derc

DELHI ELECTRICITY REGULATORY COMMISSION 1

ANNUAL REPORT : 2007-08

The year 2007-08 has been a momentous year forDERC in as much as some of the landmarkregulations which mark a new era in power sectorregulation in Delhi, i.e. Delhi Electricity Supply Codeand Performance Standards Regulations, 2007; theMulti Year Tariff (MYT) Regulations, 2007 forgeneration, transmission and distribution utilities;and the Open Access Regulations, 2007 being themore significant ones, were issued during the year.The Commission also issued its first tariff order underthe MYT regime for the Control period 2007-11.

Infraline, a well known magazine covering issuesrelating to infrastructure sector, instituted awards forexcellence. Various organizations working in thesector sent feedback as regards their role andachievements. Such organizations includedElectricity Regulatory Commissions among others.A jury was constituted by the organizers, for selectingthe best performer, headed by Sh. B.K. Chaturvedi,Member Planning Commission. DERC wasselected by the jury and conferred the “Power MarketEnabler Award for Excellence in Development ofPower Sector”. The award function was organizedon the 12th October, 2007, at Hotel Inter Continental,New Delhi. The award included a trophy and acertificate. The role of DERC in actively promotinginterest of Delhi Electricity Consumers, involvingthem in the Commission’s activities continually andfor a host of pioneering regulatory reforms carriedout by the Commission, such as move towards MultiYear Tariff etc. came in for special mention. The juryalso noted the efforts of DERC in formulating rulesfor bringing grid discipline, guidelines and standardsto be followed by stakeholders in the State

I. INTRODUCTION

Transmission System (STS) to develop, maintainand operate the system efficiently. The DERC’s rolein scrutinizing the investment claims made bycompanies was appreciated while noting, inparticular, the efforts of DERC in reducing costs byclosely scrutinizing the expenditure proposals madeby Discoms, making scheme by scheme scrutiny ofinvestment proposals, including undertaking sitevisits for actual verification of investments made.

The year also assumes special significance as itwas the first year after the policy directions, issuedby Government of National Capital Territory of Delhi(GNCTD) post privatization, came to an end. Theyear also saw the Discoms performing well in thematter of reduction of Aggregate Technical &Commercial (AT&C) losses. In fact, BSES-YamunaPower Limited (BYPL) which had the highest losslevels at the time of privatization, did exceedinglywell to reduce its loss levels to under 30% byachieving about 10% loss reduction during 2007-08. This, incidentally, happens to be one of thehighest loss reductions achieved in one year by aDiscom in Delhi.

Through the first MYT order, the Commission askedthe Discoms to achieve 1% of their total powerpurchase from renewable sources for promoting useof clean fuel and mitigating pollution. In pursuanceof the National Electricity Policy which envisagessetting up of Solid Waste Based Energy Projects inurban areas to recover energy from domestic/industrial waste, the Commission accorded approvalto the tariff fixation in respect of an integrated wastemanagement complex plant to be set up at Okhla,Delhi. The plant with 16 MW generation capacity

2 DELHI ELECTRICITY REGULATORY COMMISSION


will have a combined capacity of processing about2000 tonnes of Municipal Solid Waste (MSW) perday to prepare Refuse Derived Fuel (RDF) while thebio-methanation plant is expected to process about200 tonnes of green waste per day. The plant is awelcome proposition to Delhi as it helps promote acleaner Delhi by converting refuse to valuable powerat a competitive levelised tariff of Rs.2.83/kWh.

In discharge of its statutory obligation underElectricity Act, 2003 the Commission constituted theState Advisory Committee (SAC) which representsthe interests of commerce, industry, transport,agriculture, labour, consumers, non governmentalorganizations, academic and research bodies inelectricity sector. The objects set out in the ElectricityAct, 2003 for the committee are to advise theCommission on major questions of policy; mattersrelating to quality and continuity of electricity supplyand extent of service provided by the licensees;compliance by licensees with the conditions andrequirements of their license; protection of consumerinterest; and electricity supply and overall standardsof performance of utilities.

For providing adequate representation to theconsumers before various fora like DERC, theAppellate Tribunal for Electricity (ATE) and other

courts of the land, the GNCTD, at the instance ofDERC, set up the Electricity Consumers AdvocacyCommittee (ECAC). The Committee is headed bya retired High Court Judge.

The Commission has also been laying strongemphasis on strengthening the in-house grievancesredressal mechanism within the Discoms. TheCommission has been monitoring the performanceof the call centers set up by the Discoms byascertaining the quality of service being afforded toconsumers.

The year also saw the Consumer GrievancesRedressal Forums (CGRFs) and the institution ofthe Electricity Ombudsman successfully completetheir first term of three years after these were set-upin August, 2004. Over 80% of the cases decided byCGRFs and more than 60% of the appeals disposedoff by the Electricity Ombudsman, during the first 3years term of these statutory institutions, have gonein favour of the complainants i.e. the consumers.

During the year, third party meter testing mechanismwas also put in place with the Commissionauthorizing the Electronic Regional Test Laboratory(North) for carrying out third party testing of metersin their laboratory situated at Okhla in Delhi.



2. CONSUMER WELFARE

Good practices adopted and followedby DERC on Consumer Welfare matters

2.1. Delhi Electricity Supply Code &Performance Standards,Regulations, 2007

These Regulations were issued superceding the“DERC (Performance Standard - Metering andBilling) Regulations, 2002” for ensuring thatconsumers get high quality services from utilities overa range of parameters and for bringing in operationalefficiency, the regulations provide for standards ofperformance specifying therein the type of supplyfailure and the maximum time limit within which thesupply shall be restored by utilities. Nature of supplyfailures listed in the regulations are quitecomprehensive such as fuse blown out or MCBtripped; service line broken or snapped from the pole;fault in distribution line/system; distributiontransformer failed/burnt; High Tension mains failed;problem in grid (33kV or 66kV) sub station; failureof power transformer; burnt meter; and street lightfailures etc.

These standards envisage to bring about greateroperational efficiency in Discom functioning.Efficiencies shall also be secured through some ofthe other provisions of the regulations also, whichprescribe:

(i) Standards in terms of quality of supply suchas tolerance limits for low and high voltage.

(ii) Time limit for rectifying voltage relatedproblems, the time limit for testing accuracyof meter against application made for the

purpose by consumer and time limit forreplacement of defective / stuck meter andburnt meter;

(iii) Overall Standards of Performance (SoP),such as, fuse blown off complaints are to berectified within the time limit prescribed in theregulations in not less than 99% of the cases.Similarly, the line breakdown, distributiontransformer failure and scheduled outagesneed to be rectified within the prescribedtime limit in not less than 95% of the cases.

(iv) Reliability indices such as System AverageInterruption Frequency Index (SAIFI), SystemAverage Interruption Duration Index (SAIDI)and Momentary Average InterruptionFrequency Index (MAIFI). The utilities arerequired to indicate their quality of servicetargets along these indices. NDPL while filingtheir MYT ARR petition for the control period2007-11 indicated their targets whereas, theBSES Discoms have not so far furnished thesame.

(v) Amounts of compensation payable to theaggrieved consumers on account of utilityfailing to adhere to the prescribed SoP.

In order to remove any ambiguity and arbitrarinessin functioning of Discoms and to bring aboutuniformity of approach and also to increaseoperational efficiency on various aspects ofconsumer – utility interaction, the regulations includestandard formats for inspection report and metertesting report as also for each of the following typesof applications made by consumers to the utility:

� for a new connection;



� for temporary connection;

� for change of registered consumer;

� for transfer of ownership to legal heir;

� for load enhancement or reduction;

� for change of category;

� for advance payment;

� for disconnection etc.

Such standard forms and practices add to theefficiency of the overall system while bringing abouttransparency and uniformity to utility functioning andadd to consumer welfare.

2.2. Consumer Satisfaction SurveyIn 2007, DERC got a Consumer Satisfaction Surveyconducted across the distribution areas served bythe three private distribution companies, viz. BSESRajdhani Power Ltd. (BRPL), BSES Yamuna PowerLtd.(BYPL) and North Delhi Power Ltd. (NDPL). TheSurvey was carried out to get a first handassessment of the level of satisfaction amongconsumers vis-à-vis the services provided by theDiscoms. In the process, 10391 domesticconsumers were surveyed across all the threeDiscoms. The consumers were divided into threeload categories: 0-2 kW; 2-5 kW; and above 10 kW,for the purpose of the survey. The questionnaireapproved by the Commission consisted of 21questions broadly covering the following 4 areas:-

i) The main consumer concerns;

ii) Metering and billing problems faced byconsumers;

iii) Awareness among consumers about theGrievances Redressal Mechanisms andDERC; and

iv) Overall Satisfaction level of consumers.

The Survey reported load shedding as the mainconsumer concern followed by Metering and Billingrelated problems. Over 60% consumers expressedproblems as regards load shedding, 20-30%expressed problems relating to Metering and 15-20% reported billing related problems.

The consumers were not much aware about thegrievances handling mechanism which have beenput in place in form of Discom-wise ConsumerGrievances Redressal Forums (CGRFs) and theAppellate Institution of the Electricity Ombudsman.The awareness about DERC among consumers wasalso not much.

However, the Survey found that the consumerspreferred the services rendered by the Discoms overthose of the erstwhile DESU/DVB.

2.3. Meter Testing DrivesThe Commission has been alive to the publicapprehensions about fast running of electronicmeters. In order to assess for itself whether thepopular perception was indeed based on reality atground level, the Commission undertook variousinitiatives as under:-

i) In the year 2003, DERC tested about 375meters picked-up randomly from variousgodowns of the Discoms. The tests revealedthat more than 91% of the meters recordedconsumption levels within the limitsprescribed in the Indian Electricity Rules.About 2% of the meters were found to be slowand 0.5% were faster than the prescribedlimit. About 5% of the meters, however, werefound to be defective, seemingly due to



design features.

In addition to the above, the Commissionissued guidelines to the Discoms regardingmeter testing. On the basis of theseguidelines a fresh drive was initiated by theDiscoms during July/August, 2004. TheDiscoms tested over 6000 meters of which46, 58 and 303 meters were found fast, slowand defective, respectively.

Subsequently, the Distribution Companiesassociated the Central Power ResearchInstitute (CPRI), Bangalore, an autonomousinstitution under Ministry of Power, Govt. ofIndia, as an independent third party for testingof meters. In this exercise 1314 meters weretested, out of which 1 meter was found fastand 2 were slow.

The Government of NCT of Delhi (GNCTD)also undertook a Meter Testing Drive underthe supervision of Sub-Divisional Magistrateson four successive Saturdays starting from17.9.2005. The exercise was carried outalong with representatives of ResidentWelfare Associations, ConsumerCoordination Council, Faculty Members fromthe Department of Training and TechnicalEducation, GNCTD and Discoms.

ii) The DERC conducted a Meter Testing Drivefrom 1st October, 2005 to 10th of January2006 in association with the Bureau of IndianStandards (BIS) and the CPRI, whererepresentatives from both the organizationswere present when the meters were testedon site. In this Meter Testing Drive, 536meters were tested and only 4 (four) were

found to be fast. Discom-wise test resultsare as follows:

DERC : Meter testing DriveTABLE : 2.1

Though only 4 meters were found to be fastout of the 536 meters tested, 96 meters werefound to have a neutral problem, which actuallyrelates to the loop connection or faulty wiringin the premises of the consumers. Whereversuch cases were noticed, neutral wasseparately provided or the consumers wereadvised to get their wiring checked.

The problems arising due to earth leakageand neutral mixing were taken up seriouslyand education campaign was launched by theDiscoms cautioning consumers about theproblem of neutral wires by inserting publicnotices in newspapers including notifying listsof Discom trained electricians to deal withsuch issues. The meter-readers were alsodirected to inform the consumers whereversuch problems were noticed.

(iii) To assess and ascertain the quality andaccuracy of energy meters purchased byDiscoms for installation at consumerpremises, 14 energy meters each weredrawn from the stores of the 3 Discoms vizBSES Rajdhani Power Ltd. (BRPL), BSESYamuna Power Ltd. (BYPL) and North DelhiPower Ltd. (NDPL) at random to constitute asample of 42 meters which were sent toNABL approved laboratory for testing of



accuracy requirements. Out of the 14 meterspicked from each Discom, 10 were singlephase meters and 4 were 3 phase meters.Subsequently, the results were analysed andall the thirty samples of single phase energymeters were found within the permissiblelimits of accuracy as per the latest IndianStandard applicable to such meters. Twosamples each of BRPL and NDPL, of thethree phase whole current meters, were foundmarginally slower than the permissible limits.None of the meters was found fast. Theresults were intimated to the respectiveDiscoms for necessary action at their end.

Such random and independent testing driveshave helped in instilling confidence amongthe consumers about the accuracy of energymeters being installed at their premises bythe Discoms.

2.4. Discoms monthly meeting withResidents Welfare Associations(RWAs)

On the Ist Saturday of every calendar month,Discoms hold meetings with RWAs, Traders/Industrialists Associations at some of their offices.Nominated DERC representative attends suchmeetings as observer. These meetings areconducted in a structured manner where Minutes aredrawn up and Action Taken Report(ATR) in respectof the previous meetings is considered before takingup the Agenda. A copy of Minutes of such meetingis also endorsed to DERC by the Discom. Thesemeetings are indicative of first hand impressionsabout the quality of service being rendered by theDiscoms to their consumers. The important problem

area that emerged was the issue of street lightswhich appeared to be more in case of a particularDiscom. This issue was separately taken up by theconcerned Grievance Redressal Officer (GRO) ofthe Commission with the concerned Discom and theproblems seem to be sorted out to a large extent.

2.5. Grievance Redressal OfficerHearings

Discom-wise Grievance Redressal officers (GROs)have been appointed by the Commission fromamongst its officers. GROs identify the seriousconsumer complaints and call the Discomrepresentatives and the consumer concerned for apersonal interaction. The matters taken up aresorted out across the table during the hearing. It isobserved that once such a hearing notice is issued,the Discoms get in touch with the aggrievedconsumer and in most cases solve the problem. Thesatisfaction letter issued by the consumer isproduced by the Discom during the hearing. Ofcourse, the consumer avoids the trouble of personalappearance in such cases. The end objective ofbringing relief to the consumer is achieved.

2.6. Call Centre MonitoringCall Centres have added a new dimension toconsumer comfort in so far as registration ofcomplaints is concerned thereby obviating the needfor the consumer to personally visit the Discom officefor lodging his complaint. Two types of Call Centreshave been set-up by the Discoms, the ‘Technical CallCentre’ and the ‘Commercial Call Centre’. The typeof complaints being handled by these Call Centresare as follows:-



Discom Call Centres : Types of complaints handledTABLE : 2.2

During FY 2007-08, the Discom-wise details of the consumers, who availed the benefit of services of theCall Centres, are as follows:-

From the table it is obvious that footfalls at theDiscom offices to the extent of 5,69,239 consumershave been avoided leading to not only an orderlyfunctioning but also adding to the efficiency of theDiscom.

In addition to the above, the GROs have also beenmaking random calls to the respective Call Centrenumbers for assessing the quality of response anordinary consumer would get by calling at thesenumbers.

2.7. Electricity Consumers AdvocacyCommittee (ECAC)

It was observed that of late, substantial litigationaffecting consumer interest has emerged at alllevels, from the Regulatory Commissions upto theSupreme Court. Some of the issues in these

Discom Call Centres : Number of complaints handledTABLE : 2.3

litigations are concerning tariff, depreciation, crosssubsidy, replacement of electronic meters, electricitysupply to unauthorized areas, status of single pointdelivery contractors etc. Whereas other parties tothese disputes like the Discoms are represented bytop legal experts, there is no institutional mechanismensuring effective representation of the consumerinterest. Almost invariably, the consumers are notadequately represented. In the long term, it wouldhave serious repercussions for the consumers andit was felt that this situation needs to be remediedearly.

The Commission had an occasion to have interactionwith the representatives of Regulatory Commissionsfrom the States of Pennsylvania and Ohio, USA.During the interaction, it was learnt that in USA, mostState Governments have set up an office of the



Consumer Advocate (OCA), which is legallyrequired/ authorized to represent the consumersbefore the Regulatory Commission/ Appellate Courtsetc. This institution is stated to be an importantfunctionary in the Governmental set up of a State andis quite effective in protecting the interests ofconsumers.

Considering the success of this institution in USA,the Commission wrote to the GNCTD to considersetting up an institution like the office of theConsumer Advocate which shall be legallyresponsible for representing the consumers inelectricity related litigation including filing appealson behalf of the consumers. The GNCTD acceptedthe suggestion and have appointed the ECAC forrepresenting consumers before DERC, theAppellate Tribunal for Electricity, the Delhi High Courtand the Supreme Court in the matters involvingpublic interest.

2.8. Third Party Meter TestingMaking arrangements for third party meter testingfor testing of energy meters is a statutory obligationcast upon SERCs under the Electricity Act, 2003and the relevant Regulations made thereunder. Adetailed exercise was carried out by theCommission and a number of laboratories, testinghouses, meter manufacturers, distributioncompanies and Regulatory Commissions werecontacted to collect information on meter testinglaboratories available, their testing fee structure,their status as regards NABL Accreditation etc. Asa result, ERTL Okhla, Delhi an NABL accreditedlaboratory under the Govt. of India, was appointedby the Commission as the Independent third partytesting agency to carryout the testing of samples of

energy meters in their own laboratory at Okhla, Delhi.Existence of an independent testing mechanism forenergy meters is expected to mitigate consumergrievances about the accuracy of energy metersinstalled by Discoms.

2.9. Hearings Under Section 142 ofElectricity Act, 2003

For violation of any of the provisions contained inElectricity Act, 2003, the regulations notified byDERC etc., the consumers move a petition beforeDERC for imposition of penalty against theconcerned Discom. The DERC, after following theprocedure prescribed under the law, hears suchcases. The detail of penalty imposed, case-wiseand Discom-wise is given in table 5.2 of chapter-5of this report. The quantum of compensation/ penaltyawarded/imposed in each case is also mentionedtherein.

2.10. Consumer GrievancesRedressal Forums (CGRFs) andOmbudsman

The Discom-wise CGRFs and the AppellateInstitution of the Electricity Ombudsman were set upin August, 2004 in pursuance to the provisions ofElectricity Act, 2003. These institutions have nowbeen in existence for almost 4 years. During theseyears, the details of number of complaints/appealsdealt with by these institutions including the Discom-wise number of complaints / received, disposed andpending alongwith the number of cases decided infavour of Consumer/Discom are given in thefollowing tabulation:-



* Includes 111 applications which could not be admitted due to technical reason like the matter beingpending before other Courts/ Forums etc.

(from 2nd Aug, 2004 to 31st March, 2008)


Discom CGRFs : Details of complaints receivedTABLE : 2.4

Ombudsman : Details of Appeals Disposed ofTABLE : 2.6

* Includes appeals rejected for non-compliance of statutory requirements as prescribed in the DERC Regulations.

Discom CGRFs : Details of complaints disposed ofTABLE : 2.5




2.11. Public Grievances CellOne issue which was repeatedly raised by consumergroups in 2006-07, was the dissatisfaction of someof the consumers with the Grievance Handling of theDiscoms. The aggrieved consumers felt that theymust have some alternative remedy. Some of theconsumers perceive even the Consumer GrievancesRedressal Forum (CGRF), set-up in accordance withthe provision of Section 42(5) of the Electricity Act,2003, to be a part of the utility as the salaries etc. ofthe CGRF Chairman and Members are paid by theDiscoms, notwithstanding the fact that over 80% ofthe cases decided till date, since the inception ofthe CGRFs at Delhi, in August, 2004, have gone theconsumer way. The subsequent amendment to theRule 7 of the Electricity Rules, 2005 has onlystrengthened this perception. The amended Rulestipulates that the appropriate Commission shallnominate one independent member on CGRF, whois familiar with consumer affairs while the othermembers shall be the officers of the licensee.

In 2006-07, the Commission had the occasion tohave detailed interaction with the Chairman/Members/Officers of Regulatory Commissions fromthe States of Pennsylvania and Ohio, USA. Duringthe interaction, it came out that in USA also, theyhad faced this problem and the same was resolvedby the government by setting up a group independentof the Discoms, which is funded by the state andsupervised by the Regulatory Commission. Thegroup receives complaints from consumers andresolves these by taking up the matter with theconcerned utility. The serious ones are put up to theRegulatory Commission for initiating formalproceedings. This group is said to be verysuccessful and has lent substantial credibility to thesystem and has raised the satisfaction level of theconsumers. Most states in USA are said to be havingsuch a system.

Considering the success of this Institution in USA,DERC wrote to Government of NCT of Delhirequesting it to set up a similar Institution at Delhi.It was suggested to the Government that the mandateof this group would be to take up with the Discoms,the unresolved grievances and in cases where theDiscoms are seen to have not acted properly, theissue can be recommended to the CGRF / DERCfor further action depending upon the nature of thefault. This group was meant to provide an alternativeto those not satisfied with the Grievance Handlingof the Discoms. Being independent of the Discoms,it would have greater credibility.The Govt. of NCT of Delhi, set up the PublicGrievances Cell (PGC) in January 2007 headed bya retired judge of Delhi High Court and assisted bya retired Chief Engineer as the other Member. It isin addition to the grievance redressal systems of theDiscoms. By the end of 2007-08, the PGC receivedabout 20,000 consumer grievances, out of whichmore than 90% stood resolved as on 31.03.2008.Where the consumer is not satisfied with theaccuracy of his meter, the PGC also gets suchmeters tested in association with the officers of theCentral Power Research Institute (CPRI), aBangalore based autonomous organization of theGovernment of India, Ministry of Power. Testing ofmeters is carried out on subsidized charges ofRs.50/- for a single phase meter and Rs.100 for a 3phase meter, payable by the consumers. The PGChas got tested 866 meters on site, out of which 34meters were found to be beyond the permissibletolerance limit of ± 2.5%. These meters were quicklyreplaced by the concerned Discom and necessarybilling related corrections carried out. The PGC isaccessible to consumers through web enabledconsumer friendly software for registering theirgrievances. This unique experiment conducted atDelhi is proving beneficial for the consumers as alsofor the sector generally.



Initiatives for Improvement ofInfrastructure and Services

3.1. Power Availability in DelhiThere has been a noticeable improvement in theavailability of power at Delhi in recent years. LoadShedding in Delhi has reduced from 558 million units(MU) or 3.0% of total energy consumption in 2001-02 to 136 MU in 2007-08 which is about 0.6% of thetotal energy consumption.Till 31.03.2007, the function of bulk power supply wasvested with the Delhi Transco Limited (DTL), theState Transmission Utility, which is a wholly ownedutility of the Govt. of NCT of Delhi. Subsequently, thePower Purchase Agreements (PPAs) have beenreassigned to the distribution licensees w.e.f01.04.2007 as per Order dated 31.03.2007 issuedby the Commission. The bulk power procurementthereafter is effected by the Discoms from thegenerating stations located in Delhi, Central SectorStations as per the share allocated by Ministry ofPower, Govt. of India and the bilateral contractsentered into with other utilities. It is a fact thatNorthern Region has been facing an overall powershortage and therefore, occasionally, load sheddinghad to be resorted to for maintaining grid frequencyand ensuring integrated operation, under theinstructions of Northern Regional Load DispatchCentre (NRLDC). Under these conditions ofshortage, the distribution licensees were advised tomake efforts for buying whatever power that couldbe available even at a relatively higher cost so as tominimize load shedding. The improved poweravailability to consumers is evident from the fact thatload shedding has substantially reduced despite

3. DELHI POWER SECTOR :DEVELOPMENT OF INFRASTRUCTURE, SERVICES AND SOME

ASSOCIATED KEY ISSUESsignificant growth in power demand.

