bihar state power holding company limited (bsphcl… tariff-order... · 4.17 interest on working...

BIHAR ELECTRICITY REGULATORY COMMISSION

Order onTruing up of FY 2012-13

For

BIHAR STATE POWER HOLDING COMPANY LIMITED(BSPHCL)

Case No. 21 of 2013

28th February, 2014

BSPHCL True-up for FY 2012-13

Bihar Electricity Regulatory Commission Page i

CONTENTSORDER ........................................................................................................................................ 11. Introduction ............................................................................................................................ 5

1.1 Bihar Electricity Regulatory Commission (BERC) .................................................................... 51.2 Functions of BERC................................................................................................................... 51.3 Background and Brief History................................................................................................. 61.4 Commission’s Orders issued earlier........................................................................................ 71.5 Admission of Current Petition and Public Hearing Process..................................................101.6 Approach of this order...........................................................................................................121.7 Contents of this order............................................................................................................13

2. Summary of Petition filed by BSPHCL for True up for FY 2012-13............................................. 142.1 Summary of ARR approved in FY 2012-13 (RE) ....................................................................142.2 Request to the Commission..................................................................................................15

3. Stakeholder’s Objections/Suggestions, Petitioner’s response and Commission’s observation .. 163.1 Introduction:.........................................................................................................................163.2 Issue-wise Stakeholder’s Objections/Suggestions, BSPHCL’s Response and Commission’sobservations......................................................................................................................................16

4. Truing-up for FY 2012-13........................................................................................................ 324.1 Background...........................................................................................................................324.2 Truing-up of ARR for FY 2012-13 ..........................................................................................334.3 Category wise energy sales...................................................................................................334.4 Transmission and Distribution Losses ..................................................................................374.5 BSEB’s Own Generation.........................................................................................................394.6 Power Purchase ....................................................................................................................404.7 Energy Balance .....................................................................................................................424.8 Power Purchase Cost ............................................................................................................454.9 Disincentive for non-achievement of T&D loss reduction target.........................................484.10 Employee cost.......................................................................................................................514.11 Repairs and Maintenance (R&M) Expenses .........................................................................524.12 Administrative & General (A&G) Expenses ..........................................................................544.13 Operation and Maintenance (O&M) Costs...........................................................................564.14 Capital Expenditure ..............................................................................................................564.15 Depreciation .........................................................................................................................604.16 Interest and Finance Charges ...............................................................................................634.17 Interest on working Capital ..................................................................................................724.18 Interest on Security Deposit .................................................................................................734.19 Return on Equity...................................................................................................................744.20 Non-Tariff Income .................................................................................................................774.21 Net Prior Period Credits / Charges .......................................................................................804.22 Revenue from Sale of Power at existing Tariff for FY 2012-13.............................................884.23 Resource gap funding received from the State Government for FY 2012-13 ......................894.24 Approved ARR and Revenue Gap for FY 2012-13.................................................................914.25 Past Recoveries.....................................................................................................................93

ANNEXURE-I.............................................................................................................................. 96ANNEXURE-II............................................................................................................................101


