as under:

Table 6-25: Estimated Non-Solar RE Purchase for FY 2014-15 and FY 2015-16 as

submitted by RInfra-D (MU)

Source

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Reliance Innoventures Pvt. Ltd. 90.67 83.10 90.91 83.10

AAA Sons Enterprise 6.80 3.33 6.82 3.33

Jindal Steel and Power Ltd. 31.54 35.39 31.62 35.39


Tembhu Power Private Ltd. 8.00 2.17 8.00 2.17

Reliance Clean Power Ltd. 78.84 80.67 79.06 80.67

Total 226.36 216.24 226.95 216.24

RInfra-D submitted that, for H2 of FY 2014-15, it has considered the energy availability

from renewable sources at the same level as that of H2 of FY 2013-14. For FY 2015-16, it

has been considered at the same level as that of FY 2014-15. The power purchase rates for

the non-Solar sources in FY 2014-15 and FY 2015-16 as submitted by RInfra-D is as

under:

Table 6-26: Power Purchase Rates for Non Solar RE Sources as submitted by RInfra-D

(Rs. /kWh)

Source FY 2014-15 FY 2015-16

Reliance Innoventures Pvt. Ltd. 4.25 4.40

AAA Sons Enterprise 4.25 4.40

Jindal Steel and Power Ltd. 4.25 4.40

Jindal Steel and Power Ltd. 5.07 5.07

Tembhu Power Private Ltd. 4.26 4.26

Reliance Clean Power Ltd. 5.81 5.81

RInfra-D submitted that, considering the above rates and the actual power purchase cost

for H1 of FY 2014-15, the estimated power purchase cost for FY 2014-15 and FY 2015-

16 is as follows:


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Table 6-27: Non-Solar RE Purchase Cost for FY 2014-15 and FY 2015-16 (Rs. crore)

as submitted by RInfra-D

Source

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Reliance Innoventures Pvt. Ltd. 38.53 35.32 40.00 36.57

AAA Sons Enterprise 2.89 1.42 3.00 1.47



Tembhu Power Private Ltd. 3.41 0.92 3.41 0.92

Reliance Clean Power Ltd. 44.70 46.87 44.83 46.87

Total 108.27 105.44 110.49 107.27

The Commission, in its Order dated 6 March, 2014 in Case No.183 of 2013, had directed

RInfra-D to meet the gap in procurement of Mini/Micro Hydel power vis-à-vis the RPO

target on a cumulative basis for FY 2010-11 to FY 2015-16. RInfra-D submitted that its

present Petition has been prepared considering only the existing long-term contracts for

procurement of Non-Solar RE. Since RInfra-D does not have any contract for

procurement of Mini/Micro Hydel power, the same has not been considered. However, it

continues to explore the possibility of procurement of Mini/Micro Hydel power so as to

fulfil its RPO target. RInfra-D submitted that actual procurement from Mini/Micro Hydel

made in future, if any, would be presented when actuals for FY 2014-15 and FY 2015-16

are submitted in future and during RPO compliance proceedings.

RInfra-D submitted that the non-Solar RPO as per the RPO-REC Regulations, 2010 for

FY 2014-15 and FY 2015-16 is worked out as shown below:

Table 6-28: Non Solar RPO Target Vs. Estimated Purchase in FY 2014-15 and in FY

2015-16 as submitted by RInfra-D

Source

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Power Purchase at G-T (MU) 7,920.15 8,767.22 8,184.07 9,208.08

Non-Solar RPO (%) 8.50% 8.50% 8.50% 8.50%

Non Solar obligation (MU) 673.21 745.21 695.65 782.69

Non Solar estimated purchase (MU) 226.35 216.24 226.95 216.24

Gap (MU) – to be met through purchase of

REC 446.86 528.97 468.69 566.45


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RInfra-D submitted that the shortfall in Non-Solar RPO after considering the existing

contracts is estimated to be met through purchase of REC. It shall, however, continue to

explore the possibility of entering into additional long-term contracts for procurement of

Non-Solar RE power. For the purposes of this Petition, it has considered only the existing

contracts, with the balance RPO proposed to be met through purchase of RECs. The REC

cost is considered as Rs. 1.52/kWh in FY 2014-15 and FY 2015-16, as approved by the

Commission in the MYT Order. The cost of RECs estimated in FY 2014-15 and FY

2015-16 as submitted by RInfra-D is as under:

Table 6-29: Estimated Cost of RECs for FY 2014-15 and FY 2015-16 as submitted by

RInfra-D

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Gap (MU) 446.86 528.97 468.69 566.45

Cost of REC (Rs./kWh) 1.52 1.52 1.52 1.52

Total Cost (Rs. crore) 67.92 80.40 71.24 86.10


In the course of these proceedings, RInfra-D submitted details of the actual power

purchase from non-Solar renewable sources in FY 2014-15, which have been considered

by the Commission.

The Commission has computed the quantum of non-Solar RPO for FY 2014-15 and FY

2015-16 at 8.50% of the power purchase approved by it for these years in this Order. The

Commission has considered the cost of non-Solar RECs at the floor price of Rs.1.50

/kWh.

In view of the above, the Commission has approved the non-Solar power purchase for FY

2014-15 and FY 2015-16 as tabulated below:


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Commission

Particulars


Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Non-Solar

Power

Purchase

226.36 108.26 4.78 216.24 105.44 4.88 204.60 100.08 4.89

Non-Solar

REC Purchase 67.92 1.52

80.40 1.52

81.69 1.50

Total 226.36 176.18 7.78 216.24 185.84 8.59 204.60 181.77 8.88


Commission

Particulars


Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantu

m

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quant

um

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Non-Solar

Power

Purchase

226.95 110.49 4.87 216.24 107.27 4.96 204.60 101.73 4.97

Non-Solar

REC Purchase 71.24 1.52 86.10 1.52 83.17 1.50

Total 226.95 181.73 8.01 216.24 193.37 8.94 204.60 184.90 9.04

6.3.6 SHORT-TERM POWER PURCHASE AND SALE OF SURPLUS POWER

6.3.6.1 Actuals for First Half of FY 2014-15

Short-Term Power Purchase and Imbalance Pool Decrement

RInfra-D submitted that, in order to meet its peak load requirements and to manage

variations in load, it procures power from short-term sources through bilateral contracts

and from Power Exchanges. During the first half of FY 2014-15, it has purchased power

under short-term contracts and from Power Exchanges in order to meet the peak load in

summer months. It has also purchased some power from MSEDCL under the existing

Stand-by arrangement. The actual short-term power purchase from different sources and

cost thereof for H1 of FY 2014-15 as submitted by RInfra-D are shown in the Table

below:


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Table 6-32: Short Term Power Purchase for H1 of FY 2014-15 as submitted by RInfra-

D

Source Purchase (MU) Rate (Rs./kWh) Cost (Rs. crore)

IEX 390.78 4.15 162.00

PTC 34.06 2.79 9.50

NVVN 6.46 2.96 1.91

JSWPTC 421.81 3.66 154.18

Manikaran 2.48 4.25 1.06

VIPL Infirm Power (FY 2013-14) 0.00 0.00 0.43

Stand-By Purchase from MSEDCL 23.32 4.02 9.37

Total 878.91 3.85 338.45

RInfra-D submitted that, during the first half of FY 2014-15, as per the provisional FBSM

statements, it has decremented the State Imbalance Pool and paid for the same at the

System Marginal Price, in accordance with the prevailing methodology. Further, it has

received some revenue from the Pool account pertaining to previous years. RInfra-D

submitted that it has netted off that amount from the cost of energy decrement to the Pool.

The details of Pool decrement and the cost thereon as submitted by RInfra-D are shown in

the Table below:

Table 6-33: Imbalance Pool Decrement in H1 of 2014-15 as submitted by RInfra-D


Pool Decrement (MU) 10.00

Cost of Energy Due to Pool Decrement (Rs. crore) 11.00

Revenue pertaining to previous years (Rs. crore) (28.72)

Total Cost (Rs. crore) (17.72)

Rate of Energy from Pool (Rs./kWh) 11.00

Sale of Surplus Power

The actual quantum of surplus power sold in Power Exchanges and the revenue

realization thereon in H1 of FY 2014-15 as submitted by RInfra-D is as shown in the

Table below:

Table 6-34: Surplus Sale in H1 of FY 2014-15 as submitted by RInfra-D


Short Term Sale (MU) 21.51

Rate (Rs./kWh) 3.81

Revenue (Rs. crore) 8.20


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RInfra-D submitted that most of its surplus power is available in the night (off peak)

hours, and it has been making efforts to schedule the surplus power for sale in Power

Exchanges for optimizing the revenue from such sale. Normally, the realization from sale

of surplus power is much lower than the actual realization in H1. The realization in H1

has been higher side mainly due to higher demand as a result of National Elections and

the then impending Assembly Elections in Maharashtra.

6.3.6.2 Estimates for Second Half of FY 14-15

Short-term Power Purchase and Sale of Surplus Power

RInfra-D submitted that, to estimate the purchase and sale of short-term power in the

second half of FY 2014-15, it has forecast the likely Gap / Surplus on an hourly basis,

considering hourly demand forecast and generation schedules as projected in H2 of FY

2014-15. No Stand-by purchase from MSEDCL has been considered in H2 of FY 2014-

15 since it cannot be forecast with any certainty. RInfra-D submitted that no increment /

decrement to the State Pool has been estimated in the second half, as it would be included

in the hourly deficit/(Surplus) as forecast.

RInfra-D had invited Bids for supply of 250 MW (RTC) power from October, 2014 to

March, 2015. The weighted average rate of the quoted Energy Charges in the Bids

received works out to Rs. 4.31/kWh. For estimating the short-term power purchase cost in

H2 of FY 2014-15, it has, therefore, considered a rate of Rs. 4.25/kWh. The quantum and

cost of short-term power projected in H2 of FY 2014-15 as submitted by RInfra-D are as

under:

Table 6-35: Short-Term Power Purchase in H2 of FY 2014-15 as submitted by RInfra-

D


Short Term Purchase (MU) 382.10

Rate (Rs./kWh) 4.25

Cost (Rs. crore) 162.39

RInfra-D submitted that, going forward, it does not expect sale of surplus power to fetch

such higher rates as in H1 of FY 2014-15, since these were mostly the result of elections

and higher summer demand. This is also supported by the average IEX Market Clearing

Price (MCP) for Western Region (WR) of night off-peak (00:00 to 08:00 hours), which

shows a decreasing trend from September to November, 2014.


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RInfra-D submitted that assuming an additional charge of Rs. 0.25/kWh for selling

surplus power at the WR periphery, the rate realized comes down further. Hence, it has

considered the rate of surplus power at Rs. 2.10/kWh for H2 of FY 2014-15. The quantum

of sale and revenue from surplus power sale, projected for H2 of FY 14-15 by RInfra-D,

is as under:

Table 6-36: Surplus Sale in H2 of FY 2014-15 as submitted by RInfra-D


Short Term Purchase (MU) 434.74

Rate (Rs./kWh) 2.10

Revenue (Rs. crore) 91.30

6.3.6.3 Projections of Short-term Power Purchase and Sale of Surplus

Power for FY 2015-16

RInfra-D submitted that, as for H2 of FY 2014-15, for projecting the short-term power

purchase requirement and likely surplus power for FY 2015-16, it has used the projected

hourly demand and generation availability from contracted sources (including DTPS,

VIPL and Renewables) and determined, on an hourly basis, the surplus and gap in energy

terms.

RInfra-D submitted that it has signed short-term power purchase contracts with some

sources for the period from 1 April, 2015 to 10 June, 2015, the weighted average rate of

which comes to Rs. 3.93/kWh. Keeping the remaining part of the year in mind, it has

considered a rate of Rs. 4.00/kWh for short-term power purchase in FY 2015-16.

Regarding the rate of sale of surplus power, RInfra-D submitted that the estimated

difference between the short-term purchase and sale rate in FY 2014-15 is Rs. 1.79 /kWh.

It is considering the same margin in FY 2015-16 also, i.e., the rate of sale of short-term

surplus power is estimated as Rs. 2.21/kWh. The cost and quantum projected for short-

term purchase and the volume and realization projected for sale of surplus power in FY

2015-16 as submitted by RInfra-D are as under:

Table 6-37: Short-Term Power Purchase in FY 2015-16 as submitted by RInfra-D


Short Term Purchase (MU) 631.09 1,527.52

Rate (Rs./kWh) 3.75 4.00

Cost (Rs. crore) 236.92 611.01


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Table 6-38: Surplus Sale in FY 2015-16 as submitted by RInfra-D


Short Term Purchase (MU) 571.94 478.94

Rate (Rs./kWh) 2.35 2.21



RInfra-D has invited Bids for 250 MW RTC power from October, 2014 to March, 2015,

and the weighted average rate of such power has been considered as Rs. 4.25 /kWh. The

Commission asked RInfra-D to submit justification for procuring RTC power when it is

surplus at certain hours of the day and the surplus power is being sold at rates of around

Rs. 2.00/kWh.

RInfra-D submitted that it had invited Bids on RTC basis for this period since bilateral

power buy/sell options are mostly available in the market on RTC and Peak/Off peak

Period basis, and not on time block basis. Based on the weighted average rate of the

received Bids, it had considered a rate of Rs. 4.25/kWh for short-term power purchase in

H2 of FY 2014-15 in its Petition. While the Bids were invited to ascertain market price,

no procurement was made, nor has contracting been done on RTC basis. RInfra-D is

procuring short-term requirements mainly from Power Exchanges based on time-slot-wise

power demand forecast. Most of the surplus power available during certain time-slots is

out of the base load contracts (with DTPS and VPIL) and not out of the short-term

purchase.

RInfra-D submitted the actual short-term power purchase quantum and cost for FY 2014-

15 in the course of the present proceedings. The Commission is of the view that, as and

when RInfra-D invites Bids for short-term power purchase, it should do so only for the

required time-slots. The Commission has considered the actual average rate of power

purchase of Rs. 3.77 per kWh for projecting the cost of power purchase from short-term

sources for FY 2015-16.

The Ministry of Power (MoP), vide Resolution dated 15 May, 2012, has issued

Guidelines for short-term power procurement by Distribution Licensees through tariff-

based competitive bidding under S. 63 of the EA, 2003. In line with the same, the

Commission directs RInfra-D to procure the short-term power over and above the

approved short-term power purchase for FY 2015-16, in case the need arises, through the

competitive bidding route only, in accordance with the above-said Guidelines, except in


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case of power procured from the Power Exchange or under Banking mechanism. In

accordance with the said Resolution, RInfra-D shall have to submit a Petition to the

Commission within two days of signing the PPA, for adoption of Tariff determined

through competitive bidding, in case the quantum of power procured and tariff determined

are higher than the above blanket approval granted by the Commission. Alternatively,

RInfra-D may also approach the Commission for prior approval of such short-term power

purchase in excess of the approved quantum and cost of short-term power purchase, in

case RInfra-D does not procure short-term power through the competitive bidding route.

The energy quantum decremented by RInfra-D into the State Imbalance Pool has been

considered as the balancing figure based on the InSTS loss reported by MSLDC and the

approved Distribution Loss.

Considering the above, the Commission has approved the short-term power purchase for

RInfra-D for FY 2014-15 and FY 2015-16 as shown in the Tables below:

Table 6-39: Power Procurement from Short-Term Sources in FY 2014-15 and FY

2015-16 approved by the Commission

Source

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Purchase (MU) 493.34 1271.07 1464.51 631.09 1527.52 829.44

Cost (Rs. crore) 185.21 483.13 552.47 236.92 611.01 312.89

Rate (Rs./kWh) 3.75 3.80 3.77 3.75 4.00 3.77

The Commission has accepted RInfra-D’s submission regarding the sale of surplus power

through bilateral contracts/Power Exchanges, and has considered the actual sale of surplus

power in FY 2014-15 for FY 2014-15 and FY 2015-16.

Accordingly, the Commission has approved the sale of surplus power for FY 2014-15 and

FY 2015-16 as below:

Table 6-40: Surplus Power Sale in FY 2014-15 and FY 2015-16 approved by the

Commission

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Surplus Energy Sold (MU) (674.58) (456.25) (46.22) (571.94) (478.94) (46.22)


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Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Revenue Realised (Rs.

crore) (158.32) (99.50) (13.29) (134.23) (106.02) (13.29)

Rate (Rs./kWh) 2.35 2.18 2.88 2.35 2.21 2.88

6.3.7 TRANSMISSION CHARGES, STAND-BY CHARGES, AND MSLDC

CHARGES


The Commission had approved Transmission Charges of Rs. 390.27 crore to be paid by

RInfra-D in FY 2014-15 in the MYT Order, which translated to monthly Transmission

Charges of Rs. 32.52 crore. RInfra-D submitted that it has accordingly paid these Charges

from April to August 2014. Subsequently, the Commission, in its suo-motu Order dated

14 August, 2014 in Case No. 123 of 2014, determined revised Transmission Charges of

Rs. 38.36 crore from September, 2014 onwards for FY 2014-15, which RInfra-D has paid

as Transmission Charges in September, 2014. RInfra-D submitted that the total

Transmission Charges paid in H1 of FY 2014-15 are Rs. 200.91 crore, and the Charges

payable in FY 2014-15 and in FY 2015-16 have been considered in accordance with the

Commission’s Order in Case No. 123 of 2014.

Table 6-41: Transmission Charges for FY 2014-15 and FY 2015-16 as submitted by


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition



The Commission has approved the actual Transmission Charges paid by RInfra-D for FY

2014-15, which are in accordance with the applicable Transmission Charges for the

respective periods. For FY 2015-16, the Commission has considered the Transmission

Charges as per its suo-motu InSTS Tariff Order dated 26 June, 2015 in Case No. 57 of

2015.


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Accordingly, the Commission has approved the Transmission Charges for FY 2014-15

and FY 2015-16 as shown in the Table below:

Table 6-42: Transmission Charges for FY 2014-15 and FY 2015-16 approved by the


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Transmission Charges 390.27 431.07 431.07 453.23 505.53 319.32


RInfra-D submitted that the Commission had approved Stand-by Charges payable to

MSEDCL as Rs. 137 crore in FY 2014-15 and FY 2015-16 in the MYT Order, which

translated to monthly Stand-by Charges of Rs. 11.42 crore. The total Stand-by Charge

paid in H1 of FY 2014-15 is Rs. 68.50 crore. RInfra-D submitted that monthly Stand-by

Charges as per the MYT Order will continue to be paid in H2 of FY 2014-15 as well.

However, for FY 2015-16, RInfra-D has considered revised Stand-by Charges in

accordance with the revised Coincident Peak Demand (CPD)/Non-coincident Peak

Demand (NCPD) values approved in Case No. 123 of 2014. RInfra-D has assumed that

the Commission would consider that Order and re-calculate the shares of Stand-by

Charges for each Distribution Licensee for FY 2015-16 in their respective Tariff Orders.

The revised shares, in accordance with the demand ratios approved in Case No. 123 of

2014, as submitted by RInfra-D are as under:

Table 6-43: Revised Shares of Stand-by Charges for FY 2015-16 as submitted by

RInfra-D

Licensee % of Average of

CPD and NCPD

% Share of

each Licensee

Total Stand-

by Charge

(Rs. crore)

Stand-by

Charge for

each

Licensee

(Rs. crore)

RInfra-D 6.37% 35.73%

396.00

141.48

TPC-D 6.60% 37.02% 146.58

BEST 4.86% 27.26% 107.94

RInfra-D submitted that accordingly, total Stand-by Charges for FY 2014-15 and FY

2015-16 would be as under:


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Table 6-44: Stand-by Charges for FY 2014-15 and FY 2015-16 as submitted by RInfra-

D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Stand-by Charges 137.00 137.00 137.00 141.48


The Commission has considered the actual Stand-by Charges paid by RInfra-D for FY

2014-15, which is as per the applicable Orders. For FY 2015-16, the Commission has

considered the Stand-by Charges based on the share of RInfra-D in the CPD and NCPD,

as considered in the InSTS Tariff Order dated 26 June, 2015 in Case No. 57 of 2015.

In view of the above, the Commission has approved the Stand-by Charges for FY 2014-15

and FY 2015-16 as shown in the Table below:

Table 6-45: Stand-by Charges for FY 2014-15 and FY 2015-16 as approved by the


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Stand-by Charges 137.00 137.00 137.00 137.00 141.48 172.11


RInfra-D submitted that the Commission has approved MSLDC charges of Rs. 1.16 crore

to be paid by it in FY 2014-15 in the MYT Order. RInfra-D has, however, paid MSLDC

charges in H1 of FY 2014-15 as per the Order dated 7 March, 2014 in Case No. 178 of

2013, in which the Commission has approved the MSLDC charges payable by

Distribution Licensees for FY 2014-15. RInfra-D submitted that the MSLDC Charges

payable in FY 2015-16 have been estimated as 10% higher than in FY 2014-15.


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Table 6-46: MSLDC Charges for FY 2014-15 and FY 2015-16 as submitted by RInfra-

D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

MSLDC

Charges 1.16 2.04 1.22 2.24


The Commission has considered the MSLDC charges for FY 2014-15 and FY 2015-16 at

the same level, as approved in the Order dated 7 March, 2014 on MSLDC's Budget for

FY 2014-15, since the Order for FY 2015-16 is yet to be issued.

Table 6-47: MSLDC Charges for FY 2014-15 and FY 2015-16 as approved by the


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

MSLDC

Charges 1.16 2.04 2.04 1.22 2.24 2.04

6.3.8 SUMMARY OF POWER PURCHASE

The summary of quantum of power purchase for FY 2014-15 and FY 2015-16 as

submitted by RInfra-D is as shown in the Table below:

Table 6-48: Power Purchase Quantum for FY 2014-15 and FY 2015-16 as submitted by

RInfra-D (MU)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

DTPS 3,787.60 4,032.51 3,798.13 3,802.80

VIPL 4,047.80 3,445.69 4,058.91 4,070.83

TPC Unit 6 0.00 188.41 0.00 0.00

Renewable 265.95 285.85 267.87 285.85

Short term Purchase 493.34 1,271.01 631.09 1,527.52


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Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Surplus Sale (674.58) (456.25) (571.94) (478.94)

Total 7,920.15 8,767.22 8,184.07 9,208.08

The summary of power purchase cost for FY 2014-15 and FY 2015-16 as submitted by

RInfra-D is shown in the Table below:

Table 6-49: Power Purchase Cost for FY 2014-15 and FY 2015-16 as submitted by


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

DTPS 1,400.66 1,464.87 1,449.27 1,626.02

VIPL 1,384.87 2,048.06 1,404.58 1,793.33

TPC Unit 6 0.00 252.18 0.00 0.00

WPCL 0.00 95.00 0.00 0.00

Renewable 179.19 230.12 183.78 231.94

REC 67.92 80.40 71.24 86.10

Short term Purchase 185.21 483.13 236.92 611.01

Surplus Sale (158.32) (99.50) (134.23) (106.02)

Stand by Charges 137.00 137.00 137.00 141.48

MSLDC Charges 1.16 2.04 1.22 2.24


Total 3,587.96 5,124.37 3,803.00 4,891.63

RInfra-D submitted that the difference in power purchase cost in the revised estimates of

FY 2014-15 and FY 2015-16 is on account of the increase in Energy Charges of VIPL,

the higher fixed cost of DTPS due to recovery of past years as per the ATE Judgment, and

purchase of power from TPC-G Unit 6 due to force majeure conditions. The significant

difference in short-term power purchase cost is on account of purchase of short-term

power to meet the demand of consumers shifting back to RInfra-D pursuant to the issue of

MYT Order, which had not envisaged any migration of consumers back to RInfra-D.


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Based on the source-wise approval of power purchase as discussed above, the power

purchase quantum and cost for FY 2014-15 and FY 2015-16 have been approved by the

Commission as shown in the following Tables:

Table 6-50: Power Purchase for FY 2014-15 approved by the Commission (Rs. crore)

Particulars

MYT T.O. RInfra-D Petition Approved in this Order

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Dahanu Thermal

Power Station 3787.60 1400.66 3.70 4032.51 1464.87 3.63 3642.26 1371.20 3.76

Wardha Power

Company

Limited

95.00

95.00

TPC-G Unit-6

188.41 252.18 13.38 198.04 266.23 13.44

VIPL 4047.82 1384.87 3.42 3445.69 2048.06 5.94 3297.70 1444.77 4.38

Solar Including

REC 39.60 70.91 17.91 69.61 124.68 17.91 68.52 88.26 12.88

Non-Solar

including REC 226.36 176.18 7.78 216.24 185.84 8.59 204.60 181.77 8.88

Short Term incl.

banking and

Stand-by

493.34 185.21 3.75 1271.01 483.13 3.80 1464.51 552.47 3.77

Surplus Sale (674.58) (158.32) 2.35 (456.25) (99.50) 2.18 (46.22) (13.29) 2.88

Power

Purchase Cost 7920.15 3059.51 3.86 8767.22 4554.26 5.19 8829.40 3986.41 4.51

Intra-State

Transmission

Charges

390.27

431.07

431.07

MSLDC

Charges 1.16

2.04

2.04

Stand-by

Charges 137.00

137.00

137.00

TOTAL

POWER

PURCHASE

COST

7920.15 3587.95 4.53 8767.22 5124.37 5.84 8829.40 4556.52 5.16


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Table 6-51: Power Purchase for FY 2015-16 as approved by the Commission (Rs.

crore)

Source

FY 2015-16

MYT Order RInfra-D Petition Approved

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Quantum

(MU)

Cost

(Rs.

crore)

Rate

(Rs./

kWh)

Dahanu Thermal

Power Station 3798.13 1449.27 3.82 3802.80 1626.02 4.28 3802.80 1442.26 3.79

VIPL 4058.91 1404.58 3.46 4070.83 1793.33 4.41 4070.83 1678.86 4.12

Solar Including REC 40.92 73.29 17.91 69.61 124.68 17.91 68.52 88.97 12.99

Non-Solar including

REC 226.95 181.73 8.01 216.24 193.37 8.94 204.60 184.90 9.04

Short Term incl.

banking and Stand-by 631.09 236.92 3.75 1527.52 611.01 4.00 829.44 312.89 3.77

Total Sales -

including Pool

settlement

(571.94) (134.23) 2.35 (478.94) (106.02) 2.21 (46.22) (13.29) 2.88

Power Purchase

Cost 8184.07 3211.56 3.92 9208.08 4242.38 4.61 8929.97 3694.60 4.14

Intra-State

Transmission Charges 453.23

505.53

319.32

MSLDC Charges

1.22

2.24

2.04

Stand-by Charges

137.00

141.48

172.11

TOTAL POWER

PURCHASE COST 8184.07 3803.00 4.65 9208.08 4891.63 5.31 8929.97 4188.06 4.69


RInfra-D submitted that the O&M Expenses approved by the Commission in RInfra-D’s

MYT Order for FY 2014-15 and for FY 2015-16 are as under:

Table 6-52: O&M Expenses approved in MYT Order for FY 2014-15 and FY 2015-16


Particulars O&M Expense Less: SCADA Charges

payable by RInfra-T

Net O&M

Expense

FY 2014-15 972.62 (1.46) 971.16

FY 2015-16 1,034.45 (1.59) 1,032.86

In the MYT proceedings, the Commission had considered the actual O&M Expenses for

FY 2012-13 which were presented by RInfra-D net of adjustments on account of SCADA

allocation and Land Usage Charges payable to RInfra-T, and deducted the SCADA


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charges allocated to RInfra-T for FY 2012-13 from the O&M Expenses to arrive at the

approved value of O&M Expenses for FY 2012-13. Thereafter, the Commission escalated

the base level of expenses by 6.15% (for Employee Expenses), 6.83% (for R&M

Expenses) and 6.42% (for A&G Expenses) to forecast the expenses for future years.

RInfra-D submitted that, since the SCADA charges allocable to RInfra-T for the

respective years were deducted from the base level of expenses to arrive at the approved

values of O&M Expenses, the SCADA adjustments were double counted in the base level

of O&M Expenses.

For forecasting the O&M Expenses for FY 2014-15 and FY 2015-16, RInfra-D has

considered the actual O&M Expenses in FY 2013-14 (which includes adjustments on

account of SCADA allocation and Land Usage Charges payable to RInfra-T), and has

applied the 5-year average point to point (September to August) WPI and CPI thereon.

6.4.1 EMPLOYEE EXPENSES

The MYT Order had approved an increase in Employee Expenses for FY 2014-15 and FY

2015-16 of 6.15% escalation over the approved Expenses for FY 2013-14. RInfra-D

submitted that, for estimating the Employee Expenses, it has used an escalation factor of

10.02%, which is the average of point to point inflation in CPI between September and

August of the last 5 years, so as to apply a realistic level of inflation-related escalation

since inflation is uncontrollable for it. This escalation factor has been applied to the actual

Employee Expenses for FY 2013-14 to arrive at the estimated Expenses for FY 2014-15;

thereafter, the estimated Employee Expenses of FY 2014-15 have been escalated by

10.02% to arrive at the estimated Expenses of FY 2015- 16. The estimated Employee

Expenses in FY 2014-15 and for FY 2015-16 as submitted by RInfra-D are as shown

below:

Table 6-53: Employee Expenses for FY 2014-15 and FY 2015-16 as submitted by


Particulars FY 2014-15 FY 2015-16

Employee Expenses 610.06 671.19

6.4.2 A&G EXPENSES

The MYT Order had approved the A&G Expenses for FY 2014-15 and FY 2015-16 by

considering escalation of 6.42% (60% of 6.15%, and 40% of 6.83%) over the approved

A&G Expenses for FY 2013-14. For estimating the A&G Expenses, RInfra-D has used an

escalation factor of 8.24 %, derived from 60% and 40% weightage of the 5-year average


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of point to point inflation in CPI and WPI respectively. This escalation factor is applied to

the actual A&G Expenses for FY 2013-14 to arrive at the estimate for FY 2014-15; and

thereafter, the estimated A&G Expense of FY 2014-15 is escalated by 8.24% to arrive at

the estimate for FY 2015-16. The estimated A&G Expenses for FY 2014-15 and FY

2015-16 as submitted by RInfra-D are as shown below:

Table 6-54: A&G Expenses for FY 2014-15 and FY 2015-16 as submitted by RInfra-D

(Rs. crore)


A&G Expenses 180.69 195.58

6.4.3 REPAIR AND MAINTENANCE EXPENSES

The MYT Order had approved the R&M Expenses for FY 2014-15 and for FY 2015-16

by considering 6.83% escalation over the approved Expenses for FY 2013-14. RInfra-D

submitted that a major portion of R&M Expenses consists of RI Expenses paid to MCGM

for filling up trenches dug up for repairing cables or for clearing cable faults. These RI

charges are included in the Wires Business as they relate to maintenance of distribution

network.

In October, 2013, MCGM increased the RI rates by more than 30%, and these came into

effect from April, 2014. RInfra-D submitted that it had to incur additional RI expenditure

in FY 2014-15 due to this increase. The increase would fall under “Change in Law”,

which is an uncontrollable factor as per Regulation 12.1 of the MYT Regulations, and

RInfra-D contended that it is entitled to the additional burden. RInfra-D submitted that, to

estimate R&M Expenses, it has first determined R&M Expenses of FY 2013-14 after

excluding RI charges, and increased the amount by 5.58% (average point to point

inflation in WPI of last 5 years) to arrive at the forecast of FY 2014-15. The same

escalation factor is applied on estimates of FY 2014-15 to project the expenses for FY

2015-16, without RI charges.

RInfra-D submitted that the actual RI charges incurred in FY 2013-14 were Rs. 63.67

crore. At the beginning of FY 2014-15, it had estimated the likely RI charge at RI rates

notified in FY 2009-10, at Rs 63.35 crore. As the RI rates have increased by more than

30%, the expenditure likely in FY 2014-15 would be Rs. 84.74 crore, i.e. an additional

burden of Rs. 21.40 crore. RInfra-D submitted that it has calculated the R&M Expenses

by adding the estimated RI charges payable to MCGM at revised rates, with the other

R&M Expenses estimates considering inflation. For estimating the R&M Expenses for


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FY 2015-16, both the revised RI charges payable to MCGM and other R&M Expenses

estimated for FY 2014-15 have been escalated by the inflation rate of 5.58%. The

summary of R&M Expenses for FY 2014-15 and for FY 2015-16 as submitted by RInfra-

D are shown in Table below:

Table 6-55: R&M Expenses for FY 2014-15 and FY 2015-16 as submitted by RInfra-D

(Rs. crore)

Particulars FY 2014-15

(H1)

FY 2014-15

(H2)

FY 2014-15

(Total)

FY 2015-

16

Wires-RI Charges 34.68 50.06 84.74 89.47

Wires - R&M Expense

W/o RI Charges 56.73 75.88 132.61 140.01

Supply Business - R&M

Expense 7.00 8.19 15.19 16.04

Net R&M Expense

with RI Charges 98.41 134.13 232.54 245.52

The summary of O&M Expenses for FY 2014-15 and for FY 2015-16 as submitted by

RInfra-D is shown in Table below:

Table 6-56: O&M Expenses for FY 2014-15 and FY 2015-16 as submitted by RInfra-D

(Rs. crore)


MYT Order 971.16 1,032.86

Wires Business


A&G Expenses 107.90 116.79

R&M Expenses 217.35 229.48

Total 686.59 743.81

Supply Business


A&G Expenses 72.79 78.79

R&M Expenses 15.19 16.04

Total 336.71 368.48

Wires+ Supply


A&G Expenses 180.69 195.58

R&M Expenses 232.54 245.52

Total 1,023.29 1,112.29


of 399


The Commission has considered the submission of RInfra-D regarding adjustments on

account of SCADA charges attributable to RInfra-T and Land Usage Charges receivable

from RInfra-T. It has approved the actual expenses from the audited Reconciliation

Statements showing allocation of expenses and incomes between Generation,

Transmission and Distribution business. The adjustments on account of SCADA charges

and Land Usage Charges have been automatically covered in the Commission’s approved

O&M Expenses. For computing O&M Expenses for FY 2014-15 and FY 2015-16, the

Commission has considered the approved O&M Expenses of the respective previous

years as the base.