3.2. Capital Expenditure and ImprovedInfrastructure

The Distribution Companies have been pursuing anaggressive Capital Expenditure (CAPEX)programme since the infrastructure inherited fromthe erstwhile Delhi Vidyut Board (DVB) was old andtherefore, prone to frequent faults. Expenditure onCAPEX has helped in reducing both, technical andcommercial losses. The following Table gives anidea of the magnitude of year-wise CAPEX incurredsince 1st July, 2002 to 31st March, 2008, by all thethree Distribution Companies (Discoms) and theTransmission Licensee – Delhi Transco Limited(DTL) :

Capital Investment by Discoms and TranscoTABLE : 3.1

There has been significant addition to theinfrastructure such as Power transformers, EHVcables, installation of distribution transformers,installation of 11kV feeders, installation of shuntcapacitors, etc. by the Distribution Companies andcorresponding augmentation of Grid & Grid stationshas been undertaken by DTL.



3.3. Reduction in Aggregate Technical& Commercial (AT&C) Losses

The Distribution Companies in Delhi have been ableto reduce their AT&C Losses through a combinationof several measures such as:

(i) Installation of meters for all consumers;

(ii) Replacement of electro-mechanical meterswith electronic meters;

(iii) Implementation of CAPEX Schemes.Technical losses have come down throughreplacement of Distribution transformers,cables and lines etc. ;

(iv) Having an aggressive anti-theft drive whereinenforcement raids are conducted regularly.Introduction of schemes, such as, Low-Tension - Aerial Bunched Cables (LT-ABC),High Voltage Distribution Schemes (HVDS)have also helped in bringing downcommercial losses; and

(v) Improvements brought about in CollectionEfficiency, which also includes managerialimprovements by way of better billingmethods and collection of past DVB arrearsfrom private and public sector consumers.

Other measures which have helped/will help in furtherreduction of losses are:

(i) Deployment of CISF personnel in DistributionCompanies to help them in conduct ofenforcement raids for detecting and stoppingpower thefts ;

(ii) Setting up of six Special Courts in the NCTof Delhi exclusively for trial of electricityrelated offences.

(iii) Making theft a cognizable offence in theElectricity Act, 2003.

3.4. Improvement in Plant Load Factorof Generating Units in Delhi

3.4.1. The Commission has been taking proactivesteps towards enabling Indraprastha PowerGeneration Company Ltd. (IPGCL) to achievebetter performance, including higher PlantLoad Factor (PLF) and better Station HeatRate. The efforts made to this end and theoutcomes there of is outlined here under.

3.4.2. IPGCL had cited the problem in evacuationof power of GT Power station as thededicated feeders to NDMC area andDMRC drew very little power during night timeand the existing 100 MVA transformers gotloaded to its full capacity. Hence, the entirepower which could be generated at GTstation was not getting evacuated and iteventually resulted in backing down of thegeneration. The Commission directed theDelhi Transco Limited (DTL) to install 160MVA capacity Power Transformers in placeof 100 MVA Transformers to overcome thisproblem and the said works are underexecution.

3.4.3. During the year 2005-06, Rajghat PowerHouse of IPGCL could not recover full FixedCost due to certain technical reasons whichrequired shutdown of generating units atRajghat for attending to major repairs. Toincentivise the expected better performanceof the generating units after these repairs, theCommission relaxed the norms for recoveryof full Fixed Cost for Rajghat Power Houseand the Target Availability for the year 2005-06 and 2006-07 were clubbed together at



60%. In view of the allowance so provided tofacilitate the repair works and additionalexpenditure for rectification works, the PLFof Rajghat Power House has gone upsignificantly from 53.69% in FY 2006-07 to75.71% in FY 2007-08.

3.4.4. In view of the gas shortage affecting thegeneration at Gas Turbine (GT) station ofIPGCL, the Commission held discussionswith all the concerned utilities with regard toproviding facilities for Liquid Fuel firing apartfrom the gas firing, for ensuring availability ofadditional generation in Delhi system to meetthe summer load of 2008. The distributionlicensees expressed their agreement forbearing the additional charges arising onaccount of conversion for operation of two(2)Gas Turbines of GT station on liquid fuel.Accordingly, IPGCL took appropriate actionfor conversion of the two (2) Gas Turbines tofacilitate liquid fuel firing as an alternative togas firing.

3.4.5. The Plant Load Factor (PLF) and generationfrom the generating units in Delhi over theyears is as follows:

(All figures in %)

Generating Units in Delhi :Overall Generation and PLF

TABLE : 3.3

The above cited generation and overall PLF level isdespite the significant adverse impact on thegeneration at the gas based stations of Delhi owingto shortage of gas at different points of time.

3.5. Sale / Banking of Surplus Power3.5.1. The allocation of the existing Power Purchase

Agreements (PPAs) among Discoms as perCommission’s Order dated 31st March,2007 was based on certain principles which,inter-alia, included the conditions for thetransactions of sale/banking of surplus power.Subsequently, the Commission in its Orderdated 12th June,2007 laid down the followingparameters/policies within which the Sale ofsurplus power will take place :

(i) Any transaction for sale shall be resorted toonly if surplus power is available aftermeeting the requirements of all theLicensees of Delhi and no load-sheddingshall be resorted to on account of suchtransactions by any of the Licensees.

(ii) All the three Distribution Licensees in Delhi,namely, BRPL, BYPL and NDPL and the twodeemed Licensees, namely, NDMC andMES, along with the SLDC are associated

PLF : Generating Units in DelhiTABLE : 3.2



in the meetings of the Delhi PowerProcurement Group (DPPG) while workingout the likely surplus that would be availablefor sale. The SLDC is also responsible forthe apportionment of the surplus among theparticipating Distribution Companies,including the deemed Licensees in case theyrequire it for their own use.

(iii) The first option for sale would be bankingarrangement with any other State Utilityfollowed by direct sales to Utilities withappropriate Payment Security Mechanism.Sale to traders should be the next option andthe last resort would be transactions throughthe UI mechanism due to uncertainty in receiptof the receivable amount.

(iv) The pricing formula for transactions amongstthe Licensees in Delhi, including the DeemedLicensees, at the proposed full cost ofBadarpur Thermal Power Station, shall bediscussed and approved separately.

(v) The DPPG is free to nominate the NodalAgency for each transaction for sale and thatparticular Nodal Agency will be responsiblefor tying up adequate Payment SecurityMechanism in order to ensure that the interestof consumers of Delhi is not jeopardized.Alternatively, if the sale quantum is decidedin advance, the transactions could beundertaken directly by the DistributionCompanies / Agencies with the buyer.

3.5.2. The said Order of the Commission is aninterim procedure subject to the Orders of theHon’ble Supreme Court of India, whenreceived, in Appeal (Civil) 68 of 2007 in

matter of PTC India Ltd. versus GajendraHaldea & Others and Appeal (Civil) No. 275of 2007 in matter of West Bengal ElectricityRegulatory Commission (WBERC) versusGajendra Haldea & Others.

3.6. Rates for Inter-Discom Tradingwithin Delhi

3.6.1 In view of the surplus capacity available withsome of the Discoms in certain time slots,the Commission vide Order dated14.08.2007 directed the following procedureand settlement mechanism for Inter-DiscomPower Transfers:

(i) For the purpose of Inter-Discom PowerTransfer, the base allocation done by theCommission shall be the criteria and anydecision on the use of 15% unallocated quotacan be taken only by Govt. of NCT of Delhi.

(ii) A utility, may surrender surplus capacitywithin the base allocation, in advance, toother utilities and in case the demand of otherutilities is more than the surrenderedcapacity, the allocation shall take place inaccordance with the ratio adopted in theCommission’s Order dated 31.03.2007,subject to mutual agreement between theparties. Alternatively, the Discoms and otherlicensees shall requisition their actualrequirement during scheduling on a dailybasis. Large deviations between “Schedule”& “actual” will be treated as “gaming”.

(iii) Other distribution licensees of Delhi shall thenbe offered such un-requisitioned capacity bythe SLDC and the single rate settlementbetween the utilities should be linked to



Badarpur Thermal Power Station, due to thefact that this load centre power station metthe entire allocation for NDMC and MES,which were likely to have surplus capacity.With the current fixed charge for BTPS thenbeing Rs. 0.53 per kWh , the variable chargeRs. 2.11 per kWh as of 30.06.2007 andadding 10 paise per kWh for all otheradjustments such as, towards income tax andany other item which was unforeseen at thatstage, the single settlement rate between theDiscoms for such transactions was fixed atRs. 2.75 per kWh. Any fuel price adjustmentto Rs. 2.11 per kWh beyond 30.06.2007 wasto be added at actuals to the prescribed rateof 2.75 kWh.

(iv) All the Discoms/deemed licensees were toposition their representatives in the SLDC atthe pre-designated time, as decided by theGM, SLDC, on a daily basis so that theschedules are finalized through an interactiveprocess within the SLDC itself.

(v) Any underdrawal by a utility leading tosurrendering its capacity by more than 10 percent of the scheduled energy in each of the15 minutes time block, shall be treated as‘gaming’ and the SLDC shall report suchconduct of the utility to the Commission forfurther action.

(vi) As regards the utilities, which arerequisitioning such un-requisitioned surplus,any under-drawal leading to recovery of UIcharges from the regional grid, shall bereported by the SLDC to DERC for furtheraction in accordance with the provisions ofthe Act.

3.7. Reassignment of Power PurchaseAgreements (PPAs) to DistributionLicensees and Deemed Licensees

3.7.1. In exercise of the powers conferred underSection 60 read with Sections 15 & 16 of theof the Delhi Electricity Reform Act (DERA),2000, the Government of NCT of Delhi(GNCTD) notified the Transfer Scheme on20th November, 2001 (as amended on 26th

June, 2002 and brought into effect from 1st

July, 2002), whereby the various functions ofthe erstwhile Delhi Vidyut Board (DVB) wereunbundled and the business of procurement,transmission and bulk supply of electricitywas assigned to the Transmission Companyi.e. Delhi Transco Limited (DTL) which wasalso designated as the State TransmissionUtility. The said Policy Directions issued bythe Govt. of NCT of Delhi were valid for theperiod July, 2002 to 31st Mar, 2007 and stoodsaved by Section 185 (2) of the subsequentlyenacted the Electricity Act, 2003. Accordingly,the responsibility for arranging power forsupply in the NCT of Delhi was to be vestedwith the Distribution Companies w.e.f.01.04.2007 in accordance with the provisionsof the Electricity Act, 2003 and NationalElectricity Policy. From 01.04.2007, DTLwas, thus, to engage only in the activity ofwheeling of power and operating the StateLoad Dispatch Centre. This necessitated thereassignment of the then existing PPAs to thevarious Distribution Licensees in Delhi.

3.7.2 Under Policy directions of GNCTDcommunicated on 30.03.2007, the



Commission proceeded to issue the Orderon 31st March, 2007, whereby the PPAs werereassigned to the Distribution Licenseesincluding the deemed licensees in the NCTof Delhi w.e.f. 01st April, 2007. In the saidOrder, the NDMC and MES were allocateda capacity of 350 MW and 50 MWrespectively from the Badarpur TPS. Allexisting PPAs (with the exception of BadarpurTPS, NCR Dadri TPS, IPGCL and PPCL bothexisting and future capacities) were to beallocated amongst the three DistributionCompanies, namely, the NDPL, BRPL andBYPL in the proportion of 29.18%, 43.58%and 27.24%, respectively, which was inaccordance with the energy drawn by themfrom the date of unbundling to February,2007.For the NCR Dadri TPS, IPGCL and PPCLonly 85% of the capacities were allocatedamongst the three Discoms on the sameprinciple. In respect of Badarpur TPS, only85% of the capacity left after allocating toNDMC & MES was allocated among thethree Discoms, again on similar lines. 15%of the capacity of NCR Dadri TPS, IPGCLand PPCL and the balance of Badarpur TPSafter allocating to the NDMC & MES wastreated as unallocated share analogous to theCentral sector in respect of Central SectorPower Units. This unallocated share of 15%was kept at the disposal of the Governmentof NCT of Delhi for allocation to theDistribution Company(ies) whoseconsumers are likely to face a relatively highertariff in any year. The cost of power from theseplants is regulated and is lower than the cost

at which power could be procured throughbilateral arrangements and also throughUnscheduled Interchange (UI). TheGovernment may also use this unallocatedshare to meet any contingency or forcemajeure condition that may arise in anyparticular geographical area in the NCT ofDelhi. In case the allocation results in anyexcess capacity in the hands of any of theDistribution Companies/Agency at any time,such excess capacity would be offered toother Distribution Utilities in Delhi at the firstinstance and only if such spare capacitycannot be absorbed within Delhi, it shall beoffered to others.

3.7.3 The NDMC filed a Petition seekingmodification of the Commission’s Orderdated 31.03.2007 allocating 350 MW powerto NDMC from the Badarpur TPS, prayingthat the order be suitably amended and powerto NDMC be reallocated in terms ofdirections of the Government of Indiacontained in letter dated 18.12.2007, in thefollowing manner:

NDMC : Proposed Reallocation of PowerTABLE : 3.4

The Commission felt that the concern of NDMC tosecure reliable power is genuine considering thesensitivity of the area of its supply where manystrategically important buildings and offices arelocated. However, it was also equally important for



by the Commission in its Order dated 31.03.2007in respect of other Discoms and also akin to thepractice adopted by the Central Govt. in this regard.This unallocated share of 15% would be at thedisposal of the Government of NCT of Delhi. It wasclarified that by carving out 15% unallocated sharefrom the allocation of NDMC, the total allocation isnot reduced and as and when the NDMC needsmore power, the same would be available to it butthe only difference would be that NDMC would haveto approach the Govt. of NCT of Delhi for allocationof power out of the unallocated share of 15%.Further, NDMC would also be eligible to getallocation from 299MW of unallocated capacitycarved out in the Commission’s Order dated31.03.2007, if required. The Commission clarifiedthat the Government of NCT of Delhi may also usethe total unallocated share of (299MW + 53MW) tomeet any contingency or force majeure condition thatmay arise in any particular geographical area in theNCT of Delhi. This Order of the Commission forrevised allocation of capacity has come into effectfrom 01st April, 2008. However, there has been nochange in other terms and conditions contained inthe previous Order of the Commission dated31st March, 2007 and the same will continue to applyin the NCT of Delhi hithertofore.

3.8. Procurement of Power on Short/Medium Term

3.8.1. North Delhi Power Limited (NDPL) on it’sbehalf as well as on behalf of the BSESRajdhani Power Limited (BRPL) and BSESYamuna Power Limited (BYPL), made anapplication for procurement of power onshort/medium term basis through competitive

the Commission to ensure that the interests of theconsumers living in other areas of Delhi are notjeopardised because of review of the reassignmentorder and giving supply to NDMC from three differentplants as proposed by it. The Commissionconsidered the facts that tariff from BTPS isrelatively higher than the tariff from Dadri and PragatiPower Stations and the other Discoms will not beable to get extra power ranging from 20 to 30 MWdue to transfer of gas from IPGCL to PPCL for whichthey had given their consent. Also, it is a fact thatPLF in the case of Dadri TPS is 97% as comparedto BTPS where PLF is 87% which will facilitateNDMC to get higher quantum of energy. TheCommission felt that the Review Petition of NDMCcannot be considered or decided in isolation as theCommission was under statutory obligation to watchthe interests of the consumers as well as theelectricity sector as a whole in NCT of Delhi. Whileconsidering the request for review of theReassignment Order, the Commission had to ensurethat such review does not lead to discrimination ordisadvantage and is not detrimental or cause anyprejudice to the millions of other consumers residingin the area of other Discoms. Therefore, it was ofthe considered view that NDMC should not be givenpreferential treatment at the cost of other consumers.

Considering all the factors, the actual consumptionpattern of NDMC and the overall interest of theconsumers as well as the electricity sector as a wholein NCT of Delhi, the Commission allowed the Petitionof NDMC with a rider, and reallocated power asproposed by the utility.

The allocation was made subject to the conditionthat 15% of this allocated power would be treatedas unallocated share, analogous to what was done



bidding process. Section 63 of the ElectricityAct, 2003 envisages that the appropriateCommission shall adopt the tariff if such tariffhas been determined through transparentprocess of bidding, in accordance with theguidelines issued by the Government of India.The Government of India, Ministry of Power,has issued the guidelines contemplatedunder Section 63 of the Act, titled “Guidelinesfor Determination of Tariff by Bidding Processfor Procurement of Power by DistributionLicensees” vide Resolution No. 23/11/2004-R&R Vol. II dated 19.1.2005.

3.8.2. BRPL and BYPL authorised NDPL to act ontheir behalf for short/medium term powerprocurement from various sources in orderto meet the future short/medium term powerrequirement. The NDPL/Joint PowerProcurement Committee constituted by theLicensees of Delhi forwarded the draft biddocuments, Request for Proposal (RFP),Power Purchase Agreement (PPA) and thesame were accorded “in principle” approvalby the Commission on 22.8.2006.Subsequently, NDPL forwarded to theCommission the revised bid documents forProcurement of Power. The Commissionperused the major changes/modificationsproposed in the various sections of therevised document and the considered viewsof the Commission were communicated tothe NDPL/procurer to take a final decisionwith respect to short/medium PowerProcurement vide letter dated 23.3.2007. TheNDPL on behalf of all the three Discoms inNCT of Delhi invited bids for short/medium

power procurement from various sources.

3.8.3. With only one of the seven bidders qualifyingfor consideration, it was suggested by theCommission that NDPL/procurer mayconsider taking up the bid process afresh,giving wider publicity to seek competitiveoffers from utilities all over the country in viewof the fact that this bid is for the medium termand not confining the same to the sevennumbers bidders short listed earlier. Inaccordance with the directions of theCommission, fresh tenders for short/mediumPower Procurement were issued inSeptember, 2007. Two offers were receivedfrom M/s. Jindal Power Limited and M/s.Maithon Power Limited and the bids wereopened in presence of representatives ofbidders, NDPL and BRPL. NDPL informedthe Commission that M/s. Maithon PowerLimited (MPL) is a joint venture between theTata Power Company and the DamodarValley Corporation, (DVC). The Tata PowerCompany holds 76% equity shares in theproject and the remaining 24% equity stakebeing held by the DVC. It was consideredthat the bid from M/s. MPL being from anaffiliate company or companies of theprocurer i.e. NDPL which attracts clause 5.7of the ‘Guidelines’ and requires specificconsent of the appropriate Commission forthe entire bidding process.

3.8.4. On perusal of the application alongwith otherdocuments, the Commission observed thatthe bidding process adopted by the NDPL/procurer from the initial stage till theevaluation of financial bid by the Evaluation



Committee was in accordance with theguidelines issued by the Central Governmentand the modifications proposed by theCommission in the revised bid document.The bid of the M/s. MPL was lowest @Rs.3.48 per KWh at NDPL/BRPL peripheryand appeared to be reasonable in thepresent scenario of the power supply positionin the NCT of Delhi. The Commission wasof the view that the procurement of powerunder medium term power procurement @Rs.3.48 per kWh seems to be in publicinterest duly taking into account thecommissioning schedule of variousgenerating stations for which long term PPAshave been signed by the distribution utilitiesof Delhi. Further, the entire bidding processwas transparent in accordance with theguidelines issued by the Central Governmentand as per Section 63 of the Electricity Act,which provides for determination of tariff bybidding process.

3.8.5. In the interest of the consumers of the NCT ofDelhi, the Commission vide its Order dated28.03.2008 accorded its consent to thebidding process adopted by the NDPL/procurer. NDPL was advised that the letterof intent (LOI) may be issued to M/s. MPLaccording to the terms and conditionsprovided in the bid documents and proceedfurther in the matter of signing of PPA, etc,.The Commission also directed the NDPL/procurer to provide certificate of conformityof the bidding process according to Clause6.2 of the guidelines issued by the CentralGovernment. Further, the procurer has to

make public, the bid documents indicatingall the components of the tariff quoted by allthe bidders after signing of the PPA or thePPA becoming effective whichever is later.The Commission will adopt the tariff in termsof Section 63 of the Act after receiving thesigned PPA alongwith the certificate by theEvaluation Committee.

3.9. Co-ordination Forum3.9.1. The Commission approached the GNCTD on

1 April, 2005 to constitute a CoordinationForum consisting of the Chairperson of theState Commission and the Members thereof,representatives of the generating companies,transmission licensees, and distributionlicensees engaged in generation,transmission and distribution, in accordancewith Section 166(4) of the Electricity Act,2003.

3.9.2. The GNCTD vide Notification No. F.11/36/2005/Power/1789 dated 16 June 2005constituted the Coordination Forum,comprising of Chairperson and Members ofDERC, Chairman & Managing Director ofDTL, Managing Director of IPGCL/PPCL,CEOs of NDPL, BYPL and BRPL withSecretary, DERC as the Member Secretary.Since the Committee constituted did notinclude NDMC and MES, who also distributepower in Delhi, the Commission decided toinvite them for all the meetings. TheCommission has since conducted 16meetings of the forum.

3.9.3. In these meetings, issues relating toarranging power to meet the demand of Delhi



till FY 2010-11 as well as other issues ofcommon interest to ensure overalldevelopment of the power sector in Delhiwere discussed. The Commission has,through the Coordination Forum, facilitatedsigning of long term PPAs for capacity ofover 3660 MW which would provide power

to Delhi with gradual commissioning ofgenerating units commencing henceforthupto FY10. The details in this regard arefurnished below:

Arrangement of Power for Delhi on Long

Term BasisTABLE : 3.5



3.9.4. All the above projects are being developedby various Central Power Sector Utilities(CPSUs)/ State Power Utilities (SPUs) andaccordingly, the tariff would be regulated bythe Central Electricity RegulatoryCommission (CERC) in regard to theCPSUs. Further, Delhi has been allocated200 MW power from Tala HEP. Besidesthese projects, from which power has beentied up, the Coordination Forum alsodiscussed projects like Combined Cycle GasProject in Tripura, setting up of 2000 MWplant by Delhi in Chattisgarh etc. but no finaldecision could be arrived at in view of theprojects being at the conceptual stage.

3.9.5. Further, a share of 750 MW from the 1500MW joint venture project being set up atJhajjar (Haryana) by M/s. Aravali Power Co.with Haryana, Delhi & NTPC as partners, hasbeen agreed to in the Coordination Forummeetings. Apart from this, the CoordinationForum authorised TRANSCO to enter intolong term agreement with DVC forprocurement of 100 MW power fromDecember 2006 to September 2007 andgradually going upto 2500 MW on round theclock basis from DVC for a period of 25 yearsfrom the commissioning of the respectivenew generating units. Apart from this, PPAshave been signed for various upcomingprojects of NHPC as well. Delhi is allocatedabout 500 MW of power from one of the UltraMega projects. The total tie up of additionalpower aggregates to about 7600 MW. Thistie-up of additional capacity together withsystem augmentation/up-gradation would

significantly improve the power availability inDelhi in future.

3.9.6. The Commission has also worked throughthe Coordination Forum to removebottlenecks in the execution of various majorschemes such as setting up of two 220 kVGIS sub-stations at Electric Lane and TraumaCentre/AIIMS in NDMC area and upgradation of Ridge Valley Sub-station to 220KV GIS type. The issue of execution ofdedicated transmission system forevacuation of power to Delhi from theupcoming projects at Dadri (NTPC) andJhajjar (Aravali Power Co.) has beendiscussed in the Coordination Forummeeting held on 23 November, 2007.Considering the criticality of the power fromthese Projects for meeting the power demandof Delhi specifically at the time ofCommonwealth Games scheduled forOctober 2010, the Commission had taken upthe matter with GNCTD as well as CentralGovernment/Ministry of Power for necessaryintervention in the matter. It is understood thatthe issue is now resolved and the associatedtransmission lines for Dadri NCRTPPextension and Jhajjar TPS would be built byNTPC.

3.9.7. The Coordination Forum in its meeting heldon 25 October, 2005 decided that Discomswill jointly move a common proposal forseeking bids for procurement of power onshort-term as well as long term basis. Thedocument for short/medium term powerprocurement was received in theCommission by the end of March 2006, and



was subsequently discussed in variousCoordination Forum meetings. After detaileddeliberations on various issues involved inthe procurement process and approval of theCommission to the bid document, theDiscoms were authorized in August, 2006 toinvite bids. This exercise is in compliancewith the National Electricity Policy and TariffPolicy which mandate the distributioncompanies to procure power throughcompetitive bidding.