Bihar Electricity Regulatory Commission Page ii

LIST OF TABLES 1

Table 2.1: ARR approved in Tariff Order for FY 2012-13, in review and now claimed in True up for FY2012-13 .................................................................................................................................................14Table 4.1: Category-wise actual energy sales proposed for FY 2012-13 ............................................. 34Table 4.2: Summary of Category-wise energy sales approved for FY 2012-13.................................... 37Table 4.3: T&D Losses proposed for FY 2012-13.................................................................................. 38Table 4.4: Approved T&D Losses for FY 2012-13 ................................................................................. 39Table 4.5: Power Purchase proposed for FY 2012-13 .......................................................................... 40Table 4.6: Source-wise Power Purchase quantum approved for FY 2012-13...................................... 41Table 4.7 : Energy Balance proposed for FY 2012-13........................................................................... 42Table 4.8: Energy Balance approved for FY 2012-13 ........................................................................... 44Table 4.9: Proposed Power Purchase Cost for FY 2012-13 .................................................................. 45Table 4.10: Approved Power Purchase Cost for FY 2012-13................................................................ 47Table 4.11: Disallowed Power Purchase proposed for FY 2012-13 ..................................................... 49Table 4.12: Cost of Disallowed Power Purchase proposed for FY 2012-13 ......................................... 50Table 4.13: Disincentive for Non-achievement of T&D loss reduction target for FY 2012-13............. 50Table 4.14: Employee cost proposed for FY 2012-13........................................................................... 51Table 4.15: Employee Cost approved for FY 2012-13 .......................................................................... 52Table 4.16: Repairs and Maintenance Expenses proposed for FY 2012-13......................................... 53Table 4.17: Summary of approved R&M expenses for FY 2012-13 ..................................................... 53Table 4.18: A&G expenses proposed for FY 2012-13........................................................................... 54Table 4.19: Summary of approved A&G expenses for FY 2012-13 ...................................................... 55Table 4.20: Summary of approved O&M expenses for FY 2012-13..................................................... 56Table 4.21 Details of Capital works in progress proposed by the Petitioner....................................... 57Table 4.22: Estimation of CWIP............................................................................................................ 58Table 4.23: Gross Fixed Assets for FY 2012-13..................................................................................... 59Table 4.24: Net depreciation proposed for FY 2012-13....................................................................... 60Table 4.25: Depreciation approved in the truing-up for FY 2012-13 62Table 4.26: Interest and finance charges claimed in the truing up for FY 2012-13 64Table 4.27: Computation of effective rate of interest for FY 2012-13................................................. 68Table 4.28: Approved interest and finance charges for FY 2012-13 68Table 4.29 Other interest and finance charges for FY 2012-13.......................................................... 69Table 4.30: Other Interest and Finance Charges for FY 2012-13 ......................................................... 69Table 4.31: Approved interest and finance charges for FY 2012-13.................................................... 71Table 4.32: Proposed Interest on Working Capital for FY 2012-13...................................................... 72Table 4.33: Summary of Interest on working capital approved for FY 2012-13 .................................. 73Table 4.34: Interest on Consumers Security Deposit for FY 2012-13 .................................................. 74Table 4.35: Proposed Return on Equity for FY 2012-13....................................................................... 75Table 4.36: Return on equity approved for FY 2012-13....................................................................... 77Table 4.37 Non-tariff income proposed for FY 2012-13 ...................................................................... 77Table 4.38: Funding of DPS .................................................................................................................. 79Table 4.39: Non-tariff Income approved for FY 2012-13 ..................................................................... 79Table 4.40 Net prior period charges proposed for FY 2012-13............................................................ 80Table 4.41: Prior period charges as per annual accounts for FY 2012-13............................................ 84Table 4.42 Revenue from sale of power for FY 2012-13...................................................................... 88Table 4.43: Estimated Revenue from Sale of Power for FY 2012-13 ................................................... 89Table 4.44: Actual Revenue received as per the audited Annual Accounts for FY 2012-13 ................ 89Table 4.45: Details of Subsidy and Grant received during FY 2012-13 ................................................ 90Table 4.46: Allocation of Resource Gap for FY 2012-13....................................................................... 90


Bihar Electricity Regulatory Commission Page iii

Table 4.47: Details of State Government Resource Gap Assistance/Subsidy for FY 2012-13 ............. 91Table 4.48: Summary of Trued-up ARR and Revenue gap/surplus for FY 2012-13 ............................. 92Table 4.49: Summary of the interest on revenue surplus of FY 2012-13 permitted to be carriedforward to ARR of FY 2014-15 ..............................................................................................................93Table 4:50: Approved Revenue Gap/ (Surplus) based on true-up to end of FY 2012-13..................... 95


Bihar Electricity Regulatory Commission Page iv

ABBREVIATONSA&G Administration and General ExpensesACT Electricity Act. 2003ARR Aggregate Revenue RequirementBERC Bihar Electricity Regulatory CommissionBSHPS Bihar State Hydro Power StationBSEB Bihar State Electricity BoardBSPHCL Bihar State Power (Holding) Company LimitedBSPTC Bihar State Power Transmission Corporation LimitedBTPS Barauni Thermal Power StationCAGR Compounded Annual Growth RateCAPEX Capital ExpenditureCEA Central Electricity AuthorityCERC Central Electricity Regulatory CommissionCGS Central Generating StationCTU Central Transmission UtilityDISCOM Distribution CompanyDPS Delayed Payment SurchargeDS Domestic ServiceDSM Demand Side ManagementDT Distribution TransformerERLDC Eastern Region Load Despatch CentreERPC Eastern Region Power CommitteeFC Fixed ChargesFPPCA Fuel and Power Purchase Cost AdjustmentFY Financial YearGFA Gross Fixed AssetHT High TensionHTSS High Tension Specified ServiceKBUNL Kanti Bijlee Utpadan Nigam LimitedKJ Kutir JyotiKVA Kilo Volt AmpereKVAH Kilo Volt Ampere HourKWH Kilo Watt HourLT Low TensionMMC Monthly Minimum ChargeMoP Ministry of PowerMU Million UnitMVA Mega Volt AmpereMW Mega WattMYT Multi-Year TariffNBPDCL North Bihar Power Distribution Company LimitedNDS Non Domestic ServiceNEP National Electricity Policy