Employee Expenses

The Commission has approved the Employee Expenses for FY 2014-15 by considering

escalation of 6.15% over the approved figure for FY 2013-14, as considered in the MYT

Order. For FY 2015-16, an escalation rate of 5.72% has been applied over the approved

Expenses for FY 2014-15 by 5.72%, which is the normative annual escalation for O&M

Expenses in the MYT Regulations. The allocation of Employee Expenses between Wires

Business and Supply Business has been considered in the same ratio as projected by

RInfra-D.

Administrative and General Expenses

The Commission has approved the A&G Expenses for FY 2014-15 with escalation of

6.42% over the approved figure for FY 2013-14, as considered in the MYT Order. For FY

2015-16, the Commission has applied escalation of 5.72% over the approved Expenses

for FY 2014-15, which is the normative annual escalation for O&M Expenses in the MYT

Regulations. The allocation of A&G Expenses between Wires Business and Supply

Business has been considered in the same ratio as projected by RInfra-D.

Repair and Maintenance Expenses

The Commission has approved the R&M Expenses for FY 2014-15 with escalation of

6.83% over that approved for FY 2013-14, as in the MYT Order. For FY 2015-16, the

escalation rate is 5.72% over the previous year, as specified in the MYT Regulations. The

Commission has not considered any impact of increase in RI charges at this point in time.

The allocation of R&M Expenses between Wires Business and Supply Business has been

considered in the same ratio as projected by RInfra-D.


of 399

Thus, the Commission has approved the O&M Expenses for FY 2014-15 and FY 2015-16

as summarised in the Table below:

Table 6-57: O&M Expenses for FY 2014-15 approved by the Commission (Rs. crore)



Employee

Expenses 361.34 248.72 610.06 348.63 239.98 588.60

A&G

Expenses 107.90 72.79 180.69 106.09 71.57 177.66

R&M

Expenses 217.35 15.19 232.54 203.36 14.21 217.57

Total

O&M

Expenses

649.01 322.16 971.16 686.59 336.71 1023.29 658.07 325.76 983.83

Table 6-58: O&M Expenses for FY 2015-16 approved by the Commission (Rs. crore)



Employee

Expenses 397.54 273.65 671.19 368.57 253.70 622.27

A&G

Expenses 116.79 78.79 195.58 112.16 75.67 187.82

R&M

Expenses 229.48 16.04 245.52 214.99 15.02 230.01

Total

O&M

Expenses

688.95 343.91 1032.86 743.81 368.48 1112.29 695.72 344.39 1040.11


The MYT Order had approved capitalisation of Rs.416.81 crore and Rs. 490.42 crore for

FY 2014-15 and FY 2015-16, respectively. However, but considering the present business

scenario, RInfra-D has revised the expected DPR capitalisation in FY 2014-15 and FY

2015-16 to Rs. 322.95 crore and 409.12 crore, respectively. The actual capital expenditure

and capitalisation in the Wires Business and Supply Business in H1 of FY 2014-15 and

the estimates for H2 of FY 2014-15 and FY 2015-16 as submitted by RInfra-D are as

under:


of 399

Table 6-59: Capital Expenditure and Capitalisation in FY 2014-15 and FY 2015-16 for

Wires Business and Supply Business as submitted by RInfra-D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

(Projected) H1 (Actuals) H2 (Estimated) Total

(Estimated)

Wires Supply Wires Supply Wires Supply Wires Supply

Capital

Expenditure 94.26 6.65 161.92 29.35 256.19 36.00 369.60 35.52

Capitalisation 79.31 6.65 207.64 29.35 286.95 36.00 373.60 35.52

The actual capital expenditure and capitalisation in H1 of FY 2014-15 and estimates for

H2 of FY 2014-15 and FY 2015-16 as submitted by RInfra-D are as under:

Table 6-60: Capital Expenditure and Capitalisation in FY 2014-15 and in FY 2015-16


Particulars

FY 2014-15 FY 2015-16

(Projected) H1

(Actual)

H2

(Estimated)

Total

(Estimated)

Capital Expenditure 100.91 191.28 292.19 405.12

Capitalisation 85.96 237.00 322.95 409.12

RInfra-D has assumed that the asset class-wise capitalisation in H1 of FY 2014-15 is in

the same ratio as in FY 2013-14, since that of H1 of FY 2014-15 has not been finalized

till now. For H2 of FY 2014-15 and for FY 2015-16 also, RInfra-D has projected the asset

class-wise capitalisation in the same proportion as for FY 2013-14. RInfra-D submitted

that it has calculated the Interest during Construction (IDC) using appropriate interest

rates. The IDC is apportioned to three asset classes of Wires Business, namely Building

and Roads, Plant and Machinery, and Distribution System.

RInfra-D submitted that the capital expenditure planned during FY 2014-15 and FY 2015-

16 is as per approved DPRs taking into account the spill-over from previous year DPR

works.


The Commission has examined the capital expenditure and capitalisation proposed by

RInfra-D vis-a-vis the capex schemes approved by the Commission, and accepts its

projections of capital expenditure and capitalisation for the Wires Business and Supply


of 399

Business for FY 2014-15 and FY 2015-16, except in respect of the DPR scheme of

Distribution Corporate Office (R&D Bldg) which does not have the Commission's in-

principle approval, as tabulated below:

Table 6-61: Capital Expenditure & Capitalisation for FY 2014-15 and FY 2015-16


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Capital Expenditure

Wires Business 256.19 255.89 369.60 369.21

Supply Business 36.00 36.00 35.52 35.52

Total Capital

Expenditure 292.19 291.89 405.12 404.73

Capitalisation

Wires Business 375.47 286.95 286.95 450.10 373.60 373.60

Supply Business 41.34 36.00 36.00 40.32 35.52 35.52

Total Capitalisation 416.81 322.95 322.95 490.42 409.12 409.12

6.6 DEPRECIATION

RInfra-D submitted that Depreciation on assets for FY 2014-15 and for FY 2015-16 has

been calculated in accordance with the rates specified in MYT Regulations. The effect of

retirement of assets likely in future and the corresponding withdrawal of accumulated

Depreciation has been taken into consideration. The Table below shows the Depreciation

calculation for Wires Business for FY 2014-15 and FY 2015-16, as submitted by RInfra-

D.

Table 6-62: Depreciation in FY 2014-15 and FY 2015-16 for Wires Business as


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Opening GFA 4,277.03 4,095.64 4,645.77 4,372.89

Addition 375.47 286.95 450.10 373.60

Retirement 6.73 9.71 6.61 9.71

Closing GFA 4,645.77 4,372.89 5,089.26 4,736.78

Depreciation 198.71 183.06 218.59 191.87


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Depreciation (as % of

average balance) 4.45% 4.32% 4.49% 4.21%

The Table below shows the Depreciation calculation for Supply Business for FY 2014-15

and FY 2015-16 as submitted by RInfra-D.

Table 6-63: Depreciation in FY 2014-15 and FY 2015-16 for Supply Business as


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition MYT Order

RInfra-D

Petition

Opening GFA 564.74 494.56 599.84 530.56

Addition 41.34 36.00 40.32 35.52

Retirement 6.24 0.00 6.16 0.00

Closing GFA 599.84 530.56 634.00 566.08

Depreciation 20.43 19.58 22.40 21.47

Depreciation (as % of

average balance) 3.51% 3.82% 3.63% 3.92%

RInfra-D submitted that the estimated Depreciation on assets is lower than that approved

in the MYT Order on account of lower opening balance of assets (due to lower

capitalisation in earlier years), and revised lower capitalisation going forward into the

Control Period.


The Commission sought the detailed calculations of asset-wise Depreciation in

accordance with the MYT Regulations. RInfra-D submitted that Depreciation for the

assets as on 1

April, 2014 has been calculated in the SAP system, wherein the

Depreciation methodology and rates as per the MYT Regulations, 2011 have been

codified. For the estimated asset addition in FY 2014-15 and in FY 2015-16, it has

calculated the Depreciation by considering the rates as per the MYT Regulations. As

sought by the Commission, RInfra-D confirmed that no asset has been depreciated more

than 90% of gross value of the asset, as per the Regulations.


of 399


opening balance of GFA for Wires Business and Supply Business as approved in the final

truing up of FY 2013-14 in this Order. The Commission has considered asset addition for

FY 2014-15 in line with the approved capitalisation for FY 2013-14. As regards asset

retirement, it has accepted the submission of RInfra-D. From the approved opening GFA,

asset addition and asset retirement, the Commission has approved the closing GFA for FY

2014-15 for the Wires and Supply Business. The same has been considered as the opening

balance of GFA for computation of Depreciation for FY 2015-16.

Accordingly, the Commission has approved Depreciation for Wires Business and Supply

Business for FY 2014-15 and FY 2015-16 as tabulated below:

Table 6-64: Depreciation for Wires Business for FY 2014-15 and FY 2015-16 approved


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

Opening GFA 4277.03 4095.64 4090.11 4645.77 4372.89 4367.35

Addition 375.47 286.95 286.95 450.10 373.60 373.60

Retirement 6.73 9.71 9.71 6.61 9.71 9.71

Closing GFA 4645.77 4372.89 4367.35 5089.26 4736.78 4731.24

Depreciation 198.71 183.06 178.30 218.59 191.87 191.82

Depreciation

(as % of GFA) 4.32% 4.22%

4.21% 4.22%

Table 6-65: Depreciation for Supply Business for FY 2014-15 and FY 2015-16


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

Opening GFA 564.74 494.56 493.98 599.84 530.56 529.97

Addition 41.34 36.00 36.00 40.32 35.52 35.52

Retirement 6.24 0.00 0.00 6.16 0.00 0.00

Closing GFA 599.84 530.56 529.97 634.50 566.08 565.49

Depreciation 20.44 19.58 19.27 22.40 21.47 20.62

Depreciation

(as% of GFA) 3.82% 3.76%

3.92% 3.76%


of 399

6.7 FINANCING PLAN AND INTEREST EXPENSES

RInfra-D submitted that its actual long-term borrowings portfolio includes the NCDs

issued by the Company, secured against the assets of the Mumbai Distribution Business

and used for capital expenditure – both past and current – of that Business. As per the

MYT Regulations, it is entitled to interest on long-term loans based on the weighted

average interest rate of its actual loan portfolio in each financial year. Therefore, for FY

2014-15 and FY 2015-16, it has determined the weighted average interest rate based on

the actual redemption schedule of the NCDs and the accrued interest thereon. RInfra-D

submitted that, thereafter, this interest rate is applied on the normative loan balances

determined considering Depreciation as repayment, in accordance with the Regulations.

Fresh capitalisation beyond actual debt availability in FY 2014-15 and FY 2015-16 is

considered as financed through normative debt, ensuring 70%:30% Debt: Equity ratio as

per the MYT Regulations. The interest charges for FY 2014-15 and for FY 2015-16 as

submitted by RInfra-D are as under:

Table 6-66: Interest on Loans for FY 2014-15 and FY 2015-16 as submitted by RInfra-

D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT Order RInfra-D

Petition MYT Order

RInfra-D

Petition

Wires

Opening Balance 1,373.52 1,257.04 1,437.64 1,259.04

Addition of new loans 262.83 185.06 315.07 245.71

Repayment 198.71 183.06 218.59 191.87

Closing Balance 1,437.64 1,259.04 1,534.11 1,312.87

Interest 123.41 137.09 130.46 150.04

Supply

Opening Balance 172.27 121.39 180.77 127.01


Repayment 20.43 19.58 22.4 21.47

Closing Balance 180.77 127.01 186.6 130.41

Interest 15.5 13.53 16.13 15.03

Wires + Supply

Opening Balance 1,545.79 1,378.43 1,618.41 1,386.05


Repayment 291.15 202.64 240.99 213.34

Closing Balance 1,618.41 1,386.05 1,720.71 1,443.28


of 399

Particulars

FY 2014-15 FY 2015-16

MYT Order RInfra-D

Petition MYT Order

RInfra-D

Petition

Interest 138.91 150.62 146.71 165.08

RInfra-D submitted that the projected increase in interest cost vis-à-vis the MYT Order is

due to taking into account the interest rate of its actual loans. RInfra-D requested the

Commission to recognize the actual borrowings, or approve an interest rate reflective of

market interest rate, for determining the interest on loan capital allowable in the ARR, in

accordance with the ATE Judgment.


As elaborated in earlier Sections, the Commission has considered the refinancing of the

normative loans of previous years with actual loans. Accordingly, the interest rate on debt

for FY 2014-15 and FY 2015-16 has been considered based on the actual loan portfolio of

RInfra-D as on 1 April, 2014. Accordingly, the Commission has considered the weighted

average interest rate for computation of interest on long-term loan for FY 2014-15 and FY

2015-16 as 10.70% for the Wires Business and Supply Business.

The Commission has considered the opening balance of the loan for FY 2014-15 as the

closing balance approved for FY 2013-14; and the opening balance of the loan for FY

2015-16 as equal to the closing balance of FY 2014-15. For assets capitalised in FY 2014-

15, the Commission has considered 70% of the additional asset value as normative debt in

accordance with the MYT Regulations.

Accordingly, the Commission has approved interest on loan for FY 2014-15 and FY

2015-16, as given in the following Table:

Table 6-67: Interest Expenses for FY 2014-15 approved by the Commission (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

Wires Business

Opening Balance 1373.52 1257.04 1254.96 1437.64 1259.04 1261.71

Addition of new

loans 262.83 185.06 185.05 315.07 245.71 245.71

Repayment 198.71 183.06 178.30 218.59 191.87 191.82


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

Closing Balance 1437.64 1259.04 1261.71 1534.12 1312.87 1315.60

Interest 123.41 137.09 134.61 130.46 150.04 137.85

Supply Business

Opening Balance 172.27 121.39 121.02 180.77 127.01 126.94

Addition of new

loans 28.94 25.20 25.20 28.22 24.86 24.86

Repayment 20.43 19.58 19.27 22.40 21.47 20.62

Closing Balance 180.78 127.01 126.94 186.60 130.41 131.19

Interest 15.50 13.53 13.26 16.13 15.03 13.81


RInfra-D submitted that RoE has been determined by applying the rates specified in the

MYT Regulations. Consumer contribution of Rs. 11.29 crore received in H1 of FY 2014-

15 has been reduced from capitalisation in H1 of FY 2014-15 to derive the capitalisation

net of consumer contribution. 30% of this is treated as the equity portion of capitalisation

in H1 of FY 2014-15. In the same manner, equity portion of capitalisation has been

derived for H2 of FY 2014-15 and for FY 2015-16. RInfra-D submitted that consumer

contribution in H2 of FY 2014-15 is assumed to be at the same level of Rs. 11.29 crore as

for H1 of FY 2014-15, and that in FY 2015-16 is assumed at the same level as for FY

2014-15, i.e. Rs.22.59 crore, since RInfra-D does not propose any change in the approved

Schedule of Charges for FY 2015-16.

The RoE for Wires Business as submitted by RInfra-D is as under:

Table 6-68:Return on Equity for FY 2014-15 and FY 2015-16 for Wires Business as


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Regulatory Equity at the beginning

of the year 1,598.77 1,547.73 1,702.63 1,624.13

Capitalisation during the year 375.47 286.95 450.10 373.60

Consumer Contribution and Grants 22.57 22.59 24.83 22.59

Capitalisation net of Consumer 352.90 264.37 425.27 351.01


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Contribution

Equity portion of capitalisation

during the year 103.85 79.31 125.60 105.30

Equity portion of asset retired during

the year 2.02 2.91 1.98 2.91

Regulatory Equity at the end of the

year 1,702.63 1,624.13 1,826.25 1,726.52

Rate of Return (%) 15.50% 15.50% 15.50% 15.50%

Total RoE 255.86 244.35 273.64 259.68

The RoE for Supply Business as submitted by RInfra-D is as under:

Table 6-69: Return on Equity for FY 2014-15 and in FY 2015-16 for Supply Business


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Regulatory Equity at the beginning

of the year 173.74 152.69 184.28 163.49

Capitalisation during the year 31.34 36.00 40.32 35.52

Consumer Contribution and Grants 0.00 0.00 0.00 0.00

Capitalisation net of Consumer

Contribution 31.34 36.00 40.32 35.52

Equity portion of capitalisation

during the year 10.53 10.80 10.25 10.66

Equity portion of asset retired during

the year 1.87 0.00 1.85 0.00

Regulatory Equity at the end of the

year 184.28 163.49 194.52 174.14

Rate of Return (%) 17.50% 17.50% 17.50% 17.50%

Total RoE 31.33 27.37 33.14 29.54

RInfra-D submitted that the reduction in RoE vis-à-vis that approved in the MYT Order is

on account of lower capitalisation of assets.


of 399


To determine the equity eligible for returns as per the MYT Regulations, the Commission

has considered opening equity for FY 2014-15 the same as the closing equity of FY 2013-

14 as approved in this Order. Additional equity has been approved as 30% of the

approved capitalisation in the year after deducting the consumer contribution from the

capitalisation. Further, 30% of asset retirement approved is reduced from the same to

arrive at the amount of equity eligible for returns as per the MYT Regulations.

As regards rate of Return on Equity, the Commission has considered it as 17.5% for

Supply Business and 15.5% for Wires Business, in accordance with the MYT

Regulations.

Accordingly, the RoE approved by the Commission for FY 2014-15 and FY 2015-16 is as

given in the Table below:

Table 6-70: Return on Equity approved by the Commission for Wires Business for FY

2014-15 and FY 2015-16 (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Regulatory Equity at the

beginning of the year 1598.77 1,547.73 1,546.07 1702.63 1,624.13 1,622.46

Capitalisation during

the year 375.47 286.95 286.95 450.10 373.60 373.60

Equity portion of

capitalisation during the

year

103.85 79.31 79.31 125.60 105.30 105.30

Consumer Contribution

and Grants used during

the year for

Capitalisation

22.57 22.59 22.59 24.83 22.59 22.59

Reduction in Equity

Capital on account of

retirement / replacement

of assets

6.73 2.91 2.91 6.61 2.91 2.91

Regulatory Equity at the 1702.63 1,624.13 1,622.46 1828.22 1,726.52 1,724.86


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

end of the year

Total Return on

Regulatory Equity 255.86 244.35 245.56 273.64 259.68 259.42

Table 6-71: Return on Equity approved by the Commission for Supply Business for FY

2014-15 and FY 2015-16 (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Regulatory Equity at

the beginning of the

year

173.74 152.69 152.52 184.28 163.49 163.31

Capitalisation during

the year 41.34 36.00 36.00 40.32 35.52 35.52

Equity portion of

capitalisation during

the year

10.53 10.80 10.80 10.25 10.66 10.66

Regulatory Equity at

the end of the year 184.28 163.49 163.31 194.52 174.14 173.97

Return Computation

-

Return on Regulatory

Equity at the

beginning of the year

30.41 -

32.25

Return on Equity

portion of

capitalisation during

the year

0.92 -

0.90

Total Return on

Regulatory Equity 31.33 27.37 27.64 33.14 29.54 29.51


of 399


RInfra-D submitted that working capital for FY 2014-15 and FY 2015-16 has been

computed in accordance with MYT Regulations. RInfra-D submitted that it has used the

SBAR of 14.75% prevailing as on 1 April, 2014 for calculation of IoWC for both FY

2014-15 and FY 2015-16. IoWC for Wires Business as submitted by RInfra-D is shown in

the Table below:

Table 6-72: Interest on Working Capital for FY 2014-15 and FY 2015-16 for Wires

Business as submitted by RInfra-D (Rs. crore)


One Twelfth of O&M Expenses 57.22 61.98

One Twelfth of the sum of book value of stores, materials and

supplies 62.88 62.88


Distribution Wires at prevailing tariffs 190.85 197.35

Less

Amount of Security Deposit from Distribution System Users 0.00 0.00


Rate of Interest 14.75% 14.75%

Interest on Working Capital 45.86 47.53

IoWC for Supply Business as submitted by RInfra-D is shown in Table below:

Table 6-73: Interest on Working Capital for FY 2014-15 and FY 2015-16 for Supply

Business as submitted by RInfra-D (Rs. crore)


One Twelfth of O&M Expenses 28.06 30.71

One Twelfth of the sum of book value of stores, materials

and supplies 0.00 0.00


Distribution Wires at prevailing tariffs 859.64 925.37

Less:

Amount of Security Deposit from Supply Consumers 386.80 396.08

One month Equivalent of cost of power purchased 304.40 271.55


Rate of Interest 14.75% 14.75%

Interest on Working Capital 28.98 42.55


of 399


The Commission has approved IoWC for RInfra-D's Wires Business and Supply Business

in accordance with Regulation 35.3 and 35.4 of the MYT Regulations.

The Commission has considered 14.75% as the rate for computation for IoWC for FY

2014-15 and FY 2015-16 in accordance with the Regulations.

Accordingly, the IoWC for FY 2014-15 and FY 2015-16 as approved by the Commission

is as given in the Tables below:

Table 6-74: Interest on Working Capital for Wires Business for FY 2014-15 and FY


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

One-twelfth of the amount of

Operations and Maintenance

Expenses

57.22 54.84

61.98 57.98

One-twelfth of the sum of the

book value of stores, materials

and supplies

62.88 62.88

62.88 62.88

Two months of the expected

revenue from charges for use

of Distribution Wires at the

prevailing tariffs

190.85 192.17

197.35 221.76


310.94 309.89

322.21 342.61


14.75% 14.75%

14.75% 14.75%

Interest on Working Capital 27.07 45.86 45.71 29.43 47.53 50.54

Table 6-75: Interest on Working Capital for Supply Business for FY 2014-15 and FY

2015-16 approved by the Commission

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

One-twelfth of the amount

of Operations and

Maintenance Expenses

28.06 27.15

30.71 28.70


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

Two months of the expected

revenue from sale of

electricity at the prevailing

tariffs

859.64 882.96

925.37 761.41

Less:

Amount of Security Deposit

from supply consumers 386.80 386.80

396.08 386.80

One month equivalent of

cost of power purchased 304.40 264.12

271.55 227.36


196.49 259.19

288.45 175.95


14.75% 14.75%

14.75% 14.75%

Interest on Working

Capital (IWC) 63.92* 28.98 38.23 52.78* 42.55 25.95

Note: * Combined IoWC and Interest on Consumers' Security Deposit

6.10 INTEREST ON CONSUMERS' SECURITY DEPOSIT

RInfra-D submitted that the CSD available with it as on 30 September, 2014 (mentioned

as 2015 in the Petition) is Rs. 382.21 crore. RInfra-D has provided interest on CSD

considering the Bank Rate, as per Regulation 35.4 (c). The Bank Rate in H1 of FY 2014-

15 has been 9.5%. RInfra-D submitted that interest on CSD has been provided

accordingly. For H2 of FY 2014-15 and for FY 2015-16, it has assumed that CSD would

grow by 1.41%, which is the 2 year CAGR in sales. Interest on CSD as calculated by

considering 9% Bank Rate, as submitted by RInfra-D, is shown below:

Table 6-76: Interest on Consumers' Security Deposit in FY 2014-15 and in FY 2015-16



Value of Consumer Security Deposit 386.80 396.08

Interest Rate (%) 9.00% 9.00%

Interest on CSD 28.92 35.65


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The summary of IoWC and interest on CSD for FY 2014-15 and FY 2015-16 for Wires

Business and Supply Business, as submitted by RInfra-D are shown in the Table below:

Table 6-77: Interest on Working Capital and on Security Deposit for FY 2014-15 and

FY 2015-16 as submitted by RInfra-D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Supply Business 63.84 57.90 52.69 78.19

Wires Business 27.07 45.86 29.43 47.53

Total 90.99* 103.76 82.21* 125.72

Note: *The Commission has incorporated the corrected figures which were erroneously

submitted as 90.91 and 82.12 by RInfra-D in its MTR Petition.


The Commission has considered the CSD as projected by RInfra-D and approved the

interest thereon for FY 2014-15 and FY 2015-16 for the Supply Business, by considering

the Bank Rate as 9% and 8.75% for FY 2014-15 and FY 2015-16, respectively, as shown

in the Table below:

Table 6-78: Interest on Working Capital and CSD for Supply Business for FY 2014-15

and FY 2015-16 approved by the Commission (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order Total

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

Interest on Working

Capital 28.98 38.23

42.55 25.95

Interest on Security

Deposit 28.92 28.92

35.65 33.84

Interest on Working

Capital of Supply

+Interest on CSD

90.99 57.90 67.15 82.21 78.19 59.80


RInfra-D has made a provision of Rs. 6.98 crore towards bad and doubtful debts for H1 of

FY 2014-15 in its accounts, and included it in the ARR for H1 of FY 2014-15. RInfra-D

submitted that it expects the same level of provision in H2 of FY 2014-15 and has

included it in the ARR for H2 of FY 2014-15. For FY 2015-16, it expects the provision


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for bad debts at the same level as for FY 2014-15; therefore, provision for bad debts of

Rs. 13.96 crore has been included in the ARR for FY 2015-16. RInfra-D submitted that

the MYT Regulations permit provision for bad debts with a ceiling of 1.5% of

receivables, but it cannot project debtors (receivables) for FY 2014-15 or FY 2015-16. In

view of increasing sales and revenue, the debtors would likely increase. Therefore, Rs.

13.96 crore as provision for bad debts is a reasonable estimate for these two years.


The Commission has allowed the provision for bad and doubtful debts for FY 2014-15

and FY 2015-16 at the same level as approved for FY 2013-14 in this Order, as shown in

the following Table:

Table 6-79: Provision for Bad and Doubtful Debts for FY 2014-15 and FY 2015-16


Particulars

FY 2014-15 FY 2015-16

RInfra-D

Petition

Approved

in this

Order

RInfra-D

Petition

Approved

in this

Order

Provision for bad and doubtful

debts for Wires Business 2.65 2.90 2.65 2.90

Provision for bad and doubtful

debts for Supply Business 11.31 9.56 11.31 9.56

Total 13.96 12.45 13.96 12.45


RInfra-D submitted that, in accordance with Regulation 36.1 of MYT Regulations, it has

calculated the contribution to Contingency Reserves for Wires Business and Supply

Business at 0.25% of their opening GFA. The Table below summarises the contribution to

Contingency Reserve for Wires Business for FY 2014-15 and FY 2015-16 as submitted

by RInfra-D.


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Table 6-80: Contribution to Contingency Reserve in FY 2014-15 and in FY 2015-16 for

Wires Business as submitted by RInfra-D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Opening GFA 4277.03* 4,095.64 4645.77* 4,372.89

% Contribution 0.25% 0.25% 0.25% 0.25%


Note: *The Commission has mentioned the corrected values, which were erroneously mentioned

by RInfra-D as Rs. 4,317.42 crore for FY 2014-15 and Rs. 4,762.90 crore for FY 2015-16.

The Table below gives summarises the contribution to Contingency Reserve for Supply

Business for FY 2014-15 and FY 2015-16, as submitted by RInfra-D.

Table 6-81: Contribution to Contingency Reserve in FY 2014-15 and in FY 2015-16 for

Supply Business as submitted by RInfra-D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Opening GFA 564.74* 494.56 599.84* 530.56

% Contribution 0.25% 0.25% 0.25% 0.25%


Note: *The Commission has mentioned the corrected values which were erroneously mentioned

by RInfra-D as Rs. 565.02 crore for FY 2014-15 and Rs. 600.24 crore for FY 2015-16


As per Regulation 36 of MYT Regulations, the provision for Contingency Reserves for a

year shall be between 0.25% and 0.50% of the original cost of fixed assets. The

Commission has approved the provision for Contingency Reserves for Wires Business

and Supply Business for FY 2014-15 and FY 2015-16 at 0.25% of the approved value of

the opening GFA for respective Businesses.

Accordingly, the Commission has approved the contribution to Contingency Reserves for

FY 2014-15 and FY 2015-16 as shown in the following Table:


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Table 6-82: Contribution to Contingency Reserves for FY 2014-15 and FY 2015-16


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved in

this Order

Wires Business

Opening Balance of

GFA 4277.03 4095.64 4090.11 4645.77 4372.89 4367.35

% Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%


Supply Business

Opening Balance of

GFA 564.74 494.56 493.98 599.84 530.56 529.97

% Contribution 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%


Total Contribution

to Contingency

Reserves

12.10 11.48 11.46 13.11 12.26 12.24

6.13 AMOUNT PAYABLE TOWARDS TPC-G'S PAST REVENUE GAPS

RInfra-D's share of TPC-G's past Revenue Gap/(Surplus) including the impact of ATE

Judgments on TPC-G, have been considered as approved by the Commission in its Order

dated 26 June, 2015 in Case No. 6 of 2015, as Rs. 93.43 crore.

6.14 INCOME TAX

RInfra-D has projected the Income Tax for FY 2014-15 based on actual payable Income

Tax of FY 2013-14 of RInfra’s Distribution business segment on a stand-alone basis in

accordance with Regulation 34.1. Accordingly, the Income Tax for FY 2014-15 and FY

2015-16 is considered at the same level as the actual Income Tax payable for FY 2013-14

and is shown in the Table below:


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Table 6-83: Income Tax for FY 2014-15 and FY 2015-16 as submitted by RInfra-D (Rs.

crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Income Tax-Wires

29.39

29.39

Income Tax- Supply

88.14

88.14

Total 0.00 117.52 0.00 117.52


Regulation 34.1 of MYT Regulations specifies as follows:

“34.1 The Commission in its MYT Order shall provisionally approve Income Tax

payable for each year of the Control Period, if any, based on the actual income

tax paid on permissible return as allowed by the Commission relating to

electricity business regulated by the Commission, as per latest Audited Accounts

available for the applicant, subject to prudence check.”

For FY 2013-14, the Commission has computed the Income Tax payable by RInfra-D as

Nil, after computing it on PBT basis, in accordance with the ATE Judgment. The nil tax

payment is primarily on account of the carry-forward losses of RInfra-D. Some carry

forward losses are available for FY 2014-15 also, as shown in the Income Tax

computation for FY 2013-14. Hence, for FY 2014-15, the Commission has considered

Income Tax payable as nil for the purposes of this Order. The same shall be trued up on

PBT basis once the details for the year are available. For FY 2015-16, however, as RInfra-

D's income will increase due to the tariff revision being approved in this Order, the

Commission has accepted its projection of Income Tax.

Accordingly, the Commission has approved the Income Tax for FY 2014-15 and FY

2015-16 as shown in the Table below:

Table 6-84: Income Tax for FY 2014-15 and FY 2015-16 approved by the Commission

(Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Income Tax-Wires

29.39 0.00

29.39 29.39

Income Tax- Supply

88.14 0.00

88.14 88.14


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Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Total 0.00 117.52 0.00 0.00 117.52 117.52


RInfra-D submitted that it has considered the Land Usage Charges receivable from

RInfra-T and rent from Devidas Lane office as Non-Tariff Income without prejudice to its

contentions in Appeal No. 274 of 2013.

6.15.1 REBATE ON POWER PURCHASE COST

RInfra-D submitted that rebate on power purchase cost availed in H1 of FY 2014-15 has

been included in the Non-Tariff Income as per the Commission’s Order dated 15 June,

2012 (Case No. 180 of 2011). The rebate in H2 of FY 2014-15 has been considered as the

same as in H1 of FY 2014-15.

6.15.2 INTEREST ON CONTINGENCY RESERVE INVESTMENTS

RInfra-D submitted that it has used the weighted average rate of interest derived for FY

2013-14, based on the Contingency Reserve investments in FY 2013-14 (as per Section

12(A)(d) of the Annual Accounts for FY 2013-14), for calculating the interest on

Contingency Reserves for FY 2014-15 and for FY 2015-16.

6.15.3 LAND USAGE CHARGES

RInfra-D submitted that the rental payable and receivable between RInfra-D and RInfra-T

is accounted for as per the arrangement formalised in the MoM dated 15 March, 2013.

According to those terms, the Land usage charge receivable from RInfra-T for FY 2014-

15 and FY 2015-16, as submitted by RInfra-D, are as shown in the Table below:

Table 6-85: Land Usage Charges in FY 2014-15 and in FY 2015-16 as submitted by



Land Usage Charges 3.68 3.86


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RInfra-D submitted that Land Usage Charges receivable from RInfra-T have been

included in Non Tariff Income of Wires Business only, and other components of Non-

Tariff Income in H2 of FY 2014-15 have been kept at the same level as those in H1 of FY

2014-15.

6.15.4 RENT FROM DEVIDAS LANE OFFICE

RInfra-D submitted that the rental for the use of the Devidas Lane Office by RInfra

Corporate is governed by the MoM dated 25 October, 2011, as per which the rents

receivable by RInfra-D in FY 2014-15 and in FY 2015-16 are as under:

Table 6-86: Rent from Devidas Lane Office in FY 2014-15 and in FY 2015-16 as



Area occupied by Corporate business (Sq. ft) 53,089 53,089

Rate (Rs./Sq. ft) 141.17 155.29

Rental income from Devidas Lane Office (Rs. crore) 8.99 9.89

RInfra-D submitted that the consideration of rental from Devidas Lane Office in Non-

Tariff Income as against Income from Other Business is without prejudice to its

contentions in Appeal No 274 of 2013. Other components of Non-Tariff Income of FY

2015-16 have been estimated by escalating those components of FY 2014-15 by 5%.

