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Bihar Electricity Regulatory Commission
Case No. 33 of 2017
Tariff Order
Truing up for FY 2016-17,
Annual Performance Review for FY 2017-18 and
Annual Revenue Requirement (ARR) and determination of
Transmission charges for FY 2018-19
for
BIHAR GRID COMPANY LIMITED
(BGCL)
Issued on 7th March, 2018
(With effect from 1st April, 2018)
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CONTENTS
ORDER ........................................................................................................................................................ 1
1.1 Bihar Electricity Regulatory Commission (BERC) ............................................................................... 4
1.2 Functions of BERC .............................................................................................................................. 4
1.3 Constitution of Bihar Grid Company Limited ..................................................................................... 5
1.4 Profile of BGCL ................................................................................................................................... 6
1.5 Petition submitted by BGCL ............................................................................................................... 6
1.6 Admission of Current Petition and Public Hearing Process ............................................................... 6
1.7 Approach of this Order ...................................................................................................................... 8 1.8 Contents of this order ........................................................................................................................ 9
2. Summary of Petition filed for Truing up for FY 2016-17, Review for FY 2017-18 and Annual Revenue Requirement for FY 2017-18 ........................................................................................................... 10
2.1 Background ...................................................................................................................................... 10
2.2 Request to the Commission ............................................................................................................. 11
3. Stakeholder’s Objections/Suggestions, Petitioner’s Response and Commission’s Observation ........ 12
4. Truing up for FY 2016-17 ..................................................................................................................... 19
4.1 Background ...................................................................................................................................... 19
4.2 Performance of Transmission System ............................................................................................. 20
4.3 Capitalisation ................................................................................................................................... 21
4.4 Gross Fixed Assets............................................................................................................................ 22
4.5 Depreciation .................................................................................................................................... 23
4.6 Interest and Finance Charges .......................................................................................................... 25
4.7 Operation and Maintenance expenses ............................................................................................ 28
4.8 Return on Equity .............................................................................................................................. 29
4.9 Interest on working capital .............................................................................................................. 31
4.10 Income Tax/Minimum Alternate Tax (MAT) .................................................................................... 33
4.11 Non-Tariff Income ............................................................................................................................ 34
4.12 Annual Fixed Charges / Transmission ARR for FY 2016-17 .............................................................. 35
4.13 Revenue Gap / (Surplus) for FY 2016-17.......................................................................................... 36 5. Annual Performance Review (APR) for FY 2017-18 ............................................................................. 38
5.1 Background ...................................................................................................................................... 38
5.2 Performance of Transmission System ............................................................................................. 38
5.2.1Availability of Transmission System ................................................................................................ 38
5.2.2 Transmission Loss ........................................................................................................................... 39
5.3 Capital Investment Plan ................................................................................................................... 39
5.4 Gross Fixed Assets............................................................................................................................ 43
5.5 Depreciation .................................................................................................................................... 44
5.6 Interest on Loans ............................................................................................................................. 46
5.7 Operation and Maintenance (O&M) Expenses ................................................................................ 49
5.7.1 Inflation index / Escalation rate...................................................................................................... 49
5.7.2 Employee Costs .............................................................................................................................. 52
5.7.3 Repairs and Maintenance (R&M) Expenses ................................................................................... 53
5.7.4 Administration and General (A&G) Expenses................................................................................. 55
5.7.5Summary of Operations and Maintenance (O&M) Expenses ......................................................... 56
5.8 Return on Equity .............................................................................................................................. 57
5.9 Interest on working capital .............................................................................................................. 59
5.10 Non-Tariff Income ............................................................................................................................ 61
5.11 Annual Transmission charges for FY 2017-18 .................................................................................. 62 5.12 Revenue Gap / (Surplus) for FY 2017-18 (RE) .................................................................................. 63
6. Annual Revenue Requirement (ARR) and Transmission charges for FY 2018-19................................ 65
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6.1 Background ........................................................................................................................................ 65
6.2 Transmission Loss ............................................................................................................................ 65
6.3 Capital Investment Plan ................................................................................................................... 66
6.4 Funding of Capitalisation ................................................................................................................. 69
6.5 Gross Fixed Assets............................................................................................................................ 70 6.6 Depreciation .................................................................................................................................... 71
6.7 Interest on Loans ............................................................................................................................. 73
6.8 Operation and Maintenance (O&M) Expenses ................................................................................ 75
6.8.1Employee Costs ............................................................................................................................... 77
6.8.2Repairs and Maintenance (R&M) Expenses .................................................................................... 78
6.8.3Administration and General (A&G) Expenses ................................................................................. 80
6.8.4Summary of Operation and Maintenance (O&M) Expenses ........................................................... 81
6.9 Return on Equity .............................................................................................................................. 82
6.10 Interest on working capital .............................................................................................................. 84
6.11 Non-Tariff Income ............................................................................................................................ 86 6.12 Annual Fixed charges for FY 2018-19............................................................................................... 87
6.13 Methodology for Recovery of ARR .................................................................................................. 88
7. Compliance of Directives ..................................................................................................................... 90
7.1 Back Ground .................................................................................................................................... 90
7.2 Directives issued and status of compliance .................................................................................... 90
7.2.1Directive 1 : Assets Register ............................................................................................................ 90
7.2.2Directive 2 : Revised Business Plan ................................................................................................. 91
7.2.3Directive 3 : Details of Programmed works ..................................................................................... 91
7.2.4Directive 4: Commissioning of Transmission Network .................................................................... 92
7.2.5Directive 5: Energy audit ................................................................................................................. 92 Annexure – I............................................................................................................................................. 95
Annexure – II.......................................................................................................................................... 101
Annexure-A ............................................................................................................................................ 102
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LIST OF TABLES Table 1.1: Power Transformer Capacity (MVA) ...................................................................................... 6 Table1.2: Transmission Line Length (Ckt.km) ......................................................................................... 6 Table 2.1: True up of ARR projected for FY 2016-17 (Rs. Crore) .......................................................... 10 Table 2.2: Projected Annual Fixed charges/ARR for FY 2017-18 (RE) and for FY 2018-19 ................... 10 Table 2.3: Proposed Recovery of ARR during FY 2018-19 .................................................................... 11 Table 4.1 : Capital expenditure and Capitalisation proposed for FY 2016-17 ...................................... 21 Table 4.2: Capital expenditure approved in truing up for FY 2016-17 ................................................. 22 Table 4.3: Gross Fixed Assets proposed for truing up for FY 2016-17 .................................................. 23 Table 4.4: Gross Fixed Assets approved in truing up for FY 2016-17 ................................................... 23 Table 4.5: Depreciation claimed in true up for FY 2016-17 (Rs. Crore) ............................................... 24 Table 4.6: Depreciation claimed in true up for FY 2016-17 (Rs. Crore) ............................................... 25 Table 4.6: Interest on loans claimed in truing up for FY 2016-17 ......................................................... 25 Table 4.7: Funding of capitalisation considered for FY 2016-17 ........................................................... 27 Table 4.8: Effective rate of interest on loans considered for FY 2016-17 ............................................ 27 Table 4.9: Interest on loans approved in truing up for FY 2016-17 ...................................................... 28 Table 4.10: O&M Expenses claimed for FY 2016-17 ............................................................................. 29 Table 4.11: Total O&M Expenses approved in truing up for FY 2016-17 ............................................. 29 Table 4.12: Return on Equity claimed in truing up for FY 2016-17 ....................................................... 30 Table 4.13: Return on Equity approved in truing up for FY 2016-17 .................................................... 31 Table 4.14: Norms for working capital requirement ............................................................................ 31 Table 4.15: Interest on working capital projected for FY 2016-17 ....................................................... 32 Table 4.16: Interest on working capital approved in truing up for FY 2016-17 .................................... 33 Table 4.17: Annual Fixed Charges claimed for FY 2016-17 ................................................................... 35 Table 4.18: Annual Fixed Charges approved in truing up for FY 2016-17 ............................................ 36 Table 4.19: Revenue Gap approved in truing up for FY 2016-17 .......................................................... 37 Table 5.1 : Summary of Revised capex and capitalization proposed for FY 2016-17 to FY 2018-19 .... 40 Table 5.2: Capex and Capitalisation projected for FY 2017-18 ............................................................. 40 Table 5.3: Capex and Capitalisation provided in Tariff petition for FY 2017-18 ................................... 41 Table 5.4 Revised Capex and Capitalisation proposed for FY 2016-17 to FY 2018-19 ......................... 41 Table 5.5: Capital Investment and capitalisation approved for FY 2016-17 and FY 2018-19 ............... 42 Table 5.6: Capitalisation considered by the Commission for FY 2017-18 ............................................. 42 Table 5.7: Gross Fixed Assets projected for FY 2017-18 ....................................................................... 43 Table 5.8: Gross Fixed Assets approved in review for FY 2017-18 ....................................................... 44 Table 5.9: Projected Depreciation for FY 2017-18 ................................................................................ 44 Table 5.10: Approved Depreciation for FY 2017-18 ............................................................................. 45 Table 5.11: Projected Interest on Loan for FY 2017-18 ........................................................................ 46 Table 5.12: Interest on Loans approved for FY 2017-18 ....................................................................... 49 Table 5.13: Weightage of indexation/inflation factor .......................................................................... 50 Table 5.14: Weightage of indexation/inflation factor .......................................................................... 51 Table 5.15: Employee Cost for FY 2017-18 (RE) projected by the Petitioner ....................................... 52 Table 5.16: Approved Employee Cost for FY 2017-18 .......................................................................... 53 Table 5.17: Projected Repairs and Maintenance expenses for FY 2017-18 ......................................... 53 Table 5.18: Approved R&M expenses for FY 2017-18 .......................................................................... 55 Table 5.19: Proposed Administration and General Expenses for FY 2017-18 ...................................... 55 Table 5.20: Approved Administration & General Expenses for FY 2017-18 ......................................... 56 Table 5.21: Total O&M cost approved for FY 2017-18 (RE) .................................................................. 56 Table 5.22: Projected Return on Equity for FY 2017-18 (RE) ................................................................ 57 Table 5.23: Approved Return on Equity for FY 2017-18 (RE) ................................................................ 59 Table 5.24: Norms for working capital requirement ............................................................................ 60
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Table 5.25: Projected Interest on working capital for FY 2017-18 ....................................................... 60 Table 5.26: Approved Interest on working capital for FY 2017-18 ....................................................... 61 Table 5.27: Projected Annual Fixed Charges/ (ARR) for FY 2017-18 .................................................... 62 Table 5.28: Approved Annual Fixed Charges / ARR for FY 2017-18 ...................................................... 63 Table 5.29: Approved revenue gap / (surplus) for FY 2017-18 ............................................................. 63 Table 6.1: Summary of capex and capitalisation proposed for FY 2016-17 and FY 2018-19................ 66 Table 6.2: Capex and Capitalisation projected for FY 2018-19 ............................................................. 66 Table 6.3: Capital Investment and capitalisation approved for FY 2016-17 and FY 2018-19 ............... 67 Table 6.4: Total Capital Investment and capitalisation approved for project Phase-IV part-1 ............ 68 Table 6.5: Capitalisation considered by the Commission for FY 2018-19 ............................................. 68 Table 6.6: Funding of capitalisation considered for FY 2018-19 ........................................................... 70 Table 6.7: Gross fixed assets projected for FY 2018-19 ........................................................................ 70 Table 6.8: Gross Fixed Assets approved for FY 2018-19 ....................................................................... 70 Table 6.9: Projected Depreciation for FY 2018-19 ................................................................................ 71 Table 6.10: Depreciation approved for FY 2018-19 .............................................................................. 72 Table 6.11: Projected Interest on loans for FY 2018-19 ....................................................................... 73 Table 6.12: Interest on loans approved for FY 2018-19........................................................................ 75 Table 6.13: Employee expenses projected for FY 2018-19 ................................................................... 77 Table 6.14: Employee Cost approved for FY 2018-19 ........................................................................... 78 Table 6.15: Projected R&M expenses for FY 2018-19 .......................................................................... 78 Table 6.16: Repairs & Maintenance Expenses approved for FY 2018-19 ............................................. 80 Table 6.17: Projected Administration & General Expenses for FY 2018-19 ......................................... 80 Table 6.18: Administration & General Expenses approved for FY 2018-19 ......................................... 81 Table 6.19: Total O&M expenses projected for FY 2018-19 ................................................................. 81 Table 6.20: Total O&M cost approved for FY 2018-19 ......................................................................... 81 Table 6.21: Projected Return on Equity for FY 2018-19 ....................................................................... 82 Table 6.22: Debt-Equity Approved for FY 2018-19 ............................................................................... 84 Table 6.23: Approved Return on Equity for FY 2018-19 ....................................................................... 84 Table 6.24: Norms for working capital requirement ............................................................................ 85 Table 6.25: Projected Interest on working capital for FY 2018-19 ....................................................... 85 Table 6.26: Approved Interest on working capital for FY 2018-19 ....................................................... 86 Table 6.27: Projected Annual Fixed charges / ARR for FY 2018-19 ...................................................... 87 Table 6.28: Annual Fixed charges /ARR approved for FY 2018-19 ....................................................... 88 Table 6.29: ARR Recovery proposed by the Petitioner for FY 2018-19 ............................................... 88 Table 6.30: ARR Recovery approved for FY 2018-19 ............................................................................ 89
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ABBREVIATIONS
A&G Administration and General Expenses
ACT Electricity Act. 2003
ARR Annual Revenue Requirement
BERC Bihar Electricity Regulatory Commission BGCL Bihar Grid Company Limited
BSPHCL Bihar State Power (Holding) Company Limited BSPTCL Bihar State Power Transmission Company Limited CAPEX Capital Expenditure CEA Central Electricity Authority CKM Circuit Kilo Meter
CWIP Capital Work in Progress
DISCOM Distribution Company
FY Financial Year
GFA Gross Fixed Asset
IDC Interest During Construction
IEDC Incidental Expenditure During Construction
JV Joint Venture
MVA Mega Volt Ampere
O&M Operation and Maintenance POWERGRD Power Grid Corporation of India Limited
R&M Repair and Maintenance
REC Rural Electrification Corporation
RoE Return on Equity
SAC State Advisory Committee
STU State Transmission Utility
TC Transmission charges
TTSC Total Transmission System Cost
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Bihar Electricity Regulatory Commission Ground floor, Vidyut Bhawan –II
Jawaharlal Nehru Marg, Patna – 800021
Case No: 33 of 2017
In the matter of:
True-up for FY 2016-17, Annual Performance Review for FY 2017-18 and determination of
Annual Revenue Requirement (ARR) and Transmission charges for FY 2018-19 of Bihar Grid
Company Limited (BGCL).
AND Bihar Grid Company Limited ……………………………Petitioner
Present:
Shri S. K. Negi - Chairman Shri Rajeev Amit - Member Shri R. K. Choudhary - Member
ORDER
(Passed on 7th March, 2018)
Bihar Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff )
Regulations, 2007 specify that the Transmission licensees shall file the Petition for Annual
Revenue Requirement (ARR) and Tariff, complete in all respects along-with requisite fee as
specified in the BERC (Fees, Fines and charges) Regulations, 2005 on or before 15th
November of the preceding year.
The Transmission Licence was issued to BGCL vide Letter No. BERC/Case No.7/2013-792-
01-Tr.L. dated 21 June 2013.
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BGCL has filed the petition on 14 th November, 2017 for True-up for FY 2016-17, Review
of ARR for FY 2017-18 and determination of ARR and Transmission tariff for FY 2018-19
and the same was admitted on 22.12.2017 for hearing and orders.
In exercise of the powers vested in Bihar Electricity Regulatory Commission under Section
62(1)(b) read with Section 64 (3) of the Electricity Act, 2003 and Bihar Electricity
Regulatory Commission (Terms and conditions for Determination of Tariff) Regulations
2007 (hereinafter referred to as ‘Tariff Regulations’) and other enabling provisions in this
behalf, the Commission has issued this order, determining the ARR and Transmission Tariff
for FY 2018-19 for Bihar Grid Company Limited (BGCL) for Transmission of Electricity in
Bihar State.
As per Regulation 6(5) of the BERC Tariff Regulations, 2007 and for providing adequate
opportunities to all stakeholders and general public for making suggestions/objections on
the petitions as mandated under section 64(3) of the Electricity Act, 2003, the Commission
directed BGCL to publish the petition in abridged form as ‘Public Notice’ in newspapers
having wide circulation in the State inviting suggestions/objections on the tariff petition.
Accordingly, BGCL published the tariff petition in the abridged form as public notice in
various newspapers. The last date of submission of suggestions/objections was fixed as
29.01.2018. The Commission, vide Advertisement No.5/BERC dated 12.02.2018, has
extended the last date up to 20.02.2018 for submission of suggestions/objections by the
stakeholders.
The Commission, in order to ensure transparency in the process of dealing with the above
petition and for providing proper opportunity to all stakeholders and general public for
making suggestions/objections on the tariff petition, decided to hold the public hearing in
its office at Patna and accordingly the Commission held public hearing in the Court Room,
BERC office at Patna on 22.02.2018.
The above petition submitted by BGCL, was also placed before the State Advisory
Committee on 06.02.2018 and the various aspects were discussed by the Committee. The
Commission took the advice of the State Advisory Committee on the petition of BGCL
during the meeting of the Committee.
The Commission took into consideration the facts presented by the BGCL in its petition and
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subsequent various filings, objections/suggestions which came up during public hearing and
suggestions of State Advisory Committee and response of the Bihar Grid Company Limited
and has True-up ARR for FY 2016-17, Reviewed ARR for FY 2017-18 (RE) and determined the
ARR and Transmission Charges for FY 2018-19.
BGCL vide letter no. 1828 dated 30.01.2018 has claimed revised Annual Revenue
Requirement (ARR) of Rs.0.83 Crore in True up for FY 2016-17 against which the
Commission has approved Rs.0.65 Crore.
BGCL has estimated ARR of Rs.130.82 Crore for FY 2017-18 in Review against which the
Commission has approved ARR of Rs.115.73 Crore.
BGCL has projected ARR of Rs.293.87 Crore for FY 2018-19 against which the Commission
has for approved ARR of Rs.276.24 Crore including trued up gap of Rs.0.65 crore of FY 2016-
17.
The Commission directs BGCL to bill the transmission charges on monthly basis from
BSP(H)CL in twelve equal monthly instalments. The monthly Transmission charges shall be
fully recovered only if BGCL achieves at least 98% of Transmission system availability, else
recovery of monthly Transmission charges shall be on pro-rata basis in terms of Regulation
68 and 74 of the BERC (Terms and Conditions for Determination of Tariff) Regulations,
2007.
This order shall be effective from 1st April 2018 and shall remain in force till 31st March
2019 or till the next tariff order of the Commission.
This order will be placed on the website of the Commission and copies will be sent to BGCL,
BSPHCL, BSPGCL, BSPTCL, NBPDCL, SBPDCL, Department of Energy of Government of Bihar,
Central Electricity Regulatory Commission and Central Electricity Authority.
Pronounced in the open court on this day of 7th March, 2018.
Sd/- Sd/- Sd/- (R.K.Choudhary) (Rajeev Amit) (S.K.Negi)
Member Member Chairman
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1. Introduction
1.1 Bihar Electricity Regulatory Commission (BERC)
The Bihar Electricity Regulatory Commission (hereinafter referred to as
“Commission” or “BERC”) was constituted by the Government of Bihar under
Section 17 of the Electricity Regulatory Commission Act, 1998 vide Government of
Bihar notification No.1284 dated 15th April 2002. The Electricity Regulatory
Commission Act, 1998 along with Indian Electricity Act, 1910 and Electricity
(Supply) Act, 1948 was repealed by Section 185(1) of the Electricity Act, 2003
(hereinafter referred to as the “Act”). The first proviso of Section 82(1) has
envisaged continuity of the Bihar Electricity Regulatory Commission by laying
down that the State Electricity Regulatory Commission established by the State
Government under Section 17 of Electricity Regulatory Commission Act, 1998 and
functioning as such, immediately before the appointed date, shall be the
State Electricity Regulatory Commission for the purpose of the Act.
1.2 Functions of BERC
As per Section 86 of the Electricity Act 2003, the State Commission shall
discharge the following functions, namely:
a) determine the tariff for generation, supply, transmission and wheeling of
electricity, wholesale, bulk or retail, as the case may be, within the State:
b) Provided that where open access has been permitted to a category of
consumers under section 42, the State Commission shall determine only the
wheeling charges and surcharge thereon, if any, for the said category of
consumers;
c) regulate electricity purchase and procurement process of distribution
licensees including the price at which electricity shall be procured from
the generating companies or licensees or from other sources through
agreements for purchase of power for distribution and supply within the
State;
d) facilitate intra-state transmission and wheeling of electricity;
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e) issue licenses to persons seeking to act as transmission licensees,
distribution licensees and electricity traders with respect to their operations
within the State;
f) promote co-generation and generation of electricity from renewable
sources of energy by providing suitable measures for connectivity with the
grid and sale of electricity to any person, and also specify, for purchase of
electricity from such sources, a percentage of the total consumption of
electricity in the area of a distribution licensee;
g) adjudicate upon the disputes between the licensees, and generating
companies and to refer any dispute for arbitration;
h) levy fee for the purposes of the Act;
i) specify State Grid Code consistent with the Indian Electricity Grid Code with
regard to grid standards;
j) specify or enforce standards with respect to quality, continuity and
reliability of service by licensees;
k) fix the trading margin in the intra-state trading of electricity, if considered
necessary; and
l) discharge such other functions as may be assigned to it under the Act.
1.3 Constitution of Bihar Grid Company Limited
To develop the Intra-State Transmission System in the State of Bihar, it was
agreed between Bihar State Power (Holding) Company Limited (BSP(H)CL) and
Power Grid Corporation of India Limited (POWER GRID) to form a 50:50 Joint
Venture Company in the name of Bihar Grid Company Limited under the
provisions of the Companies Act,1956. The Company will build, own and operate
the transmission system and it will be a transmission licensee under the Act duly
authorised by the Bihar Electricity Regulatory Commission.
Bihar Grid Company Limited (BGCL) was registered on January 4, 2013 under the
Companies Act, 1956 with the objective of providing transmission facilities to the
State distribution companies and any other transmission system users and
also fulfils the responsibility of planning, developing and coordinating with the
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State Transmission Utility (STU) of the State of Bihar.
The Transmission Licence was issued to BGCL on June 21, 2013 vide Letter No.
BERC/Case No.7/2013-792-01-Tr.L.