Bihar Electricity Regulatory Commission Page v

NFA Net Fixed AssetNHPC National Hydro Power CorporationNTPC National Thermal Power CorporationO&M Operation and MaintenancePGCIL Power Grid Corporation of India LimitedPLF Plant Load FactorPTC Power Trading CorporationPWW Public Water WorksR&M Repair and MaintenanceRE Revised EstimatesREA Regional Energy AccountingRGGVY Rajiv Gandhi Grameen Vidyutikaran YojnaRLDC Regional Load Despatch CentreRoE Return on EquitySAC State Advisory CommitteeSBPDCL South Bihar Power Distribution Company LimitedSERC State Electricity Regulatory CommissionSS Sub-stationT&D Transmission and DistributionToD Time of DayTPS Thermal Power StationUI Unscheduled Interchange


Bihar Electricity Regulatory Commission Page 1

Bihar Electricity Regulatory CommissionGround Floor, Vidyut Bhawan – II

Jawahar Lal Nehru Marg, Patna – 800 021

Case No. - 21 of 2013

In the matter of:

True-up of Aggregate Revenue Requirement (ARR) for the Financial Year 2012-13 for

Bihar State Power Holding Company Limited.

And

Bihar State Power Holding Company Limited……………..…………..…… Petitioner

Present:

U.N. Panjiar - Chairman

S.C. Jha - Member

ORDER

(Passed 28th Day of February, 2014)

The erstwhile Bihar State Electricity Board (BSEB) is restructured on functional basis

with affect from 1st November, 2012 into five successor companies under Bihar State

Electricity Reforms Transfer Scheme, 2012 vide notification no. 17 dated 30-10-2012

issued by Energy Department, Government of Bihar, namely;

1. Bihar State Power Holding Company Limited (BSPHCL)

2. Bihar State Power Generation Company Limited (BSPGCL)

3. Bihar State Power Transmission Company Limited (BSPTCL)



4. North Bihar Power Distribution Company Limited (NBPDCL)

5. South Bihar Power Distribution Company Limited (SBPDCL)

BSPHCL, the holding company, has earlier filed the Multi Year Tariff (MYT) petition

on behalf of successor generation, transmission and two distribution companies on

14th November, 2012 for true up of ARR of FY 2011-12, Review of ARR for FY 2012-13

and determination of ARR for generation and transmission companies separately

and combined petition for two distribution companies for the control period from

FY 2013-14 to FY 2015-16. The Commission taking into consideration all the facts

brought before it and issued the order of true-up of the ARR for FY 2011-12 for

erstwhile BSEB, reviewed the ARR and revenue for FY 2012-13 of erstwhile BSEB and

its successor companies and also approved the ARR for the years FY 2013-14 to

2015-16 for BSPGCL, BSPTCL separately and combined ARR for the two distribution

companies viz. NBPDCL and SBPDCL in the order dated 15th March, 2013.

BSPHCL has now filed the petition for true-up of ARR of FY 2012-13 on behalf of the

erstwhile BSEB from 1.4.2012 to 31.10.2012 and the four successor companies

BSPGCL, BSPTCL, NBPDCL and SBPDCL on 11th November, 2013.

In exercise of the powers vested to Bihar Electricity Regulatory Commission under

section 62(1)(d) read with Section 62(3) and Section 64 (3)(a) of the Electricity Act,

2003 and Bihar Electricity Regulatory Commission (Terms and Conditions for

Determination of Tariff) Regulations 2007 (hereinafter referred to as 'Tariff

Regulations, 2007') and other enabling provisions in this behalf, the Commission

issues this order, truing up of the Aggregate Revenue Requirement (ARR) for

financial year (FY) 2012-13, based on the Petition filed by Bihar State Power Holding

Company Limited on behalf of erstwhile Bihar State Electricity Board and its

successor companies.

Regulation 22 of the Tariff Regulations, 2007 provides that the Commission shall

undertake a review along with next Tariff Order, of the expenses and revenue

approved by the Commission in the current year’s Tariff Order. After audited

accounts of the year are made available, the Commission shall undertake a similar



exercise based on the final actual figures as per the audited accounts. Accordingly

BSPHCL has submitted petition for truing up of ARR and revenue for FY 2012-13

based on the audited annual accounts on behalf of erstwhile BSEB on the unbundled

entities.

As per Regulation 6(5) of the Tariff Regulation and for providing adequate

opportunities to all stakeholders and general public for making

suggestions/objections on the true up petition as mandated under section 64(3) of

the Electricity Act, 2003, the Commission directed BSPHCL vide letter no. 1566 dated

30.11.2013 to publish the True-up petition for FY 2012-13 in abridged form as public

notice in newspapers having wide circulation in the State inviting

suggestions/objections on the True-up petition. Accordingly BSPHCL published the

tariff petition in the abridged form as public notice in various newspapers. The last

date of submission of detailed suggestions/objections was fixed as 3rd January, 2014.

However, on request from stakeholders, the Commission extended the last date of

submission up to 31st January 2014.

The Commission, to ensure transparency in the process of finalization true up

petition for FY 2012-13 and for providing proper opportunity to all stakeholders and

general public for making suggestions/objections on the tariff petition hold the

public hearing at BERC Court Room, BERC office at Patna on 11th January 2014.

