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True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 1
BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION
BHOPAL
CASE NO:
Filing of the Petition for True Up of FY 2013-14 under the MPERC (Terms and Conditions
for determination of tariff for supply and wheeling of electricity and methods and
principles for fixation of charges) Regulations, 2012 along with other guidelines and
directions issued by the MPERC from time to time AND under Part VII (Section 61 to
Section 64) of the Electricity Act, 2003 read with the relevant Guidelines.
Filed by:-
MADHYA PRADESH AUDYOGIK KENDRA VIKAS NIGAM (INDORE) LTD
3/54, Press Complex, Free Press House, Indore (Madhya Pradesh)
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 2
BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION
BHOPAL
Filing No:
Case No:
IN THE MATTER OF Filing of the Petition for True Up of FY 2013-14 under the MPERC
(Terms and Conditions for determination of tariff for supply and
wheeling of electricity and methods and principles for fixation of
charges) Regulations, 2012 along with other guidelines and
directions issued by the MPERC from time to time AND under Part
VII (Section 61 to Section 64) of the Electricity Act, 2003 read with
the relevant Guidelines
AND
IN THE MATTER OF Madhya Pradesh Audhogik Vikas Nigam (Indore) Ltd.
3/54, Press Complex, Free Press House, Indore (M.P.)
PETITIONER
THE PETITIONER ABOVE NAMED RESPECTFULLY SUBMITS
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 3
TABLE OF CONTENTS
1. Executive Summary .................................................................................................. 6
1.1. Preamble ........................................................................................................... 6
1.2. True Up of FY 2013-14 ...................................................................................... 7
2. Introduction ........................................................................................................... 10
2.1. Preamble ......................................................................................................... 10
2.2. Introduction .................................................................................................... 10
2.3. Submission to the Hon’ble Commission ......................................................... 11
3. True Up for FY 2013-14 .......................................................................................... 13
3.1. Preamble ......................................................................................................... 13
3.2. Principles for True Up for FY 2013-14 ............................................................. 13
3.3. Category wise Sales ......................................................................................... 14
3.4. Distribution Losses .......................................................................................... 14
3.5. Energy Requirement and Energy Balance....................................................... 14
3.6. Power Purchase Cost ...................................................................................... 15
3.7. Transmission Charges ..................................................................................... 17
3.8. Capitalisation .................................................................................................. 17
3.9. Funding of Capital Expenditure ...................................................................... 18
3.10. Aggregate Revenue Requirements for FY 2013-14 ........................................ 18
3.11. Operation & Maintenance Expenses .............................................................. 19
3.12. Depreciation .................................................................................................... 23
3.13. Interest & Financial Charges ........................................................................... 24
3.14. Interest on Working Capital ............................................................................ 25
3.15. Lease Rent ....................................................................................................... 25
3.16. Return on equity ............................................................................................. 28
3.17. Other Income .................................................................................................. 28
3.18. Income Tax ...................................................................................................... 28
3.19. Aggregate Revenue Requirement for FY 2013-14 .......................................... 29
3.20. Revenue for FY 2013-14 .................................................................................. 30
3.21. Revenue Gap / (Surplus) for FY 2013-14 ........................................................ 30
4. Prayer ..................................................................................................................... 31
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 4
Annexure 1: Letter of CAG ....................................................................................................... 32
Annexure 2: Letter of GoMP regarding lease rent .................................................................. 33
Annexure 3: Tariff Filing Formats............................................................................................. 35
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 5
LIST OF TABLES
Table 1 : Category-wise Sales (MU) ........................................................................................... 7
Table 2 : Distribution Losses ...................................................................................................... 7
Table 3 : Power Purchase Cost for FY 2013-14 ......................................................................... 8
Table 4 : Capitalization for FY 2013-14 (Rs. Crore) .................................................................... 8
Table 5 : Aggregate Revenue Requirement for FY 2013-14 (Rs. Crore) .................................... 9
Table 6 : Revenue Gap/ (Surplus) for FY 2013-14 (Rs. Crore) .................................................... 9
Table 7 : Category-wise Sales (MU) ......................................................................................... 14
Table 8 : Distribution Losses .................................................................................................... 14
Table 9 : Energy Requirement and Energy Balance ................................................................. 15
Table 10 : Summary of source-wise Power Purchase Quantum and Cost for FY 2013-14 ..... 16
Table 11 : Power Purchase Cost for FY 2013-14 ..................................................................... 17
Table 12 : Transmission Charges for FY 2013-14 (Rs. Crore) .................................................. 17
Table 13 : Capitalization for FY 2013-14 (Rs. Crore) ................................................................ 18
Table 14 : Funding of Capitalisation (Rs. Crore) ...................................................................... 18
Table 15 : Employee Cost for FY 2013-14 (Rs. Crore) .............................................................. 19
Table 16 : Repair & Maintenance Cost for FY 2013-14 (Rs. Crore) .......................................... 22
Table 17 : Administration & General Expenses for FY 2013-14 (Rs. Crore) ............................. 22
Table 18 : O&M Expenses for FY 2013-14 (Rs. Crore) ............................................................. 23
Table 19 : Depreciation for FY 2013-14 (Rs. Crore) ................................................................. 23
Table 20 : Net Depreciation for FY 2013-14 (Rs. Crore) .......................................................... 23
Table 21 : Interest & Financial Charges for FY 2013-14 (Rs. Crore) ......................................... 24
Table 22 : Interest on Consumer Security Deposit for FY 2013-14 (Rs. Crore) ....................... 24
Table 23 : Interest on Working Capital for FY 2013-14 (Rs. Crore) ......................................... 25
Table 24 : Lease Rent for FY 2013-14 (Rs. Crore) ..................................................................... 26
Table 25 : Return on Equity for FY 2013-14 (Rs. Crore) ........................................................... 28
Table 26 : Other Income for FY 2013-14 (Rs. Crore) ................................................................ 28
Table 27 : Income Tax for FY 2013-14 (Rs. Crore) .................................................................... 29
Table 28 : Aggregate Revenue Requirement for FY 2013-14 (Rs. Crore) ................................ 30
Table 29 : Revenue Gap/ (Surplus) for FY 2013-14 (Rs. Crore) ................................................ 30
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 6
1. Executive Summary
1.1. Preamble
1.1.1. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd., (hereinafter referred
as the ‘Petitioner’, MPAKVN, ‘the Company’ or ‘the Licensee’), is a Company
incorporated under the Companies Act, 1956(Now Companies Act, 2013) having its
registered office at 3/54, Press Complex, Free Press House, Indore. The Petitioner is
a deemed distribution licensee under the fifth Proviso to Section 14 of the
Electricity Act, 2003. The area of supply of the Petitioner is SEZ Indore (Pithampur)
within the State of Madhya Pradesh (‘MP’).