1.4 Profile of BGCL
BGCL owns and operates the Transmission system at 132 KV and 220 KV voltage
level in Bihar State. The total proposed capacity in Transmission system once all
the projects attain commercial operation is as given below:
Table 1.1: Power Transformer Capacity (MVA)
Substations FY 2017-18 FY 2018-19
220/132 KV 1120 2240
132/33 KV 450 750
Table1.2: Transmission Line Length (Ckt.km)
Substations FY 2017-18 FY 2018-19
220 KV 374.17 438.34
132 KV 243.33 357.10
1.5 Petition submitted by BGCL
BGCL filed the present petition on 14th November, 2017 for Truing up of ARR for FY
2016-17, Review of Annual Revenue Requirement for FY 2017-18, approval of
Annual Revenue Requirement (ARR) for FY 2018-19 and determination of
Transmission Charges for FY 2018-19 under section 62 of Electricity Act, 2003 read
with Bihar Electricity Regulatory Commission (Terms and Conditions for
Determination of Tariff) Regulations, 2007.
1.6 Admission of Current Petition and Public Hearing Process
On preliminary verification of the Petition, the Commission has admitted the
petition as Case No. 33 of 2017 in accordance with section 64 of the Electricity Act,
2003 and sub clause 6 (5) of BERC (Terms and Conditions of Determination of Tariff)
Regulations, 2007. The Commission directed the BGCL to publish the petition in an
abridged form in at least two daily newspapers, one in English and the other in
Hindi, having wide circulation in the State inviting objections and suggestions from
its stakeholders on the ARR and Tariff Petition filed by it.
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BGCL was also directed to publish the schedule for Public Hearings along with the
public notice inviting objections/suggestions and also to upload the petition on its
official website.
The public notice was published in the following newspapers as given below:
Sl. No Name of the News Paper
Language
Date of Publication
1 The Times of India English 29.12.2017 2 Dainik Bhaskar Hindi 30.12.2017 3 Hindustan Hindi 30.12.2017 4 The Telegraph English 03.01.2018 5 Sanmarg Hindi 04.01.2018
Copies of the petition along with Annexure were also made available for sale in the
office of the Director (Projects), 2nd Floor, Alankar Place, Boring Road, Patna-800
001. The Commission has also uploaded the Petition on its Website.
The interested parties/stakeholders were asked to file their objections/suggestions
on the Petition on or before 29.01.2018. The Commission, vide Advertisement
No.5/BERC dated 12.02.2018, has extended the last date up to 20.02.2018 for
submission of suggestions/objections by the stakeholders.
The Commission has received three (3) written objections/suggestions from South
Bihar Power Distribution Company Limited (SBPDCL), Patna, Bihar Industries
Association, Patna and Shri Nand Sharma, Patna. The Commission directed the
Petitioner to submit the replies/response to the objections/suggestions to the
objector with a copy to the Commission. The Petitioner has submitted the reply vide
letter no.BGCL/Tariff/1892 dated 27.02.2018.
The proposal of BGCL was also placed before the State Advisory Committee (SAC) at
its meeting held on 06.02.2018 and various aspects of the petition were discussed by
the committee. The Commission took the advice of the State Advisory Committee
on the petition filed by BGCL during the meeting of the Committee. The minutes of
the meeting are given in Annexure-I.
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The public hearing was conducted as scheduled in the Court Room of BERC on
22.02.2018. A note on the main issues raised by the objectors in written submissions
and also in the public hearing in respect of the petitions, along with the response of
BGCL and the Commission’s views on the response, are given in Chapter-3.
1.7 Approach of this Order
The BERC (Terms and Conditions for determination of Tariff) Regulations, 2007
provides for determination of ARR for the FY 2018-19 and transmission charges for
FY 2018-19.
The BGCL has now approached the Commission with the present petition for Truing
up for FY 2016-17, Review for FY 2017-18 and for approval of Annual Revenue
Requirement for FY 2017-18 and determination of transmission charges for FY
2018-19.
The Commission has examined the petition and observed that certain additional
data/information and clarifications are required for taking up detailed analysis of
the Petition. The Commission directed Petitioner to submit the additional
data/information and clarifications vide following letter Nos.
1. BERC Case No.33/2017-1417 dated 08.12.2017 2. BERC Case No.33/2017-13 dated 04.01.2018 3. BERC Case No.33/2017-56 dated 12.01.2018
The Petitioner submitted additional information/data/clarifications vide its
following letter Nos.
1. JV/BGCL/Tariff/Directive Compliance/1729 dated 15.12.2017 2. JV/BGCL/Tariff/Directive Compliance/1785 dated 08.01.2018 3. JV/BGCL/Tariff/Directive Compliance/1793 dated 15.01.2018 4. JV/BGCL/Tariff/Directive Compliance/1828 dated 30.01.2018
The Commission has undertaken Truing up for FY 2016-17, Review for FY 2017-18
and determination of Annual Revenue Requirement (ARR) for FY 2018-19 and
transmission charges for FY 2018-19 for BGCL, based on the BERC (Terms and
Conditions for determination of Tariff) Regulations, 2007.
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1.8 Contents of this order
The order is divided into Seven (7) Chapters for BGCL as detailed below:
1. The First Chapter provides a background of BGCL, filing of the Petition,
details of public hearing process, and the approach adopted for this order.
2. The Second Chapter contains a summary of Tariff Petition of BGCL.
3. The Third Chapter provides a brief account of the public hearing process,
including the objections raised by stakeholders, Petitioner’s response and
Commission’s views on the same.
4. The Fourth Chapter deals with Truing up for FY 2016-17.
5. The Fifth Chapter deals with the Review of ARR for FY 2017-18.
6. The Sixth Chapter deals with the Annual Revenue Requirement for FY 2018-
19 and transmission charges for FY 2018-19.
7. The Seventh Chapter deals with the Compliance Directives issued in Tariff
Order dated 09.03.2017.
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2. Summary of Petition filed for Truing up for FY 2016-17, Review for FY 2017-18 and Annual Revenue Requirement for
FY 2017-18
2.1 Background
The Bihar Grid Company Limited (BGCL) has filed the present petition on 14th
November, 2017 seeking approval for Truing up for FY 2016-17, Review for FY
2017-18 and determination of Annual Revenue Requirement (ARR) and
transmission charges for the FY 2018-19 as given in Tables below:
Table 2.1: True up of ARR projected for FY 2016-17 (Rs. Crore)
Sl. No. Particulars FY 2016-17
1 O&M expenses 0.03
a) Employee Cost 0.02
b) R&M expenses 0.00
c) A&G expenses 0.01
2 Depreciation 0.23
3 Interest on finance charges 0.71
4 Interest on working capital 0.20
5 Return on Equity 0.25
6 Income Tax 0.07
7 Gross Annual Revenue Requirement 1.49
8 Less : Non Tariff Income 0.00
9 Annual Revenue Requirement 1.48
Table 2.2: Projected Annual Fixed charges/ARR for FY 2017-18 (RE) and for FY 2018-19
(Rs. Crore)
Sl. No. Particulars
FY 2017-18
Projected for
FY 2018-19
Approved in Tariff order
dated 09.03.2017
Revised Estimate
(RE)
1 O&M expenses 35.65 22.20 48.92
a) Employee Cost 8.44 7.10 8.49
b) R&M expenses 25.07 12.11 37.33
c) A&G expenses 2.14 2.99 3.11
2 Depreciation 50.09 30.41 69.15
3 Interest on finance charges 82.84 54.75 121.25
4 Interest on working capital 4.79 3.10 8.27
5 Return on Equity 31.08 20.36 46.28
6 Gross Annual Revenue Requirement 204.45 130.82 293.87
7 Less : Non Tariff Income 0.00 0.00 0.00
8 Annual Revenue Requirement 204.45 130.82 293.87
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Bihar Electricity Regulatory Commission | P a g e 11
Based on the projected Annual Revenue Requirement for FY 2018-19, BGCL has
proposed to raise bills on BSP(H)CL in 12 equal instalments (every month) as
shown below:
Table 2.3: Proposed Recovery of ARR during FY 2018-19
(Rs. Crore)
Sl. No. Particulars FY2018-19
1
Total Annual Revenue Requirement 293.87
2
Monthly Bill to be raised to BSP(H)CL 24.49
2.2 Request to the Commission
The Petitioner has requested to:
a) Admit this Petition;
b) Examine the proposal submitted by the Petitioner in the enclosed Petition
for a favourable dispensation;
c) Pass suitable orders with respect to the True up for FY 2016-17 for Rs.1.48
Crore, APR for FY 2017-18 for Rs.130.82 Crore and Annual Revenue
Requirement (ARR) for FY 2018-19 and for Rs.293.87 Crore.
d) Condone any in advertent omissions, errors, short comings and permit BGCL
to add/change/modify/alter this filing and make further submissions as may
be required at a future date; and
e) Pass such Order as the Commission may deem fit and appropriate
keeping in view the facts and circumstances of the case.
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Bihar Electricity Regulatory Commission | P a g e 12
3. Stakeholder’s Objections/Suggestions, Petitioner’s Response and Commission’s Observation
3.1 Background
In response to the public notice (abridge form of the petition) published by the
petitioner inviting objections / suggestions from the general public / stakeholders on
the Tariff Petition filed by BGCL, no written objections were received before the
stipulated last date i.e. 29th January 2018. The Commission, vide Advertisement
No.5/BERC dated 12.02.2018, has extended the last date up to 20.02.2018 for
submission of suggestions/ objections by the stakeholders.
3.2 Public Hearing
The Commission has also published the ‘Notice’ on 13th February 2018 in three daily
Hindi Newspapers i.e. Dainik Jagran, Dainik Bhaskar, Prabath Kabar and Times of
India (English) intimating that the Commission will hear the case on 22.02.2018 at
10.30 AM in its Court Room of BERC office at Patna and inviting the suggestions/
objections/ comments of the general public/stakeholders on the petition filed by the
BGCL (Case on 33 of 2017).
The public hearing, as scheduled was held in the Court Room of BERC office, Patna
on 22nd February, 2018 wherein the representative of South Bihar Power Distribution
Company Limited, Patna, Bihar Industries Association, Patna and Shri Nand Sharma,
Patna have put forth their comments and suggestions before the Commission in the
presence of the Petitioner, BGCL. The list of participants in the public hearing is
appended to this order as Annexure –II.
BGCL has submitted its response on the comments and suggestion of the
stakeholders vide their letter no. BGCL/TARIFF/1892 dated 27.02.2018. The
Commission has examined the comments/suggestions submitted by the
objectors/stakeholders in response to the ARR petition, the replies given by the
Petitioner and the Commission’s views have been summarized under various sub-
heads as given below.
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Bihar Electricity Regulatory Commission | P a g e 13
Name of the Objector/Stakeholders: M/s. South Bihar Power Distribution Company
Limited, Patna
Issue 1: Transmission System availability certificate to be submitted every month
As per Regulations 68 and 74 of BERC (Terms and conditions for determination of
Tariff) Regulations 2007 transmission charges shall be fully recovered from Discoms
only if BGCL achieves at least 98% of the Transmission System Availability, else shall
be on pro-rata basis. The Commission has directed the Petitioner to ensure
submission of the State Transmission System Availability as per guidelines provided
in the CERC Tariff Regulations for 2014-19 in all its future petitions.
It may be made mandatory for BGCL to submit the 98% system availability certificate
from SLDC to Discoms along with the bill every month.
Petitioner’s submission:
BGCL regularly submitted the details of outage of its system for certification to SLDC
in every month. However, the availability certificate has been received in recent
past for period upto December 2017. The same will be submitted to Discoms with
monthly transmission charges bill with the last availability certificate issued by the
SLDC.
Commission’s view:
The Regulation 68 read with Regulation 74 of BERC (Terms and conditions for
determination of Tariff) Regulations 2007 specifies transmission charges shall be
recovered/paid fully if transmission licensee achieves at-least 98% of Transmission
System Availability Factor (TAF), else shall be recovered/paid on pro-rata basis. The
Commission directs the Petitioner to submit the TAF every month along with the
monthly transmission bills invariably.
Name of the Objector/Stakeholders:
1. South Bihar Power Distribution Company Limited, Patna
2. Shri Nand Sharma, Patna
Issue 2: Install appropriate energy meters at all interface points
To Install appropriate energy meters at all interface points to record actual energy
flow through transmission lines (input and output) and energy handled.
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Bihar Electricity Regulatory Commission | P a g e 14
A report shall be made available to SLDC and Discoms and SLDC shall verify the
same based on REA data.
Petitioner’s submission:
Energy meters are provided and are in use at all interface points since the BGCL
system is commissioned. The details of energy meters at interface points have
already submitted vide letter dated 15.12.2017 to the Commission.
It is submitted that the transmission systems are evaluated with their availability
and energy flow is not a guiding factor for accessing its performance. Hence it is
submitted that data regarding flow of energy through different transmission
elements are not of significant relevance.
Commission’s view:
The Commission has noted the objection and response of the Petitioner. The
Commission directs the Petitioner to provide appropriate energy meters at all
interface points and ensure that they are in working condition and meter readings
recorded and provided to the Commission as and when data is sought for.
Name of the Objector/Stakeholders:
1. M/s. Bihar Industries Association, Patna
2. Shri Nand Sharma, Patna
Issue 3: BGCL as a STU, JV and geographical area of operation
BGCL was granted license on 21.06.2013. BGCL is a Joint Venture (JV) between
BSPHCL and PGCIL, whether BSPHCL was empowered to form JV and notified as
State Transmission Utility (STU) by the State Government and geographical area of
operation is defined to ascertain energy transmitted and to prevent overlap and
double charging.
Petitioner’s submission:
There is no geographical demarcation with BSPTCL for BGCL system. BGCL system is
also an integral part of the integrated transmission system in Bihar.
It is submitted that BSPHCL were duly empowered by the State Government to form
BGCL.
Commission’s view:
The Commission had granted transmission licence to the Bihar Grid Company
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Bihar Electricity Regulatory Commission | P a g e 15
Limited vide Letter No. BERC/Case No.7/2013-792-01-Tr.L. dated 21 June 2013 and
will function as intra-state transmission utility parallel to BSPTCL in the State of
Bihar. BGCL is a joint venture between BSPHCL and PGCIL with a share holding of
50:50.
The Commission endeavours to corroborate the lines and substations of BGCL and
BSPTCL and the assets are separately maintained by both the utilities. The lines and
substations of BGCL and BSPTCL are interconnected facilities and endeavours to
ensure that there is no overlapping and double charge on assets.
Issue 4: Report under Regulation 4(3) of BERC Tariff Regulations 2007
As per Regulation 4(3) of BERC Tariff Regulations 2007, the STU shall submit a
report on assets mentioned in the application for licensee form part of intra-state
transmission system, completion schedule, technical suitability of assets, etc. The
report may be provided/put on public domain.
Petitioner’s submission:
The petitioner has not furnished the response.
Commission’s view:
The Commission has noted the stakeholder’s suggestion.
The Commission has approved the capital investment plan of Rs.1699.36 crore in case
no.20/2013 (Phase-IV Part-1) from FY 2016-17 to FY 2018-19 which was revised and
provisionally approved for Rs.1833.23 crore in Tariff order dated 9.2.2017.
The Commission, further on 28.07.2017 in Case No.5 of 2017 has approved Phase IV Part-II
project amounting to Rs.1688 crore.
The scheme-wise/work-wise details are available in orders which were available on the
official website of the Commission.
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Bihar Electricity Regulatory Commission | P a g e 16
Name of the Objector/Stakeholders:
1. M/s. Bihar Industries Association, Patna
2. Shri Nand Sharma, Patna
Issue 5: Geographical operational area and demarcation of assets of BSPTCL and BGCL. The transmission network in Bihar is owned and operated by BSPTCL and separate
areas of activity and supply of BSPTCL and BGCL must be defined under regulation
16 of BERC (Transmission Licensing) Regulations 2007. The details of transmission
lines and substations have been given, however not mentioned these are new
assets created. The geographical area of operation and demarcation of assets of
two utilities may be ensured to prevent double charge for the same assets.
It may be clarified whether old asset of BSPTCL is taken over by BGCL if so, the value
of old asset shall be reduced.
Petitioner’s submission:
BGCL system is also an integral part of the integrated transmission system in Bihar.
Commission’s view:
The Commission had granted transmission licence to the Bihar Grid Company
Limited vide Letter No. BERC/Case No.7/2013-792-01-Tr.L. dated 21 June 2013 and
will function as intra-state transmission utility parallel to BSPTCL in the State of
Bihar. The assets are being maintained separately by the utilities.
Name of the Objector/Stakeholders:
1. M/s. Bihar Industries Association, Patna
2. Shri Nand Sharma, Patna
Issue 7: Transmission loss
To ensure that the transmission loss is charged only once on the entire power being
transmitted as it appears that transmission loss is being charged in addition to
transmission loss of BSPTCL.
Petitioner’s submission:
The transmission losses of BGCL and BSPTCL are actually system losses i.e. pertaining
to technical losses of 3.92% and the same has been claimed by BGCL for its
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Bihar Electricity Regulatory Commission | P a g e 17
transmission infrastructure and BSPTCL for its transmission network. 3.92% is the
maximum transmission loss which may occur during transmission of power in EHV
system.
Commission’s view:
The Commission has noted the objection and response of the Petitioner.
The Commission has considered 3.92% as threshold limit for transmission losses in
the transmission network of both the utilities. BGCL has not handled/transmitted
considerable power during FY 2016-17 and the actual system losses could not be
assessed hence, the Commission has considered threshold limit of 3.92% for
processing the tariff order.
The Commission directs the Petitioner to provide appropriate meters at all interface
points and ensure that they are in good working condition and meter readings
recorded for energy accounting and audit and provided to the Commission as and
when data is sought for.
Name of the Objector/Stakeholders:
1. M/s. Bihar Industries Association, Patna
2. Shri Nand Sharma, Patna
Issue 7: Equity in JV by BSPHCL
BSPHCL and PGCIL have equity investment in the ratio of 50 : 50 in BGCL. It may be
verified whether the equity is reflected in BSPHCL balance sheet and RoE claimed.
Similarly in the books of PGCIL. Further, the assets of BSPTCL do not include the
assets of BGCL.
Petitioner’s submission:
The petitioner has not furnished its response to the issue.
Commission’s view:
The Commission has been considering the O&M cost of holding company i.e. BSPHCL
and allocated to the utilities in the share holding ratio of the BSPGCL, BSPTCL,
SBPDCL and NBPDCL. The investment made by BSPHCL in subsidiary companies is
depicted as equity investment in subsidiaries under Investment but not as Equity in
the books of BSPHCL and allowing RoE does not arise.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 18
Name of the Objector/Stakeholders: Shri Nand Sharma, Patna
Issue 8: Employee cost
BGCL is a JV and BSPHCL and PGCCIL has 50 : 50 share and employees of BGCL shall
be deployed in the ratio of 50:50 by BSPHCL and PGCIL. The employee details shall
be incorporated indicating strength of PGCIL and BSPHCL.
Petitioner’s submission:
The employee details are as follows:
BGCL employees/consultant - 37
Deputation from PGCIL - 22
Deputation from BSPHCL - 1
Commission’s view:
The objection of the stakeholder and response of the Petitioner are noted. BGCL and
BSPTCL are two separate independent companies.
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Bihar Electricity Regulatory Commission | P a g e 19
4. Truing up for FY 2016-17
4.1 Background
At the time of filling of Tariff Petition for determination of ARR for FY 2017-18,
BGCL had also filed for Annual Performance Review for FY 2016-17. However, the
Commission during the hearing dated December 30, 2016, had asked BGCL to file a
Tariff petition for determination of ARR for FY 2017-18 only, as previously no ARR
for FY 2016-17 was determined. Further, the Commission had directed BGCL to
approach the Commission separately seeking methodology for recovery of ARR of
FY 2016-17. In accordance with the direction of Commission, BGCL filed its revised
Tariff petition for determination of ARR for FY 2017-18 on January 13, 2017. BGCL
had also requested the Commission to specify the methodology for recovery of FY
2016-17. The Commission on 7 November, 2017 asked BGCL to file for true up for
FY 2016-17. Accordingly, BGCL has filed for True-up for FY 2016-17 (1 Month i.e. for
the month of March, 2017 only) based on audited accounts along with the Review
for FY 2017-18 and ARR for FY 2018-19 in accordance with BERC (Terms and
Conditions for Determination of Tariff Regulations, 2007 amended from time to
time.
BGCL has submitted the present Tariff petition for FY 2018-19 on 14th November,
2017 for Truing-up for FY 2016-17, Annual performance review for FY 2017-18 and
ARR and determination of transmission tariff for FY 2018-19 along with audited
accounts for FY 2016-17.
The Truing-up for FY 2016-17 is to be done according to the Regulation 22 (1) & 2 of
the BERC (Terms and Conditions for Determination of Tariff) Regulations, 2007
which is reproduced below:
“The Commission shall undertake a review along with next Tariff Order of the
expenses and revenues approved by the Commission in the current year Tariff
Order. While doing so, the Commission shall consider variations between approvals
and revised estimates / pre-actuals of the sale of electricity, income and
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 20
expenditure for the relevant year and permit necessary adjustments / changes in
case such variations are for adequate and justifiable reasons. Such an exercise shall
be called Review”.
“After audited accounts of the year are made available, the Commission shall
undertake a similar exercise as in sub-clause (1) above based on the final actual
figures as per the audited accounts. This exercise based on the audited accounts
shall be called ‘Truing-up’. The Truing-up exercise for any year shall not ordinarily be
considered after more than one year gap after “Review”.
Accordingly, the “Truing-up” exercise for FY 2016-17 has been undertaken by the
Commission on the basis of audited annual accounts of BGCL for FY 2016-17 and
BERC (Terms and Conditions for determination of Tariff) Regulations 2007.
4.2 Performance of Transmission System
Petitioner’s submission:
BGCL has submitted that it has started only part of its operation in March, 2017 and
did not handle any energy in FY 2016-17, hence there is no actual transmission loss
for FY 2016-17.
Commission’s analysis: BGCL has submitted that it started only part of its operation in March 2017 and did
not handle any energy in FY 2016-17. The Petitioner was directed to submit the
reasons of non-handling of energy despite Commercial operation Date (CoD). The
Petitioner vide its letter no.1793 dated 15.01.2018 has replied that power flow has
commenced since CoD. Further the Petitioner vide letter no.1828 dated 30.01.2018
has submitted that the entire GIS SS, Hajipur was commissioned on 28.02.2017 and
energy flow commenced from 01.03.2017 for meeting the load requirement of 3rd
100 MVA transformer of BSPTCL. BGCL has submitted the transformer is the asset
of BSPTCL and energy flow through Hajipur GIS SS during March 2017 was handled
by BSPTCL and not by BGCL. BGCL has submitted that the energy handled by
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 21
Hajipur GIS SS during March 2017 is at 23043 MWH. The Commission having due
validation has considered the same.