The true-up petition for FY 2012-13 was also placed before the State Advisory

Committee on 23rd January 2014 and the various aspects were discussed by the

Committee.

The Commission took into consideration the facts presented by the BSPHCL in the

true up petition and subsequent various filings, the suggestion/objections received

from stakeholders, consumer organizations, general public and State Advisory

Committee and response of the Bihar State Power Holding Company Limited on the

suggestions/objections and passed the trued-up order on the ARR and revenue for

FY 2012-13, of erstwhile BSEB and its successor companies.



The State Government has been giving resource gap grant to erstwhile BSEB which

has been used for reducing the revenue gap of erstwhile BSEB. This treatment of

resource gap has the effect of reducing the average tariff of all categories of

consumers across the state till FY 2011-12. The State Government vide letter No.

4208 dated 19th September, 2011 has clarified that the resource gap grant being

provided to the BSEB is meant for first compensating BSEB for the financial loss

incurred by BSEB on account of additional power purchase due to difference in the

actual T&D loss and the T&D losses as approved by the Commission and the balance

amount of resource gap grant will be used to subsidize the agricultural and rural

consumers. Accordingly in truing-up of ARR for FY 2012-13 the resource gap grant

received during FY 2012-13 to erstwhile BSEB and its successor companies has been

used to first compensate for the financial losses caused on account of additional

power purchase due to difference in the actual T&D losses and the T&D losses

approved by the Commission and the remaining portion of the grant has been used

to subsidize the agriculture and rural consumers.

The BSPHCL in its true-up petition for FY 2012-13 has claimed Rs. 228.86 crore

revenue gap and prayed the Commission to carry forward the above gap with a

carrying cost of Rs. 33.07 crore in the ARR for FY 2014-15. Against the above revenue

gap, the Commission after proper scrutiny of data and facts, brought out a surplus of

Rs. 1273.24 crore including the carrying cost for one and half year for FY 2014-15

which is carried forward for adjustment, in the ARR of FY 2014-15 of the Distribution

Companies.

Sd/- Sd/-

(S. C. Jha) (U. N. Panjiar)Member Chairman



1. Introduction

1.1 Bihar Electricity Regulatory Commission (BERC)

The Bihar Electricity Regulatory Commission (hereinafter referred to as

“Commission” or “BERC”) was constituted by the Government of Bihar under

Section 17 of the Electricity Regulatory Commission Act, 1998 vide Government of

Bihar notification No. 1284 dated 1 5 t h A p r i l 2002. The Electricity Regulatory

Commission Act, 1998 along with Indian Electricity Act, 1910 and Electricity

(Supply) Act, 1948 was repealed by Section 185 (1) of the Electricity Act, 2003

(hereinafter referred to as the “Act”). The first proviso of Section 82 (1) has ensured

continuity of the Bihar Electricity Regulatory Commission by laying down that the

S t a t e Electricity Regulatory Commission established by the State Government

under Section 17 of Electricity Regulatory Commission Act, 1998 and functioning as

such, immediately before the appointed date, shall be the State Electricity

Regulatory Commission for the purpose of the Act.

1.2 Functions of BERC

1.2.1 As per Section 86 of the Electricity Act 2003, the State Commission shall discharge

the following functions, namely,

a) determine the tariff for generation, supply, transmission and wheeling of

electricity, wholesale, bulk or retail, as the case may be, within the State:

Provided that where open access has been permitted to a category of

consumers under section 42, the State Commission shall determine only

the wheeling charges and surcharge thereon, if any, for the said category of

consumers;

b) regulate electricity purchase and procurement process of distribution licensees

including the price at which electricity shall be procured from the generating

companies or licensees or from other sources through agreements for

purchase of power for distribution and supply within the State;

c) facilitate intra-state transmission and wheeling of electricity;



d) issue licenses to persons seeking to act as transmission licensees, distribution

licensees and electricity traders with respect to their operations within the

State;

e) promote co-generation and generation of electricity from renewable sources of

energy by providing suitable measures for connectivity with the grid and sale of

electricity to any person, and also specify, for purchase of electricity from

such sources, a percentage of the total consumption of electricity in the

area of a distribution licensee;

f) adjudicate upon the disputes between the licensees, and generating

companies and to refer any dispute for arbitration;

g) levy fee for the purposes of this Act;

h) specify State Grid Code consistent with the Indian Electricity Grid Code

specified with regard to grid standards;

i) specify or enforce standards with respect to quality, continuity and reliability

of service by licensees;

j) fix the trading margin in the intra-state trading of electricity, if

considered, necessary; and

k) discharge such other functions as may be assigned to it under this Act.