1.1.2. The Government of Madhya Pradesh (‘GoMP’ or ‘State Government’), has passed
the Special Economic Zone Policy in August 2003. The Indore Special Economic
Zone (Special Provisions), Act 2003 was also enacted in the year 2003. This Act has
been passed by the Madhya Pradesh Vidhan Sabha on dated 28th March 2003
(Madhya Pradesh Act No 23 of 2003), The Indore Special Economic Zone (Special
Provisions), Act 2003 an Act to provide for the development, operation,
maintenance and administration of Indore Special Economic Zone.
1.1.3. It is submitted that licensee MPAKVN (I) Ltd. is the wholly owned undertaking of
Government of Madhya Pradesh and working for the Industrial Promotion &
Development in the State. MPAKVN (I) Ltd has three subsidiary Companies viz.
SEZ Indore Ltd (Specially formed for the operation, development, maintenance
and administration of SEZ for which MPAKVN (I) Ltd is a Deemed Distribution
Licensee),
Crystal IT Park Indore Ltd. and
Pithampur Auto Cluster Ltd.
1.1.4. In the backdrop of the above facts and circumstances, the present application is
being submitted by the Petitioner (MPAKVN Indore Ltd.) under Section 61 and
Section 62 (1) (d) of the Electricity Act 2003 for True up for ARR of FY 2013-14
under the MPERC (Terms and Conditions for determination of tariff for supply and
wheeling of electricity and methods and principles for fixation of charges)
Regulations, 2012 hereinafter referred as “Tariff Regulations, 2012”.
1.1.5. The present application is being submitted by the Petitioner under Section 61 and
Section 62 (1) (d) of the Electricity Act 2003 for True up for ARR of FY 2013-14
under the tariff principles laid down in the Tariff Regulations, 2012 for approval by
the Hon’ble Commission.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 7
1.2. True Up of FY 2013-14
1.2.1. The actual ARR for FY 2013-14 is based on audited accounts of FY 2013-14 and the
principles adopted by the Hon’ble Commission in its previous Orders on various
ARR elements. The actual expenses have been compared against those approved
for FY 2013-14 in the Tariff Order dated 10th September, 2013 under Petition No.
38/2013.
1.2.2. The actual Energy Sales and those approved by the Hon’ble Commission in its Order
approving the ARR for FY 2013-14 are compared for True up purposes. The
following table shows the energy sales for FY 2013-14.
Table 1 : Category-wise Sales (MU)
Approved Actual
LT Consumer Categories
Non Domestic - 0.04
Public Water Works and Street Light 0.21 0.28
Industrial 0.22 0.10
Total LT Sale 0.43 0.42
HT Consumer Categories
Industrial 224.04 193.21
Non Industrial - -
Total HT Sale 224.04 193.21
Total LT+HT Sale 224.47 193.63
FY 2013-14Consumer Category
1.2.3. In FY 2013-14, the actual distribution losses were 2.32% as against the approved
level of 3.70%. The table below highlights the comparison of actual distribution
losses against that approved by the Hon’ble Commission vide its Tariff Order.
Table 2 : Distribution Losses
Particulars FY 2013-14
(Approved)
FY 2013-14
(Actual)
Distribution Losses 3.70% 2.32% 1.2.4. For FY 2013-14 the Petitioner had proposed the procurement of power from
sources such as NTPC and MPPKVVCL. The comparison of the approved and the
actual cost of power purchase for FY 2013-14 is given in the table below. The
reasons for variation in the power purchase cost as claimed in this Petition as
compared to the audited annual accounts have been elaborated in the subsequent
chapters.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 8
Table 3 : Power Purchase Cost for FY 2013-14
Units
(MU)
Cost
(Rs. Crore)
Units
(MU)
Cost
(Rs. Crore)
NTPC 129.13 26.18 138.12 29.36
MPPKVVCL 112.61 63.02 56.45 30.85
MPPMCL - - - -
Unscheduled Interchange - - 14.89 6.12
Power Purchase 241.74 89.20 209.47 66.32
Particular FY 2013-14 (Approved) FY 2013-14 (Actual)
1.2.5. The actual capitalization of MPAKVN during the FY 2013-14 is Rs. 3.08 Crore out of
which the capitalisation from consumer contribution is Rs. 0.17 Crore. The actual
capitalisation is higher than that approved by the Hon’ble Commission at Rs. 1.25
Crore in the Tariff Order dated 10th September, 2013. The following table shows
the capitalisation for FY 2013-14.
Table 4 : Capitalization for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Actual)
Furniture and Fixture -
Computers -
Buildings 0.06
Plant and Macinery 3.02
Total 3.08 1.2.6. The True up of Aggregate Revenue Requirement of MPAKVN for FY 2013-14 as
against the values approved by the Hon’ble Commission is summarised in the table
below. The element wise details are provided in subsequent chapters of the
Petition.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 9
Table 5 : Aggregate Revenue Requirement for FY 2013-14 (Rs. Crore)
Approved Actual
1 Purchase of Power 89.20 66.32
2 Inter-State Transmission Charges 2.78 4.71
3 Intra-State Transmission (MP Transco) Charges 2.80 4.41
4 SLDC Charges 0.01 0.04
5 Employee Expenses 3.60
6 R&M Expenses 4.32
7 A&G Expenses 2.50
8 MPERC and MPPMCL Fees & Other 0.01 0.01
9 Depreciation 0.39 0.62
10 Interest & Finance Charges 1.33 1.90
11 Interest on Working Capital - -
12 Lease Rent - 4.64
13 Income Tax 0.14 -
14 Sub Total (1 to 13) 100.94 93.09
14 Return on Equity 0.42 0.62
15 Total Expenditure (13 + 14) 101.36 93.71
16 Less: Other Income 0.02 0.43
17 Aggregate Revenue Requirement (15 - 17) 101.34 93.28
Sr. No. Particulars FY 2013-14
4.28
1.2.7. This Aggregate Revenue Requirement is compared against the actual Income of Rs.
87.48 Crore under the head Revenue from Sale of Power. Accordingly, total
Revenue Gap of MPAKVN for FY 2013-14 is as depicted in the table below:
Table 6 : Revenue Gap/ (Surplus) for FY 2013-14 (Rs. Crore)
Sr. No. Particulars FY 2013-14
(Actual)
1 Aggregate Revenue Requirement 93.28
2 Revenue from Sale of Power 87.48
3 Revenu Gap/(Surplus) (1-2) 5.80 1.2.8. The Hon’ble Commission is requested to approve above mentioned revenue gap
and allow recovery of the same while determination of the retail tariff for FY 2018-
19.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 10
2. Introduction
2.1. Preamble
2.1.1. This section presents the background and reasons for filing this Petition.
2.2. Introduction
2.2.1. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd., (hereinafter referred
as the ‘MPAKVN’ or ‘Petitioner’ or ‘the Company’ or ‘the Licensee’), is a Company
incorporated under the Companies Act, 1956 (which has now been superseded by
the Companies Act, 2013) having its registered office at 3/54, Press Complex, Free
Press House, Indore. The Petitioner is a deemed distribution licensee under the
fifth Proviso to Section 14 of the Electricity Act, 2003. The area of supply of the
Petitioner is SEZ Indore (Pithampur) within the State of Madhya Pradesh (‘MP’).