4.3 Capitalisation
Petitioner’s submission
BGCL has submitted that as per the audited annual accounts for FY 2016-17,
capitalisation is at Rs.48.97 Crore. The Petitioner has furnished the actual capital
expenditure and capitalisation for truing up for FY 2016-17 as shown in the Table
below:
Table 4.1 : Capital expenditure and Capitalisation proposed for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars Reference Claimed by BGCL for FY
2016-17
1 Opening CWIP a 429.85
2 Opening IDC b 6.11
3 Opening IEDC c 59.90
4 Capital investment during the year d 771.00
5 IDC addition during the year e 52.97
6 IEDC addition during the year f 11.11
7 Asset capitalisation without IDC & IEDC g 44.76
8 IDC capitalised h 1.92
9 IEDC capitalised i 2.28
10 Total capitalisation during the year j=g+h+i 48.97
11 Closing CWIP k=a+d-g 1156.09
12 Closing IDC l=b+e-h 57.16
13 Closing IEDC m=c+f-i 68.73
Commission’s analysis:
The Petitioner has submitted that Hajipur Extension GIS was commissioned on
02.03.2017. It is noted that the capital investment of Hajipur GIS of Rs.46.31 crore
is capitalized and being used as per the information submitted by the Petitioner.
As per the audited accounts of FY 2016-17, the addition to assets/capitalisation is
at Rs.48.97 crore. The details of total assets capitalised during FY 2016-17 is as
given below:
Sl. No.
Particulars Amount (Rs. crore)
1 Plant & Machinery (Hajipur Extension GIS) 46.31
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Bihar Electricity Regulatory Commission | P a g e 22
2 Land 2.54
3 Furniture & Fixtures 0.04
4 Office equipment (incl. computers) 0.08
5 Total 48.97
The Commission accordingly approves the capitalisation/addition to assets at
Rs.48.97 crore based on the audited accounts for FY 2016-17 in true up. However,
as the value of assets capitalised towards Land, Furniture & Fixtures and Office
equipment are directly charged to assets without routing through CWIP, the
Commission, based on the audited annual accounts of FY 2016-17, has considered
the opening CWIP at Rs.495.86 crore (including IDC and IEDC) and investment in
capital expenditure during FY 2016-17 at Rs.832.43 crore (including IDC and IEDC)
and capitalisation 46.31 crore during FY 2016-17. The details of opening, additions,
capitalisation and closing capex for FY 2016-17 is furnished as given in the Table
below:
Table 4.2: Capital expenditure approved in truing up for FY 2016-17 (Rs. Crore)
Sl. No.
Particulars Claimed by BGCL
for FY 2016-17 Approved in truing up for FY 2016-17
1 Opening CWIP 429.85 429.85
2 Opening IDC 6.11 6.11
3 Opening IEDC 59.90 59.90
4 Total Opening CWIP (1 to 3) 495.86 495.86
Addition during the year
5 CWIP 768.35 768.35
6 IDC 52.97 52.97
7 IEDC 11.11 11.11
8 sub-total (5 to 7) 832.43 832.43
Capitalisation during the year
9 CWIP 42.11 42.11
10 IDC 1.92 1.92
11 IEDC 2.28 2.28
12 sub-total (9 to 11) 46.31 46.31
13 Closing CWIP (1+5-9) 1156.09 1156.09
14 Closing IDC (2+6-10) 57.16 57.16
15 Closing IEDC (3+7-11) 68.73 68.73
16 Total Closing CWIP (13 to 15) 1281.98 1281.98
4.4 Gross Fixed Assets
Petitioner’s submission:
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Bihar Electricity Regulatory Commission | P a g e 23
BGCL has submitted the value of Opening GFA, Additions to GFA and Closing GFA
based on the audited annual accounts for FY 2016-17 as detailed in the Table
below:
Table 4.3: Gross Fixed Assets proposed for truing up for FY 2016-17 (Rs. Crore) SI.
No. Particulars
Claimed by BGCL for FY 2016-17
1 Opening GFA 4.14
2 Add: Additions during the year 48.97
3 Less: Deductions during the year --
4 Closing GFA (1+2-3) 53.11
Commission’s analysis:
The Commission has observed from the audited accounts for FY 2016-17, the
opening GFA at Rs.4.14 crore mainly consisting of Land (Rs.4.03 crore), Furniture &
Fixtures (Rs.0.04 crore) and Office equipment (Rs.0.07 crore) and addition to GFA
during FY 2016-17 is at Rs.48.97 crore. The Commission has approved capitalisation
at Rs.48.97 crore for FY 2016-17 based on the audited accounts for FY 2016-17. The
Commission, accordingly considers the opening GFA, additions to GFA during the
year and closing GFA for FY 2016-17 in true up as detailed in the Table below:
Table 4.4: Gross Fixed Assets approved in truing up for FY 2016-17
(Rs. Crore)
SI. No.
Particulars
Claimed by BGCL for FY 2016-17
vide letter no.1828 dated 30.01.2018
Approved in truing up for FY 2016-17
1 Opening GFA 4.14 4.14
2 Add: Net additions during the year 48.97 48.97
3 Closing GFA (1+2) 53.11 53.11
4.5 Depreciation
Petitioner’s submission:
BGCL has submitted that depreciation as per audited accounts is at Rs.0.23 Crore
for FY 2016-17. Regulation 73(2)(a)(ii) of the BERC (Terms and Conditions for
Determination of Tariff) Regulations 2007 specify that “Land is not a depreciable
asset and its cost shall be excluded from the capital cost” and therefore no
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Bihar Electricity Regulatory Commission | P a g e 24
depreciation is considered on land. BGCL has claimed depreciation of Rs.0.23 Crore
in truing up for FY 2016-17.
The Petitioner vide letter no.1828 dated 30.01.2018 has submitted the revised
computation depreciation and claimed depreciation at Rs.0.21 crore for FY 2016-17
as given below:
Table 4.5: Depreciation claimed in true up for FY 2016-17 (Rs. Crore)
SI.No.
Particulars
Claimed by BGCL for FY 2016-17
vide letter no.1828 dated
30.01.2018
1 Opening GFA as on 1.4.2016 --
2 Additions during the year 48.97
3 Closing GFA 48.97
4 Rate of Depreciation 5.28%
5 Depreciation for 30 days [(3*4)/365*30] 0.21
Commission’s analysis:
The Commission has examined the computation of depreciation claimed by the
Petitioner in truing up for FY 2016-17. It is observed that the petitioner has claimed
depreciation on assets (Plant & Machinery) capitalised in respect of Hajipur GIS
(commissioned on 02.03.2017) for 30 days of the Month of March 2017.
The value of assets capitalised Rs.48.97 crore during FY 2016-17 also includes value
of land of Rs.2.54 crore. The Regulation 73 (2)(a)(ii) of BERC Tariff Regulations 2007
specify “Land is not a depreciable asset and its cost shall be excluded from the
capital cost”. Accordingly, the Commission has reduced the value of land for
computation of depreciation for FY 2016-17. The rate of depreciation of 5.28% is
adopted as per the CERC Regulations and as specified by the BERC Tariff
Regulations 2007. The Commission, accordingly, has considered the depreciation in
true up for FY 2016-17 as given in the table below:
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Bihar Electricity Regulatory Commission | P a g e 25
Table 4.6: Depreciation claimed in true up for FY 2016-17 (Rs. Crore)
SI.No.
Particulars
Claimed by BGCL for FY 2016-17
vide letter no.1828 dated
30.01.2018
Approved in true up
for FY 2016-17
1 Opening GFA as on 1.4.2016 -- --
2 Additions during the year 48.97 48.97
3 Less: Value of land -- 2.54
4 Closing GFA (2-3) 48.97 46.43
5 Rate of Depreciation 5.28% 5.28%
6 Depreciation for 30 days [(4*5)/365*30] 0.21 0.20
The Commission, accordingly, approves depreciation of Rs.0.20 Crore in truing up
for FY 2016-17.
4.6 Interest and Finance Charges
Petitioner’s submission:
BGCL has submitted that interest and finance charges have been claimed in
accordance with the Regulation 73 of BERC (Terms and Conditions for
Determination of Tariff) Regulations 2007. Actual funding pattern of 80:20 debt
equity is considered as per Regulation 71(1)(i) of BERC (Terms and Conditions for
Determination of Tariff) Regulations 2007. The weighted average rate of interest of
10.83% is considered based on actual loans drawn up to 31.3.2017 and repayment
of loan is considered equal to depreciation. The Petitioner vide letter no.1828
dated 30.01.2018 has furnished the revised computation of interest and financing
charges for FY 2016-17 as given in the Table below:
Table 4.6: Interest on loans claimed in truing up for FY 2016-17 (Rs. Crore)
SI. No.
Particulars
Claimed by BGCL for FY 2016-17 vide
letter no.1828 dated 30.01.2018
1 Opening Loan --
2 Additions during the year 39.17
3 Repayments --
4 Closing loan (1+2-3) 39.17
5 Rate of Interest 10.83%
6 Interest on Loan for 30 days (4*5)/365*30) 0.35
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Commission’s Analysis:
The Commission has examined the computation of interest on loan claimed by the
Petitioner in truing up for FY 2016-17. The Petitioner vide letter no.1828 dated
30.01.2018 has submitted revised computation of interest on loan for FY 2016-17 as
detailed in the Table above. Accordingly, the Commission considers the revised
submissions made by the Petitioner for claiming interest on loan for FY 2016-17. The
Commission has observed that the petitioner has not considered the normative
repayment i.e. depreciation for the year, in computing the normative interest on
loan in truing up for FY 2016-17.
The Regulation 73 (1) of the BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
(a) interest on loan capital shall be computed loan-wise, on the loans arrived at in
the manner indicated in Regulation 71.
(b) ……... (c) …………. (d) ………….. (e) …………… (f) In case any moratorium period is availed by the transmission licensee,
depreciation provided for in the tariff during the years of moratorium shall be
treated as repayment during those years and interest on loan capital shall be
calculated accordingly.
The Regulation 71 of BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
“(1) ………..
Provided that;
(i) in case a project, if the actual equity employed is less than 30%. The actual debt
and equity employed shall be taken for determination of tariff.
(ii) ……...”
The Petitioner has submitted that funding of capex is @ 80 : 20 in Debt Equity ratio.
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Bihar Electricity Regulatory Commission | P a g e 27
The Petitioner has projected opening loan at Nil, accordingly, for the purpose of
computing interest, the Commission has considered opening loan as Nil for in truing
up FY 2016-17. As per the audited annual accounts for FY 2016-17, the capitalization
amount is Rs.48.97 Crore. The Commission, for the purpose of computation of
interest, has considered loan at 80% of the capitalisation during FY 2016-17 as given
below:
Table 4.7: Funding of capitalisation considered for FY 2016-17
Sl. No. Particulars Amount
(Rs. Crore)
1 Capitalisation during FY 2016-17 48.97
2 Less: Grants --
3 Net capitalisation 48.97
4 Equity considered (@20% of 3) 9.79
5 Debt considered (@80% of 3) 39.17
The Commission, in terms of Regulation 73 (1) (f) of BERC Tariff Regulations 2007,
has considered repayment of loans equivalent to Depreciation allowed in truing up
for year 2016-17.
The Commission has arrived at the effective rate of interest for FY 2016-17 as
detailed hereunder.
Table 4.8: Effective rate of interest on loans considered for FY 2016-17
Date of Loan
drawn
Amount (Rs.)
RoI (%)
No. of days
Interest
1 2 3 4 5
19-02-15 49988447 11.50% 365 5748671
2-3-2015 150000000 11.50% 365 17250000
27-03-15 185000000 11.50% 365 21275000
13-05-15 125000000 11.50% 365 14375000
1-7-2015 291799604 11.10% 365 32389756
16-10-15 510000000 11.10% 365 56610000
30-11-15 205000000 10.75% 365 22037500
13-01-16 280000000 10.75% 365 30100000
17-02-16 203200000 10.75% 365 21844000
7-3-2016 680400000 10.75% 365 73143000
28-03-16 283500000 10.75% 365 30476250
31-03-16 56370883 10.75% 365 6059870
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Bihar Electricity Regulatory Commission | P a g e 28
Date of Loan
drawn
Amount (Rs.)
RoI (%)
No. of days
Interest
11-4-2016 204400000 10.75% 355 21371000
25-05-16 435300000 10.75% 311 39871691
17-06-15 340000000 10.75% 288 28839452
18-07-16 60000000 10.75% 257 4541507
18-07-16 440000000 10.75% 257 33304384
12-9-2016 700000000 10.75% 201 41439041
20-10-16 1000000000 10.75% 163 48006849
21-12-16 1270000000 10.75% 101 37778151
31-12-16 167057146 10.75% 91 4477360
14-02-17 330000000 10.75% 46 4470822
31-03-17 208441961 10.75% 1 61390
31-03-17 91558039 10.75% 1 26966
Total 8267016080
595497660
Weighted Average Rate of Interest [(595497660 / 8267016080)x100] 7.20%
The Commission, accordingly, has computed effective rate of interest at 7.20% and
considered for arriving interest on loan in the truing up for FY 2016-17 as detailed
in the Table below:
Table 4.9: Interest on loans approved in truing up for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars
Claimed by BGCL for FY 2016-17
vide letter no.1828 dated
30.01.2018
Approved in truing up for
2016-17
1 Opening loan -- --
2 Additions during the year 39.17 39.17
3 Normative Repayment -- 0.21
4 Closing Loan (1+2-3) 39.17 38.96
5 Rate of Interest % 10.83% 7.20%
6 Interest on loan (4*5)/365*30 days
0.35 0.23
The Commission, accordingly, approves the interest on loans of Rs.0.23 Crore for
FY 2016-17 in truing up.
4.7 Operation and Maintenance expenses
Petitioner’s submission:
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Bihar Electricity Regulatory Commission | P a g e 29
BGCL has claimed O&M expenses of Rs.0.03 crore consisting of employee expenses
(Rs.0.02 crore) and A&G expenses (Rs.0.01 crore) based on the actual expenses
charged to P&L account as per the audited accounts for FY 2016-17 as detailed in
the Table below:
Table 4.10: O&M Expenses claimed for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars Claimed by BGCL
for FY 2016-17
1 Employee cost 0.02
2 A & G expenses 0.01
3 Total O&M cost 0.03
Commission’s analysis:
The Commission, based on the audited accounts, has approved the O&M expenses
for FY 2016-17 in the truing up as detailed in the Table below:
Table 4.11: Total O&M Expenses approved in truing up for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars Claimed by BGCL for FY
2016-17
Approved in truing up for FY
2016-17
1 Employee cost 0.02 0.02
2 A & G expenses 0.01 0.01
3 Total O&M cost 0.03 0.03
The Commission, accordingly, approves total O&M expenses at Rs.0.03 Crore for
FY 2016-17 in the truing up.
4.8 Return on Equity
Petitioner’s submission
BGCL has submitted that Debt : Equity ratio of 80:20 is considered in accordance
with the Regulation 71 of BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007. The rate of return on equity is considered at 15.5% and return is
considered on pro-rata basis for March 2017, the month in which Hajipur
substation is capitalised. The Petitioner vide letter no.1828 dated 30.01.2018 has
submitted revised computation of RoE for FY 2016-17 and claimed RoE in truing up
for FY 2016-17 as detailed in the Table below:
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Bihar Electricity Regulatory Commission | P a g e 30
Table 4.12: Return on Equity claimed in truing up for FY 2016-17 (Rs. Crore)
Sl. No.
Particulars
Claimed by BGCL for FY 2016-17 vide letter
no.1828 dated 30.01.2018
1 Opening Equity --
2 Addition during the year 9.79
3 Closing Equity (1+2) 9.79
4 Rate of Return on Equity % 15.50%
5 Return on Equity 0.12
Commission’s analysis:
The Commission has examined the computation of Return on equity claimed by the
Petitioner in truing up for FY 2016-17. The Petitioner vide letter no.1828 dated
30.01.2018 has submitted revised computation of RoE for FY 2016-17 and claimed
RoE at Rs.0.12 crore for 30 days in truing up for FY 2016-17.
The Commission, in view of above, has considered the RoE as under.
The BERC in Gazette Notification dated 26th March 2014 has issued amendment to
Regulation 73 (2) (i) of BERC (Terms and Conditions for Determination of Tariff) (2nd
Amendment) Regulations, 2014 which specify that “Return on equity shall be
computed on the equity base determined in accordance with Regulation 71 and
shall be @15.50% for the projects which are commissioned on and after
01.04.2015”.
The Regulation 71 of BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
“(1) ……….
Provided that;
(i) in case a project, if the actual equity employed is less than 30%. The actual debt
and equity employed shall be taken for determination of tariff.
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Bihar Electricity Regulatory Commission | P a g e 31
The Commission, in view of the above Regulations, for the purpose of computation
of RoE, has considered the opening equity as Nil as projected by the Petitioner and
equity addition during FY 2016-17 at Rs.9.79 crore as approved in Table 4.7 above.
The rate of return on equity is considered @15.50% in accordance with the BERC
(Terms and Conditions for Determination of Tariff) (2nd Amendment) Regulations,
2014 dated 26.03.2014.
The Commission, accordingly, has considered Return on Equity in true up for FY
2016-17 as detailed in the Table below:
Table 4.13: Return on Equity approved in truing up for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars
Claimed by BGCL for FY 2016-17 vide
letter no.1828 dated 30.01.2018
Approved in truing up for FY 2016-17
1 Opening Equity -- --
2 Addition during the year 9.79 9.79
3 Closing Equity (1+2) 9.79 9.79
4 Rate of Return on Equity % 15.50% 15.50%
5 Return on Equity (3*4)/365*30 days
0.25 0.12
The Commission accordingly approves Return on Equity at Rs.0.12 Crore for FY
2016-17 in the truing up.
4.9 Interest on working capital
Petitioner’s submission
BGCL has submitted that it has arrived at the working capital requirement
according to applicable norms for transmission function provided in the BERC
(Terms and Conditions of Tariff) Regulations, 2007 which are reproduced in the
following Table:
Table 4.14: Norms for working capital requirement
Sl. No. Particulars Norm
1 O&M expenses One month
2 Maintenance spares @1% of historical cost of GFA escalated @ 6% per annum
3 Receivables Two months of transmission charges
4 Rate of interest on working capital
Rate of interest on working capital will be computed at 350 basis points over and above the State Bank of India (SBI) Base
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Bihar Electricity Regulatory Commission | P a g e 32
Sl. No. Particulars Norm
Rate. The interest on working capital shall be payable on normative basis notwithstanding that the transmission licensee may not have taken working capital loan from any outside agency or taken at different rates and amounts.
The rate of interest applied on the working capital is SBI Base Rate plus 350 basis
points i.e. 12.80%.
The Petitioner vide letter no.1828 dated 30.01.2018 has submitted the revised
computation of working capital computed as per the above norms for FY 2016-17 as
detailed in the Table below:
Table 4.15: Interest on working capital projected for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars
Claimed by BGCL for FY 2016-17 vide
letter no.1828 dated 30.01.2018
1 O&M expenses (1 month) 0.03
2 Maintenance spares @1% of opening GFA with 6% escalation
0.04
3 Receivables - 2 months 1.48
4 Total working capital 1.56
5 Rate of interest 12.80%
6 Interest on working capital 0.16
Commission’s analysis:
The Commission has examined the computation of interest on working capital
submitted by the Petitioner.
According to the amended Regulation 73(4)(ii) of the BERC Tariff Regulations, 2007
(amendment notified in the Bihar Gazette dated 27.03.2014) the rate of interest on
working capital will be computed at 350 basis point over and above the Base Rate.
The SBI Base Rate as on 1st April 2016 is at 9.30% and the rate of interest to be
considered for computing interest on working capital shall be 12.80% (i.e.9.30% +
3.50%) for FY 2016-17 in truing up.
Regulation 73(4)(i)(b) of the BERC Tariff Regulations, 2007 specify “maintenance
spares @ 1% of the historical cost escalated at 6% per annum …………..”.
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Bihar Electricity Regulatory Commission | P a g e 33
The Commission has considered opening GFA at Rs.4.14 crore approved in Table
4.4 above. The Commission, accordingly considered maintenance spares at 1% of
the historical value of GFA (Rs.4.14 crore) with escalation @6% at Rs.0.04 crore in
true up for FY 2016-17. The expenses considered in the ARR for FY 2016-17 in true
up represent one month expenses only and hence, the entire ARR is considered as
receivable for working capital requirement. The Rate of interest is considered at
12.80% as on 1st April 2016. The interest on working capital is considered for one
month on pro-rata basis as the rate of interest of 12.80% is per annum.
The Commission, in terms of Regulations, has computed the working capital
requirement and interest on working capital based on the approved expenses at an
interest rate of 12.80% as on 1st April 2016 as given in the Table below:
Table 4.16: Interest on working capital approved in truing up for FY 2016-17
(Rs. Crore)
Sl. No.
Particulars
Claimed by BGCL for FY 2016-17 vide
letter no.1828 dated 30.01.2018
Approved in truing up for FY 2016-17
1 O&M expenses (1 month) 0.03 0.03
2 Maintenance spares @1% of opening GFA with 6% escalation
0.04 0.04
3 Receivables – 2 months 1.48 0.70
4 Total working capital 1.56 0.77
5 Rate of interest 12.80% 12.80%
6 Interest on working capital (4*5)/365*30 days 0.02 0.01
The Commission approves interest on working capital at Rs.0.01 Crore in truing
up for FY 2016-17.
4.10 Income Tax/Minimum Alternate Tax (MAT)
Petitioner’s submission
BGCL has submitted that it has made a payment of Rs.0.07 crore as income tax for
FY 2016-17 and requested the Commission to approve the same part of true up for
FY 2016-17.
Commission’s analysis:
Regulation 16 of BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007 specify:
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Bihar Electricity Regulatory Commission | P a g e 34
“(1) Tax on income of an integrated utility or a generating company or the
transmission licensee or the distribution licensee, as the case may be, from its
core business, shall be computed as an expense and shall be recovered from the
beneficiaries or consumers.
(2) Under – recovery or over – recovery of any amount from the beneficiaries or the
consumers on account of such tax, having been passed on to them shall be
adjusted every year on the basis of income-tax assessment under Income Tax
Act, 1961, as certified by the statutory auditors. An integrated utility or the
generating company or the transmission licensee / distribution licensee, as the
case may be, may make such adjustments directly.
Provided that
(i) tax on any income, other than core business, shall not constitute a pass
through component in tariff and the tax on such other income shall be
borne by the integrated utility or generating company or the transmission /
distribution licensee, as the case may be.
(ii) ….
(iii) the benefit of tax – holiday as applicable in accordance with provisions of
Income Tax Act, 1961 shall be passed on to the beneficiaries.
(iv) …. (v) ….
The Commission observed from the IT Return acknowledgment submitted by the
BGCL that BGCL has paid income tax Rs.0.07 crore towards MAT u/s.194 JB for FY
2016-17. The Commission, in terms of regulation 16 above, provisionally considers
payment of income tax as pass through in the ARR, subject to adjustment based on
final assessment orders as per regulation 16(2) above.
The Commission approves income tax at Rs.0.07 Crore in truing up for FY 2016-17.