1.3 Background and Brief History

1.3.1 Bihar State Power Holding Company Limited

The Government of Bihar under the provision of Bihar Electricity Reforms Transfer

Scheme 2012 notified vide Notification No. 17 dated 30.10.2012 of the Energy

Department, Govt. of Bihar restructured the Bihar State Electricity Board with

effect from 1st November, 2012. The Generation, Transmission and Distribution

Businesses of the erstwhile Bihar State Electricity Board are transferred to four

successor companies with one Holding Company as listed below:

1) Bihar State Power Holding Company Limited (BSPHCL)

2) Bihar State Power Generation Company Limited (BSPGCL)

3) Bihar State Power Transmission Company Limited (BSPTCL)

4) North Bihar Power Distribution Company Limited (NBPDCL)



5) South Bihar Power Distribution Company Limited (SBPDCL)

Bihar State Power (Holding) Company Limited (BSPHCL) is a holding company

responsible for purchase of electricity from various sources and supply of

electricity to Distribution companies and other activities including trading of

electricity. The BSPHCL has filed the Petition for truing up of FY 2012-13 on behalf

of erstwhile BSEB for the period from 1st March, 2012 to 31st October, 2012 and on

behalf of BSPGCL, BSPTCL, NBPDCL and SBPDCL for the period 1st November, 2012

to 31st March, 2013.

The Government of Bihar vide notification dated 30th October, 2012, notified the

provisional opening Balance Sheet of the transferee companies as on 1st April, 2011.

The value of assets and liabilities stand transferred from the erstwhile Bihar State

Electricity Board to the transferee companies, including the Bihar State Power

(Holding) Company Limited. Assets and liabilities (gross block, loans and equity), as

on the date mentioned in the notification, have been considered by the

Commission in line with the Financial Restructuring Plan (FRP) as approved by the

Government of Bihar.

1.3.2 Background

The Bihar State Power (Holding) Company Limited (herein after referred to as

BSPHCL or Petitioner) has filed its Petition on behalf of erstwhile Bihar State

Electricity Board (BSEB) and four unbundled entities for True up of FY 2012-13

based on Audited Accounts for FY 2012-13 on 11th November, 2013 under

Section 62 of the Electricity Act, 2003, read with Bihar Electricity Regulatory

Commission (Terms and Conditions for Determination of Tariff) Regulations,

2007 (hereinafter referred as 'BERC Tariff Regulations, 2007').

1.4 Commission’s Orders issued earlier

The chronology of the filing of tariff petitions and issue of Tariff Orders from

FY 2006-07 are listed below:

The BSEB had submitted its first Aggregate Revenue Requirement (hereinafter



referred to as “ARR”) and tariff petition for the FY 2006-07 on 10th April, 2006.

The Commission passed the Tariff Order on that petition on 29th November, 2006.

The BSEB submitted its ARR and tariff petition for FY 2007-08 on 18th December,

2007. As the tariff petition for FY 2007-08 was filed very late, the Commission vide

letter no. BERC.Tariff-9/07-03 dated 2nd January 2008 directed the BSEB to file the

ARR and tariff petition for FY 2008-09 along with data as specified by the

Commission in the BERC (Terms and Conditions for Determination of Tariff)

Regulations, 2007 by 31st January 2008.

The BSEB submitted its ARR and tariff petition for FY 2008-09 on 14th February,

2008. The Tariff Order for FY 2008-09 was passed by the Commission on

26th August, 2008. The Commission also undertook the “Review” of ARR for

FY 2006-07 along with Tariff Order for FY 2008-09.

The BSEB filed on 9th October 2009 the petition for determination of ARR and

approval of retail tariff for FY 2009-10. However, due to delay in filing of the

ARR/ tariff petition for FY 2009-10, the Commission directed the BSEB to file the

ARR and tariff petition for the FY 2010-11. In view of the same, there was no

approval of the ARR for FY 2009-10.

The BSEB submitted its ARR and tariff petition for FY 2010-11 before the

Commission on 3rd February, 2010. The Commission passed the Tariff Order for

FY 2010-11 on 6th December, 2010. The Commission also undertook the

“Review” of ARR for FY 2008-09 along with the Tariff Order for FY 2010-11.

The BSEB submitted its ARR and tariff petition for FY 2011-12 before the

Commission on 17th February, 2011. The Commission passed the Tariff Order for

FY 2011-12 on 1st June, 2011, effective from 1st May 2011.

The True-up petition for FY 2006-07, FY 2007-08 and FY 2008-09, based on the

audited annual accounts of BSEB, was filed by the BSEB on 01st September 2011.

The addendum to this True-up petition was filed by BSEB on 17th October 2011. The

Commission passed its first truing up order for FY 2006-07, FY 2007-08 and

FY 2008-09 on 4th January 2012.



Subsequently, the BSEB filed the Truing up petition for FY 2009-10 on 13th October,

2011. The truing up order for FY 2009-10 was issued by the Commission on

27th January 2012.