2.2.2. The Government of Madhya Pradesh (‘GoMP’ or ‘State Government’), has passed
the Special Economic Zone Policy in August 2003. The Indore Special Economic
Zone (Special Provisions), Act 2003 was also enacted in the year 2003. This Act has
been passed by the Madhya Pradesh Vidhan Sabha on dated 28th March, 2003
(Madhya Pradesh Act No 23 of 2003) and was enacted to provide for the
development, operation, maintenance and administration of Indore Special
Economic Zone.
2.2.3. The Madhya Pradesh Electricity Regulatory Commission (hereinafter referred to as
“MPERC” or “the Hon’ble Commission”), an independent statutory body
constituted by Government of Madhya Pradesh vide Gazette Notification dated
20th August, 1998 under Electricity Regulatory Commission’s Act, 1998.
Subsequently after the M.P. Vidyut Sudhar Adhiniyam, 2000 came into effect from
03rd July, 2001, the State Regulatory Commission was deemed to have been
constituted under State Act. The Electricity Act 2003 (No. 36 of 2003) enacted by
parliament has come into force w.e.f. 10th June, 2003 and the Commission is now
deemed to have been constituted and functioning under the provisions of
Electricity Act 2003.
2.2.4. The Hon’ble Commission has issued the MPERC (Terms and Conditions for
determination of tariff for supply and wheeling of electricity and methods and
principles for fixation of charges) Regulations, 2012 (hereinafter referred as “Tariff
Regulations, 2012”) which were effective from 1st April, 2013 and up to 31st March,
2016.
2.2.5. The present application is being submitted by the Petitioner under Section 61 and
Section 62 (1) (d) of the Electricity Act 2003 for True up for ARR of FY 2013-14
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 11
under tariff principles laid down in the Tariff Regulations, 2012 for approval by the
Hon’ble Commission.
2.2.6. It is submitted that the MPAKVN has prepared separate Accounts for the power
business of the SEZ for FY 2013-14 on the basis of rational allocation of Revenue,
Expenses, and Assets & Liabilities between power & other business and shall
continue preparing separate Accounts for subsequent years as directed by the
Hon’ble Commission.
2.2.7. While filing the present True up and ARR under the prevailing Regulations,
MPAKVN has endeavoured to comply with the various applicable legal and
regulatory directions and stipulations including the directions of the Hon’ble
Commission in the Business Rules of the Commission, the Guidelines, previous ARR
of Discoms and Tariff Orders and the Regulations.
2.2.8. Based on the information available, the Petitioner has made sincere efforts to
comply with the Regulations of the Hon’ble Commission and discharge its
obligations to the best of its capabilities. However, if any further material
information becomes available in the near future, the applicant craves leave of the
Hon’ble Commission to file such additional information and consequently amend/
revise the application.
2.2.9. Shri D.L. Goyal, Joint Director (Planning) of MPAKVN has been authorized to
execute and file all the documents on behalf of the Petitioner in this regard.
Accordingly, the current filing is signed and verified by, and backed by the affidavit
of Shri D.L. Goyal.
2.3. Submission to the Hon’ble Commission
2.3.1. The Petitioner had filed the Petition in Case No. 38/2013 on 12 July, 2013. Vide
letter dated 16 August, 2013, the Hon’ble Commission directed the Petitioner to
substantiate the claims made in the Petition on various items of ARR. Meanwhile,
the petitioner was also directed to invite comments / suggestions / objections from
the stakeholders through a public notice which was published on 8 August, 2013.
The Hon’ble Commission held the motion hearing on 24 August, 2013 and admitted
the Petition vide order dated 26 August, 2013.
2.3.2. The Commission observed that the Petitioner submitted abstracts of the Balance
Sheet and Profit and Loss Account of MPAKVN (I) Ltd., Indore for FY 2011-12 and FY
2012-13, for its power business of SEZ at Pithampur, certified by Chartered
Accountant. These abstracts of Balance Sheet and Profit and Loss Account of power
business have been carved out from the annual accounts of MPAKVN (I) Ltd. on
pro-rata basis making certain assumptions for each item of expense related to the
power business. It further observed that the petitioner could not submit actual
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 12
expenses incurred in the power business. Thus, in the Tariff Order the Commission
admitted the ARR of MPAKVN (I) Ltd. and determined the tariff provisionally for FY
2013-14.
2.3.3. MPAKVN hereby submits the Petition under Section 62 of the Electricity Act, 2003
for True-up of FY 2013-14 as per Tariff Regulations, 2012 and based on the audited
annual accounts for FY 2013-14 for the power business of MPAKVN.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 13
3. True Up for FY 2013-14
3.1. Preamble
3.1.1. This section outlines the actual performance of MPAKVN for FY 2013-14. The True
Up for FY 2013-14 has been prepared in line with the provisions of the Tariff
Regulations, 2012. It is submitted that the main Annual Accounts of MPAKVN are
audited by the CAG for FY 2013-14. As per the directions from the Hon’ble
Commission, MPAKVN requested the CAG to audit the Annual Accounts of the
power business of MPAKVN for FY 2010-11 to FY 2014-15. However, vide letter
dated 16 February, 2017, the CAG has stated that it has already conducted
supplementary audit of MPAKVN (I) Ltd., under Section 143(6) of the Companies
Act, 2013 up to the year 2015-16 and audited accounts had already been adopted
in the AGM of the Company. In the absence of any enabling provisions in the
Companies Act, the separate accounts of power business activity of the MPAKVN
for FY 2010-11 to FY 2014-15 cannot be audited/certified by the Statutory auditors/
the CAG. A copy of the said letter is attached at Annexure – 1. Accordingly, the
expenses for FY 2013-14 presented for True-Up are based on the Annual Accounts
duly audited by the Chartered Accountant for the power business of MPAKVN in
compliance with the directive issued by the Hon’ble Commission and other
principles specified in the Tariff Regulations, 2012. The ARR so arrived for the
purpose of true up has been compared with the ARR for FY 2013-14 approved by
the Hon’ble Commission vide Tariff Order dated 10th September, 2013.
3.2. Principles for True Up for FY 2013-14
3.2.1. As per Tariff Regulations, 2012, the Hon’ble Commission shall undertake the True
Up of the licensee for FY 2013-14 based on the comparison of the actual
performance of the past year with the approved estimates for such year.
