Analysis of ARR & Tariff Proposal

2011-12 of

OHPC

World Institute of Sustainable Energy

Consumer Counsel

Presentation Outline

ARR & Tariff Proposed by OHPC Comparison of ARR parameter & Tariff

with previous year approved ARR (2010-11)

Observations and suggestion on the current ARR & Tariff filings (2011-12)

Conclusion

Installed Capacity of OHPC Stations

Sl. No.

Name of the Power Stations

Installed Capacity (2010-11)

MW

Installed Capacity (2011-12)

MW

1 Hirakud (HHEP) 275.50 275.50

2 Chiplima(CHEP ) 72.00 72.00

3 Balimela (BHEP ) 510.00 510.00

4 Rengali ( RHEP) 250.00 250.00

5 Upper Kolab (UKHEP ) 320.00 320.00

6Upper Indravati(UIHEP )

600.00 600.00

7Machhkund ( Orissa share)

34.50 34.50

Total 2062 2062

Design Energy of OHPC Stations

Sl. No.

Name of the Power Stations

Design Energy (DE)

(in MU)

Design Energy for sale

(MU)

1 HHEP 684.00 677.16

2 CHEP 490.00 485.10

3 BHEP 1183.00 1171.17

4 RHEP 525.00 519.75

5 UKHEP 832.00 823.68

6 UIHEP 1962.00 1942.38

Total 5676.00 5619.24

Proposed Project Cost in ARR 2011-12

Sl. No

Power Stations

Historical cost of assets as on 01.04.96

Revalued Cost of assets as on 01.04.96

New additions up to 2010-11

Project cost for 2010-11 (based on original cost)

Project cost for 2010-11 (based on revalued cost)

1 HHEP 72.75 130.16 191.74 264.49 321.90

2 CHEP 92.23 165.01 42.82 135.05 207.83

3 BHEP 115.42 334.66 209.62 325.04 544.28

4 RHEP 91.09 259.01 3.61 94.70 262.62

5 UKHEP

108.31 307.96 3.82 112.13 311.78

Total Old PS

479.80 1196.80 451.61 931.41 1648.41

6 UIHEP Approved project cost 1195.42 1195.42

Proposed ARR & Tariff for 2011-12

Components of ARR / Tariff RHEP UKHEP BHEP HHEP CHEP UIHEP Total

Salable Design energy (MU)

519.75 823.68 1171.17 677.16 485.10 1942.38 5619.24

Interest on Loan 0.11 0.13 8.56 2.98 1.46 38.21 51.45

Depreciation 2.43 2.88 16.17 6.86 3.47 30.23 62.04

Return on equity 0.21 0.22 12.17 9.28 2.49 57.82 82.19

O&M Expenses 38.10 28.07 46.80 40.78 16.55 61.97 232.27

Interest on working capital

2.00 1.50 3.17 2.49 1.00 5.85 16.02

Total ARR ( Crs) 42.85 32.80 86.87 62.39 24.97 194.08 443.97

Average Tariff (P/U)

82.451 39.824 74.178 92.134 51.480

99.919 79.010

Proposed capacity charge and energy charge

Sl. No.

Name of the Power Stations

Capacity charge

(Rs crore)

Energy Charge(P/U)

1 HHEP 31.195 46.067

2 CHEP 12.485 25.74

3 BHEP 43.435 37.089

4 RHEP 21.425 41.225

5 UKHEP 16.40 19.912

6 UIHEP 97.04 49.958

Comparison of ARR parameters and Tariff

with Previous year ARR

Comparison of components of ARR

(Rs in Cr)

Component of ARR 

HHEP CHEP BHEP RHEP UKHEP UIHEP

2010-11 (A)

2011-12 (P)

2010-11 (A)

2011-12 (P)

2010-11(A)

2011-12 (P)

2010-11 (A)

2011-12 (P)

2010-11 (A)

2011-12 (P)

2010-11(A)

2011-12 (P)

Return of Equity 8.87 9.28 1.68 2.49 4.13

12.17 0.16 0.21 0.21 0.22

55.78

57.82

Interest on loan 3.64 2.98 1.00 1.46 1.3 8.56 0.21 0.11 0.25 0.13 0

38.21

Depreciation 7.97 6.86 3.3 3.47

16.12

16.17 2.41 2.43 2.88 2.88

30.23

30.23

O&M37.92

40.78

15.93

16.55 44.3 46.8

31.56 38.1

22.82

28.07

56.39

61.97

Interest on WC 2.23 2.49 0.88 1 2.55 3.17 1.57 2 1.16 1.5 4.42 5.85

Total ARR60.64

62.39

22.79

24.97 68.4

86.87

35.91

42.85

27.32 32.8

146.82

194.08

% Increase 2.88

%9.56

% 27% 19% 20% 32%

Percentage increase in Tariff over 2010-11

Sl. No.