3.10. Status of Open AccessIn pursuance of the provisions of the Electricity Act,2003, the Commission notified the Open AccessRegulations on 3rd January, 2006, which inter-aliaalso contain provisions in respect of Intra-state OpenAccess in Transmission, Open Access in distributionSystem in a phased manner and Applicable Chargesviz. Transmission Charges/Wheeling Charges,Surcharge, Additional Surcharge, SchedulingCharges, Unscheduled Interchange Charge,Reactive Energy Charge and any other charges,which the Commission may determine from time totime.

3.10.1. Open Access in Transmission System

Intra-State Open Access is already available in theTransmission System. The Nodal agency forarranging Long term Open Access is StateTransmission Utility (STU) and for the purpose ofShort term Open Access it is the State LoadDispatch Centre (SLDC).

3.10.2.Open Access Charges in DistributionSystem

In accordance with the Open Access Regulations,the Open Access to the Distribution System in theState is available for delivery of electricity for use bythe Consumers with the connected load of three MWand above with effect from 01.10.08. The Nodalagency for arranging Long term and Short term OpenAccess is the SLDC.

3.10.3. Applicable Charges

In accordance with Regulations 6.7 and 6.8 of theDERC (Terms and Conditions for determination ofTransmission Tariff) Regulations, 2007, theCommission has prescribed the AggregateRevenue Requirements (ARR) in respect of theTransmission business in the MYT Order of DelhiTransco Limited (State Transmission Utility), issuedon 20 December 2007.

The Commission has also prescribed the Wheelingand Retail Supply Charges separately in its MYTOrder of the Distribution Companies, issued on 23February 2008.

As regards Surcharge and Additional Surcharge etc.the Commission is in the process of finalizing theissue with the Stakeholders and Utilities.

3.11. Special Voluntary RetirementScheme

Special Voluntary Retirement Scheme (SVRS) wasimplemented by the Discoms during the FY 2003-04 and the SVRS expenses form part of theEmployee expenses. The Commission, in its TariffOrder for FY 2004-05 had opined that theexpenditure on the SVRS, the borrowing cost andthe retirement dues of the employees who have



availed of SVRS shall be met from the savings inthe employee cost over the future years on accountof reduction in the employees.

3.11.1. One Time Initial Outgo

Accordingly, the one time initial outgo of the Discomswas completely amortised by the Commission bythe FY 2007-08 along with carrying cost. In additionto the one time outgo, the Discoms have alsoclaimed for the payment of Pension/Medical /LTA toSVRS retirees.

3.11.2. Highlights of the High Court Order

The matter of aforesaid additional liabilities wasargued before the Hon’ble Delhi High Court whichhas pronounced its judgement on the issues ofpayment of terminal benefits including pension,gratuity, earned leave, etc. to the VSS optees. TheHigh Court observed that the optees do not fall withinthe description of those voluntarily retiring as perconditions of service existing as on 1 July, 2002. Theywere induced to contractually depart fromemployment. The Pension Trust is not geared tobear this sudden and substantial, unilaterally createdburden; the GNCTD, too is not liable in terms of theAct or Rule 6(9), to fund the payment of terminalbenefits of such VRS/SVSS optees. The severancebeing achieved through contract between theDiscoms and the employees, the liability for paymentof terminal benefits, as well as commutation ofpension and monthly residual pension, is that of theDiscoms.

The Hon’ble High Court in its Order dated 2 July,2007 directed as follows:

(i) The Pension Trust and GNCTD are not liableto make payment towards terminal benefits

and residual pension arising to those whoopted VRS/VSS, formulated by the Discoms.The employees of the Discoms who optedfor VRS/VSS and were relieved fromemployment are entitled to payment ofterminal dues (which expression wouldinclude all accrued benefits such as gratuity,provident fund, leave travel concession, leaveencashment, payment towards medicalfacilities, commutation of pension andresidual pension and such other paymentsas they are entitled to in terms of theprotected terms and conditions of serviceunder the Act and Rules) from the date of theirrespective severance from employment.

(ii) It is open to the Discoms to adopt the IPGCLModel of paying pension, gratuity, leaveencashment and other liabilities to theoptees, in terms of the letter of the GNCTDdated 11 November, 2004.

(iii) The Discoms shall indicate to the PensionTrust, in writing within two weeks from the dateof this judgement whether they are willing toaccept IPGCL Model or not.

(iv) In the event of the Discoms not accepting theIPGCL Model, they shall be liable to payadditional contributions to the Pension Trust(second option).

(v) For the purpose of deciding the additionalcontribution to the pension trust on accountof all the terminal benefits and liabilities dueto such optees, the matter shall be referredto the actuarial tribunal. The actuarial tribunalshall complete its proceedings and publishits award within six months from the date of



its constitution.

(vi) The liability to pay residual pension i.e.monthly pension from the date of thisjudgement in the event the Discoms exercisethe second option i.e. of going in for actuarialcalculation; shall be borne by the Discomsconcerned, for the period till the award ispublished by the Tribunal and payment madeto the pension trust on the basis of suchaward, by the concerned Discom.

(vii) The payments made by the DISCOMs to theoptees shall also be subject to suitableadjustment/reckoning for the actuarialexercise adjudication by the Tribunal.

(viii) The liability of the Trust to make payments tothe VRS/VSS optees shall arise after thePetitioner deposit the amounts determinedas additional contributions with the pensiontrust.

(ix) The VRS optees are entitled to interest onterminal benefits, arrears of pension etc @8% p.a. from the date of entitlement topayment. This shall be paid by the Discoms.

3.11.3. Option Exercised by Discoms

In consequence of the Hon’ble High Court order, theDiscoms opted for the second option of actuarialvaluation of the liabilities. The nomination for thearbitral tribunal to be formed pursuant to thedirections of the High Court is under progress.

3.11.4. Monthly Pension/LTA/MedicalPayments to SVRS Optees

The Commission based on its understanding of theissue, believes that the Discoms will be required topay monthly pension till the outcome of the award of

the Tribunal. The Tribunal will be deciding the lumpsum amount which the Petitioner will be required topay for transfering all pension and terminal benefitliabilities to the Pension Trust. This lump sum amountwill be for the additional pension requirement for theperiod before the actual superannuation of the VSSoptees and for shifting terminal benefits of the VSSoptees from the superannuation date to an earlydate. The monthly pension payments being madeto VSS optees shall be appropriately taken upbefore the proceedings of the Tribunal by theDiscoms.

The Commission allowed monthly pensionprovisionally subject to the outcome of the Tribunalaward with the condition that any refund/reliefprovided on this account to the Discoms by the Trustwill be available for adjustment in the futureemployee expenses. The Discoms are payingmonthly pension to the SVRS optees from FY05onwards. The Commission approved the monthlypension payment to SVRS optees in the truing up ofFY07. The Commission had considered carryingcost of 8% per annum for the arrears of pensionpayment in FY05 and FY06 which is equal to carryingcost proposed by the Petitioner for amortization ofSVRS expenses.

The Commission also provisionally approved theSVRS Pension expenses proposed by the Discomsfor the FY 2007-08.

3.11.5. Payments of Terminal Benefits

On the issue of payment of the terminal benefits bythe Discoms, the actual liability of the Petitionertowards the pension trust shall be determined by thetribunal at a future date. The Discoms were uncertainabout the time of constitution of the Tribunal. The



Commission recognised that delay in constitutionof the tribunal is getting translated into moreintervening monthly pension payments by theDiscoms and is increasing the burden on the tariff.The Commission, therefore directed the Discomsto expedite the constitution of the Tribunal; and also,seek clarification on the refund of the interveningmonthly pension payments. The Commission alsodirected the Discoms to inform the Commission ofany interim/final Order on the aforesaid issue.

The Commision will, accordingly allow the paymentto be made on account of terminal benefits by thePetitioner to the pension trust, based on the outcomeof the proceeding of the actuarial tribunal, in thefuture truing up.

3.12. Municipal Solid Waste Projects3.12.1. National Electricity Policy envisages setting

up of municipal solid waste based energyprojects in urban areas with a view to reducingenvironmental pollution apart from generatingadditional energy.

3.12.2. One of the functions of the State ElectricityCommission mentioned in Section 86 (1) (e)of the Electricity Act, 2003 is to promotecogeneration and generation of electricityfrom renewable sources of energy byproviding suitable measures for connectivitywith the grid and sale of electricity to anyperson, and also to specify, for purchase ofelectricity from such sources, a percentageof the total consumption of electricity in theareas of a distribution licensee.

3.12.3. National Tariff Policy 2006 further providesthat pursuant to provisions of Section 86 (1)(e) of the Electricity Act, 2003 the State

Electricity Commission shall fix a minimumpercentage for purchase of energy from suchsources taking into account availability ofsuch resources in the region and its impacton retail tariff.

3.12.4. In pursuance of the above mentionedprovisions and policy guidelines, the DERC,in its first MYT order for the control period2007-11, has asked the Discoms to achieve1% of their total power purchase fromrenewable sources for encouraging use ofclean fuel and mitigating pollution. Initially alow percentage i.e. 1% has been prescribedconsidering that there is not much scope inDelhi for such generation.

3.12.5. Acting on a petition from IL&FS, a proposalfor setting up a Municipal Solid Waste basedpower project at Okhla and Timarpur in Delhiwas processed by the Commission by wayof scrutiny of the bid documents, analysis ofdeviations from the Standard biddingguidelines and various related aspectsraised by other stake holders like MCD,NDMC, DPCL, Delhi Government and thespecial purpose vehicle. After a series ofmeetings, the bid documents were finalizedand approved by the Commission forsubsequent processing by IL&FS. Tariffbased Bidding process has since beencompleted and the project has been awardedto M/s Jindal Urban Infrastructure Limited ata levelised electricity tariff of Rs 2.83 perkWh. This would help mitigate the pollutionproblem apart from handling the disposal ofmunicipal solid waste being generated inDelhi.



3.12.6. Municipal Solid Waste (MSW) based powerproject at Okhla and Timarpur in Delhicomprises of a Power Plant of 16 MWcapacity at Okhla. The facility will have acombined capability of processing about2000 tonnes of MSW per day to prepareRefuse Derived Fuel (RDF) which will betransported from Timarpur to Okhla. The Bio-methanation Plant at Okhla is expected toprocess about 200 tonnes green waste perday. The plant is being constructed by theTimarpur Okhla Waste Management Co. Pvt.Ltd. (TOWMCL).

3.12.7. Non-availability of land for use as landfillsite in Delhi and adjoining areas makes theproject all the more desirable.

3.12.8. The project is expected to offer a unique andintegrated solution for management of solidwaste in the city of Delhi. The implementationof this environment friendly project would helpin reducing pollution, minimize the landfill andhelp generating green electricity in the city ofDelhi.

3.12.9. Another similar MSW project of 8 MWcapacity to be set up at Ghazipur in Delhi isbeing processed by the Commission, whichwould help in the disposal of 1300 MT ofgarbage and MSW being generated ineastern part of Delhi.

3.13. Govt. of NCT of Delhi TargettedSubsidy Scheme

Para 8.3 of the National Tariff Policy (NTP) providesthat the State Governments can provide subsidy toany class of consumers to the extent consideredappropriate, as per the provisions of Section 65 of

the Electricity Act, 2003. It has also been stated thatgiving direct subsidy is a better way to support thepoorer categories of consumers than themechanism of cross-subsidizing through tariff. Ithas also been mentioned in the NTP that subsidiesshould be targeted effectively and in a transparentmanner. Consequent upon the request of Govt. ofNCT of Delhi to frame a subsidy scheme for the lowend domestic consumers of electricity of Delhi, asper broad guidelines given by the govt, a subsidyscheme was drafted by the Commission andapproved by the Delhi Government, forimplementation by the Discoms. The subsidyscheme will be operational for a period of one yearfrom 1st March, 2008 to 28th Feb, 2009.

The salient features of the subsidy scheme are :

(i) Subsidy @ Re One per unit will be availablefor all domestic consumers consuming upto150/200 units of power per month

(ii) Monthly consumption limit for peak months :200 units/calendar month with a variation upto10 units per billing cycle

(iii) Monthly consumption limit for non-peakmonths : 150 units/calendar month with avariation upto 10 units per billing cycle

(iv) Peak months of summer are May, June, Julyand August

(v) Peak months of Winter are December andJanuary

(vi) Non peak months are February , March, April,September, October and November

In addition to helping the poorer sections of thesociety, the new subsidy scheme would encouragethese consumers of Delhi to conserve energy so asto become eligible for the subsidy. This, in turn,



would result in reduction in overall energyrequirement of Delhi.

This new subsidy would be in addition to the othersubsidy announced by GNCTD for domesticconsumers and agricultural consumers to neutralizethe tariff hike beyond the tariff level of 2004-05.

The Discoms are to keep an account of the subsidy

amount claimed from GNCTD and submit theaccounts at the end of each quarter so as todetermine the actual level of subsidy disbursed. Thissubsidy would be released by GNCTD in advancefor each quarter at the beginning of that quarter inaccordance with the provisions of Section 65 of theElectricity Act, 2003.



4.1. Tariff FilingThe Electricity Act, 2003 mandates the State ElectricityRegulatory Commissions, including the Delhi ElectricityRegulatory Commission (DERC), to take measuresconducive to the development and management of theelectricity industry in an efficient, economic andcompetitive manner.

The National Electricity Policy, the National Tariff Policyand the Delhi Electricity Reform Act, 2000 (DERA) alsoguide the Commission in the tariff determinationprocess and issuance of tariff orders.

In order to provide a Multi Year Tariff (MYT) frame work,as required in terms of Section 61(f) of the ElectricityAct, 2003 and para 8.1 of the NTP, which could bringabout regulatory certainty to investors and incentiviseefficiency in performance, the first MYT Regulationswere framed and notified by DERC for determinationof generation, transmission and distribution tariffs, on30th May, 2007. Important issues like AT&C lossreduction targets, cross subsidy reduction, profitsharing rules, tariff control and quality improvement etc.have been addressed in the MYT Regulations. TheRegulations specify the AT&C loss reduction targetsrequired to be achieved by the distribution companiesat the end of the control period. BRPL and NDPL haveto achieve AT&C loss reduction target of 17% andBYPL 22% at the end of the control period i.e. FY 2010-11.

In pursuance to these regulations all the licensees viz.Generating Companies (Gencos), Delhi Transco Ltd.(DTL) and the Distribution companies (Discoms) filedtheir respective Multi Year Tariff Petitions before theCommission for the control period FY 08 to FY 11 as

per the provisions of the Electricity Act and the DERCMYT Regulations, 2007.

After a preliminary analysis of the petitions and thenecessary directions given by the Commission tocomply with the MYT Regulations, all petitions wereadmitted by the Commission. The petitions of thelicensees were hosted on the website of theCommission and that of the respective licensee.Public notices by both, the Commission and thelicensees were issued in National dailies publicizingfiling of the Petitions by licensees and mentioningavailability of copy of the Petition for sale at therespective offices of the licensees. Copies of thepetitions were also made available for inspection atthe office of the Commission to the general public alongwith advisory services by the staff of the Commissionfor the general public to understand the petitions.Objections and suggestions were invited on thepetitions from the public and various stakeholders.

The comments of the stakeholders generally placedemphasis on consumer grievances, quality of supply,loss levels of Discoms, cross subsidy, billing andmetering, transparency in accounts of Discoms, fuelexpenses, capital expenditure etc. to name a few.Subsequently, public hearings were held on thepetitions of the licensees where various stakeholdersappeared in person and submitted their views.

The utilitiywise details of date of filing, date ofadmission, last date for filing objections, number ofStakeholders who gave their comments against thepetition, date of public hearing and the date ofrelease of Tariff Orders are given in the followingtable:

4. TARIFF



MYT Filing : Utility - wise detailsTABLE : 4.1

The Commission also held many validation sessionswith the petitioners to seek additional clarificationson the information submitted by the petitioners. Keyissues such as capital expenditure plans, powerpurchase arrangements, Operations & Maintenance(O&M) expenses which include Employeeexpenses, Administration & General expenses,Repair & Maintenance (R&M) expenses etc., AT&Closs reduction trajectory and other expenditure weredeliberated upon. The steps taken by theCommission for processing the tariff petitions aresummarised as under :

i) Scrutiny of petitions for data / informationdeficiencies, preparation of deficiencymemoranda thereon for the petitioners to

take note and remove the same;

ii) Technical sessions with the petitioners forseeking additional information/ clarifications;

iii) Approving the newspaper advertisements ofthe licensees giving salient features of thetariff petitions, calling for public comments;

iv) Appointment of officers of the Commissionfor helping the general public understand theMYT Petitions of the licensees;

v) Examining the public responses and repliesof the Discoms and ensuring that properreplies are sent by the licensees to allindividual public responses;

vi) Conducting public hearings on the petitions.



In all, there were eight sessions of ½ day eachover a period of 4 days from 8th to 11th Jan,2008 for the three Discoms. In addition tothese, a day of public hearing each was alsoassigned to Gencos, DTL and NDMC on24.09.2007, 03.10.2007 and 05.02.2008,respectively.

vii) Analysis of the ARR petitions and variouscomponents of Annual Revenue Requirementsuch as power purchase, Operations &Maintenance (O&M) expenses which includeemployee expenses, Administration &General (A&G) expenses, Repair &Maintenance (R&M) expenses etc. AT&CLosses, energy sales, energy balance, trueup of past period expenses, variousexpenses etc. using the computer softwarebased model in MS-Excel; and

viii) Designing the Retail Supply Tariff, supplymargin, wheeling tariff etc. The supply marginand wheeling tariff were computed for the firsttime and reflected in the tariff orders ofdistribution licensees.

Subsequently, after prudence checks and verificationof data etc. MYT orders were issued for generationcompanies i.e. IGPCL and PPCL, for transmissionlicensee i.e. DTL and distribution licensees i.eBRPL, BYPL, NDPL and NDMC. The orders wereissued within the stipulated time provided in theElectricity Act i.e. 120 days from the date ofadmission of the tariff / ARR petitions.

4.2. Stakeholders’ Comments

Generating Companies (GENCOs)

4.2.1Indrasprastha Power GenerationCompany Ltd. (IPGCL)

4.2.1.1. Norms of Operation

Stakeholder Objection - The Discoms expressed,that the Petitioner has not met the norms of operationas per the MYT Regulations, even though the threestations were given relaxed norms. The Commissionwas requested to take into consideration only thenorms as per the MYT Regulations to arrive at theTariff for the Petitioner as any relaxation in the normswill lead to inefficiencies being passed on to theconsumers. The Discoms also maintained that thePetitioner should take sufficient steps to improve theperformance of all the stations.

Petitioner’s response - The Petitioner put forth theargument that all stations of IPGCL were in a badstate from the time they were taken over afterunbundling of DVB. However, substantial efforts havebeen made to improve the performance of thesestations, but the plans put forth for renovation andmodernization, were not sanctioned by Govt. of NCTof Delhi (GNCTD) and Ministry of Environment andForests (MoEF). The IP Station did not have anymajor renovation and modernization activity in thepast as it was due for closure by 2010. Hence, onlynecessary Repair & Maintenance (R&M) is beingcarried out. The other stations also faced constanttechnical problems which were being addressed inconsultation with BHEL. Therefore, the Petitionerrequested the Commission for approval of relaxednorms.



PUBLIC HEARING: MYT 2007-11



PUBLIC HEARING: MYT 2007-11



Commission’s View - The Commission, afteranalysis of the submissions concluded that any kindof inefficiencies and poor performance due totechnical problems or fuel supply constraints has tobe mitigated by the Petitioner and could not bepassed on to the consumers, except in force majuereevents. The norms of operation as specified in theMYT Regulations were determined after consideringvintage of the plants, their technical performancesetc. Further, performance improvements areexpected with the proposed capital investmentduring the Control period.

4.2.1.2. Specific Coal Consumption

Stakeholder Objection - BYPL and BRPL submittedthat the specific coal consumption for the ControlPeriod for IP Station and RPH are significantly higherthan the All India average level.

Petitioner’s response - The Petitioner clarified thatthe specific coal consumption was higher since theAll India average level also included data for units of210 MW & 500 MW capacity which cannot becompared to IP Station and RPH.

Commission’s View - The Commission clarified thatnorms as stated in the MYT regulations haveconsidered the vintage and size of plants. Therefore,the specific coal consumption would be consideredbased on the approved SHR and the grossgeneration of each plant.

4.2.1.3. Specific Oil Consumption

Stakeholder Objection - BYPL and BRPL claimedthat that the specific oil consumption for the ControlPeriod for IP station and RPH were well beyond thenorms which was causing a rise in the variable cost.

Petitioner’s response - The Petitioner clarified that

specific oil consumption was high due to frequentoil firing at the time of start ups as was required dueto frequent trippings as caused by grid disturbancesand outages due to age and inadequate R&M ofthe plants.

Commission’s View - The Commission stated thatthe vintage and size of plants were considered whilearriving at the norms for stating the specific oilconsumption in the plants in the MYT Regulationswhich has to be, accordingly, considered fordeterminations of tariffs.

4.2.1.4. Gas Supply Arrangement

Stakeholder Objection - NDPL submitted that thePetitioner should plan for ensuring continuous supplyof fuel and in case of non-supply of fuel, the burdenon account of alternative arrangements of fuelpurchase should be compensated by the originalsupplier and the same should not be passed on tothe consumers.

Petitioner’s response - The Petitioner clarified thatit has inked an agreement with GAIL for continuoussupply of fuel. However, on occasions of short supplyof fuel from GAIL and only when all other alternativesof fall back arrangements fail, it resorts to purchaseof fuel from the spot market.

Commission’s View - The Commission stated thatfuel risks had to be borne by the Petitioner and thatconsumers cannot be made to bear the burden ofincreased fuel cost which may arise due to purchaseof expensive fuel. The Commission also observedthat the Petitioner did not comply with the directivesof the Commission regarding submission of stepstaken on efficient fuel procurement. The Petitionerwas advised to prudently handle its fuel supply for



consuming cheaper gas first.

4.2.1.5. Advance Against Depreciation

Stakeholder Objection - BRPL and BYPL objectedto the Petitioner claiming Advance AgainstDepreciation (AAD) without proposing any capitalinvestment.

Petitioner’s response - The Petitioner clarified thatit had claimed AAD in view of new essential capitalexpenditure planned for RPH and GTPS to meet thestipulations of the requirement of environmentalauthorities, hence, the Commission was requestedto consider the AAD.

Commission’s View - The Commission stated thatany requirement of AAD would be appropriatelyconsidered on account of capital expenditureapproved by the Commission, while determining thetariffs.

4.2.1.6. Coal Transit Loss

Stakeholder Objection - BRPL and BYPL opinedthat the coal transit loss of 3.80% as proposed bythe Petitioner could be reduced as the causesattributable to the loss were controllable and shouldbe curtailed by the Petitioner.

Petitioner’s response - The Petitioner clarified thatwashed coal was being used as per specificationsgiven in the directives of the Hon’ble Supreme Court.Therefore, the percentage of loss was higher thanthat specified by CERC. Hence, the Petitionerrequested the Commission for approval of theprojected transit loss due to the requirement ofwashed coal for its plants.

Commission’s View - The Commission analyzed thereasons submitted by the Petitioner for usingwashed coal and the causes of higher transit loss.

The Petitioner was advised to improve its coal stockmanagement and also monitor the transit lossesregularly. Keeping in line with the transit loss asspecified by CERC, the Commission alsomaintained the coal transit loss at 0.8% as per thenorms specified in the MYT Regulations.

4.2.1.7. Operation & Maintenance Expenses

Stakeholder Objection - BRPL and BYPL expressedconcern that the O&M costs for the IP Station werealmost 30% above the CERC norms for coal-basedgeneration plants. The Commission was requestedto disallow such high costs especially because ofthe low PLF of the plant.