3.2.2. In line with the provisions of Tariff Regulations, 2012, MPAKVN has filed this
Petition for True Up for the FY 2013-14. Information provided in the True Up for FY
2013-14 is based on the audited actual performance and considering the principles
adopted by the Hon’ble Commission in its previous Orders. The actual performance
has been compared with the ARR approved as per the Tariff Order dated 10th
September, 2013.
3.2.3. Accordingly, the details of the elements of the revised Aggregate Revenue
Requirement, the actual revenue earned during the year and the consequent
revenue gap for FY 2013-14 is discussed in the subsequent paragraphs of this
chapter.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 14
3.3. Category wise Sales
3.3.1. The following table shows the category-wise sales approved by the Hon’ble
Commission and actually recorded for FY 2013-14.
Table 7 : Category-wise Sales (MU)
Approved Actual
LT Consumer Categories
Non Domestic - 0.04
Public Water Works and Street Light 0.21 0.28
Industrial 0.22 0.10
Total LT Sale 0.43 0.42
HT Consumer Categories
Industrial 224.04 193.21
Non Industrial - -
Total HT Sale 224.04 193.21
Total LT+HT Sale 224.47 193.63
FY 2013-14Consumer Category
3.3.2. As can be seen from the table, the actual energy sales for both LT and HT
categories are lower as compared to that approved by the Hon’ble Commission in
its Tariff Order for FY 2013-14. Accordingly, MPAKVN requests the Hon’ble
Commission to approve the actual sales for FY 2013-14.
3.4. Distribution Losses
3.4.1. In FY 2013-14, the actual distribution losses were 2.32% as against the approved
level of 3.70% The table below highlights the comparison of actual distribution
losses against that approved by the Hon’ble Commission vide its Tariff Order.
Table 8 : Distribution Losses
Particulars FY 2013-14
(Approved)
FY 2013-14
(Actual)
Distribution Losses 3.70% 2.32%
3.5. Energy Requirement and Energy Balance
3.5.1. The energy balance based on the actual sales during the year and the distribution
losses for FY 2013-14 is given below:
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 15
Table 9 : Energy Requirement and Energy Balance
Approved Actual
1 Total Units sold to LT category MU 0.43 0.42
2 Total Units sold to HT category MU 224.04 193.21
3 Total Units Sold (1+2) MU 224.47 193.63
4 Distribution Losses % 3.70% 2.32%
5 Distribution Losses MU 8.63 4.60
6 Units Input at AKVN Distribution Boundary (3
+ 5)
MU 233.10 198.24
7 Transmission Losses % 3.16% 3.00%
8 Transmission Losses MU 3.93 6.13
9 Input at G-T interface (6 + 8) MU 237.03 204.37
10 PGCIL Losses % 3.64% 3.69%
11 PGCIL Losses MU 4.71 5.10
12 Total Units Purchased (9 + 11) MU 241.74 209.47
Sr. No. Particlars Unit FY 2013-14
3.5.2. The net energy purchased by MPAKVN during FY 2013-14 for sale to retail
consumers is 209.47 MU as compared to 241.74 MU approved by the Hon’ble
Commission.
3.6. Power Purchase Cost
3.6.1. The Petitioner has purchased power from various sources viz. NTPC and MPPMCL
in the year FY 2013-14. Further, the power purchase also includes the over/under
drawal and consequent Unscheduled Interchange (UI) charges applicable.
3.6.2. The following table shows the monthly source-wise power purchase details as per
the power purchase bills. The UI units and charges have been taken from the MP
SLDC website.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 16
Table 10 : Summary of source-wise Power Purchase Quantum and Cost for FY 2013-14
MU Amount
(Rs. Crore)
MU Amount
(Rs. Crore)
MU Amount
(Rs. Crore)
MU Amount
(Rs. Crore)
MU Amount
(Rs. Crore)
April 11.00 2.17 4.53 2.47 - - 0.52 1.32 16.05 5.95
May 11.54 2.79 4.38 2.38 - - 0.61 0.22 16.52 5.39
June 9.94 2.23 4.81 2.56 - - 1.83 0.43 16.57 5.23
July 10.21 2.20 4.82 2.62 - - 2.12 0.52 17.14 5.33
August 9.29 1.86 4.99 2.72 - - 3.28 0.80 17.56 5.38
September 10.30 1.99 5.05 2.72 - - 2.46 0.75 17.81 5.46
October 11.52 3.07 4.91 2.66 - - 1.22 0.96 17.65 6.69
November 11.85 2.70 4.61 2.54 - - (0.52) (0.03) 15.93 5.22
December 12.02 2.83 4.47 2.46 - - 0.60 0.28 17.09 5.57
January 12.09 2.68 4.70 2.59 - - 0.49 0.16 17.29 5.43
February 10.70 2.28 4.60 2.56 - - 0.67 0.23 15.98 5.06
March 11.73 2.56 4.58 2.56 - - 1.63 0.49 17.93 5.61
Adjustment as
per REA
account
5.93 5.93 -
Total 138.12 29.36 56.45 30.85 - - 14.89 6.12 209.47 66.32
Particulars FY 2013-14
NTPC MPPKVVCL MPPMCL UI Total
3.6.3. It is submitted that there is some variation in the power purchase cost as claimed
in the True up Petition and as considered in the annual accounts on account of
various reasons as follows:
The amount of Rs. 4.32 Crore as per the O&M agreement with MPPKVVCL is
considered under the power purchase cost in the annual accounts for FY 2013-
14 which is claimed separately under the R&M expense head of the O&M
expenses in the present Petition.
A power purchase bill of NTPC amounting to Rs. 1.76 Crore for FY 2012-13 was
considered in the audited accounts of FY 2013-14 as it was paid during FY 2013-
14. However, since it is claimed in the Petition for FY 2012-13, it is not claimed
in the present Petition.
Payment of Rs. 6.21 Crore towards UI charges for over/under drawal of power
was made in FY 2013-14 was considered in the audited accounts of FY 2013-14,
however, the same is claimed in the present Petition as it is lump sum payment
towards UI charges and not actual cost of UI for FY 2013-14.
The actual cost of Rs. 6.12 Crore towards UI charges for over/under drawal of
power in FY 2013-14 is not considered in the annual accounts, however, the
same is claimed in the present Petition.
Moreover, MPAKVN is entitled to the gross power purchase cost considering
accrual basis of accounting however, in the audited annual accounts, the cost
towards power purchase has been considered on actual payment basis which is
net of all rebates/incentives/penalties etc. and hence a lower value of power
purchase cost is recorded in the annual accounts.