BSEB also submitted a petition on 13th October, 2011 vide letter No. Com/ FPPCA-

136/2011-1659 for the review of ARR for FY 2010-11 based on their Audited Annual

Accounts. The Commission vide its Order dated 3rd November, 2011 directed BSEB

to submit its petition for review of the expenses and revenues for the FY 2010-11

along with tariff petition for FY 2012-13. Commission also directed BSEB that, if the

final audited accounts for the FY 2010-11 are made available to the Commission

along with the petition or during the hearing of tariff petition for FY 2012-13, a

final true up of the expenses and revenues for the FY 2010-11 shall be considered by

the Commission.

The Board filed its ARR and tariff petition for FY 2012-13 on 15th November 2011.

In this petition the Board also carried out review exercise for FY 2011-12 projecting

the revised estimates for FY 2011-12 based on the provisional annual accounts of

BSEB for FY 2010-11. A Supplementary petition for determination of ARR & retail

tariff petition for FY 2012-13 was subsequently filed by the Board vide letter no.

Com/ Tariff-152/ 2011-(Part-I) -017 on 2nd January 2012.

BSEB vide letter No. Com/ Tar-132/ 2011-392 dated 2nd March, 2012 submitted the

audited annual accounts for FY 2010-11 along with the audit certificate issued by

CAG to the Commission. Subsequently, BSEB vide letter No. Com/ Tar-132/ 2011-

451 dated 16th March, 2012 submitted the truing up petition of BSEB for FY 2010-

11 based on the audited annual accounts for FY 2010-11.

The BSEB filed petition for truing up for FY 2010-11, Performance Review for

FY 2011-12 and determination of ARR and Tariff for FY 2012-13. The

Commission issued the Tariff Order on 30th March, 2012 effective from 1st April,

2012.

The BSPHCL filed the Petition on behalf of Generation, Transmission and



Distribution Companies for provisional truing up of FY 2011-12 along with

provisional Annual Accounts for FY 2011-12, Performance Review for FY 2012-13

and MYT Petition for determination of ARR for FY 2013-14 to FY 2015-16 and

determination of tariff for FY 2013-14 on 14th November, 2012 vide their letter No.

Com/Tariff petition- 160/2012/2857 dated 12.11.2012.

Subsequently the Petitioner filed revised True up Petition for FY 2011-12 along with

Audited Accounts on 24.12.2012. The Commission issued the Tariff Order for

FY 2013-14 along with true-up of ARR for FY 2011-12 and APR of FY 2012-13 on

15th march, 2013 effective from 1st April, 2013.

1.5 Admission of Current Petition and Public Hearing Process

BSPHCL has filed the Petition for Truing up of FY 2012-13 on behalf of erstwhile

BSEB for the period 1st March, 2012 to 31st October, 2012 and on behalf of BSPGCL,

BSPTCL, NBPDCL and SBPDCL for the period 1st November, 2012 to 31st March,

2013 on the 11th November, 2013.

On preliminary verification of the Petition, the Commission has admitted the

Petition (Case No. 21/2013) on 12th November, 2013 and in accordance with

section 64 of the Electricity Act, 2003 and sub clause 6(5) of BERC (Terms and

Conditions of Determination of Tariff) Regulations, 2007, the Commission directed

the BSPHCL to publish the Petition in the abridged form in at least two daily

newspapers, one in English and the other in Hindi, having wide circulation in

the State inviting objections and suggestions from its stakeholders on the ARR and

Tariff Petition filed by it.

The public notices were published in the following newspapers as given below:

Sl. No. Name of the news paper Language Date of firstpublication

Date of secondpublication

1 Dainik Jagran Hindi 14.12.2013 -2 Prabhat Khabar Hindi - 19.12.20133 Hindustan Times English 14.12.2013 19.12.2013

The tariff petition was also placed on the website of BSPHCL for inviting objections/

suggestions on the petition and copies of the petition along with Annexure were

also made available for sale in the office of the Chief Engineer (Commercial),



BSPHCL.

The interested parties / stakeholders were asked to file their objections /

suggestions on the Petition on or before 3rd January, 2014. However, on request of

some stakeholder’s, the Commission extended the last date of submission up to

31st January 2014.

The proposal of BSPHCL was also placed before the State Advisory Committee

(SAC) in its meeting held on 23rd January 2014 and various aspects of the petition

was discussed by the Committee. The Commission took the advice of the State

Advisory Committee on the True up Petition filed by BSPHCL during the meeting of

the Committee. The minutes of the meeting are given in Annexure-I.

BSPHCL was also directed to publish the schedule for Public Hearings along with the

public notice inviting objections/suggestions.

The Commission received four (4) written objections / suggestions from consumers/

consumer organizations. The Commission directed Petitioners to submit the replies/

response to the suggestions/ objections to the Commission vide letter No. as

mentioned below:

BERC Letter No. DateNo. of

objection/suggestionsent to BSPHCL

Date of submissionof reply by BSPHCL

108 23/1/2014 Four (4) 31/01/201411/02/2014

Separate communications were sent to the objectors to take part in the public

hearing process for presenting their views in person before the Commission.