Petitioner’s response - The Petitioner explainedthere were a number of factors such as vintage ofthe plants, high cost of associated manpower,increased taxes and inflation factors whichcontributed to the high O & M costs and steps werebeing taken to reduce the expenses.

Commission’s View - The Commission was of theopinion that CERC norms for coal-based stationswere not applicable to IP Station or RPH due tovintage and size of the plants. Therefore, the O&Mexpenses of each station were approved consideringthe vintage and size of generating units, therecommendations of the CEA and the expectedperformance levels of the plant.

4.2.2. Pragati Power Corporation Limited(PPCL)

4.2.2.1. Norms of Operation

Stakeholder Objection - The Discoms expressedconcern over the contentions of the Petitioner thatthe norms of operation as specified in the MYTRegulations could not be adhered to. The Discoms



were of the opinion that Pragati as a new plantshould not have such constraints. Hence, theyrequested the Commission not to relax any normsboth for open cycle and combined cycle operations.

Petitioner’s response - PPCL clarified that they wereunable to achieve the targets for Station Heat Rate(SHR) as against the same specified by themanufacturer. The other contributory factors were thefrequent grid trippings which caused an increase inthe Heat Rate. However, the Petitioner was makingconstant efforts to reduce the auxiliary consumptionfor which an energy audit had been conducted bythe PCRA.

Commission’s View - The Commission stated thatit had fixed the norms for SHR in the MYTRegulations considering the operating conditions ofthe plant along with the norms set by CERC. TheCommission did not accept the claim of thePetitioner and maintained that norms specified inthe MYT Regulations will be adhered to whiledetermining the tariffs for the Control period.

4.2.2.2. Gas Availability

Stakeholder Objection - The Discoms stated thatPPCL should make efforts to ensure that the supplyof fuel is continuous so that the Petitioner is notrequired to resort to purchase of expensive fuel andburden the consumers. It was submitted that thePetitioner should make suitable arrangements toensure continuous supply of fuel and in case of fuelshortfall, the extra burden on account of alternativearrangements of fuel purchase should becompensated by the original supplier and should notbe recovered from consumers.

Petitioner’s response - The Petitioner clarified thatthey had inked a long term agreement with GAIL for

supply of gas. However, there had been times whensupply of gas was reduced and purchase of gas fromthe spot market had to be resorted to. It wasexplained that this step of purchase from the spotmarket would be resorted to only when other fall backarrangements with GAIL have been exhausted.

Commission’s View - The Commission observedthat PPCL had not complied with the directives ofthe Commission for submitting information on thearrangements made by them to purchase additionalgas and also restructuring of the existing contractsfor optimal usage of available fuel.

4.2.2.3. Operation and Maintenance Expenses

Stakeholder Objection - BRPL and BYPL claimedthat the Petitioner should treat the expenses on DLNburners as capital expenditure and not as part ofO&M Expenses.

Petitioner’s response - The Petitioner clarified thatthe expenses on DLN burners were a routineexpenditure, hence, they were treated as O & Mexpenditure. This was also in accordance with theaccepted accounting practices.

Commission’s View - The Commission agreed withthe explanations given by the Petitioner andconsidered these expenses as special R&M and notas part of the normal O&M Expenses.

4.2.2.4. Return on Equity

Stakeholder Objection - NDPL asked for details onthe increase in equity during FY 2006-07 and detailsof capital expenditure during the year.Petitioner’s response - The Petitioner clarifiedthat the increase in equity was for expensesincurred for the Pragati II Power Station, which wouldbe transferred to the new plant at the time ofcommissioning.



Commission’s View - The Commission differed onthe explanation given by PPCL and stated that theycould not increase equity on account of expensesincurred for setting up another power station andaccordingly, the increase in equity would not beapproved.

4.2.2.5. Interest Expenses

Stakeholder Objection - BRPL and BYPL wantedthe Petitioner to refinance their expensive loans soas to reduce interest costs. They also contested theissue of including the rebate on timely payment inthe interest expenses.

Petitioner’s response - The Petitioner clarified theyhad already restructured the PFC loans at lowerinterest rates. As regards rebate on timely payment,the Petitioner maintained that as the working capitalpermitted by the Commission was not sufficient torecover the rebate given by PPCL for timelypayments, they have accounted for this in the interestexpenses.

Commission’s View - The Commission maintainedthe same stand as taken by it in the previous tarifforders wherein it had opined that the rebate offeredwas a commercial arrangement so as to expeditereceipt of payment. As the Commission hadconsidered receivables of 2 months for estimatingthe working capital requirement and the interest wasallowed accordingly, the rebate on timely paymentwould, therefore, become a trade-off with the intereston 2 months receivables considered in workingcapital requirement, therefore the rebate on timelypayment was disallowed in determination of tariff.

4.2.2.6. Fixed Fuel Expenses

Stakeholder Objection - BRPL and BYPL were notin agreement with the Petitioner for including thefixed fuel cost as a part of the Fixed cost andmaintained that it should be a part of the Variablecost.

Petitioner’s response - The Petitioner clarified thatfixed fuel costs correspond to a fixed component,not associated with the quantum of gas purchased.Hence, the cost cannot be considered as variablein nature.

Commission’s View - The Commission reiteratedits stand as taken in the Tariff order issued onSeptember 22, 2006 wherein it considered the fixedfuel expenses as part of Fixed cost since such costshad to be paid irrespective of the quantum of gaspurchased. Therefore, such expenses are to bereimbursed to PPCL, notwithstanding thecategorization.

4.2.3. Stakeholders’ Comments : Delhi TranscoLtd. (DTL)

4.2.3.1 Capital Expenditure

Stakeholder Objection - The Discoms expressedtheir apprehensions on the very high cost of capitalinvestment proposed by DTL for the control periodat Rs 2800 Cr by drawing comparisons to theaverage capital investment by DTL for the previous5 years which stood at Rs 82.41 Cr. They alsobrought to the notice of the Commission thedifference in capacity/line addition and values ofinvestment as proposed by DTL in their MYT petitionand in their Business Plan. The mismatch betweenthe increase in capacity proposed at grid stationsand the increase in projected load was also brought



out. It was also submitted that DTL had not envisagedany projects / schemes which was to inter connectnew generation capacities in the Delhi system in theControl period. One of the Discoms also pointed outto the lack of space for switchyard expansion /augmentation of DTL grid sub stations.

Petitioner’s response - The petitioner clarified thatit has considered the recommendations of the 17th

Electric Power Survey, conducted by CEA and theplanning criteria of CEA to plan its Capex. They alsoinformed that the costs for various schemes havebeen estimated at current market prices and the totalinvestment is higher due to factors such asinstallation of GIS sub-stations, installation ofunderground cables instead of overhead lines.These investments are expected to be raised fromGNCTD / borrowings from the market. DTL alsosubmitted that the Discoms had not signed anyPPAs with the Central Generating stations,Transmission Service agreements with DTL andBulk Power transmission agreement with PGCIL.DTL also confirmed about developing switchyards,installing new substations and power transformersto improve the existing infrastructure. Regarding lackof space for switchyard expansion, it was clarifiedby DTL that they would provide for grid stations atalternative locations .

Commission’s View - The Commission expressedthe opinion that capital investment should be basedon future plans and requirements and not on the pastperformance as the high investment as sought byDTL will have an impact on the Transmission Servicecharges. However, the plans as proposed by DTLwere in sync with that projected in the 11th PlanSystem Studies by the CEA. Discoms wereexpected to propose their investments in line with

what was proposed by DTL. The Commission wasalso in receipt of a communication from GNCTDconfirming granting debt to DTL to the tune ofRs 1250 Cr (including Rs 25 Cr for SLDC) at 11.5%interest. GNCTD also confirmed providing 100%funding (if required) for the Capex of DTL. Asregards signing of various agreements by Discoms,they were advised to do so at the earliest. TheCommission also assured the stakeholders thatappropriate capital investment for DTL will beapproved after prudence check and scrutiny. Lastly,the Commission advised the Discoms and DTL towork in co-ordination for executing various plans soas to ensure that there is no mismatch.

4.2.3.2. Transmission Losses

Stakeholder Objection - The stakeholders raisedobjections against the projection of high loss levelsof 0.8% - 1.2% for the Control Period which theyattributed to the high Capex projected by DTL. TheDiscoms also requested the Commission to specifyperformance standard norms for DTL.

Petitioner’s response - DTL clarified that out of thetotal power purchase of 24629 MUs, the total losswas 1036 MU and necessary documents weresubmitted to support the losses as claimed by DTL.Improper line loading by Discoms was attributed tobe the main reason for such high losses and relevantstatistics were submitted by DTL to support theirclaim.

Commission’s View - The Commission examinedvarious documents submitted by DTL in support ofits claims and determined the loss levels based onexisting losses as confirmed by SLDC because DTLdid not have any control over its losses in the PGCILnetwork. As regards the Discoms contributing to highlosses for DTL, the Commission noted the lack of



co-ordination between the Discoms and DTL andadvised both to co-ordinate for effectively improvingthe system.

4.2.3.3. Incentives from Central Power Sector Units

Stakeholder Objection - The Commission shouldcall for details of incentives received by DTL fromthe Central Power Sector Units (CPSUs) and findout whether it was linked to any future liabilities.

Petitioner’s response - DTL submitted that they hadreceived Rs 667.81 Cr (for the period FY 02 – FY05) as incentive for the one time settlement schemefrom CPSUs.

Commission’s View - The Commission maintainedthat as the incentive received by DTL was on accountof power purchase, it would be considered as anadjustment of the power purchase cost of DTL. TheCommission also directed DTL to submit completedetails of this amount and the manner of utilisationof this incentive and clarified that interest earned onthis amount would be considered appropriatelyduring true up.

4.2.4. Stakeholders’ Comments : DistributionCompanies (Discoms) – BSES RajdhaniPower Ltd. (BRPL); BSES Yamuna PowerLtd. (BYPL); and North Delhi Power Ltd.(NDPL).

4.2.4.1. Concessional Tariff

Stakeholder Objection - While some of theconsumers sought concessional tariff for seniorcitizens, places of worship, educational institutions,charitable institutions etc. run by NGOs on land givenby DDA/MCD/GNCTD at concessional rate, otherswere not in favour of such concessions.

Petitioner’s response - The Discoms stated that thedecision on grant of concessional tariff is to be takenby the Commission in the overall interests of allconsumers.

Commission’s View - The Commission clarified thatit would not be practical to offer concessional tariffto senior citizens due to difficulties in ensuring thatthe connections are used by senior citizens only.However, Discoms were advised to extendcourteous and prompt service to senior citizens.

As regard requests from certain categories of theconsumers for concessional tariff, the Commissioncited Clause 8.3 of National Tariff Policy which statedthat direct subsidy is a better way to support thepoorer categories of the consumers than themechanism of cross subsidizing the tariff across theboard. Clause 9.1 of the Commission’s DistributionTariff Regulations also states that any consumerdesirous of getting subsidized tariff, should approachthe State Government which may consider givingsubsidy to that class of consumers. In line with theNational Tariff Policy and the Regulations, theCommission opined that extending freshconcessional tariff to any class of consumers will onlyincrease the cross subsidy element which would notbe in the interest of other consumers. TheCommission felt that it was ideal to fix electricitytariff for all consumers on cost to serve basis andany subsidy based on socio-economic factors orotherwise should be extended by the State Govt.Rightly, it is the State Govt. which should bear thisresponsibility and the same should not be thrust onother sections of consumers.



4.2.4.2. Cross Subsidy

Stakeholder Objection - The consumers expressedthat uniform tariff should be levied on all consumercategories, doing away with the cross subsidyelement in the tariff. However, the economicallyweaker categories of consumers along with theagricultural consumers may be charged subsidizedtariff for some more time.

Petitioner’s response - The petitioners citedSections 61and 65 of the Electricity Act, 2003 forthe SERCs to ensure that tariffs should reflect thecost of supply of electricity and that any furthersubsidy / concession to any class of consumersshould be in the form of direct subsidy by the stategovernment. The petitioners also cited the NationalElectricity Policy and National the Tariff Policy forreduction in cross subsidy and expected theCommission to reduce cross subsidy gradually asstated in these policies.

Commission’s View - The Commission alsoreiterated the provisions of the Tariff Policy for statingthat any consumer requesting for concessional tariffmay approach the State Government as theresponsibility of supporting the weaker sections ofsociety lies with the state government and not withother consumers of electricity. The Commission’sendeavour is to fix tariffs on the basis of cost to serve.However, as cross subsidies do exist in the tariffshistorically, efforts are being made by theCommission to reduce such cross subsidies over aperiod of time.

4.2.4.3. Aggregate Technical and Commercial(AT&C) Loss Reduction

Stakeholder Objection - The consumers offered anumber of comments on AT & C losses, such as

follows:

i) It was desired that AT & C losses should alsoinclude commercial losses and unpaid billsof consumers and information was sought onmajor defaulters and action taken thereon bythe Discoms.

ii) Some of the consumers expressedapprehension on the evaluation of energylosses by the Discoms because the Discomshad neither carried out audit of energysupplied by distribution transformers nor onthe corresponding connected consumers. Infact, they questioned that as AT & C lossesare due to inefficient management ofbusiness, the consumers cannot be made topay for such inefficiencies. They alsorequested that those areas where the AT &C losses were below 20% should be sparedof power cuts.

iii) Some of the consumers observed that theDiscoms did not comply with the targets setforth for AT & C loss reduction in the MYTRegulations and that the Commission shouldensure compliance to the Regulations byDiscoms in this respect .

Petitioner’s response - The Discoms listed out theirachievements post privatisation, some of which areas follows:

i) Improving the distribution system reliabilityindex .

ii) Reduction of AT & C losses.

iii) Targeting high theft prone areas for reducingthe losses by taking assistance of CISF,citizens, RWAs, NGOs and the Govt .

The Discoms also expressed the following difficulties



in achieving the desired AT & C loss reduction:

i) Effect of socio-political environment andpublic resistance in certain areas.

ii) Presence of a large number of unauthorisedcolonies and JJ clusters.

iii) Level of theft in unauthorised areas is highdue to limited infrastructure.

iv) Use of domestic connections for industrialpurposes.

v) High costs incurred for using technicalsolutions in rural areas, thus rendering thewhole exercise cost ineffective.

vi) Non electrification of unauthorised areaseven though residents are willing to pay forelectricity, thus, leading residents to usepower from neighbouring networks.

vii) Public resistance to the replacement ofelectro-mechanical meters with electronicmeters.

The Discoms listed out various measures taken toreduce the losses, such as follows:

i) Conducting Energy Audit for monitoring flowand accounting across the distributionnetwork by installing energy meters withremote reading facility on all feeders anddistribution transformers.

ii) Tagging consumers to distributiontransformers to detect theft of energy.

iii) Improving and introducing the latest technicalinfrastructure in high theft prone areas.

iv) Implementing LVDS / HVDS in electrificationschemes which would bring down the numberof unauthorised consumers.

v) Invoking the provisions of the Electricity Act,2003 for higher penalties for theft of electricity.

vi) Setting up of Special Courts for booking andresolving such cases.

vii) Taking assistance of local police forces andspecial task forces like CISF while bookingtheft.

viii) Rewarding performers within theorganisation for loss reduction.

Commission’s View - The Commission hasspecified the AT & C loss reduction targets in theMYT Regulations, 2007 which were fixed afterconsidering various factors such as :

i) past loss reduction achievement

ii) capital expenditure programmes

iii) consumer mix pattern

iv) metering status

v) drawing comparisons with the loss levels ofsimilar Discoms in urban areas such asAhmedabad, Mumbai etc.

The Commission also advised the Discoms to takethe following steps:

i) Submit monthly statement of AT & C loss withall relevant details within 15 days after the endof each month.

ii) Promote conservation of energy and efficientuse of energy through consumer awarenessprogrammes.

iii) Carry out Energy Audit.

In addition, the Commission has also advised theGNCTD to constitute district committees inaccordance with sub-section 5 of Section 166 tofurther streamline various activities as envisaged inthe Act.



4.2.4.4. Transparency In Discoms’ Accounts

Stakeholder Objection - The consumers alleged thatthe BSES Discoms have made purchases fromtheir sister concerns by paying Rs 1250 Cr forequipments worth Rs 800 Cr, thus, manipulating theiraccounts and misleading the general public.Accordingly, it was demanded that the accounts ofDiscoms be audited by Comptroller and AuditorGeneral (C&AG) of India. They also demanded thatDiscoms should be brought under the purview of theRTI Act as the state government holds 49% stake inthese companies.

Petitioner’s response - The petitioners clarified thatall purchases have been made by followingestablished practices for procurement of equipmentat competitive market rates. There is also no scopefor any manipulation of accounts as the accounts areaudited by internal and external statutory auditorsbesides the audit of Electricity tax by MCD, scrutinyof accounts by the Commission before approvingthe ARR and audit of the billing software by theCommission through the STQC Directorate underthe Ministry of Information Technology. However, asthe Discoms are private business entities and nota government company, they do not come underthe purview of the RTI Act and their accounts cannotbe audited by the C & AG.

Commission’s View - The Commission maintainedthat the Discoms are public utilities, hence, shouldcomply with the provisions of the RTI Act. This wasalso upheld by the Central Information Commissionin its Order dt 30 November 2006. However, thisOrder was challenged in the High Delhi Court by theDiscoms and a stay order threon had been obtainedby the Discoms. The Commission filed a separatewrit petition before the High Court for declaration of

the Discoms as ‘Public Authority’ under the RTI Act,2005. The matter is sub- judice. Regardingpurchases from sister concerns by BSES, theCommission held the view that the submissionsmade by the Petitioners are subjected to prudencecheck during the analysis of their ARR petitions andonly the rational and justified expenses andpurchases are allowed in the approved ARR.

4.2.4.5. Power Purchase from Renewable Sources

Stakeholder Objection - The consumers wanted theDiscoms to source some minimum power purchasefrom renewable sources of energy such as wind,solar and bio-mass. The government may encouragesuch sources with higher subsidy, though care shouldbe taken that it does not result in hike in consumertariff.

Petitioner’s response - The petitioners welcomedand agreed to the suggestions given by theconsumers and stated that the Commission mayfix a minimum percentage of purchase from non-conventional sources of energy keeping in view thecost factor and its availability in Delhi.

Commission’s View - The Commission, in its roleof encouraging sourcing of power from non-conventional and renewable sources of energystipulated that Discoms should try to achieve 1% ofthe total power purchase from renewable sources.However, as the scope of sourcing of such energyin Delhi is minimal, it was necessary for states likeDelhi to look for procurement from renewables fromother states.

The Commission also requested the Central and theState Governments for evolving an appropriatemethodology for trading in renewables by way ofrenewable energy certificates which would protect



the interests of both the buyers and sellers of suchcertificates.

4.2.4.6. Time of Day Metering

Stakeholder Objection - There were mixed reactionsto the Time of Day Metering scheme. While some ofthe stakeholders wanted more clarity on the scheme,some others wanted the proposal to be madeoptional and voluntary. Some stakeholders wereopposed to the scheme as they felt that othercategories may have to pay higher charges underthis scheme.

Petitioner’s response - Discoms clarified that thisscheme was optional and would benefit consumerswhen there would be a shift of consumption frompeak periods to off peak periods.

Commission’s View - The Commission clarified thatit intends to introduce this scheme on a voluntaryand pilot basis to test its effectiveness.

4.2.4.7. Rationalization of Fixed Charges

Stakeholder Objection - Some of the consumersrequested for doing away with the fixed charges astheir contention was that even other public utilitiessuch as Railways / Airlines do not levy fixed charges.Instead, they suggested adjusting the fixed chargesin the energy charges as was the practice followedearlier. They also referred to the case of NDMC fornot levying any fixed charges.

Petitioner’s response - The petitioners clarified thatthe concept of levying fixed and energy charges wasexplained in the previous tariff orders of theCommission. However, the petitioners once againclarified the concept of fixed charges and itsnecessity to be a part of the tariff. Moreover, theElectricity Act (EA), 2003 also permits a two part

tariff. The petitioners expressed their ignorance onfixed charges not being levied by NDMC.

Commission’s View - The Commission explainedthe reasons for introduction of two part tariff and forabolishing of the monthly minimum charges. In thewake of receiving objections and suggestions fromvarious stakeholders on this issue, the Commissiononce again studied the options of levy of fixedcharges with reference to provisions of the ElectricityAct, 2003, stand taken in the previous tariff ordersof the Commission and judgements of the ATE. Itwas of the opinion that if fixed charges are abolished,the energy charges would increase. Such fixedcharges at Delhi are rather nominal considering thefixed costs of the licensees. This being anestablished practice in the electricity industry, it wasconcluded that the Commission will continue with theexisting methodology of levying fixed charges. In thelatest order of NDMC, the Commission hasintroduced fixed charges , although, notionally.

4.2.4.8. Uniform / Differential Tariff across Discoms

Stakeholder Objection - There were mixed reactionson this issue. While some of the consumers wereagreeable for a differential tariff as the EA, 2003also permits the same, some of the stakeholderswanted a uniform tariff for different consumercategories across all Discoms. Some of them alsoapproved of the energy charges to be based on Costof Supply so as to eliminate cross subsidy.

Petitioner’s response - The petitioners submittedthat fixation of tariff is the prerogative of theCommission.

Commission’s View - In line with the stand taken bythe Commission in the previous Tariff Orders andas specified in the Tariff Policy, the Commission



maintained that for the time being uniform tariff willbe applicable for different consumer categoriesacross all Discoms in Delhi

4.2.4.9. Uniform Tariff for Delhi Government Offices

Stakeholder Objection - The consumers supportedthe initiative of the GNCTD for introduction ofprepaid meters in Govt offices. They also called forconduct of energy audits by GNCTD in governmentschools and offices. Such measures should also beextended to MCD run offices and schools. Theconsumers also stressed that there should be nocategorization such as Govt / Public usage andtariff for the same should not be concessional.

Petitioner’s response - The Petitioners submittedthat the concept of uniform tariff for GovernmentConsumers is being explored in the backdrop ofinstallation of Prepaid Metering as proposed byDelhi Govt. They also appreciated the flagging ofthis issue by the Commission and trusted that thetariff as and when determined by the Commissionwill be cost reflective keeping in view the objectiveof reduction in cross subsidy across categories inline with the NEP and the NTP. The Petitionersclarified that they are already charging non-domestictariff to all Delhi Govt. offices.

Commission’s View - The Commission examinedthe matter in view of the request from Govt. of Delhito facilitate the installation of pre-paid meters in theoffices of Delhi. It is of the view that a uniform tarifffor all Govt. offices of Delhi would ensure easyimplementation of pre-paid metering. The Govt. ofDelhi offices are currently being charged underNDLT category, where pre-paid metering can beeasily implemented. The Commission has, therefore,not created any new consumer category in tariff

schedule for Govt. of Delhi offices and continued withthe existing practice.

4.2.5. Stakeholders’ Comments : New DelhiMunicipal Council (NDMC)

4.2.5.1. Power Purchase

Stakeholder Objection - There is no transparencyin the process of determining power purchase cost.The Commission should revisit the allocations madeto NDMC so that the consumers residing in otherareas of Delhi do not bear the burden of subsidisingthe consumers of NDMC area.

Petitioner’s response - Transparency in proposingand determining power purchase expenses duringthe Control Period is ensured. The projections arebased on the actual bills raised by NTPC. As regardsearnings on account of UI transactions and sale ofpower, it is largely on paper and only a small part ofit is realised. In fact, Bills even from the DelhiDiscoms were pending payment.

Commission’s View - The Commission has takendue caution in projecting power purchase cost forthe Control period. The Commission recognises theconcerns of consumers of other Discoms, that therehas been an adverse impact on power purchase costof the Discoms due to possible excess allocation toNDMC.

4.2.5.2. Tariff Rationalization

Stakeholder Objection - There should not be anyincrease in tariff during the Control period and thereshould be some degree of justification for the tariffcharged from consumers.