3.6.4. The comparison of the approved and the actual cost of power purchase for FY
2013-14 is given in the table below:
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 17
Table 11 : Power Purchase Cost for FY 2013-14
Units
(MU)
Cost
(Rs. Crore)
Units
(MU)
Cost
(Rs. Crore)
NTPC 129.13 26.18 138.12 29.36
MPPKVVCL 112.61 63.02 56.45 30.85
MPPMCL - - - -
Unscheduled Interchange - - 14.89 6.12
Power Purchase 241.74 89.20 209.47 66.32
Particular FY 2013-14 (Approved) FY 2013-14 (Actual)
3.7. Transmission Charges
3.7.1. The Petitioner has submitted the PGCIL charges (for inter-state power purchase),
MPPTCL charges (for intra-state power purchase) and SLDC charges based on the
audited accounts for FY 2013-14 wherein the Transmission Charges have been
considered under the head of total Power Purchase Cost and are not available
separately.
3.7.2. The comparison of the approved and the actual transmission cost is as given in the
table below:
Table 12 : Transmission Charges for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Approved)
FY 2013-14
(Actual)
Intra-State Transmission Charges 2.78 4.41
Inter-State Transmission Charges 2.80 4.71
SLDC Charges 0.01 0.04
Total Transmission Charges 5.59 9.17 3.7.3. MPAKVN is entitled to the gross transmission charges considering accrual basis of
accounting however, in the audited annual accounts, the cost towards transmission
charges has been considered on actual payment basis which is net of all
rebates/incentives/penalties etc. and hence a lower value of transmission charges
is recorded in the annual accounts.
3.7.4. MPAKVN requests the Commission to approve the actual inter-state and intra-state
transmission charges & SLDC charges for FY 2013-14.
3.8. Capitalisation
3.8.1. The actual capitalization of MPAKVN during the FY 2013-14 is Rs. 3.08 Crore out of
which Rs. 0.17 Crore is through consumer contribution. The Hon’ble Commission
had approved capitalization of Rs. 1.25 Crore in the Tariff Order dated 10th
September, 2013.
3.8.2. The asset head wise capitalization in FY 2013-14 is as shown below.
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 18
Table 13 : Capitalization for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Actual)
Furniture and Fixture -
Computers -
Buildings 0.06
Plant and Macinery 3.02
Total 3.08
3.9. Funding of Capital Expenditure
3.9.1. The funding of above mentioned Capital Expenditure is done through various
sources which are mainly categorised under four headings namely: (i) Consumer
Contribution; (ii) Grants; (iii) Equity; and (iv) Debt. The detailed breakup of funding
of capitalisation which took place during FY 2013-14 is mentioned in the table
below.
Table 14 : Funding of Capitalisation (Rs. Crore)
Approved Actual
Total Capitalization 1.25 3.08
Consumer Contribution - 0.17
Grants - -
Balance Capitalisation for the Year 1.25 2.90
Debt 0.87 2.03
Equity 0.37 0.87
Particulars FY 2013-14
3.9.2. It is submitted that the entire funding of the assets (other than those funded
through consumer contribution and grants) capitalised during FY 2013-14 is
through equity. However, in view of the provisions of the Tariff Regulation, 2012,
the quantum of equity has been restricted at 30% of the total funding requirement
and the remaining quantum is treated as normative debt. This is in line with the
provisions of the Tariff Regulations, 2012 and also in line with the approach
adopted by the Hon’ble Commission in the past.
3.9.3. The details pertaining to the interest charges on the normative debt funding and
the Return on the Equity has been discussed in subsequent paragraphs of the
Petition.
3.10. Aggregate Revenue Requirements for FY 2013-14
3.10.1. The ARR of MPAKVN for the FY 2013-14 has been determined in accordance with
the provisions of the Tariff Regulations, 2012 and also considers the cost elements
(both equity and normative debt components) emanating from the Capital Cost of
the Capitalised Expenditure considered in FY 2013-14.
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 19
3.10.2. The net ARR of MPAKVN has been computed after netting off non-Tariff income for
the gross ARR mentioned previously.
3.10.3. The subsequent paragraphs outline the details of all the elements of the ARR of
MPAKVN.
3.11. Operation & Maintenance Expenses
3.11.1. The Hon’ble Commission in the Tariff Order for FY 2013-14 had approved the
consolidated O&M expenses of Rs. 4.28 Crore.
3.11.2. Operations and Maintenance (O&M) Expenses of MPAKVN consists of the following
elements:
Employee Expenses
Repairs and Maintenance Costs
Administrative and General Expenses
MPERC Expenses
Employee Cost
3.11.3. Employees of various department of MPAKVN like planning, commercial, technical,
legal, financial & accounts, administrative etc. are involved in activity of power
business. Actual employee expense for FY 2013-14 is Rs. 3.60 Crore which also
includes DA and terminal benefits. The summary of the actual employee expenses
for FY 2013-14 is given in the table below:
Table 15 : Employee Cost for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Actual)
Employee Cost excluding DA,
arrears, terminal benefits and
incentives
1.76
Arrears -
DA 0.90
Terminal Benefits 0.94
Incentive -
Total Employee Cost 3.60
Repair & Maintenance Cost
3.11.4. In the Tariff Order for FY 2013-14, the Hon’ble Commission had noted that the
petitioner had filed O&M expenses as per the Regulations and has also filed the
expenses as per the agreement signed with MPPKVVCL, Indore dated 26 March,
2013 and sought approval of these expenses over and above the regular O&M
expenses. Under this agreement, the MPPKVVCL has to undertake all activities
related to Repairs & Maintenance and also to provide consultancy services in
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 20
various techno-commercial matters relating to the distribution and supply of
electricity in the SEZ area. The Hon’ble Commission in view of the difficulties faced
by the petitioner in the past related to its power business, had considered the
contract between the petitioner and MPPKVVCL, Indore in the interest of the
consumers and also due to the fact that MPPKVVCL is a State owned Distribution
Licensee and has expertise in operation and maintenance of power distribution
system.
3.11.5. The actual R&M expenses based on the audited accounts for FY 2013-14 is Rs. 4.32
Crore which also includes the additional O&M expenses approved vide agreement
between MPAKVN and MPPKVVCL dated 26 March, 2013 as well as the other
routine maintenance expenses not covered under the scope of the agreement.
3.11.6. Further, it is submitted that MPAKVN is an SEZ whose area of operation is limited
and cost of activities carried out for providing power supply gets apportioned over
a smaller area, consumer base and asset base as compared to other State Discoms
which have a wide area of operation and thus have the benefit of economies of
scale which is not available to MPAKVN. Hence, it would not be appropriate to link
the R&M expenses with the Gross Fixed Asset of the SEZ area.