The Table below shows the details of Non-Tariff Income for Wires Business for FY

2014-15 and FY 2015-16, as submitted by RInfra-D.

Table 6-87: Non Tariff Income in FY 2014-15 and in FY 2015-16 for Wires Business as



Approved in MYT Order 24.20 26.23

Rents 0.98 1.03

Other/Miscellaneous receipts 8.26 8.67

Interest on Contingency Reserve Investments 5.59 6.43

Interest on Other Investments 0.08 0.08

Interest on staff loans and Advances 1.01 1.06

Sale of Scrap 4.77 5.01

Liabilities no longer required written off 15.74 16.52

Land Usage Charges 3.68 3.86


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Rent from Devidas Lane office 8.99 9.89

Total 49.10 52.56

The Table below shows the details of Non-Tariff Income for Supply Business for FY

2014-15 and FY 2015-16, as submitted by RInfra-D.

Table 6-88: Non Tariff Income in FY 2014-15 and in FY 2015-16 for Supply Business



Approved in MYT Order 183.44 198.29

Customer Charges 1.54 1.62

Other/Miscellaneous receipts 50.54 53.07

Interest on Contingency Reserve Investments 0.88 0.98

Delayed Payment Charges 40.45 42.47

Interest on Delayed Payment 15.87 16.67

Recovery from theft of power 16.06 16.86

Interest on staff loans and Advances 0.95 1.00

Rebate on power purchase 6.65 6.98

Connection / Reconnection Fees 4.27 4.49

Burnt Meter Recovery 1.76 1.85

Bad Debts Recovered 0.14 0.15

Total 139.11 146.13



T and rental income from Devidas Lane Office as part of Non-Tariff Income. Against this,

RInfra-D had filed an Appeal in Case No. 274 of 2013 before the ATE.

During the present proceedings, the ATE has issued its Judgment dated 8 April, 2015. The

relevant ATE rulings have been discussed in the previous Section on the impact of ATE

Judgments. The ATE has ruled that the rental income received from RInfra-T shall be a

part of Non-Tariff Income; however, income from the Devidas Lane Office has to be

considered as income from non-regulated business.

Accordingly, the Commission has considered the rental income from RInfra-T as Non-

Tariff Income. RInfra-D submitted its working of the income from the Devidas Lane


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building by removing it from Non-Tariff Income, and considering one third of it as

Income from Other Business in the Wires ARR. Income from the other sources of Non-

Tariff Income for the Wires Business has been accepted as projected by RInfra-D for FY

2014-15 and FY 2015-16.

The issue of rental income from the Santa Cruz land has been discussed in detail in the

Section on Impact of ATE Judgments. For the purpose of this Order, the Commission has

not considered any amount against rental income from the Santa Cruz land for FY 2013-

14 and onwards.

The Commission observed that there is an increase of 12% in the Non-Tariff Income of

the Supply Business for FY 2013-14 over that of FY 2012-13, as submitted by RInfra-D.

Further, RInfra-D has estimated the Non-Tariff Income for FY 2014-15 and FY 2015-16

considering an increase of 5%. However, the increase considered in the MYT Order was

10%. In view of the above, the Commission has applied an escalation of 10% over the

Non-Tariff Income of FY 2013-14 and FY 2014-15 for approving the Non-Tariff Income

for FY 2014-15 and FY 2015-16, respectively, of the Supply Business as shown in the

Table below:

Table 6-89: Non Tariff Income for FY 2014-15 and FY 2015-16 approved by the


Non-tariff

Income

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Wires Business 24.20 49.10 40.11 26.23 52.56 44.21

Supply

Business 183.44 139.11 169.72 198.29 146.13 186.73

Total 207.64 188.21 209.83 224.52 198.69 230.94


RInfra-D submitted that it has included the actual rental income from RCom (BTS

towers) and actual income from advertisement kiosks in H1 of FY 2014-15 as Income

from Other Business. RInfra-D has kept these two components in H2 of FY 2014-15 at

the same level as for H1 of that year. For FY 2015-16, these two components of Income

from Other Business have been kept at the same level as for FY 2014-15. RInfra-D

submitted that a portion of income from rental of sub-station rooftops for BTS towers is

being accounted for under RInfra-T from FY 2013-14 onwards, as the space actually


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belonged to RInfra-T and is included in its asset base. RInfra-D has considered one third

of the Income from Other Business net of tax for reduction from ARR. The summary of

Income from Other Business for FY 2014-15 and for FY 2015-16 as submitted by RInfra-

D is shown in the Table below:

Table 6-90: Income from Other Business in FY 2014-15 and FY 2015-16 as submitted


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition


1.26

1.21

1.68

1.21


of Kiosks 0.12 0.12

Total 1.26 1.33 1.68 1.33

The summary of Income from Other Business for FY 2014-15 and for FY 2015-16

considered (1/3rd of total) for reduction in the ARR is as shown in Table below:

Table 6-91: Income from Other Business considered in ARR in FY 2014-15 and FY


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition


0.42

0.40

0.56

0.40


of Kiosks 0.04 0.04

Total 0.42 0.44 0.56 0.44


As discussed in Section 3 of this Order, in its Judgment dated 8 April, 2015, the ATE has

held that the rental income from the Devidas Lane office given to RInfra’s Corporate

office should be considered as Income from Other Business, and only one-third of it

should be deducted from the ARR in determining the Wheeling Charges of the Wires

Business of RInfra-D. The Commission has treated the Rental Income from the Devidas

Lane Office accordingly.


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As regards the rental income from RCom towers and income from advertisement kiosks,

the Commission has accepted the submission of RInfra-D for FY 2014-15, and considered

it as approved for FY 2015-16. Accordingly, the Income from Other Business for FY

2014-15 and FY 2015-16 as approved by the Commission is given in the Table below:

Table 6-92: Income from Other Business for FY 2014-15 and FY 2015-16 approved by


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Rental Income from

RCom Towers 0.40 0.45

0.40 0.45

Advertisement Kiosks

0.04 0.03

0.04 0.03

Rent of Devidas Lane

office 3.00

3.30

Total 0.42 0.44 3.48 0.56 0.44 3.78

6.16.1 INTEREST ON FAC

RInfra-D submitted that, in the truing up of FY 2012-13 and FY 2013-14, it has claimed

the interest portion of FAC billed to consumers, as the FAC is included in the revenue for

the corresponding years, and would mean returning back to the consumers the interest

collected from them. For the same reason, RInfra-D submitted that the carrying cost on

FAC billed to consumers from April to September 2014 also needs to be included in the

ARR for H1 of FY 2014-15, as it is included in the revenue billed to consumers in that

period. RInfra-D has therefore included Rs. 3.14 crore of carrying cost on FAC in the

ARR for H1 of FY 2014-15. No estimation is made for the second half of FY 2014-15

and FY 2015-16. RInfra-D requested the Commission to approve this cost in the ARR.


As elaborated in Section 5 of this Order, the Commission is of the view that the FAC

formula already provides for interest due to its delayed recovery. Moreover, the

Commission has already allowed the normative IoWC, which is RInfra-D's legitimate

claim, and has hence disallowed the interest of Rs. 3.14 Crore on FAC recovery claimed

by RInfra-D for FY 2014-15.


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6.17 PROVISIONAL TRUING UP OF FY 2014-15 AND REVISED ARR FOR FY

2015-16

RInfra-D has provided the summary of the revised ARR of FY 2014-15 and FY 2015-16

vis-a-vis that approved in the MYT Order, as given below.

Table 6-93: ARR for Wires Business for FY 2014-15 and FY 2015-16 as submitted by


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

O&M Expenses 649.01 686.59 37.58 688.95 743.81 54.86

Depreciation 198.71 183.06 (15.65) 218.59 191.87 (26.72)

Interest on Long term

Loan Capital 123.41 137.09 13.68 130.46 150.04 19.58

Interest on Working

Capital and on

consumer Security

Deposits

27.07 45.86 18.79 29.43 47.53 18.10

Provisioning for Bad

and Doubtful Debts 0.00 2.65 2.65 0.00 2.65 2.65

Other Expenses 0.00 0.00 0.00 0.00 0.00 0.00

Income Tax 0.00 29.39 29.39 0.00 29.39 29.39

Contribution to

contingency

reserves

10.69 10.24 (0.45) 11.61 10.93 (0.68)

Total Revenue

Expenditure 1,008.89 1,094.87 85.98 1,079.05 1,176.22 97.19

Return on Equity

Capital 255.86 244.35 (11.51) 273.64 259.68 (13.96)

Aggregate Revenue

Requirement 1,264.75 1,339.22 74.47 1,352.69 1,435.90 83.23

Less: Non Tariff

Income 24.20 49.10 24.90 26.23 52.56 26.33

Less: Income from

Other Business 0.42 0.44 0.02 0.56 0.44 (0.12)


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Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

Net Aggregate

Revenue

Requirement

1,240.13 1,289.68 49.55 1,325.90 1,382.90 57.02

RInfra-D submitted that the ARR for the Wires Business for FY 2014-15 and FY 2015-16

is very similar to the approved forecast as per the MYT Order. The difference is mainly

due to Income Tax being considered as per the payable Income Tax of the last financial

year, in accordance with the MYT Regulations, and the differences in O&M cost due to

revision in RI rates by MCGM and the revised forecast of inflation.

The following Table gives the summary of the ARR for the Supply Business as submitted

by RInfra-D for FY 2014-15 and for FY 2015-16.

Table 6-94: ARR for Supply Business in FY 2014-15 and in FY 2015-16 as submitted


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

Power Purchase

Expenses 3,197.69 4,693.30 1,495.61 3,349.77 4,386.10 1,036.33

O&M Expenses 322.16 336.71 14.55 343.91 368.48 24.57

Depreciation 20.43 19.58 (0.85) 22.40 21.47 (0.93)

Interest on Long Term

Loan Capital 15.50 13.53 (1.97) 16.13 15.03 (1.10)

Interest on Working

Capital and on CSD 63.84 57.90 (5.94) 52.69 78.19 25.50



Other Expenses 0.00 0.00 0.00 0.00 0.00 0.00

Income Tax 0.00 88.14 88.14 0.00 88.14 88.14


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

Transmission Charges -

intra- State 390.27 431.07 40.80 453.23 505.53 52.30

Contribution to

Contingency Reserves 1.41 1.24 (0.17) 1.50 1.33 (0.17)

Total Revenue

Expenditure 4,011.30 5,652.77 1,641.47 4,239.63 5,475.57 1,235.94

Return on Equity

Capital 31.33 27.37 (3.96) 33.14 29.54 (3.60)

Aggregate Revenue

Requirement 4,042.63 5,680.13 1,637.50 4,272.77 5,505.11 1,232.34

Less: Non Tariff

Income 183.44 139.11 (44.33) 198.29 146.13 (52.16)

Add: Interest on FAC 0.00 3.14 3.14 0.00 0.00 0.00

Net Aggregate

Revenue Requirement 3,859.19 5,544.16 1,684.97 4,074.48 5,358.99 1,284.51

The following Table summarises the ARR for both Wires Business and Supply Business

for FY 2014-15 and FY 2015-16, as submitted by RInfra-D.

Table 6-95: ARR for Wires Business and Supply Business in FY 2014-15 and FY 2015-

16 as submitted by RInfra-D (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

Power Purchase

Expenses 3,197.69 4,693.30 1,495.61 3,349.77 4,386.10 1,036.33

O&M Expenses 971.17 1,023.29 52.12 1,032.86 1,112.29 79.43

Depreciation 219.14 202.64 (16.50) 240.99 213.34 (27.65)

Interest on Long Term

Loan Capital 138.91 150.62 11.71 146.59 165.08 18.49

Interest on Working 90.91 103.76 12.85 82.12 125.72 43.60


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

MYT

Order

RInfra-D

Petition

Difference

(RInfra-D

Petition -

Order)

Capital and on CSD



Other Expenses 0.00 0.00 0.00 0.00 0.00 0.00

Income Tax 0.00 117.52 117.52 0.00 117.52 117.52


intra- State 390.27 431.07 40.80 453.23 505.53 52.30

Contribution to

Contingency Reserves 12.10 11.48 (0.62) 13.11 12.26 (0.85)

Total Revenue

Expenditure 5,020.19 6,747.64 1,727.45 5,318.68 6,651.80 1,333.13

Return on Equity

Capital 287.19 271.72 (15.47) 306.78 289.22 (17.56)

Aggregate Revenue

Requirement 5,307.38 7,019.36 1,711.98 5,625.46 6,941.01 1,315.56

Less: Non Tariff

Income 207.64 188.21 (19.43) 224.52 198.69 (25.83)

Less: Income from

Other Business 0.42 0.44 0.02 0.56 0.44 (0.12)

Add: Interest on FAC 0.00 3.14 3.14 0.00 0.00 0.00

Net Aggregate

Revenue Requirement 5,099.32 6,833.84 1,734.52 5,400.38 6,741.89 1,341.52


Based on the components as approved in the above paragraphs, the Commission has

approved the ARR for Wires Business and Supply Business for FY 2014-15 and FY

2015-16 as follows:


of 399

Table 6-96: ARR for Wires Business for FY 2014-15 and FY 2015-16 approved by the


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Operation & Maintenance

Expenses 649.01 686.59 658.07 688.95 743.81 695.72

Depreciation 198.71 183.06 178.30 218.59 191.87 191.82

Interest on Long-term Loan

Capital 123.41 137.09 134.61 130.46 150.04 137.85

Interest on Working Capital

and on CSD 27.07 45.86 45.71 29.43 47.53 50.54

Provisioning for Bad &

Doubtful Debts - 2.65 2.90 - 2.65 2.90

Income Tax - 29.39 - - 29.39 29.39

Contribution to

Contingency Reserves 10.69 10.24 10.23 11.61 10.93 10.92

Total Revenue

Expenditure 1,008.89 1,094.87 1,029.81 1,079.05 1,176.22 1,119.12

Return on Equity Capital 255.86 244.35 245.56 273.64 259.68 259.42

Aggregate Revenue

Requirement 1,264.75 1,339.22 1,275.37 1,352.69 1,435.90 1,378.53

Less: Non Tariff Income 24.20 49.10 40.11 26.23 52.56 44.21

Less: Income from Other

Business 0.42 0.44 3.48 0.56 0.44 3.78

Net Aggregate Revenue

Requirement 1,240.13 1,289.68 1,231.78 1,325.90 1,382.90 1,330.54

Table 6-97: ARR for Supply Business for FY 2014-15 and FY 2015-16 approved by the


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Power Purchase Expenses

(including inter-State

Transmission Charges)

3,197.69 4,693.30 4,125.45 3,349.77 4,386.10 3,868.74


Expenses 322.16 336.71 325.76 343.91 368.48 344.39

Depreciation 20.43 19.58 19.27 22.40 21.47 20.62


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order


Capital 15.50 13.53 13.26 16.13 15.03 13.81


and on consumer Security

Deposits

63.84 57.90 67.15 52.69 78.19 59.80


Doubtful Debts - 11.31 9.56 - 11.31 9.56

Income Tax - 88.14 - - 88.14 88.14


intra-State 390.27 431.07 431.07 453.23 505.53 319.32

Contribution to Contingency

Reserves 1.41 1.24 1.23 1.50 1.33 1.32

Total Revenue

Expenditure 4,011.30 5,652.77 4,992.75 4,239.63 5,475.57 4,725.70

Return on Equity Capital 31.33 27.37 27.64 33.14 29.54 29.51 Aggregate Revenue

Requirement 4,042.63 5,680.13 5,020.38 4,272.77 5,505.12 4,755.21


Add: Interest on FAC

3.14 0.00

-

Aggregate Revenue

Requirement from Retail

Supply Tariff

3,859.19 5,544.16 4,850.66 4,074.48 5,358.99 4,568.48

Table 6-98: Combined ARR for Wires Business and Supply Business for FY 2014-15

and FY 2015-16 approved by the Commission (Rs. crore)

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Power Purchase Expenses

(including Inter-State

Transmission Charges)

3,197.69 4,693.30 4,125.45 3,349.77 4,386.10 3,868.74


Expenses 971.17 1,023.29 983.83 1,032.86 1,112.29 1,040.11

Depreciation 219.14 202.64 197.57 240.99 213.34 212.44


Capital 138.91 150.62 147.87 146.59 165.08 151.66


of 399

Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved in

this Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order


and on consumer Security

Deposits

90.91 103.76 112.85 82.12 125.72 110.33


Doubtful Debts - 13.96 12.45 - 13.96 12.45

Income Tax - 117.52 - - 117.52 117.52


Intra-State 390.27 431.07 431.07 453.23 505.53 319.32

Contribution to

Contingency Reserves 12.10 11.48 11.46 13.11 12.26 12.24

Total Revenue

Expenditure 5,020.19 6,747.64 6,022.56 5,318.68 6,651.80 5,844.82

Return on Equity Capital 287.19 271.72 273.20 306.78 289.22 288.93

Aggregate Revenue

Requirement 5,307.38 7,019.36 6,295.75 5,625.46 6,941.01 6,133.75


Less: Income from Other

Business 0.42 0.44 3.48 0.56 0.44 3.78

Add: Interest on FAC

3.14 0.00


Requirement 5,099.32 6,833.84 6,082.44 5,400.38 6,741.89 5,899.02

The ARR approved for FY 2014-15 and FY 2015-16 is different from that submitted by

RInfra-D due to the following reasons:

g) Reduction in Power Purchase Expenses.

h) Reduction in approved O&M Expenses.

i) Reduction in Income Tax approved for FY 2014-15.

j) Reduction in InSTS Transmission Charges.

k) Increase in Non-Tariff Income and Income from Other Business.


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6.18 REVENUE

6.18.1 REVENUE FROM WHEELING CHARGES FROM CHANGE-OVER

CONSUMERS

The actual revenue from Wheeling Charges from change-over consumers in H1 of FY

2014-15 along with the estimated revenue in H2 of FY 2014-15, as submitted by RInfra-D

are shown in the Table below:

Table 6-99: Estimated Wheeling Revenue from Change-over Consumers in FY 2014-15


Particulars MYT

Order

RInfra-D Petition

H1

(Actuals)

H2

(Estimates)

Total

(Estimates)

Change-over Consumers (HT) 62.96 2.64 1.15 3.80

Change-over Consumers (LT) 358.39 142.88 118.73 261.61

Total 421.35 145.52 119.89 265.41


During the present proceedings, RInfra-D submitted the actual revenue from Wheeling

Charges from change-over consumers for FY 2014-15. The Commission has considered it

for the provisional true up for FY 2014-15. For FY 2015-16, the Commission has

computed the revenue from Wheeling Charges from change-over consumers based on the

Wheeling Charges and change-over sales approved in this Order for FY 2015-16.

The Commission has approved the revenue from change-over consumers in FY 2014-15

and FY 2015-16 as shown in the Table below.

Table 6-100: Wheeling Revenue from Change-over Consumers in FY 2014-15 and FY


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-

D

Petition

Approved

in this

Order

MYT

Order

RInfra-

D

Petition

Approved in

this Order

Wheeling Revenue

from change-over

consumers

421.30 265.41 269.74 469.90 513.09* 426.51

Note: *As per the revised Wheeling Charges proposed by RInfra-D


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6.18.2 REVENUE FROM CROSS SUBSIDY SURCHARGE

The actual revenue from CSS from change-over consumers in H1 of FY 2014-15 and the

revenue from estimated change-over sales in H2 of FY 2014-15 as submitted by RInfra-D

are shown in the Table below:

Table 6-101: Estimated Revenue from CSS in FY 2014-15 as submitted by RInfra-D

(Rs. crore)

Particulars MYT

Order

RInfra-D Petition

H1

(Actuals)

H2

(Estimates)

Total

(Estimates)


9.64 3.64 13.28

Change-over Consumers (LT) 122.49 86.27 208.76

Total 895.90 132.13 89.91 222.04

RInfra-D submitted that the significant reduction in CSS revenue as compared to the

MYT Order is primarily due to high projection of change-over sales, as explained earlier,

and migration of change-over consumers back to RInfra-D. The corresponding increase in

tariff revenue due to shifting back of consumers is subsumed in the total increase in

revenue from retail tariffs. RInfra-D submitted that another reason for reduction of CSS

revenue is that the Commission, in its workings in the MYT Order, considered CSS rates

to be applied on grossed-up change-over sales and not metered sales whereas, in actual

practice, TPC-D has applied CSS charges on metered sales and accordingly remitted the

same.


During the proceedings, RInfra-D submitted the actual revenue from CSS from change-

over consumers for FY 2014-15. The Commission has this for the provisional true up for

FY 2014-15. For FY 2015-16, the Commission has computed the revenue from CSS from

change-over consumers based on the CSS and change-over sales approved in this Order

for FY 2015-16.

The Commission has approved revenue from CSS from change-over consumers in FY

2014-15 and FY 2015-16 as shown in the Table below.


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Table 6-102: Revenue from CSS in FY 2014-15 and FY 2015-16 approved by the


Particulars

FY 2014-15 FY 2015-16

MYT

Order

RInfra-D

Petition

Approved

in this

Order

MYT

Order

RInfra-D

Petition

Approved

in this

Order

Revenue from CSS 895.90 222.04 222.79 519.00 150.04 24.89

6.18.3 REVENUE FROM SALE OF ELECTRICITY

RInfra-D submitted that, in H1 of FY 2014-15, it has charged the tariff approved in the

MYT Order. The actual revenue (excluding the revenue from RAC) from sales, along

with the FAC charged and the revenue expected from sales in H2 of FY 2014-15, in

accordance with the MYT Regulations, in H1, as submitted by RInfra-D, is shown in the

Table below. RInfra-D submitted that the FAC per unit charged in the first six months of

FY 2014-15, as per MYT Regulations, works out to 130.31 Paisa/kWh. RInfra-D has,

therefore, for the last six months of FY 2014-15, estimated the revenue from FAC by

considering FAC per unit of 130.31 paise/kWh only. The actual revenue billed in H1 of

FY 2014-15 (excluding RA Recovery) and the revenue from estimated sales in H2 of FY

2014-15 (at the approved tariffs plus present FAC) as submitted by RInfra-D is

summarized below.

Table 6-103: Estimated Revenue in FY 2014-15 as submitted by RInfra-D

Particulars MYT

Order

RInfra-D Petition

H1 (Actuals) H2 (Estimates) Total (Estimates)

Revenue (Rs. crore) 4,191.32 2,988.92 2,810.50 5,799.41

Sales (MU) 6,790.34 4,018.23 3,593.49 7,611.72

ABR (Rs./kWh) 6.17 7.44 7.82 7.62

RInfra-D submitted that the actual sales of 4022.90 MU in H1 of FY 2014-15 includes

assessed sales of 4.67 MU. The recovery from assessed sales and theft of energy has been

added to the Non-Tariff Income, as directed in Case No. 180 of 2011. Based on sales of

4018.23 MU (4022.90 – 4.67), the ABR for H1 of FY 2014-15 works out to Rs.

7.44/kWh. RInfra-D submitted that the increase in revenue from retail tariffs as compared

to that approved for FY 2014-15 is on account of consumers shifting back to RInfra-D

and their corresponding sales contribution, pursuant to the issue of the MYT Order.


of 399

RInfra-D did not submit any computation of revenue from sale of electricity for FY 2015-

16 in its Petition.


The Commission has considered the actual provisional revenue earned in FY 2014-15 as

submitted by RInfra-D. For FY 2015-16, the Commission has computed the revenue from

sale of electricity by applying the existing tariffs for FY 2015-16, as approved in the

MYT Order, plus applicable FAC, to the category-wise sales approved by the

Commission. Accordingly, the Commission has considered the total revenue, including

revenue from sale of power, Wheeling Charges and CSS, as shown in the following

Table:

Table 6-104: Total Revenue in FY 2014-15 and FY 2015-16 approved by the

Commission (Rs. Crore)


Revenue from Wheeling Charges from own consumers 888.53 923.56

Revenue from Wheeling Charges from Change-over

consumers 269.74 426.51

Revenue from CSS from Change-over consumers 222.79 24.89

Revenue from retail sale of electricity 4939.12 4457.12

Total Revenue 6320.18 5832.09

It may be noted that the revenue from sale of electricity at the existing approved tariff in

FY 2015-16 is lower than the actual revenue earned in FY 2014-15, on account of the

lower tariff approved by the Commission for FY 2015-16 in the MYT Order.

6.19 REVENUE GAP FOR FY 2014-15 AND FY 2015-16 FOR THE WIRES

BUSINESS AND SUPPLY BUSINESS

RInfra-D requested the Commission to separately true up the ARR of the Wires Business

and Supply Business. The Revenue Gap for Wires Business for FY 2014-15 at existing

tariff as submitted by RInfra-D is shown in the Table below:

Table 6-105: Revenue Gap for Wires Business in FY 2014-15 as submitted by RInfra-D

(Rs. crore)


Expenditure in Wires Business 1,289.68


of 399


Less : Recovery from Wheeling from change-over consumers 265.41

Net Expenditure 1,024.27


Revenue Gap / (Surplus) 144.58

The Revenue Gap for Supply Business for FY 2014-15 at existing tariff as submitted by

RInfra-D is as shown in the Table below:

Table 6-106: Revenue Gap for Supply Business in FY 2014-15 as submitted by RInfra-

D (Rs. crore)


Expenditure in Supply Business 5,544.16

Less : Recovery from CSS 222.04

Net Expenditure 5,322.12

Revenue from retail tariff 4,919.72

Revenue Gap / (Surplus) 402.40

RInfra-D did not submit the Revenue and Revenue Gap for FY 2015-16.


Based on the ARR and revenue approved for FY 2014-15 in the earlier paragraphs, the

Revenue Gap/(Surplus) for Wires Business and Supply Business for FY 2014-15 as

approved by the Commission is shown in the Table below:

Table 6-107: Revenue Gap/(Surplus) for Wires Business and Supply Business for FY


Particulars


RInfra-D

Petition

Approved in

this Order

RInfra-D

Petition

Approved in

this Order

ARR 1289.68 1231.78 5544.16 4850.66

Revenue from Wheeling Charges/

CSS from Changeover Consumers 1024.27 269.74 222.04 222.79


Requirement 1,024.27 962.04 5,322.12 4627.87

Revenue 879.69 888.53 4,919.72 4939.12

Revenue Gap/(Surplus) 144.58 73.51 402.40 (311.25)


of 399

Based on the ARR and revenue approved for FY 2015-16 in the earlier paragraphs, the

Revenue Gap/(Surplus) for Wires Business and Supply Business for FY 2015-16 as

approved by the Commission is shown in the Table below:

Table 6-108: Revenue Gap/(Surplus) for Wires Business and Supply Business for FY


Particulars Wires Business Supply Business

ARR 1330.54 4568.48

Revenue from Wheeling Charges/CSS

from Changeover Consumers 426.51 24.89

Net Aggregate Revenue Requirement 904.03 4543.59

Revenue 923.56 4457.12

Revenue Gap/(Surplus) (19.53) 86.47

6.20 CUMULATIVE REVENUE GAP

6.20.1 IMPACT OF ATE JUDGMENTS, WITH CARRYING COST

RInfra-D submitted that as it had proposed separate truing up of Wires Business and

Supply Business in its Petition, the impact of ATE Judgments should also be separated

between the Wires Business and Supply Business. RInfra-D submitted the apportionment

of different items claimed as part of the impact of ATE Judgments between the two

segments as under:

Income Tax for FY 2009-10: Rs. 153.87 crore, apportioned between Wires

Business and Supply Business in the same ratio as approved by the Commission in

its Order dated 15 June, 2012 (Case No. 180 of 2011), i.e. Rs. 21.06 crore for

Wires Business and Rs. 132.80 crore for Supply Business.

Income Tax for FY 2010-11: Rs. (53.87) crore, apportioned between Wires

Business and Supply Business in the same ratio as approved by the Commission in

its Order dated 15 June, 2012 (Case No. 180 of 2011), i.e. Rs. (7.70) crore for

Wires Business and Rs. (46.17) crore for Supply Business.

Interest on Loans for FY 2011-12: RInfra-D has calculated the impact on

account of interest on loans for FY 2011-12 separately for Wires Business and


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Supply Business, i.e., Rs. 25.47 crore for Wires Business and Rs. 2.52 crore for

Supply Business.

Interest on Delayed Payment for FY 2008-09: Rs. 6.68 crore, considered

entirely in Supply Business.

RInfra-D submitted that, in line with the ATE Judgments, it has claimed the impact on

account of interest on delayed payments for FY 2008-09 with carrying cost up to FY

2013-14 only.

Table 6-109: Interest on Delayed Payment for FY 2008-09, with Carrying Cost up to FY

2013-14, as submitted by RInfra-D (Rs. crore)

Particulars FY

2008-09

FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

SBAR 12.75% 13.00% 11.75% 14.75% 14.75% 14.45%

Opening balance 0.00 7.11 8.03 8.97 10.30 11.82

Addition 6.68 0.00 0.00 0.00 0.00 0.00

Carrying cost on

Opening 0.00 0.92 0.94 1.32 1.52 0.85

Carrying Cost on

Addition 0.43 0.00 0.00 0.00 0.00 0.00

Closing Balance 7.11 8.03 8.97 10.30 11.82 12.67

The impact on account of Income Tax for FY 2009-10 and FY 2010-11 and interest on

loans for FY 2011-12, along with carrying cost for Wires Business, as submitted by

RInfra-D is shown in the Table below:

Table 6-110: Impact on account of Income Tax and Interest up to FY 2011-12 with

Carrying Cost up to FY 2015-16 for Wires Business as submitted by RInfra-D (Rs.

crore)

Particulars FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

SBAR 13.00% 11.75% 14.75% 14.75% 14.45% 14.75% 14.75%

Opening

balance 0.00 22.43 16.91 46.76 53.65 61.41 70.46%

Addition 21.06 (7.70) 25.47 0.00 0.00 0.00 0.00

Carrying cost

on Opening 0.00 2.64 2.49 6.90 7.75 9.06 5.20

Carrying Cost 1.37 (0.45) 1.88 0.00 0.00 0.00 0.00


of 399

Particulars FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

on Addition

Closing

Balance 22.43 16.91 46.76 53.65 61.41 70.46 75.66

The impact on account of Income Tax for FY 2009-10 and FY 2010-11 and on account of

interest on loans for FY 2011-12, along with carrying cost, for Supply Business as

submitted by RInfra-D is shown in the Table below:

Table 6-111: Impact on account of Income Tax and Interest up to FY 2011-12 with

Carrying Cost up to FY 2015-16 for Supply Business as submitted by RInfra-D (Rs.

crore)

Particulars FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

SBAR 13.00% 11.75% 14.75% 14.75% 14.45% 14.75% 14.75%

Opening balance 0.00 141.43 109.17 127.98 146.85 168.08 192.87

Addition 132.80 (46.17) 2.52 0.00 0.00 0.00 0.00

Carrying cost on

Opening 0.00 16.62 16.10 18.88 21.22 24.79 14.22

Carrying Cost on

Addition 8.63 (2.71) 0.19 0.00 0.00 0.00 0.00

Closing Balance 141.43 109.17 127.98 146.85 168.08 192.87 207.09


The principal amounts and the corresponding carrying cost to be allowed on account of

various heads as per the ATE Judgment have been discussed in detail in Section 3 of this

Order. Accordingly, the Commission has approved the total impact of ATE Judgments

along with the carrying cost, as applicable, as shown in the Table below:

Table 6-112: Impact of ATE along with Carrying Cost approved by the Commission

(Rs. crore)

Particulars

RInfra-D Petition Approved in

this Order

Total Wires

Business

Supply

Business

Total (Supply

Business)

Income Tax for FY 2009-10 153.87 21.06 132.80 153.87

Income Tax for FY 2010-11 (53.87) (7.70) (46.17) (53.87)

Interest on loans for FY 2011-12 27.99 25.47 2.52 27.85


of 399

Particulars

RInfra-D Petition Approved in

this Order

Total Wires

Business

Supply

Business

Total (Supply

Business)

Interest on delayed payments for FY 2008-09 6.68 0.00 6.68 6.68

Total 134.67 38.83 95.83 134.53

Carrying Cost 160.75 36.83 123.93 4.46

Total ATE Impact with Carrying Cost 295.41 75.66 219.76 139.00

6.20.2 REVENUE GAP/(SURPLUS) OF FY 2012-13 AND FY 2013-14, WITH

CARRYING COST

The stand-alone Revenue Gaps/(Surplus) for FY 2012-13 and FY 2013-14 as submitted

by RInfra-D are shown in the Table below:

Table 6-113: Stand-alone Revenue Gap / (Surplus) for FY 2012-13 and FY 2013-14 as


Particulars

FY 2012-13 FY 2013-14

MYT

Order

RInfra-D

Petition

MYT

Order

RInfra-D

Petition

Revenue Requirement 5,251.62 5,318.72 5,289.39 5,274.71

Less: Revenue from CSS 256.00 258.79 377.90 296.15

Less: Revenue from Wheeling Charges from

Change-over and OA consumers 98.70 99.20 818.80 288.74

Net Revenue Requirement 4,897.02 4,960.72 4,092.69 4,689.82

Revenue from own sales 4,441.62 4,421.69 4,663.85 4,747.59

Revenue Gap/(Surplus) 455.40 539.04 (571.16) (57.77)

Note: The Commission had included the approved gap of FY 2012-13 (Rs. 455.40 crore) in the

ARR of FY 2013-14 in the MYT Order, thus the Surplus in FY 2013-14 allowed in the MYT

Order was Rs. 115.76 crore.