Petitioner’s response - There has been no tariff hikesince 2001. However, in view of growing economy,



and demand of electricity with time, capitalexpenditure and Commercial needs for running thebusiness of distribution of electricity, the tariff hikehas been proposed for consideration of theCommission.

Commission’s View - The Commission undertakesprudence checks in analyzing the ARR andintroduces various tariff rationalization measures fordifferent categories of consumers.

4.2.5.3. Aggregate Technical and CommercialLosses

Stakeholder Objection - NDMC should strive forreduction in T&D losses, control theft and recoveroutstanding arrears rather than increasing tariff.

Petitioner’s response - The Collection efficiency isin the range of 98-99%. However, Commerciallosses are in the range 0.5%-1.5% of the totalconsumption due to certain defective meters in thesystem. Although there are practical constraints infurther reducing the technical losses, however, in lightof the capital expenditure proposed, a reduction intechnical losses is proposed at 1%.

Commission’s View - The Commission followed theAT&C loss reduction targets as per the provisionsof the MYT Regulations, 2007.

4.2.5.4. Inconsistency in the Petition

Stakeholder Objection - There are gross anomaliesin the MYT petition filed by the Petitioner and thepetition be re-examined.

Petitioner’s response - The ARR petition and tariffproposal is submitted to the Commission for scrutinyand prudence check.

Commission’s View - The Commission hasexamined the petition and analysed the ARR as

submitted by the Petitioner and sought clarificationsand otherwise made reasonable assumptions forallowing the various expenses.

4.2.5.5. Cross Subsidy

Stakeholder Objection - There should be uniformtariff for all categories of consumers. Details ofcertain classes of consumers, whom concessionsare granted, be made public for scrutiny.

Petitioner’s response - The determination of Tariffto be charged from various categories of consumersis the prerogative of the Commission.

Commission’s View - It would be ideal to fix tariff forall categories on cost to serve basis. However, ascross subsidies have been in-built in the systemhistorically, it would take time to bring down crosssubsidy. If providing concessional tariff to certaindeserving consumer categories can be consideredby the Government by way of subsidies, it would beeasier to reduce cross subsidies.

4.2.5.6. Tariff for Delhi Metro Rail Corporation

Stakeholder Objection - The Commission maycontinue with its previous principles for determiningtariff and the tariff should be based on the input costof the Petitioner.

Petitioner’s response - No tariff hike was proposedfor DMRC, which is not an existing customer of theNDMC. The Commission to take an independentview at the time when DMRC becomes theircustomer.

Commission’s View - The tariff for DMRC shouldbe made applicable on Cost to Serve principle inline with the National Tariff Policy as any crosssubsidization of DMRC tariff would only result inburdening other consumer categories.



4.2.5.7. Power Purchase from Renewable Sources

Stakeholder Objection - Discoms should sourcesome minimum power from renewable sources ofenergy such as wind, solar and bio-mass with dueconsideration to its impact on tariffs. Governmentmay encourage such sources with higher subsidy

Petitioner’s response - The suggestions werewelcomed and agreed upon. The Commission tofix a minimum percentage of purchase from non-conventional sources of energy keeping in view thecost factor and its availability in Delhi.

Commission’s View - To start with, the Discomsshould try to achieve 1% of the total power purchasefrom renewable sources. Even a higher cost wouldbe allowed by the Commission. The procurementfrom renewables can be made from other states asthe scope of sourcing of such energy in Delhi isminimal. The Central and the State Government wererequested for evolving an appropriate methodologyfor trading in renewables by way of renewable energycertificates which would protect the interests of boththe buyers and sellers of such certificates.

4.3. Truing-up and Analysis of ARR :Generating Companies (GENCOs)

4.3.1 While approving the ARR for FY 2007-08, theCommission trued up the variouscomponents of the ARR for FY 2006-07 withrespect to the Tariff Order issued onSeptember 22, 2006. Since the trued upvalues, were lower than the values approvedby the Commission in the Tariff Order for FY2006-07 issued on September 22, 2006, thePetitioners were directed to refund theexcess amount recovered from beneficiariesin the future bills with carrying cost of 9% whichwas the allowed rate by the Hon’ble ATE inOrder of July 21, 2006. The Commissionfurther directed that the refund of the cost ofvarious beneficiaries shall be in the ratio ofthe capacity allocation to each beneficiary inFY 2006-07.

Overview of the MYT Petitions

A snap shot of the MYT Petitions submitted by theGeneration companies is as follows:

Gencos : Overview of MYT PetitionsTABLE : 4.2



4.3.3. Energy Charges

The Energy charges (Variable cost) of the plantdepends on the operational parameters such as theStation Heat Rate, Auxiliary Consumption, Fuel Costand the Gross Calorific Value of the fuel used. TheCommission considered all these factors and thedetails of fuel supply for determination of fuel costand hence, the Variable Cost for the respectiveplants.

4.3.4. Fixed Cost

The Commission analysed all the components of theFixed Cost submitted by the Petitioners. As per theMYT Regulations, the Fixed cost includes thefollowing components:

i) Operation and Maintenance Expenses

ii) Depreciation

iii) Advance against Depreciation

iv) Return on Equity

v) Interest Expenses

vi) Interest on Working Capital


The Commission projected the total O&M expensesby considering base O&M which were calculatedusing the average of base O&M expenses in the lasttwo years (FY 2005-06 & 2006-07). The averageO&M expenses, thus, obtained were escalated by4% annually to arrive at the base O&M expenses forthe Control Period. These expenses wereproportionally allocated to Employee expenses,Repair & Maintenance and Administrative & Generalexpenses.

4.3.4.2. Depreciation

The Commission proportionally modified the assetvalues as submitted by the Petitioners with the totalvalues approved by the Commission as closingbalance of Gross Fixed Assets (GFA) in FY 2006-07. The Commission considered addition in assetsaccording to the revised capital expenditure plan

4.3.2. For the MYT Control Period FY 2007-08 to FY 2010-11, the Commission considered the parameters/norms of operation as follows:

Gencos : Plantwise norms of OperationTABLE : 4.3



submitted by the Petitioners. Depreciation wascalculated on each asset category, using thedepreciation rates as specified in the MYTRegulations.

4.3.4.3. Advance Against Depreciation

The Commission calculated the Advance AgainstDepreciation (AAD) using the principles specifiedin the MYT Regulations and considered the detailsof actual accumulated debt repayment andaccumulated depreciation claimed by thePetitioners.

4.3.4.4. Return on Equity

The Commission calculated Return on Equity at 14%on the average equity for each year in line with theMYT Regulations. The Commission approved equityaddition at 30% of the revised capital expenditureplan submitted by the Petitioners.

4.3.4.5. Interest Expenses

The Commission determined the interest cost foreach year of the Control Period by considering theopening balance of loans, the repayment scheduleand by applying the actual rate of interest applicableto various component of the loans. The Commissionalso considered fresh loans from the GNCTDcorresponding to 70% of the proposed capitalexpenditure with loan terms as proposed by thePetitioners.

4.3.4.6. Interest on Working Capital

The Commission calculated Interest on WorkingCapital considering the approved values of thevarious components as specified in the MYTRegulations and considering an interest rate of12.75% based on SBI Prime Lending Rate for short-

term loans as on April 09, 2007. This rate would beapplicable from April 1, 2007 for calculation ofinterest on working capital in FY 2007-08.

4.3.5 Determination of Generation Tariff

The Generation Tariffs applicable to the three (3)generating stations of IPGCL and one(1) generatingstation of PPCL, as determined by the Commissionafter true-up of FY 2006-07 and approval of theAggregate Revenue Requirement (fixed andvariable costs ) for the FY 2007-08, are summarizedas follow :

Gencos: ARR approvalTABLE : 4.4

4.3.6 Mechanism of Recovery of GenerationTariff

The recovery of approved Tariff was stipulated in thefollowing manner :

4.3.6.1.The total Fixed Cost (Capacity Charges)shall be recovered at Target Availabilityspecified by the Commission. The recoveryof Fixed Cost below the level of TargetAvailability shall be on pro rata basis with noFixed Cost payable at zero availability. Forthis purpose, the Availability of the PowerStation shall be certified by the SLDC. Anyadjustment of recovery of Annual Fixed Costshall be based on the cumulative Availabilityas certified by the SLDC at the end of the



year. The Fixed Cost shall be recovered in12 equal monthly installments in proportionto allocated/contracted capacity.

4.3.6.2.Intra-state Availability Based Tariff (ABT) isin operation in Delhi since April 1, 2007.Consequent to this, the Variable Cost shallbe billed to the beneficiaries based on theScheduled generation during the month fromthe station as per the rates approved by theCommission.

4.3.6.3. Incentive shall be payable at a flat rate of 25paise/kWh for the scheduled generationachieved beyond the level corresponding toTarget PLF. However, the generating stationshall comply with the SLDC instructions withrespect to the backing down of thegeneration and such backing down shall notqualify for calculation of PLF for Incentive.Further, in case of non-compliance bygenerating stations to backing downinstructions given by SLDC, generation

during backing down period as instructed bySLDC shall not be considered for Incentivepurpose. The SLDC shall at the end of theyear, certify the generation level of generatingstations which qualifies for Incentive purposeas per the above guidelines.

4.3.6.4. Deviations from the Schedule are to beaccounted for in accordance with theprinciples laid down in the order of theCommission regarding Intra-state ABT.

4.4. Truing-up and Analysis of ARR :Delhi Transco Ltd. (DTL)

4.4.1. True-up for FY 06 and FY 07

The Commission trued up the revenue requirementand revenue gap / surplus of DTL for FY 06 and FY07 based on the audited accounts as the previoustariff order for FY 06 and FY 07 was based onprovisional data submitted by DTL. The summaryof the true-up is given in the Tables as follow:



Figures in bracket indicate sales and revenue realized from such sale. These figures may be read as negative.

DTL : Revenue Requirement and Revenue Surplus/ Gap for FY07TABLE : 4.6

DTL : Revenue Requirement and Revenue Surplus/ Gap for FY06TABLE : 4.5

(Rs in Crore)


(Rs in Crore)



4.4.1.1. Power Purchase

In order to true up the power purchase costs for FY07, the Commission obtained details of the actualpower purchase costs from various generatingstations. Refunds of income tax received, if any, from

the generating stations would be adjusted for DTLin the year in which it would be received.

The summary of the power purchase - both quantumand cost-wise for FY 07 as follows:

DTL: Summary Of Power PurchaseTABLE : 4.7


Total Cost(Rs. in Crore)



4.4.1.2. Regional Load Despatch Centre (RLDC)and Unified Load DespatchCommunication (ULDC) Charges

Excess RLDC and ULDC charges of Rs 3.45 Cr(for the period July 2002 to March 2006) as allowedto DTL in the Tariff Order issued in Sept 2006 wasadjusted based on actual payments made to RLDCand ULDC. These charges are in line with CERCOrder of September 2, 2005.

4.4.1.3. Energy Sales and Revenue

The Commission in its Tariff Order of September22, 2006 approved 21367 MUs of energy sales toDTL. In the MYT petition, DTL submitted energysales for FY 07 as 21769 MUs. The Commissionverified the actual power purchased by variousDISCOMS and accordingly, approved the energysales of 21769 MUs to DTL. These sales excluded1748 MUs as UI and sale to other states.

In the FY 07 Tariff Order, the Commission hadestimated revenues for DTL at Rs 4873 Cr. In theMYT petition, DTL has submitted Rs 4779 Cr as theactual revenue realised from sale of power toDiscoms. DTL clarified the decrease in revenue dueto the applicability of the new Bulk Supply Tariff(BST), only w.e.f October 1, 2006 while a differentBST was charged from April to September 2006.The Commission also cross verified this revenuewith the power purchase costs of the Discoms andapproved the revenue realisation of Rs 4779 Cr forFY 07.

4.4.1.4. Transition Loan Support

GNCTD provided DTL Rs 3452 Cr. as a transitionloan support during the period FY 03-FY 07 in orderto bridge the gap between its revenue requirement

and the bulk supply price received from the Discoms.The Commission had expressly mentioned in theprevious tariff orders that the servicing of this loanshould not be reflected in the ARR of DTL as it wouldlead to increasing the revenue gap, thus, translatinginto a tariff shock for the consumers. Hence, astatutory advice was given to GNCTD u/s 86(2) ofthe Electricity Act, 2003 to convert the loan into agrant. In response, GNCTD on July 4, 2007conveyed the Delhi cabinet’s decision to convert theloan into equity. Accordingly, DTL submitted that itdid not consider this equity capital as a part of theproposed capital structure and that it was not treatedfor the purpose of creation of future assets duringthe control period. In view of the submissions madeby DTL, the Commission also did not consider anyRoE or RoCE on Rs 3452 Cr.

4.4.1.5. Analysis of Aggregate RevenueRequirement (ARR) for the ControlPeriod

DTL submitted the MYT petition for approval of ARRand determination of Transmission Service chargefor the Control period of FY 08 – FY 11. Summary ofthe petition is as follows:

(Rs in Crore)

Figures in bracket indicate sales and revenue realized fromsuch sale. These figures may be read as negative.

DTL : Summary of MYT PetitionTABLE : 4.8



While DTL considered financial year FY 06 as thebase year for projecting certain cost elements, theCommission considered FY 07 as the base yearwhich is as per the MYT Regulations and also inview of the availability of the audited accounts forFY 07

For the MYT period, as per the Regulations, theCommission analysed all the components of the ARRlike O & M Expenses, Return on Capital Employed(RoCE), Depreciation (including Advance AgainstDepreciation), Tax expenses, Non tariff income andIncome from other business.

Accordingly, the Commission determined the ARRfor the control period as follows:

DTL : Approved ARRTABLE : 4.9

In accordance with the MYT Regulations, DTL wasto separate its business into transmission andSLDC functions and segregate the accountsaccordingly. Until this process is over, DTL was tosubmit the allocation statement which contains theapportionment of such costs.

In line with the submissions of DTL in the MYTpetition, the Commission also approved the ARRfor DTL for the control period and the revenuerequirement of SLDC for FY 08 is detailed as follows:

DTL : Approved ARR for the Control PeriodTABLE: 4.10

The MYT regulations stipulate that DTL shouldpropose transmission tariff design for each year ofthe Control period. In the absence of such a proposalfrom DTL, the Commission determined the tariffsas per the approach specified in the Regulations.

DTL was permitted to raise bills for AnnualTransmission charges for each year of the Controlperiod on the basis of the approved ARR. Thesecharges shall be recovered every month on pro-ratabasis and shared by all the Discoms including thedeemed licensees and other beneficiaries inproportion to the power allocated to them fromvarious Central Sector Generating Stations,generating stations within Delhi and contractedpower on bilateral basis. Recovery of charges fromshort term open access customers, if any, would alsobe as per the MYT Regulations.

4.5. Truing-up and Analysis of ARR :BSES Rajdhani Power Ltd. (BRPL)

4.5.1. True-up for Policy Direction Period(FY 2003 to FY 2007)

The Commission trued up the ARRs of BRPL for thepolicy direction period of FY 03 to FY 07 andimplemented the decisions of the Hon’ble SupremeCourt and the Appellate Tribunal of Electricity (ATE).The Supreme Court as per its Order of 15th February2007 directed the Commission to allow depreciation@ 6.69% for the entire policy direction period as

(Rs in Crore)

(Rs in Crore)



against 3.32% to 3.75% allowed by the Commissionand also stipulating that this would be effective onlyfor the said period of 5 years.

The ATE vide its Order dated 23 May 2007 observedthat the Commission needs to allow all the actualexpenses incurred towards employees includingcontractual employees. Further, the expensesincurred on telephone, postal, telegraph andconveyance charges were also to be allowed forFY05 and FY06 at actual. In addition, depreciationas per directions of the Hon’ble Supreme Court witha carrying cost of 9% was also to be allowed.Accordingly, BRPL has claimed true up of variouscost elements as a part of the MYT petition.

Net increase / impact on account of true up due tothe implementation of the Orders of the SupremeCourt and the ATE is as follows:

Truing up for FY 03: Rs 31.87 Cr




Carrying cost for past true up @ 9%: Rs 44.11 Cr

Accordingly, the Commission after prudency check,approved the revenue gap of Rs 404.44 Cr for theFY 07 (inclusive of truing-up relating to previousyears) as against BRPL’s claim of Rs 597.53 Cr

4.5.2. Analysis of Aggregate RevenueRequirement (ARR) for the ControlPeriod

BRPL submitted the MYT petition for approval ofARR and determination of Wheeling and RetailSupply Tariffs for the Control period of FY 08 – FY11. The summary of the petition is as follows:


In accordance with the MYT Regulations, BRPLsubmitted the allocation statement for eachcomponent of the ARR into Wheeling and RetailSupply Business for FY 07, which was consideredby the Commission as the base year for projectingall elements of the ARR for the control period.

4.5.3. Sales Forecast

BRPL projected growth in sales for the control periodassuming a variety of economic, commercial anddemographic factors. The Commission, afterdetailed study and finding that the energy salesprojection of BRPL for each category did not reflecta predictive trend, decided to forecast the sales,number of consumers and connected load for theControl period on the basis of past trends andprojections made by BRPL, weighted averageprojections of all the Discoms, combined with theCAGR methodology (computed for 2 – 12 yearsduration) for BRPL. The sales projections made byBRPL and that approved by the Commission for thecontrol period are as follows:

BRPL : Summary of MYT PetitionTABLE : 4.11

(Rs in Crore)



BRPL : Sales ProjectionsTABLE : 4.12

(Total Sales in MUs)

4.5.4. Aggregate Technical and Commercial(AT&C) Losses

In the policy direction period, GNCTD had set outthe principles of determination of AT & C losses formeasuring the efficiency of Discoms. For the MYTperiod, the Commission had set targets for BRPLunder the provisions of the MYT Regulations forachievement of AT&C Loss level of 17% by the endof the Control period. However, BRPL expressedits inability to achieve the said target due to variousconstraints and instead proposed their targetsbased on the Abraham Committee Report ondistribution loss reduction. The Commissionreiterated its stand on conforming to the MYTRegulations as a number of factors, such as pastachievements on loss reduction, Capexprogrammes, consumer mix in Delhi, meteringstatus, loss levels of private utilities in other citiesetc. have been factored in while fixing the targets in

the regulations. Incentives / penalties for over / underachievement of AT & C loss reduction target wasalso set by the Commission. Consequently,distribution loss targets were also set for BRPL afterassuming reasonable collection efficiency.

BRPL submissions and the figures approved byCommission are as follows:

BRPL SubmissionTABLE : 4.13

Commission ApprovedTABLE : 4.14



4.5.5. Power Purchase Quantum and Cost

4.5.5.1. Power Purchase from Central GeneratingStations

BRPL was assigned its share from variousgenerating stations as per the Commission’s Orderdated 31.03.2007. In addition to this firm allocation,BRPL also got a portion from the 15% unallocatedpower from the Central Pool (as decided by theCEA/ Ministry of Power, Govt. of India from time totime) based on power requirement and powershortage in different states.

4.5.5.2. Energy Availability from Future Projects

BRPL considered commissioning of Kahalgaon II,Koldam HEP, Chandrapura I, Chandrapura II andDadri Stage-II during different years of the ControlPeriod and accounted for energy available fromthem accordingly.

The Commission considered the commissioningschedule of the future stations based on the dataavailable from CEA website and as per thediscussions held with all the concerned Discoms.

4.5.5.3. Power Purchase from Bilateral, OtherSources, Short Term Arrangements andBanking

While projecting power purchase quantum and costfor FY08, the Commission included actual powerpurchase from bilateral and short term arrangementsupto December 2007. For January–March 2008, anadditional 100 MUs from bilateral purchase throughintra-state sources were estimated by theCommission while approving the power purchasecost for FY08.

For the remaining Control Period, the Commissionassumed that 5% of net annual power requirementshall be required to be sourced through bilateralpurchases and short term arrangements with tradingcompanies for meeting seasonal peak demand insummer and winter months. Further, the Commissionconsidered that 25% of such short term peak powershall be available from intra-state sources and 75%through inter-state sources. The Commission alsoassumed that 20% of deficit power procured frominter-state sources will be met through bankingarrangements and the balance from bilateralpurchase through short term arrangements/tradingcompanies.

4.5.5.4. Power Purchase Cost

The Commission approved Power Purchase Costby considering the following :

(i) The Commission derived annual fixedcharges (in proportion to the Petitioner’sshare) applicable in FY08 and FY09 forvarious central sector generating stationsfrom the relevant Tariff Order issued byCERC. The annual fixed charges for FY10and FY11 were considered at same level asthat for FY09 on the assumption that anyincrease in Operation & Maintenance costwill be offset by the decrease in other fixedcharges.

(ii) The fixed cost for State generating stationswas taken as approved by the Commissionin respective MYT Orders for the ControlPeriod FY08 to FY11.

(iii) The variable cost including Fuel PriceAdjustment (FPA) for the Control Period was



based upon the power purchase data forFY07, as submitted by DTL. An escalation of3% and 4% was also applied for coal andgas/liquid fired plants respectively on thevariable cost for subsequent years.

(iv) For nuclear plants, based on the actual powerpurchase bill for FY07, single part tariff with1% annual escalation was considered.

(v) For hydro stations, net charges payable werederived after deducting the free share ofpower.

(vi) Incentives payable were calculated asapplicable for generation above target PLF.

(vii) Income tax and any other charges payablewere considered at the same level as actualpaid in FY07.

(viii) Total power purchase cost was estimatedconsidering fixed charges, variable charges,Fuel Price Adjustment (FPA), Income tax,incentive and other charges.

(ix) The Commission considered powerpurchase from coal based future projects at250 Paisa per unit in FY08 and subsequentlyescalated at 3% p.a. Power purchase fromfuture hydro projects is considered at 270Paisa per unit in FY08 escalated at 3% p.a.Power from DVC future projects wasconsidered at 300 Paisa per unit in FY08escalated at 3% per annum.

(x) The Commission considered actual cost ofbilateral purchase up to December 2007 as

submitted by the Petitioner. For rest of theControl Period, the Commission consideredbilateral purchase from intra-state sources atthe regulated rate of Rs 2.75 per unit andfrom inter-state sources at Rs 7.00 per unit.

(xi) The sale of surplus energy available in nonpeak duration was considered at theregulated rate of Rs 2.75 per unit for intra-state sale and Rs 4.00 for inter-state sale.


The Commission estimated PGCIL losses at 3.5%for northern region and 3.0% for eastern regionbased on past trends. DTL losses were estimatedat 0.95% as approved by the Commission in MYTTariff Order of DTL dated 20 December, 2007.

4.5.5.6. Transmission Charges

The Commission estimated intra-state transmissioncharges payable to DTL by apportioning DTL’s ARRamongst all utilities namely BRPL, BYPL, NDPL,MES and NDMC in proportion to their weightedaverage allocation of power in MW.

Inter-state transmission (PGCIL) charges wereestimated by first calculating per MW transmissioncharges paid to PGCIL by DTL in FY07 andmultiplying it with total MW capacity allocation forthe Petitioner in the respective years in projectslocated outside Delhi.

Energy Balance : Total power purchase of BRPL forthe Control Period as approved by the Commissionis summarized as follows:



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4.5.5.7.Other Expenses : For the MYT period, theCommission analysed and approved all thecomponents of the ARR such as O&MExpenses, Return on Capital Employed(RoCE), Depreciation including Advanceagainst Depreciation, Working capitalrequirement, tax expenses, non-tariff incomeand other miscellaneous expenses inaccordance with the MYT Regulations.

4.5.5.8. Supply Margin: The Commission alsodesigned a supply margin so as toincentivise BRPL to sell power to itsconsumers instead of load shedding.However, if BRPL were to achieve energysales higher than that approved by theCommission, the additional revenue wouldbe adjusted against the ARR during true up.