4.11 Non-Tariff Income
Petitioner’s submission
BGCL has submitted that non tariff income accounted for in the annual accounts for
FY 2016-17 is at Rs.0.005 Crore and accordingly, proposed the non-tariff income for
truing up for FY 2016-17.
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Bihar Electricity Regulatory Commission | P a g e 35
Commission’s Analysis:
The Commission has considered the non-tariff income of Rs.0.005 crore in truing up
based on the audited accounts for FY 2016.17.
The Commission approves the non-tariff income at Rs.0.005 Crore in truing up for
FY 2016-17.
4.12 Annual Fixed Charges / Transmission ARR for FY 2016-17
Petitioner’s submission
BGCL has submitted that the annual fixed charges/Transmission charges have been
arrived at by aggregating all the expenses detailed in the previous sections i.e.
Depreciation, Interest on Loan, O&M expenses, RoE and Interest on working
capital. The total expenses less non tariff income are the net Annual Fixed Charges
or Transmission charges. The Petitioner has claimed ARR in true up of FY 2016-17 as
detailed in the Table below:
Table 4.17: Annual Fixed Charges claimed for FY 2016-17
(Rs. Crore)
SI. No.
Particulars
Claimed by BGCL for FY 2016-17 vide
letter no.1828 dated 30.01.2018
1 O&M expenses (a+b+c) 0.03
a Employee Expenses 0.02
b R&M expenses --
c A&G Expenses 0.01
2 Depreciation 0.21
3 Interest and finance charges 0.35
4 Interest on working capital 0.16
5 Return on equity 0.12
6 Income tax 0.07
7 Gross Annual Revenue Requirement 0.83
8 Less: Non-Tariff Income 0.00
9 Net Revenue Requirement 0.83
Commission’s analysis:
Based on the detailed analysis, the annual fixed charges/Transmission charges
considered by the Commission in true up for FY 2016-17 are as detailed in the Table
below:
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Bihar Electricity Regulatory Commission | P a g e 36
Table 4.18: Annual Fixed Charges approved in truing up for FY 2016-17
(Rs. Crore)
SI. No.
Particulars
Claimed by BGCL for FY 2016-17
vide letter no.1828 dated
30.01.2018
Approved in truing up for FY 2016-17
1 O&M expenses (a+b+c) 0.03 0.03
A Employee Expenses 0.02 0.02
B R&M expenses -- --
C A&G Expenses 0.01 0.01
2 Depreciation 0.21 0.20
3 Interest and finance charges 0.35 0.23
4 Interest on working capital 0.02 0.01
5 Return on equity 0.12 0.12
6 Income tax 0.07 0.07
7 Gross Annual Revenue Requirement (1 to 6) 0.83 0.66
8 Less: Non-Tariff Income 0.00 0.01
9 Net Revenue Requirement (7-8) 0.83 0.65
The Commission approves annual fixed charges/Transmission charges at Rs.0.65
Crore in truing up for FY 2016-17.
4.13 Revenue Gap / (Surplus) for FY 2016-17
Commission’s analysis:
The Commission had approved net revenue requirement of Rs.0.65 Crore in true up
for FY 2016-17.
As per the audited accounts for FY 2016-17, the Petitioner has received Rs.0.77
Crore towards transmission charges during FY 2016-17. On a query from the
Commission BGCL submitted vide letter no.1785 dated 08.01.2018 that BGCL has
not issued any bill to beneficiary i.e. BSPHCL/DISCOMs for FY 2016-17. The
computation of transmission charges has been done as per accounting policy of the
Company (Note-1, Para2.15 of the Audited Accounts for FY 2016-17). It is also
submitted that BGCL has requested the Commission for separate one-time
recovery of ARR for FY 2016-17 from BSPHCL as the amount is very small.
The Commission, based on the detailed analysis, has considered the annual fixed
charges/Transmission charges and the net revenue requirement in true up for FY
2016-17 as detailed in the Table below:
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Bihar Electricity Regulatory Commission | P a g e 37
Table 4.19: Revenue Gap approved in truing up for FY 2016-17
(Rs. Crore)
SI. No.
Particulars Claimed by BGCL for FY
2016-17
Approved in truing up for FY 2016-17
1 Net Aggregate Revenue Requirement 0.83 0.65
2 Less: Revenue received from Transmission charges
- -
3 Revenue Gap / (Surplus) for the year (1-2) 0.83 0.65
The Commission approved Revenue Gap at Rs. 0.65 crore for FY 2016-17 in truing up
as detailed in the table above.
The Regulation 22(3) of the BERC Tariff Regulations, 2007, specifies “the revenue gap
of next year shall be adjusted as a result of Review and Truing up exercises”.
Accordingly, the revenue gap of Rs.0.65 crore arising out of the truing up for FY
2016-17 is to be adjusted in the ARR for FY 2018-19.
The Commission has not considered carrying cost as the Petitioner has filed the true
up petition for FY 2016-17 along with the present tariff petition for FY 2018-19 and
there was no earlier approved Tariff Order for FY 2016-17 to compare the approved
projections vis-à-vis actual.
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Bihar Electricity Regulatory Commission | P a g e 38
5. Annual Performance Review (APR) for FY 2017-18
5.1 Background
BGCL has filed the present petition for approval of annual revenue requirement and
transmission charges for FY 2018-19 on 14th November, 2017, which includes
Annual Performance Review (APR) for FY 2017-18 also. The Petitioner has
submitted that the APR for entire year FY 2017-18 has been projected based on the
actual expenses of 1st half year i.e. six months from April 2017 to September 2017
in FY 2017-18.
Review for FY 2017-18 is to be done according to the Regulation 22 (1) of BERC
(Terms and Conditions for Determination of Tariff) Regulations, 2007 which is
reproduced below:
“The Commission shall undertake a review along with next Tariff Order of the
expenses and revenues approved by the Commission in the current year Tariff
Order. While doing so, the Commission shall consider variations between approvals
and revised estimates / pre-actuals of the sale of electricity, income and
expenditure for the relevant year and permit necessary adjustments / changes in
case such variations are for adequate and justifiable reasons. Such an exercise shall
be called Review”.
Accordingly, the “Review” exercise for FY 2017-18 has been undertaken by the
Commission on the basis of annual accounts for FY 2016-17, revised estimates for
FY 2017-18 submitted by the Petitioner and as per BERC (Terms and Conditions for
Determination of Tariff) Regulations, 2007.
5.2 Performance of Transmission System
5.2.1 Availability of Transmission System
Petitioner’s submission
BGCL has submitted that it is handling the energy on its system from April, 2017
and its system availability is more than 98% for each month from April, 2017 to
October, 2017.
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Bihar Electricity Regulatory Commission | P a g e 39
Commission’s analysis: The Commission has noted the submission of the Petitioner. The Commission
retains the target availability of transmission system availability for FY 2017-18 at
98% for full recovery of transmission charges for FY 2017-18 in accordance with the
BERC (Terms and conditions for determination of Tariff) Regulations, 2007.
5.2.2 Transmission Loss
Petitioner’s submission
BGCL has submitted that as per the 6 months data from April, 2017 to September,
2017 the transmission losses are within the level of 3.92% approved for FY 2017-18
in Tariff Order dated 09.03.2017 and requested to approve the same losses for FY
2017-18 (RE).
Commission analysis:
The Commission has provisionally approved transmission loss trajectory at 3.92%
for FY 2017-18 in Tariff Order dated 09.03.2017 as no past data was available. The
Petitioner has requested to approve the transmission loss trajectory at 3.92% for FY
2017-18 in Review. Accordingly, the Commission provisionally approves the
transmission loss trajectory at 3.92% for FY 2017-18 (RE), which will be revisited
while truing up for FY 2017-18, based on actuals.
5.3 Capital Investment Plan
Petitioner’s submission:
BGCL has submitted the revised year-wise capital investment plan (Phase IV, Part-I)
for transmission system development with addition of 400/220 kV and 220/132/33
kV Substations, 220kV and 132 kV lines and other related works as detailed in the
Table below:
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Bihar Electricity Regulatory Commission | P a g e 40
Table 5.1 : Summary of Revised capex and capitalization proposed for FY 2016-17 to FY 2018-19
Sl. No.
Name of the Scheme
Cost of the
Scheme
Source of Funding Capital Expenditure Capitalisation
Loan Equity Total upto FY 2016-17
FY 2017-18
FY 2018-19
upto FY 2016-17
FY 2017-18
FY 2018-19
1 Substations 760.00 608.00 152.00 760.00 631.00 91.00 38.00 49.00 478.00 233.00
2 Lines 687.00 550.00 137.00 687.00 574.00 86.00 27.00 0.00 539.00 149.00
3 Contingencies 43.00 -- -- -- -- -- -- -- -- --
Total 1490.00 1158.00 289.00 1447.00 1205.00 177.00 65.00 49.00 1017.00 382.00
The Petitioner has further submitted that the Commission in Case No.5 of 2017 on
28.07.2017 has approved Business Plan for Phase IV Part II Projects (12th Plan)
amounting to Rs.1688 crore.
BGCL has projected capital investment and capitalisation for FY 2017-18 (RE) for
Phase IV, Part-I as given in the Table below:
Table 5.2: Capex and Capitalisation projected for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars Reference
Approved in Tariff Order
dated 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
1 Opening CWIP a 1327.55 1156.09
2 Opening IDC b 70.00 57.16
3 Opening IEDC c 21.63 68.73
4 Capital investment during the year d 89.72 176.69
5 IDC addition during the year e 28.32 54.12
6 IEDC addition during the year f 4.12 11.11
7 Asset capitalisation without IDC & IEDC g 1174.62 1016.09
8 IDC capitalised h 98.32 111.28
9 IEDC capitalised i 25.75 79.84
10 Total capitalisation during the year j=g+h+i 1298.69 1207.21
11 Closing CWIP k=a+d-g 242.66 316.69
12 Closing IDC l=b+e-h 0.00 0.00
13 Closing IEDC m=c+f-i 0.00 0.00
Commission’s analysis:
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Bihar Electricity Regulatory Commission | P a g e 41
The Petitioner in the Tariff Petition for FY 2017-18 has furnished the capital
investment plan of Rs.1359.21 crore (Phase-IV Part-1) from FY 2016-17 to FY 2018-19
as given in the Table below:
Table 5.3: Capex and Capitalisation provided in Tariff petition for FY 2017-18
(Rs. crore)
Sl. No.
Scheme Cost of
the Scheme
Source of Funding Capital Expenditure Capitalisation
Loan Equity Total upto FY 2016-17
FY 2017-18
FY 2018-19
upto FY 2016-17
FY 2017-18
FY 2018-19
1 Substations 715.40 572.32 143.08 715.40 632.49 49.90 33.00 35.06 597.16 83.17
2 Lines 643.81 515.05 128.76 643.81 577.45 39.82 26.55 0.00 577.45 66.36
3 Contingencies
Total 1359.21 1087.37 271.84 1359.21 1209.94 89.72 59.55 35.06 1174.62 149.54
In the present petition the Petitioner has revised the planned scheme’s cost and
furnished the revised capex for FY 2016-17 to FY 2018-19 as given in the table below:
Table 5.4 Revised Capex and Capitalisation proposed for FY 2016-17 to FY 2018-19
(Rs. crore)
Sl. No.
Scheme Cost of
the Scheme
Source of Funding Capital Expenditure Capitalisation
Loan Equity Total upto FY 2016-17
FY 2017-18
FY 2018-19
upto FY 2016-17
FY 2017-18
FY 2018-19
1 Substations 760.00 608.00 152.00 760.00 631.00 91.00 38.00 49.00 478.00 233.00
2 Lines 687.00 550.00 137.00 687.00 574.00 86.00 27.00 0.00 539.00 149.00
3 Contingencies 43.00 -- -- -- --- -- -- -- -- --
Total 1490.00 1158.00 289.00 1447.00 1205.00 177.00 65.00 49.00 1017.00 382.00
The scheme-wise details of the works provided by the Petitioner are enclosed as
Annexure –A.
The Commission vide order dated 04.01.2014 in case no.20/2013 had approved
capital investment of Rs.1699.36 crore scheduled to be completed and capitalised in
FT 2015-16. The Petitioner has submitted the revised project cost at Rs.1833.23
crore in its tariff petition filed for FY 2017-18. The Commission, in paragraph 4.4 of
Tariff Order dated 09.03.2017, had observed/directed the Petitioner shall file
petition for approval of revised project cost/business plan for Rs.1833.23 crore giving
reasons for enhancement of project and delay in completion of the Project.
However, for the purpose of process of tariff petition has provisionally approved the
revised capital cost of Rs.1833.23 crore in the Tariff Order dated 09.03.2017.
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Bihar Electricity Regulatory Commission | P a g e 42
It is submitted by the Petitioner that the revised cost estimates of Phase IV Part-I
was submitted to the Commission vide letter No.JV/BGCL/Tariff/Directive
Compliance/1302 dated 23.05.2017 for approval.
BGCL has further submitted that the Commission on 28.07.2017 in Case No.5 of 2017
has approved Phase IV Part-II project amounting to Rs.1688 crore. However, the
Petitioner has not included the cost of works/schemes relating to Phase-IV Part-II
projects in the investment plan proposed for FY 2016-17 to FY 2018-19 in the
petition. The Petitioner has not furnished the reasons for not considering Phase-IV
Part-II projects in the petition.
The Commission, provisionally, approves the revised capital investment and
capitalisation plan for FY 2016-17 to FY 2018-19 as projected by BGCL as detailed in
the Table below:
Table 5.5: Capital Investment and capitalisation approved for FY 2016-17 and FY 2018-19
(Rs. Crore)
Sl. No.
Scheme
Capital Expenditure Capitalisation
To end of FY
2016-17
FY 2017-18
FY 2018-19
To end of FY
2016-17
FY 2017-18
FY 2018-19
1 Substations 630.65 90.69 38.25 48.74 477.56 233.30
2 Lines 574.17 86.00 26.94 0.00 538.53 148.57
3 Contingency 0.22
0.22 Total 1205.05 176.69 65.19 48.97 1016.09 381.87
The Commission accordingly, has considered capital investment and capitalisation of
capital expenditure/transferred to fixed assets i.e. GFA based on the capital
investment considered by the Commission for FY 2017-18 as given in the Table
below:
Table 5.6: Capitalisation considered by the Commission for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars Reference
Approved in Tariff order
dated 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
Approved in review for FY 2017-18
1 Opening CWIP A 1327.55 1156.09 1156.09
Opening IDC B 70.00 57.16 57.16
Opening IEDC C 21.63 68.73 68.73
2 Capital investment during the year D 89.72 176.69 176.69
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 43
Sl. No.
Particulars Reference
Approved in Tariff order
dated 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
Approved in review for FY 2017-18
3 IDC addition during the year E 28.32 54.12 54.12
4 IEDC addition during the year F 4.12 11.11 11.11
5 Asset capitalisation without IDC & IEDC G 1174.62 1016.09 1016.09
6 IDC capitalised H 98.32 111.28 111.28
7 IEDC capitalised I 25.75 79.84 79.84
Sub-total (total capitalisation) G+H+I 1298.69 1207.21 1207.21
8 Closing CWIP J=A+D-G 242.65 316.69 316.69
9 Closing IDC K=B+E-H -- -- --
10 Closing IEDC L=C+F-I -- -- --
5.4 Gross Fixed Assets
Petitioner’s submission:
BGCL has projected GFA for FY 2017-18 as detailed in the Table below:
Table 5.7: Gross Fixed Assets projected for FY 2017-18 (Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
1 Opening GFA 35.31 53.11
2 Additions during the year 1289.74 1207.21
3 Closing GFA (1+2) 1325.05 1260.32
Commission’s Analysis
The Commission has examined the GFA projected by the Petitioner for FY 2017-18.
The Commission has approved closing GFA at Rs.53.11 crore for FY 2016-17 in true
up and the same is considered as opening GFA for FY 2017-18. Addition to the GFA
during FY 2017-18 is considered based on capitalisation considered in Table 5.6
above.
The Commission, based the capitalisation considered for FY 2017-18 has arrived at
the closing GFA for FY 2017-18 as given in the Table below:
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 44
Table 5.8: Gross Fixed Assets approved in review for FY 2017-18 (Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
Approved in review for FY 2017-18 (RE)
1 Opening GFA 35.31 53.11 53.11
2 Additions during the year 1174.62 1016.09 1016.09
3 IDC capitalised 98.32 111.28 111.28
4 IEDC capitalised 25.75 79.84 79.84
5 Less: Income capitalised 8.95 -- --
6 Closing GFA (1+2+3+4-5) 1325.05 1260.32 1260.32
5.5 Depreciation
Petitioner’s Submission BGCL has submitted that depreciation is computed in accordance with the
Regulation 73(2)(a) of the BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007. It is submitted that no consumer contribution/grants/deposits
have been received for capex and the entire assets are being funded through debt
and equity.
BGCL has projected the depreciation for FY 2017-18 (RE) as detailed in the Table
below:
Table 5.9: Projected Depreciation for FY 2017-18 (Rs. Crore)
Sl. No.
Particulars Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
1 Opening GFA (excl. land value) 31.28 46.54
2 Additions during the year 1289.74 1207.21
3 Less: Value of land 33.48 149.35
4 Closing GFA (1+2-3) 1287.54 1104.39
5 Average GFA {(1+4)/2} -- 575.47
6 Weighted average rate of depreciation -- 5.29%
7 Depreciation (5*6) 50.09 30.41
Commission’s Analysis
The Commission has examined the depreciation computation of the Petitioner.
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Bihar Electricity Regulatory Commission | P a g e 45
Regulation 73 (2) (a) (i) of the BERC (Terms and Conditions for Determination of
Tariff) Regulations 2007, specifies that “the value base for the purpose of
depreciation shall be the historical cost of the asset”. Regulation 73 (2) (a) (ii) of the
BERC (Terms and Conditions for Determination of Tariff) Regulations 2007, specifies
that “Land is not a depreciable asset and its cost shall be excluded from the capital
cost”.
The Commission has approved closing value of depreciable GFA at Rs.46.43 Crore
(excluding value of land) in the true up for FY 2016-17. Accordingly, the same is
considered as opening GFA as on 1st April 2017 for computation of depreciation for
FY 2017-18 in review subject to true up based on audited accounts for FY 2017-18.
The Commission has observed that 99.5% of the assets fall under Plant & Machinery
which attract depreciation rate of 5.28% and 0.5% assets attract depreciation rate of
6.33% (Furniture & Fixtures, Office equipment, etc). Hence, the Commission has
considered depreciation rate of 5.28% in review for FY 2017-18.
The opening value of GFA, additions and closing GFA considered by the Commission
for computation of depreciation is given in the Table below:
Table 5.10: Approved Depreciation for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff
Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
Approved in review
for FY 2017-18
(RE)
1 Opening GFA (excl. land value) 31.28 46.54 46.43
2 Additions during the year 1289.74 1207.21 1207.21
3 Less: Value of land 33.48 149.35 149.35
4 Closing GFA (1+2-3) 1287.54 1104.39 1104.29
5 Average GFA {(1+4)/2} -- 575.47 575.36
6 Weighted average rate of depreciation -- 5.29% 5.28%
7 Depreciation (5*6) 50.09 30.41 30.38
The Commission, accordingly, approves depreciation of Rs.30.38 Crore in review
for FY 2017-18.
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Bihar Electricity Regulatory Commission | P a g e 46
5.6 Interest on Loans
Petitioner’s Submission The Petitioner has submitted that interest on loans is projected in accordance with
the Regulation 73 of BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007. Normative funding pattern of 80:20 Debt : Equity has been
considered as per Regulation 71 of BERC Terms and Conditions for Determination of
Tariff Regulations, 2007.
“71 (1) in case of all projects, the debt - equity ratio as on the date of commercial
operation shall be 70:30 for determination of Tariff, provided that the Commission
may in deserving case consider equity higher than 30% for purpose of determination
of tariff, where the transmission licensee is able to establish to the satisfaction of the
Commission that the deployment of equity more than 30% was in the interest of
general public.
Provided that;
i. in case a project, if the actual equity employed is less than 30%. The actual debt
and equity employed shall be taken for determination of tariff.
ii. in case of existing projects the actual debt : equity ratio shall be used for tariff
determination. However, any expansion shall be governed by clause (1) above.”
Further, effective rate of interest has been considered as 10.74% for FY 2017-18 and
FY 2018-19. The Petitioner has considered repayment equivalent to depreciation in
accordance with the Regulations.
BGCL has projected the interest on loans for FY 2017-18 as detailed in the Table
below:
Table 5.11: Projected Interest on Loan for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
1 Opening loan 27.94 42.26
2 Additions during the year 1031.79 965.77
3 Repayment 50.09 30.41
4 Closing Loan (1+2-3) 1009.64 977.61
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 47
Sl. No.
Particulars Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
5 Average Loan {(1+4)/2} 509.94
6 Rate of Interest 10.84% 10.74%
7 Interest on loan ( 5*6 ) 82.84 54.75
8 Finance Charges -- --
9 Total interest and finance charges 82.84 54.75
Commission’s Analysis
The Commission has examined the computation of interest on loan projected by the
Petitioner for FY 2017-18.
The Regulation 73 (1) of the BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
(a) Interest on loan capital shall be computed loan-wise, on the loans arrived at in
the manner indicated in Regulation 71.
(b) In the case of existing projects, the actual debt-equity shall be used for tariff
determination and any expansion thereto shall be governed as per Regulation 71.
(c) ………….
(d) ………….
(e) …………..
(f) In case any moratorium period is availed by the transmission licensee,
depreciation provided for in the tariff during the years of moratorium shall be
treated as repayment during those years and interest on loan capital shall be
calculated accordingly.
The Regulation 71 of BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
“(1) in case of all projects, the debt - equity ratio as on the date of commercial
operation shall be 70:30 for determination of Tariff, provided that the
Commission may in deserving case consider equity higher than 30% for purpose
of determination of tariff, where the transmission licensee is able to establish to
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 48
the satisfaction of the Commission that the deployment of equity more than 30%
was in the interest of general public.
Provided that;
i. in case a project, if the actual equity employed is less than 30%. The actual debt
and equity employed shall be taken for determination of tariff.
ii. in case of existing projects the actual debt : equity ratio shall be used for tariff
determination. However, any expansion shall be governed by clause (1) above.”
(2) the debt and equity amount arrived at in accordance with clause (1) shall be used
for calculation of interest on loan, Return on Equity, Advance Against Depreciation
and Foreign Exchange Rate Variation”.
The Commission, in view of the above Regulations, for the purpose of computation of
interest, has considered the closing loan Rs.39.17 crore approved in truing up for FY
2016-17 as opening loan for FY 2017-18 and loan addition @80% of the new
investment capitalised during FY 2017-18. The repayment is considered equivalent to
depreciation considered for FY 2017-18 (RE). The capitalisation, equity and debt for
FY 2017-18 is shown hereunder:
Capitalisation
Sl. No.