RInfra-D submitted the stand-alone Revenue Gap for Wires Business and Supply

Business for FY 2012-13 and FY 2013-14, based on the segregation of cost and revenue

between Wires and Supply Business, as shown in the Tables below:


of 399

Table 6-114: Stand-alone Revenue Gap / (Surplus) for Wires Business for FY 2012-13

and FY 2013-14 as submitted by RInfra-D (Rs. crore)


Revenue Requirement 1198.19 1218.68

Less : Recovery from Wheeling Charges from Change-over

and OA consumers 258.79 296.15

Net Revenue Requirement 939.40 922.52

Revenue from Wheeling Charges from own consumers 535.85 663.98

Revenue Gap / (Surplus) 403.55 258.54

Table 6-115: Stand-alone Revenue Gap / (Surplus) for Supply Business for FY 2012-13

and FY 2013-14 as submitted by RInfra-D (Rs. Crore)


Revenue Requirement 4120.52 4056.03

Less : Recovery from CSS 99.20 288.74

Net Revenue Requirement 4021.32 3767.30

Revenue from Existing Tariff 3885.83 4083.61

Revenue Gap / (Surplus) 135.49 (316.31)

RInfra-D submitted that it has calculated the carrying cost on the Revenue Gap of FY

2012-13 and FY 2013-14 up to FY 2015-16 as shown in the following Table:

Table 6-116: Revenue Gap of FY 2012-13 and FY 2013-14 with Carrying Cost up to FY



Wires Supply Wires Supply Wires Supply Wires Supply

SBAR 14.75% 14.75% 14.45% 14.45% 14.75% 14.75% 14.75% 14.75%

Opening Balance 0 0 433.31 145.58 773.14 (172.66) 887.18 (198.13)

Addition 403.55 135.49 258.54 (316.31) 0 0 0 0

Carrying Cost on

opening 0 0 62.61 21.02 114.04 (25.47) 65.43 (14.61)

Carrying Cost on

addition 29.76 9.99 18.68 (22.85) 0 0 0 0

Closing Balance 433.31 145.58 773.14 (172.66) 887.18 (198.13) 952.61 (212.74)


of 399

6.20.3 PROVISIONAL REVENUE GAP FOR FY 2014-15

The provisional Revenue Gap of FY 2014-15 as submitted by RInfra-D is as shown in the

Table below:

Table 6-117: Provisional Revenue Gap for FY 2014-15 as submitted by RInfra-D (Rs.

crore)


Petition

Supply Business 402.39

Wires Business 144.59

Total 546.98

6.20.4 CUMULATIVE REVENUE GAP

The cumulative Revenue Gap up to FY 2015-16 as submitted by RInfra-D is shown in the

Table below:

Table 6-118: Cumulative Revenue Gap as submitted by RInfra-D (Rs. crore)

Particulars Wires

Business Supply Business Total

Impact of ATE Judgments with carrying

cost 75.66 219.76 295.42

Revenue Gap of FY 2012-13 and FY

2013-14 with carrying cost 952.61 (212.74) 739.87

Provisional Revenue Gap of FY 2014-

15 (without carrying cost) 144.59 402.39 546.98

Total 1,172.86 469.41 1,582.27


The net ARR actually being sought by RInfra-D was not very clear, considering the

manner in which the numbers had been presented by RInfra-D in its Petition. Hence, to

obtain greater clarity regarding the actual revenue requirement, revenue from existing

tariffs, and Revenue Gap, the Commission directed RInfra-D to submit the details of the

ARR and Revenue Gap/(Surplus) in the format provided by it. This was submitted by

RInfra-D, as shown in the Table below:


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Table 6-119: Net ARR for FY 2015-16 as submitted by RInfra-D in the prescribed

format (Rs. Crore)


Stand-alone Revenue Gap/(Surplus) for FY 2012-13 403.55 135.49 539.03

Stand-alone Revenue Gap/(Surplus) for FY 2013-14 258.54 (316.31) (57.77)

Carrying cost on Stand-alone Revenue Gap/(Surplus)

for FY 2012-13 and FY 2013-14 290.52 (31.92) 258.61


Impact of ATE Judgments 38.83 95.83 134.66

Carrying cost on impact of ATE Judgments 36.83 123.93 160.75

Stand-alone ARR for FY 2015-16 1382.90 5358.99 6741.89

Cumulative ARR for FY 2015-16 2555.75 5768.41 8324.15

Revenue from change-over consumers from revised

Wheeling Charges/CSS 513.09 269.50 782.59

Net ARR for FY 2015-16 2042.66 5498.91 7541.56

Regulatory Asset recovery at approved RAC for FY

2015-16 698.16

Net ARR for FY 2015-16 with RA recovery 2042.66 5498.91 8239.72

Revenue at existing tariff from own consumers for FY

2015-16 926.03 5385.33 6311.36


2015-16 698.16

Total Revenue 926.03 5385.33 7009.52


Average Tariff Increase (%)

17.6%

Thus, RInfra-D has actually projected a cumulative Revenue Gap of Rs. 1230.20 crore,

and proposed to recover it entirely in FY 2015-16 with an average tariff increase of

17.6%. It may be noted that RInfra-D filed its revised Petition in February 2015, when the

approved tariffs for FY 2014-15 were in force. From 1 April, 2015, the tariffs approved in

the MYT Order for FY 2014-15 have come into effect. Further, the FAC has continued to

be levied in FY 2015-16 also, as the fuel and power purchase costs have changed vis-a-vis

those considered in the MYT Order. Hence, the Commission has re-stated the above

Table submitted by RInfra-D by considering the revenue from existing tariffs based on the

tariffs effective from 1 April, 2015, plus category-wise FAC, as shown in the Table

below:


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Table 6-120: Revised Net ARR for FY 2015-16 as submitted by RInfra-D based on

tariffs approved for FY 2015-16 in the MYT Order (Rs. Crore)



Stand-alone Revenue Gap/(Surplus) for FY 2013-14 258.54 (316.31) (57.77)

Carrying cost on Stand-alone Revenue Gap/(Surplus)

for FY 2012-13 and FY 2013-14 290.52 (31.92) 258.61



Carrying cost on impact of ATE Judgments 36.83 123.93 160.75

Stand-alone ARR for FY 2015-16 1382.90 5358.99 6741.89

Cumulative ARR for FY 2015-16 2555.75 5768.41 8324.15

Revenue from change-over consumers from revised

Wheeling Charges/CSS 513.09 269.50 782.59

Net ARR for FY 2015-16 2042.66 5498.91 7541.56


2015-16 698.16

Net ARR for FY 2015-16 with RA recovery 2042.66 5498.91 8239.72

Revenue at existing tariff from own consumers for FY

2015-16 947.81 4646.36 5594.17


2015-16 698.16

Total Revenue 947.81 4646.36 6292.33



30.9%

Thus, the cumulative Revenue Gap projected by RInfra-D in FY 2015-16 tariffs works

out to Rs. 1947.39 crore, and the average tariff increase required works out to 30.9%. The

higher cumulative Revenue Gap for FY 2015-16 is on account of the lower revenue due to

applicability of tariffs approved in the MYT Order for FY 2015-16, which were lower

than the tariffs approved for FY 2014-15 in the MYT Order.

As regards the carrying cost claimed by RInfra-D on the Revenue Gap for FY 2012-13,

the Commission directed RInfra-D to justify claiming it from FY 2012-13 onwards, when

some amount of Revenue Gap of FY 2012-13 has already been passed through in the

revised tariffs from FY 2013-14 onwards that were determined through the MYT Order.

RInfra-D submitted that the provisional Revenue Gap for FY 2012-13, as approved in the

MYT Order, was Rs.455.40 Crore. This was added to the ARR of FY 2013-14, for fixing


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tariffs. However, carrying cost on it was not provided in the MYT Order. As per the ATE

Judgment dated 2 January, 2013 (in Review Petition No. 13 of 2012 on Appeal No. 203 of

2010), carrying cost is admissible on the Revenue Gap as a result of allowance of

legitimate expenditure in the true up. RInfra-D submitted that carrying cost on Rs. 455.40

Crore for one year should, therefore, have been allowed in the MYT Order. RInfra-D

submitted the computed Revenue Gap of FY 2012-13 with carrying cost up to FY 2015-

16, including the carrying cost on Rs. 455.40 Crore allowable for one year. RInfra-D

further submitted that, if the computation of Revenue Gap of FY 2012-13 and FY 2013-

14 with carrying cost up to FY 2015-16 is done considering the stand-alone Revenue

Gaps of FY 2012-13 and FY 2013-14, the same result is arrived at as by the previous

method explained above. The calculation of carrying cost for the Wires Business and

Supply Business, as submitted by RInfra-D under both the methods, is given in the Tables

below:

Table 6-121: Method - A : Computation of Revenue Gap of FY 2012-13 & FY 2013-14

with carrying cost up to FY 2015-16 considering Incremental Revenue Gap of FY 2012-

13 and FY 2013-14 for Wires Business as submitted by RInfra-D (Rs. crore)


Revenue Gap as per MYT Order 361.96

Incremental Revenue Gap 41.59

Total Revenue Gap 403.55 258.54

SBAR 14.75% 14.45% 14.75% 14.75%

Revenue Gap as per Order

361.96

Carrying cost on above for half year

26.15

Opening Balance - 71.35 773.14 887.18

Addition during the year 403.55 620.50 - -

Closing Balance 403.55 691.85 773.14 887.18

Carrying Cost on Opening - 10.31 114.04 65.43

Carrying Cost on Addition 29.76 44.83 - -

Total Carrying Cost 29.76 81.29 114.04 65.43

Closing Balance with Carrying

Cost 952.61

Table 6-122:Method - B : Computation of Revenue Gap of FY 2012-13 & FY 2013-14

with carrying cost up to FY 2015-16 considering Stand-alone Revenue Gap of FY 2012-

13 and FY 2013-14 for Wires Business as submitted by RInfra-D (Rs. crore)


SBAR 14.75% 14.45% 14.75% 14.75%

Opening Balance - 433.31 773.14 887.18


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Addition 403.55 258.54 - -

Carrying Cost on

opening - 62.61 114.04 65.43

Carrying Cost on

addition 29.76 18.68 - -

Closing Balance 433.31 773.14 887.18 952.61

Table 6-123: Method - A : Computation of Revenue Gap of FY 2012-13 & FY 2013-14

with carrying cost up to FY 2015-16 considering Incremental Revenue Gap of FY 2012-

13 and FY 2013-14for Supply Business as submitted by RInfra-D (Rs. crore)


Revenue Gap as per MYT Order 93.34

Incremental Revenue Gap 42.15

Total Revenue Gap 135.49 (316.31)

SBAR 14.75% 14.45% 14.75% 14.75%

Revenue Gap as per Order

93.34

Carrying cost on above for half year

6.74

Opening Balance - 52.14 (172.66) (198.13)

Addition during the year 135.49 (222.97) - -

Closing Balance 135.49 (170.83) (172.66) (198.13)

Carrying Cost on Opening - 7.53 (25.47) (14.61)

Carrying Cost on Addition 9.99 (16.11) - -

Total Carrying Cost 9.99 (1.83) (25.47) (14.61)

Closing Balance with Carrying

Cost (212.74)

Table 6-124: Method - B: Computation of Revenue Gap of FY 2012-13 & FY 2013-14

with carrying cost up to FY 2015-16 considering Stand-alone Revenue Gap of FY 2012-

13 and FY 2013-14 for Supply Business as submitted by RInfra-D (Rs. crore)


SBAR 14.75% 14.45% 14.75% 14.75%

Opening Balance - 145.48 (172.66) (198.13)

Addition 135.49 (316.31) - -

Carrying Cost on

opening - 21.02 (25.47) (14.61)

Carrying Cost on 9.99 (22.85) - -


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addition

Closing Balance 145.48 (172.66) (198.13) (212.74)

The Commission observes that RInfra-D has included the Revenue Gap of FY 2012-13

while computing carrying cost from FY 2013-14 onwards, even though this amount was

already allowed to be recovered in the ARR of FY 2013-14 onwards in the MYT Order,

as admitted by RInfra-D. As a result, the carrying cost is being unnecessarily computed on

an amount that has already been allowed for recovery, and this burden is being proposed

to be passed on to consumers. Hence, the Commission has corrected the calculations of

carrying cost/holding cost by considering only the amounts that are yet to be recovered in

that particular year.

Further, RInfra-D has proposed compounding of the carrying cost over the years by

adding the carrying cost of a particular year to the closing balance of the actual amount

outstanding, and computing carrying cost on such higher amount. As elaborated in

Section 3 of this Order, the Commission is of the view that RInfra-D is entitled to

carrying cost only on the basis of simple interest calculation, rather than compound

interest.

Accordingly, the Commission has approved the carrying cost/holding cost on past

Revenue Gap for the Wires Business and Supply Business as given in the Tables below:

Table 6-125: Carrying Cost on Past Revenue Gap for Wires Business approved by the


Particulars


FY 2012-

13

FY

2013-14

FY

2014-15

FY

2015-16

FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Revenue Gap as per

MYT Order 361.96

0.00

Incremental Revenue

Gap 41.59

-

Total Revenue Gap 403.55 258.54

- 226.15

Interest rate 14.75% 14.45% 14.75% 14.75% 14.61% 14.58% 14.75% 14.75%

Revenue Gap as per

Order 361.96

0.00

Carrying cost on above

for half year 26.15

-

Opening Balance - 71.35 773.14 887.18 - - 226.15 226.15

Addition during the

year 403.55 620.50 - - - 226.15 - -

Closing Balance 403.55 691.85 773.14 887.18 - 226.15 226.15 226.15

Carrying Cost on - 10.31 114.04 65.43 - - 33.36 16.68


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Particulars


FY 2012-

13

FY

2013-14

FY

2014-15

FY

2015-16

FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Opening

Carrying Cost on

Addition 29.76 44.83 - - - 16.49 - -

Total Carrying Cost 29.76 81.29 114.04 65.43 - 16.49 33.36 16.68

Table 6-126: Carrying Cost on Past Revenue Gap for Supply Business approved by the


Particulars


FY 2012-

13

FY

2013-14

FY

2014-15

FY

2015-16

FY 2012-

13

FY 2013-

14

FY 2014-

15

FY 2015-

16

Revenue Gap as per

MYT Order 93.34

455.30

Incremental Revenue

Gap 42.15

20.13

Total Revenue Gap 135.49 (316.31)

475.43 (457.22)

Interest rate 14.75% 14.45% 14.75% 14.75% 14.61% 14.58% 14.75% 14.75%

Revenue Gap as per

Order 93.34

455.30

Carrying cost on above

for half year 6.74

33.20

Opening Balance - 52.15 (172.66) (198.12) - 20.13 (437.09) (437.09)

Addition during the

year 135.49 (222.97) - - 475.43 (457.22) - -

Closing Balance 135.49 (170.83) (172.66) (198.12) 475.43 (437.09) (437.09) (437.09)

Carrying Cost on

Opening - 7.54 (25.47) (14.61) - 2.94 (64.47) (32.24)

Carrying Cost on

Addition 9.99 (16.11) - - 34.74 (33.34) - -

Total Carrying Cost 9.99 (1.83) (25.47) (14.61) 34.74 2.79 (64.47) (32.24)

Thus, the total carrying cost approved by the Commission works out to Rs. 66.52 crore

for the Wires Business as compared to Rs. 290.52 crore claimed by RInfra-D. The total

holding cost approved by the Commission on the surplus of the Supply Business works

out to Rs. 59.17 crore, as compared to Rs. 31.92 crore submitted by RInfra-D.

Based on the various components and the carrying cost approved above, the cumulative

ARR and the net Revenue Gap approved by the Commission for FY 2015-16 are shown

in the following Table:


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Table 6-127: Revised Net ARR for FY 2015-16 approved by the Commission for FY

2015-16 (Rs. Crore)

Particulars RInfra-D Petition Approved in this Order


Stand-alone Revenue

Gap/(Surplus) for FY 2012-13 403.55 135.49 539.04 0.00 475.43 475.43

Stand-alone Revenue

Gap/(Surplus) for FY 2013-14 258.54 (316.31) (57.77) 226.15 (457.22) (231.08)

Carrying cost on Stand-alone

Revenue Gap/(Surplus) for FY

2012-13 and FY 2013-14

290.52 (31.92) 258.61 66.52 (59.17) 7.35

Stand-alone Revenue

Gap/(Surplus) for FY 2014-15 144.58 402.40 546.98 73.51 (311.25) (237.74)

Impact of ATE Judgments 38.83 95.83 134.66 0.00 134.53 134.53

Carrying cost on impact of ATE

Judgments 36.83 123.93 160.75 0.00 4.46 4.46

TPC-G Gap for FY 2012-13 to FY

2014-15 including carrying cost &

impact of ATE Judgment

93.43 93.43

Stand-alone ARR for FY 2015-16 1382.90 5358.99 6741.89 1330.54 4568.48 5899.02

Cumulative ARR for FY 2015-16 2555.75 5768.41 8324.15 1696.72 4448.70 6145.42

Revenue from change-over

consumers from revised Wheeling

Charges/CSS

513.09 269.50 782.59 426.51 24.89 451.41

Net ARR for FY 2015-16 2042.66 5498.91 7541.56 1270.21 4423.80 5694.01

Regulatory Asset recovery at

approved RAC for FY 2015-16 698.16 698.16

Net ARR for FY 2015-16 with

RA recovery 2042.66 5498.91 8239.72 1270.21 4423.80 6392.17

Revenue at existing tariff from

own consumers for FY 2015-16 947.81 4646.36 5594.17 923.56 4457.12 5380.68



Total Revenue 947.81 4646.36 6292.33 923.56 4457.12 6078.84

Revenue Gap/(Surplus) 1094.85 852.55 1947.39 346.65 (33.32) 313.34


30.9% 5.2%

Total Sales (MU)

8014 7767

ACOS (Rs/kWh)

10.28 8.23


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The key reasons for the reduction in cumulative Revenue Gap for FY 2015-16, as against

the cumulative Revenue Gap sought by RInfra-D are as under:

a) Reduction in Power Purchase Expenses on account of the following:

i. The Commission has disallowed the significantly higher cost of power

purchase from VIPL considered by RInfra-D, the reasons for which are

mentioned in para 6.3.2 of this Order. The Commission has allowed the

cost of power purchase from VIPL based on the tariff approved for VIPL

in Order dated 9 March, 2014 in Case No. 115 of 2014.

ii. The Commission has allowed the cost of power purchase from RInfra-G

based on the tariff approved for Dahanu TPS, in a separate Order issued by

the Commission.

iii. The Commission has disallowed the cost of purchase of Solar power

beyond the RPO requirement, which has been considered at the highest

rate in Merit Order Stack for short-term power purchase.

b) Reduction in Transmission Charges payable by RInfra-D, as approved by the

Commission in a separate Order.

c) The Commission has allowed lower Income Tax as compared to that claimed by

RInfra-D, based on computations of Income Tax on PBT basis, and carry-forward

of past losses.

d) The Commission has allowed lower Operation & Maintenance expenses as

compared to that sought by RInfra-D.

e) Sharing of efficiency loss has been considered on account of higher Distribution

Loss as compared to target Loss.

The Commission has considered the provisional true-up amount for FY 2014-15 and the

tariff approved for FY 2015-16 in the MYT Order for determining the cumulative

Revenue Gap, ACOS, and tariff increase required for FY 2015-16. The cumulative

Revenue Gap approved by the Commission for FY 2015-16 is Rs. 313.34 crore, and the

ACOS is Rs. 8.23 per kWh, requiring an average tariff increase of 5.2%.


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7 TARIFF PHILOSOPHY AND CATEGORY-WISE

TARIFFS FOR FY 2015-16

7.1 TARIFF PHILOSOPHY OF THE COMMISSION

The Commission believes that, if the goal of speedy economic growth combined with 24

x 7 electricity for all is to be achieved, it has to be appreciated that there are upward

pressures on electricity tariffs because of likely increases in input costs and the need to

invest in strengthening and augmenting the network and other infrastructure. Moreover,

industrial and commercial consumers, in particular, will continue in the foreseeable future

to pay higher tariffs in order to cross-subsidise residential (and, outside Mumbai,

agricultural) consumers so as to keep their tariffs relatively low.

Thus, while electricity is one of the most important drivers of economic growth, the cost

and tariffs of electricity are driven by multiple factors. All stakeholders, including the

State Government, need to make concerted efforts to sensitize the public regarding the

need to conserve electricity, not merely through more sophisticated DSM measures, but

also through easily achievable and simple steps like switching off lights, fans and air

conditioners, when not in use, and by consciously reducing their use when required. The

time has come to accept this reality and take steps to control electricity consumption with

the same meticulousness with which other household and business activities are

controlled.

The Commission has a duty to ensure a proper balance between the health of the Utility

and the price of electricity to consumers. In Mumbai, TPC-D has recently been granted a

new parallel Distribution Licence in areas already being serviced by BEST in the Island

City and RInfra-D in most of the suburbs. Historically, TPC-D had been providing

electricity mostly to certain bulk consumers, with a correspondingly limited network,

whereas RInfra-D and BEST have also been catering to a much wider retail consumer

market through more extensive networks. While BEST, being part of a Local Authority is

not obliged to provide its network to TPC-D consumers under the EA, 2003, the existing

wires of RInfra–D can be utilized on certain payments and other conditions.

The Commission has a mandate to promote consumer choice, and has been pro-active in

facilitating fair competition between the Distribution Licensees, so that the consumers can

benefit from more efficient operations through competitive tariffs and improved quality of

supply. The aim of the Commission has been to ensure that consumers should get the

maximum benefit and a choice of suppliers as per the mandate of the EA, 2003.


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In its Judgment dated 28 November, 2014 in Appeal No. 246 of 2012, the ATE has held

that national resources are scarce and should not be squandered by duplicating the

distribution network in a common area where an existing Licensee already has a well-

established network. In its previous Orders, the Commission has maintained that, in a city

like Mumbai, where space is a huge constraint, it is practically impossible for all

consumers to have a choice of physical network connectivity to more than one

Distribution Licensee even though all have a Universal Service Obligation, and practical

solutions have to be found to address the typical problems that arise under such

circumstances. The existing distribution network has to be effectively utilised by both

Licensees to ensure that only optimum capital expenditure is undertaken, the space

constraints are addressed, and public inconvenience and disruptions are minimised. The

topography of Mumbai is such that it is surrounded by ocean on three sides, with a high

population density, unlike Delhi. Moreover, in Delhi, the Distribution Licensees operate

in separate areas of supply, and already have their own extensive distribution networks to

which they can add. Hence, in the case of Mumbai, power to consumers who opt for TPC-

D will have to be provided electricity primarily through the wires of RInfra-D, as per the

ATE Judgment in Appeal No. 246 of 2012 dated 28 November, 2014.

However, the cost of operation, maintenance, and technological upgradation of the

network of the Licensee providing it has to also be borne by the consumers of electricity

supplied by the other Licensee. The Commission has endeavoured to ensure that, while

the Licensees share their physical resources, neither should be put to any economic

disadvantage.

Competition in the sense mandated by the EA, 2003 is predicated on there being a level

playing field. However, for historical reasons, TPC-D’s consumer mix is such that its

proportion of sales to categories whose tariffs can cross-subsidise lower-end consumers is

substantially higher than in the case of RInfra-D, which has a larger proportion of such

cross-subsidised consumers. While the extent of this divergence in consumer mix has

been reducing, partly because of the Commission’s dispensations, it remains significant.

Coupled with other differences in power sources and costs, this means that uniform tariffs

across the parallel Licensees is not possible at this stage.

However, the Commission’s endeavour has been to move towards a situation in which,

particularly for the majority of low-end consumers, a competitive choice between

suppliers is available, with a level playing field between them. These and other such

considerations underlie the Commission’s approach in the present Order. The


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Commission will finalize the change-over protocol separately keeping all these issues in

mind and after following the due regulatory process, in accordance with ATE's directions.

7.2 TARIFF PROPOSAL SUBMITTED BY RINFRA-D

RInfra-D has estimated that there would be a significant Revenue Gap at the close of FY

2014-15. The major factors contributing to this Revenue Gap are the lower than expected

revenue from Wheeling Charges, CSS, and even from revenue from own sales because of

the forecasting assumptions made at the time of the MYT Order as well as the revenue

forecast for FY 2013-14, which was prepared considering applicability of revised tariffs

for the full year instead of only seven months of that year.

The cumulative Revenue Gap (excluding carrying cost), including the estimated Revenue

Gap of FY 2014-15, divided between Wires Business and Supply Business, as submitted

by RInfra-D is as follows:

Table 7-1: Cumulative Revenue Gap up to FY 2014-15 without Carrying Cost as


Particulars Wires

Business

Supply

Business Total


Revenue Gap of FY 2012-13 403.55 135.49 539.04

Revenue Gap of FY 2013-14 258.54 (316.31) (57.77)

Provisional Revenue Gap of FY 2014-15 144.59 402.39 546.98

Total 845.51 317.40 1162.91

RInfra-D requested separate truing-up of Revenue Gap of Wires Business and Supply

Business stating that it is important that the Revenue Gap of Wires Business is

proportionately shared between all its users – including change-over consumers – and not

passed on only to RInfra-D’s retail consumers, by merging the past cumulative Revenue

Gap for the Wires Business with its stand-alone ARR for FY 2015-16 for determination

of Wheeling Charges.

RInfra-D proposed to recover the cumulative Revenue Gap of the Wires Business up to

the close of FY 2014-15 by increasing Wheeling Charges in FY 2015-16. Similarly, it

proposes to recover the cumulative Revenue Gap of the Supply Business up to the close

of FY 2014-15 by increase in Energy Charges in FY 2015-16. RInfra-D submitted that,

while there would be a significant increase in Wheeling Charges for FY 2015-16, the

increase would be last only for a one year, Thereafter, the Wheeling Charges would not

only fall, but would change only nominally due to year on year cost variations. RInfra-D


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submitted that its proposal is also in the interest of the Wires users because, if the

cumulative Revenue Gap is deferred for recovery over a longer period, carrying cost will

accumulate, while also burdening future consumers with past costs.

RInfra-D submitted that it is already recovering Regulatory Assets as approved by the

Commission over a six-year period from FY 2013-14 to FY 2018-19. Therefore,

deferment of further Revenue Gap over future years would only amount to creating more

Regulatory Assets, which is undesirable. RInfra-D had proposed earlier a phased recovery

of its past Regulatory Assets over a six-year period. This was necessary in view of the

very large quantum and the tariff shock it would have caused had it been recovered in one

year. However, in the present case, the amount involved is smaller and the volume of

sales on which it is to be spread is also larger than that a couple of years earlier. RInfra-D

submitted that, since FY 2015-16 is proposed as the recovery year, as per the ATE

Judgment, the individual components of the cumulative Revenue Gap will attract carrying

cost from the year of origin up to FY 2015-16. The carrying cost for both the year of

origin and the year of recovery will be for half the year, while the carrying cost for

intervening years will be for the full year.


As elaborated in Section 4 of this Order, the Commission has undertaken separate truing

up and provisional truing up of the Wires Business and Supply Business for FY 2013-14

and FY 2014-15, respectively. However, for FY 2012-13, separate truing up of Wires

Business and Supply Business cannot be done since the MYT Order came into effect after

FY 2012-13 was over, and the actual revenue from Wheeling Charges for FY 2012-13 is

not separately available. Accordingly, the Commission has approved the combined

Revenue Gap/ (Surplus) for FY 2012-13 for Wires Business and Supply Business,

although truing up of all the components of expenses has been done separately for each.

The combined Revenue Gap for FY 2012-13 has been considered as the Revenue Gap for

the Supply Business for FY 2012-13 for computation of the cumulative Revenue Gap.

Accordingly, as elaborated in Section 6 of this Order, the cumulative Revenue Gap

approved by the Commission (excluding carrying cost), including the estimated Revenue

Gap of FY 2014-15, divided between Wires Business and Supply Business, is as given in

the Table below:


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Table 7-2: Cumulative Revenue Gap up to FY 2014-15 without Carrying Cost approved

by the Commission (Rs. Crore)

Particulars


Wires

Business

Supply

Business Total

Wires

Business

Supply

Business Total

Impact of ATE

Judgments 38.83 95.83 134.66 0.00 134.53 134.53

Revenue Gap of

FY 2012-13 403.55 135.49 539.03 0.00 475.43 475.43

Revenue Gap of

FY 2013-14 258.54 (316.31) (57.77) 226.15 (457.22) (231.08)

Provisional

Revenue Gap of

FY 2014-15

144.58 402.40 546.98 73.51 (311.25) (237.74)

Total 845.50 317.41 1162.90 299.66 (158.51) 141.14

Thus, the cumulative Revenue Gap up to FY 2014-15, without considering carrying cost,

has been approved as Rs. 141.14 crore by the Commission, as compared to Rs. 1162.90

crore projected by RInfra-D, the reasons for which are elaborated in previous Sections of

this Order.

7.3 WHEELING CHARGES

RInfra-D submitted the cumulative ARR for the Wires Business recoverable in FY 2015-

16, as shown in the following Table:

Table 7-3: Cumulative ARR for the Wires Business in FY 2015-16 as submitted by



Impact of ATE Judgments with carrying cost 75.66

Revenue Gap of FY 2012-13 and FY 2013-14 with carrying cost 952.61

Provisional Revenue Gap of FY 2014-15 144.59

Wires ARR for FY 2015-16 1382.90

Total 2555.75

RInfra-D proposed to recover the cumulative Revenue Gap upto FY 2014-15 and the

ARR for Wires Business of FY 2015-16 through revision of Wheeling Charges in FY

2015-16. For this purpose, in accordance with the philosophy of the Commission, RInfra-


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D has distributed the total revenue requirement of the Wires Business between HT and LT

based on the ratio of assets, i.e., 55:45 (HT: LT). Thereafter, the cost allocated to the HT

level is shared between the HT and LT levels, and Wheeling Charges computed by

distributing the allocated cost over the sales volume at HT and LT levels.

RInfra-D submitted that, presently, Wheeling Charges are determined by spreading the

ARR of the Wires Business on the grossed-up units (consumer-end energy grossed up for

wheeling losses) for change-over consumers. In this method, the energy for own sales is

considered at the consumption end, while that for change-over consumers is considered at

T<>D interface. This creates a distortion in charges, as the cost is spread over the sales

volume measured at two different points, and is also in contravention to the MERC

(Distribution OA) Regulations, 2014. The proviso to Regulation 16.1 specifies as under:

“16.1….Provided that the Wheeling charges shall be payable on the basis of

actual energy flow at the consumption end:”

RInfra-D submitted that, in accordance with the above Regulations, the change-over

consumers (who are held to be OA users pursuant to the ATE Judgment in Appeal Nos.

132, 133, 139, 144 and 164 of 2011) are also required to pay Wheeling Charges on the

energy measured at consumption end. The grossing up of sales volume for change-over

consumers and then determining the Wheeling Charges also creates a further anomaly in

the computation of CSS.

RInfra-D submitted that the formula for CSS as per the Tariff Policy is CSS = T –

C*(1+L) + D, where “T” is the average Tariff of the consumer category at the

consumption end, “C” is the power purchase cost, which is grossed up for losses “L” to

arrive at the equivalent purchase cost at the consumption end. Therefore, the element “D”

pertaining to Wheeling Charges is the only element in the formula which is determined by

considering sales volume at two different points. RInfra-D submitted that this anomaly

should be corrected so that even the element “D” is determined at the consumption end

only. It is only then that the CSS would be correctly determined. In its MYT Petition also,

it had considered Wheeling Charges using energy for both own and change-over

consumers at the consumption end only. The Commission, however, while approving the

Wheeling Charges, had considered the energy for change-over consumers at the T<>D

interface.

RInfra-D requested the Commission to modify the methodology for determination and

applicability of Wheeling Charges on change-over consumers, by determining the


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Wheeling Charges at the consumption end and prescribing that they should be applied on

energy measured at the consumption end only.

Accordingly, RInfra-D proposed the Wheeling Charges for FY 2015-16 based on the

above methodology as shown in the Table below:

Table 7-4: Wheeling Charges for FY 2015-16 as proposed by RInfra-D


Revenue Requirement from Wire Business (Rs. Crore) 2555.75

Total Sales ( Own + Migration) (MU) 9907.58

Distribution of Charges between HT and LT Network

GFA attributable to HT network (%) 55%

GFA attributable to LT network (%) 45%

Charge recoverable for HT Network (Rs Cr.) 1405.67

Charge recoverable for LT Network (Rs Cr.) 1150.09

Distribution of Charges between HT and LT consumers

HT Sales (MU) 1163.62

LT Sales (MU) 8743.96

Charge recoverable for HT consumers (Rs Cr.) 165.09

Charge recoverable for LT consumers (Rs Cr.) 2390.67

Proposed Wheeling Charges

HT (Rs per kWh) 1.42

LT (Rs per kWh) 2.73

Existing Wheeling Charges

HT (Rs per kWh) 0.64

LT (Rs per kWh) 1.24

RInfra-D has estimated the income from Wheeling Charges from change-over consumers

by applying the above charges to the sales of change-over consumers for the relevant

year. The computation of income from Wheeling Charges from change-over consumers as

submitted by RInfra-D is given in the Table below:

Table 7-5: Wheeling Revenue from Change-over Consumers as submitted by RInfra-D

Particulars

RInfra-D

Petition

Total Wires ARR (Rs crore) 2555.75

HT - Wheeling Sales (MU) 34.83

HT - Wheeling Charges (Rs /kWh) 1.42

LT - Wheeling Sales (MU) 1858.58


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Particulars

RInfra-D

Petition

LT - Wheeling Charge (Rs /kWh) 2.73

Revenue from wheeling Charges from Change-over Consumers (Rs crore) 513.09

Net Wires ARR passed for recovery from Retail consumers (Rs crore) 2042.66


As elaborated in Section 6 of this Order, the cumulative ARR approved by the

Commission for recovery in FY 2015-16 for the Wires Business, is shown in the

following Table:

Table 7-6: Cumulative ARR for the Wires Business in FY 2015-16 approved by the



Petition

Approved in this

Order

Impact of ATE Judgments with carrying cost 75.66 0.00

Revenue Gap of FY 2012-13 and FY 2013-14 with

carrying cost 952.61 292.67

Provisional Revenue Gap of FY 2014-15 144.58 73.51

Wires ARR for FY 2015-16 1382.90 1330.54

Total 2555.75 1696.72

As regards the issue of the grossed up units being considered for computation of the

Wheeling Charges in the MYT Order, it is clarified that this has no material impact on

either RInfra-D or the change-over consumers, as the Wheeling Charges thus determined

are being levied on the grossed up units rather than the metered units.