4.5.5.9. Contingency Reserve: MYT regulationsprovide for maintenance of contingencyreserve in order to provide tariff stability andtransfer of benefits accrued to the consumersduring the MYT period. The Commissiondirected BRPL to transfer the refundsreceived from DTL, IP Station, Rajghat PowerHouse, GTPS and PPCL as specified in theMYT Order of the respective companies /Licensees to the MYT contingency reserve.

After detailed analysis of various heads ofexpenditure and income by the Commission inaccordance with the business plan, loss reductiontrajectory and quality of supply of BRPL, theCommission determined the ARR for the controlperiod as below :

BRPL : Approved ARR for the Control PeriodTABLE : 4.16

(Rs in Crore)



The Commission also analysed the total ARR ofBRPL vis-a-vis revenue from existing tariffs toassess whether the ARR is met with such tariffs atthe approved sales. If there was a revenue gap, thesame would be bridged by way of increase in tariffs.Subsequently, the net revenue surplus / (gap) forBRPL along with the adjustment of the truing up gapat approved tariffs is as follows :

4.6. Truing-up and Analysis of ARR : BSES Yamuna Power Ltd. (BYPL)

4.6.1.True up for Policy Direction Period(FY 2003 to FY 2007)

The Commission trued up the ARRs of BYPL forthe policy direction period of FY 03 to FY 07 andimplemented the decisions of the Hon’ble SupremeCourt and the Appellate Tribunal of Electricity (ATE).The Supreme Court as per its Order of 15th February2007 directed the Commission to allow depreciation@ 6.69% for the entire policy direction period as

BRPL : Approved ARRTABLE : 4.17

against 3.58% to 3.94% allowed by the Commissionand also stipulating that this would be effective onlyfor the said period of 5 years. The ATE vide its Orderdated 23 May 2007 observed that the Commissionneeds to allow all the actual expenses incurredtowards employees including contractualemployees.

Further, the expenses incurred on telephone, postal,telegraph and conveyance charges were also to beallowed for FY05 and FY06 at actual. In addition,depreciation as per directions of the Hon’bleSupreme Court with a carrying cost of 9% was alsoto be allowed. Accordingly, BYPL has claimed trueup of various cost elements as a part of the MYTpetition.

Net increase / impact on account of true up due tothe implementation of the Orders of the SupremeCourt and the ATE is as follows:





Carrying cost for past true-up @ 9%: Rs 15.30 Cr

Accordingly, the Commission after prudency check,approved the revenue gap of Rs 158.50 Cr for theFY 07 (inclusive of previous years true-up) as againstBYPL claim of Rs 330.39 Cr


BYPL submitted the MYT petition for approval ofARR and determination of Wheeling and RetailSupply Tariffs for the Control period of FY 08 – FY11. The summary of the petition is as follows:

(Rs in Crore)




BYPL : Summary of MYT PetitionTABLE : 4.18

(Rs in Crore)


In accordance with the MYT Regulations, BYPLsubmitted the allocation statement for allocating eachcomponent of the ARR into Wheeling and RetailSupply Business for FY 07 which was consideredby the Commission as the base year for projectingall elements of the ARR for the control period.

4.6.3. Sales Forecast

BYPL projected growth in sales for the control periodassuming a variety of economic, commercial anddemographic factors. The Commission, afterdetailed study and finding that the energy salesprojection of BYPL for each category did not reflecta predictive trend, decided to forecast the sales,number of consumers and connected load for thecontrol period on the basis of past trends andprojections made by BYPL, weighted averageprojections of all the Discoms, combined with theCAGR methodology (computed for 2 – 12 yearsduration) for BYPL. The Sales projections madeby BYPL and that approved by the Commission forthe Control period were as follows:

BYPL : Sales ProjectionsTABLE : 4.19




4.6.4. Aggregate Technical and Commercial(AT&C) Losses:

In the policy direction period, GNCTD had setout the principles of determination of AT & C lossesfor measuring the efficiency of Discoms. As perthe provisions of the MYT Regulations forachievement of AT&C Loss reduction, theCommission fixed the target for BYPL at 22% bythe end of the Control period.

However, BYPL expressed its inability to achieve thesaid target due to various constraints and insteadproposed that their targets be based on the AbrahamCommittee Report on distribution loss reduction.The Commission reiterated its stand on conformingto the MYT Regulations as a number of factors suchas past achievements on loss reduction, Capexprogrammes, consumer mix in Delhi, meteringstatus, loss levels of private utilities in other citiesetc. have been factored in while fixing the targets inthe regulations. Incentives / penalties for over / underachievement of AT&C loss reduction targets werealso set by the Commission. Consequently,distribution loss targets were also set for BYPL afterassuming reasonable collection efficiency.

BYPL submissions and the figures approved byCommission are as follows:

BYPL SubmissionTABLE : 4.20


4.6.5. Power Purchase Quantum and Costs

The Petitioner assumed that the allocation of 299MW i.e. 15% unallocated power with GNCTD shallremain unaltered for the rest of the Control Period.The Commission, however, assumed that from 1April, 2008 onwards, unallocated capacity shall bereallocated between BYPL and NDPL in the ratio of55:45 till 31 March, 2009 as per GNCTD letter no.F.11/2007/Power/426 dated 22 February, 2008.

4.6.5.1. Power Purchase from Central GeneratingStations

BYPL was assigned its share from variousgenerating stations as per the Commission’s Orderdated 31.03.2007. In addition to this firm allocation,BYPL also got a portion from the 15% unallocatedpower from the Central Pool (as decided by theCEA/ Ministry of Power, Govt. of India from time totime) based on power requirement and powershortage in different states.

4.6.5.2. Energy Availability from Future Projects

The Commission considered the commissioningschedule of the future stations based on the dataavailable from CEA website and as per thediscussions held with all the concerned Discoms.



4.6.5.3. Power Purchase from Bilateral, OtherSources, Short Term Arrangements andBanking

While projecting power purchase quantum and costfor FY08, the Commission has included actual powerpurchase from bilateral and short term arrangementsupto December 2007. For January – March 2008,an additional 100 MUs from bilateral purchasethrough intra-state sources was estimated by theCommission while approving the power purchasecost for FY08.

For the remaining Control Period, the Commissionassumed that 5% of net annual power requirementshall be required to be sourced through bilateralpurchases and short term arrangements with tradingcompanies for meeting seasonal peak demand insummer and winter months. Further, the Commissionconsidered that 25% of such short term peak powershall be available from intra-state sources and 75%through inter-state sources. The Commission alsoassumed that 20% of deficit power procured frominter-state sources will be coming through bankingarrangements and the balance from bilateralpurchase through short term arrangements/tradingcompanies.


The Commission approved Power Purchase Costby considering the following :

(i) The Commission has derived annual fixedcharges (in proportion to the Petitioner’sshare) applicable in FY08 and FY09 forvarious central sector generating stationsfrom the relevant Tariff Order issued byCERC. The annual fixed charges for FY10and FY11 were considered at same level as

that for FY09 on the assumption that anyincrease in Operation & Maintenance costwill be offset by the decrease in other fixedcharges.

(ii) The fixed cost for State generating stationswas taken as approved by the Commissionin respective MYT Orders for the ControlPeriod FY 08 to FY11.

(iii) The variable cost including Fuel PriceAdjustment (FPA) for the Control Period wasbased upon the power purchase data for FY07, as submitted by DTL. An escalation of3% and 4% was also applied for coal andgas/liquid fired plants, respectively on thevariable cost for subsequent years.

(iv) For nuclear plants, based on the actual powerpurchase bill for FY07, single part tariff with1% annual escalation was considered.

(v) For hydro stations , net charges payable werederived after deducting the free share ofpower.

(vi) Incentives payable were calculated asapplicable for generation above target PLF.

(vii) Income tax and any other charges payablewere considered at the same level as actualpaid in FY07.

(viii) Total power purchase cost was estimatedconsidering fixed charges, variable charges,FPA, Income tax, incentive and othercharges.

(ix) The Commission considered powerpurchase from coal based future projects at250 Paisa per unit in FY08 and subsequentlyescalated at 3% p.a. Power purchase fromfuture hydro projects is considered at 270



Paisa per unit in FY08 escalated at 3% p.a.Power from DVC future projects wasconsidered at 300 Paisa per unit in FY08escalated at 3% per annum.

(x) The Commission considered actual cost ofbilateral purchase up to December 2007 assubmitted by the Petitioner. For rest of theControl Period, the Commission consideredbilateral purchase from intra-state sources atthe regulated rate of Rs. 2.75 per unit andfrom inter-state sources at Rs 7.00 per unit.

(xi) The sale of surplus energy available in nonpeak duration was considered at theregulated rate of Rs 2.75 per unit for intra-state sale and Rs 4.00 for inter-state sale.


The Commission estimated PGCIL losses at 3.5%for northern region and 3.0% for eastern regionbased on past trends. DTL losses were estimated

at 0.95% as approved by the Commission in MYTTariff Order of DTL dated 20 December, 2007.

4.6.5.6. Transmission Charges

The Commission estimated intra-state transmissioncharges payable to DTL by apportioning DTL’s ARRamongst all utilities namely BRPL, BYPL, NDPL,MES and NDMC in proportion to their weightedaverage allocation of power in MW.

Inter-state transmission (PGCIL) charges wereestimated by first calculating per MW transmissioncharges paid to PGCIL by DTL in FY07 andmultiplying it with total MW capacity allocation forthe Petitioner in the respective years in projectslocated outside Delhi.

4.6.5.7. Energy Balance

Total power purchase of BYPL for the Control Periodas approved by the Commission is summarized asfollows:



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4.6.4.8. Other Expenses

For the MYT period, the Commission analysed andapproved all the components of the ARR such asO&M Expenses, Return on Capital Employed(RoCE), Depreciation, including Advance againstDepreciation, Working capital requirement, taxexpenses, non-tariff income and othermiscellaneous expenses in accordance with the MYTRegulations.

4.6.4.9. Supply Margin

The Commission also designed a supply margin soas to incentivise BYPL to sell power to its consumersinstead of load shedding. However, if BYPL were toachieve energy sales higher than that approved bythe Commission, the additional revenue would beadjusted against the ARR during true up.

4.6.4.10. Contingency Reserve

MYT regulations provide for maintenance ofcontingency reserve in order to provide tariff stabilityand transfer of benefits accrued to the consumersduring the MYT period. The Commission directedBYPL to transfer the refunds received from DTL, IPStation, Rajghat Power House, GTPS and PPCL asspecified in the MYT Order of the respectivecompanies / Licensees to the MYT contingencyreserve.

After detailed analysis of various heads ofexpenditure and income by the Commission inaccordance with the business plan, loss reductiontrajectory and quality of supply of BYPL, theCommission determined the ARR for the controlperiod as follows :

BYPL : Approved ARR for the Control PeriodTABLE : 4.23 (Rs in Crore)



The Commission analysed the total ARR of BYPLvis-a-vis revenue from existing tariffs to assesswhether the ARR is met with such tariffs at theapproved sales. If there was a revenue gap, thesame would be bridged by way of increase in tariffs.

Subsequently, the net revenue surplus / (gap) forBYPL along with the adjustment of the truing up gapat approved tariffs is as follows:

BYPL : Approved ARRTABLE : 4.24

(Rs in Crore)


4.7. Truing-up and Analysis of ARR :North Delhi Power Ltd. (NDPL)

4.7.1. True-up for Policy Direction Period(FY 2003 to FY 2007)

The Commission trued up the ARRs of the NDPLfor the Policy Direction period from FY 2003 toFY2007 and implemented the decisions of theHon’ble Supreme Court and the Appellate Tribunalof Electricity (ATE).

The Supreme Court in its Order dated 15 February

2007 directed the Commission to allow depreciation@ 6.69% for the entire policy direction period asagainst 3.75% allowed by the Commission. The ATE,in its Order dated 23 May 2007 directed theCommission to allow carrying cost on such additionaldepreciation for the entire Policy Direction Period@ 9% including on assets acquired out of APDRPgrants.

The ATE also directed the Commission in its Orderof 23 May 2007 to allow the actual expenses towardsemployees including contractual employees,Consultancy charges, telephone, Postal & telegraph,Conveyance charges, Service tax and Reactiveenergy charges. The Commission was also directedto approve all the Legal expenses except for thosewhich the Commission can specifically point out tobe imprudent. Such expenses on litigation whichare found to be frivolous by the Courts may bedisallowed.

The Commission trued up the expenses andDepreciation in accordance with the ATE Orderdated 23 May 2007 for the FY 2003 to FY 2007.The Commission also allowed the monthly pension,provisionally for the FY 2005, 2006 and 2007 alongwith the carrying cost @ 8% per annum subject tothe outcome of the Arbitration Tribunal Award.


NDPL submitted the MYT petition for approval ofARR & determination of wheeling and Retail SupplyTariff for the Control Period of FY 08- FY 11. Thesummary of the Petition is as follows:



NDPL : Summary of MYT petitionTABLE : 4.25

(Rs in Crore)


The following table shows the details of NDPL salesprojections consumer categorywise and yearwise

during the control period and the extent approvalthereto given by the Commission:

The Commission approved an amount ofRs.2218.48 Crore towards Aggregate RevenueRequirement for the FY 2008-09, which consistedof the following major items:

4.7.2.1. Power Purchase CostThe Commission approved the Cost of PowerPurchase at Rs.1659.66 crores for 6009.56 Million

Units of Power for 2007-09 in due consideration ofthe Sources of Power available, allocation fromGenerating stations, energy availability from othersources, viz. bilateral, short term and bankingarrangements. Total power purchase for the ControlPeriod approved by the Commission is summarizedas follows:

NDPL : Sales ProjectionsTABLE : 4.26



ANNUAL REPORT : 2007-08N

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4.7.2.2. Aggregate Technical and CommericalLosses

The Commission approved the AT&C loss reductiontargets of 22.03% against 22.38% proposed by thePetitioner for the year 2007-08 in line with the MYTRegulations, 2007. The Commission alsoprescribed Incentive/Penalty on account of over/under achievement of the AT&C loss targets. TheNDPL submission and the Commission’s approvalto the yearwise AT&C loss reduction targets duringcontrol period are as follows:


The Commission determined the Operation &Maintenance (O&M) expenses (Employeeexpenses, Administrative & General expenses andRepair & Maintenance expenses) using themethodology detailed in the MYT Regulations, 2007.The Petitioner also submitted the allocation ofrespective heads of O&M expenses into Wheelingand Retail supply business.

As regards Employee expenses, the Commissionrecognized the uncontrollable nature of the 6th Pay


NDPL SubmissionTABLE : 4.28

Commission recommendations in determination ofemployee expenses and hence, shall true-up itsimpact based on actual basis. The Commission alsoprovisionally approved the SVRS Pension expensesas proposed by the Petitioner.

The Commission expressed concern over the highO&M cost of the petitioner and expected thepetitioner to improve its performance consideringthe repetitive nature of O&M works and introductionof new technologies.


For the purpose of allocating the approved GrossFixed Assets and Depreciation, the Commissionconsidered the allocation statement submitted by theDiscom.

After detailed analysis of various heads ofexpenditure and income by the Commission inaccordance with the business plan, loss reductiontrajectory and quality of supply of NDPL, theCommission determined the ARR for the controlperiod as follows :

NDPL : Approved ARR for the Control PeriodTABLE : 4.30

(Rs in Crore)



4.7.2.5. Supply Margin

The Commission designed Supply Margin in sucha manner that there is an incentive for the Petitionerto sell power to their consumers and not resort toload shedding.

4.7.2.6. Revenue Gap/Surplus

(i) Revenue Surplus

The NDPL was revenue surplus by Rs.15.99crores in the FY 2007-08 at the existing levelof tariffs. At the tariffs approved by theCommission for the FY 2007-08 and 2008-09, the Revenue Surplus increased toRs.19.85 crores and Rs.207.72 crores,respectively for these years.

(ii) Revenue Gap for the FY 2003-07

The Revenue gap on account of total truing-up for the policy direction period FY 2003 toFY 2007 was arrived at Rs.138.94 crores.

(iii) Net Revenue Gap/Surplus

The Commission amortized the truing-up gapof the Policy Direction Period to the extent ofavailability of the Revenue Surplus for the FY2007-08; and arrived at a net Revenuesurplus after completely amortising thebalance Revenue gap (with a carrying cost@ 9%) in the FY 2008-09.

The Commission also analysed the total ARR ofNDPL vis-a-vis revenue from existing tariffs toassess whether the ARR is met with such tariffs atthe approved sales. If there was a revenue gap, thesame would be bridged by way of increase in tariffs.Subsequently, the net revenue surplus / (gap) forNDPL along with the adjustment of the truing up gapat approved tariffs is as follows :

NDPL : Approved ARRTABLE : 4.31

(Rs in Crore)


4.8 Tariff Structure Across Discoms

New Tariff Structure as ordered vide the first MYTOrder dated 23rd Feb. 2008 became effective from1st Mar, 2008. The Commission approved a 05Paise per unit increase in Energy charges of BRPL,BYPL and NDPL uniformly across all consumercategories (except DMRC) and kept the tariffs sameacross all Discoms in Delhi. Fixed charges of allthe Consumer categories remain the same as duringthe previous year. Energy charges for DMRC wereincreased to 300 Paise/kVAh from the 230 Paise /kVAh earlier while making no change in the FixedCharges.

Any surplus generated by the Discoms after theeffect of the tariff increase and recovery of truing upgap would be transferred to their respectiveContingency Reserve as detailed in the MYTRegulations, 2007.



4.9. Discoms : Cost of ServiceThe Commission carried out a study for calculatingthe Voltage-wise Cost of Supply for the FY 2007-08. The approved ARR of the Wheeling and Retailsupply business (excluding Supply Margin) wasallocated to different Voltage levels and wasconsidered vis-à-vis the Voltage-wise respectiveSales to arrive at a Paise per unit Wheeling chargeand Retail supply charge for that Voltage level.

4.10. Truing-up and Analysis of ARR :New Delhi Municipal Council(NDMC)

4.10.1. True-up for FY 2006-07

The Commission analysed all the components of theARR with the constraints that the details of actualEmployee expenses, Administration & Generalexpenses, Repairs & Maintenance expenses, slab-wise sales and revenue, revenue from variouscomponents of tariff etc. for the FY07 were notsubmitted by the petitioner.

The Commission trued-up all the elements of ARRbased on the information provided in the revisedestimate of expenses and revenue, for the FY 2007and after ensuring that the expenses satisfied thetest of reasonable prudence.

The Petitioner did not comply with any of theDirectives issued by the Commission on O&Mexpenses and also to separately account the costof works carried out by civil engineering departmentfor electricity department and provide completedetails of such works and associated costs at theend of the year bringing out clearly the percentageexpenditure of Civil Engineering Department

booked to electricity department vis-à-vis all theother departments, as directed in the tariff order forthe FY 2007.

4.10.2. Analysis of Aggregate RevenueRequirement (ARR)

NDMC submitted the MYT petition for approval ofAAR and determination of Wheeling & Retail SupplyTariff for the Control Period of FY 08-11. Thesummary of the Petition is as follows:

NDMC: Summary of MYT PetitionTABLE : 4.32

(Rs in Crore)


4.10.2.1. Sales Forecast

The Commission projected energy sales inconsideration of the past trends and projectionsmade by the Petitioner. The Commission analysedthe year-on-year variations in sales as well as theshort term and long term trends in sales for decidingthe appropriate growth rate to forecast the energysales for a particular category. The Commissionconsidered the 4 years CAGR for projecting salesduly taking into account consumption trends in recent



period and approved 1047.38 MUs of Sales againstthe Sale forecast of 1059.83 MUs by the petitioner.

The following table shows the details of NDMCsales projections consumer categories wise &

NDMC : Sales ProjectionsTABLE : 4.33

4.10.2.2. Aggregate Technical and Commercial(AT&C) Losses

The Commission approved the AT&C loss targetsof 11.13% in line with the MYT Regulations, 2007 asagainst the target of 11.25% proposed by thepetitioner for the year 2007-08. The Commissionalso prescribed Incentive/Penalty on account of over/under achievement of the AT&C loss targets.

The following tables show NDMC submission and theCommission’s approval to the year - wise AT & C lossreduction targets during control period:

Commission Approved

NDMC SubmissionTABLE : 4.34

year wise during the Control Period and the extentapproved by the Commission:





The Commission, in determining the Powerpurchase cost, made reasonable assumption forPLF, auxiliary consumption, transmission losses andweighted average allocation of the NDMC to arriveat the quantum of energy available to the Petitioner.The Commission observed that the Petitioner had

surplus power available for sale during FY 2008. TheCommission approved the power available for saleat 1178.48 MUs at Rs.240.39 crores for the FY2008.

Total Power Purchase for the Control Periodapproved by the Commission is summarized asfollows:

NDMC : Energy BalanceTABLE : 4.35


The Commission determined the Operation &Maintenance expenses (employee expenses,Administration & General expenses and Repair &Maintenance expenses) in accordance with the MYTRegulations, 2007.

While calculating the employee expenses, theCommission recognised the uncontrollable natureof the 6th Pay Commission recommendations indetermination of employee expenses during the

Control Period. The Commission considered anincrease of 10% in total employee expenses fromJanuary 1, 2006 and payment of all the arrears dueto this impact in the FY2009.

4.10.2.5. Administrative Department and CivilEngineering Department Expenses

The Petitioner assured to provide complete detailsof expenditure relating to the electricity distributionrelated expenses separately once the NationalMunicipal Accounting Manual and Double entry



accounting system is implemented within NDMC. Inthe absence of any details of cost of works carriedout by the Civil Engineering Department and theAdministrative Department, the Commissionconsidered and approved the same expenses whichwere approved for the FY 2007.

4.10.2.6. Capital Investment

The Commission observed that the capitalinvestment proposed by the Petitioner is significantlyhigher than the actual investments and opined thatthe Capital investments need a review forconsidering prudent investment in an efficient andeconomical manner. The Commission provisionallyapproved the Capital Investment proposed by thePetitioner. However, this does not imply approval of

the Schemes for which separate Scheme-wiseapproval has to be obtained for the Capitalexpenditure to be incurred.


In the absence of the asset-wise break up, theCommission considered an average depreciationrate of 3.6% for the Control Period subject to true-up, once the break up of assets and theirclassification is provided by the petitioner.

After detailed analysis of various heads ofexpenditure and income by the Commission inaccordance with the business plan, loss reductiontrajectory and quality of supply of NDMC, theCommission determined the ARR for the ControlPeriod as follows:

NDMC : Approved ARRTABLE : 4.36

(Rs in Crore)

4.10.2.8. Tariff Design

The Commission observed that the Petitioner shallbe Revenue Surplus in FY08 at existing tariffs i.e.there would be no requirement for increase inexisting tariff as the Petitioner would be able torecover its net revenue requirement for FY08 throughexisting tariff. The Commission, therefore, retainedexisting tariffs in respect of the Energy Charges forthe FY 08 for all categories.

The Commission also noted that the current practiceof levying Monthly Minimum Charges (MMC) wouldlead to under-recovery of fixed cost in cases wherethe consumption exceeded certain minimum levels,as only energy charges were levied in such cases.Thus, as a part of the Tariff rationalization measurethe Commission replaced Monthly MinimumCharges (MMC) with Fixed Charges from 1 April2008 onwards for all categories.



4.11. Directives of the Commission :Generating Companies (GENCOs)

The Commission derives power from the DelhiElectricity Reform Act (DERA), 2000 and Section61 of the Electricity Act, 2003 to issue directives forfostering competition, efficiency, and economicaluse of the resources, good performance andoptimum investments.

The Commission in its MYT Tariff Orders gave thefollowing directives to the Generating Companiesin Delhi :

4.11.1.IPGCL was directed to inform the SLDCregarding the fuel being used for generationon any particular slot/ day, since the variablecost is different for each fuel and the SLDCcould consider the same during merit orderdispatch.

4.11.2.PPCL was directed to inform the SLDC whenthe plant was operated on Spot R-LNG, sincethe variable cost is expected to besignificantly higher and the SLDC canconsider the same during merit orderdispatch.