Particulars 2017-18
1 Capitalisation during the year 1207.21
2 Equity considered (@20% of 1) 241.44
3 Debt considered (@80% of 1) 965.77
The Petitioner has considered weighted average rate of interest of 10.74% for FY
2017-18. The Commission, however, has arrived the weighted average rate of
interest at 10.08% for FY 2017-18 as given in the table below:
Sl. No.
Date of Loan Drawn Amount
(Rs.) RoI (%)
No. of days
Interest
A B C D E F=[(CxD)/365]xE
1 Loan at the end of 31.03.2017 8267016080 10.83% 365 895317841
2 29-05-17 700000000 10.50% 307 61820548
3 30-06-17 380335548 10.50% 275 30088189
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 49
Sl. No.
Date of Loan Drawn Amount
(Rs.) RoI (%)
No. of days
Interest
4 30-06-17 390000000 10.50% 275 30852740
5 30-06-17 229664452 10.50% 275 18168660
6 6/9/2017 750000000 10.25% 207 43597603
7 Total 10717016080 1079845581
8 Weighted Average Rate of interest (F7/C7)x100 10.08%
The Commission, accordingly, has considered RoI and computed the interest for FY
2017-18 (RE) as detailed in the Table below:
Table 5.12: Interest on Loans approved for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in
Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
Approved in review for FY 2017-18
(RE)
1 Opening loan 27.94 42.26 39.17
2 Additions during the year 1031.79 965.77 965.77
3 Repayment 50.09 30.41 30.38
4 Closing Loan (1+2-3) 1009.64 977.61 974.56
5 Average Loan {(1+4)/2} 509.94 506.86
6 Rate of Interest 10.84% 10.74% 10.08%
7 Interest on loan ( 5*6 ) 82.84 54.75 51.09
8 Finance Charges -- -- --
9 Total interest and finance charges 82.84 54.75 51.09
The Commission accordingly, approves the interest & finance charges of Rs.51.09
Crore for FY 2017-18 (RE).
5.7 Operation and Maintenance (O&M) Expenses
5.7.1 Inflation index / Escalation rate Petitioner’s submission:
BSPTCL has submitted that as per Regulation 73(3) of BERC (Terms and Conditions
for Determination of Tariff) Regulations 2007:
“(3) Operation and Maintenance Expenses
Norms for operation and maintenance expenses per ckt km and per bay shall be as
under
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Bihar Electricity Regulatory Commission | P a g e 50
(a) The Commission shall, for the purpose of fixing normative rates for operation and
maintenance expenses, study the O&M expenses incurred over the last 4 to 5
years and fix appropriate rates per ckt-km of transmission line and per bay. The
norms so fixed for 2008-09 shall be escalated at 4% per annum.
(b) The total allowable O&M expenses for a transmission licensee shall be calculated
by multiplying the numbers of bays and ckt-km of line length with the applicable
norms for O&M expenses per bay and per ckt-km respectively”.
The Petitioner has submitted that it has followed the inflation index (based on CPI
and WPI) methodology considered in Tariff order dated 9.3.2017. For projection of
Employee expenses and Administration & General expenses for 2nd half year of FY
2017-18 the inflation index on 3.99% is considered over the 1st half year actual
expenses of FY 2017-18. The Petitioner has furnished the computation of indexation
based on CPI and WPI as given in the table below:
Table 5.13: Weightage of indexation/inflation factor
Sl. No.
Particulars WPI CPI Total
1 Weightage 0.45 0.55 1.00
2 Index points for FY 2016-17 183.16 275.92
3 Indexation n (index point * weightage) 82.42 151.75 234.18
4 Index points for FY 2015-16 176.51 265.01
5 Indexation n-i (index point * weightage) 79.43 145.76 225.19
6 Combined inflation ( 3-5) / 5) 3.99%
Commission’s Analysis:
Regulation 73(3) of BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007 specify;
“Norms for operation and maintenance expenses per ckt km and per bay shall be as
under
(c) The Commission shall, for the purpose of fixing normative rates for operation and
maintenance expenses, study the O&M expenses incurred over the last 4 to 5
years and fix appropriate rates per ckt-km of transmission line and per bay. The
norms so fixed for 2008-09 shall be escalated at 4% per annum.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 51
(d) The total allowable O&M expenses for a transmission licensee shall be calculated
by multiplying the numbers of bays and ckt-km of line length with the applicable
norms for O&M expenses per bay and per ckt-km respectively”.
The Commission in the Tariff Order dated 09.03.2017 had observed that;
“BGCL has filed petition for the first time and the assets are scheduled to be
capitalised during FY 2017-18 and no norms are fixed by the Commission. Hence, the
Commission considers appropriate to follow the methodology adopted for BSPTCL for
determination of O&M expenses may be made applicable for BGCL also as both the
utilities are in transmission business.
The Commission, accordingly, has proposed following inflation index methodology for
for computation of O&M expenses.
INDXn = 0.55*CPIn + 0.45*WPIn
- CPIn is the consumer price index increase for immediate preceding year over
previous year.
- WPIn is the wholesale price index increase for immediate preceding year over
previous year”.
The Commission opines that, since no norm for O&M expenses are fixed, the
methodology adopted in Tariff Order dated 09.03.2017 shall be adopted for FY 2017-
18 (RE) and FY 2018-19 subject to true up based on the audited accounts of the
relevant financial years.
The Commission, accordingly, has followed the inflation index methodology, based
on the available full financial year CPI on the official website labourbureaunew.gov.in
and WPI on the official website eaindustry.nic.in, for computation of employee
expenses and Administration & General expenses for FY 2017-18 and FY 2018-19 as
detailed in the table below:
Table 5.14: Weightage of indexation/inflation factor
Sl. No.
Particulars WPI CPI Total
1 Weightage 0.45 0.55 1.00
2 Index points for FY 2016-17 111.62 275.92
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 52
Sl. No.
Particulars WPI CPI Total
3 Indexation n (index point * weightage) 50.23 151.75 201.98
4 Index points for FY 2015-16 109.72 265.01
5 Indexation n-i (index point * weightage) 49.37 145.75 195.13
6 Combined inflation ( 3-5) / 5) 3.51%
5.7.2 Employee Costs
Petitioner’s submission:
BGCL has submitted that the employee cost comprises of salaries, dearness
allowance, bonus, staff welfare, medical benefits, leave travel and earned leave
encashment and the terminal benefits in the form of pension, gratuity, etc.
BGCL has also submitted that employee expenses for FY 2017-18 are based on the
1st half year actual expenses of FY 2017-18 and further projected for 2nd half year of
FY 2017-18 with an increase of 3.99% over the actual expenses of 1st half year of FY
2017-18 as detailed in the Table below:
Table 5.15: Employee Cost for FY 2017-18 (RE) projected by the Petitioner
(Rs. Crore)
Sl. No.
Particulars
Approved in Tariff order
dated 09.03.2017
FY 2017-18
April’17 to Sept’17 (Actual)
Oct’17 to March’17
(Estimated)
Total (RE)
1 Employee cost 4.08 3.06 3.06 6.17
2 Indexation 2.59% 3.99%
3 Add: Inflationary increase (1*2) 0.11 0.06
4 Addition of Manpower 4.62 --
5 Add: O&M manpower on contract 2.45 --
6 Pay Revision impact -- 0.93
7 Employee cost 8.44 3.06 3.12 7.10 Note: The employee cost approved in TO dated 09.03.2017 is for 9 months only.
Commission’s Analysis:
The Commission has examined the computation of employee cost by the Petitioner.
The employee cost approved in truing up for FY 2016-17 represents the one month
cost pertaining to part of assets put to use. Major portion of employee cost of FY
2016-17 is charged to CWIP and hence, the employee cost approved in true up of FY
2016-17 cannot be considered as base expenses for projecting cost for FY 2017-18.
Therefore, the Commission has provisionally considered the employee cost as
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 53
projected by the petitioner for FY 2017-18 subject to true up based on audited
annual accounts for FY 2017-18 as detailed in the Table below:
Table 5.16: Approved Employee Cost for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved in Tariff
order dated
09.03.2017
Projected by BGCL for FY 2017-18 Approved in review
for FY 2017-18
(RE)
April,17 to Sept'17
(Actuals)
Oct,17 to March'18
(Estimates)
Total (RE)
1 Employee cost 4.08 3.06 3.06 6.17 6.17
2 Indexation 2.59% 3.99%
3 Add: Inflationary increase (1*2) 0.11 0.06
4 Addition of Manpower 4.62 --
5 Add: O&M manpower on contract 2.45 --
6 Pay Revision impact -- 0.93 0.93
7 Employee cost 8.44 3.06 3.12 7.10 7.10
The Commission approves employee cost at Rs.7.10 Crore for FY 2016-17 (RE). 5.7.3 Repairs and Maintenance (R&M) Expenses
Petitioner’s submission: BGCL has submitted that most of the capitalisation is proposed during 2nd half of FY
2017-18 and is expected to incur Rs.12 crore during 2nd half of FY 2017-18. The
Petitioner has projected R&M expenses for FY 2017-18 as given in the Table below:
Table 5.17: Projected Repairs and Maintenance expenses for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved in Tariff order
dated 09.03.2017
Projected for FY 2017-18 (RE)
April’17 to Sept’17 (Actual)
Oct’17 to March’17
(Estimated)
Total (RE)
1 Opening GFA 35.31
2 % on GFA 2.50%
3 R&M on opening GFA (1*2) 0.88
4 GFA addition during the year 1289.74
5 R&M on GFA addition 24.18
6 Total R&M expenses 25.07 0.11 12.00 12.11
Commission’s analysis
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Bihar Electricity Regulatory Commission | P a g e 54
The Commission has examined the R&M expenses projected by BGCL.
The Commission in Tariff Order dated 09.03.2017 has opined that;
“The Commission has not fixed any norms for O&M expenses for transmission system
i.e. BGCL or BSPTCL. The Petitioner has proposed that R&M expenses may be
considered as a percentage on the opening GFA. Further, the Commission in the draft
BERC (Multi Year Transmission Regulations) 2016 has proposed that R&M expense
shall be calculated as percentage (as per the norm determined) of opening GFA. The
Commission concur with the Petitioner’s submission that some ERCs are considering
R&M expenses on a % basis on the opening GFA.
The Petitioner has considered R&M expenses at 2.50% on opening GFA and also on
the additions to GFA (for 9 months) during FY 2017-18. The Commission, in absence
of R&M norms, provisionally considers 2.50% (as proposed by the Petitioner) for
providing R&M expenses for FY 2017-18 subject to true up based on audited
accounts”.
The Petitioner has reported actual R&M expenses for 1st half of FY 2017-18 at
Rs.0.11 crore and projected Rs.12.00 crore for 2nd half of FY 2017-18 stating that
most of assets are proposed to be capitalised. The Commission opines that the
assets are new and does not require huge R&M expenses and hence, following the
principle of prudence and consistency provisionally considers R&M expenses on a %
basis i.e. at 2.50% on the Opening GFA for FY 2017-18 (RE) in line with the rate
considered in Tariff Order dated 09.03.2017, subject to true up based on audited
accounts for FY 2017-18.
The Commission, accordingly, considered R&M expenses for FY 2017-18 in review as
detailed in the Table below:
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 55
Table 5.18: Approved R&M expenses for FY 2017-18 (Rs. Crore)
Sl. No.
Particulars
Approved in Tariff
order dated
09.03.2017
Projected by BGCL for FY 2017-18 Approved in review
for FY 2017-18
(RE)
April,17 to Sept'17
(Actuals)
Oct,17 to March'18
(Estimates)
Total (RE)
1 Opening GFA 35.31
53.11
2 % on GFA 2.50%
2.50%
3 R&M on opening GFA (1*2) 0.88
1.33
4 GFA addition during the year 1289.74
--
5 R&M on GFA addition 24.18
--
6 Total R&M expenses 25.07 0.11 12.00 12.11 1.33
The Commission, accordingly, approves R&M expenses at Rs.1.33 Crore in review
for FY 2017-18.
5.7.4 Administration and General (A&G) Expenses
Petitioner’s Submission
BGCL has submitted that the Administration and General expenses mainly comprise
of rents, telephone and other communication expenses, professional charges,
conveyance and traveling expenses etc.
BGCL has submitted that A&G expenses for FY 2017-18 are based on the actual
expenses of the 1st half of FY 2017-18 and further projected for 2nd half of FY 2017-
18 with an increase of 3.99% over the actual expenses of 1st half of FY 2017-18 as
detailed in the Table below:
Table 5.19: Proposed Administration and General Expenses for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved in Tariff order
dated 09.03.2017
Projected for FY 2017-18 (RE)
April’17 to Sept’17 (Actual)
Oct’17 to March’17
(Estimated)
Total (RE)
1 Base A&G expenses 2.78 1.48 1.48 2.96
2 Inflationary index % 2.59% 3.99%
3 Inflationary increase (1*2) 0.07 0.03 0.03
4 A&G expenses 2.14 1.48 1.51 2.99
Commission’s Analysis:
The Commission has examined the A&G expenses projected by BGCL.
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Bihar Electricity Regulatory Commission | P a g e 56
The A&G expenses approved in truing up for FY 2016-17 represents only one month
cost pertaining to part of assets put to use. Hence, the expenses approved in true up
of FY 2016-17 cannot be considered as base expenses for projecting A&G expenses
for FY 2017-18 (RE). Therefore, the Commission has provisionally considered the
A&G expenses as projected by the petitioner for FY 2017-18 subject to true up based
on audited annual accounts for FY 2017-18 as detailed in the Table below:
Table 5.20: Approved Administration & General Expenses for FY 2017-18
(Rs. Crore)
Sl.
No. Particulars
Approved in Tariff
order dated
09.03.2017
Projected by BGCL for FY 2017-18 Approved in review
for FY 2017-18
(RE)
April,17 to Sept'17
(Actuals)
Oct,17 to March'18
(Estimates)
Total (RE)
1 Base A&G expenses 2.78 1.48 1.48 2.96 2.96
2 Inflationary index % 2.59%
3.99% 3 Inflationary increase (1*2) 0.07
0.03 0.03 0.03
4 A&G expenses 2.14 1.48 1.51 2.99 2.99
The Commission, accordingly, approves Administration and General Expenses at
Rs.2.99 Crore in review for FY 2017-18 (RE).
5.7.5 Summary of Operations and Maintenance (O&M) Expenses
Table 5.21: Total O&M cost approved for FY 2017-18 (RE)
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
Approved for FY
2017-18 (RE)
1 Employee cost 8.44 7.10 7.10
2 R&M expenses 25.07 12.11 1.33
3 A&G Expenses 2.14 2.99 2.99
4 Net O&M expenses 35.65 22.20 11.41
The Commission approves O&M cost at Rs.11.41 Crore for FY 2017-18 in review.
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Bihar Electricity Regulatory Commission | P a g e 57
5.8 Return on Equity
Petitioner’s submission:
BGCL has submitted that debt equity 80:20 is considered in accordance with
Regulation 71 of the BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007 and RoE is considered at 15.5% for assets capitalised on or after 1st
April 2015 as amended from time to time.
BGCL has computed the Return on Equity for FY 2017-18 (RE) as detailed in the Table
below:
Table 5.22: Projected Return on Equity for FY 2017-18 (RE)
(Rs. Crore)
BGCL has requested the Commission to consider the RoE as per the computations
furnished in the Table above for FY 2017-18 (RE).
Commission’s Analysis
The Commission has examined the computation of Return on Equity (RoE) claimed
by the Petitioner.
The Regulation 73 (2) (c) of the BERC Terms and Conditions for Determination of
Tariff Regulations, 2007 specify;
(i) Return on Equity shall be computed on the equity base determined in accordance with
Regulation 71 and shall be @ 14% per annum.
(ii) …………..
Sl. No.
Particulars
Approved for FY 2017-18 in
Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
1 Opening equity 7.06 10.62
2 Addition in FY 2017-18 257.95 241.44
3 Closing Equity (1+2) 265.01 252.06
4 Average equity (1+3)/2 131.34
5 Rate of Return on equity 15.50% 15.50%
6 Return on equity (4*5) 31.08 20.36
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The BERC in Gazette Notification dated 26th March 2014 has issued amendment to
Regulation 73 (2) (i) of BERC (Terms and Conditions for Determination of Tariff) (2nd
Amendment) Regulations, 2014 which specify that “Return on equity shall be
computed on the equity base determined in accordance with Regulation 71 and
shall be @15.50% for the projects which are commissioned on and after
01.04.2015”.
The Regulation 71 of BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
“(1) in case of all projects, the debt - equity ratio as on the date of commercial
operation shall be 70:30 for determination of Tariff, provided that the
Commission may in deserving case consider equity higher than 30% for purpose
of determination of tariff, where the transmission licensee is able to establish to
the satisfaction of the Commission that the deployment of equity more than
30% was in the interest of general public.
Provided that;
(i) in case a project, if the actual equity employed is less than 30%. The actual
debt and equity employed shall be taken for determination of tariff.
(ii) in case of existing projects the actual debt : equity ratio shall be used for
tariff determination. However, any expansion shall be governed by clause
(1) above.”
(2) the debt and equity amount arrived at in accordance with clause (1) shall be used
for calculation of interest on loan, Return on Equity, Advance Against
Depreciation and Foreign Exchange Rate Variation”.
A conjoint reading of Regulations 73 and 71 explicitly specify that Return on Equity
shall be provided on the actual Equity or 30% of the project cost. The funding of
capital assets is in 80:20 debt equity ratio.
The Commission, in view of the above Regulations, for the purpose of computation
of RoE, has considered the capitalisation, equity and debt for FY 2017-18 (RE) as
shown hereunder:
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Bihar Electricity Regulatory Commission | P a g e 59
Capitalisation
Sl. No. Particulars Amount
(Rs. Crore)
1 Capitalisation during the year 1207.21
2 Equity considered (@20% of 1) 241.44
3 Debt considered (@80% of 1) 965.77
The Commission has considered the opening equity of Rs.9.79 crore for FY 2017-18
(RE) based on closing equity approved in true up for FY 2016-17 and further updated
based on funding of capitalisation approved in review and arrived at the equity for
FY 2017-18 (RE).
The Commission, in view of the Regulations 73 and 71 of the BERC Tariff Regulations,
2007, for the purpose of computation of Return on Equity, has considered the rate of
return on equity @15.50% as per the BERC Tariff Regulations read with 2nd
amendment dated 26.03.2014.
The Commission, accordingly, has considered Return on Equity for FY 2017-18 in
review as detailed in the Table below:
Table 5.23: Approved Return on Equity for FY 2017-18 (RE)
(Rs. Crore)
The Commission approves Return on Equity at Rs.20.23 Crore for FY 2017-18 (RE).
5.9 Interest on working capital
Petitioner’s submission:
Sl. No.
Particulars
Approved for FY 2017-18 in
Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
Approved in review for FY 2017-18 (RE)
1 Opening equity 7.06 10.62 9.79
2 Addition in FY 2017-18 257.95 241.44 241.44
3 Closing Equity (1+2) 265.01 252.06 251.23
4 Average equity (1+3)/2 131.34 130.51
5 Rate of Return on equity 15.50% 15.50% 15.50%
6 Return on equity (4*5) 31.08 20.36 20.23
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BGCL has submitted that it has arrived at the working capital requirement according
to applicable norms for transmission function provided in the BERC (Terms and
Conditions of Tariff) Regulations, 2007 which are reproduced in the following Table:
Table 5.24: Norms for working capital requirement
Sl. No. Particulars Norm
1 O&M expenses One month
2 Maintenance spares @1% of historical cost of GFA escalated @ 6% per annum
3 Receivables Two months of transmission charges
4 Rate of interest on working capital
Base Rate of State Band of India
The rate of interest applied on the proposed working capital is @12.80% as per the
SBI Base Rate plus 350 basis points.
BGCL has projected interest on working for FY 2017-18 on the above norms as
detailed in the Table below:
Table 5.25: Projected Interest on working capital for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
1 O&M expenses (1 month) 3.02 1.85
2 Maintenance spares @1% of opening GFA with 6% escalation 0.37 0.56
3 Receivables - 2 months 34.08 21.80
4 Total working capital 37.42 24.22
5 Rate of interest 12.80% 12.80%
6 Interest on working capital 4.79 3.10
Commission’s Analysis
The Commission has examined the computation of interest on working capital
submitted by the Petitioner.
The Commission has considered opening GFA at Rs.53.11 Crore to consider
maintenance spares for the purpose of computing working capital requirement and
interest on working capital. The Commission, accordingly considered maintenance
spares at 1% of the historical cost of GFA (Rs.53.11 crore) with escalation @6% for FY
2017-18.
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The Regulation 73(4)(ii) of BERC Tariff Regulations, 2007 specify the rate of interest
on working capital shall be equal to Short terms PLR of SBI on 1st April of the year.
The BERC has issued amendment to the Regulation 73(4)(ii) (amendment notified in
the Bihar Gazette dated 27.03.2014) that the rate of interest on working capital will
be computed at 350 basis points over and above the base rate. The Regulation
(amendment) shall come into force from the date of publication in the Bihar Gazette
i.e. with effect from 27.03.2014.
The SBI Base Rate as on 1st April 2017 is at 9.10%. The rate of interest to be
considered on working capital works out to 12.60% [SBI Base Rate of 9.10% (MCLR) +
3.50% (350 basis points)] for FY 2017-18 (RE).
The Commission has computed the working capital and interest on working capital
as per expenses approved at an interest rate of 12.60% as given in the Table below:
Table 5.26: Approved Interest on working capital for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
Approved in review for FY 2017-18
(RE)
1 O&M expenses (1 month) 3.02 1.85 0.95
2 Maintenance spares @1% of opening GFA with 6% escalation 0.37 0.56 0.56
3 Receivables - 2 months 34.08 21.80 19.29
4 Total working capital 37.42 24.22 20.80
5 Rate of interest 12.80% 12.80% 12.60%
6 Interest on working capital 4.79 3.10 2.62
The Commission approves interest on working capital at Rs.2.62 Crore in review for
FY 2017-18 (RE).
5.10 Non-Tariff Income
Petitioner’s submission:
The Petitioner has not projected any non tariff income for FY 2017-18 and proposed
to present at the time of truing up.
Commission’s Analysis:
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Bihar Electricity Regulatory Commission | P a g e 62
The Commission had considered the submissions made by the Petitioner and no non
tariff income is considered in review for FY 2017-18 subject to true up based on
audited accounts for FY 2017-18.
The Commission, accordingly, considers Non-tariff income as ‘Nil’ for FY 2017-18 in
review.
5.11 Annual Transmission charges for FY 2017-18
Petitioner’s submission
BGCL has submitted the annual fixed charges or Transmission charges arrived at by
aggregating all the expenses viz. Depreciation, Interest on Loans, Interest on working
capital, O&M expenses, Return on Equity. The total expenses less non-tariff income
are the net annual fixed charges or transmission charges.