However, the MERC (Distribution OA) Regulations, 2014 notified subsequently specify

that the Wheeling Charges shall be payable on the basis of actual energy flow at the

consumption end. Hence, the Commission has determined the Wheeling Charges for FY

2015-16 in this Order by considering the metered consumption of the direct consumers as

well as the change-over consumers. It is clarified that the Wheeling Charges determined

in this Order shall be levied on the metered units of the change-over consumers, rather

than on the grossed up units as at present.

Apart from this one change, the HT and LT Wheeling Charges for FY 2015-16 have been

determined on the same basis as in the MYT Order, i.e., the ratio of GFA has been


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considered as 55:45, and the HT: LT sales ratio, including change-over sales, has been

considered as approved in this Order.

Accordingly, the Commission has approved the Wheeling Charges for FY 2015-16 as


Table 7-7: Wheeling Charges for FY 2015-16 approved by the Commission


Petition

Approved in

this Order

Cumulative Revenue Requirement from Wire Business (Rs. Crore) 2555.75 1696.72

Total Sales ( Own + Migration) (MU) 9907.58 9953.40

Distribution of Charges between HT and LT Network

GFA attributable to HT network (%) 55% 55%

GFA attributable to LT network (%) 45% 45%

Charge recoverable for HT Network (Rs Cr.) 1405.67 933.20

Charge recoverable for LT Network (Rs Cr.) 1150.09 763.53

Distribution of Charges between HT and LT consumers

HT Sales (MU) 1163.62 1064.03

LT Sales (MU) 8743.96 8889.38

Charge recoverable for HT consumers (Rs Cr.) 165.09 99.76

Charge recoverable for LT consumers (Rs Cr.) 2390.67 1596.97

Revised Wheeling Charges for FY 2015-16

HT (Rs per kWh) 1.42 0.94

LT (Rs per kWh) 2.73 1.80

The income from Wheeling Charges from change-over consumers, by applying the above

Wheeling Charges to their approved sales for FY 2015-16, has been considered to

determine the net Wires ARR to be recovered from Supply Business consumers, as shown

in the Table below:

Table 7-8: Wheeling Revenue from Change-over Consumers for FY 2015-16 approved


Particulars

RInfra-D

Petition

Approved in

this Order

Cumulative Wires ARR (Rs crore) 2555.75 1696.72

HT - Change-over Sales (MU) 34.83 50.26

HT - Wheeling Charges (Rs /kWh) 1.42 0.94

LT - Change-over Sales (MU) 1858.58 2136.14

LT - Wheeling Charge (Rs /kWh) 2.73 1.80


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Particulars

RInfra-D

Petition

Approved in

this Order

Revenue from Wheeling Charges from Change-over

Consumers (Rs crore) 513.09 426.51

Net Wires ARR to be recovered from Retail

consumers (Rs crore) 2042.66 1270.21

7.4 RETAIL TARIFFS

RInfra-D submitted that it has netted off the recovery from CSS and Wheeling Charges

from the ARR of FY 2015-16 and added the past Revenue Gap to arrive at the recoverable

ARR for FY 2015-16, to be recovered through revision in retail tariffs. The net ARR to be

recovered from the Supply Business in FY 2015-16 and the Average Cost of Supply

(AOS) projected by RInfra-D are shown in the Table below:

Table 7-9: Net ARR of Supply Business and Average Cost of Supply for FY 2015-16 as



Net Wires ARR allocable to Own Consumers (Rs. crore) 2042.66

Add: Retail ARR FY 2015-16 (Rs. crore) 5358.99

Add: Retail Revenue Gap (Rs. crore) 409.41

Less: Income from revised CSS (Rs. crore) 269.50

Net ARR (Allocated Wires+ Retail ARR) (Rs. crore) 7541.56

Projected Retail Sales (MU) 8014.16

Average Cost of Supply (Rs./kWh) 9.41


The cumulative ARR and the net Revenue Gap approved by the Commission for FY

2015-16 for the Supply Business, as elaborated in Section 6 of this Order, and the

approved ACOS for FY 2015-16, are shown in the following Table:

Table 7-10: Revised Net ARR for FY 2015-16 approved by the Commission (Rs. Crore)



Cumulative Revenue

Gap/(Surplus) 1094.85 852.55 1947.39 346.65 (33.32) 313.34

Average Tariff Increase

30.9% 5.2%


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(%)

Total Sales (MU)

8014 7767

Average Cost of Supply

(Rs/kWh) 10.28 8.23

The key reason for the above reduction in ACOS from Rs. 10.28 per kWh sought by

RInfra-D and the ACOS of Rs. 8.23 per kWh approved by the Commission is the

reduction in power purchase expenses on account of disallowance of the steep increase in

cost of power purchase from VIPL sought by RInfra-D. It is evident that RInfra-D has

completely miscalculated the cost of power purchase from VIPL for FY 2014-15 and FY

2015-16. In the Petition for approval of the PPA between RInfra-D and VIPL, RInfra-D

had submitted that VIPL would source lower cost coal under the FSA, however, in reality,

VIPL has not entered into the FSA and has procured expensive coal from other sources,

which has resulted in steep increase in the generation cost, which RInfra-D has proposed

to pass on to the consumers. This is a total deviation from the PPA approved by the

Commission, both in physical terms and in financial terms. RInfra-D was required to have

obtained the Commission's prior approval for this deviation much earlier, in accordance

with Regulation 26 of the MERC MYT Regulations, 2011. However, RInfra-D has failed

to do so. RInfra-D was also aware that as per the MERC MYT Regulations, 2011, power

purchase expenses in excess of 105% of the approved power purchase cost should have

been submitted to the Commission for prior approval, as is evident from the fact that it

had submitted a Petition for increase in power purchase cost on account of the purchase

from TPC-G's Unit 6, under SLDC directions. Hence, the Commission is left with no

option but to restrict the cost of power purchase from VIPL to the tariff approved for

VIPL, in the Order dated 9 March, 2015 in Case No. 115 of 2014, for FY 2014-15 and FY

2015-16. The cumulative Revenue Gap approved by the Commission for FY 2015-16 is

Rs. 313.34 crore, and the ACOS is Rs. 8.23 per kWh, requiring an average tariff increase

of 5.2%.

As regards the Cost of Supply parameter to be considered for tariff determination, i.e.,

ACOS or Voltage-wise Cost of Supply (VCOS), in the MYT Order the Commission had

stated as follows:

"5.5.3.9 The Commission observed that in case of RInfra-D, wheeling losses for

HT and LT level are available but applying average power purchase cost to LT

and HT level to determine cost results in average voltage wise supply. The


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Commission further notes that such a tariff design on the basis on average voltage

wise cost of supply would lead to tariff shock to certain categories of consumers.

Moreover, RInfra-D has not submitted the details of Voltage-wise Cost of Supply

in the MYT Petition that was published for public comments.

5.5.3.10 Also, the consumers have not had the opportunity to give their comments

and suggestions on the proposal to determine tariffs and cross-subsidy on the

basis of voltage-wise cost of supply.

5.5.3.11 In view of all the above reasons, the Commission is of the view that it

would not be appropriate to determine tariffs on the basis of voltage-wise cost of

supply at this point in time, and hence, for the purpose of this Order, the

Commission has continued to compute the cross-subsidy with respect to the

Average Cost of Supply. However, the Commission has attempted to ensure that

the overall objective of reduction of cross-subsidies to be within the limits of

+20% of the Average Cost of Supply, as laid down in the Tariff Policy as well as

several Judgments of Tribunal."

On the same issue, in the MYT Order of TPC-D, the other Distribution Licensee

operating in RInfra-D’s area of supply, the Commission had stated that:

"The Commission has ensured that the HT tariffs are lower than the LT tariffs, as the

cost of supply is lower than the cost of supply at lower voltages, due to the lower

losses at higher voltages, and the lower network related costs since the electricity

does not have to stepped down to lower voltages. In this regard, ATE, in its Judgment

dated 26 July, 2012 in Appeal No. 13 of 2010, Appeal No. 198 of 2010 and Appeal

No. 42 of 2011, ruled as under:

“15.4 The issue relating to voltage-wise cost of supply and cross subsidy has

been decided in the judgment dated 30.05.2011 in Appeal nos. 102 of 2010 and

batch in the matter of Tata Steel Ltd. Vs. Orissa Electricity Regulatory

Commission & Another. The relevant extracts of the judgment are reproduced

below:-

“22. After cogent reading of all the above provisions of the Act, the Policy

and the Regulations we infer the following: ...

“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 voltage-wise 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


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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.

“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.” ...

“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.” ...

“37. We, however, direct the State Commission to determine the cross

subsidy for each consumer category after working out the voltage-wise

cost of supply based on the directions given in the preceding

paragraphs. The cross subsidy will be calculated as the difference

between the average tariff realization for that category as per the

Annual Revenue Requirement and the cost of supply for the consumer

category based on voltage-based cost of supply.”

As can be seen from the above extract of Appellate Tribunal's Judgment, Tribunal has

ruled that the voltage-wise cost of supply should be used to determine the category-

wise cross-subsidy, and in the absence of requisite data, Tribunal has further advised

that the power purchase costs, which are the major component of the Distribution

Licensee's costs, can be apportioned to different voltage levels in proportion to the

distribution losses at the respective voltage levels.

In this regard, as already clarified earlier, in TPC-D's case, given the low loss

levels (1.12% in FY 2013-14, 1.22% in FY 2014-15, and so on) and higher


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proportion of HT sales as well as HT network, and lack of any data in this regard,

the Commission has not apportioned the distribution losses between HT level and

LT level, since, it is difficult to arrive at any realistic estimate of the distribution

losses at HT level and LT level, for such a low overall loss level. Moreover, TPC-D

has not submitted the details of Voltage-wise Cost of Supply in the MYT Petition

that was published for public comments. Also, the consumers have not had the

opportunity to give their comments and suggestions on the proposal to determine

tariffs and cross-subsidy on the basis of voltage-wise cost of supply. In view of all

the above reasons, the Commission is of the view that it would not be appropriate to

determine tariffs on the basis of voltage-wise cost of supply at this point in time,

and hence, for the purpose of this Order, the Commission has continued to

compute the cross-subsidy with respect to the Average Cost of Supply. However, the

Commission has attempted to ensure that the overall objective of reduction of

cross-subsidies to be the limits of +20% of the Average Cost of Supply, as laid down

in the Tariff Policy as well as several Judgments of the Hon’ble Tribunal."

Recently, in its Judgment dated 24 March, 2015 in Appeal No. 103 of 2012, the ATE

ruled as under on the issue of determination of tariff and cross-subsidy with reference to

the voltage-wise cost of supply:

"68. This Tribunal in the various judgments from the year 2006 onwards has

repeatedly stated that the tariffs have to be determined considering both the

overall average cost of supply of the distribution licensees and the voltage-wise

cost of supply. The principles laid down by this Tribunal are as under:-

“i) The cost of supply referred in Section 61(g) is the cost of supply to the

consumer category and not overall average cost of supply.

ii) The cross subsidy for a consumer category is the difference between

cost to serve that category of consumer and average tariff realization for

that category of consumer.

iii) The State Commission has to determine the category wise cost of

supply as well as overall average cost of supply to all the consumers of

the distribution licensee.

iv) While the cross subsidies have to be reduced progressively and

gradually in the manner specified by the Appropriate Commission so as to

avoid tariff shock to the subsidized categories of consumers, it is not the

intention of the legislation that cross subsidies have to be eliminated.

Therefore, it is not necessary that the tariff should be the mirror image of

actual cost of supply to the concerned category of consumer and to make

the cross subsidy zero.

v) The subsidizing consumers should not be subjected to disproportionate

increase in tariff so as to subject them to tariff shock.


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vi) The State Commission should fix a limit of consumption for the

subsidized consumer categories and once a consumer exceeds that limit he

has to be charged at normal tariff.

vii) Tariff for consumer below the poverty line will be at least 50% of the

average cost of supply. Tariffs for all other categories should be within

±20% of the overall average cost of supply for the distribution licensee by

the end of 2010-11.

viii) The tariffs can be differentiated according to consumer’s load 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. For example, the consumers in domestic

category can be differentiated from the consumers in Industrial category

or commercial category on the basis of purpose for which electricity is

required.

ix) The Tribunal in Appeal no. 102 of 2010 and batch in Tata Steel case

has also given a formulation for determination of voltage-wise cost of

supply in the absence of availability of detailed data.”

69. This Tribunal in Tata Steel Ltd. gave a method for determination of cost of

supply for different consumer categories. It was held that in the absence of

segregated network costs, it would be prudent to work out 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 tariff, apportioning the power purchase cost at different voltage

levels taking into account the distribution loss at the relevant voltage level and

the upstream system will facilitate determination of voltage-wise cost of supply.

Thus, a practical method was suggested to reflect the consumer-wise cost of

supply. However voltage-wise cost of supply would also require determination of

distribution loss at different voltage levels of the distribution system."

The Commission directed TPC-D and RInfra-D to submit the necessary data regarding

voltage-wise cost of supply. In reply, RInfra-D submitted that, as the tariff and the cross-

subsidy reduction trajectory for the entire Control Period was determined by the

Commission based on ACOS in the MYT Order, the cross subsidy should not be

calculated on the basis of voltage-wise cost of supply at the present MTR stage.

In its reply, TPC-D submitted that the HT losses of TPC-D for FY 2013-14 were 1.04%

and LT Losses were 1.38%. The tariffs and the cross-subsidy reduction trajectory for the

MYT Control Period were determined by the Commission on ACOS of TPC-D as a

whole. TPC-D further submitted that, subsequently, due to tariff dynamics between the

tariffs of the Licensees in Mumbai, there has been a substantial change in the consumer

mix of TPC-D, which has resulted in a situation wherein cross subsidy reduction cannot

be proposed without giving a tariff shock to subsidised consumers. In case cross subsidy


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is computed on the basis of VCOS, it would lead to enormous tariff shock for the

subsidised category of consumers. Therefore, TPC-D requested the Commission to

compute the cross-subsidy on the basis of VCOS after the sales mix stabilises.

The Commission has taken due cognisance of the submissions of RInfra-D and TPC-D in

this regard. Further, the framework prescribed by ATE requires that the category-wise

tariffs be determined on the basis of ACOS as well as VCOS, and also that the tariffs for

all categories should be within ±20% of the overall average cost of supply for the

Distribution Licensee. The Commission has endeavoured to ensure that the tariffs of most

categories are within +20% of the average cost of supply, as stipulated in the Tariff

Policy. Further, the issues highlighted in the MYT Order of TPC-D still exist, and its total

Distribution Loss is in the range of 1%, which leaves little scope for determining

differential cost of supply at different voltages on the basis of differential losses at

different voltage levels.

There is also the issue of presence of more than one Distribution Licensee in the same

area of supply in Mumbai. The Commission is bound to ensure a level playing field, and

hence cannot determine tariffs based on Average Cost of Supply for one Licensee, and on

the basis of Voltage-wise Cost of Supply for the other Licensee in the same area of

supply. The Commission has granted parallel license to ensure that there is competition

and choice for consumers within the common area of supply.

In view of the above, the Commission has taken a considered decision to continue

determination of category-wise tariff and cross-subsidy on the basis of the Average Cost

of Supply, for the present, in this MTR Order.

7.5 TARIFF PROPOSAL FOR FY 2015-16

7.5.1 TARIFF DESIGN PRINCIPLES

RInfra-D submitted that its proposal for retail tariffs for FY 2015-16 includes recovery of

all past Revenue Gaps, including the provisional Revenue Gap of FY 2014-15 and the

projected ARR of FY 2015-16. RInfra-D submitted that it appreciates that recovery of a

large Revenue Gap in one year would result in significant rise in tariffs in FY 2015-16.

Hence, it has attempted to soften the impact on small consumers of LT Residential

category, i.e., those consuming up to 300 units /month.

RInfra-D submitted that deferment of Revenue Gaps only builds up interest cost, which is

loaded on the consumers. Hence, such deferment is undesirable unless it is unavoidable.


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RInfra-D further submitted that, since it is already recovering Regulatory Assets as a

separate charge, it does not wish to create any further Regulatory Assets by deferring the

Revenue Gaps arising during the MYT Control Period. The increase in ACOS, therefore,

is only a reflection of passing through the Revenue Gap in one year. It could well have

been kept lower, though artificially, by passing only a part in FY 2015-16 and deferring

the balance for later years. While the present increase in ACOS appears high, it holds the

promise of only nominal increases, if at all, in the subsequent years, since the estimated

Revenue Gap up to FY 2014-15 gets taken care of by the proposed increase.

RInfra-D submitted that the tariffs approved in the MYT Order for FY 2015-16 are no

longer valid, as that Order assumed that there would be revenue surpluses in FY 2013-14

and FY 2014-15; and such expected surplus and the then projected revenue deficit for FY

2015-16 were normalized to give a reducing tariff trajectory over the three-year period

from FY 2013-14 to FY 2015-16. The premise that there would be revenue surplus in FY

2013-14 and FY 2014-15 hinged on the level of revenue from CSS and Wheeling

Charges. This did not materialize due to lower sales and the period of applicability of

revised CSS, i.e., from September instead of April, 2013. RInfra-D submitted that, as per

the MYT Order, there would otherwise have been a tariff increase in FY 2015-16 of

1.04%, but it was reduced due to normalization of assumed revenue surplus of previous

years. If the assumed revenue surplus had turned out to be a revenue deficit, instead of the

12% decline in tariffs in the MYT Order there would actually have been an increase to

recover the Revenue Gaps. RInfra-D submitted that this is happening in the instant case.

Hence, it has not considered the tariffs of FY 2015-16 as the base, and has instead

considered the presently applicable tariffs (i.e., tariffs of FY 2014-15, plus the presently

applicable FAC) for the purpose. RInfra-D proposed the following principles of design of

the revised tariffs for FY 2015-16:

1. RInfra-D proposed to increase the tariff for 0-100 units and 101-300 units in the

residential category at a lower rate than for the other categories. This results in an

increase in cross subsidy for these two slabs (i.e., new ABR/ACOS % < existing

ABR/ACOS %). This distortion has been made up by increasing the tariffs of

higher slabs (>300 units), so that the cross-subsidy for the LT Residential category

as a whole is maintained at almost the existing level. RInfra-D submitted that the

increase in tariffs for consumption more than 300 units would not be as much due

to the telescopic benefit available from lower slabs.

2. RInfra-D has ensured that the cross-subsidy measured as % of ABR/ACOS is

lower than the existing levels for categories with a present ratio exceeding 100%,

and higher for other categories.


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3. No change is proposed in the Fixed Charges or Demand Charges of any category,

and the increase required is adjusted through changes in Energy Charges.

4. In view of the reduction expected in the marginal cost of power purchase in FY

2015-16, the tariffs of LT Temporary Supply (other than Religious) and HT

Temporary Supply have been reduced.

5. The tariff of HT Public Service category has been kept lower than for the LT

Public Service category, based on the philosophy that tariffs for consumers

availing supply at higher voltage level should be lower than for lower voltage

levels.

7.5.2 OTHER ISSUES REGARDING RETAIL TARIFFS

RInfra-D submitted that it had filed a Petition in Case No. 153 of 2013 for clarifications

on certain issues related to design of retail tariffs, including issues related to an earlier

Clarificatory Order of the Commission in Case No. 46 of 2009. Considering the

clarifications given in its Order dated 16 June, 2014, RInfra-D requested the Commission

to revise the definitions of consumer categories in the Tariff Schedule for FY 2015-16.

RInfra-D also sought clarity as to whether and what type of educational institutions,

hospitals and dispensaries would be covered in the Public Service category.

RInfra-D submitted that it had also observed the following other issues with the Tariff

Schedules in the MYT Order, and requested the Commission to clarify these for FY 2015-

16:

1. The total variable tariff, as approved by the Commission for LT-II (A) (0-20kW)

Commercial category is lower than the tariff of LT-X Public Service, with Fixed

Charges being identical. This would result in a tariff rise for consumers with

Sanctioned Load up to 20 kW who are eligible to shift to LT-X Public Service

category from LT II (A) Commercial. This was so with regard to the approved

Tariffs of FY 2013-14 and FY 2014-15 also, because of which many consumers

who would otherwise be categorized under LT- X Public Service did not apply for

re-categorisation. The tariffs of such consumers are also expected to be lower than

for equivalent consumers rendering purely commercial services. However, this is

not true for consumers up to Sanctioned Load / Contract Demand of 20 kW.

RInfra-D requested the Commission to correct this anomaly. This could be done

either by approving a higher tariff for LT-II (A) vis-à-vis LT-X Public Service, or


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approving slab-wise tariffs for LT-X Public Services as well. The slabs could be

CD / Sanctioned Load based, as for the slabs of LT-II Commercial, and keeping

the first slab tariff higher in case of LT-Commercial. RInfra-D has proposed lower

Energy Charge for LT X – Public Service vis a vis LT II (A) - Commercial.

2. The MYT Order provides incentive for maintaining a Load Factor over 85% at 1%

of the Energy Charges for every percentage point increase above 85%. RInfra-D

submitted that it is not clear whether the term “Energy Charges” in this case is

generic, meaning all variable charges put together (i.e., Energy Charge, Wheeling

Charge and RAC), or whether it refers to only the “Energy Charges” portion of the

Tariff Schedule.

RInfra-D submitted that, in view of the unbundling of retail tariffs, elements such

as “Wheeling Charges”, “RAC”, etc., which were all bundled together in pre-

MYT Tariffs, were separated. In view of the change in tariff structure and design,

the definitions and applicability of all tariff categories and various incentives /

penalties are required to be changed accordingly or clarified, so as to be

unambiguous when viewed with reference to the new tariff structure.

3. RInfra-D submitted that there is no provision in the MERC (Electricity Supply

Code and Other Conditions of Supply) Regulations, 2005 (‘Supply Code’) to send

Electronic Bills (E-Bill) to the consumer instead of a hard copy, if a consumer opts

for it.

RInfra-D requested the Commission to allow it to send E-Bills to those consumers

who would like to receive bills in electronic form only. RInfra-D would make

appropriate arrangements for consumers on its website to avail such facility.


The Commission's views and rulings on various aspects and elements of tariff

determination are set out in the following paragraphs:

a) Period for recovery of Revenue Gap

As regards spreading of the recovery of the approved Revenue Gap/(Surplus) over a

period of time, the Commission is of the view that the overall increase of around 2.8% is

reasonable, and would not result in a ‘tariff shock’ if it is passed on to consumers in FY

2015-16 itself rather than deferring it for recovery over the next 2 to 3 years. This would


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also save consumers from an additional burden of carrying cost in future years. As RInfra-

D has stated, a Regulatory Asset whose recovery is spread over six years, from FY 2013-

14 to FY 2018-19, was already created in the MYT Order, and it would not be prudent to

create another. Hence, the Commission has determined the Wheeling Charges and Retail

Tariff in such a way that the approved Revenue Gap is recovered in one year, in FY 2015-

16 itself.

b) Increase in Fixed/Demand Charges

The Commission observes that the recovery of fixed costs through fixed/demand charges

is quite low. The approved fixed costs of RInfra-D in FY 2015-16 accounts for 46% of its

ARR, and the revenue from Fixed/Demand Charges enable it to recover only 22% of the

fixed costs, which is quite low. The recovery of fixed costs through fixed/demand charges

needs to be increased gradually. Hence, the Commission has increased these charges such

that the resultant revenue enables RInfra-D to recover 24% of its fixed costs.

As regards the monthly Fixed Charges for LT Residential category, the Commission

would like to move towards a uniform Fixed Charge for single-phase consumers, rather

than the prevalent consumption slab-wise differential Fixed Charges since, ideally, the

Fixed Charges should not be different for different consumption levels for otherwise

similar (i.e. single-phase) consumers. RInfra-D should make its submissions in this regard

with its next Tariff Petition, while ensuring that the impact is not adverse to any

consumption slab.

c) Reduction of Cross-subsidy

The Commission has revised the category-wise tariffs in such a manner that the entire

Revenue Gap is recovered from the revised tariffs; the cross-subsidies between different

consumer categories are reduced to within the band of +20% of ACOS to the extent

possible; and that no consumer category is subjected to a tariff shock.

The Commission has continued to determine the tariffs with an in-built incentive to

consumers to reduce their consumption. The billing impact is designed to increase as the

consumption increases, on account of the higher telescopic tariffs applicable to higher

consumption slabs, while at the same time ensuring that even consumers in the higher

consumption slabs are charged at a lower rate to the extent of consumption corresponding

to the lower slab.


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The reduction in the category-wise cross-subsidy approved in this Order is given in the

Table below:

Table 7-11: Cross-subsidy reduction approved by the Commission for FY 2015-16

Category

Average

Cost of

Supply

(Rs./unit)

Average Billing Rate

(Rs./kWh)

Ratio of Average

Billing Rate to

Average Cost of

Supply (%) Approved

percentage

increase in

tariff (%)

Existing

Tariff

Revised

Tariff

As per

MYT

Order

As per

Revised

Tariff

HT Category

HT I - Industry

8.23

8.93 9.53 127% 116% 7%

HT II - Commercial 10.27 10.99 141% 134% 7%

HT III - Bulk Supply

(Residential) 8.64 8.89 116% 108% 3%

HT IV - Temporary Supply 12.54 12.74 169% 155% 2%

HT V - Metro & Monorail 8.73 9.43 121% 115% 8%

HT VI - Public Services 9.15 8.39 * 102% (8)%

LT Category

LT I - Residential

8.23

6.22 6.56 $ 80% 5%

LT II (A) - Commercial upto 20

kW 8.16 8.91 107% 108% 9%

LT II (B) - Commercial > 20 kW

& <=50 kW 9.80 10.07 127% 122% 3%

LT II (C) - Commercial above 50

kW 11.24 11.07 149% 135% (2)%

LT III - LT Industry upto 20 kW 8.50 9.15 113% 111% 8%

LT-IV - LT Industry > 20 kW 8.31 9.20 114% 112% 11%

LT V - Advertisement &

Hoardings 20.28 20.65 269% 251% 2%

LT VI - Street Lights 10.06 9.12 114% 111% (9)%

LT VII (A) - Temporary Supply

Religious 7.17 7.54 132% 92% 5%

LT VII (B) - Temporary Supply

Others 19.88 20.45 264% 249% 3%

LT VIII - Crematorium & Burial

Grounds 7.15 7.58 96% 92% 6%

LT IX - Agriculture 2.77 3.19 38% 39% 15%

LT X - Public Services 8.07 8.28 * 101% 3%

Note:

* - Not provided in MYT Order, as these were newly created categories in the MYT Order

$ - Not provided in MYT Order for the LT residential category as a whole

The Commission has ensured that the cross-subsidies are reduced, and are within the band

of +20% of ACOS, to the extent possible.


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d) Creation/rationalisation of Consumer Categories

In the MYT Order, the Commission created a new category of "Public Service" in LT and

HT in accordance with the ATE Judgment dated 20 October, 2011 in Appeal Nos. 110,

111, 170, 171, 201 and 202 of 2009 and 70, 71, 78, 79, 80, 81 and 82 of 2010.

In its subsequent Judgment dated 28 August 2012 in Appeal No. 39 of 2012, the ATE has

ruled as under:

"29. The above contention of the Appellant that Government run educational

institutes and institutes run by private parties are equal is misconceived and is

liable to be rejected for the following reasons:

i. Government run institutes are controlled by the education departments and

run on budgetary support. On the other hand private institutions are run

by the Companies incorporated under Companies Act 1956 and operate on

the commercial principles. The survival of Government run institutes very

often depends upon the budgetary provision and not upon private

resources which are available to the institutes in the private sector.

ii. Right to education is a fundamental right under Article 21 read with

Articles 39, 41, 45 and 46 of the Constitution of India and the State is

under obligation to provide education facilities at affordable cost to all

citizens of the country. Private institutes are not under any such obligation

and they are running the education institutes purely as commercial

activity.

iii. Article 45 of the Constitution mandates the State to provide free

compulsory education to all the children till they attain the age of 14

years. In furtherance to this directive principle enshrined in the

Constitution, a Municipal School providing free education along with free

mid-day meal to weaker sections of society cannot be put in the same

bracket along with Public School with Air-conditioned class rooms and

Air-conditioned bus for transportation for children of elite group of

society. They are different classes in themselves and have to be treated

differently. Where Article 14 of the Constitution prohibits equals to be

treated unequally, it also prohibits un-equals to be treated equally.

iv. The same is true for hospitals. Right to health is a fundamental right under

Article 21 of the Constitution and Government has constitutional

obligation to provide the health facilities to all citizens of India. Therefore,

Hospital run by the State giving almost free treatment to all the sections of

society cannot be treated at par with a private hospital which charges

hefty fees even for seeing a general physician.

30. Supreme Court in Hindustan Paper Corpn. Ltd. vs. Govt. of Kerala, (1986) 3

SCC 398 has also held that government undertakings and companies form a

class by themselves.


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31. In view of above, we are of the opinion that the Commission has rightly

distinguished the Government run educational institutes from the institutes run

by the members of the Appellant Society and that the Commission has not shown

any undue preference to the government run institutes over the institutes of the

Appellant Society. Accordingly the Commission has not violated the provisions of

Section 62(3) of the Act."

In the light of the above ATE Judgment, the Commission has created a new sub-category

under "Public Service", in both the HT and LT categories for Government Educational

Institutions and Hospitals. The tariff for this sub-category has been kept close to the

Average Cost of Supply, such that it neither subsidises nor is subsidised by other

categories. The Commission has obtained the necessary consumption-related data from

RInfra-D. The HT and LT Public Service categories will now have the following two sub-

categories:

HT VI - Public Services

(A) Government Educational Institutions and Hospitals

Applicability

This Tariff shall be applicable to all Educational Institutions such as Schools and

Colleges, and Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic

Centres/Laboratories and Libraries and Public reading rooms of State or Central

Government, Local self Government bodies such as Municipal Bodies, Zilla Parishads,

Panchayat Samities or Gram Panchayat, and Sports Club / Health Club / Gymnasium /

Swimming Pool attached to such Educational Institution / Hospital provided said Sports

Club / Health Club / Gymnasium / Swimming Pool is situated in the same premises and is

primarily meant for the students / faculty/ employees/ patients of such Educational

Institutions and Hospitals.

(B) Other Public Services

Applicability

This Tariff shall be applicable to Education Institutions such as Schools and Colleges, and

Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic

Centres/Laboratories and Libraries and Public reading rooms other than those of State or

Central Government, Municipal Bodies, Zilla Parishads, Panchayat Samities or Gram

Panchayat; and Sports Club / Health Club / Gymnasium / Swimming Pool attached to the


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Educational Institution / Hospital provided said Sports Club / Health Club / Gymnasium /

Swimming Pool is situated in the same premises and is primarily meant for the students/

faculty/ employees/ patients of such Educational Institutions and Hospitals.

This category also includes all offices of Government/Municipal Bodies, Local Authority,

local self-Government, Zilla Parishad, and Gram Panchayat; Police Stations, Police

Chowkies, Post Offices, Defence establishments (army, navy and air-force), Spiritual

Organisations which are service oriented, Railways/Monorail/Metro except traction, State

transport establishments; Railways/MonoRail/Metro and State Transport Workshops,

Transport Workshops operated by Local Authority, Fire Service Stations, Jails, Prisons,

Courts, Airports, Ports.

LT IX - Public Services

(A) Government Educational Institutions and Hospitals

Applicability

This Tariff shall be applicable to all Educational Institutions such as Schools and

Colleges, and Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic

Centres/Laboratories and Libraries and Public reading rooms of State or Central

Government, Local self Government bodies such as Municipal Bodies, Zilla Parishads,

Panchayat Samities or Gram Panchayat, and Sports Club / Health Club / Gymnasium /

Swimming Pool attached to such Educational Institution / Hospital provided said Sports

Club / Health Club / Gymnasium / Swimming Pool is situated in the same premises and is

primarily meant for the students / faculty/ employees/ patients of such Educational

Institutions and Hospitals.

(B) Others

Applicability


Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic

Centres/Laboratories and Libraries and Public reading rooms other than those of State or

Central Government, Municipal Bodies, Zilla Parishads, Panchayat Samities or Gram

Panchayat; and Sports Club / Health Club / Gymnasium / Swimming Pool attached to the

Educational Institution / Hospital provided said Sports Club / Health Club / Gymnasium /

Swimming Pool is situated in the same premises and is primarily meant for the students/

faculty/ employees/ patients of such Educational Institutions and Hospitals.