4.11.3.SLDC may test the declared capacity ofGTPS and Pragati Power Station at randomand in the event of the power station failingto demonstrate the declared capability, theSLDC shall report the matter to theCommission, which would then determine thepenalty, if any, to be levied for falsedeclaration.

4.11.4.IPGCL and PPCL were directed to consider

any source of cheaper fuel available in thefuture, and accordingly, restructure the orderof scheduling of fuel to ensure that thecheapest available fuel is utilized first.

4.12. Directives of the Commission :Delhi Transco Ltd. (DTL)

The Commission in its MYT Tariff Orders directedDTL to :-

4.12.1. take all possible measures to ensure thatthe projects/schemes are completed onschedule.

4.12.2. seek approval of the Commission for allschemes as per the terms and conditions ofthe License.

4.12.3. submit quarterly progress reports for theschemes being implemented during eachyear of the Control Period within 15 days ofthe end of each quarter and also to submitthe actual details of capitalisation for eachyear of the Control Period by June 30 of thefollowing year for consideration of theCommission. All information regardingcapitalisation of assets shall be furnished inthe formats prescribed by the Commission.These formats shall be submitted along withthe necessary statutory clearances/certificates of Electrical Inspector, etc. for allEHV & HV works and certificate of SLDCfor commissioning/commercial operation.

4.12.4. file a separate petition for determination ofSLDC charges for the subsequent years,including details of actual expenses for FY08.

DIRECTIVES



The commission also clarified that thispetition would entail no petition fee.

4.12.5. maintain a separate account for the reactiveenergy wheeled and the respective reactivecharges levied to the Discoms. Since noproposal for reactive energy charges wasincluded by the Petitioner in this petition, theexisting arrangement for levy of reactiveenergy charges shall continue. The DTL wasfurther directed to file an appropriate petitionfor reactive energy charges within threemonths of issue of the MYT order (2008-11).

4.12.6. submit details of actual receipt of theincentive amount received from CPSU’sunder the one-time settlement scheme as wellas the time and manner it was put to use. Anyinterest earned on the incentive amount shallbe adjusted during true-up.

4.12.7. take up the issue of interest rate on PlanFunds with GNCTD for appropriatereduction. It may also borrow from otherlenders at a lesser rate of interest.

4.12.8. submit details of actual R&M works carriedout at the end of each quarter, within 30 daysof the end of the quarter, as in the past.

4.13. Directives of the Commission :Distribution Companies(Discoms)

The Commission in its MYT Orders issued thefollowing directives to the Discoms:

4.13.1. Special Voluntary Retirement Scheme(SVRS) related expenses: The Commissiondirected the Discoms to expedite constitutionof the Actuarial Tribunal; and also, seek

clarification on the refund of the interveningmonthly pension payments. The Commissionalso directed the Discoms to inform theCommission of any interim/final Order on theaforesaid issue.

4.13.2. Asset Capitalisation: The Commissiondirected the Discoms to submit actual detailsof capitalization for each year for the ControlPeriod by September 30 of the following yearfor scrutiny and year-wise capitalization ofassets. The Commission also directed theDiscoms to organize for scheme-wisecompletion and consequent capitalization ofthe assets in consonance with thecommissioning/ commercial operation of therespective scheme which would be certifiedby the Electrical Inspector/ SLDC/ relevantauthority.

The Discoms were further directed to furnishthe relevant information in the formatsprescribed by the Commission forcapitalization of assets. The said formats areto be submitted along with the necessarystatutory clearances/ certificates of ElectricalInspector, etc. for all EHV & HV works andcertificate of SLDC for commissioning/commercial operation.

4.13.3. Contingency Reserve: The Commissiondirected the Discoms to transfer the amountallowed as contribution to contingencyreserve in the past to MYT contingencyreserve and to maintain separate accountsin their books and reflect the balance in theMYT Contingency Reserve Account in theBalance Sheet. The Discoms could use theamount for investing in safe securities and



earning returns based on market conditions,however, the Discoms were refrained fromusing the money for speculative purposes.

4.13.4. Voltage-wise Assets Segregation: TheCommission directed the Discoms to carryout Voltage-wise Assets Segregation andprovide the details of the same to theCommission.

4.13.5. Submission of case wise details of legalexpenses: The Commission directed theDiscoms to submit casewise details and theirexpenses where, either the courts have foundthe litigation by the Discoms frivolous, or thecourts pronounced decision against theDiscoms, for final approval of the legalexpenses.

4.13.6. Break-up of energy charges: TheCommission directed the Discoms to bill theconsumers using Wheeling Tariff, RetailSupply charge and Supply Margin chargeinstead of the existing practice of billing theconsumers on energy charges.

4.13.7. Voltage wise distribution losses: TheCommission directed all the Discoms toimmediately carry out energy audit of thesales at HT level (33 kV and 11kV) and submitthe report to the Commission, so as to usethe data to calculate the cost of supply in thenext Tariff Order.

4.13.8. Tariff structure of JJ Clusters: TheCommission directed the Discoms to installmeters in JJ clusters and bill them as per theapplicable tariff for domestic category slabsin line with the National Tariff Policy.

4.13.9. Power connections in un-electrified left out

pockets and villages: The Commissiondirected the Discoms to furnish the numberof installations where supply is alreadymetered and the number of connectionswhich are yet to be provided with meters.

The Directives continued from the previous tarifforders:

4.13.10. Capital Investment: The Commissiondirected the Discoms to submit completeDetailed Project Reports (DPRs) with costbenefit analysis for schemes more than Rs 2Cr for obtaining investment approval. Theapproval of the Commission shall also beobtained for individual schemes less than Rs2 Cr but aggregating to Rs 20 Cr in a year.

4.13.11. Payments through Cheques: TheCommission directed the Discoms to acceptthe payment of the Bill by means of an AccountPayee cheque/DD in case the bill forconsumption of electricity is more than Rs.4,000.

4.13.12. kVAh Billing: The Commission directed theDiscoms to maintain data on the averagepower factor, kWh, kVAh and kVRhconsumption for consumers having electronicmeters. The Discoms have been submittingthe compliance reports.

4.13.13. AT&C Loss monitoring : The Commissiondirected the Discoms to provide the breakup of energy input to the Discom supply area,energy sold, energy billed by the Discoms,the revenue realisation against billed energyand the Division/ District-wise AT&C losseson a monthly basis to the Commission withinfifteen days after the end of each calendar



month. The Discoms have been complyingwith this directive.

4.14. Directives of the Commission :New Delhi Municipal Council(NDMC)

4.14.1. Aggregate Technical and Commercial(AT&C) Losses

The Commission directed the NDMC to providebreak up of energy input to its supply area, energysold, energy billed, the revenue realisation againstbilled energy and the district-wise AT&C losses ona monthly basis to the Commission within fifteen daysafter the end of each month.

4.14.2. Capital Expenditure

The Commission directed the NDMC to submit thescheme-wise details of the capital schemes carriedout in FY07 by 30 September 2008.

4.14.3. Capital Investments

The Commission directed the NDMC to file adetailed proposal for various capital expenditureschemes implemented/ to be implemented duringControl Period.

4.14.4. Asset Capitalisation

The Commission directed the NDMC to submitactual details of capitalization for each year of theControl Period by September 30 of the followingyear to the Commission for scrutiny and year-wisecapitalization of assets.

The Commission also directed the Petitioner toorganize for scheme-wise completion andconsequent capitalization of the assets inconsonance with the commissioning/ commercial

operation of the respective scheme which would becertified by the Electrical Inspector/ SLDC/ relevantauthority and considered as an element ofdistribution system in operation. The Petitioner wasalso directed to submit the necessary statutoryclearances/ certificates of Electrical Inspector, etc.for all EHV & HV works and certificate of SLDC forcommissioning/ commercial operation.

4.14.5. Operation and Maintenance Expenses

The Commission directed the Petitioner to carry outa proper cost benefit analysis before taking up anynew initiatives and submit the same for the approvalto the Commission.

4.14.6. Administrative & Civil EngineeringDepartment Expenses

The Commission directed the NDMC to separatelybook the cost of works carried out by civilengineering department for electricity departmentand provide complete details of such works andassociated costs at the end of the year bringing outclearly the percentage expenditure of CivilEngineering Department booked to electricitydepartment vis-à-vis all the other departments.

4.14.7. Depreciation

The Commission directed the petitioner to submitthe break-up of opening block of assets and assetscapitalized during the year as per the classificationspecified in the MYT Regulations, 2007.

4.15. Rationalization of TariffStructure

The Commission directed the NDMC to recordrevenue collected on account of fixed charges andenergy charges separately and submit the same



along with slab-wise number of consumers andsanctioned load within six months of issue of theTariff Order so that the Commission can takeappropriate steps to rationalise tariff structure forNDMC consumers in the subsequent Tariff Orders.

The Commission further directed the NDMC that theestimated surplus revenue realised in FY 08 ofRs. 113.49 Crore be transferred to MYT Contingencyreserve. The Petitioner was directed to maintainseparate accounts in their books and reflect thebalance in the Contingency Reserve Account in the

balance sheet. There shall be yearly additions anddrawals to/from these Contingency Reserveaccounts based on the annual review andperformance of the Petitioner. Funds under the MYTContingency Reserve shall be kept in a separatebank account and shall be effectively invested andmanaged to earn returns based on marketconditions ensuring adequate liquidity. This fund shallnot be utilized for speculative purposes. The use ofthese funds in any other manner shall be only withthe prior approval of the Commission.



5.1. DERC RegulationsDuring the period under report, the Commissionframed the following Regulations:

(i) Delhi Electricity Supply Code andPerformance Standards, Regulations, 2007;

(ii) Delhi Electricity Regulatory Commission(Terms and Conditions for Determination ofGeneration Tariff) Regulations, 2007;

(iii) Delhi Electricity Regulatory Commission(Terms and Conditions for Determination ofTransmission Tariff) Regulations, 2007;

(iv) Delhi Electricity Regulatory Commission(Terms and Conditions for Determination ofWheeling Tariff and Retail Supply Tariff)Regulations, 2007;

(v) Delhi Electricity Regulatory Commission(Levy and Collection of Fee and Charges byState Load Dispatch Centre) Regulations,2007; and

(vi) Delhi Electricity Regulatory Commission

(State Grid Code), Regulations 2008.

The salient features of these Regulations, mentionedabove, are as follows:

5.1.1. Delhi Electricity Supply Code andPerformance Standards, Regulations,2007

The Commission, in exercise of its powers underSection 50 of the Electricity Act, 2003, read with

5. LAW DIVISION

Sections 57, 86 and 181 of the said Act, framedthese Regulations which were notified on18.04.2007. These Regulations are an importantmile stone in the electricity sector of Delhi which bindthe Distribution Companies to attend to complaintsand redress the grievances of consumers in a timebound manner. These Regulations provide for thesystem of supply and classification of supply; theprocedure to deal with new connections in electrifiedand unelectrified areas; problems relating tometering and billing and procedure thereof;disconnection and reconnection. The Regulationsalso prescribe the procedure to deal with the casesrelating to theft and unauthorized use of electricity;procedure for lodging complaints and their handlingby the utilities, the guaranteed and overall standardsof performance. These Regulations specificallymention the maximum time limit in which a complaintis to be attended to and redressed and in case offailure on the part of the Distribution Licensee, toimpose penalty and also award compensation to theaffected consumer.

In Schedule III of the Regulations, GuaranteedStandards of performance and compensation toconsumers in case of default by the Licensee, havebeen specifically provided which are as follows:



TABLE : 5.1





The Regulations also provide the manner of paymentof compensation amount which in brief is as follows:

1. The Licensee shall register every complaintof a consumer regarding failure of powersupply, quality of power supply, meters, billsetc., at the Centralized Complaint Center orComplaint Centers and intimate thecomplaint number to the consumer;

2. The Licensee shall maintain consumer-wiserecords regarding the GuaranteedStandards of performance in order to give afair treatment to all consumers and avoid anydispute regarding violation of standards; and

3. All payments of compensation shall be madeby way of adjustment against current and/orfuture bills for supply of electricity, but not later

than ninety days from the date of violation ofa Guaranteed Standard.

However, if the Licensee fails to disburse thecompensation amount, the aggrieved consumer canapproach the respective Consumer GrievanceRedressal Forum for redressal of grievances ofconsumers to seek such compensation. In suchevent, additional penalty may be levied on Licenseefor not implementing Regulations faithfully on a case-to-case basis.

5.1.1. Delhi Electricity Regulatory Commission(Terms and Conditions for Determinationof Generation Tariff) Regulations, 2007.

The Commission, in exercise of its powers underSub-sections (zd), (ze) and (zf) of Section 181(2)read with Sections 61, 62 and 86 of the Electricity



Act, 2003 and all powers enabling it in that behalf,framed these Regulations which were notified on30.05.2007. The enactment of these Regulations isan important development in the NCT of Delhi as itprovides for a framework to determine Multi YearTariff by the State Commission. The State of Delhihas, thus, become one of the very few States in theCountry, to frame such Regulations and issue multiyear tariff orders for the first control period i.e. fromFY 2007-08 to FY 2010-11.

The Generation Tariff Regulations, provide for theprocedure for determination of generation tariff,general approach and guiding principles, principlesfor determination of tariff, operational norms forThermal Power Generating stations and theprocedure for Multi-Year Tariff filing. The generalapproach and guiding principles of theseRegulations are, as mentioned in Sections 61 and62 of the Act, to encourage competition, efficiency,economical use of resources, good performanceand optimum investments. The Regulations, further,provide that the Commission shall adopt Multi YearTariff framework for determination of tariff for eachyear of the Control Period which shall be based onthe following:

i) Business Plan of the Generating Company(plant wise separately) for the entire ControlPeriod to be submitted to the Commissionfor approval;

ii) Applicant’s forecast of expected tariff for saleof power for each year of the Control Period,based on reasonable assumptions of theunderlying financial and operationalparameters, as submitted in the BusinessPlan;

iii) Trajectory for specific parameters shall be

stipulated by the Commission, where theperformance of the applicant is sought to beimproved through incentives anddisincentives;

iv) Annual review of performance shall beconducted vis-à-vis the approved forecast.

5.1.2 The Regulations also empower theCommission to set targets for each year ofthe Control Period for the items orparameters that are deemed to be“controllable” and which include:

i) Station Heat Rate;

ii) Availability;

iii) Auxiliary Energy Consumption;

iv) Secondary Fuel Oil Consumption;

v) Operation and Maintenance Expenses;

vi) Plant Load Factor;

vii) Financing Cost which includes cost of debt(interest), cost of equity (return); and

vii) Depreciation.

These Regulations also provide for review at the endof the control period as well as periodical reviews toensure smooth implementation of the MYTframework.

5.1.3. Delhi Electricity RegulatoryCommission (Terms andConditions for Determination ofTransmission Tariff) Regulations,2007.

The Commission, in exercise of its powers underSub-sections (zd), (ze) and (zf) of Section 181(2)read with Sections 61, 62 and 86 of the Electricity



Act, 2003 and all powers enabling it in that behalf,framed these Regulations notified on 30.05.2007,to provide a detailed mechanism and procedure todetermine transmission tariff and other relatedissues. Like the Regulations applicable in the caseof Generation, these Regulations also provide forgeneral approach and guiding principles, principlesfor determination of ARR, transmission tariff andprocedure for filing multi year tariff petitions. TheseRegulations further provide for review at the end ofthe control period as well as periodic reviews by theCommission to ensure smooth implementation ofthe Multi Year Tariff framework.

5.1.4. Delhi Electricity RegulatoryCommission (Terms andConditions for Determination ofWheeling Tariff and Retail SupplyTariff) Regulations, 2007.

5.1.4.1.The Commission, in exercise of its powersunder Sub-sections (zd), (ze) and (zf) ofSection 181(2) read with Sections 61, 62 and86 of the Electricity Act, 2003 and all powersenabling it in that behalf, framed theseRegulations, notified on 30.05.2007, forspecifying the terms and conditions fordetermination of Wheeling and Retail SupplyTariff in the case of Distribution Companies.The Regulations provide for generalapproach and guiding principles, principlesfor determination of ARR, Treatment ofincome from cross subsidy surcharge andadditional surcharges, quality of supply andservices, multi year tariff process,Government support for social causes, truingup and periodical reviews etc. These

Regulations specifically provide that theCommission shall adopt MYT framework forapproval of ARR and expected revenue fromtariffs and charges. The control period shallcommence from the date of issue of the MYTOrder and extend till 31.03.2011. TheseRegulations further provide that the MYTframe work shall be based on the following:

(i) Business Plan of the Distribution Licenseefor the entire Control Period to be submittedto the Commission for approval;

(ii) Applicant’s forecast of expected WheelingTariff and Retail Supply Tariff for each year ofthe Control Period, based on reasonableassumptions of the underlying financial andoperational parameters, as submitted in theBusiness Plan;

(iii) Trajectory for specific parameters shall bestipulated by the Commission, where theperformance of the applicant is sought to beimproved through incentives anddisincentives;

(iv) Annual review of performance shall beconducted vis-à-vis the approved forecastand categorization of variations inperformance into controllable factors anduncontrollable factors;

(i) Profit sharing shall be applied on the profitsarising from the Distribution Licensee’sbetter performance vis-à-vis AT&C lossreduction targets specified by theCommission;

(vii) Variation in revenue/cost on account ofuncontrollable factors like sales and powerpurchase shall be trued up.



5.1.4.2.The Commission has also been empoweredto set targets for each year of the controlperiod for the items or parameters that aredeemed to be controllable and which include:

i) AT&C Loss, which shall be measured as thedifference between the units input into thedistribution system and the units realised(units billed and collected) wherein the unitsrealised shall be equal to the product of unitsbilled and collection efficiency;

ii) Distribution losses, which shall be measuredas the difference between total energy inputfor sale to all its consumers and the totalenergy billed in its license area in the sameyear;

iii) Collection efficiency, which shall bemeasured as ratio of total revenue realisedto the total revenue billed for the same year.The revenue realisation from arrears relatingto the DVB period, electricity duty and latepayment surcharge shall be included forcomputation of collection efficiency;

iv) Operation and Maintenance Expenditurewhich includes employee expenses, repairsand maintenance expenses, administrationand general expenses and othermiscellaneous expenses viz. audit fees,rents, legal fees etc;

v) Return on Capital Employed

vi) Depreciation;

vii) Quality of Supply.

5.1.4.3. The Commission, in these Regulations, hasfixed the target for AT&C Loss levels to beachieved by the Distribution Licensees at theend of the control period which are as under

(i) NDPL – AT&C Loss level shall be at 17percent at the end of the Control Period i.e.31.03.2011.

� Provided that the year-wise loss reductiontrajectory for the Control Period shall be fixedfor the Distribution Licensee in the Multi YearTariff Order for 2007-08;

� Provided that profits arising from achievingloss level better than specified in the lossreduction trajectory shall be equally sharedbetween the Licensee and ContingencyReserve;

� Provided that profits arising from achievingloss level better than 15% in any year shallbe completely to the account of the Licensee;

� Provided that the loss reduction targets andyear-wise loss reduction trajectory forsubsequent Control Periods shall bespecified by the Commission before the startof each Control Period;

(ii) BRPL – AT&C Loss level shall be at 17percent at the end of the Control Period i.e.31.03.2011.






� Provided that the loss reduction targets andyear-wise loss reduction trajectory forsubsequent Control Periods shall bespecified by the Commission before the startof each Control Period.

(iii) BYPL – AT&C Loss level shall be at 22percent at the end of the Control Period i.e.31.03.2011.





(iv) NDMC – AT&C Loss level shall be at 10percent at the end of the Control Period i.e.31.03.2011.


� Provided that profits arising from achievingloss level better than specified in the loss

reduction trajectory shall be equally sharedbetween the Licensee and ContingencyReserve;

� Provided that profits arising from achievingloss level better than 9% in any year shall becompletely to the account of the Licensee;


These Regulations make a clear provision that forany class of consumers be it a consumer below thepoverty line, school, hospital, etc. desirous of seekingconcessional tariff, shall approach the Governmentof NCT of Delhi for obtaining subsidy. It would bethe discretion of the Government of NCT of Delhi toconsider giving subsidy to any class of consumersit so desires;

Provided that the amount of the subsidy for aparticular year of the Control Period shall be paidatleast in four equal quarterly instalments and inadvance of the period to which it is applicable;

The Regulations also provide for periodic review ofthe Licensees’ performance during the control periodby the Commission so as to ensure smoothimplementation of the MYT framework.



5.1.5. Delhi Electricity Regulatory Commission(Levy and Collection of Fee and Chargesby State Load Despatch Centre)Regulations, 2007

The Commission, in exercise of its powers undersection 181(2)(g) read with section 32 (3) of theElectricity Act, 2003 and the Electricity (Removal ofDifficulty) Sixth Order 2005, framed theseRegulations for levy and collection of fee and chargesby SLDC in the National Capital Territory of Delhi.The Regulations were notified on 18.10.2007.

These Regulations provide for levy of fee on theexisting generating stations, TransmissionLicensees and beneficiaries falling under thedomain of SLDC. The SLDC would be entitled torecover annual charges incurred while dischargingits functions from the beneficiaries which shall includethe following:

(i) The component of return on equity/investments;

(ii) Employee cost, Administrative & General(A&G) expenses, Repair and Maintenance(R&M) expenses, depreciation, advanceagainst depreciation, interest and financecharges, interest on working capital, if any,and any other expenses incidental todischarging the functions of SLDC asdeemed appropriate by the Commission.

These Regulations also provide for the procedurefor collection of charges by SLDC and the disputeresolution which are detailed as follows:

i) The SLDC shall furnish necessary monthlybills at the rate of 1/12th of the annual chargesas approved by the Commission, to thebeneficiaries;

ii) The Beneficiaries shall make payment to theSLDC within one month of the date of receiptof the bill;

iii) Non-payment within the given time or latepayment shall attract penalty; and

iv) Disputes to be settled amicably and mutually.In case of failure to resolve any disputemutually, the matter shall be referred to theCommission, whose decision shall be finaland binding on all parties.

5.1.6. Delhi Electricity Regulatory Commission(State Grid Code) Regulations, 2008

In exercise of the powers vested with theCommission under sub-section (zp) of Section181(2) read with sub-section (h) of Section 86(1) ofthe Electricity Act, 2003, the Delhi ElectricityRegulatory Commission (State Grid Code )Regulations, 2008 were notified on 31st March,2008. The Delhi Grid Code (DGC) lays down theregulations, guidelines and standards to be followedby various agencies and participants in the StateTransmission System (STS) to plan, develop,maintain and operate the STS, a part of NorthernRegion Grid System, in the most efficient, reliable,economic, and secure manner, while facilitating ahealthy competition in the generation and supply ofelectricity. The DGC governs the boundary betweenthe State Transmission Utility (STU), TransmissionLicensee(s) and other Users and establishesprocedures for operations of facilities, which use theSTS. It lays down both the information requirementsand the procedures governing the relationshipbetween various users of STS as well as the StateLoad Despatch Centre (SLDC). The DGC, however,is not concerned with the detailed design and



operation of Generators, Power Stations, Suppliersand Distribution Systems, provided that their overallcompatibility with the Transmission System needsare assured. The DGC covers all material technicalaspects relating to connections to operation and useof the STS including the operation of electric linesand electrical plant connected thereto in so far asrelevant to the operation and use of the TransmissionSystem. It is designed so as to permit the planning,development, maintenance and operation tofacilitate an efficient, coordinated, secured, reliableand economical system for the transmission andsupply including trading of electricity in the State.