The summary of revised annual fixed charges / ARR projections and ARR approved by
the Commission for FY 2017-18 (RE) are given in the Table below:
Table 5.27: Projected Annual Fixed Charges/ (ARR) for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
1 O&M expenses (2+3+4) 35.65 22.20
2 Employee cost 8.44 7.10
3 R&M expenses 25.07 12.11
4 A&G Expenses 2.14 2.99
5 Interest and finance charges 82.84 54.75
6 Interest on working capital 4.79 3.10
7 Depreciation 50.09 30.41
8 Return on Equity 31.08 20.36
9 Total Aggregate Revenue Requirement (2 to 8) 204.45 130.82
10 Less: Non-tariff income -- --
11 Net Aggregate Revenue Requirement (9-10) 204.45 130.82
Commission’s analysis:
Based on the Commission’s detailed analysis, the Aggregate Revenue Requirement/
annual fixed charges/Transmission charges considered by the Commission for FY
2017-18 (RE) are as detailed in the Table below:
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Table 5.28: Approved Annual Fixed Charges / ARR for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in Tariff Order 09.03.2017
Projected by BGCL for FY
2017-18 (RE)
Approved by Commission in review for FY 2017-18
(RE)
1 O&M expenses (2+3+4) 36.27 22.20 11.42
2 Employee cost 8.44 7.10 7.10
3 R&M expenses 25.07 12.11 1.33
4 A&G Expenses 2.14 2.99 2.99
5 Interest and finance charges 82.84 54.75 51.09
6 Interest on working capital 4.79 3.10 2.62
7 Depreciation 50.09 30.41 30.38
8 Return on Equity 31.08 20.36 20.23
9 Total Aggregate Revenue Requirement (2 to 8) 204.45 130.82 115.73
10 Less: Non-tariff income -- -- --
11 Net Aggregate Revenue Requirement (9-10) 204.45 130.82 115.73
5.12 Revenue Gap / (Surplus) for FY 2017-18 (RE)
Commission’s Analysis:
The Commission, based on the detailed analysis of the projections made by the
Petitioner, has arrived at the ARR for FY 2017-18 (RE) as detailed in the Table below:
Table 5.29: Approved revenue gap / (surplus) for FY 2017-18
(Rs. Crore)
Sl. No.
Particulars
Approved for FY 2017-18 in
Tariff Order 09.03.2017
Projected by BGCL for FY 2017-18 (RE)
Approved in review for FY 2017-18 (RE)
1 Aggregate Revenue Requirement for FY 2017-18 204.45 130.82 115.73
2 Less: Approved Annual Transmission Charges in the Tariff Order dated 09.03.2017 204.45 204.45 204.45
3 Revenue Gap / (Surplus) for FY 2017-18 (1-2) -- (73.63) (88.72)
The Commission thus approves Revenue surplus of 88.72 Crore in Review for FY
2017-18 (RE).
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The net Surplus of Rs.88.72 Crore has been worked out in the review for FY 2017-18
(RE).
The deficit / (surplus) ARR of FY 2017-18 will generally be considered in the ARR of FY
2019-20, after truing-up of FY 2017-18 when the audited annual accounts will be
made available by BGCL.
In view of the above, the surplus of Rs.88.72 crore is not considered to be carried
forward in the ARR of FY 2018-19.
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6. Annual Revenue Requirement (ARR) and Transmission charges for FY 2018-19
6.1 Background
BGCL has submitted the petition on 14th November, 2017 for approval of True up for
FY 2016-17, Annual Performance Review for FY 2017-18 and Aggregate Revenue
Requirement (ARR) and determination of transmission charges for FY 2018-19.
Determination of Aggregate Revenue Requirement (ARR) for FY 2018-19 of BGCL has
been undertaken by the Commission on the basis of revised estimates for FY 2017-
18 as the true up for FY 2016-17 has been done for only one month of operation and
no actual data is available for the whole year of FY 2017-18 and as per BERC (Terms
and Conditions for Determination of Tariff) Regulations, 2007.
6.2 Transmission Loss
Petitioner’s submission
BGCL has requested to approve the transmission loss trajectory at 3.92% for FY
2018-19 at the same level as approved by the Commission for FY 2017-18 in the
Tariff Order dated 09.03.2017.
Commission’s Analysis
The Commission has considered the transmission loss trajectory of 3.92% for BSPTCL
for the MYT control period of FY 2016-17 to FY 2018-19 in Tariff Order dated
21.03.2016. Since BGCL is also in the business of transmission of electricity at par
with BSPTCL in the State of Bihar, the Commission had provisionally approved the
transmission loss trajectory for BGCL also at 3.92% for FY 2017-18 as was approved
for BSPTCL for FY 2017-18.
Since adequate past data is not available, the Commission provisionally approves the
transmission loss for BGCL at 3.92% for FY 2018-19, which will be revisited while
reviewing for FY 2018-19 (RE)
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6.3 Capital Investment Plan
Petitioner’s submission:
BGCL has submitted the revised year-wise capital investment plan (Phase IV Part-
I)for transmission system development with addition of 400/220 kV and 220/132/33
kV Substations, 220kV and 132 kV lines and other related works as detailed in the
Tables below:
Table 6.1: Summary of capex and capitalisation proposed for FY 2016-17 and FY 2018-19
Sl. No.
Name of the Scheme
Cost of the
Scheme
Source of Funding Capital Expenditure Capitalisation
Loan Equity Total upto FY 2016-17
FY 2017-18
FY 2018-19
upto FY 2016-17
FY 2017-18
FY 2018-19
1 Substations 760.00 608.00 152.00 760.00 631.00 91.00 38.00 49.00 478.00 233.00
2 Lines 687.00 550.00 137.00 687.00 574.00 86.00 27.00 0.00 539.00 149.00
3 Contingencies 43.00 -- -- -- -- -- -- -- -- --
Total 1490.00 1158.00 289.00 1447.00 1205.00 177.00 65.00 49.00 1017.00 382.00
The Petitioner has further submitted that the Commission in Case No.5 of 2017 on
28.07.2017 has approved Business Plan for Phase IV Part II Projects (12th Plan)
amounting to Rs.1688 crore.
BGCL has projected capital investment and capitalisation for FY 2018-19 for Phase IV
Part I as given in the Table below:
Table 6.2: Capex and Capitalisation projected for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Reference Projected by BGCL for FY
2018-19
1 Opening CWIP a 316.69
2 Opening IDC b --
3 Opening IEDC c --
4 Capital investment during the year d 65.19
5 IDC addition during the year e 72.48
6 IEDC addition during the year f 11.11
7 Asset capitalisation without IDC & IEDC g 381.87
8 IDC capitalised h 72.48
9 IEDC capitalised i 11.11
10 Total capitalisation during the year j=g+h+i 465.46
11 Closing CWIP k=a+d-g --
12 Closing IDC l=b+e-h --
13 Closing IEDC m=c+f-i --
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Bihar Electricity Regulatory Commission | P a g e 67
Commission’s analysis:
The Commission, had provisionally considered the revised capital investment and
capitalisation plan for FY 2016-17 to FY 2018-19 in its review for FY 2017-18 (table
5.5) as detailed in the Table below:
Table 6.3: Capital Investment and capitalisation approved for FY 2016-17 and FY 2018-19
(Rs. Crore)
Sl. No.
Scheme
Capital Expenditure Capitalisation
To end of FY
2016-17
FY 2017-18
FY 2018-19
To end of FY
2016-17
FY 2017-18
FY 2018-19
1 Substations 630.65 90.69 38.25 48.74 477.56 233.30
2 Lines 574.17 86.00 26.94 0.00 538.53 148.57
3 Contingency 0.22
0.22 Total 1205.05 176.69 65.19 48.97 1016.09 381.87
The Commission vide order dated 04.01.2014 in case no.20/2013 had approved
capital investment of Rs.1699.36 crore scheduled to be completed and capitalised in
FT 2015-16. The Petitioner has submitted the revised project cost at Rs.1833.23
crore in its tariff petition filed for FY 2017-18. The Commission, in paragraph 4.4 of
Tariff Order dated 09.03.2017, had observed/directed the Petitioner shall file
petition for approval of revised project cost/business plan for Rs.1833.23 crore giving
reasons for enhancement of project and delay in completion of the Project.
However, for the purpose of process of tariff petition has provisionally approved the
revised capital cost of Rs.1833.23 crore in the Tariff Order dated 09.03.2017.
The Commission has approved closing CWIP at Rs.316.69 crore for FY 2017-18 in
review and the same is considered as opening CWIP for FY 2018-19, which is in line
with the projection made by the Petitioner.
The Petitioner has proposed addition to capex at Rs.65.19 crore, IDC at Rs.72.48
crore and IEDC at Rs.11.11 crore for FY 2018-19. The IDC proposed by the Petitioner
is not commensurate with the opening CWIP (Rs.316.69 crore) and capex (Rs.65.19
crore). The IDC is working out to 20.75% on the average of CWIP of Rs.349.28 crore
(316.69+32.59(65.19/2)). The weighted average rate of interest on loan is worked to
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Bihar Electricity Regulatory Commission | P a g e 68
10.08% for FY 2018-19. Hence, the IDC is regulated adopting the weighted average
rate of interest of 10.08% for opening CWIP for one year and on addition to capex
for half year. The Commission, accordingly, has computed the IDC at Rs.35.20 crore
(Rs.31.92 crore on opening CWIP and 3.28 crore on Capex during the year for half
year) and the same is considered in capex and capitalisation during FY 2018-19.
The year-wise capex and capitalisation considered and approved by the Commission
to end FY 2018-19 in respect of Phase-IV Part-1 is furnished hereunder for reference:
Table 6.4: Total Capital Investment and capitalisation approved for project Phase-IV part-1
Sl. No.
Year Capital investment Year-wise Capitalisation Year-wise
CWIP IDC IEDC Total CWIP IDC IEDC Total
1 To end of 2015-16 429.85 6.11 59.90 495.86 -- -- -- --
2 2016-17 768.35 52.97 11.11 832.43 42.11 1.92 2.28 46.31
3 2017-18 176.69 54.12 11.11 241.92 1016.09 111.28 79.84 1207.21
4 2018-19 65.19 35.20 11.11 111.50 381.88 35.20 11.11 428.19
5 Total 1440.08 148.40 93.23 1681.71 1440.08 148.40 93.23 1681.71
It can be observed from the table above, the total capex and capitalisation
considered by the Commission is at Rs.1681.71 crore which is within the capital
investment plan approved by the Commission in order dated 04.01.2018 in Case
no.20/2013 for Rs.1699.36 crore.
The Commission accordingly, has considered capital investment including IDC and
IEDC and capitalisation of capital expenditure/transferred to fixed assets i.e. GFA
based on the capital investment approved by the Commission for FY 2018-19 as
given in the Table below:
Table 6.5: Capitalisation considered by the Commission for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Reference Projected by BGCL for FY
2018-19
Approved in review
for FY 2018-19
1 Opening CWIP a 316.69 316.69
2 Opening IDC b -- --
3 Opening IEDC c -- --
4 Capital investment during the year d 65.19 65.19
5 IDC addition during the year e 72.48 35.20
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Bihar Electricity Regulatory Commission | P a g e 69
Sl. No.
Particulars Reference Projected by BGCL for FY
2018-19
Approved in review
for FY 2018-19
6 IEDC addition during the year f 11.11 11.11
7 Asset capitalisation without IDC & IEDC g 381.87 381.88
8 IDC capitalised h 72.48 35.20
9 IEDC capitalised i 11.11 11.11
10 Total capitalisation during the year j=g+h+i 465.46 428.19
11 Closing CWIP k=a+d-g -- --
12 Closing IDC l=b+e-h -- --
13 Closing IEDC m=c+f-i -- --
6.4 Funding of Capitalisation
Petitioner’s submission:
The Petitioner has considered funding of the capitalisation in the debt : equity ratio
of 80 : 20 respectively in the petition.
Commission’s analysis
Regulation 71 of the BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007 specify;
(1) In case of all projects, the debt-equity ratio as on the date of commercial operation shall
be 70 : 30 for determination of tariff, provided that the commission may in deserving
case consider equity higher than 30% for purpose of determination of tariff, where the
transmission licensee is able to establish to the satisfaction of the Commission that the
deployment of equity more than 30% was in the interest of general public.
Provided that
(i) in case of a project, if the actual equity employed is less than 30%, the actual debt and
equity employed shall be taken for determination of tariff”.
The Petitioner has considered funding of capitalisation through debt @80% and
through equity @20% for FY 2018-19.
The Commission in terms of Regulation 71(1)(i) as above, considers the funding of
capitalisation through debt @80% and equity @20% for FY 2017-18 as given in the
Table below:
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Table 6.6: Funding of capitalisation considered for FY 2018-19 (Rs. Crore)
Sl. No.
Particulars Approved for
FY 2018-19
1 Capitalisation 428.19
Funding of capitalization
2 a. Equity @20% 85.64
3 b. Loans @80% 342.55
6.5 Gross Fixed Assets
Petitioner’s submission:
BGCL has projected Gross Fixed Asset (GFA) for FY 2018-19 as given in the Table
below:
Table 6.7: Gross fixed assets projected for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL
for FY 2018-19
1 Opening GFA 1260.32
2 Additions to GFA during the year 465.46
3 Closing GFA (1+2) 1725.78
Commission’s Analysis
The Commission has considered closing GFA at Rs.1260.32 crore in review for FY
2017-18 and the same is considered as opening GFA for FY 2018-19 and further
updated with the additions to GFA based on capitalisation approved for FY 2018-19
in Table 6.5 above. The opening value of GFA, additions and closing GFA for FY 2018-
19 is as given in the Table below:
Table 6.8: Gross Fixed Assets approved for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
Approved for FY 2018-19
1 Opening GFA 1260.32 1260.32
2 Additions to GFA during the year (a+b+c-d) 465.46 428.19
a. Additions during the year 381.87 381.88
b. Interest During Construction (IDC) 72.48 35.20
c. Expenses during construction period capitalised (IEDC) 11.11 11.11
3 Closing GFA (1+2) 1725.78 1688.51
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Bihar Electricity Regulatory Commission | P a g e 71
6.6 Depreciation
Petitioner’s Submission
BGCL has submitted that depreciation is computed in accordance with the
Regulation 73 (2) (a) of the BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007. The asset-wise depreciation has been computed in accordance
with the depreciation schedule specified in CERC (Terms and Conditions of Tariff)
Regulations, 2014.
Regulation 73 (2) (a) (ii) of the BERC (Terms and Conditions for Determination of
Tariff) Regulations 2007, specifies that “Land is not a depreciable asset and its cost
shall be excluded from the capital cost” and accordingly, no depreciation has been
considered on land. BGCL has projected the depreciation for FY 2018-19 as shown in
the Table below:
Table 6.9: Projected Depreciation for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
1 Opening GFA 1104.40
2 Additions during the year 465.46
3 Less: Value of land 57.59
4 Less: Deductions --
5 Closing GFA (1+2-3-4) 1512.27
6 Average GFA (1+5)/2 1308.34
7 Weighted average rate of depreciation 5.29%
8 Depreciation 69.15
Commission’s Analysis
BERC (Terms and Conditions for Determination of Tariff) Regulations 2007,
Regulation 73(2)(a) - Depreciation:
For the purpose of tariff, depreciation shall be computed in the following manner;
(i) the value base for the purpose of depreciation shall be the historical cost of
the asset
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(ii) depreciation shall be calculated annually, based on straight-line method over
the useful life of the assets and at rates prescribed by the Central Electricity
Regulatory Commission, from time to time ....
The residual value of the asset shall be considered as 10% and the
depreciation shall be allowed up to a maximum of 90% of the historical
capital cost of the asset. Land is not a depreciable asset and its cost shall be
excluded from the capital cost while computing 90% of the historical cost of
the asset. The historical capital cost of the asset shall include additional
capitalisation on account of foreign exchange rate variation as allowed by
the Central Government/Central Electricity Regulatory Commission.
(iii) On repayment of entire loan, the remaining depreciable value shall be spread
over the balance useful life of the asset.
(iv) Depreciation shall be chargeable from the first year of operation of the asset.
For part of the year, depreciation shall be charged on pro rata basis.
The Commission has arrived at the rate of depreciation of 5.28% for FY 2017-18 in
review and the same is adopted provisionally for FY 2018-19 subject to true up based
on the audited accounts for FY 2018-19.
The Commission has considered closing value of depreciable assets at Rs.1104.29
crore in review for FY 2017-18 and the same is considered as opening depreciable
GFA for FY 2018-19. Addition to GFA and value of land during FY 2018-19 is
considered as projected by the Petitioner. The Commission, accordingly, has
considered opening value of GFA, additions to GFA and closing GFA and depreciation
on assets for FY 2018-19 is given in the Table below:
Table 6.10: Depreciation approved for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected
by BGCL for FY 2018-19
Approved for FY 2018-19
1 Opening GFA 1104.39 1104.29
2 Additions during the year 465.46 428.19
3 Less: Value of land 57.59 57.59
4 Closing GFA (1+2-3) 1512.26 1474.89
5 Average GFA (1+5)/2 1308.34 1289.59
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Sl. No.
Particulars Projected
by BGCL for FY 2018-19
Approved for FY 2018-19
6 Weighted average rate of depreciation 5.29% 5.28%
7 Depreciation 69.15 68.09
The Commission, accordingly, approves Rs.68.09 crore towards depreciation for FY
2018-19.
6.7 Interest on Loans
Petitioner’s Submission
BGCL has submitted that interest on loans is projected in accordance with Regulation
73 of BERC (Terms and Conditions for Determination of Tariff Regulations), 2007.
Actual funding pattern of 80:20 Debt : Equity is considered as per Regulation 71 (1)(i)
of BERC Terms and Conditions for Determination of Tariff Regulations, 2007.
BGCL has submitted that entire loan for construction of assets has been taken from
REC and weighted average rate of interest is considered at 10.74% based on actual
loans drawn upto September 2017. The repayment of loan is considered equivalent
to Depreciation allowed for FY 2018-19. BGCL has projected interest on loans for FY
2017-18 as detailed in the Table below:
Table 6.11: Projected Interest on loans for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
1 Opening loan 977.61
2 Additions during the year 372.37
3 Repayment 69.15
4 Closing Loan (1+2-3) 1280.84
5 Average Loan (1+4)/2 1129.22
6 Rate of Interest 10.74%
7 Interest Charges (5* 6) 121.25
8 Finance charges --
9 Interest & Finance charges (7+8) 121.25
Commission’s analysis
The Commission has examined the computation of interest on loan projected by the
Petitioner for FY 2018-19.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 74
The Regulation 73 (1) of the BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007 specify;
(a) interest on loan capital shall be computed loan-wise, on the loans arrived at in
the manner indicated in Regulation 71.
(b) In the case of existing projects, the actual debt-equity shall be used for tariff
determination and any expansion thereto shall be governed as per Regulation 71.
(c) ………….
(d) ………….
(e) …………..
(f) In case any moratorium period is availed by the transmission licensee,
depreciation provided for in the tariff during the years of moratorium shall be
treated as repayment during those years and interest on loan capital shall be
calculated accordingly.
The Regulation 71 of BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007 specify;
“(1) in case of all projects, the debt - equity ratio as on the date of commercial
operation shall be 70:30 for determination of Tariff, provided that the
Commission may in deserving case consider equity higher than 30% for purpose
of determination of tariff, where the transmission licensee is able to establish to
the satisfaction of the Commission that the deployment of equity more than 30%
was in the interest of general public.
Provided that;
i. in case a project, if the actual equity employed is less than 30%. The actual debt
and equity employed shall be taken for determination of tariff.
ii. in case of existing projects the actual debt : equity ratio shall be used for tariff
determination. However, any expansion shall be governed by clause (1) above.”
(2) the debt and equity amount arrived at in accordance with clause (1) shall be used
for calculation of interest on loan, Return on Equity, Advance Against Depreciation
and Foreign Exchange Rate Variation”.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 75
A conjoint reading of the above Regulations explicitly specifies that interest shall be
provided on the debt @70% of the project cost. Further, the regulations specify that
if actual equity employed is less than 30%, the actual debt and equity employed shall
be taken for determination of tariff. The Petitioner has considered equity @20% and
debt @80% of the project cost.
The Commission, in view of the above Regulations has considered the debt @80% of
the asset addition during FY 2018-19 (as shown in Table 6.6). The opening loan for FY
2018-19 is considered based on the closing loan approved in review for FY 2017-18
and weighted average rate of interest is considered for FY 2018-19 at the same level
as it has been arrived at 10.08% in the review for FY 2017-18.
The Commission, accordingly, has considered interest on loans for FY 2018-19 as
detailed in the Table below:
Table 6.12: Interest on loans approved for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
Approved for FY 2018-19
1 Opening loan 977.61 974.56
2 Additions during the year 372.37 342.55
3 Repayment 69.15 68.09
4 Closing Loan (1+2-3) 1280.84 1249.02
5 Average Loan (1+4)/2 1129.22 1111.79
6 Rate of Interest 10.74% 10.08%
7 Interest Charges (5* 6) 121.25 112.07
The Commission accordingly, approves interest on loans at Rs.112.07 crore for FY
2018-19 as detailed in the table above.
6.8 Operation and Maintenance (O&M) Expenses
Petitioner’s submission:
BSPTCL has submitted that the O&M expenses are projected on actual basis as no
norms were determined by the Commission for FY 2018-19.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 76
The Petitioner has further submitted that it has followed the inflation index (based
on CPI and WPI) methodology considered in Tariff order dated 9.3.2017. For
projection of Employee expenses and Administration & General expenses for FY
2018-19, the Petitioner has adopted the Employee expenses and Administration &
General expenses approved for FY 2017-18 in review as base expenses and further
escalated with inflation index at 3.99% (as deliberated in para 5.8 above) for
inflationary increase for FY 2018-19.
Commission’s Analysis:
Regulation 73(3) of BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007 specify;
“Norms for operation and maintenance expenses per ckt km and per bay shall be as
under
(e) The Commission shall, for the purpose of fixing normative rates for operation and
maintenance expenses, study the O&M expenses incurred over the last 4 to 5
years and fix appropriate rates per ckt-km of transmission line and per bay. The
norms so fixed for 2008-09 shall be escalated at 4% per annum.
(f) The total allowable O&M expenses for a transmission licensee shall be calculated
by multiplying the numbers of bays and ckt-km of line length with the applicable
norms for O&M expenses per bay and per ckt-km respectively”.
The Commission in the Tariff Order dated 09.03.2017 had observed that;
“BGCL has filed petition for the first time and the assets are scheduled to be
capitalised during FY 2017-18 and no norms are fixed by the Commission. Hence, the
Commission considers appropriate to follow the methodology adopted for BSPTCL for
determination of O&M expenses may be made applicable for BGCL also as both the
utilities are in transmission business.