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The Commission has renamed the HT V: Railwayss category as HT V: Metro &

Monorail.

e) Applicability of BPL category tariffs

The applicability of the BPL category tariffs has been retained as specified in the MYT

Order, read with any clarifications thereon. The eligibility criterion has been retained as

an annual limit of 360 units. The applicability of the BPL category to a consumer will

have to be assessed at the end of each financial year. In case any BPL consumer has

consumed more than 360 units in the previous financial year, such consumer would

henceforth be considered under the LT-I residential category, and cannot revert to the

BPL category thereafter irrespective of the level of future consumption.

f) Specific category-related tariff issues raised by RInfra-D

As regards the anomaly between the tariff of LT X Public Services and LT II (A)

Commercial category, the Commission has ensured that the ABR of the LT X Public

Service category is lower than the ABR of the LT II (A) Commercial category.

g) Time of Day tariffs

The TOD tariffs have been retained at the existing levels. The TOD tariffs shall be

compulsorily applicable to LT II: Non-Residential/Commercial [LT II (B), LT II (C)] (for

Contract Demand/Sanctioned Load above 20 kW), LT IV : Industry, and LT X : Public

Service [LT X (A) and LT X (B)], HT I- Industry, HT II - Commercial, HT VI (A) -

Public Services - Government Educational Institutions & Hospitals, HT VI (B) - Public

Service - Others, and optionally available to LT II (A) and LT III categories.

h) Additional Demand Charges for CPPs

Additional demand charges of Rs. 20 per kVA per month would be chargeable for the

stand-by component for CPPs, only if the actual demand recorded exceeds the Contract

Demand.


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i) Billing Demand definition

The existing Billing Demand definition has been retained.

Monthly Billing Demand for HT categories will be the higher of the following:

a) Actual Maximum Demand recorded in the month during 0600 hours to 2200

hours;

b) 75% of the highest billing demand/Contract Demand, whichever is lower,

recorded during the preceding eleven months;

c) 50% of the Contract Demand.

Monthly Billing Demand for LT categories will be the higher of the following:

a) 65% of the actual Maximum Demand recorded in the month during 0600 hours to

2200 hours;

b) 40% of the Contract Demand.

j) Facility for E-Bills

As regards RInfra-D’s suggestion to permit the issue of energy bills to consumers by

electronic means, the Commission notes that Regulation 15 of the Supply Code

Regulations, 2005 does not bar e-billing. RInfra-D may issue such e-bills if the consumer

opts for them instead of or in addition to hard copies. The consumer will retain the option

of reverting to hard copies subsequently upon intimation to RInfra-D.

k) Fuel Adjustment Charges

The existing FAC has been equated to zero, on account of the adoption of the existing fuel

costs and power purchase costs for projection of the power purchase expenses. In case of

any variation in the fuel prices and power purchase prices with respect to these levels,

RInfra-D shall pass on the changes in the cost of power procured due to change in fuel

cost through the FAC component of Z-factor Charge, as specified in Regulations 13.4 to

13.9 of the MYT Regulations.

All previous clarifications given by the Commission through its various Orders continue

to be applicable, unless they are specifically contrary to anything that has been stated in

this Order, in which case the clarifications given in this Order shall prevail.


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7.6 REVISED TARIFFS WITH EFFECT FROM 1 JUNE, 2015

Sl.

Consumer Category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

LOW TENSION

CATEGORIES

1 LT I - Residential

(BPL) Rs. 10 1.80 0.65 0.27

LT I – Residential

0-100 units Rs. 50 $$ 1.80 2.43 0.56

101-300 units Rs. 75

$$ 1.80 3.99 0.75

301 to 500 units 1.80 5.57 0.89

Above 500 units

(balance units) Rs. 100

$$ 1.80 7.21 1.07

2 LT II - LT

Commercial

(A) ≤ 20 kW Rs. 275 1.80 5.42 0.84

(B) > 20 kW and ≤ 50

kW Rs. 220 per kVA 1.80 6.33 1.01

(C) > 50 kW 1.80 7.26 1.22

3

LT III - LT

Industry upto 20

kW load

Rs. 275 1.80 6.08 0.97

4

LT IV - LT

Industry above 20

kW

Rs. 220 per kVA 1.80 6.03 0.93

5

LT V -

Advertisement &

Hoardings, incl.

floodlights & neon

signs

Rs. 450 1.80 14.83 2.19

6 LT VI – Streetlights Rs. 220 per kVA # 1.80 4.19 0.93

7 LT VII –

Temporary Supply

(A) TSR – Temporary

Supply - Religious Rs 225 1.80 4.84 0.84

(B) TSO – Temporary

Supply - Others Rs 450 1.80 16.07 2.36


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Sl.

Consumer Category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

8

LT VIII –

Crematoriums and

Burial Grounds

Rs 225 1.80 4.80 0.86

9 LT IX - Agriculture Rs 25 per HP 1.80 1.01 0.34

10 LT X – Public

Services

(A)

Government

Hospitals &

Educational

Institutions

Rs 275 1.80 5.50 0.92

(B) Others Rs 275 1.80 6.37 0.92

TOD Tariffs (in

addition to above

base tariffs) –

compulsory for LT

II (B) and (C), LT

IV, and LT X (A)

and (B) categories,

and optional for LT

II (A) and LT III

categories

0600 hours to 0900

hours 0.00

0900 hours to 1200

hours 0.50

1200 hours to 1800

hours 0.00

1800 hours to 2200

hours 1.00

2200 hours to 0600

hours -0.75

HIGH TENSION

CATEGORIES

10 HT I – Industry Rs 220 per kVA 0.94 7.27 1.04

11 HT II –

Commercial Rs 220 per kVA 0.94 8.48 1.17

12 HT III – Bulk Rs 220 per kVA 0.94 6.40 0.98


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Sl.

Consumer Category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

Supply

(Residential)

13 HT IV –

Temporary Supply

Rs 450 per

connection 0.94 10.61 1.52

14 HT V – Metro &

Monorail Rs 220 per kVA 0.94 7.37 1.01

15 HT VI – Public

Services

(A)

Government

Hospitals &

Educational

Institutions

Rs 220 per kVA 0.94 5.75 1.01

(B) Others Rs 220 per kVA 0.94 6.36 1.01

TOD Tariffs (in

addition to above

base tariffs) for HT

I, HT II and HT VI

(A) and (B)

categories

0600 hours to 0900

hours 0.00

0900 hours to 1200

hours 0.50

1200 hours to 1800

hours 0.00

1800 hours to 2200

hours 1.00

2200 hours to 0600

hours -0.75

Notes:

1. Fuel Adjustment Cost will be applicable to all consumers and will be charged over the

above tariffs, on the basis of the FAC formula specified by the Commission, and

computed on a monthly basis.

2. $$: Fixed Charge of Rs. 100 per month will be levied on residential consumers

availing 3 phase supply. Additional Fixed Charge of Rs. 100 per 10 kW load or part

thereof above 10 kW load shall be payable.


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3. #: Street lighting having 'automatic timers' for switching 'on/off' would be levied

Demand Charges on the lower of the following:

a) 50% of the Contract Demand

b) Actual Recorded Demand

The detailed computation of category-wise revenue with revised tariffs for FY 2015-16 is

set out at Annexure I to this Order.

The approved Tariff Schedule is given at Annexure II to this Order.

7.7 CROSS-SUBSIDY SURCHARGE

RInfra-D submitted that the MYT Order, which modified the CSS, was challenged by

TPC-D and some consumers before ATE in Appeal Nos. 294, 299, 331 and 333 of 2013.

The contentions raised, inter alia, were that increase of CSS is not permissible under the

EA, 2003, and that the methodology of CSS determination was flawed as certain costs

were not included in the computation, and resulted in a CSS higher than approved in the

retail tariffs.

RInfra-D submitted that the ATE, in its Judgment on the above Appeals, has clarified that

there is no discrepancy or error in the determination of CSS, and that the Commission has

correctly applied the formula of the Tariff Policy. Thus, the issues of applicability of CSS

on change-over consumers and the methodology for its computation have achieved

finality. This Judgment, and the previous ATE Judgment in Appeal No. 178 of 2011, also

hold that the CSS will be re-determined every time the underlying tariffs and cost undergo

change and are approved afresh by the Commission.

RInfra-D submitted that, in the light of these Judgments, it has re-computed the CSS for

FY 2015-16 considering the retail tariffs, projected cost of power purchase, and Wheeling

Charges proposed for FY 2015-16.

7.7.1 REVISED CSS FOR FY 2015-16

RInfra-D submitted that it has considered the formula prescribed in the Tariff Policy to

estimate the CSS for FY 2015-16, as under:

CSS = T – [C *(1+L %) + D]

Where,

CSS is the Cross Subsidy Surcharge for the relevant year


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T is the Tariff payable by the relevant category of consumers for the relevant year;

C is the weighted average cost of power purchase of the top 5% at the margin,

excluding liquid fuel-based generation and renewable power for the relevant year

D is the Wheeling Charge for the relevant year

L is the system Losses for the applicable voltage level, expressed as a percentage.

RInfra-D explained each of the elements of the above CSS formula as follows:

“T” in the CSS formula is the proposed revised tariff for FY 2015-16 (excluding the RAC

approved for FY 2015-16 in the MYT Order, which RInfra-D has proposed to be

continued);

“C” refers to the weighted average cost of power purchase of top 5% at the margin,

excluding liquid fuel based generation and renewable power for the relevant year. RInfra-

D submitted that it has considered “C” based on the source-wise cost of power as

submitted by it for FY 2015-16 in the present Petition, as shown in the Table below:

Table 7-12: Marginal Power Purchase Cost per unit for FY 2015-16 as submitted by

RInfra-D


Marginal Power Purchase Cost per unit (Rs/kWh) 4.41

“L” in the CSS formula refers to the wheeling losses for the applicable voltage level,

expressed as a percentage. RInfra-D has submitted that it has considered the wheeling

losses to be the same as considered in the determination of Energy Balance in the present

Petition, i.e., the revised wheeling losses at HT and LT level as per the ASCI report. The

Table below gives the details of the wheeling losses considered by RInfra-D for the

computation of revised CSS for FY 2015-16.

Table 7-13: Wheeling Losses for FY 2015-16 as submitted by RInfra-D as submitted by

RInfra-D


Transmission Losses 4.08%

Distribution Losses : HT network 1.88%

Distribution Losses : LT network 9.90%

“D” in the CSS formula refers to the Wheeling Charges for use of the RInfra-D network.


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The revised Wheeling Charges proposed by RInfra-D for FY 2015-16 are given in the

Table below:

Table 7-14: Wheeling Charges for FY 2015-16 as submitted by RInfra-D (Rs /kWh)


Wheeling Charges per unit – HT 1.42

Wheeling Charges per unit – LT 2.73

RInfra-D submitted that the revised CSS is recoverable from change-over consumers on

their consumption during FY 2015-16. The revised CSS shall be applicable to change-

over consumers for the energy consumed at the consumption end.

RInfra-D submitted that the MYT Order estimated revenue from CSS using the grossed

up energy for change-over consumers, whereas RInfra-D understands that CSS should be

applied on the energy consumed by the consumer (i.e., as measured at the consumption

end); and that CSS has been applied in this manner only on the change-over consumers

since the time CSS was prescribed through the Order in Case No. 43 of 2010. Since all

elements in the CSS formula pertain to the consumption point, the result of the formula,

i.e., the CSS, should also pertain to the consumption point only, and cannot be applied on

the T<>D interface energy, which is grossed up for wheeling losses. RInfra-D requested

the Commission to correct it accordingly in this Order.

The category-wise CSS proposed by RInfra-D for change-over consumers for FY 2015-16

is given in the Table below:

Table 7-15: CSS for FY 2015-16 proposed by RInfra-D (Rs./kWh)

Consumer Category RInfra-D

Petition



0-100

101-300

301-500 3.16

501 and above 5.54


0-100

101-300


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Consumer Category RInfra-D

Petition

301-500 2.96

501 and above 5.30

LT II (A)- 0-20 kW 3.72

LT II (B) - 20-50 kW 4.62

LT II (C) - above 50 kW 5.21

LT III - LT Industry up to 20 kW 2.50

LT IV - LT Industry above 20 kW 2.38

LT-V : LT- Advertisements and Hoardings 14.44

LT VI: LT -Street Lights 3.77

LT-VII (A): LT -Temporary Supply Religious 1.98

LT-VII (B): LT -Temporary Supply Others 5.24

LT VIII: LT – Crematorium and Burial

Grounds 0.46

LT IX: LT –Agriculture

LT X: LT -Public Service 2.57

HT I: HT-Industry 3.68

HTII : HT- Commercial 5.52

HT III: HT-Group Housing Society 3.54

HTIV : HT - Temporary Supply 5.11

HT V – Metro & Monorail 4.06

HT VI - Public Service 3.89

RInfra-D submitted that it had filed Appeal No. 140 of 2011 on recovery of CSS from all

migrating consumers, including Group III consumers, in which ATE rejected its

contentions. RInfra-D has filed an appeal against this before the Supreme Court (Civil

Appeal No. 3326 of 2014), which is pending. In view of the above, in its MTR Petition

RInfra-D has considered the recovery of CSS only from change-over consumers. Its

applicability to switch-over consumers would depend on the outcome of that Appeal.

Income from recovery of CSS for FY 2015-16, as submitted by RInfra-D is given below:



Cross Subsidy Surcharge (Rs. crore) 269.50


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In the MYT Order, the Commission had determined the CSS in accordance with the

formula stipulated under the Tariff Policy. Subsequently, the Commission notified the

MERC (Distribution OA) Regulations, 2014 on 25 June, 2014. The relevant extracts are

reproduced below:

"17. Cross Subsidy Surcharge

17.1 Every consumer of a Distribution Licensee who has been granted Open

Access in accordance with these Regulations or any consumer situated within area

of the supply of Distribution Licensee and/or receiving supply from a Generating

Company using dedicated transmission line, shall be liable to pay a cross subsidy

surcharge, as may be stipulated, as a condition for availing Open Access:...

17.3 The formula for the purpose of determination of Cross-subsidy surcharge

shall be as under:

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

excluding liquid fuel based generation and renewable power;

D is the Wheeling charge in per kWh basis;

L is the Distribution System Losses as stipulated by the Commission in accordance

with Regulation 25.2 of these Regulations for the applicable voltage level,

expressed as a percentage:

Provided that in case the above formula gives negative value of surcharge,

the same shall be zero:

Provided that ‘L’ shall be the losses at the voltage level of the consumer

category and shall include the Transmission Losses corresponding to the source of

power purchase component ‘C’:

Provided further that the concessions to the applicable surcharge, if any,

in case the Open Access consumer purchases power from a Renewable source of

energy, shall be stipulated by the Commission from time to time:

Provided further that the Commission may, if required, revisit the

formula and modify the same by general or special Order.

17.4 The Cross-subsidy surcharge payable to the Distribution Licensee by

consumer shall be determined by the Commission in the Tariff Order of the

Distribution Licensees or any other Order issued by the Commission:

...Provided further that as and when the Cross subsidy reduction road map

is specified the surcharge to be levied on consumers shall be revised by the

Commission.


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17.5 The Distribution Licensee shall submit full details of the calculation of cross

subsidy surcharge within the area of supply of such Distribution Licensee together

with its application for determination of tariff submitted to the Commission in

accordance with the provisions of clause (d) of sub-section (1) of Section 62 of the

Act."

In accordance with these Regulations, the Commission has computed the category-wise

CSS for RInfra-D for FY 2015-16, based on the approved values of various components

of CSS formulae, as explained in the paragraphs below.

Computation of 'C'

The rate of power purchase from VIPL is the costliest, and its quantum is 46% of the

power purchase approved for RInfra-D for FY 2015-16, excluding that purchased from

renewable energy sources. Therefore, the rate of power purchase from VIPL has been

considered to be the weighted average power purchase rate of the top 5% at the margin.

On this basis, ‘C’ as computed for RInfra-D for FY 2015-16 is Rs 4.12/kWh.

Average Billing Rate

The category-wise ABRs for FY 2015-16 have been considered as approved for the

consumers of RInfra-D in the earlier paragraphs of this Section, and as elaborated in the

Tables of cross-subsidy reduction for the respective years.

System Loss ‘L’

The system loss for RInfra-D comprises the Wheeling Loss and Transmission Loss

approved by the Commission while approving the Energy Balance for FY 2015-16, as

elaborated in Section 6 of this Order.

As discussed earlier, the Wheeling Loss at HT and LT levels has been considered as

1.94% and 9.00%, respectively, while the InSTS loss has been considered as 3.89%.

Wheeling Charges ‘D’

The voltage-wise Wheeling Charges for FY 2015-16 have been considered as approved

by the Commission in the earlier paragraphs of this Section.


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Category-wise CSS computed as per the formula in the MERC (Distribution OA)

Regulations, 2014

The category-wise CSS computed as per the formula specified in the MERC (Distribution

OA) Regulations, 2014 is given in the Table below:

Table 7-17: Category-wise CSS for RInfra-D as per formula specified in the

Distribution OA Regulations (Rs/kWh)

Sl.

No. Category T C C*(1+L%) W CSS

LT Category

1 LT -I Residential

0-100 4.49 4.12 4.67 1.80 -

101-300 6.39 4.12 4.67 1.80 -

301-500 7.79 4.12 4.67 1.80 1.32

501 and above 9.23 4.12 4.67 1.80 2.76

2 LT II - Commercial - Upto 20 kW 8.07 4.12 4.67 1.80 1.60

3 LT II - Commercial - > 20 kW & ≤

50kW 9.06 4.12 4.67 1.80 2.59

4 LT II - Commercial - > 50 kW 9.85 4.12 4.67 1.80 3.38

5 LT III - Industry ≤ 20 kW 8.18 4.12 4.67 1.80 1.71

6 LT IV - LT Industry above 20 kW 8.27 4.12 4.67 1.80 1.80

7 LT-V : LT- Advertisements and

Hoardings 18.46 4.12 4.67 1.80 11.99

8 LT VI - Street Lights 8.19 4.12 4.67 1.80 1.72

9 LT-VII (A): LT -Temporary Supply

Religious 6.70 4.12 4.67 1.80 0.23

10 LT-VII (B): LT -Temporary Supply

Others 18.09 4.12 4.67 1.80 11.62

11 LT VIII - Crematorium 6.72 4.12 4.67 1.80 0.25

12 LT IX - Agriculture 2.85 4.12 4.67 1.80 -

13 LT X (B) Public Service Others 8.28 4.12 4.67 1.80 1.81

HT Category

14 HT I: HT-Industry 8.49 4.12 4.37 0.94 3.18

15 HT II : HT- Commercial 9.82 4.12 4.37 0.94 4.51

16 HT III: Bulk Supply (Residential) 7.91 4.12 4.37 0.94 2.60

17 HT IV : HT - Temporary Supply 11.22 4.12 4.37 0.94 5.91

18 HT V - Metro & Monorail 8.42 4.12 4.37 0.94 3.11

19 HT VI - Public Service Others 8.39 4.12 4.37 0.94 3.08


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The Commission observes that the category-wise CSS computed above is very high for

most categories, and is significantly higher than the CSS determined for FY 2015-16 in

the MYT Order.

As the category-wise tariffs have been determined on the basis of Average Cost of

Supply, the actual loss of cross-subsidy to RInfra-D on account of consumers migrating

from it through OA is the difference between the category-wise ABR and the ACOS.

However, it is observed that the CSS computed in accordance with the Tariff Policy and

the Distribution OA Regulations, 2014 formulae results in a serious anomaly, since the

CSS works out to be much higher than the actual loss of cross-subsidy to RInfra-D. This

anomaly is a consequence of the interplay between the different values of 'T', 'C', 'D' and

'L' in the formula, and is significantly affected by the value of 'C' which reflects the

weighted average cost of power purchase of the top 5% at the margin. In a situation where

the marginal rate of power purchase reduces even though the overall average rate

increases, keeping all other factors the same, the CSS computed as per the Tariff Policy

formula will work out to be higher, even though the actual loss of cross-subsidy would be

lower on account of the ACOS being consequently higher.

Since the CSS is intended to compensate the Licensee for the loss of cross-subsidy and

not result in profit, the Commission is of the view that the formula for computation of

CSS needs to be revisited in the present circumstances. The MERC (Distribution Open

Access) Regulations, 2014 has an enabling provision, as under:

"Provided further that the Commission may, if required, revisit the formula and

modify the same by general or special Order."

Further, the intention of the CSS is not to block OA or to create hurdles to competition by

artificially keeping the barriers to OA high.

In view of the above, the Commission has decided to revisit the formula for determination

of CSS for the purposes of this Order. It has accordingly computed the category-wise CSS

for RInfra-D for FY 2015-16 as the difference between the ABR of the respective

categories as approved in this Order, and the ACOS for FY 2015-16, as shown in the

Table below:


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Table 7-18: Category-wise CSS for RInfra-D, as per ABR minus ACOS formula

(Rs/kWh) computed by the Commission

Sl.

No. Category ABR ACOS CSS

LT Category

1 LT -I Residential

0-100 4.49 8.23 -

101-300 6.39 8.23 -

301-500 7.79 8.23 -

501 and above 9.23 8.23 1.00

2 LT II - Commercial - Upto 20 kW 8.07 8.23 -

3 LT II - Commercial - > 20 kW & ≤

50 kW 9.06 8.23 0.83

4 LT II - Commercial - > 50 kW 9.85 8.23 1.62

5 LT III - Industry ≤ 20 kW 8.18 8.23 -

6 LT IV - LT Industry above 20 kW 8.27 8.23 0.04

7 LT-V : LT- Advertisements and

Hoardings 18.46 8.23 10.23

8 LT VI - Street Lights 8.19 8.23 -


Religious 6.70 8.23 -

10 LT-VII (B): LT -Temporary Supply

Others 18.09 8.23 9.86

11 LT VIII : Crematorium 6.72 8.23 -

12 LT IX : Agriculture 2.85 8.23 -

13 LT X (B): Public Service Others 8.28 8.23 0.05

HT Category

14 HT I: HT-Industry 8.49 8.23 0.26

15 HT II : HT- Commercial 9.82 8.23 1.59

16 HT III: Bulk Supply (Residential) 7.91 8.23 -

17 HT IV : HT - Temporary Supply 11.22 8.23 2.99

18 HT V : Metro & Monorail 8.42 8.23 0.19

19 HT VI (B) : Public Service Others 8.39 8.23 0.16

The Tariff Policy also stipulates that the CSS should not be so onerous that it eliminates

competition, and also that it should be brought down progressively, as far as possible at a

linear rate to a maximum of 20% of its opening level by 2010-11:

"8.5 Cross-subsidy surcharge and additional surcharge for open access


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8.5.1 National Electricity Policy lays down that the amount of cross-subsidy

surcharge and the additional surcharge to be levied from consumers who are

permitted open access should not be so onerous that it eliminates competition

which is intended to be fostered in generation and supply of power directly to the

consumers through open access.

A consumer who is permitted open access will have to make payment to the

generator, the transmission licensee whose transmission systems are used,

distribution utility for the Wheeling Charges and, in addition, the cross subsidy

surcharge. The computation of cross subsidy surcharge, therefore, needs to be

done in a manner that while it compensates the distribution licensee, it does not

constrain introduction of competition through open access. A consumer would

avail of open access only if the payment of all the charges leads to a benefit to

him. While the interest of distribution licensee needs to be protected it would be

essential that this provision of the Act, which requires the open access to be

introduced in a time-bound manner, is used to bring about competition in the

larger interest of consumers...

The cross-subsidy surcharge should be brought down progressively and, as far as

possible, at a linear rate to a maximum of 20% of its opening level by the year

2010-11..."

Hence, the Commission has decided that the CSS for FY 2015-16 shall be levied at the

rate of 75% of that determined as the difference between the ABR of the respective

categories as approved in this Order, and the ACOS, as shown in the above Table.

Accordingly, the category-wise CSS approved by the Commission for RInfra-D for FY

2015-16 is as shown in the Table below:

Table 7-19: Category-wise CSS for RInfra-D approved by the Commission for FY 2015-

16 (Rs/kWh)

Sl.

No. Category CSS @75%

LT Category

1 LT -I Residential

0-100 -

101-300 -

301-500 -

501 and above 0.75

2 LT II - Commercial - Upto 20 kW -

3 LT II - Commercial - > 20 kW & ≤ 50kW 0.62

4 LT II - Commercial - > 50kW 1.22

5 LT III - Industry ≤ 20 kW -

6 LT IV - LT Industry above 20 kW 0.03

7 LT-V : LT- Advertisements and Hoardings 7.67


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Sl.

No. Category CSS @75%

8 LT VI - Street Lights -


Religious -

10 LT-VII (B): LT -Temporary Supply Others 7.40

11 LT VIII : Crematorium -

12 LT IX : Agriculture -

13 LT X (B): Public Service Others 0.04

HT Category

14 HT I: HT-Industry 0.20

15 HT II : HT- Commercial 1.19

16 HT III: Bulk Supply (Residential) -

17 HT IV : HT - Temporary Supply 2.24

18 HT V : Metro & Monorail 0.14

19 HT VI (B) : Public Service Others 0.12

In case the Open Access consumer purchases power from a Renewable source of energy,

then only 25% of the above determined CSS shall be payable.

The CSS approved as above shall be applicable on the energy actually consumed by the

change-over/OA consumer, i.e., metered consumption, rather than the grossed up

consumption.

The income from recovery of CSS from change-over consumers for FY 2015-16, as

approved by the Commission, is given below:

Table 7-20: Revenue from CSS in FY 2015-16 as approved by the Commission (Rs.

crore)


Cross Subsidy Surcharge (Rs. crore) 269.50 24.89

The above income from CSS from the change-over consumers has been considered to

determine the net ARR of the Supply Business to be recovered from Supply Business

consumers.

7.8 REGULATORY ASSET RECOVERY AND CHARGES

RInfra-D submitted that the MYT Order approved RAC for the FY 2013-14 to FY 2018-

19 to enable it to recover its past accumulated losses (up to FY 2011-12), which had


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arisen mainly due to non-revision in tariffs since FY 2009-10, and the loss of cross-

subsidy due to non-recovery of CSS. The Commission approved the recovery of

Regulatory Assets of RInfra-D, both from its own supply consumers as well as change-

over consumers, in accordance with its Orders in the past. RInfra-D has accordingly been

recovering RAC through its billing of its own consumers. As regards change-over

consumers, the RAC is billed by TPC-D and remitted to RInfra-D. RInfra-D proposes to

continue with the RAC approved for FY 2015-16 in the MYT Order, which would be in

addition to the retail tariffs proposed.

RInfra-D submitted that, if RAC is merged in retail tariffs, the CSS would become

significantly higher, as the entire RAC in Rs./kWh approved for a category would reflect

in that category’s CSS. Since the CSS for low-end consumers (i.e. up to 300 units

residential) would be likely to be zero, this would mean that no RAC would be recovered

from low-end change-over consumers since they would not be liable to pay CSS. This

would result in under-recovery of RAC, which would accumulate over time and attract

further carrying cost when recovered in future. RInfra-D requested the Commission to

consider these submissions.

RInfra-D submitted that, in the MYT Order, the Commission approved the recovery of

RAC from own consumers on the metered consumption, i.e., energy measured at the

consumption point whereas, for change-over consumers, the energy grossed-up for

wheeling losses was considered. The revenue from RAC projected in the MYT Order was

based on this premise. However, in practice, RAC is levied by TPC-D on change-over

consumers only on the metered consumption. Thus, RAC recovery is lower than was

estimated in the MYT Order. Another significant reason for under-recovery of RAC is the

projection of change-over sales and own sales volume in the MYT Order. RInfra-D

submitted that own sales as well as change-over sales have been lower than were

anticipated at the time of the MYT Order. RInfra-D submitted the following Table

showing the approved and actual recovery of RAC in each year from FY 2013-14

onwards, including the anticipated recovery in FY 2015-16:

Table 7-21: Regulatory Asset Recovery from FY 2013-14 to FY 2015-16 as submitted by

RInfra-D


14

FY 2014-

15

FY 2015-

16

RAC (overall) approved (Rs./kWh) 0.91 0.87 0.82

RAC as approved (Rs. Crore) 924.82 924.82 924.82

RAC (overall) actual (Rs./kWh) 0.95 0.92 0.85

RAC actual (Rs. Crore) 497.73 877.87 842.12


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14

FY 2014-

15

FY 2015-

16

Under-recovery (Rs. Crore) 427.09 46.95 82.70

RInfra-D submitted that it has not proposed to recover the shortfall of RAC during the

present MYT Period, but in the next MYT Period. Thus, in the present Petition, it has not

proposed any change in the approved RAC from own and change-over consumers.


The Commission has accepted RInfra-D's proposal and decided to assess the overall

over/under-recovery of RAC at the end of the present Control Period, and the same shall

be passed through for recovery through retail tariffs at the appropriate time.

7.9 SCHEDULE OF CHARGES

RInfra-D submitted that it does not propose any change in the present Schedule of

Charges.


As RInfra-D has not sought any revision, the Commission has decided to retain the

Schedule of Charges as approved vide Order dated 28 December, 2012 in Case No. 73 of

2012.

7.10 APPLICABILITY OF REVISED TARIFFS

The revised tariffs approved in this Order will be applicable from 1 June, 2015 onwards.

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 the existing and

revised tariffs shall be computed based on the pro-rata consumption (units consumed

during the respective periods, arrived at on the basis of average unit consumption per day

multiplied by the number of days in the respective period falling under the billing cycle).


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8 RULINGS OF THE COMMISSION

8.1 IMPACT OF ATE JUDGMENTS

8.1.1 The Commission has approved the total impact of ATE Judgment along with

carrying cost as Rs. 139.00 crore as against Rs. 295.41 crore claimed by RInfra-D,

as under:

a) The Commission has allowed the additional impact on account of Income Tax

of previous years as Rs. 100 crore, as claimed by RInfra-D.

b) The Commission has allowed the interest on long term loans for FY 2011-12 as

Rs. 27.85 crore as against Rs. 27.99 crore claimed by RInfra-D.

c) The Commission has allowed the amount of Rs. 6.68 crore on account of

interest on delayed payment for FY 2008-09 as claimed by RInfra-D.

d) The Commission has approved the carrying cost on delayed payments as Rs.

4.46 crore as against Rs. 160.75 crore claimed by RInfra-D.

8.2 TRUE UP FOR FY 2012-13

8.2.1 The Commission has approved the combined Revenue Gap/(Surplus) for FY

2012-13 for the Wires Business and Supply Business, although truing up for all

the components of expenses have been done separately for the Wires and Supply

Businesses.

8.2.2 The Commission has approved the actual sales for FY 2012-13 as submitted by

RInfra-D.

8.2.3 The Commission has considered the actual Transmission Losses of 4.12% for FY

2012-13 as against 5.18% considered by RInfra-D.

8.2.4 The Distribution Loss of RInfra-D for FY 2012-13 works out to 10.24%, as

against 9.49% reported by RInfra-D.

8.2.5 The Commission has approved the power purchase cost of Rs. 3312.56 crore for

FY 2012-13 as against Rs. 3341.81 crore claimed by RInfra-D, based on the

following:

a) The excess purchase of non-Solar RECs have been disallowed


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b) The quantum of power purchase from the Imbalance Pool has been considered

based on the total energy input considered in the suo-motu Order on RPO

compliance.

8.2.6 The Commission has approved O&M Expenses of Rs. 971.49 crore for FY 2012-

13 as against Rs. 971.50 crore claimed by RInfra-D.

8.2.7 The Commission has approved the capitalisation of Rs. 198.40 crore for FY 2012-

13, as against Rs. 199.47 crore claimed by RInfra-D.

8.2.8 The Commission has approved the Depreciation of Rs. 176.58 crore for FY 2012-

13, as against Rs. 177.60 crore claimed by RInfra-D.

8.2.9 The Commission has approved the interest on loans as Rs. 152.37 crore for FY

2012-13, as against Rs. 151.58 crore claimed by RInfra-D.

8.2.10 The Commission has approved the interest on working capital as Rs. 63.87 crore

for FY 2012-13, as against Rs. 64.61 crore claimed by RInfra-D.

8.2.11 The Commission has approved the interest on Consumers' Security Deposit as Rs.

20.47 crore for FY 2012-13, as claimed by RInfra-D.

8.2.12 The Commission has approved the provision for bad and doubtful debts as Rs.


8.2.13 The Commission has approved the Income Tax as zero for FY 2012-13, as

claimed by RInfra-D.

8.2.14 The Commission has approved the intra-State Transmission Charges as Rs. 261.37

crore for FY 2012-13, as claimed by RInfra-D.

8.2.15 The Commission has approved the Contribution to Contingency Reserve as Rs.


8.2.16 The Commission has considered efficiency loss of Rs. 38.30 crore due to higher

Distribution Losses for FY 2012-13, which has deducted from the ARR for FY

2012-13.

8.2.17 The Commission has approved the Return on Equity as Rs. 250.58 crore and

additional RoE of Rs. 9.65 crore for higher Wires Availability and Supply

Availability for FY 2012-13, as against Return on Equity of Rs. 250.60 crore and

additional RoE of Rs. 9.67 crore claimed by RInfra-D.


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8.2.18 The Commission has approved the Non-Tariff Income as Rs. 164.69 crore for FY

2012-13, as against Rs. 172.12 crore claimed by RInfra-D.

8.2.19 The Commission has approved the Income from Other Business as Rs. 2.65 crore


8.2.20 Based on the above, the Commission has approved the ARR as Rs. 5255.10 crore


8.2.21 The Commission has approved the actual revenue as Rs. 4421.69 crore for FY

2012-13, as claimed by RInfra-D.

8.2.22 Based on the above, the Commission has approved the Revenue Gap as Rs. 475.43

crore for FY 2012-13, as against Rs. 539.03 crore claimed by RInfra-D.

8.3 TRUE UP FOR FY 2013-14

8.3.1 The Commission has trued up the ARR for FY 2013-14 for Wires Business and

Supply Business separately.