Name of the Power Station

s

Average cost in

2009-10 (P/U)

(approved)

Average cost in 20010-

11 (P/U))

(approved)

Proposed Average

cost (P/U) FY 2011-

12(proposed

)

(Increase in P/ U)

Percentage increase over

2010-11

1 HHEP64.96

89.54 92.134 (2.59) 2.90%

2 CHEP 46.98 51.48 (4.5) 9.58%

3 BHEP 56.66 58.41 74.178 (15.17) 27%

4RHEP 58.22 69.09 82.45 (13.36)19.34

%

5 UKHEP 25.19 33.17 39.42 (6.25)18.84%

5UIHEP 73.35 75.59 99.919 (24.32)32.19

%

Percentage increase in Tariff over 2010-11

During FY 2011-12, OHPC propose to supply an estimated energy of 5619.24 MU at an average rate of 79.01 P/kWh

During FY 2010-11 , same unit supply was approved by Commission at an average rate of 64.40 P/kWh

Over all Hike of 22.68% in OHPC tariff

Comparison of two-part tariff

Sl. No

Name of the

Power Stations

Approved tariff 2010-11

Proposed tariff 2011-12

Capacity charge

(Rs crore)

Energy Charge

(P/U)

Capacity charge

(Rs crore)

Energy Charge(P/U)

1 HHEP 30.320 40.775 31.195 46.067

2 CHEP 11.395 23.490 12.485 25.74

3 BHEP 34.20 29.201 43.435 37.089

4 RHEP 17.955 34.545 21.425 41.225

5 UKHEP 13.660 16.584 16.40 19.912

6 UIHEP 73.410 37.793 97.04 49.958

Observations and suggestion on the ARR & Tariff parameters (2011-12)

Two Part Tariff – CERC Regulation 09

Annual Fixed cost for Hydro station is to be recover through

Capacity Charge (50%)

Energy Charge (50%) Annual Fixed Cost consist of Return of Equity

Interest on loan capital

Depreciation

O&M

Interest on working capital

Capitalization of asset during 2010-11

Sl. No.

Name of the

Power Stations

Historical cost of

Asset as on

01.04.96( Cr)

New additions

up to 2009-10

( Cr)(approved)

Proposed new

additions up to

2010-11

Additional Capitalization during 2010-11

(Cr)

1 HHEP 72.75 190.09 191.94 1.85

2 CHEP 92.23 36.02 42.82 6.8

3 BHEP 115.42 208.74 209.62 0.88

4 RHEP 91.09 2.83 3.61 0.78

5 UKHEP 108.31 3.81 3.82 0.01

6 UIHEP Approved Project cost – 1195.42 10.32

Capitalization of asset during 2010-11

Observations & submission The expenditure of 10.32 Cr on account of

capitalization of assets during 2010-11 is not approved by the Commission in 2010-11 ARR

The expenditure details and the status of the work for the proposed asset capitalization is missing in the ARR.

Expenditure details of TRCM installation at Chiplima HEP (6.80 Cr against order value of 6.06 Cr) may required to be furnished

Hon. Commission may consider the expenses on account of capitalization of asset to pass through in the ARR after verifying the cost and necessity of the work

Interest on Loan

Observation & Suggestion The loan liability of OHPC consist of state Govt loan and

PFC loan OERC has advised the Govt that the effects of up-valuation

of assets and moratorium on debt services of state Govt loan shall be kept in abeyance till end 2012-13

Interest of Rs 38.21 Cr on State Government investment /loan (545.86 cr) in UIHEP may be kept in abeyance till end of the control period Or OERC may recommend Govt to make it interest fee loan

This will substantially reduce UIHEP tariff as well as the average cost of supply of OHPC stations (6.8 P/U); since UIHEP contribute app 35% share of design energy of OHPC stations

O& M expenses

Observation OHPC has claimed O& M expenses as per CERC 2009

regulation (5.72 % escalation on previous yr O&M) and thereafter added various Arrear salary and terminal liabilities

Submission Arrear salary and terminal liabilities of Corporate Office

claimed in the ARR 2011-12 ( 6.95 Cr) – It is not clear whether it is paid in 2010-11 or proposed to be paid in 2011-12 . If not paid in 2010-11 same shall not be considered in ARR 2011-12.

Differential Pension liability (21.28 Cr) should be met through Terminal (Pension) liabilities fund (140.95 Cr) earmarked for the purpose by OHPC & shall not allow to pass through in the ARR – Reply to the query raised by Director Tariff in OHPC ARR order of 2010-11

Interest on Working capital

Submission CERC Tariff Regulation 2009 specifies the interest of

W.C as SPLR of SBI as on 01.04.09 or 1st April of the year in which the generating station is declared under commercial operation, which ever is later.

As all 6 HEP of OHPC has put on commercial operation prior to 01.04.2009 the SBI SPLR prevailing as on 01.04.2009 may be consider for calculating interest on working capital.

Since there is provision of Rs 14 Cr for Rolling Working Capital earmarked by OHPC during 2009-10, total working capital requirement for FY 2011-12 (128.19 Cr ) may be reduced by appropriate amount .

In Conclusion

Hon Commission may consider the suggestions of consumer counsel with regard to interest on loan (particularly of UIHEP), O&M, interest on working capital and curtail the ARR accordingly in the interest of consumers.

As per Govt notification OHPC is claiming license fee for water used for generation of electricity from all HEP (5.67 Cr) . Since it is non-consumptive use of water and OHPC is Govt Corporation OERC may advice Govt to waive the license fees

Thank You