3.11.7. It is also submitted that MPAKVN has been consistently providing power with
higher reliability throughout the year to the industrial units of the SEZ which
requires a robust R&M mechanism and which entails substantial cost. Accordingly,
it is submitted that the R&M expenses actually incurred and paid by MPAKVN be
approved as a part of True up of ARR. State Electricity Regulatory Commissions in
other States have also approved additional charges such as Reliability Charges for
uninterrupted / reliable supply of power. The Maharashtra Electricity Regulatory
Commission has approved Reliability Charges to be levied by the State Discom
MSEDCL from the consumers of Pune vide its Order in Case No. 5 of 2008. The
relevant extracts are reproduced below:
“3. MSEDCL, in its Petition, prayed as under:
“The Commission may accord
1. Approval of appointment of the Tata Power Co. Ltd. as Additional Supply Agency;
2. Approval and regularisation of power purchase from them for a period from 4th
April 2008 upto 30th June 2008 and;
3. Approval of Reliability Charge to be recovered from consumers of Pune Circles
of Ganeshkhind and Rasta Peth, for mitigating load shedding in Pune Circles.”
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 21
35. Having heard the parties and after considering the material placed on record,
the Commission is of the view as under:
…..
c) Since most of the consumers who attended the hearing, supported MSEDCL’s
proposal to procure additional power from TPC to mitigate load shedding in Pune
Urban Circles, the Commission accords its acceptance to MSEDCL’s proposal for
additional power purchase to mitigate load shedding in Pune Urban Circles, and
has determined the Reliability Charges in this Order.”
3.11.8. It is further submitted that the MPAKVN has entered into the O&M agreement with
MPPKVVCL which is a Government owned entity and the Hon’ble Commission also
has considered such agreement and associated cost to be prudent in its Tariff
Order for FY 2013-14 dated 10 September, 2013 vide Petition No. 38/2013. The
relevant extract of the Order is reproduced below:
“2.47 The Commission noticed that the petitioner has filed O&M expenses as per
the Regulations and has also filed the expenses as per the agreement signed with
MPPKVVCL, Indore dated March 26, 2013. The petitioner has requested that the
expenses in accordance with the agreement executed by them with MPPKVVCL be
allowed. MPPKVVCL has to undertake all activities related to O&M expenses and
also to provide consultancy services in various techno-commercial matters relating
to the distribution and supply of electricity in the SEZ area. The Commission is of
the view that looking at the difficulties faced by the petitioner in the past related
to its power business, it would be prudent to consider the contract between the
petitioner and MPPKVVCL, Indore in the interest of the consumers. MPPKVVCL is a
State owned Distribution Licensee and has expertise in operation and
maintenance of power distribution system.”
3.11.9. It is important to note that although the term used in the agreement is O&M
however, the scope of work under the agreement is related to R&M activities only
and hence expenses incurred under the agreement should be considered as a part
of R&M expenses only and not the O&M expenses.
3.11.10. It is also submitted that all components of the O&M expenses viz. Employee
expenses, A&G expenses and R&M expenses have been actually incurred by
MPAKVN in the course of supply of power to the consumers of SEZ and the Hon’ble
Commission may undertake an independent third party audit of such O&M
expenses of MPAKVN, if deemed fit, for approval as a part of True up of ARR.
3.11.11. The Regulation 46 and 48 of the Tariff Regulations, 2012 reads as under:
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 22
“46 Deviation from norms.
46.1 The Distribution Tariff to be recovered by the Distribution Licensees from the
consumers may also be determined by the Commission in deviation of the norms
specified in these Regulations.
…..
48 Power to Amend.
48.1 The Commission may, at any time add, vary, alter, modify or amend any
provisions of these Regulations.”
3.11.12. As can be seen from the above, as per the Clause 46 of Tariff Regulations, 2012, the
Hon’ble Commission can determine Distribution Tariff in deviation from the norms
and under Clause 48 of Tariff Regulations, 2012, the Hon’ble Commission also has
the power to amend any provisions of these Regulation. Considering these factors
and the above stated reasons, it is requested that the Hon’ble Commission allow
the actual R&M expenses incurred for FY 2013-14 instead of the normative value.
3.11.13. The R&M expenditure for FY 2013-14 is as under:
Table 16 : Repair & Maintenance Cost for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Actual)
R&M Expenses 4.32
Administration & General Expenses
3.11.14. The actual A&G expense for FY 2013-14 is Rs. 2.50 Crore. Actual A&G expense of
MPAKVN are given in the table below:
Table 17 : Administration & General Expenses for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Actual)
A&G Expenses 2.50
MPERC Expenses
3.11.15. The actual MPERC expense for FY 2013-14 is Rs. 0.01 Crore. The Hon’ble
Commission is requested to kindly approve the same.
Consolidated O&M Expenses
3.11.16. The summary of actual O&M expenses as against approved by the Hon’ble
Commission are given in the table below:
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 23
Table 18 : O&M Expenses for FY 2013-14 (Rs. Crore)
Approved Actual
Employee Expenses 3.60
Repair & Maintenance Expenses 4.32
Administrative & General Expenses 2.50
MPERC Fees 0.01 0.01
Operation & Maintenance Expenses 4.29 10.43
Particulars FY 2013-14
4.28
3.11.17. The Hon’ble Commission is requested to approve actual O&M expenses incurred by
MPAKVN for FY 2013-14.
3.12. Depreciation
3.12.1. The rate of depreciation as specified in the Tariff Regulations, 2012 have been
considered for the computation of depreciation. The actual and approved
depreciation for FY 2013-14 is as shown below:
Table 19 : Depreciation for FY 2013-14 (Rs. Crore)
Approved Actual
Opening Gross Fixed Asset 11.94 12.74
Addition during the year 1.25 3.08
Deduction during the year 0.00 0.00
Closing Gross Fixed Asset 13.19 15.81
Depreciation 0.63 0.70
Depreciation Rate 5.00% 4.87%
Particulars FY 2013-14
3.12.2. MPAKVN has reduced the amortization of the assets capitalized from the consumer
contribution & grant. Accordingly, net depreciation on GFA for FY 2013-14 after
reducing amortization on consumer contribution is shown in the table below:
Table 20 : Net Depreciation for FY 2013-14 (Rs. Crore)
Approved Actual
Depreciation 0.63 0.70
Less: Consumer contribution
amortized
0.24 0.07
Net Depreciation 0.39 0.62
Particulars FY 2013-14
3.12.3. The Hon’ble Commission is requested to approve depreciation expenses incurred
by MPAKVN for FY 2013-14.
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 24
3.13. Interest & Financial Charges
3.13.1. For assessing interest charges on loans in FY 2013-14, the opening balance of Loans
has been considered as the normative closing loan balance for FY 2012-13. The loan
addition in FY 2013-14 is considered at Rs. 2.03 Crore based on the actual
capitalisation during the year as discussed in paragraph 3.9 above.
3.13.2. In line with the approach adopted by the Hon’ble Commission in its Tariff Order
dated 10th September, 2013 and as prescribed by Tariff Regulations, 2012
repayment during the year has been considered equal to depreciation charged for
the financial year.
3.13.3. MPAKVN does not have actual loans and hence in line with Hon’ble Commission’s
methodology, since the True up of State Discoms for FY 2013-14 has not been
carried out, the last available weighted average rate of interest of the West Discom
of 9.48% as approved by the Hon’ble Commission in its True up Order for FY 2012-
13 for the State Discoms dated 17th March, 2016 is considered.