8.3.2 The Commission has approved the actual sales for FY 2013-14 as submitted by

RInfra-D.

8.3.3 The Commission has considered the actual Transmission Losses of 4.09% for FY

2013-as considered by RInfra-D.

8.3.4 The Distribution Loss of RInfra-D for FY 2013-14 works out to 9.50%, as

reported by RInfra-D.

8.3.5 The Commission has approved the power purchase cost of Rs. 2979.67 crore for

FY 2012-13 as against Rs. 3028.09 crore claimed by RInfra-D, based on the

following:

a) The excess purchase of non-Solar RECs have been disallowed

b) The quantum of power purchase from the Imbalance Pool has been considered

based on the total energy input considered in the suo-motu Order on RPO

compliance.

8.3.6 For FY 2013-14, for the Wires Business the Commission has approved O&M

Expenses of Rs. 617.39 crore as against Rs. 617.38 crore claimed by RInfra-D,

and for the Supply Business, the Commission has approved O&M Expenses of Rs.

307.71 crore as claimed by RInfra-D.


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8.3.7 The Commission has approved capitalisation of Rs. 288.00 crore and Rs. 10.40

crore for the Wires Business and Supply Business, respectively, for FY 2013-14,

as against Rs. 292.87 crore and Rs. 10.58 crore claimed by RInfra-D for the Wires

Business and Supply Business, respectively.

8.3.8 The Commission has approved Depreciation of Rs. 166.58 crore and Rs. 18.62


as against Rs. 167.38 crore and Rs. 18.63 crore claimed by RInfra-D for the Wires


8.3.9 The Commission has approved the interest on loans as Rs. 134.92 crore and Rs.

13.77 crore for the Wires Business and Supply Business, respectively, for FY

2013-14, as against Rs. 133.79 crore and Rs. 13.68 crore claimed by RInfra-D for

the Wires Business and Supply Business, respectively.

8.3.10 The Commission has approved the IoWC as Rs. 40.09 crore and Rs. 32.84 crore

for the Wires Business and Supply Business, respectively, for FY 2013-14, as

against Rs. 39.95 crore and Rs. 32.15 crore claimed by RInfra-D for the Wires


8.3.11 The Commission has approved interest on Consumers' Security Deposit as Rs.

22.79 crore for the Supply Business for FY 2013-14, as claimed by RInfra-D.

8.3.12 The Commission has approved the Provision for Bad and Doubtful Debts as Rs.

2.90 crore and Rs. 9.56 crore for the Wires Business and Supply Business,

respectively, for FY 2013-14, as against Rs. 2.37 crore and Rs. 10.09 crore

claimed by RInfra-D for the Wires Business and Supply Business, respectively.

8.3.13 The Commission has approved the Income Tax as zero for both the Wires

Business and Supply Business for FY 2013-14, as against Rs. 29.39 crore and Rs.

88.14 crore claimed by RInfra-D for the Wires Business and Supply Business,

respectively.

8.3.14 The Commission has approved the Interest on FAC as zero for FY 2013-14, as

against Rs. 3.81 crore claimed by RInfra-D.

8.3.15 The Commission has approved the intra-State Transmission Charges as Rs. 428.16

crore for the Supply Business for FY 2013-14, as claimed by RInfra-D.

8.3.16 The Commission has approved the Contribution to Contingency Reserves at Rs.

9.53 crore and Rs. 1.24 crore for the Wires Business and Supply Business,

respectively, for FY 2013-14, as claimed by RInfra-D.


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8.3.17 The Commission has approved RoE of Rs. 233.42 crore for Wires Business as

against Rs. 233.56 crore claimed by RInfra-D and RoE of Rs. 26.72 crore as

against Rs 26.75 crore claimed by RInfra-D for Supply Business. The Commission

has approved additional RoE of Rs. (0.01) crore and Rs. 1.36 crore for higher

Availability for the Wires Business and Supply Business, respectively, for FY

2013-14, as against additional RoE of Rs. 7.49 crore and Rs. 2.13 crore claimed by

RInfra-D for the Wires Business and Supply Business, respectively.

8.3.18 For FY 2013-14, the Commission has approved the Non-Tariff Income for the

Wires Business as Rs. 13.49 crore as against Rs. 21.67 crore claimed by RInfra-D.

For FY 2013-14, the Commission has approved the Non-Tariff Income for the

Supply Business as Rs. 154.29 crore as claimed by RInfra-D.

8.3.19 The Commission has approved the ARR as Rs. 1186.28 crore and Rs. 3915.12


as against Rs. 1218.68 crore and Rs. 4056.03 crore claimed by RInfra-D for the

Wires Business and Supply Business, respectively.

8.3.20 The Commission has approved the actual Revenue of Rs. 663.98 crore and Rs.

4083.61 crore for the Wires Business and Supply Business, respectively, for FY

2013-14, as claimed by RInfra-D.

8.3.21 The Commission has approved the total Revenue Gap of Rs. 226.15 crore for the

Wires Business and Revenue Surplus of Rs. 457.22 crore for the Supply Business

for FY 2013-14, as against Revenue Gap of Rs. 258.54 crore for the Wires

Business and Revenue Surplus of Rs. 316.31 crore for the Supply Business


8.4 PROVISIONAL TRUE UP FOR FY 2014-15 AND REVISED ARR FOR FY

2015-16

8.4.1 For FY 2014-15, the Commission has approved the total own sales of 7675.06 MU

as against 7616.39 MU as claimed by RInfra-D. For FY 2015-16, the Commission

has approved the total own sales of 7767.01 MU as against 8014.16 MU as


8.4.2 The Commission has considered the Transmission Losses of 3.89% for FY 2014-

15 and FY 2015-16 as against 3.94% and 4.08%, respectively, as submitted by

RInfra-D.

8.4.3 The Commission has considered the Distribution Losses of 9.41% for FY 2014-15


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and 9.36% FY 2015-16 in accordance with the Loss reduction trajectory approved

in the MYT Order for RInfra-D.

8.4.4 It is evident that RInfra-D has completely miscalculated the cost of power

purchase from VIPL for FY 2014-15 and FY 2015-16. The PPA between RInfra-D

and VIPL, approved by the Commission, was based on the presumption that VIPL

would source lower cost coal under the FSA, however, in reality, VIPL has not

entered into the FSA and has procured coal from other costlier sources, which has

resulted in steep increase in the generation cost, which RInfra-D is desirous of

passing on to the consumers. This is a total deviation from the PPA approved by

the Commission, both in physical terms and in financial terms. RInfra-D was

required to have obtained the Commission's prior approval for this deviation much

earlier, in accordance with Regulation 26 of the MERC MYT Regulations, 2011.

However, RInfra-D has failed to do so. RInfra-D was also aware that as per the

MERC MYT Regulations, 2011, power purchase expenses in excess of 105% of

the approved power purchase cost should have been submitted to the Commission

for prior approval, as is evident from the fact that it had submitted a Petition for

increase in power purchase cost on account of the purchase from TPC-G's Unit 6,

under SLDC directions. Hence, the Commission is left with no option but to

restrict the cost of power purchase from VIPL to the tariff approved for VIPL, in

the Order dated 9 March, 2015 in Case No. 115 of 2014, for FY 2014-15 and FY

2015-16. Thus, for FY 2014-15, the Commission has approved the total power

purchase cost of Rs. 3986.41 crore as against Rs. 4554.26 crore claimed by

RInfra-D. For FY 2015-16, the Commission has approved the total power

purchase cost of Rs. 3694.60 crore as against Rs. 4242.38 crore claimed by

RInfra-D. The Commission has approved the intra-State Transmission Charges as

Rs. 431.07 crore and Rs. 319.32 crore for the Supply Business for FY 2014-15 and

FY 2015-16, respectively, as against Rs. 431.07 crore and Rs. 505.53 crore


8.4.5 For FY 2014-15, the Commission has approved the O&M Expenses for Wires

Business and Supply Business as Rs. 658.07 crore and Rs. 325.76 crore,

respectively, as against Rs. 686.59 crore and Rs. 336.71 crore claimed by RInfra-

D. For FY 2015-16, the Commission has approved the O&M Expenses for Wires

Business and Supply Business as Rs. 695.72 crore and Rs. 344.39 crore,

respectively, as against Rs. 743.81 crore and Rs. 368.48 crore claimed by RInfra-

D.

8.4.6 For FY 2014-15, the Commission has approved the Capitalisation as Rs. 286.95

crore and Rs. 36.00 crore, as submitted by RInfra-D for the Wires Business and


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Supply Business, respectively. For FY 2015-16, the Commission has approved the

Capitalisation at Rs. 373.60 crore and Rs. 35.52 crore for the Wires Business and

Supply Business, respectively, as claimed by RInfra-D.

8.4.7 For FY 2014-15, the Commission has approved Depreciation as Rs. 178.30 crore

and Rs. 19.27 crore for Wires Business and Supply Business, respectively, as

against Rs. 183.06 crore and Rs. 19.58 crore for Wires Business and Supply

Business, respectively, claimed by RInfra-D. For FY 2015-16, the Commission

has approved Depreciation as Rs. 191.82 crore and Rs. 20.62 crore for Wires

Business and Supply Business, respectively, as against Rs. 191.87 crore and Rs.

21.47 crore claimed by RInfra-D.

8.4.8 For FY 2014-15, the Commission has approved the interest on loan at Rs. 134.61

crore and Rs. 13.26 crore for Wires Business and Supply Business, respectively,

as against Rs. 137.09 crore and Rs. 13.53 crore claimed by RInfra-D. For FY

2015-16, the Commission has approved the interest on loan at Rs. 137.85 crore

and Rs. 13.81 crore for Wires Business and Supply Business respectively, as

against Rs. 150.04 crore and Rs. 15.03 crore as claimed by RInfra-D.

8.4.9 For FY 2014-15, the Commission has approved the IoWC as Rs. 45.71 crore and

Rs. 38.23 crore for Wires Business and Supply Business respectively, as against

Rs. 45.86 crore and Rs. 28.98 crore claimed by RInfra-D. For FY 2015-16, the

Commission has approved the IoWC as Rs. 50.54 crore and Rs. 25.95 crore for

Wires Business and Supply Business respectively, as against Rs. 47.53 crore and

Rs. 42.55 crore claimed by RInfra-D.

8.4.10 For Supply Business, the Commission has approved the interest on consumers’

Security Deposit as Rs. 28.92 crore for FY 2014-15 as claimed by RInfra-D, and

for FY 2015-16, the Commission has approved the interest on consumers’

Security Deposit as Rs. 33.84 crore as against Rs. 35.65 crore claimed by RInfra-

D.

8.4.11 For FY 2014-15, the Commission has approved Return on Equity at Rs. 245.56

crore and Rs. 27.64 crore for Wires Business and Supply Business, respectively,

as against Rs. 244.35 crore and Rs. 27.37 crore claimed by RInfra-D. For FY

2015-16, the Commission has approved Return on Equity as Rs. 259.42 crore and

Rs. 29.51 crore for Wires Business and Supply Business, respectively, as against

Rs. 259.68 crore and Rs. 29.54 crore claimed by RInfra-D.

8.4.12 For FY 2014-15, the Commission has approved the Provision for Bad and

Doubtful Debts as Rs. 2.90 crore and Rs. 9.56 crore for the Wires Business and


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Supply Business, respectively, as against Rs. 2.65 crore and Rs. 11.31 crore

claimed by RInfra-D. For FY 2015-16, the Commission has approved the

Provision for Bad and Doubtful Debts as Rs. 2.90 crore and Rs. 9.56 crore for the

Wires Business and Supply Business, respectively, as against Rs. 2.65 crore and

Rs. 11.31 crore claimed by RInfra-D.

8.4.13 For FY 2014-15, the Commission has approved the Contribution to Contingency

Reserve as Rs. 10.23 crore and Rs. 1.23 crore for the Wires Business and Supply

Business, respectively, as against Rs. 10.24 crore and Rs. 1.24 crore claimed by

RInfra-D. For FY 2015-16, the Commission has approved the Contribution to

Contingency Reserve as Rs. 10.92 crore and Rs. 1.32 crore for the Wires Business

and Supply Business, respectively, as against Rs. 10.93 crore and Rs. 1.33 crore


8.4.14 The Commission has approved the Income Tax as zero for both the Wires

Business and Supply Business for FY 2014-15, as against Rs. 29.39 crore and Rs.

88.14 crore claimed by RInfra-D for the Wires Business and Supply Business,

respectively. For FY 2015-16, the commission has approved the Income Tax as

Rs. 29.39 crore and Rs. 88.14 crore for Wires Business and Supply Business as


8.4.15 For FY 2014-15, the Commission has approved the Non-Tariff Income for Wires

Business and Supply Business as Rs. 40.11 crore and Rs.169.72 crore,

respectively, as against Rs. 49.10 crore and Rs. 139.11 crore claimed by RInfra-D.

For FY 2015-16, the Commission has approved the Non-Tariff Income for Wires

Business and Supply Business as Rs. 44.21 crore and Rs. 186.73 crore

respectively as against Rs. 52.56 crore and Rs. 146.13 crore claimed by RInfra-D.

8.4.16 For FY 2014-15, the Commission has approved net ARR as Rs. 1231.78 crore and

Rs. 4850.66 crore for Wires Business and Supply Business, respectively, as

against Rs. 1289.68 crore and Rs. 5544.16 crore claimed by RInfra-D. For FY

2015-16, the Commission has approved net ARR as Rs. 1330.54 crore and Rs.

4568.48 crore for Wires Business and Supply Business, respectively, as against

Rs. 1382.90 crore and Rs. 5358.99 crore claimed by RInfra-D.

8.4.17 For FY 2014-15, the Commission has approved the recovery of Wheeling Charges

from change-over consumers and OA consumers as Rs. 269.74 crore as against

Rs. 265.41 crore claimed by RInfra-D. For FY 2015-16, the Commission has

approved the recovery of revised Wheeling Charges from change-over consumers


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and OA consumers as Rs. 426.51 crore as against Rs. 513.09 crore claimed by

RInfra-D.

8.4.18 For FY 2014-15, the Commission has approved the revenue from Wheeling

Charges from own consumers for Wires Business as Rs. 888.53 crore as against


approved the revenue from existing tariff from retail supply consumers for Supply

Business as Rs. 4939.12 crore as against Rs. 4919.72 crore claimed by RInfra-D.

For FY 2015-16, the Commission has approved the revenue from Wheeling

Charges from own consumers for Wires Business as Rs. 923.56 crore as against


approved the revenue from existing tariff from retail supply consumers for Supply

Business as Rs. 4457.12 crore as against Rs. 4646.36 crore claimed by RInfra-D.

8.4.19 For FY 2014-15, the Commission has approved the total Revenue Gap of Rs.

73.51 crore for the Wires Business and Revenue Surplus of Rs. 311.25 crore for

the Supply Business, as against Revenue Gap of Rs. 144.58 crore and Rs. 402.40

crore for the Wires Business and Supply Business, respectively, claimed by

RInfra-D. For FY 2015-16, the Commission has approved the total Revenue

Surplus of Rs. 19.53 crore for the Wires Business and Revenue Gap of Rs. 86.47

crore for the Supply Business.

8.4.20 Based on the various components of ARR and Revenue and the carrying cost, the

cumulative ARR and the net Revenue Gap approved by the Commission for FY

2015-16 are shown in the following Table:



Stand-alone Revenue

Gap/(Surplus) for FY 2012-13 403.55 135.49 539.04 0.00 475.43 475.43

Stand-alone Revenue

Gap/(Surplus) for FY 2013-14 258.54 (316.31) (57.77) 226.15 (457.22) (231.08)

Carrying cost on Stand-alone

Revenue Gap/(Surplus) for FY

2012-13 and FY 2013-14

290.52 (31.92) 258.61 66.52 (59.17) 7.35

Stand-alone Revenue

Gap/(Surplus) for FY 2014-15 144.58 402.40 546.98 73.51 (311.25) (237.74)

Impact of ATE Judgments 38.83 95.83 134.66 0.00 134.53 134.53

Carrying cost on impact of 36.83 123.93 160.75 0.00 4.46 4.46


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ATE Judgments

TPC-G Gap for FY 2012-13 to

FY 2014-15 including carrying

cost & impact of ATE

Judgment

93.43 93.43

Stand-alone ARR for FY 2015-

16 1382.90 5358.99 6741.89 1330.54 4568.48 5899.02

Cumulative ARR for FY 2015-

16 2555.75 5768.41 8324.15 1696.72 4448.70 6145.42

Revenue from change-over

consumers from revised

Wheeling Charges/CSS

513.09 269.50 782.59 426.51 24.89 451.41

Net ARR for FY 2015-16 2042.66 5498.91 7541.56 1270.21 4423.80 5694.01



Net ARR for FY 2015-16 with

RA recovery 2042.66 5498.91 8239.72 1270.21 4423.80 6392.17

Revenue at existing tariff from

own consumers for FY 2015-

16

947.81 4646.36 5594.17 923.56 4457.12 5380.68



Total Revenue 947.81 4646.36 6292.33 923.56 4457.12 6078.84

Revenue Gap/(Surplus) 1094.85 852.55 1947.39 346.65 (33.32) 313.34


30.9% 5.2%

Total Sales (MU)

8014 7767

Average Cost of Supply

(Rs/kWh) 10.28 8.23

8.5 TARIFF PHILOSOPHY AND REVISED TARIFF FOR FY 2015-16

8.5.1 The Commission has approved the Wheeling Charges for FY 2015-16 as Rs. 0.94

per kWh and Rs. 1.80 per kWh for HT category and LT category, respectively, as

against Rs. 1.42 per kWh and Rs. 2.73 per kWh claimed by RInfra-D for HT

category and LT category, respectively.


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8.5.2 The Commission has determined the Wheeling Charges and Retail Tariff in such a

way that the approved Revenue Gap is recovered in one year, i.e., FY 2015-16

itself.

8.5.3 The revised ACOS being allowed for recovery through tariffs for FY 2015-16

works out to Rs. 8.23 per kWh.

8.5.4 The Commission has taken a considered decision to continue determination of

category-wise tariff and cross-subsidy on the basis of the Average Cost of Supply,

for the present, in the MTR Order.

8.5.5 The Commission has increased the fixed/demand charges for the consumer

categories, such that the revenue from Fixed/Demand Charges enables RInfra-D to

recover 24% of the fixed costs.

8.5.6 The Commission has ensured that the cross-subsidies are reduced, and are within

the band of +20% of ACOS, to the extent possible.

8.5.7 The Commission has created a new sub-category under "Public Service" category

in both HT and LT category for Government Educational Institutions and

Hospitals.

8.5.8 The Commission has renamed the HT V: Railwayss category as HT V: Metro and

Monorail.

8.5.9 The revised tariffs approved by the Commission that shall come into force with

effect from June 1, 2015 are as under:

Sl.

No.

Consumer category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

LOW TENSION

CATEGORIES

1 LT I - Residential

(BPL) Rs. 10 1.80 0.65 0.27

LT I – Residential

0-100 units Rs. 50 $$ 1.80 2.43 0.56

101-300 units Rs. 75

$$ 1.80 3.99 0.75

301 to 500 units 1.80 5.57 0.89

Above 500 units

(balance units) Rs. 100

$$ 1.80 7.21 1.07


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Sl.

No.

Consumer category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

2 LT II - LT

Commercial

(A) ≤ 20 kW Rs. 275 1.80 5.42 0.84

(B) > 20 kW and ≤ 50

kW Rs. 220 per kVA 1.80 6.33 1.01

(C) > 50 kW 1.80 7.26 1.22

3

LT III - LT

Industry upto 20

kW load Rs. 275 1.80 6.08 0.97

4

LT IV - LT

Industry above 20

kW Rs. 220 per kVA 1.80 6.03 0.93

5

LT V -

Advertisement &

Hoardings, incl.

floodlights & neon

signs

Rs. 450 1.80 14.83 2.19

6 LT VI – Streetlights Rs. 220 per kVA # 1.80 4.19 0.93

7 LT VII –

Temporary Supply

(A) TSR – Temporary

Supply Religious Rs 225 1.80 4.84 0.84

(B) TSO – Temporary

Supply Others Rs 450 1.80 16.07 2.36

8

LT VIII –

Crematoriums and

Burial Grounds

Rs 225 1.80 4.80 0.86

9 LT IX - Agriculture Rs 25 per HP 1.80 1.01 0.34

10 LT X – Public

Services

(A)

Government

Hospitals &

Educational

Institutions

Rs 275 1.80 5.50 0.92

(B) Others Rs 275 1.80 6.37 0.92

TOD Tariffs (in

addition to above


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Sl.

No.

Consumer category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

base tariffs) –

compulsory for LT

II (B) and (C), LT

IV, and LT X (A)

and (B) category,

and optional for LT

II (A) and LT III

category

0600 hours to 0900

hours 0.00

0900 hours to 1200

hours 0.50

1200 hours to 1800

hours 0.00

1800 hours to 2200

hours 1.00

2200 hours to 0600

hours -0.75

HIGH TENSION

CATEGORIES

10 HT I – Industry Rs 220 per kVA 0.94 7.27 1.04

11 HT II –

Commercial Rs 220 per kVA 0.94 8.48 1.17

12

HT III – Bulk

Supply

(Residential)

Rs 220 per kVA 0.94 6.40 0.98

13 HT IV –

Temporary Supply

Rs 450 per

connection 0.94 10.61 1.52

14 HT V – Metro and

Monorail Rs 220 per kVA 0.94 7.37 1.01

15 HT VI – Public

Services

(A)

Government

Hospitals &

Educational

Institutions

Rs 220 per kVA 0.94 5.75 1.01

(B) Others Rs 220 per kVA 0.94 6.36 1.01


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Sl.

No.

Consumer category

&

Consumption Slab

Fixed/ Demand

Charge per month

Wheeling

Charges

(Rs/kWh)

Energy

Charge

(Rs/kWh)

Regulatory

Asset

Charge

(Rs/kWh)

TOD Tariffs (in

addition to above

base tariffs) for HT

I, HT II and HT VI

(A) and (B)

categories

0600 hours to 0900

hours 0.00

0900 hours to 1200

hours 0.50

1200 hours to 1800

hours 0.00

1800 hours to 2200

hours 1.00

2200 hours to 0600

hours -0.75

Notes:

1. Fuel Adjustment Cost (FAC) will be applicable to all consumers and will be charged

over the above tariffs, on the basis of the FAC formula prescribed by the Commission,

and computed on a monthly basis.

2. $$: Fixed charge of Rs. 100 per month will be levied on residential consumers

availing 3 phase supply. Additional Fixed Charge of Rs. 100 per 10 kW load or part


3. #: Street lightings having 'automatic timers' for switching 'on/off' would be levied

Demand Charges on the lower of the following:

a) 50% of the Contract Demand

b) Actual Recorded Demand

8.5.10 The category-wise CSS approved by the Commission for FY 2015-16 are given in

the Table below. In case the Open Access consumer purchases power from a

Renewable source of energy, then only 25% of the below determined CSS shall be

payable:


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Sl.

No. Category

CSS @75%

(Rs.kWh)

LT Category

1 LT -I Residential

0-100 -

101-300 -

301-500 -

501 and above 0.75

2 LT II - Commercial - Upto 20 kW -

3 LT II - Commercial - > 20 kW & ≤ 50kW 0.62

4 LT II - Commercial - > 50kW 1.22

5 LT III - Industry ≤ 20 kW -

6 LT IV - LT Industry above 20 kW 0.03

7 LT-V : LT- Advertisements and Hoardings 7.67

8 LT VI - Street Lights -

9 LT-VII (A): LT -Temporary Supply Religious -

10 LT-VII (B): LT -Temporary Supply Others 7.40

11 LT VIII - Crematorium -

12 LT IX - Agriculture -

13 LT X (B) Public Service Others 0.04

HT Category

14 HT I: HT-Industry 0.20

15 HT II : HT- Commercial 1.19

16 HT III: Group Housing Society -

17 HT IV : HT - Temporary Supply 2.24

18 HT V - Metro & Monorail 0.14

19 HT VI (B)- Public Service Others 0.12

The above approved CSS shall be applicable on the energy actually consumed by the

change-over/OA consumer, i.e., metered consumption, rather than the grossed up

consumption after considering the wheeling losses.


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8.5.11 The revised tariffs will be applicable from 1 June, 2015 onwards. In cases, where

there is a billing cycle difference for a consumer with respect to the date of

applicability of the revised tariffs, then the revised tariff should be made

applicable on a pro-rata basis for the consumption from 1 June, 2015. The bills for

the respective periods as per existing tariff and revised tariffs shall be calculated

based on the pro-rata consumption (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).

The Petition of M/s Reliance Infrastructure Ltd. in Case No. 4 of 2015 stands

disposed of accordingly.

Sd/- Sd/- Sd/-

(Deepak Lad)

Member

(Azeez M. Khan)

Member

(Chandra Iyengar)

Chairperson


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Appendix I

List of persons who attended the TVS on 28 January, 2015

Sl. No. Name of Person Name of the Company/Institution

1 Shri. R R Mehta CEO, RInfra-D

2 Shri. Dilip S. Shah RInfra-D

3 Mrs. Sampada Jaint

RInfra-D

4 Shri. Ranjeet Savardekar RInfra-D

5 Shri. Vinay Modi

RInfra-D

6 Shri. K. Sridhar RInfra-D

7 Shri. Ajit Karape RInfra-D

8 Shri. Anvesh Jain RInfra-D

9 Shri. Kishor Patil RInfra-D

10 Shri. Vivek Mishra RInfra-D

11 Shri. Kapil Sharma RInfra-D

12 Shri. Abaji Narvekar RInfra-D

13 Shri. Ghanshyam Thakkar RInfra-D

14 Shri. Ganesh Balsubramaniam RInfra-D

15 Shri. Anupam Patra RInfra-D

16 Shri. P.B. Aughad MSETCL


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Appendix II

List of persons who attended the Public Hearing on 16 March, 2015

Sr. No. Name of Person Name of the Company/Institution

1 Varsha Raut Mumbai Grahak Panchayat

2 Ashok Pendse

Thane Belapur Industries Association

(Consumer Rep.)

3 P. P. Karhade

4 Sandeep N. Ohri

5 Sujabhai Hussain

6 Rakshpal Abrol

7 Daljeet Singh

8 Jabir

9 K. K. Jain

10 P. G. Muzumdar

11 B N Khosale MSETCL

12 A V Shenoy

13 Amey Naik Tata Power

14 V P Singh

15 Debasis Mohat

16 E. P. Rao

17 Ramesh T Naidu

18 Harman Preet

19 Rahul MP En Systems

20 S. Joglekar

21 Mohammed Afzal

22 Shashank Rao Mid-Day

23 Abhijit Dhamdhere

24 P. Wadhe

25 Arun Puranik

26 Rahuldeo Sharma Live India

27 Bhaskar Sarkar Tata Power

28 Sumegh Mangle R-Infra-T

29 P. G. Phokmare R-Infra-T

30 D. M. Devasthale R-Infra-T

31 Vivek Mishra R-Infra-T

32 Rajiv Nakhare R-Infra-T


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33 Dilip S Shah R-Infra-T

34 Anil P. Bendre R-Infra-T

35 G. J. Thakkar R-Infra-T

36 Sampada P Jaint R-Infra-T

37 Rakesh Raj R-Infra-T

38 Arvind Sha R-Infra-T

39 Ambica Gupta Tata Power

40 R Nandi DTPS

41 P. S. Jalkote DTPS

42 Supriya Zadbuke DTPS

43 Sanjay Patil DTPS

44 Gaurav Khandelwal DTPS

45 R R Mehta R-Infra

46 Kapil Sharma R-Infra

47 Kishor Patil R-Infra

48 Abaji Naralkar R-Infra

49 Ranjeet Savadekar R-Infra

50 Shital Khiraiya Tata Power

51 A. R. Waghambare R-Infra

52 Anup Mandal R-Infra

53 Shrinath Kosi R-Infra

54 K Sridhar R-Infra

55 Shraddha keley R-Infra

56 Anvesh Jain R-Infra

57 Pratik Shah R-Infra

58 Sachin Gad M. Marathi

59 Suhas Dhapan

60 Chintamani Chitnis Tata Power

61 Dhanashri Dabne Tata Power

62 T. E. Shelke Tata Power

63 D Dey Tata Power

64 B. Mehta R-Infra

65 Amir Kumar Samant R-Infra

66 Ganesh Balasubramaniam R-Infra

67 Gaurav Gautam Tata Power

68 Abhishek Ramkrishna Tata Power


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69 Debashish Banerjee R-Infra

70 S T Dharwal R-Infra

71 S. Varudkar R-Infra

72 Laxman Sawant R-Infra

73 Dhruv Palekar R-Infra

74 Sandeep S Khule R-Infra

75 Jayant Kulkarni MSLDC

76 Naresh Sonawane R-Infra

77 J M R-Infra

78 Vivek Shah R-Infra

79 Sajimuh R-Infra

80 Sandeep Nawale R-Infra


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Annexure I: Revenue from Sale of Electricity at revised Tariffs in FY 2015-16

Energy

Charge

(Rs/kWh)

Fixed

Charge (Rs /

Consumer

/month)

Wheeling

Charge

(Rs/kWh)

Demand

Charge

(Rs/KVA/mo

nth)

Regulatory

Asset

Charges

(Rs/kWh)

Energy Units

(MU)

Avg. Demand (KVA

/ month)

Energy Charge

(Rs Cr)

Fixed Charge

(Rs Cr)

Demand

Charge (Rs Cr)

Wheeling

Charge (Rs Cr)

Regulatory

Asset Recovery

(RsCr)

PF Surcharge

(Rs Cr)

PF Incentive

(Rs Cr)

Load Factor

Incentive (Rs

Cr)

Prompt

Payment

Discount (Rs

Cr)

Total

(Rs Cr)

Low Tension - LT

LT I : LT -Residential

LT I - Below Poverty Line 281 0.65 10 1.80 0.27 0.02 - 0.00 0.00 - 0.00 0.00 - - - - 0.01

LT -I Residential (Single Phase) - - - - - - -

0-100 7,84,720 2.43 50 1.80 0.56 1,664.65 - 404.76 47.08 - 299.05 93.22 - - - (1.64) 842.47

101-300 7,77,361 3.99 75 1.80 0.75 989.73 - 395.10 69.96 - 177.80 74.23 - - - (1.09) 716.00

301-500 97,916 5.57 75 1.80 0.89 165.25 - 92.08 8.81 - 29.69 14.71 - - - (0.19) 145.10

500and above 18,954 7.21 100 1.80 1.07 53.36 - 38.49 2.27 - 9.59 5.71 - - - (0.07) 55.99

LT -I Residential Three phase - - - - - - - -

0-100 35,952 2.43 100 1.80 0.56 192.11 - 46.71 4.31 - 34.51 10.76 - - - (0.20) 96.10

101-300 68,066 3.99 100 1.80 0.75 285.73 - 114.06 8.17 - 51.33 21.43 - - - (0.30) 194.69

301-500 51,425 5.57 100 1.80 0.89 183.15 - 102.05 6.17 - 32.90 16.30 - - - (0.16) 157.26

500and above 47,438 7.21 100 1.80 1.07 296.11 - 213.62 5.69 - 53.20 31.68 - - - (0.29) 303.91

LT II (a) - 0-20 kW 4,07,716 5.42 275 1.80 0.84 1,553.89 - 841.90 134.55 - 279.15 130.53 (0.01) - - (2.04) 1,384.08

LT II (b) - 20-50 kW 5,532 6.33 - 1.80 220 1.01 202.45 85,982.71 128.19 - 22.70 36.37 20.45 3.14 (6.65) - (0.30) 203.91

LT II (c) - above 50 kW 3,869 7.26 - 1.80 220 1.22 445.20 1,87,795.50 323.12 - 49.58 79.98 54.31 4.01 (17.25) - (0.93) 492.82

LT III - LT Industrial upto 20 kW 14,645 6.08 275 1.80 0.97 151.84 - 92.33 4.83 - 27.28 14.73 0.04 - - (0.25) 138.96

LT IV - LT Industrial above 20

kW3,030 6.03 - 1.80 220 0.93 361.98 1,08,429.19 218.27 - 28.63 65.03 33.66 1.55 (12.13) - (1.84) 333.18


Hoardings1,102 14.83 450 1.80 2.19 3.25 - 4.81 0.59 - 0.58 0.71 - - - - 6.70

LT VI: LT -Street Lights 154 4.19 - 1.80 220 0.93 59.60 49,901.22 24.95 - 13.17 10.71 5.54 - - - - 54.37

LT-VII (A): LT -Temporary

Supply Religious45 4.84 225 1.80 0.84 1.86 - 0.90 0.01 - 0.33 0.16 - - - - 1.40

LT-VII (B): LT -Temporary

Supply Others3,980 16.07 450 1.80 2.36 85.24 - 136.95 2.15 - 15.31 20.12 - - - (0.21) 174.32

LT VIII: LT - Crematorium &

Burial Grounds28 4.80 225 1.80 0.86 0.62 - 0.30 0.01 - 0.11 0.05 - - - - 0.47

LT IX: LT -Agriculture 17 1.01 25 1.80 0.34 0.12 - 0.01 0.00 - 0.02 0.00 - - - - 0.04

LT X: LT -Public Service 1,885 57.11 1,08,068.54 36.14 0.62 - 10.26 0.28 - - - - 47.30

a) Govt. Edu. Inst. & Hospitals 178 5.50 275 1.80 0.92 3.01 1.66 0.06 - 0.54 0.28 2.53

b) Others 1,708 6.37 275 1.80 0.92 54.10 34.48 0.56 - 9.72 44.76

Total LT 23,24,115 6,753.24 5,40,177 3,214.76 295.24 114.08 1,213.21 548.58 8.74 (36.03) - (9.52) 5,349.06

HT

HT I: HT-Industry 165 7.27 - 0.94 220 1.04 284.08 98,715.73 206.52 - 26.06 26.63 29.54 0.50 (13.37) (2.40) (2.88) 270.61

HTII : HT- Commercial 313 8.48 - 0.94 220 1.17 582.63 2,07,720.03 493.95 - 54.84 54.63 68.17 0.96 (29.70) (0.63) (2.15) 640.06

HT III: HT-Group Housing

Society18 6.40 - 0.94 220 0.98 43.67 10,464.55 27.95 - 2.76 4.09 4.28 - - - (0.25) 38.84

HTIV : HT - Temporary Supply 12 10.61 450 0.94 1.52 5.97 - 6.33 0.01 - 0.56 0.91 - - - (0.20) 7.60

HT V - Metro & Monorail 1 7.37 - 0.94 220 1.01 25.38 5,278.93 18.70 - 1.39 2.38 2.56 - (1.03) - (0.09) 23.92

HT VI - Public Service 59 72.05 29,549.92 45.67 - 7.80 6.75 - 0.09 (3.75) (0.01) - 60.48

a) Govt. Edu. Inst. & Hospitals 5.75 0.94 220 1.01 2.49 1,021.78 1.43 0.27 0.23 0.25 2.19

b) Others 6.36 0.94 220 1.01 69.55 28,528.14 44.24 7.53 6.52 58.29

Total HT 568.86 1,013.77 3,51,729 799.12 0.01 92.86 95.05 105.71 1.45 -44.10 -3.03 -5.57 1,041.50

Total 23,24,684 7,767.01 8,91,906 4,013.88 295.25 206.93 1,308.26 654.29 10.19 (80.13) (3.03) (15.09) 6,390.57

Relevant sales & load/demand data

for revenue calculation

Revenue (Rs Cr)

CategoryAverage No. of

consumers

Tariff


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ANNEXURE -2

RELIANCE INFRASTRUCTURE LIMITED

SCHEDULE OF ELECTRICITY TARIFFS

(With effect from 1 June, 2015)

The Maharashtra Electricity Regulatory Commission, in exercise of the powers vested in it

under Sections 61 and 62 of the Electricity Act, 2003 and all other powers enabling it in this

behalf, has determined, by its Mid Term Review Order dated 26 June, 2015 in Case No.4 of

2015, the Tariff for supply of electricity by Reliance Infrastructure Limited – Distribution

Business (RInfra-D) for various classes of consumers as applicable from 1 June, 2015.