The public hearing was conducted at BERC Office on 11th January, 2014.

The names of consumers / consumer organizations who filed their objections and

the list of objectors participated in the public hearing for presenting their

objections / suggestions are given in Annexure-II.

A note on the main issues raised by the objectors in the written submissions and

also in the public hearing in respect of the petitions, along with the response of



BSPHCL and the Commission’s views on the response, are given in Chapter-3.

1.6 Approach of this order

The BERC (Terms and Conditions for Determination of Tariff) Regulations, 2007

provides for truing up of previous year (FY 2012-13).

The BSPHCL has now approached the Commission with the present Petition

on behalf of erstwhile BSEB for the period 1st April, 2012 to 31st October, 2012

and other unbundled entities from 1st November 2012 to 31st March, 2013 for

truing up of FY 2012-13 based on Audited Annual Accounts for FY 2012-13.

The Commission has examined the Petition and observed that certain additional

data / information and clarifications are required for taking up detailed analysis of

the Petition. The Commission directed Petitioners to submit the additional data /

information and clarifications through various letters. In response, the

Petit ioner has submitted their rep l ies. The status of the Commission’s

letters and the Petit ioners replies are as follows:

Commission’seven letter no. Date Petitioner’s

even letter no. Date

1565 29/11/2013 18 03/01/201496 21/01/2014

191 25/01/201499 22/01/201470 11/01/2014

199 27/01/2014101 22/01/2014122 23/01/2014 247 01/02/2014138 31/01/2014 257 05/02/2014

The Commission has undertaken ‘truing up’ of the FY 2012-13 based on Audited

Annual Accounts.

While considering the truing up of the ARR for FY 2012-13, the Commission has

been primarily guided by the following principles:

1. Controllable parameters have been considered at the level approved under

the Tariff Order for FY 2012-13 unless the Commission considers there are



valid reasons for revising the same.

2. Uncontrollable parameters have been revised, based on the actual

performance observed.

The truing up for the FY 2012-13 has been considered based on the BERC (Terms

and Conditions for Determination of Tariff) Regulations, 2007.

1.7 Contents of this order

The order is divided into Four (4) chapters as detailed below:

1. The First Chapter provides a background of BSPHCL, Commission’s Orders in

earlier years, the Petition, details of public hearing process, and the

approach adopted for this order.

2. The Second Chapter contains a summary of True up Petition of BSPHCL.

3. The Third Chapter provides a brief Account of the public hearing process,

including the objections raised by stakeholders, Petitioner’s response and

Commission’s views on the same.

4. The Fourth Chapter deals with the Truing up for the FY 2012-13 filed by BSPHCL.



2. Summary of Petition filed by BSPHCL for True up for FY 2012-13

2.1 Summary of ARR approved in FY 2012-13 (RE)

The summary of Aggregate Revenue Requirement (ARR) approved in Review for FY

2012-13 in the Tariff Order dated 15th March, 2013 and now claimed by BSPHCL in

True up for FY 2012-13 is as given in the Table below:

Table 2.1: ARR approved in Tariff Order for FY 2012-13, in review and now claimed in True

up for FY 2012-13

(Rs. Crore)

SI .No Item of Expenditure

Approved inreview

(FY12-13)Apr-Oct

2013(BSEB)

Claimed in True upNovember 2012 to March 2013 Total

BSPGCL BSPTCL NBPDCL SBPDCL

1 Cost of Power Purchase 4167.07 2546.37 - - 588.3 1017.76 4152.43

2 PGCIL Transmission Charge 180 111.48 - - 91.03 15748 359.99

3 BSPTCL Transmission Charge - - - - 19.66 34.01 53.66

4 Employee costs (Net) 470.05 265.99 - 33.93 62.03 456.93

5 R&M Expenses 90.99 37.89 - 5.7 15.16 15.43 74.18

6 Admin &General Expenses 49.4 43.47 - 4.12 12.95 8.03 68.57

7 Depreciation 83.04 61.59 - 6.6 22.87 37.18 128.25

8 Interest &Financial Charges 144.5 149.22 - 4.31 38.47 44.44 236.44

9 Interest on working Capital 93.28 - - - - - 159.52

10 Return on Equity 85.05 - - - 95.83 124.91 220.74

11 Interest on Security Deposits - 7.02 - - 3.35 4.22 14.6

12 Total Revenue Requirement 5363.38 3223.02 - 54.67 949.65 1538.44 5925.31

13Add: Prior PeriodCharges(net)/Other debits - 594.5 - 0.01 66.89 84.48 745.88

14Less: Expenditure Disallowed dueto higher T&D Losses 1020.17 - - - - - 1025.22

15 Less: Non Tariff income 72.76 75.55 - 1.02 24.72 36.61 137.9

16Net Revenue Requirement (12+13-14-15) 4270.45 3741.97 - 53.66 991.82 1586.31 5508.07