3.13.4. The Interest & Financial charges for FY 2013-14 computed by MPAKVN against
approved by the Hon’ble Commission is as shown below:
Table 21 : Interest & Financial Charges for FY 2013-14 (Rs. Crore)
Approved Actual
Debt Associated with GFA as on the beginning of the
year (Net of consumer contribution)
4.01 6.39
Addition to net debt 0.59 2.03
Repayment during the year 0.39 0.62
Total debt associated with GFA at the end of the
year
4.21 7.80
Weighted average interest rate of State Discoms 9.48% 9.48%
Interest on project loans(normative) 0.39 0.67
Particulars FY 2013-14
3.13.5. The interest paid on consumer security deposit in line with the provisions of the
Tariff Regulations, 2012 is given in table below:
Table 22 : Interest on Consumer Security Deposit for FY 2013-14 (Rs. Crore)
Approved Actual
Consumer Security Deposit 11.09 10.95
Interest amount claimed 0.94 1.23
Particulars FY 2013-14
3.13.6. Based on the above, the Hon’ble Commission is requested to approve total interest
& finance charges of Rs. 1.90 Crore for FY 2013-14.
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 25
3.14. Interest on Working Capital
3.14.1. The interest on working capital has been calculated on the basis of normative
parameters as provided in the Tariff Regulations, 2012.
3.14.2. The rate of interest considered is the SBI Base Rate as on 1 April 2013 plus 3.5% as
provided in Tariff Regulations, 2012. The interest on working capital for FY 2013-14
incurred by MPAKVN as against that approved by the Hon’ble Commission is as
shown below:
Table 23 : Interest on Working Capital for FY 2013-14 (Rs. Crore)
Approved Actual
For Wheeling Activity
1/6th of annual requirement of inventory for
previous year
0.02 0.02
1/12th of O&M Expenses 0.37 0.87
2 months of Receivables from Wheeling
charges
- -
Total Working Capital 0.39 0.89
Rate of Interest 13.20% 13.20%
Interest on Working Capital 0.05 0.12
For Retail Supply Activity
1/6th Annual requirement of Inventory for
previous year
- 0.00
2 months of Receivables of average biling 16.89 14.65
1/12th of O&M Expenses - 0.87
Minus: 1/12th of Power Purchase expenses7.43 6.29
Minus: Consumer Security Deposit 11.09 11.19
Total Working Capital (1.63) (1.95)
Rate of Interest 13.20% 13.20%
Interest on Working Capital (0.21) (0.26)
Total Interest on Working Capital - -
Particulars FY 2013-14
3.15. Lease Rent
3.15.1. MPAKVN is the SEZ developer who is responsible for providing various services to
the business units who setup their factories in the SEZ premises. As a deemed
licensee, MPAKVN also supplies power to the occupants of the SEZ. For this
purpose, MPAKVN (SEZ Developer) has provided land to power business of
MPAKVN for setting up its infrastructure necessary for providing power to the
industrial units. Against this land which has been allocated to the power business,
MPAKVN is charging lease rent for the area allocated to the power business which
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 26
is a separate business unit within the company and is a distribution licensee
recognised by the Hon’ble Commission. The lease rent applicable for the land
allocated for establishing various assets is shown below in the table:
Table 24 : Lease Rent for FY 2013-14 (Rs. Crore)
Lease Rent 4.64
FY 2013-14Particulars
3.15.2. It is humbly submitted that lease rent is legitimate expense and should be
permitted to be recovered as an expense through the ARR. The lease rent is being
charged by MPAKVN as it is an opportunity cost lost for MPAKVN SEZ business as
they could have leased out this land to some other industry and received lease rent
against it.
3.15.3. Further, as a distribution licensee, in normal course of action MPAKVN would have
purchased this land for establishment of its power distribution infrastructure. The
cost incurred for purchase of land gets capitalized and the Hon’ble Commission
allows depreciation, interest on loan and return on equity chargeable on account of
this cost as part of ARR. Accordingly, this expenditure, in the form of either lease
rent or depreciation, interest on loan and return on equity chargeable on the
capital cost incurred by MPAKVN, is inevitable.
3.15.4. MPAKVN has sought lease rent in its review petition 86 of 2012 and the Hon’ble
Commission in its Order dated 21st December, 2012 has disallowed lease rent
sighting reason of non-payment. The relevant part of the same is reproduced here
below for reference.
“ii. Land Premium and Lease rent charges:
…….
The Commission considered the matter and observed that in the instant case
since no actual payments are being made to the SEZ on account of land
premium or lease rent such notional expense cannot be charged to the
consumers. The claim made by the petitioner in this regard is not
sustainable.”
3.15.5. The Tariff Regulations, 2012 also provide for lease rent charges as an expenditure
to be approved as a part of ARR of a distribution licensee. The relevant Regulation
is reproduced below:
“33.1 Lease charges for assets taken on lease by Distribution Licensee shall be
considered as per lease agreement provided the charges are considered reasonable
by the Commission.”
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 27
3.15.6. The Hon’ble Commission in its Tariff Order for FY 2017-18 dated 7 April, 2017 vide
Petition No. 72/2016 had observed the following regarding lease rent:
“2.67 After examining the submissions regarding lease rent by the Petitioners, the
Commission finds the claim un-reasonable as the Petitioner being a deemed
licensee under the Provisions of the Electricity Act, 2003, is obligated to supply
power to the consumers under its own license area therefore the Commission has
not admitted the lease rent of Rs. 2.19 Crore claimed by the Petitioner.”
3.15.7. As can be seen from the above, the Hon’ble Commission has observed that
MPAKVN being a deemed distribution licensee, it is obligated to supply power in its
license area. However, it is submitted that the Government of Madhya Pradesh
vide letter dated 31 March, 2017 has clarified that any revenue received by
MPAKVN towards any land premium, lease rental etc. is the revenue of the
Government of Madhya Pradesh. Accordingly, it is submitted that lease rent is not
a part of revenue of either power business or non-power business of the SEZ i.e.
MPAKVN and hence, the lease rent expense should be considered as a legitimate
expense and approved as a part of True up of ARR. The aforementioned letter is
attached as Annexure-2.
3.15.8. There have been instances in other states wherein the Commission has allowed this
expenditure pertaining to lease rental as a pass through in the tariff over and above
the other expenses.