General

1. These tariffs supersede all tariffs so far in force.

2. Tariffs are subject to revision and/or surcharge that may be levied by RInfra-D from

time to time as per the directives of the Commission.

3. The tariffs are exclusive of Electricity Duty, Tax on Sale of Electricity (ToSE) and

other charges as levied by Government or other competent authorities, and will be

payable by consumers in addition to the charges levied as per the tariffs hereunder.

4. The tariffs are applicable for supply at one point only.

5. RInfra-D may measure the Maximum Demand for any period shorter than 30 minutes

of maximum use, subject to conformity with the prevalent Electricity Supply Code

Regulations notified by the Commission, where it considers that there are

considerable load fluctuations in operation.

6. The tariffs are subject to the provisions of the MERC (Electricity Supply Code and

Other Conditions of Supply) Regulations, 2005 as amended from time to time and

directions, if any, that may be issued by the Commission from time to time.

7. Unless specifically stated to the contrary, the figures of Energy Charge relate to

Rupees per unit (kWh) charge for energy consumed during the month.

8. Fuel Adjustment Costs (FAC) Charge, as may be approved by the Commission from

time to time, shall be applicable to all categories of consumers, and will be over and

above the tariffs on the basis of the FAC formula specified by the Commission and

computed on a monthly basis.


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LOW TENSION (LT) TARIFF

LT I: LT – Residential (BPL)

Applicability

Residential consumers who have a Sanctioned Load of upto 0.1 kW, and who have consumed

less than 360 units per annum in the previous financial year. The applicability of Below

Poverty Line (BPL) category will have to be assessed at the end of each financial year. In

case any BPL consumer has consumed more than 360 units in the previous financial year,

then the consumer will henceforth, be considered under the LT-I residential category. Once a

consumer is classified under the LT-I category, then he cannot be classified under BPL

category.

The categorisation of such BPL consumers will be reassessed at the end of the financial year,

on a pro-rata basis, if consumption is for only part of the year. Similarly, the classification of

BPL consumers who have been added during the previous year would be assessed on a pro-

rata basis, i.e., 30 units per month.

All new consumers subsequently added in any month with a Sanctioned Load of upto 0.1 kW

and consumption between 1 to 30 units (on pro rata basis of 1 unit/day) in the first billing

month, will be considered in BPL Category.

Consumption Slab

( kWh)

Fixed

/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

BPL Category Rs. 10 per

month 1.80 0.65 0.27

LT I: LT – Residential

Applicability

Electricity used at Low/Medium Voltage for operating various appliances used for purposes

like lighting, heating, cooling, cooking, washing/cleaning, entertainment/leisure, pumping in

the following places:


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a) Private residential premises

b) Premises exclusively used for worship such as temples, gurudwaras, churches, mosques,

etc., provided that halls, gardens or any other portion of the premises that may be let out

for a consideration or used for commercial activities would be charged at LT-II tariff as

applicable.

c) All Students Hostels affiliated to Educational Institutions.

d) All Hostels, such as Students Hostels, Working Men/Women’s Hostels.

e) Other type of Hostels, like (i) Homes/Hostels for Destitutes, Persons with Disabilities/

Handicapped persons, or mentally ill persons (ii) Remand Homes (iii) Dharamshalas, (iv)

Rescue Homes, (v) Orphanages, subject to verification and confirmation by RInfra’s

concerned Zonal Chief Engineer or equivalent.

f) Government / Private / Co-operative Housing Colonies (where electricity is used

exclusively for domestic purpose), only for common facilities, like Water Pumping /

Street Lighting / Lifts /Parking Lots/ Fire Fighting Pumps / Premises (Security) Lighting,

etc.

g) Sports Club / Health Club / Gymnasium / Swimming Pool / Community Hall of

Government / Private / Co-operative Housing Colonies provided they are situated in the

same premises, and are exclusively meant for the members of the said Government /

Private / Co-operative Housing Colonies and no outsider is allowed therein.

h) Telephone booths owned/operated by Persons with Disabilities/Handicapped persons,

subject to verification and confirmation by RInfra’s concerned Zonal Chief Engineer or

equivalent.

i) Residential premises used by professionals like Lawyers, Doctors, Professional

Engineers, Chartered Accountants, etc., in furtherance of their professional activities in

their residences, but shall not include Nursing Homes and any Surgical Wards or

Hospitals.

j) Any residential LT consumer, with consumption upto 500 units per month (current month

during which the supply is being taken), who undertakes construction or renovation

activity in his existing premises does not require any separate temporary connection, and

this consumer should be billed at his residential Tariff rate.

k) Consumers who have taken power supply on High Tension for any of the above purposes

shall be billed as per the tariff applicable for power supply on Low Tension.

The LT-Residential tariff shall also be applicable to consumers undertaking business or

other commercial / industrial / non-residential activities from a part of their residence,

subject to the condition that monthly consumption is upto 300 units a month and annual

consumption in the previous financial year was upto 3600 units. The applicability of this

Tariff will have to be assessed at the end of each financial year. In case consumption has

exceeded 3600 units in the previous financial year, the consumer will henceforth not be


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eligible for the tariff under this category, but be charged at the tariff applicable for such

consumption, with prior intimation to the consumer.

Consumption Slab

( kWh)

Fixed/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)

0-100 units Rs. 50 per month $$

1.80 2.43 0.56

101 – 300 units Rs. 75 per month

$$

1.80 3.99 0.75

301 – 500 units 1.80 5.57 0.89

Above 500 units

(balance units) Rs. 100 per month

$$ 1.80 7.21 1.07

Note: $$

: The above Fixed Charges are for single phase connections. Fixed charge of Rs. 100

per month will be levied on residential consumers availing 3 phase supply,

irrespective of consumption. Additional Fixed Charge of Rs. 100 per 10 kW load or

part thereof above 10 kW load shall be payable.

LT II: Low Tension – Non-Residential or Commercial

Applicability

Electricity used at Low/Medium Voltage in all non-residential, non-industrial premises

and/or commercial premises for commercial consumption meant for operating various

appliances used for purposes such as lighting, heating, cooling, cooking, washing/cleaning,

entertainment/leisure, pumping in the following places:

a) Non-Residential, Commercial and Business premises, including Shopping malls

b) Combined lighting and power services for Entertainment, including film studios, cinemas

and theatres, including multiplexes, Hospitality, Leisure, Meeting Halls and Recreation

places.

c) Electricity used for the external illumination of monuments, historical/heritage buildings

approved by Maharashtra Tourism Development Corporation (MTDC).


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Consumption Slab

( kWh)

Fixed/

Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

(A) 0-20 kW Rs. 275 per

month 1.80 5.42 0.84

(B) > 20 kW and ≤ 50

kW Rs. 220 per

kVA per month

1.80 6.33 1.01

(C ) > 50 kW 1.80 7.26 1.22

TOD Tariffs (in addition to above base Tariffs)

0600 to 0900 hours 0.00

0900 to 1200 hours 0.50

1200 to 1800 hours 0.00

1800 to 2200 hours 1.00

2200 to 0600 hours -0.75

Note: The ToD tariff is compulsorily applicable to LT-II (B) and (C) category, and optionally

available to LT- II (A) having ToD meter installed.

LT III: LT- Industry, upto 20 kW load

Applicability

Electricity used at Low/Medium Voltage in premises for purposes of manufacturing,

including that used within these premises for general lighting, heating/cooling, etc., having a

Sanctioned Load upto and including 20 kW (26.8 HP). This category also includes

Information Technology (IT) Industry and IT-enabled Services (as defined in the

Government of Maharashtra Policy).

Consumption Slab

( kWh)

Fixed/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs. /kWh)

Regulatory

Asset Charge

(Rs./kWh)

0-20 kW Rs. 275 per month 1.80 6.08 0.97

TOD Tariffs ( Optional - in addition to above base Tariffs)

0600 to 0900 hours 0.00

0900 to 1200 hours 0.50


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Consumption Slab

( kWh)

Fixed/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs. /kWh)

Regulatory

Asset Charge

(Rs./kWh)

1200 to 1800 hours 0.00

1800 to 2200 hours 1.00

2200 to 0600 hours -0.75

Note: The ToD tariff is optionally available to LT- III having ToD meter installed.

LT IV: LT– Industry, above 20 kW load

Applicability

Electricity used at Low/Medium Voltage in premises for purposes of manufacturing,

including that used within these premises for general lighting, heating/cooling, etc. and

having Sanctioned Load greater than 20 kW (26.8 HP). This consumer category also includes

IT Industry and IT-enabled Services (as defined in the Government of Maharashtra Policy).

Consumption Slab

( kWh)

Fixed/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)

Above 20 kW Rs. 220 per kVA per

month 1.80 6.03 0.93


0600 to 0900 hours 0.00

0900 to 1200 hours 0.50

1200 to 1800 hours 0.00

1800 to 2200 hours 1.00

2200 to 0600 hours -0.75

LT V: LT - Advertisements and Hoardings

Applicability

Electricity used for the purpose of advertisements, hoardings and other conspicuous

consumption such as external floodlights, displays, neon signs at stores, malls, multiplexes,

theatres, clubs, hotels and other such entertainment/leisure establishments, except those


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specifically covered under LT-II as well as electricity used for the external illuminations of

monuments, historical/heritage buildings approved by MTDC, which shall be covered under

LT-II category depending upon the Sanctioned Load.

Consumption Slab

( kWh)

Fixed /

Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

All Units Rs. 450 per

month 1.80 14.83 2.19

Note: The electricity used for the purpose of indicating/displaying the name and other

details of the shops or commercial premises for which electric supply is rendered,

shall not be under the LT V tariff Category. Such usage of electricity shall be covered

under the prevailing tariff of such shops or commercial premises.

LT VI: LT- Street Lights

Applicability

Electricity used at Low/Medium Voltage for purpose of public street lighting, lighting in

public gardens, traffic islands, bus shelters, public sanitary conveniences, traffic lights, public

fountains, other such common public places, irrespective of whether such facilities are being

provided by the Government or the Municipality, or Port Trust or other private parties.

Consumption

Slab

( kWh)

Fixed / Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

All Units Rs. 220 per kVA

per month 1.80 4.19 0.93

Note:

Street Lighting having ‘Automatic Timers’ for switching On/Off the street lights would

be levied Demand Charges on lower of the following–

a) 50 percent of ‘Contract Demand’ or

b) Actual ‘Recorded Demand’


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LT VII: LT-Temporary Supply

Applicability

LT VII (A) – Temporary Supply - Religious (TSR)

Electricity supplied at Low/Medium Voltage for temporary purposes during public religious

functions like Ganesh Utsav, Navaratri, Eid, Moharram, Ram Lila, Ambedkar Jayanti,

Diwali, Christmas, Guru Nanak Jayanti, etc., or areas where community prayers are held.

LT VII (B) - Temporary Supply - Others (TSO)

Electricity supplied at Low/Medium Voltage on a temporary basis for any construction work,

decorative lighting for exhibitions, circuses, film shootings, marriages, etc., and any activity

not covered under the tariff category LT VII (A).

Consumption Slab

(kWh)

Fixed/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

( Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)

LT VII (A) – All

Units

Rs. 225 per

connection per

month

1.80 4.84 0.84

LT VII (B) – All

Units

Rs. 450 per

connection month 1.80 16.07 2.36

Note: In case of LT VII (B), Additional Fixed Charges of Rs. 225 per 10 kW load or part


LT VIII: LT- Crematorium and Burial Grounds

Applicability

Electricity supplied at Low/Medium Voltage in Crematorium and Burial Grounds for all

purposes including lighting. This category will be applicable only to the portion of the

premises catering to such activities. In case part of the area is being used for other

commercial purposes, a separate meter will have to be provided for them, and the

consumption on this meter will be chargeable under LT-II Commercial rates as applicable.


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Consumption Slab

(kWh)

Fixed/Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

( Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)


connection per

month

1.80 4.80 0.86

LT IX - LT- Agriculture

Applicability

Electricity used at Low/Medium Voltage by LT agricultural consumers for motive power

loads exclusively for agricultural purposes.

Consumption

Slab

( kWh)

Fixed/

Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory Asset

Charge

(Rs./kWh)

All Units Rs 25 per HP

per month 1.80 1.01 0.34

LT X - Public Services

LT X (A) - Government Educational Institutions and Hospitals

Applicability

This Tariff shall be applicable to all Educational Institutions such as Schools and Colleges,

and Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic

Centres/Laboratories and Libraries and Public reading rooms of State or Central Government,

Local self Government bodies such as Municipal Bodies, Zilla Parishads, Panchayat Samities

or Gram Panchayat, and Sports Club / Health Club / Gymnasium / Swimming Pool attached

to such Educational Institution / Hospital provided said Sports Club / Health Club /

Gymnasium / Swimming Pool is situated in the same premises and is primarily meant for the

students / faculty/ employees/ patients of such Educational Institutions and Hospitals.


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Consumption

Slab

( kWh)

Fixed/ Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)

All Units Rs 275 per month 1.80 5.50 0.92

TOD Tariffs (in addition to above base tariffs)

0600 to 0900

hours

0.00

0900 to 1200

hours

0.50

1200 to 1800

hours

0.00

1800 to 2200

hours

1.00

2200 to 0600

hours

-0.75

LT X (B) – Others

Applicability


Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic Centres/Laboratories

and Libraries and Public reading rooms other than those of State or Central Government,

Municipal Bodies, Zilla Parishads, Panchayat Samities or Gram Panchayat; and Sports Club /

Health Club / Gymnasium / Swimming Pool attached to the Educational Institution / Hospital

provided said Sports Club / Health Club / Gymnasium / Swimming Pool is situated in the

same premises and is primarily meant for the students/ faculty/ employees/ patients of such

Educational Institutions and Hospitals.







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Consumption

Slab

( kWh)

Fixed/ Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)

All Units Rs 275 per month 1.80 6.37 0.92


0600 to 0900

hours 0.00

0900 to 1200

hours 0.50

1200 to 1800

hours 0.00

1800 to 2200

hours 1.00

2200 to 0600

hours -0.75

HIGH TENSION (HT) - TARIFF

HT I: HT – Industry

Applicability

This category includes consumers taking 3-phase electricity supply at High Voltage for

purposes of manufacturing. This Tariff shall also be applicable to IT Industry & IT enabled

Services (as defined in the Government of Maharashtra Policy) taking 3-phase electricity

supply at High Voltage.

Consumption Slab

( kWh)

Fixed/ Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

All Units Rs 220 per kVA per

month 0.94 7.27 1.04



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Consumption Slab

( kWh)

Fixed/ Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

0600 to 0900 hours 0.00

0900 to 1200 hours 0.50

1200 to 1800 hours 0.00

1800 to 2200 hours 1.00

2200 to 0600 hours -0.75

HT II: HT- Commercial

Applicability

This category includes consumers taking electricity supply at High Voltage for commercial

purposes, including Hotels, Shopping Malls, film studios, cinemas and theatres, including

multiplexes.

The Consumers belonging to HT II requiring a single point supply for the purpose of

downstream consumption by separately identifiable entities will have to either operate

through a franchisee route or such entities will have to take individual connections under

relevant category. These downstream entities will pay appropriate tariff as applicable to the

respective category as per RInfra-D Tariff Schedule, i.e., LT-II.

Consumption Slab

( kWh)

Fixed/ Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)


month 0.94 8.48 1.17


0600 to 0900 hours 0.00

0900 to 1200 hours 0.50

1200 to 1800 hours 0.00

1800 to 2200 hours 1.00

2200 to 0600 hours -0.75


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HT III: HT- Bulk Supply (Residential)

Applicability

This category shall be applicable for power supply at single point for residential purposes, in

the following cases:

a. Co-operative Group Housing Society, which owns the premises, for making electricity

available to the members of such Society residing in the same premises; and

b. Person, for making electricity available to his employees residing in the same premises.

Consumption Slab

( kWh)

Fixed/ Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)


month 0.94 6.40 0.98

HT IV- HT - Temporary Supply

Applicability

Electricity used at High Voltage on a temporary basis of supply for any construction work,

decorative lighting for exhibitions, circus, film shooting, marriages, etc.

This category also includes electricity supplied at High Voltage for temporary purposes

during public religious functions like Ganesh Utsav, Navaratri, Eid, Moharam, Ram Lila,

Ambedkar Jayanti, Diwali, Christmas, Guru Nanak Jayanti, etc., or areas where community

prayers are held.

Consumption Slab

( kWh)

Fixed/ Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset

Charge

(Rs./kWh)


connection per

month

0.94 10.61 1.52


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HT V: Metro & Monorail

Applicability

Applicable to electricity supply for traction purposes at 100 kV/33 kV/ 22 kV/11 kV/6.6 kV

to Metro and Monorail.

Consumption Slab

( kWh)

Fixed/ Demand

Charge

Wheeling

Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory

Asset Charge

(Rs./kWh)

All Units Rs. 220 per kVA per

month 0.94 7.37 1.01

HT VI - Public Services

HT VI – (A): Government Educational Institutions and Hospitals

Applicability

This Tariff shall be applicable to all Educational Institutions such as Schools and Colleges,

and Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic

Centres/Laboratories and Libraries and Public reading rooms of State or Central Government,

Local self Government bodies such as Municipal Bodies, Zilla Parishads, Panchayat Samities

or Gram Panchayat, and Sports Club / Health Club / Gymnasium / Swimming Pool attached

to such Educational Institution / Hospital provided said Sports Club / Health Club /

Gymnasium / Swimming Pool is situated in the same premises and is primarily meant for the

students / faculty/ employees/ patients of such Educational Institutions and Hospitals.

Consumption

Slab

( kWh)

Fixed/ Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory Asset

Charge

(Rs./kWh)

All Units Rs 220 per kVA

per month 0.94 5.75 1.01


0600 to 0900

hours 0.00

0900 to 1200

hours 0.50

1200 to 1800

hours 0.00


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Consumption

Slab

( kWh)

Fixed/ Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory Asset

Charge

(Rs./kWh)

1800 to 2200

hours 1.00

2200 to 0600

hours -0.75

HT VI- (B): Others


Hospitals, Dispensaries, Primary Health Care Centres and Diagnostic Centres/Laboratories

and Libraries and Public reading rooms other than those of State or Central Government,

Municipal Bodies, Zilla Parishads, Panchayat Samities or Gram Panchayat; and Sports Club /

Health Club / Gymnasium / Swimming Pool attached to the Educational Institution / Hospital

provided said Sports Club / Health Club / Gymnasium / Swimming Pool is situated in the

same premises and is primarily meant for the students/ faculty/ employees/ patients of such

Educational Institutions and Hospitals.








Consumption

Slab

( kWh)

Fixed/ Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory Asset

Charge

(Rs./kWh)

All Units Rs 220 per kVA

per month 0.94 6.36 1.01


0600 to 0900

hours

0.00

0900 to 1200

hours

0.50


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Consumption

Slab

( kWh)

Fixed/ Demand

Charge

Wheeling Charge

(Rs/kWh)

Energy

Charge

(Rs./kWh)

Regulatory Asset

Charge

(Rs./kWh)

1200 to 1800

hours

0.00

1800 to 2200

hours

1.00

2200 to 0600

hours

-0.75

MISCELLANEOUS AND GENERAL CHARGES

Fuel Adjustment Cost (FAC) Component of Z factor Charge

The FAC Component of Z factor charge will be determined based on the approved formula

and directions as may be given by the Commission from time to time, and will be applicable

to all consumer categories for their entire consumption.

In case of any variation in the fuel prices and power purchase prices, RInfra-D shall pass on

the adjustments through the Fuel Adjustment Cost (FAC) component of Z-factor Charge, as

specified in Regulations 13.4 to 13.9 of the MYT Regulations.

The details of applicable ZFAC for each month shall be available on the RInfra website

www.rinfra.com.

Electricity Duty and Tax on Sale of Electricity

The Electricity Duty and Tax on Sale of Electricity will be levied in addition to the tariffs

approved by the Commission as per the Government of Maharashtra guidelines from time to

time. However, the rate and the reference number of the Government Resolution/ Order vide

which the Electricity Duty and Tax on Sale of Electricity are made effective shall be stated in

the bill. A copy of such Resolution / Order shall be made available on the website

www.rinfra.com

Power Factor Calculation

http://www.tatapower.com/

http://www.tatapower.com/


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Where the average Power Factor measurement is not possible through the installed meter, the

following method for calculating the average Power Factor during the billing period shall be

adopted:

Average Power Factor = )(

)(

kVAhTotal

kWHTotal

Wherein the kVAh is = 22 )()( RkVAhkWh

(i.e., Square Root of the summation of the squares of kWh and RkVAh)

Power Factor Incentive

Applicable for HT I- Industry, HT II - Commercial, HT V- Metro & Monorail, HT VI (A) -

Public Services Government Educational Institutions & Hospitals, HT VI (B) - Public

Service Others, LT II: Non-Residential/Commercial [LT II (B), LT II (C)] (for Contract

Demand/Sanctioned Load above 20 kW), LT IV : Industry, and LT X : Public Service [LT X

(A) and LT X (B)].

Whenever the average Power Factor is more than 0.95, an incentive shall be given at the rate

of the following percentages of the amount of the monthly bill including Energy charges,

Wheeling Charges, RAC, FAC, and Fixed/Demand Charges, but excluding Taxes and Duties:

Sl. Range of Power Factor Power Factor Level Incentive

1 0.951 to 0.954 0.95 0%

2 0.955 to 0.964 0.96 1%

3 0.965 to 0.974 0.97 2%

4 0.975 to 0.984 0.98 3%

5 0.985 to 0.994 0.99 5%

6 0.995 to 1.000 1.00 7%

Note: PF to be measured/computed upto 3 decimals, after universal rounding off

Power Factor Penalty

Applicable for HT I- Industry, HT II - Commercial, HT V- Metro & Monorail, HT VI (A) -

Public Services Government Educational Institutions & Hospitals, HT VI (B) - Public

Service Others, LT II: Non-Residential/Commercial [LT II (B), LT II (C)] (for Contract

Demand/Sanctioned Load above 20 kW), LT IV : Industry, and LT X : Public Service [LT X

(A) and LT X (B)].


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Whenever the average PF is less than 0.9, penal charges shall be levied at the rate of the

following percentages of the amount of the monthly bill including Energy Charges, Wheeling

Charges, RAC, FAC, and Fixed/Demand Charges, but excluding Taxes and Duties:

Sl. Range of Power Factor Power Factor Level Penalty

1 0.895 to 0.900 0.90 0%

2 0.885 to 0.894 0.89 2%

3 0.875 to 0.884 0.88 3%

4 0.865 to 0.874 0.87 4%

5 0.855 to 0.864 0.86 5%

6 0.845 to 0.854 0.85 6%

7 0.835 to 0.844 0.84 7%

8 0.825 to 0.834 0.83 8%

9 0.815 to 0.824 0.82 9%

10 0.805 to 0.814 0.81 10%

... ... ... ...

Note: PF to be measured/computed upto 3 decimals, after universal rounding off

Prompt Payment Discount

A prompt payment discount of one percent on the monthly bill (excluding Taxes and Duties)

shall be available to the consumers if the bills are paid within a period of 7 working days

from the date of issue of the bill.

Delayed Payment Charges

In case the electricity bills are not paid within the due date mentioned on the bill, delayed

payment charges of 2 percent on the total electricity bill (including Taxes and Duties) shall be

levied on the bill amount. For the purpose of computation of time limit from the date of bill

for payment of bills, “the day of presentation of bill” or “the date of the bill” or "the date of

issue of the bill", etc., as the case may be, will not be excluded.

Rate of Interest on Arrears

The rate of interest chargeable on arrears will be as given below for payment of arrears-

Sr.

No.

Delay in Payment ( months) Interest Rate per

annum (%)

1 Payment after due date upto 3 months ( 0-3) 12

2 Payment made after 3 months and before 6 months (3-6) 15


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3 Payment made after 6 months (>6) 18

Load Factor Incentive

Consumers having Load Factor over 75% upto 85% will be entitled to a rebate of 0.75% on

the Wheeling Charges, Energy Charges, and RAC only, for every percentage point increase

in Load Factor from 75% to 85%. Consumers having a Load Factor over 85 % will be

entitled to rebate of 1% on the Wheeling Charges, Energy Charges, and RAC only for every

percentage point increase in Load Factor from 85%. The total rebate under this head will be

subject to a ceiling of 15% of the Wheeling Charges, Energy Charges, and RAC only for that

consumer. This incentive is limited to HT I: Industry, HT II: Commercial and HT VI: Public

Services categories - HT VI (A) and HT VI (B) only. Further, the Load Factor rebate will be

available only if the consumer has no arrears with RInfra-D, and payment is made within

seven days from the date of the bill. However, this incentive will be applicable to consumers

where payment of arrears in instalments has been granted by RInfra-D, and the same is being

made as scheduled. RInfra-D has to take a commercial decision on the issue of how to

determine the time frame for which the payments should have been made as scheduled, in

order to be eligible for the Load Factor Incentive.

The Load Factor has been defined below:

Load Factor = Consumption during the month in MU

Maximum Consumption Possible during the month in MU

Maximum consumption possible = Contract Demand (kVA) x Actual Power Factor

x (Total no. of hrs during the month less planned load shedding hours*)

* - Interruption/non-supply to the extent of 60 hours in a 30 day month has been built in the

scheme.

In case the billing demand exceeds the Contract Demand in any particular month, then the

Load Factor Incentive will not be payable in that month. (The billing demand definition

excludes the demand recorded during the non-peak hours i.e. 22:00 hrs to 06:00 hrs and

therefore, even if the maximum demand exceeds the Contract Demand in that duration, Load

Factor Incentives would be applicable. However, the consumer would be subject to the penal

charges for exceeding the Contract Demand and has to pay the applicable penal charges).

Penalty for exceeding Contract Demand

In case, a consumer (availing Demand based Tariff) exceeds his Contract Demand, he will be

billed at the appropriate Demand Charge rate for the Demand actually recorded and will be

additionally charged at the rate of 150% of the prevailing Demand Charges (only for the

excess Demand over the Contract Demand).


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In case any consumer exceeds the Contract Demand on more than three occasions in a

calendar year, the action taken in such cases would be governed by the Supply Code.

Additional Demand Charges for Consumers having Captive Power Plant

For customers having Captive Power Plant (CPP), the additional demand charges would be at

a rate of Rs. 20/kVA/month only on extent of Stand-by demand component, and not on the

entire Contract Demand. Additional Demand Charges will be levied on such consumers on

the Stand-by component, only if the consumer’s demand exceeds the Contract Demand.

Supply at 100 kV

a) In the event, power is supplied at 100 kV, then the Consumer shall be allowed a rebate of

2% of the monthly Energy Charges, over the Energy Charges applicable for supply at 11

kV/22 kV/33 kV.

Security Deposit

1) Subject to the provisions of Sub-Section (5) of Section 47 of the EA 2003, RInfra-D

would require any person to whom supply of electricity has been sanctioned to

deposit a security in accordance with the provisions of clause (a) of subsection (1) of

Section 47.

2) The amount of the Security Deposit shall be an equivalent of the average of three

months of billing or the billing cycle period, whichever is lesser. For the purpose of

determining the average billing, the average of the billing to the consumer for the last

twelve months, or in cases where supply has been provided for a shorter period, the

average of the billing of such shorter period, shall be considered

3) Where RInfra-D requires security from a consumer at the time of commencement of

service, the amount of such security shall be estimated by the Distribution Licensee

based on the tariff category and Contract Demand/Sanctioned Load, Load Factor,

diversity factor and number of working shifts of the consumer.

4) RInfra-D shall re-calculate the amount of security based on the actual billing of the

consumer once in each financial year.

5) Where the amount of Security Deposit maintained by the consumer is higher than the

security required to be maintained under the Supply Code, RInfra-D shall refund the

excess amount of such Security Deposit in a single instalment:

Provided that such refund shall be made upon request of the person who gave the

security and with an intimation to the consumer, if different from such person, shall

be, at the option of such person, either by way of adjustment in the next bill or by way

of a separate cheque payment within a period of thirty (30) days from the receipt of

such request:


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Provided further that such refund shall not be required where the amount of refund

does not exceed the higher of ten (10) per cent of the amount of Security Deposit

required to be maintained by the consumer or Rupees Three Hundred.

6) Where the amount of security re-calculated as above is higher than the Security

Deposit of the consumer, RInfra-D shall be entitled to raise a demand for additional

security on the consumer.

Provided that the consumer shall be given a time period of not less than thirty days to

deposit the additional security pursuant to such demand.

7) Upon termination of supply, RInfra-D shall, after recovery of all amounts due, refund

the remaining amount held by the Distribution Licensee to the person who deposited

the security, with intimation to the consumer, if different from such person.

8) A consumer - (i) with a consumption of electricity of not less than one lakh (1,00,000)

kilo-watt hours per month; and (ii) with no undisputed sums payable to RInfra-D

under Section 56 of the Act may, at the option of such consumer, deposit security, by

way of cash, irrevocable letter of credit or unconditional bank guarantee issued by a

scheduled commercial bank.

9) RInfra-D shall pay interest on the amount of Security Deposit in cash (including

cheque and demand draft) by the consumer at a rate equivalent to the Bank Rate of the

Reserve Bank of India:

Provided that such interest shall be paid where the amount of Security Deposit in cash

under the Supply Code is equal to or more than Rupees Fifty.

10) Interest on cash Security Deposit shall be payable from the date of deposit by the

consumer till the date of dispatch of the refund by RInfra-D.

Definitions:

Maximum Demand

Maximum Demand in Kilowatts or Kilo-Volt-Amperes, in relation to any period shall, unless

otherwise provided in any general or specific Order of the Commission, means twice the

highest number of kilowatt-hours or kilo-Volt-Ampere-hours supplied and taken during any

consecutive thirty minute blocks in that period.

Contract Demand

Contract Demand means demand in Kilowatt (kW) / Kilo –Volt Ampere (kVA), mutually

agreed between RInfra-D and the consumer as entered into in the agreement or agreed

through other written communication (For conversion of kW into kVA, Power Factor of 0.80

shall be considered).


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Sanctioned Load

Sanctioned Load means load in Kilowatt (kW) mutually agreed between RInfra-D and the

consumer.

Billing Demand (for LT categories):

Monthly Billing Demand will be the higher of the following:

a) 65% of the actual Maximum Demand recorded in the month during 0600

hours to 2200 hours.

b) 40% of the Contract Demand.

Note:

c) Demand registered during the period 0600 to 2200 Hrs. will only be

considered for determination of the Billing demand.

d) In case of change in Contract Demand, the period specified in Clause (a)

above will be reckoned from the month following the month in which the

change of Contract Demand takes place.

Billing Demand (for HT categories):

Monthly Billing Demand will be the higher of the following:

a) Actual Maximum Demand recorded in the month during 0600 hours to

2200 hours.

b) 75% of the highest billing demand recorded during preceding eleven

months subject to limit of Contract Demand.

c) 50% of the Contract Demand.

Note:

d) Demand registered during the period 0600 to 2200 Hrs. will only be

considered for determination of the Billing demand.

In case of change in Contract Demand, the period specified in Clause (a) above will be

reckoned from the month following the month in which the change of Contract Demand takes

place.

before the maharashtra electricity regulatory commission … 58 42/order-4of2015-26062015.pdf ·...

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