5.2. DERC Orders

The Commission during the period under reportissued some important orders which are as under:

i) Proposal of Amnesty Scheme for VoluntaryDeclaration of Tampered Meters (Ordersdated 28.09.2007 and dated 31.01.2008).

ii) Timarpur-Okhla Waste ManagementCompany Pvt. Limited (Determination of tarifffor sale of power generated by the integratedWaste Management Plant) (Order dated17.08.2007 and 08.11.2007). The details ofthe project have already been given inChapter-3 at paragraph number 3.12.

iii) Refusal to grant Distribution License to DelhiMetro Rail Corporation (DMRC) in its areaof operation (Order dated 25.06.2007).

iv) Payment of interest on consumer SecurityDeposits (Order dated 23.04.2007).

v) Discoms Rebate/Adjustment Scheme todomestic consumers for 2007-08 (Orderdated 09.05.2007).

vi) Review of re-assignment of PPA’s Order ofthe Commission dated 31.03.2007 on thepetition of NDMC requesting to re-allocatepower from three different plants instead ofone (Order dated 07.03.2008) has beendiscussed in detail in Chapter 3 at paragraphnumber 3.7.

vii) Procurement of 309 MW power on medium-term basis by the Discoms (Order dated28.03.2008) has been discussed in detail inChapter 3 at paragraph number 3.8.

Brief description of the above orders is as follows:

5.2.1. Amnesty Scheme for VoluntaryDeclaration of Tampered Meters

All the three Distribution Companies (Discoms),namely, BRPL, BYPL and NDPL submitted anidentical proposal to introduce a time-boundVoluntary Disclosure Scheme for consumers withintheir respective distribution area. The Discomssought approval of the Commission under Clause55 of the Delhi Electricity (Supply Code andPerformance Standards) Regulations, 2007 byrelaxing Clause 70 of the said regulations whereinthe Commission has the powers to relax any of theprovisions of the Regulations, in public interest.While submitting the Scheme, it was explained bythe Discoms that with the enforcement becomingmore stringent with the deployment of CISF, creationof Special Courts, amendment of law making theft acognizable offence, etc., the consumers havingtampered meters can be given one last chance tocome clean. It was also pointed out that enforcementactions are not easy either for the Discoms or forthe consumers and therefore, it is in the interest ofboth that the tampered meters get changed at the



earliest and consumers start paying fully for theelectricity they use. It was also explained that theScheme would also help the Discoms in their driveto change electro-mechanical meters with electronicmeters. The Commission, while considering theScheme, also felt that all possible efforts need to bemade to bring in as many consumers as possibleinto the billing net and this objective would be wellserved by introducing the proposed Scheme whichwould also help in overcoming the stiff resistancethe Distribution Companies face in installation ofelectronic meters. The Commission, afterconsidering all these aspects, approved theproposed Amnesty Scheme in the larger publicinterest vide its Order dated 28.09.2007 with thedirection that during the period of operation of theScheme, if any meter is found tampered, theconsumer shall have the option to settle the matterin terms of the Scheme.

Seeing the good response from the residents in theNCT of Delhi, BYPL requested the Commission toextend the Scheme by another two months whichwas allowed by the Commission vide its Order dated31.01.2008.

5.2.2. Delhi Metro Rail Corporation (DMRC)Application for Distribution License

The DMRC filed a Petition for grant of license fordistribution and supply of electricity in its area ofoperation. In its Petition, the DMRC raised severalissues, legal as well as factual, in support of its case.It was stated that under the DMRC Act, the Applicanthad an exclusive authority to undertake business andactivities within the area of its operation and theApplicant had the right to exclude the interferenceor control of any other party within that area. It was,

further, stated by DMRC that Sections 31, 64, 67,68, 74 etc. of the DMRC Act and the Rules 65 to 80of the Delhi Metro Railway General Rules, 2002 andalso Rules 37 to 41 of the Opening of Delhi MetroRailway for Public Carriage of Passengers Rules,2002 give exclusive powers and rights to DMRC todeal with the aspect of conveyance and transmissionof energy within its area of operations and thereforeit is necessary for it to have a reliable and fullycontrolled power system essential for uninterruptedoperations. It was submitted by DMRC that theApplicant alone is entitled to lay down and placeservice lines in its area of operations and that noperson including the Distribution Licensees can enterthe area of operation of the Applicant or otherwiselegally claim access to the service line, power supplyand traction arrangement without the authority of theApplicant. It was also stated that the Petition wassubmitted under Delhi Electricity Reform Act, 2000and it continued to be a valid application under thesaid Act. It was submitted that the provisions of theElectricity Act, 2003 need not be applicable in thepresent situation and that the license to the Applicantmay be granted under the provisions of the DelhiElectricity Reform Act, 2000, rather than theElectricity Act, 2003. As per DMRC, the provisionsof Distribution of Electricity License (AdditionalRequirements of Capital Adequacy and CreditWorthiness and Code of Conduct) Rules, 2005would not be applicable in its case. Without goinginto the full text of arguments made by DMRC insupport of its case, which are elaborately dealt inthe Commission’s Order dated 09.05.2007, onlysome important issues have been stated above.

The Distribution Licensees vehemently opposed thegrant of Distribution License to DMRC and said that



the application for grant of License should beconsidered within four corners of the Electricity Act,2003 as the said Act is a statute which is posteriorin time both to the DMRC Act as well as the DelhiElectricity Reform Act, 2000. Further, attention wasinvited to Section 185 of the Electricity Act, 2003where the provisions of State Acts given in theSchedule are saved only to the extent they are notinconsistent with the provisions of the Electricity Act,2003. It was also stated that for the purpose ofdistribution and retail supply of electricity, theElectricity Act, 2003, is the special Act and theDMRC Act, a general law and therefore, theElectricity Act, 2003 will have an overriding effecton the provisions of DMRC Act, 2002. Further,attention was also invited to Section 173, 174 and175 of the Electricity Act, 2003. It was stated thatthe Electricity Act, 2003 under Section 173, expresslyexcludes its application to the extent of inconsistency,with that of the provisions of Consumer ProtectionAct 1986, Atomic Energy Act 1962, and the RailwaysAct, 1989 and therefore, the provisions of these threeActs will have an overriding effect on the provisionsof the Electricity Act, 2003. The aforesaid sectiondoes not create an exception in favour of theApplicant to seek priority over the provisions of theElectricity Act, 2003. It was also argued that theapplication for the distribution license squarelyattracts 6th Proviso of Section 14 of the ElectricityAct, 2003. The proposed area of supply falls withinthe respective area of supply of the three DistributionCompanies of Delhi and, therefore, the Applicantmust comply with the 6th Proviso of Section 14 ofthe Electricity Act, 2003.

Objections have also been received from New DelhiMunicipal Council which is a local authority within

the area of operations of DMRC. It is stated thatthe present application is not maintainable and isdefective on various counts as it does not conformto the provisions of the Electricity Act, 2003 andRegulations made thereunder. In view of Section185(3) of the Electricity Act, 2003, the application isrequired to be considered under the Electricity Act,2003 and not under Delhi Electricity Reform Act,2000. Even otherwise, the relevant date forconsideration of a license is the date on which it isconsidered for grant, and not the date of application.It has submitted that the area of supply as defined inthe application is very ambiguous and is incapableof precise definition. It was stated that the area ofsupply as mentioned by the Applicant is not coveredwithin the meaning of Section 2(3) of the ElectricityAct, 2003. Further, the Applicant is a consumer asdefined under Section 2(15) rather than aDistribution Licensee as defined under Section2(17) of the Electricity Act, 2003. It was claimedthat a prospective Licensee has to specify the areaof supply which has to be read within the meaningas provided under the Distribution of ElectricityLicense (Additional Requirements of CapitalAdequacy, Creditworthiness and Code of Conduct)Rules, 2005, which has prescribed the minimumarea as a “Revenue District”. The Application, thus,has to be in the format covering a minimum area asstated in the notification and it cannot be for an arealisted as per desire of the Applicant. It was statedthat the Applicant has made an attempt to escapefrom the mandate of the sixth proviso to Section 14by erroneously stating that DMRC is not asking forlicense for distribution of electricity as a parallellicensee or a multiple licensee in terms of sixthproviso of Section 14. It is an erroneous submission



that the area of operations of DMRC and the areaof operation of the existing distribution licensees aredifferent and the requisites of sixth proviso to Section14 are dispensable. In fact, the geographic area ofoperations of the Applicant also runs through thearea of supply of the Distribution Companies as wellas NDMC. It was further added that Section 6(2)(h)of the Delhi Metro Railway (Operation &Maintenance) Act, 2002 is only an enablingprovision which allows the Applicant to lay or placeelectric supply lines for conveyance and transmissionof energy and to obtain license for that purpose. Thisprovision has been carved out to achieve thepurpose of the aforesaid Act. However, if anapplication is made for a distribution license then ithas to be seen whether such application satisfy theprovisions of the Electricity Act, 2003. Finally, it wasalso stated that the averments of the Applicant thatthe Delhi Metro Rail Act is a Special Act vis-a-visthe Electricity Act, 2003, is incorrect. It is stated thatthe non-obstante provisions in Sections 173 & 174of the Electricity Act, 2003 have deliberately excludedthe Railway Act, 1989, but not the DMRC Act ascontended by the Applicant.

The Commission after considering the avermentsmade by the parties on the issue of minimum areaof supply is of the view that this being a statutoryrequirement, the DMRC has to show that theapplication is made for an area of supply constitutingatleast a revenue district. In a place like Delhi wherethe entire geographical area of the city has beendivided into nine revenue Districts, the Applicant hasnot been able to show as to which revenue District itintends to supply electricity as a DistributionLicensee. What DMRC has been pleading is that6th proviso of Section 14 of the Electricity Act, 2003

and the Rules made thereunder, including therequirement of minimum area of supply, are notapplicable to it. The Commission was however,convinced that the application of DMRC, hasnecessarily to be considered under the ElectricityAct, 2003 and the 6th proviso to Section 14 and theRules made thereunder, including the requirementof minimum area of supply, are applicable in thepresent case. The Applicant cannot escape fromthe said requirements as there is no provision ofgranting exemption to any class or category ofpersons seeking license for distribution of electricityin the same area. The condition prescribed underthe Rules for the minimum area of supply isincorporated to avoid a situation of cherry pickingand is, therefore, based on very sound logic andprinciple. The Commission, therefore, refused toaccept the request of DMRC for grant of a distributionand retail supply license. However, the DMRC washeld to be at liberty to approach the Commission asand when it satisfies the requirements of theElectricity Act, 2003 and the rules made thereunder,as amended from time to time.

5.2.3. Payment of Interest on ConsumerSecurity Deposit : Discoms’ Petitions

The three Distribution Companies, named above,had filed separate petitions before the Commissionfor payment of Interest on Consumer SecurityDeposit. It was submitted that the DistributionLicensee is to pay interest to the consumers on theSecurity Deposit under Section 47(4) of theElectricity Act, 2003. The opening Balance Sheetindicated that the aggregate Security Deposit heldby them was only Rs. 29 Crore (NDPL – Rs.10Crore, BRPL – Rs.11 Crore and BYPL – Rs.8 Crore).



The rest of the liability on account of the consumerSecurity Deposits was transferred to the HoldingCompany, i.e., the Delhi Power Company Limited(DPCL). It was the Licensee’s contention thataccording to the DVB books of accounts, theSecurity Deposits from the consumers as on31.03.2001 was in the region of about Rs.175 Crore.As against this, the amount transferred to theDistribution Company was only Rs.29 Crore and,therefore, the Distribution Companies cannot beliable to pay interest on the deposits which werenever held by them. It was submitted by the Discomsthat directions to be issued to DPCL to pay intereston the Security Deposits held by it which can bedisbursed by the petitioners (Discoms) on behalf ofDPCL. Alternately, the DPCL can transfer theamount of consumer Security Deposit held by it tothe Discoms so as to enable them to remit theinterest to the consumers. The petition of Discomswas opposed by the DPCL. One of the groundsraised was that DPCL is not a Distribution Licenseeand being a Holding Company, is only concernedwith the erstwhile liabilities of the defunct DVB interms of the Schedule of the Transfer Scheme.Schedule G does not include interest on theconsumer deposits which are stated under Section47(4) of the Electricity Act, 2003. It was argued byDPCL that the accounts, as on the date of unbundling,were frozen and that no new liabilities can be createdagainst the erstwhile DVB or the Holding Company.The only exception to this are the cases where thereare notes to accounts in the Schedule and that thepresent case is not covered therein. The DPCL alsoraised several other grounds to oppose the petitionof the Distribution Companies.

The Commission considered the matter in detail

including the issues, legal as well as factual, raisedby the parties and observed in its Order dated23.04.2007 that a major portion of the consumerSecurity Deposits is held in the books of DPCL asthe liability of the erstwhile DVB transferred to DPCL.It is an accepted financial principle that any partywhich enjoys the funds, has to pay for the cost ofholding the funds. In the instant case, the interestliability on account of deposits made by theconsumers, arises in line with the provisions of theAct and the Distribution Licensees are required topay the interest to all the consumers. However, theamount of Security Deposits is not fully held byDistribution Companies and a major portion is stillheld by the DPCL. However, the liability towardspayment of interest on Security Deposits devolveson all the Distribution Licensees and DPCL to theextent of funds held by each of them. The funds heldby the Licensees and DPCL as per records are asfollows:

NDPL - Rs. 10 Crore

BRPL - Rs. 11 Crore

BYPL - Rs. 8 Crore

DPCL - Rs. 257 Crores (plus interest)

While disposing of the petition of Discoms vide itsOrder dated 23.04.2007, the Commission has madethe following observations/ directions:

“One of the most vital functions of theCommission is to protect the interest of theconsumers in line with the provisions of theAct. As far as issuing directions to M/sDPCL to transfer the amount of securitydeposits held by it, to the successordistribution licensees is concerned, theCommission has decided not to issue such



directions to M/s DPCL as M/s DPCL is nota regulated entity. However, the Commissionafter considering all relevant legalprovisions and related factors, have decidedto issue a statutory advice to the Govt. ofNCT of Delhi under Section 86(2) of theElectricity Act, 2003, for directing M/s DPCLto transfer the amount of security depositsheld by it, alongwith interest, to the successordistribution licensees after identifying theamount of consumer deposits from therecords. The distribution licensees, onreceipt of such amount, shall give effect tothe provisions of Section 47(4) of theElectricity Act, 2003 to be read with relevantRegulations and provide necessary creditto the individual consumer towards intereston security deposits.”

5.2.4. Discoms’ Rebate/Adjustment Schemefor Domestic Consumers during FY 2007-08

The three Distribution companies, namely, BRPL,BYPL and NDPL submitted proposal to continue theexisting rebate scheme by offering reduction in thetariff to the extent that the effective tariff for theDomestic and Agricultural Consumers, for the periodbeyond 31.03.2007 up till the issue of next TariffOrder for Financial Year 2007-08, remains at thesame level as was applicable by virtue of the TariffOrder dated 07.07.2005. The proposed DiscomRebate/Adjustment scheme was in consonance withthe earlier scheme which was approved by theCommission vide its Order dated 23.09.2005.The NDPL in its proposal submitted that since theTariff Order for the Financial Year 2007-08 was yetto be issued, they would request the Commission toapprove extension of the scheme till the issue of next

Tariff Order for the Financial Year 2007-08 which willalso align the Discom adjustment with the Govt. ofNCT of Delhi subsidy. It was further submitted thatsince the transition period was over on 31.03.2007,the Discom adjustment for the period from01.04.2007 onwards may be accounted for as anexpense item in the ARR for the FY 2007-08. In asubsequent communication, the NDPL clarified thatthe adjustment during the extended period beyond31.03.2007, should be adjusted from the consumers’share of additional revenue gains accrued in FY2006-07 from the over achievements of AT & C lossreduction targets.

The other two Discoms, namely, BYPL & BRPL alsomade similar submissions and stated that thecumulative amount for the Discom adjustment for theperiod commencing from 01.04.2007 will be in thenature of expense which will be adjusted (totally orpartially) against any over achievements of AT & CLosses and residual amount, if any, after suchadjustment, be treated as expense in the ARR ofFY 2007-08. The Discoms also clarified that theyhad not made any prayer for creation of RegulatoryAsset for the purpose of deferring the Discoms’adjustment in subsequent financial year.The Commission while considering the proposal ofthe Discoms for extension of the Discom Rebate/Adjustment scheme beyond 31.03.2007 observedthat it would be in the overall interest of theconsumers to extend the scheme, till the issue ofthe order for the FY 2007-08. The Commission,therefore, approved the scheme submitted by theDiscoms vide its Order dated 09.05.2007, subjectto the condition that the rebate shall be adjustedagainst the consumers’ share of over achievementsof AT & C losses ideally during 2006-07 and 2007-08. This approval was given subject to certain otherterms and conditions stipulated in the Commission’searlier Order dated 29.09.2006. The Commission



NDPL: 01 BRPL: 03 BYPL: 04

Details of Penalties and CompensationsTABLE : 5.2

also directed that the said scheme shall continue tillthe date when the next year’s tariff i.e. for 2007-08becomes effective.

5.3. Complaints Under Section 142 ofElectricity Act, 2003

During the period under report the Commission hasreceived complaints alleging violation of certainprovisions of the Electricity Act, 2003 and/or the

Regulations framed thereunder by the Commission.In such complaints the concerned Discom wasissued notice and after hearing version of both sidesif it was established that certain provisions of Law /regulation have been violated, the Commissionimposed penalty against the erring Discom underSection 142 of the Electricity Act, 2003. The detailsof cases where penalty has been imposed duringthis period, are as follows:



6.1. Administration6.1.1. The Commission has been facing problems

relating to the lack of availability of skilledman power capable of handling the technicalfunctions of the Commission relating toelectricity tariffs, Engineering and Law. Theman power trained on regulatory aspects ishardly available in Govt. Ministries /Departments. The Commission cannotprovide higher pay packages to theemployees than those applicable togovernment employees working inMinistries / Departments of theGovernment. Hence, the quality staff crunchpersists. The Officers recruited ondeputation basis have a certain gestationperiod before they can begin delivering. Thedeputationists revert to their parent cadresafter completing their term of 3-5 yearsthereby denting the institutional memoryand leaving the organization poorer whiletaking alongwith the skills they attainedduring the period of their association with theCommission. The skills acquired, as such,are often not of much use in their parentCadre. The contract employees havehigher attrition rate since they find moreattractive jobs in the private domain aftergaining some useful regulatory experience.

6.1.2. A study of incumbency position, particularly,of the Group ‘A’ Officers of the Commissionafter it was initially set up in December 1999,shows that the average stay of a Group ‘A’

6. ADMINISTRATION AND ACCOUNTS

Officer in the Commission is less than 2½years. This only spells weak institutionalmemory and low returns from the skill setsdeveloped during the stay of the officers inthe Commission. Absorption of Officersworking in the Commission on deputationbasis could be an option before theRegulatory Intuitions. Many of the SERCshave already formulated their absorptionscheme. DERC is in the process of finalizingits own scheme in consultation with GNCTD.

6.1.3. The other limiting factors which dissuade thequality man power from joining Regulatorybodies are the lack of perquisitespermissible to employees of theseinstitutions vis-à-vis those in vogue in thepublic and private sector institutions. Forinstance medical and housing benefitsrelated problems continue to be a cause ofconcern to the Officers working in theCommission since they are not entitled toretain such benefits as they were entitled toin their parent organizations.

6.2. Revenue Receipts

Apart from the receipt of grant-in-aid which isexclusively meant for the expenditure of theCommission, the other source of income of theCommission is the Revenue Receipts. Duringthe year 2007-08, the Commission’s RevenueReceipts amounted to Rs.3,21,96,175/- as perhead-wise details as follows:



DERC : Revenue ReceiptsTABLE : 6.1

In accordance with the guidelines of the Govt. of NCTof Delhi communicated by the Office of the ControllerGeneral of Accounts through Principal AccountsOffice vide letter no. Pr.A.P./Misc./12/2001/T-II/2459dated 04.12.2001; the Revenue Receipts have notbeen utilized for expenditure of the Commission. Theentire Revenue Receipts as and when receivedincluding interest earned on the unutilized amount ofgrant-in-aid were regularly remitted to the Govt. ofNCT of Delhi.

6.3. Annual AccountsThe Annual Accounts of the Commission for the year2007-08 have been prepared on cash basis in theformats approved by the Office of Comptroller andAuditor General of India. The Annual Accounts ofthe Commission after being certified by the Officeof the AG (Audit) Delhi along with audit report andaudit certificate have been submitted to the Govt. ofNCT of Delhi for placing before the State Legislature.This is a statutory requirement under the ElectricityAct, 2003.

6.4.Budget and Maintenance ofAccounts Rules

In compliance to the provisions of the Electricity Act,2003, the Draft Rules on the Delhi ElectricityRegulatory Commission (Budget) Rules standsubmitted to the Government for approval inconsultation with the Office of Comptroller andAuditor General of India for Gazette notificationthereof. Similarly, Gazette notification of the DelhiElectricity Regulatory Commission (Maintenance ofAccounts) Rules duly vetted by the Governmentstand submitted to the Government for notification.

6.5. Staff WelfareIn order to provide statutory benefits of ProvidentFund and Insurance Coverage to the regular &contractual employee of the Commission, theapproval of the Govt. of NCT of Delhi was obtainedand the benefit of Employees’ Provident Fund (EPF)has been extended to the regular employees andthose appointed on contract basis w.e.f April, 2007.

(Amount in Rs.)





TABLE OF CONTENTS

Chapter Subject PageNumber

1. Introduction 1

2. Consumer Welfare 3

2.1 Delhi Electricity Supply Code & Performance Standards, Regulations, 2007 32.2 Consumer Satisfaction Survey 42.3 Meter Testing Drives 42.4 Discoms monthly meeting with Residents Welfare Associations 62.5 Grievance Redressal Officer Hearings 62.6 Call Centre Monitoring 62.7 Electricity Consumers Advocacy Committee 72.8 Third Party Meter Testing 82.9 Hearing Under Section 142 of Electricity Act, 2003 82.10 Consumer Grievances Redressal Forums & Ombudsman 82.11 Public Grievances Cell 10

3. Delhi Power Sector : Development of Infrastructure, 11Services and Some Associated Issues

3.1 Power Availability in Delhi 113.2 Capital Expenditure and Improved Infrastructure 113.3 Reduction in Aggregate Technical & Commercial Losses 123.4 Improvement in Plant Load Factor of Generating Units in Delhi 123.5 Sale / Banking of Surplus Power 133.6 Rate for Inter-Discom Trading within Delhi 143.7 Reassignment of Power Purchase Agreement 15

to Distribution Licensees and Deemed Licensees3.8 Procurement of Power on Short / Medium Term basis 183.9 Co-ordination Forum 193.10 Status of Open Access 223.11 Special Voluntary Retirement Scheme 223.12 Municipal Solid Waste Projects 253.13 Govt. of NCT of Delhi Targetted Subsidy Scheme 26



4 Tariff 28

4.1 Tariff Filing 284.2 Stakeholders’ Comments 304.3 Truing-up & Analysis of ARR : Generating Companies 454.4 Truing-up & Analysis of ARR : Delhi Transco Ltd. 484.5 Truing up and Analysis of ARR : BSES Radhani Power Ltd. 524.6 Truing-up and Analysis of ARR : BSES Yammuna Power Ltd. 594.7 Truing-up and Analysis of ARR : North Delhi Power Ltd. 664.8 Tariff Structure Across Discoms 704.9 Discoms: Cost of Service 714.10 Truing-up and Analysis of ARR : New Delhi Municipal Council 714.11 Directives of the Commission : Generating Companies 754.12 Directives of the Commission : Delhi Transco Ltd. 754.13 Directives issued by the Commission : Distribution Companies 764.14 Directives issued by the Commission : New Delhi Municipal Council 784.15 Rationalization of Tariff Structure 78

5 Law Division 80

5.1 DERC Regulations 805.2 DERC Orders 885.3 Complaints Under Section 142 of Electricity Act, 2003 94

6 Administration and Accounts 96

6.1 Administration 966.2 Revenue Receipts 966.3 Annual Accounts 976.4 Budget and Maintenance of Accounts, Rules 976.5 Staff Benefits 97



ANNUAL REPORT

2007-08

DELHI ELECTRICITY REGULATORY COMMISSIONDELHI ELECTRICITY REGULATORY COMMISSION

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