3.15.9. A precedence in this matter can be seen in case of approval of the Truing-up of FY
2013-14 and FY 2014-15, Provisional Truing-up of FY 2015-16, and Projection of
ARR for the 3rd Control Period FY 2016-17 to FY 2019-20 for the transmission
licensee MEGPTCL in Maharashtra by the Hon’ble MERC in Case no. 50 of 2016. In
the said case, the land for Akola-II Sub-station was initially to be purchased and
handed over by MSETCL to MEGPTCL, however, later on based on management
decision, the land was leased out to MEGPTCL. Accordingly, while the total capital
cost of land in the overall capital cost was reduced, the corresponding increase in
the lease rental for the same was factored as additional Operation and
Maintenance (O&M) expenses in the ARR for the Control Period. Considering the
facts of the case, the Hon’ble Commission had approved the least rent for Akola II
Sub-station over and above the normative O&M expenses of MEGPTCL prescribed
in the MYT Regulations.
3.15.10. In view of the above, the Hon’ble Commission is humbly requested to allow lease
rent charged to MPAKVN to the power business as a legitimate expenditure as part
of the ARR.
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 28
3.16. Return on equity
3.16.1. As per the Tariff Regulations, 2012, a return @ 16% on the equity base is
considered as reasonable and allowed by the Hon’ble Commission. Accordingly,
MPAKVN has computed the Return on Equity considering a rate of return at 16%.
3.16.2. The Opening Equity for FY 2013-14 is considered as the closing normative equity for
FY 2012-13. Accordingly, the return on equity for FY 2013-14 is as shown below:
Table 25 : Return on Equity for FY 2013-14 (Rs. Crore)
Approved Actual
Equity associated with GFA as on the
beginning of the year
2.35 3.44
30% of addition to net GFA considered as
funded through equity
0.25 0.87
Total equity associated with GFA at the end
of the year
2.61 4.31
Average equity associated with GFA at the
end of the year
2.48 3.88
Return on equity @ 16% 0.42 0.62
Particulars FY 2013-14
3.17. Other Income
3.17.1. The actual other Income of MPAKVN for FY 2013-14 is Rs. 0.4309 Crore. Element
wise detail of the same is as given in table below:
Table 26 : Other Income for FY 2013-14 (Rs. Crore)
Particulars FY 2013-14
(Actual)
Miscellaneous Income 0.0292
Interest Received on Deposit with MPSEB 0.4014
Shutdown Charges 0.0004
Surcharge Received on Power Bill -
Power Application Processing Fees -
Total Other Income 0.4309
3.18. Income Tax
3.18.1. The Appellate Tribunal for Electricity in its Judgment in Appeal No. 71 of 2013
dated 30 October, 2014 had ruled the following regarding the income tax for FY
2010-11 to FY 2012-13:
“38. We find that the Appellant had claimed income tax for FY 2010-11 as per the
balance sheet but for FY 2011-12 and 2012-13 no supporting details were furnished.
The State Commission felt that the amount claimed by the Appellant was very high
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 29
when compared to the profit earned from the power business. In the absence of the
requisite information, the State Commission has admitted the income tax based on
admitted cost of return on equity at applicable income tax rates. The State
Commission has, however, submitted that the claim of the Appellant for income
tax shall be duly considered at the time of true-up based on the duly audited
financial statements of its power business.”
3.18.2. Accordingly, for FY 2013-14 also, it is submitted that MPAKVN has now prepared
separate accounts for power business which are audited. The Income tax in the
audited annual accounts has been actually paid and the same is apportioned in the
ratio income earned by the power and non-power business. Accordingly, an Income
Tax of Rs. Crore has been claimed in the present Petition as shown in the following
table:
Table 27 : Income Tax for FY 2013-14 (Rs. Crore)
Approved Actual
Income Tax 0.14 -
Particulars FY 2013-14
3.19. Aggregate Revenue Requirement for FY 2013-14
3.19.1. Based on above, the Aggregate Revenue Requirement of MPAKVN for FY 2013-14
as against the values approved by the Hon’ble Commission is summarised in the
table below.
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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 30
Table 28 : Aggregate Revenue Requirement for FY 2013-14 (Rs. Crore)
Approved Actual
1 Purchase of Power 89.20 66.32
2 Inter-State Transmission Charges 2.78 4.71
3 Intra-State Transmission (MP Transco) Charges 2.80 4.41
4 SLDC Charges 0.01 0.04
5 Employee Expenses 3.60
6 R&M Expenses 4.32
7 A&G Expenses 2.50
8 MPERC and MPPMCL Fees & Other 0.01 0.01
9 Depreciation 0.39 0.62
10 Interest & Finance Charges 1.33 1.90
11 Interest on Working Capital - -
12 Lease Rent - 4.64
13 Income Tax 0.14 -
14 Sub Total (1 to 13) 100.94 93.09
14 Return on Equity 0.42 0.62
15 Total Expenditure (13 + 14) 101.36 93.71
16 Less: Other Income 0.02 0.43
17 Aggregate Revenue Requirement (15 - 17) 101.34 93.28
Sr. No. Particulars FY 2013-14
4.28
3.20. Revenue for FY 2013-14
3.20.1. During the FY 2013-14, MPAKVN’s actual revenue from sale of power was Rs. 87.48
Crore.
3.21. Revenue Gap / (Surplus) for FY 2013-14
3.21.1. The Aggregate Revenue Requirement for FY 2013-14 works out to Rs. 93.28 Crore
and the revenue from sale of power recovered during the same period is Rs. 87.48
Crore. Accordingly, the revenue gap for FY 2013-14 works out to Rs 5.80 Crore as
given in the Table below:
Table 29 : Revenue Gap/ (Surplus) for FY 2013-14 (Rs. Crore)
Sr. No. Particulars FY 2013-14
(Actual)
1 Aggregate Revenue Requirement 93.28
2 Revenue from Sale of Power 87.48
3 Revenu Gap/(Surplus) (1-2) 5.80 3.21.2. The Hon’ble Commission is requested to approve above mentioned revenue gap
and allow recovery of the same while determination of the retail tariff for FY 2018-
19.
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 31
4. Prayer
MPAKVN Indore Ltd. respectfully prays to the Hon’ble Commission as under:
1. To admit this petition seeking True up for FY 2013-14.
2. To approve Aggregate Revenue Requirement (ARR) and Revenue Gap for FY 2013-14
as per the provisions of the Tariff Regulations, 2012.
3. To allow recovery of the Revenue Gap of FY 2013-14 while determining the retail
tariff for FY 2018-19.
4. To allow recovery of lease rent charges for the use of land for the substation and line
and premium for the substation land.
5. To grant any other relief as the Hon’ble Commission may consider appropriate.
6. To condone any inadvertent omissions, errors, short comings and permit the
Petitioner to add/change/modify/alter this filing and make further submissions as
may be required at a future date; and
7. To pass any other Order as the Hon’ble Commission may deem fit and appropriate
under the circumstances of the case and in the interest of justice.
Place: Indore
Date: _________, 2017 Signature of the Petitioner
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 32
Annexure 1: Letter of CAG
True Up for FY 2013-14
Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 33
Annexure 2: Letter of GoMP regarding lease rent