The Commission, accordingly, has proposed following inflation index methodology for
for computation of O&M expenses.
INDXn = 0.55*CPIn + 0.45*WPIn
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 77
- CPIn is the consumer price index increase for immediate preceding year over
previous year.
- WPIn is the wholesale price index increase for immediate preceding year over
previous year”.
The Commission has elaborately discussed the issue of inflationary indices to be
adopted for projecting O&M expenses for FY 2017-18 and FY 2018-19 in Paragraph
5.7.1. Accordingly, the Commission has adopted rate of escalation at 3.51% for
Employee expenses and A&G expenses for FY 2018-19.
6.8.1 Employee Costs
Petitioner’s submission:
BGCL has submitted that the employee expenses primarily include costs towards
salaries, dearness allowance, bonus, staff welfare, medical benefits, leave travel and
earned leave encashment and the terminal benefits in the form of pension, gratuity,
etc. BGCL has projected the employee expenses for FY 2018-19 based on the
employee expenses of FY 2017-18 (RE) with escalation of 3.99% for inflationary
increase for FY 2018-19. Further, the Petitioner has considered Rs.1.11 crore towards
Pay revision impact for FY 2018-19.
BGCL has projected the Employee Expenses for FY 2018-19 as given in the Table
below:
Table 6.13: Employee expenses projected for FY 2018-19
(Rs. Crore)
Sl. No
Particulars Projected by BGCL for FY
2018-19
1 Employee cost 7.10
2 Indexation 3.99%
3 Add: Inflationary increase (1*2) 0.28
4 Pay revision impact 1.11
5 Total Employee cost (1+3+4) 8.49
Commission’s Analysis:
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 78
The Commission considered the employee cost for FY 2018-19 based on the
employee cost of Rs.7.10 crore considered by the Commission for FY 2017-18 (RE)
and further escalated @ 3.51% for inflationary increase.
The Commission has not considered pay revision impact as projected by the
Petitioner for FY 2018-19 as the same has already been factored in during review of
FY 2017-18. The Commission has, accordingly, considered the employee cost for FY
2018-19 as detailed in the Table:
Table 6.14: Employee Cost approved for FY 2018-19 (Rs. Crore)
The Commission, accordingly, approves employee cost at Rs.7.35 Crore for FY
2018-19.
6.8.2 Repairs and Maintenance (R&M) Expenses
Petitioner’s submission:
The Petitioner has submitted that at present it is incurring less R&M expenses, as
most of the assets are yet to be capitalised. Once assets are capitalised, BGCL will
have to incur considerable expenses on R&M. The Petitioner requested the
Commission to consider R&M expenses as 2.5% of GFA.
BGCL has projected the R&M expenses for FY 2018-19 as given in the table below:
Table 6.15: Projected R&M expenses for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected
by BGCL for FY 2018-19
1 Base R&M expenses 1260.32
2 % on GFA 2.50%
3 R&M on opening GFA (1*2) 31.51
4 GFA addition during the year 465.46
5 R&M on GFA addition (4*2) 5.82
6 Total R&M expenses (3+5) 37.33
Sl. No.
Particulars Projected
by BGCL for FY 2018-19
Approved for FY 2018-19
1 Employee cost 7.10 7.10
2 Indexation 3.99% 3.51%
3 Add: Inflationary increase (1*2) 0.28 0.25
4 Pay revision impact 1.11 --
5 Total Employee cost (1+3+4) 8.49 7.35
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 79
Commission’s analysis
The Commission has examined the R&M expenses projected by BGCL. The Regulation 73 (3) of the BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007 specify;
Operation & Maintenance Expenses
Norms for operation & maintenance expenses per Ckt-km and per bay shall be as
under:
(a) The Commission shall, for the purpose of fixing normative rates for operation and
maintenance expenses, study the O&M expenses incurred over the last 4 to 5
years and fix appropriate rates per Ckt-km of transmission line and per bay. The
norms so fixed for ...... shall be escalated at 4% per annum.
The Commission has not fixed any norms for O&M expenses for transmission
system. The Petitioner has proposed that R&M expenses may be considered as a
percentage on the opening GFA. Further, the Commission in the draft BERC (Multi
Year Transmission Regulations) 2016 has proposed that R&M expense shall be
calculated as percentage (as per the norm determined) of opening GFA. The
Commission concur with the Petitioner’s submission that some ERCs are considering
R&M expenses on a % basis on the opening GFA.
The Petitioner has considered R&M expenses at 2.50% on opening GFA and also on
the additions to GFA during FY 2018-19. The Commission, in absence of R&M norms,
provisionally considers at 2.50% on the opening GFA in line with draft transmission
regulations for providing R&M expenses for FY 2018-19 subject to true up based on
audited accounts.
The Commission has approved opening GFA at Rs.1260.32 crore for FY 2018-19 in
Table 6.8. The Commission, accordingly, considers the R&M expenses as a % basis on
the Opening GFA for FY 2018-19 as given below:
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 80
Table 6.16: Repairs & Maintenance Expenses approved for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL
for FY 2018-19 Approved for
FY 2018-19
1 Opening GFA 1260.32 1260.32
2 % on GFA 2.50% 2.50%
3 R&M on opening GFA (1*2) 31.51 31.51
4 GFA addition during the year 465.46 --
5 R&M on GFA addition (4*2) 5.82 --
6 Total R&M expenses (3+5) 37.33 31.51
The Commission, accordingly, considered R&M expenses at Rs.31.51 crore for FY
2018-19.
6.8.3 Administration and General (A&G) Expenses
Petitioner’s submission
BGCL has submitted that Administration and General (A&G) expenses mainly
comprise costs towards rent charges, telephone and other communication expenses,
professional charges, conveyance and travelling allowances and other debits. The
A&G expenses for FY 2018-19 are projected based on the actual A&G expenses of FY
2017-18 (RE) escalated by 3.99% for inflationary increase as given in the Table
below:
Table 6.17: Projected Administration & General Expenses for FY 2018-19 (Rs. Crore)
Sl. No. Particulars Projected by BGCL
for FY 2018-19
1 Base A & G Expenses 2.99
2 Inflationary index % 3.99%
3 Add: Inflationary increase 0.12
4 Net A&G expenses 3.11
Commission’s Analysis:
The Commission has examined the A&G expenses projected by BGCL.
The Commission has considered the A&G expenses of Rs.2.99 crore of FY 2017-18
approved in review as base A&G expenses and further projected with escalation at
3.51% for inflation indexation, subject to true up based on actual expenses reported
in the audited accounts.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 81
The Commission, accordingly, has considered the A&G expenses for FY 2018-19 as
detailed in the Table below:
Table 6.18: Administration & General Expenses approved for FY 2018-19 (Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
Approved for FY 2018-19
1 Base A & G Expenses 2.99 2.99
2 Inflationary index % 3.99% 3.51%
3 Add: Inflationary increase 0.12 0.10
4 A&G expenses 3.11 3.09
The Commission, accordingly, approves Administration and General Expenses at
Rs.3.09 crore for FY 2018-19.
6.8.4 Summary of Operation and Maintenance (O&M) Expenses
Petitioner’s submission:
BGCL has projected the total O&M expenses for FY 2018-19 as given in the table
below:
Table 6.19: Total O&M expenses projected for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL
for FY 2018-19
1 Employee cost 8.49
2 R&M expenses 37.33
3 A&G Expenses 3.11
4 O&M expenses 48.93
Commission’s Analysis:
Based on the analysis, the Commission has considered the O&M expenses for FY
2018-19 as detailed in the table below:
Table 6.20: Total O&M cost approved for FY 2018-19 (Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
Approved for FY
2018-19
1 Employee cost 8.49 7.35
2 R&M expenses 37.33 31.51
3 A&G Expenses 3.11 3.09
4 O&M expenses (1+2+3) 48.93 41.95
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 82
6.9 Return on Equity
Petitioner’s submission:
BGCL has submitted that Debt : Equity ratio of 80:20 is considered in accordance
with the Regulation 71 of BERC (Terms and Conditions for Determination of Tariff)
Regulations, 2007. The return on equity has been computed at 15.5% in accordance
with the BERC (Terms and Conditions for Determination of Tariff) (2nd Amendment)
Regulations, 2014 dated 26.03.2014.
BGCL has projected return on equity for FY 2018-19 as given in the Table below:
Table 6.21: Projected Return on Equity for FY 2018-19 (Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19 1 Opening Equity 252.06
2 Addition during the year 93.09
3 Closing Equity (1+2) 345.15
4 Average Equity (1+3)/2 298.61
5 Rate of Return on Equity 15.50%
6 Return on Equity 46.28
Commission’s analysis
The Regulation 73 (2) (c) of the BERC Terms and Conditions for Determination of
Tariff Regulations, 2007 specify;
(i) Return on Equity shall be computed on the equity base determined in
accordance with Regulation 71 and shall be @ 14% per annum.
(ii) Equity invested in foreign currency shall be allowed a return upto a prescribed
limit in the same currency and the payment on this account shall be made in
Indian Rupee based on the exchange rate prevailing on the due date of billing.
Explanation:
The premium raised by the transmission licensee while issuing share capital
and investment of internal resources created out of free reserve of the
existing transmission licensee, if any, for funding the project, shall also be
reckoned as paid up capital for the purpose of computing return on equity
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 83
provided such premium amount and internal resources are actually utilised
for meeting the capital expenditure of the project and forms part of the
approved financial package. The definition of equity thus would involve all net
worth deployed in the capital of the unit. This shall not include any
revaluation of reserves and subsidies”.
The BERC in Gazette Notification dated 26th March 2014 has issued amendment to
Regulation 73 (2) (i) of BERC (Terms and Conditions for Determination of Tariff) (2nd
Amendment) Regulations, 2014 which specify that “Return on equity shall be
computed on the equity base determined in accordance with Regulation 71 and shall
be @ 15.5% for the projects which are commissioned on and after 01.04.2015”.
The Regulation 71 of BERC Terms and Conditions for Determination of Tariff
Regulations, 2007 specify;
“(1) in case of all projects, the debt - equity ratio as on the date of commercial
operation shall be 70:30 for determination of Tariff, provided that the
Commission may in deserving case consider equity higher than 30% for
purpose of determination of tariff, where the transmission licensee is able to
establish to the satisfaction of the Commission that the deployment of equity
more than 30% was in the interest of general public.
Provided that;
(i) in case a project, if the actual equity employed is less than 30%. The actual
debt and equity employed shall be taken for determination of tariff.
(ii) in case of existing projects the actual debt : equity ratio shall be used for tariff
determination. However, any expansion shall be governed by clause (1) above.”
(2) the debt and equity amount arrived at in accordance with clause (1) shall be
used for calculation of interest on loan, Return on Equity, Advance Against
Depreciation and Foreign Exchange Rate Variation”.
A conjoint reading of the above Regulations explicitly specify that Return on Equity
shall be considered @30% of the project cost. Further, the regulations also specify
that if actual equity employed is less than 30%, the actual equity employed shall be
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 84
taken for determination of tariff. The Petitioner has considered equity @20% of the
project cost. The Commission has considered debt equity as given hereunder:
Table 6.22: Debt-Equity Approved for FY 2018-19
Sl. No.
Particulars Approved for
FY 2018-19
1 Capitalisation 428.19
Funding of capitalization
2 a. Equity @20% 85.64
3 b. Loans @80% 342.55
The Commission has considered closing equity of Rs.251.23 crore approved in review
of FY 2017-18 as the opening equity for FY 2018-19. The Commission, in terms of
Regulation 71(1)(i) has considered the equity @20% of the project cost and
computed RoE for FY 2018-19 and the rate of return on equity is considered at
15.50% as specified in Regulation 73 (2) (i) of BERC (Terms and Conditions for
Determination of Tariff) (2nd Amendment) Regulations, 2014 Bihar State Gazette
Notification dated 26th March 2014. The Commission has accordingly considered RoE
for FY 2018-19 as detailed in the Table below:
Table 6.23: Approved Return on Equity for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL
for FY 2018-19 Approved for
FY 2018-19
1 Opening Equity 252.06 251.23
2 Addition during the year 93.09 85.64
3 Closing Equity Balance (1+2) 345.15 336.87
4 Average equity (1+3)/2 298.61 294.05
5 Rate of Return on Equity 15.50% 15.50%
6 Return on equity (4*5) 46.28 45.58
The Commission approves the Return on Equity at Rs.45.58 Crore for FY 2018-19 as
detailed in the Table above.
6.10 Interest on working capital
Petitioner’s submission:
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 85
BGCL has submitted that it has arrived at the working capital requirement according
to applicable norms for transmission function provided in the BERC (Terms and
Conditions of Tariff) Regulations, 2007 which are reproduced in the following:
Table 6.24: Norms for working capital requirement
Sl. No. Particulars Norm
1 O&M expenses One month
2 Maintenance spares @1% of historical cost of GFA escalated @6% per annum
3 Receivables Two months of transmission charges
4 Rate of interest on working capital Base Rate of State Bank of India plus 350 basis points
The rate of interest applied on the proposed working capital is @12.45% as per the
SBI Base Rate. BGCL has projected interest on working for FY 2018-19 as detailed in
the Table below:
Table 6.25: Projected Interest on working capital for FY 2018-19
(Rs. Crore)
Sl. No. Particulars Projected by BGCL for FY
2018-19
1 O&M expenses (1 month) 4.08
2 Maintenance spares @1% of opening GFA with 6% escalation
13.36
3 Receivables - 2 months 48.98
4 Total working capital 66.42
5 Rate of interest 12.45%
6 Interest on working capital 8.27
Commission’s Analysis
The Commission has examined the computation of interest on working capital
submitted by the Petitioner.
The Regulation 73(4)(ii) of BERC Tariff Regulations, 2007 specify the rate of interest
on working capital shall be equal to Short term PLR of SBI on 1st April of the year. The
Commission has issued amendment to the Regulation 73(4)(ii) (amendment notified
in the Bihar Gazette dated 27.03.2014) that the rate of interest on working capital
will be computed at 350 basis point over and above the SBI Base Rate.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 86
The SBI Base Rate (MCLR) as on 1st April 2017 is at 9.10%. The rate of interest on
working capital to be considered shall work out to 12.60% [SBI Base Rate of 9.10% +
3.50% (350 basis points)] for FY 2018-19.
The maintenance spares are considered at 1% of the opening GFA of Rs.1260.32
crore with escalation at 6% (i.e.Rs.13.36 crore) as per working capital norm in terms
of regulations.
The Commission has computed the working capital and interest on working capital
as per expenses approved at an interest rate of 12.60% for FY 2018-19 as given in the
Table below:
Table 6.26: Approved Interest on working capital for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL
for FY 2018-19 Approved for
FY 2017-18
1 O&M expenses (1 month) 4.08 3.50
2 Maintenance spares @1% of opening GFA with 6% escalation
13.36 13.36
3 Receivables - 2 months 48.98 45.93
4 Total working capital 66.42 62.79
5 Rate of interest 12.45% 12.60%
6 Interest on working capital 8.27 7.91
The Commission approves the interest on working capital at Rs.7.91 Crore for FY
2018-19 as given in the above Table.
6.11 Non-Tariff Income
Petitioner’s submission:
BGCL has submitted that it has not received any non tariff income and it is difficult to
envisage any non tariff income and the same will be presented at the time of truing
up.
Commission’s analysis:
The Commission has considered submissions of the Petitioner and the non tariff
income shall be considered in truing up for FY 2018-19 based on the audited
accounts.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 87
The Commission, accordingly, considers Non tariff income as ‘Nil’ for FY 2018-19
subject to truing up.
6.12 Annual Fixed charges for FY 2018-19
Petitioner’s submission
BGCL has submitted the annual fixed charges or transmission charges arrived at by
aggregating all the expenses viz. Depreciation, Interest on Loans, Interest on working
capital, O&M expenses, Return on Equity.
The summary of annual fixed cost / ARR projections for FY 2018-19 are given in the
Table below:
Table 6.27: Projected Annual Fixed charges / ARR for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
1 O&M expenses (2+3+4) 48.93
2 Employee cost 8.49
3 R&M expenses 37.33
4 A&G Expenses 3.11
5 Depreciation 69.15
6 Interest on loan capital 121.25
7 Interest on working capital 8.27
8 Return on Equity 46.28
9 Total Fixed cost (1+5+6+7+8) 293.87
BGCL has submitted that the various costs have been estimated in accordance with
the regulatory norms, assumptions and detailed justifications provided in the
petition. The Petitioner has requested the Commission to approve the ARR for FY
2018-19 and resultant transmission charges to be recovered.
Commission’s analysis:
The Commission, based on the detailed analysis, has considered the Aggregate
Revenue Requirement/annual fixed charges for FY 2018-19 as detailed in the Table
below:
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 88
Table 6.28: Annual Fixed charges /ARR approved for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by BGCL for FY
2018-19
Approved for FY 2018-19
1 O&M expenses (a+b+c) 48.93 41.95
a. Employee cost 8.49 7.35
b. R&M expenses 37.33 31.51
c. A&G Expenses 3.11 3.09
2 Depreciation 69.15 68.09
3 Interest on loan capital 121.25 112.07
4 Interest on working capital 8.27 7.91
5 Return on Equity 46.28 45.58
Total Fixed cost (1+2+3+4+5) 293.87 275.59
6.13 Methodology for Recovery of ARR
Petitioner’s submission:
The Petitioner has requested to recover its Annual Revenue Requirement from
BSP(H)CL in 12 equal monthly installments as per the methodology stipulated in
Tariff Order for FY 2017-18 dated 09.03.2017.
Based on the projected Annual Revenue Requirement for FY 2018-19, BGCL has
proposed to raise bills to BSP(H)CL in 12 equal installments (every month) as shown
below:
Table 6.29: ARR Recovery proposed by the Petitioner for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars
Projected by BGCL for FY2018-19
1 Total Annual Revenue Requirement 293.87
2 Monthly Bill to be raised to BSP(H)CL 24.49
Commission’s Analysis:
The Commission concur with the methodology for recovery of transmission charges
proposed by the Petitioner which is in accordance with the Transmission Services
Agreement as the same was agreed by the constituent companies.
The Commission, based on the above analysis, has arrived at the Annual Revenue
Requirement/Annual Transmission charges for FY 2018-19 which shall be
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 89
recovered from the BSP(H)CL in 12 equal monthly installments as shown below:
Table 6.30: ARR Recovery approved for FY 2018-19
(Rs. Crore)
Sl. No.
Particulars Projected by
BGCL for FY2018-19
Approved for FY 2018-19
1 Annual Revenue Requirement for FY 2018-19 293.87 275.59
2 Add: Trued up Gap for FY 2016-17 -- 0.65
3 Total net revenue requirement (1+2) 293.87 276.24
4 Monthly transmission charges bill to be raised on BSP(H)CL 24.49 23.02
The above approved transmission charges are subject to target availability of 98%
(AC system) as specified in Regulation 68 of BERC (Terms and Conditions for
Determination of Tariff) Regulations 2007 and recovery of the above charges below
the level of target availability shall be on pro-rata basis.
BGCL Tariff Order for FY 2018-19
Bihar Electricity Regulatory Commission | P a g e 90
7. Compliance of Directives
7.1 Back Ground
The Commission in its previous tariff Order dated 9th March 2017 has issued some
directives to Bihar Grid Company Limited (BGCL).This chapter deals with the
compliance status of directives and Commission’s observations there on as well as
new directives for compliance and implementation by BGCL.
7.2 Directives issued and status of compliance
The directives issued in the tariff order dated 9th March,2017 and their compliance
by BGCL are dealt below.
7.2.1 Directive 1 : Assets Register The Commission directs BGCL to maintain assets / property register, showing the
details of nature of equipment, value of equipment, details of extent of land,
buildings (office residential etc.) and other civil works and to submit the details
along with the tariff petition to be filed from FY 2018-19 onwards.
Compliance status of the directive:
Assets Register / details up to FY 2016-17 are submitted with the instant Tariff
Petition for FY 2018-19 and enclosed at Annexure–II.
Commission’s view:
The Petitioner has submitted the asset group/classification wise details i.e. Plant &
Machinery in respect of Hajipur GIS. The equipment-wise details i.e. equipments
available at the substation depicting the value i.e. nature of equipment, year of
installation, location of the equipment, cost of equipment, etc. were not furnished.
The property register should contain all the details of the equipment available at
the location i.e. substation, etc. showing the details of nature of equipment, year of
installation, value, rate of depreciation, depreciation (year on year as well as the
accumulated depreciation), residual value, whether the equipment is in working
condition or not, etc. BGCL is directed to submit the asset register with details as
stated above by end of September 2018.
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7.2.2 Directive 2 : Revised Business Plan
Bihar Grid Company Limited is directed to file petition before the Commission for
approval of revised project cost / business plan after the approval of its Board with
full justification for cost increase.
Compliance of the Directive:
The Petitioner is in the process of filing the petition before the Commission for
approval of revised project cost / business plan. Further, the approval of Revised
Cost estimate of Phase –IV Part 1 by Board of Directors of Bihar Grid Company
Limited has been submitted to the Commission vide letter No JV/BGCL/Tariff
/Directive Compliance /1302 Dated 23.05.2017.
Commission’s view:
The reply of BGCL is noted.
7.2.3 Directive 3 : Details of Programmed works
The Commission directs BGCL to submit the details of programmed works during FY
2017-18 and FY 2018-19 and their tentative commissioning dates to the
Commission by the end of April -2017.
Compliance of the Directive:
Details of programmed works during FY 2017-18 and FY 2018-19 with their
tentative dates of commissioning is submitted in the Tariff Formats attached with
the Tariff petition for FY 2018-19.
Commission’s view:
The Commission directs BGCL to submit the actual date of Commissioning of each
element of its transmission systems during FY 2016-17 and FY 2017-18 by end of
June 2018.
The Commission on 28.07.2017 in Case No.5 of 2017 has approved Phase IV Part-II
project amounting to Rs.1688 crore. However, the Petitioner has not included the
cost of works/schemes relating to Phase-IV Part-II projects in the investment plan
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proposed for FY 2017-18 and FY 2018-19 in the petition. The programme of starting
and commissioning of these works may be furnished.
7.2.4 Directive 4: Commissioning of Transmission Network
The Commission directs BGCL that they shall programme in advance, energisation
of their transmission lines or equipment, in consultation with BSPTCL, DISCOMS
and concerned generating stations, so that the same can be put in to use
immediately after energisation without any mismatch. The dates of commissioning
of each element of network / equipment shall be reported to the Commission.
Compliance of the Directive:
The Petitioner has communicated BSPTCL and Discoms the tentative dates of
commissioning of New System time to time so that same can be put into use
immediately after energisation. Tentative dates of Commissioning are also
submitted in the tariff Formats with this Petition.
Commission’s view
The reply of BGCL is noted. The Commission reiterate the directive for FY 2018-19
also.
7.2.5 Directive 5: Energy audit
The Commission directs BGCL to provide appropriate energy meters at all the
interface points so that the transfer of energy into BGCL system and out flow from
BGCL system can be accounted for and the transmission loss in the system can be
properly estimated. Details of such energy audit, on monthly basis, shall be
submitted to the Commission.
Compliance of the Directive:
The Petitioner has provided the energy meters at all the interface points so that the
transfer of energy into BGCL system and outflow from BGCL system can be
accounted for.
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Commission’s view
The Commission directs BGCL to submit the monthly computation of transmission
loss in its system during FY 2017-18 by end of June 2018.
New Directives
Certificate of Assets put to use
1. Benefit of depreciation, interest on loan and Return on capital will accrue to the
Petitioner BGCL only when the assets are capitalised and they are put to use. The
Commission has observed that barring the statement of achievement of CoD, no
specific evidence are added before the Commission to show that the assets which
have achieved CoD are really being used for the consumers benefit. The Petitioner is
directed look into it in future and produce supporting evidence at the time of filing
the Tariff petition.
2. As a corollary to above directives the petitioner BGCL is directed to take appropriate
steps to coordinate its activities with a user entities of its infrastructure (Assets) so
that the assets created are optimally used and burden of unused asset are not
passed on the consumers.
3. It being a new company having not many large number of assets, shall maintain
asset register in a prescribed manner, if not being prepared already, and claimed put
forward in the tariff petition, the supported by it.
Transmission availability certificate
4. The Regulation 68 of the BERC (Terms and Conditions for Determination of Tariff)
Regulations 2007 specifies the target availability for recovery of full transmission
charges for AC system at 98%. The Commission directs the petitioner to furnish
transmission system availability certificate with the bill every month from SLDC to
the Discoms.
O & M Norms to be determined for next MYT control period
5. Regulations 73 (3) of the BERC (Terms and Conditions for Determination of Tariff) Regulations 2007 specifies :
Norms for operation and maintenance expenses per ckt.km and per bay shall be as under:
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(a) The Commission shall, for the purpose of fixing normative rates for operation &
maintenance expenses, study the O&M expenses incurred over the last 4 to 5 years and fix appropriate rates per CKt - km of transmission line and per bay. The norms so fixed for 2008-09 shall be escalated at 4% per annum.
(b) The total allowable O&M expenses for a transmission licensee shall be calculated by multiplying the numbers of bays and CKt – km of line length with the applicable norms for O&M expenses per bay and per CKt-km respectively.
The Commission, directs the BGCL to ensure filing of the tariff petition for next MYT control
period i.e. from FY 2019-20 to FY 2021-22 proposing the norms for O&M expenses in
accordance with regulation 73 (3).
Auxiliary consumption and Colony consumption
6. The transmission licensees are obligated under the Regulation to take separate
electric connection from Distribution licensee for use of electricity within the Grid
substation and the electricity charges of such connection shall be booked under
Administrative & General Expenses and shall be a pass through in the tariff. Such
expenses shall not contain any electricity charges towards colony consumption.
The BGCL is directed to furnish the details of auxiliary consumption and colony
consumption in the format prescribed hereunder:
Name of the GSS
Whether metered connection taken to
measure auxiliary consumption, if so, provide details with service connection
number
Annual consumption
and electricity charges towards auxiliary
consumption
Whether separate metered connection
taken to measure colony consumption, if so, provide details
with service connection number
Annual consumption
and electricity charges towards colony
consumption
1 2 3 4 5
Sd/- Sd/- Sd/- (R.K.Choudhary) (Rajeev Amit) (S.K.Negi)
Member Member Chairman
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Annexure – I
Bihar Electricity Regulatory Commission (BERC)
Vidyut Bhawan-II, J. L. Nehru Marg, Patna 800 021 Time: 11:00 A.M. Dated: 06th February, 2018 Minutes of the meeting of the State Advisory Committee (SAC) constituted under section
87 of the Electricity Act 2003 held on 06.02.2018 in the Conference Room of the
Commission to discuss on the Tariff petition of NBPDCL, SBPDCL, BSPGCL, BSPTCL , SLDC
and BGCL for FY 2018-19.
1. The meeting of the State Advisory Committee (SAC) was held on 06.02.2017 under the
chairmanship of Sri S. K. Negi, IAS (Retd.), Chairman, BERC and SAC. The list of
participants present in the meeting is enclosed with the minutes.
2. The Chairman welcomed all the members and participants of the meeting and explained
that the State Advisory Committee has been constituted under Section 87 of the
Electricity Act 2003. He also stated that the objectives of this committee is to advise the
Commission on measures, questions of policy relating to electricity supply, matters
related to quality, continuity and extent of services provided by the licensees, protection
of consumers interest, overall standard of performance by utilities etc. He said that
ideally this meeting should be convened more frequently, which could not be done. It
shall be the endeavor of the Commission to conduct more meetings in future. Chairman,
BERC shown his concern about the designated members not attending the meeting and
once again urged all the members to attend to such meeting personally. He explained
that although the agenda of this meeting as circulated is related to the tariff petition for
FY 2018-19 submitted by BSPGCL, BSPTCL, SLDC, BGCL, NBPDCL and SBPDCL, the
members are free to put up any policy matters for discussion which comes under the
purview of the State Advisory Committee.
3. The minutes of last State Advisory Committee meeting was approved by the members.
4. It was stated by the Hon’ble Chairman that the NBPDCL and SBPDCL have sought
significant hike in demand /fixed charges for retail sale of electricity during FY 2018-19.
The Chairman also informed the SAC that the Commission have conducted public
hearings at Sherghati, Sasaram & Rajgir, and will conduct Begusarai, Kathihar,
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Madhubani, Supaul, Siwan, Mothihari and Patna. Objections/suggestions on the
petitions shall be considered before finalizing the tariff. It was further stated that the
suggestions of SAC shall also be considered in finalization of the tariff for FY 2018-19.
5. The chairman directed the Petitioners to present their petitions before the SAC.
6. The meeting started as per agenda
1. Confirmation of the Minutes of State Advisory Committee meeting held on
16.02.2017
2. Follow up action on the Minutes of Meeting
3. Comments / Suggestion on the Tariff petition filed by Generation, Transmission and
Distribution of the State
4. Renewable Purchase Obligation (RPO)
5. Tariff Rationalization and Reduction of Cross Subsidy
6. Effect Utilization of Tariff Subsidy on targeted categories of consumers and
introduction of Non-telescopic tariff rates
7. Proposed BERC Regulations for Compensation to victims of Electrical accidents
8. Consumer Awareness & Advocacy
9. Involvement of Self Help Groups (SHGs) for Reduction in T&D Loss and improvement
of collection efficiency
10. Defining a framework (including setting a threshold timing) for developing intrastate
transmission project of competitive basis.
7. Presentation by NBPDCL and SBPDCL:
a. After the presentation, members of Bihar Chamber of Commerce (BCC) and Bihar
Industrial Association (BIA) raised that the DISCOMs have not achieved the target
norms of Distribution loss trajectory approved for FY 2016-17. Similarly they pointed
out that norms related to working capital and return on equity have not been
followed in the true up chapter of the petition as per Regulations of Commission.
DISCOMs however, submitted that distribution loss, Interest on working capital,
return on equity and interest on security deposit are shown as per Regulations and
Norms only
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b. Shri. Rajesh K. Mediratta of IEX has enquired about compliance of DISCOMs in
respect of RPO for FY 2017-18 and FY 2018-19 . DISCOMs said that they are
purchasing RE power to meet RPO Obligations.
c. During the discussions it was suggested that DISCOMs are generating bills and they
get government subsidy irrespective of the receipt of non subsidized portion of the
bill from the consumers. It was observed that it promotes inefficiency in billing&
collection system of the organization. Therefore, it is opined that in the interest of
billing and collection efficiency, the government subsidy should be reimbursed to the
DISCOM only when the consumers pay their respective portion of the bill to DISCOM.
8. Presentation by Bihar State Power Transmission Co. Ltd.
After the presentation BCC representative raised their concern regarding huge
Infrastructure development and though the infrastructure is being developed but
not being utilized by DISCOMs resulting into increase of retail tariff of the consumer.
In the light of steep increase in Capex of transmission company which will result in
increase in retail tariff of the Transco, the Chairman BERC advised that no
idle/redundant capacity beyond the approved norms be created. Director BSPTCL
has explained that the infrastructure associated with transmission is being
developed as per guidelines and norms only.
Director (P) SBPDCL, also explained that network is improving and improvement of
infrastructure is required for future purpose.
(i) Renewable Purchase Obligation
Chairman and Members, BERC mentioned that instead of buying certificates they
should purchase RE power and plan to put solar plants and other RE plants in the
state although CUF in Bihar is less than the other states. Chief Engineer, SBPDCL
explained that they are buying solar power to meet RPO. Further, Member, BERC
Shri. Rajeev Amit suggested that DISCOMs should verify month-wise sales &
corresponding RPO and if they find any shortfall in meeting the RPO they should
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immediately buy the RE Certificates on monthly basis to meet their RPO and to avoid
likely penal action.
(ii) Purchase of Power as per Merit Order
Members of Bihar Chamber of Commerce has raised that the DISCOMs should follow
merit order dispatch principle for purchase of power. Members, BERC mentioned
that as per last tariff order merit order dispatch principle has been mandated for
purchase of power for FY 2017-18 but till FY 2016-17 it was not mandated in the
tariff order, however the Act and Policy envisaged. Director, SBPDCL submitted that
they are following Merit Order Dispatch principle while purchasing power.
(iii) Tariff Schedule
Members of Bihar Chamber of Commerce and Bihar Industry Association has
suggested that the Fixed charges should be removed and only Energy charges should
be charged. Members, BERC mentioned that two part tariff is applicable all over
India.
The members also raised their concern over differential tariff rates for rural and
urban domestic consumers in the scenario of 24x7hrs electricity supply in rural and
urban areas.
Director, SBPDCL requested to continue the differential tariff for urban and rural.
Member of BCC suggested that HT Tariff should be single part tariff.
(iv) Threshold Limit for Tariff based Competitive Bidding (TBC)
BSPTCL opined that TBC route for transmission loss is not pragmatic. It assured that
they would furnish detailed reason for it.
(v) Consumer Awareness and Advocacy
Shri. Rajesh K. Mediratta suggested launching publicity campaign for consumers.
Member of BCC and BIA also supported it and added that time limit of complaint
redressal should be reduced. Member, BERC Shri. R. K. Choudhary mentioned about
that the feedback received from the consumers with respect to installation of meter,
non- billing, overbillings, transformer overloading, fragile network, theft, safety
concern etc. Such types of complaints have increased many times in view of large
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number of connections given in recent past therefore registration and addressal of
such large number of complaints through manual system, toll free number (1912), e-
complaint registration through Discom's website are proving to be inadequate. It is
giving rise to unrest among consumers. In order to address this issue, it was
suggested that an additional and separate dedicated E-enabled centralized
consumer grievances redressal and monitoring system with features of uploading
the relevant supporting documents needs to be created. It will facilitate the timely
resolution of the complaints by Discoms. Also keeping in view the consumer profile
in Bihar, it would be worthwhile to introduce consumer advocacy initiative
highlighting all the options for complaint redressal system as stated above.
Member Sri Rajeev Amit pointed out that during hearings at District levels, it was
complained by consumers that in case of default of payment, their service lines are
not physically disconnected but it is shown disconnected in the ledger and FIR being
lodged giving reason of theft of electricity. He suggested to intimate the consumers
through SMS as and when their service line is reported disconnection to handle such
situation. In case of any false reporting of disconnection, the concerned consumer
will automatically lodge a complaint. The Committee also dwelt on other issues like
further reduction of consumer categories/slabs, targeted subsidy to eligible and
deserving categories, feasibility of transfer of subsidy through DBT route promoting
Open Access in the State, proper and accurate energy forecasting and planning
measures to reduce T&D losses through community involvement like SHGs etc.
Due to paucity of time, discussion on proposed BERC Regulations for Compensation
to Victims of Electrical Accidents could not be held and the same was postponed for
next meeting.
Finally, the Chairman thanked all the Members and officials present in the meeting
for attending the meeting and giving valuable suggestions. It was further stated that
the Commission would consider these suggestions while passing the tariff orders of
the Generation, Transmission, SLDC and Distribution companies.
********
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List of participants of the meeting of the STATE ADVISORY COMMITTEE (SAC) held on 06/02/2018 at 11.00 AM.
Sl. No.
Name Designation Organisation
Member of the Committee 1. Shri S.K. Negi Chairman BERC
2. Shri Rajeev Amit Member BERC
3. Shri R.K. Choudhary Member BERC
4. Shri Rajesh Kr. Mediratta Member Indian Energy Exc. Delhi
5. Shri Sanjay Bhartiya Member B.C.C.I.
6. Shri K.P.S Keshri Member BIA
7. Shri Sanjay Kanodia Member BIAESC
8. Shri Abhinav Jindal Member KBUNL
9. Shri Surendra Kumar Member EC Rly, Hajipur
10. Shri Umesh Kr. Singh Member Industry Dept.
11. Miss Kusum Member BREDA
Officer of the Utilities 12. Shri S.K.P. Singh Director (Project) NBPDCL
13. Shri BhaskarSharma Director (Project) BSPTCL
14. Shri Arvind Kumar G.M. (Fin.) BSPGCL
15. Shri Vijay Kumar G.M. (Rev.) NBPDCL
16. Shri PradipMajhi G.M. (P&A) SBPDCL
17. Shri PramodTiwari G.M. BSPTCL
18. Shri H. R. Pandey Chief Engineer (S.O) BSPTCL/ BSPHCL
19. Shri Narendra Kumar Chief Engineer (Com.) SBPDCL
20. Shri S. K. Srivastava Chief Engineer (Com.) NBPDCL
21. Shri C.C. Prasad Addl. G.M. BGCL
22. Shri Ravi Prakash AO, BSPTCL BSPTCL
23. Shri Anup Kumar Sr. Manager SBPDCL
24. Shri Ritesh Kumar EEE/Comm. NBPDCL
25. Shri Purushottam Pd. EEE/Comm. SBPDCL
26. Miss Sudhanshu AEE BSPTCL/ BSPHCL
27. Shri Binod Kumar AEE/Comm. SBPDCL
28. Shri Mukesh Kumar AEE/Tel+Interstate cell
BSPTCL
29. Shri Anurag Hingle Consultant SBPDCL
30. Oisik Mishra RM (ER) Indian Energy Exc. Ltd.
Officer of the BERC 31. Shri Parmanand Singh Secretary BERC
32. Shri Nadeem Ahmad Dy. Dir.(Dist. Tariff) BERC
33. Shri Avinash Kr. Dy. Dir.(Gen.) BERC
34. Shri Pawan Kr. Dy. Dir.(Com.) BERC
35. Shri G. Abhinav Reddy Consultant, ASCI BERC
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Annexure – II
List of participants who attended the public hearing at Patna on 22.02.2018
Case No. 33 of 2017
Appearance on behalf BGCL
1. Shri. Rajesh Srivastava Director (Projects), BGCL
2. Shri. Rakesh Prasad GM (Comml), PGCIL, Haryana
3. Shri Rakesh ESE/Trg+IS, BSPHCL & BSPTCL
4. Shri Chandrachoor Pd. AGM (O&M/Comm), BGCL
5. Shri. Bholi Jha DGM (F&A), BGCL
6. Shri. Chandra Mukhopadhyay Manager, BGCL
7. Shri. M.K.Agarwal DGM, PGCIL, Patna
8. Shri. Raman Kumar Manager, PGCIL, Patna
9. Shri. Anand Suman AEE/Inter State, BSPHCL
10. Shri Deepak Kumar AEE (Comm), SBPDCL
11. Shri. Sanjeev Kr. Singh Sr. Manager, ABPS Infra, Mumbai
Appearance on behalf of Stakeholders
1. Shri Sanjay Bhartiya Vice President, Bihar Industries Association, Patna
2. Shri Nand Sharama General Public, Purandarpur, Mithapur, Patna
3. Shri Narendra Kumar Chief Engineer (Com) on behalf of SBPDCL & NBPDCL
4. Shri Dev Mani Singh Domestic Consumer Representative, Mohanpur, Punaichak, Patna
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Annexure-A Table 1: Scheme-wise details of Transmission Lines (Rs. Crore)
Sl.no. Scheme
Name of
funding Agency
Source of funding Capital Expenditure Capitalisation
Project Cost
Loan Equity Total Exp.upto FY 2016-
17
FY 2017-
18
FY 2018-
19
Capitalisation upto FY 2016-17
FY 2017-
18
FY 2018-
19
1 132 kV D/C Chapra(New)- Chapra (Old) with ACZR Zebra Conductor REC 16 13 3 16 16
2 220 KV D/C Hazipur-Chapra (new) transmission line with ACSR Zebra conductor
REC 40 32 8 40 40
3 132 kV D/C Chapra(New)- Chapra (new)-Siwan Transmission Line with ACSR Panther
REC 27 21 5 27 27
4 220kv LILO Biharsharif-Bodhgaya 220 kV D/C Line at Gaya(New) REC 11 9 2 11 11
5 LILO OF 132 Kv Bodhgaya-Chandauti At GAYA NEW REC 0 0 0 0 0
6 LILO OF 132 Kv Bodhgaya-Wazirganj S/C Line at Gaya REC 13 10 3 13 13
7 132Kv S?C Gaya-Hulasganj Line (on D?C Tower) REC 4 3 1 4 14
8 220 KV D/C Patna-Khagaul transmission line with HTLS Zebra conductor REC 33 26 7 33 16 33
9 LILO of one circuit of 132 Kv D/C Khagaul-Digha at Bihta with ACSR Panther Conducter
REC 11 9 2 11 11
10 220 kV Gaya (PG)-Gaya (Khizirsarai) Line REC 61 49 12 61 61
11 220 Kv D/C (High Capacity) Sekhpura-Nawada(New) REC 54 43 11 54 54
12 220 Kv Nawada-gaya Line with High Capacity Conductor REC 58 46 12 58 58
13 132 kV D/C Nawada (new)-Nawada (old) with ZEBRA Conductor REC 8 7 2 8 8
14 132 kV S/C (on D/C Towers) Sekhpura New-Biharsharif REC 20 16 4 20 20
15 132 kV D/C Sheikhpura (new)-Sheikpura (old) with Zebra Conductor REC 13 11 3 13 13
16 LILO of 220 kV D/C Begusarai-Biharsharif transmission line at Hatidah (new) with ACSR Zebra Conductor
REC 12 12 7 5 0 12
17 132 kV D/C Hatidah (new)-Hatidah (old) Transmission with ACSR Zebra Conductor
REC 55 55 33 22 0 55
18 220 kV D/C (High Capacity) Jamalpur New-Sekhpura New REC 124 124 29 124
19 LILO of 220 kV D/C Sultangunj-Lakhisarai line at Jamalpur (New) with AAAC PANTHER Conductor
REC 25 25 25
20 132 KV D/C Jamalpur (New)-Jamalpur (Old) with ACSR ZEBRA REC 21 21 21
21 132 KV D/C Sabour (new)-Sabour(old) Transmission line with ACSR Zebra conductor
REC 7 7 7
22 LILO of 132 kV D/C Kahalgaon-Sulthanganj at Sabour (New) with AAAC REC 10 10 10
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Sl.no. Scheme
Name of
funding Agency
Source of funding Capital Expenditure Capitalisation
Project Cost
Loan Equity Total Exp.upto FY 2016-
17
FY 2017-
18
FY 2018-
19
Capitalisation upto FY 2016-17
FY 2017-
18
FY 2018-
19
Panther Conductor
23 220 kV (High capacity) Sabour (new)-Jamalpur (new) transmission line with HTLS Zebra Conductor
REC 64 64 64
Total 687 550 137 687 574 86 27 0 539 149
Table 2: Scheme wise details of Substations (Rs. Crore)
Sl.no. Scheme
Name of
funding Agency
Source of funding Capital Expenditure Capitalisation
Project Cost
Loan Equity Consumer
Contribution Grant Total
Exp.upto FY 2016-
17
FY 2017-18
FY 2018-19
Capitalisation upto FY 2016-17
FY 2017-
18
FY 2018-
19
1 CHAPRA GIS REC 86 69 17 86 0 86
2 GAYA GIS REC 121 97 24 121 1 112 8
3 SABOUR GIS REC 83 66 17 83 41 1 82
4 JAMALPUR GIS REC 91 72 18 91 1 75 14
5 SEKHPURA GIS REC 84 67 17 84 1 70 13
6 NAWADA GIS REC 91 73 18 91 1 75 15
7 HATIDAH GIS REC 88 71 18 88 50 38 1 87
EXTENSION OF BSPTCL(OLD) SUBSTATION
0 0
1 132/33 kV SIWAN REC 3 3 1 3 3
2 132/33 kV CHAPRA REC 9 8 2 9 9
3 220/132 kV HAZIPUR REC 42 34 8 42 42 42
4 400/200 kV GAYA REC 8 6 2 8 8
5 132/33 Kv HULASGANJ REC 2 1 0 2 2
6 400/200 Kv PATNA REC 7 6 1 7 7
7 200/132 Kv khagaul (GIS) REC 19 15 4 19 19
8 132/33 Kv SABOUR REC 4 3 1 4 4
9 132/33 Kv JAMALPUR REC 4 3 1 4 4
10 132/33 Kv B.SARIF REC 2 2 0 2 2
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Sl.no. Scheme
Name of
funding Agency
Source of funding Capital Expenditure Capitalisation
Project Cost
Loan Equity Consumer
Contribution Grant Total
Exp.upto FY 2016-
17
FY 2017-18
FY 2018-19
Capitalisation upto FY 2016-17
FY 2017-
18
FY 2018-
19
11 132/33 Kv SEIKHPURA REC 3 2 1 3 3
12 132/33 Kv NAWADA REC 3 3 1 3 3
13 132/33 Kv HATIDAH REC 4 3 1 4 4
14 220/132/33 Kv BIHTA REC 4 3 1 4 4
Total 760 608 152 0 0 760 631 91 38 49 478 233
Table 3: Summary of Transmission Lines and Sub-Stations (Rs. Crore)
Sl. no.
Scheme
Name of
funding Agency
Source of funding Capital Expenditure Capitalisation
Project Cost Loan Equity
Exp. upto FY 2016-17
FY 2017-18
FY 2018-19
Capitalisation upto FY 2016-17
FY 2017-18
FY 2018-19
1 Transmission Line REC 687.10 549.68 137.42 574.17 86.00 26.94 0.00 538.53 148.57
2 Sub-stations REC 759.60 607.68 151.92 630.65 90.69 38.25 48.74 477.56 233.30
3
Contingency @ 3% of Project cost REC 43.40 0.22 0.22
Total 1,490.10 1,157.36 289.34 1,205.05 176.69 65.19 48.97 1,016.09 381.87
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