17 Revenue from Existing Tariff 2930.08 1723.01 - - 357.96 796.2 2877.17

18Revenue from Gen/Trans TransTariff - - 53.66 - - 53.66

19Revenue from sale of power toNepal 430.98 137.83 - - 129.88 - 267.71

20 Revenue from sale of power to UI 155.87 - - 2.24 162.28

21 Gap / (Surplus) 909.39 1725.26 - 0 501.74 785.94 2147.25

22Additional Revenue Subsidy fromGovt 1859.83 - 1918.39

23 Net Gap/ (Surplus) (950.44) - 228.86



2.2 Request to the Commission

BSPHCL has requested the Commission to:

1. Admit the Petition;

2. Examine the proposal submitted by the Petitioner in the Petition for a favourable

dispensation;

3. Allow the Truing up for FY 2012-13 to be carried out on a consolidated basis and

pass on the revenue gap/(surplus) in the respective Petitions of NBPDCL and

SBPDCL as per the agreed principles;

4. Pass suitable orders with respective to approval for (surplus)/deficit in the True up

for FY 2012-13 amounting to Rs. 261.92 Cr for erstwhile BSEB and unbundled

entities on consolidated basis;

5. Pass separate order for the Petitioners against the present Petition;

6. BSPHCL may also be permitted to propose suitable changes to the respective

ARRs, prior to the final approval by the Commission. The BSPHCL believes that

such an approach would go a long way towards providing a fair treatment to all

the stakeholders and may eliminate the need for a review or clarification.

7. Condone any inadvertent omissions/errors/shortcomings and permit BSPHCL to

add/change/modify/alter this filing and make further submissions as may be

required at a future date.

8. Pass such Order, as the Commission may deem fit, appropriate keeping in view

the facts and circumstances of the case.



3. Stakeholder’s Objections/Suggestions, Petitioner’sresponse and Commission’s observation

3.1 Introduction:

In response to the public notice inviting objections/suggestions of the stakeholders

on the Tariff Petition filed by BSPHCL, the Commission has received four (4) written

objections from the following consumers/consumer organizations:

1) Bihar Industries Association, Patna

2) Balamukund Concast Limited, Patna

3) Bihar Chamber of Commerce & Industries, Patna

4) Kalyanpur Cements Limited, Patna

The public hearing, as scheduled was held in court room of BERC office, Patna on

11th January 2014 wherein the representatives of the above objectors have put forth

their comments and suggestions before the Commission in the presence of the

Petitioner i.e. BSPHCL.

The Commission has examined the issues and concerns voiced by the

representatives of the above mentioned objectors and in their written comments as

well as those made in the public hearing and also the response of the Petitioner

thereon. The comments/ suggestions submitted by the stakeholder in response to

the ARR petition, the replies given by the Petitioner and the views of the Commission

have been summarized under various sub-heads as given below:

3.2 Issue-wise Stakeholder’s Objections/Suggestions, BSPHCL’s Response and

Commission’s observations.

Issue – 1: Prior period Employees’ cost:

M/s. Bihar Industries Association, M/s Balamukund Concast Limited, M/s Bihar

Chamber of Commerce & Industries and M/s Kalyanpur Cements Limited have

submitted that the State Government in its Transfer Scheme dated 30.12.2012 has



committed to fund the entire prior period expenses related to Employees’ cost and

requested the Commission to disallow in truing up order.

M/s Balamukund Concast Limited has stated that there should not be any prior

period credit/charges as the truing up exercise for FY 2011-12 has already been

completed on the basis of audited annual accounts for FY 2011-12 It is not

understood as to how Rs. 575.46 Crore has been claimed as prior period employee

cost.

Petitioners’ submission:

It is submitted that the expenses booked under prior period are those expenses

which were not booked in that particular year to which they relate to due to non

availability of actual details while finalizing the accounts of that particular year and

represent actual expenses incurred and to be recovered from the consumers

through tariffs.

The State government has committed to fund the employee cost up to a particular

date. As, the transfer scheme is yet to be finalized by the State Government and till

date substantial amount is to be received, therefore, claimed in truing up. However,

on finalization of transfer scheme and receiving the amount from Government, the

Commission may adjust the cost accordingly in the ARR of the respective year.

Commissions’ observations:

The Commission has examined the prior period employee cost which has been

provided/accounted towards terminal benefits of employees as on the effective date

of transfer scheme i.e. 1st November 2012. As per the transfer scheme the State

Government shall fund the liability. Accordingly, the Commission has not considered

the prior period employees cost. The Commission has aptly discussed the issue

under Employee cost (Para 4.10) and also under Net Prior Period Credits / Charges

(Para 4.21) of truing up order.



Issue – 2: Prior period Consumer dues:

M/s Bihar Industries Association, Patna has submitted that any adjustment of

consumer dues should not be allowed as this will amount to double accounting.


The expenses payable to the consumers not accounted earlier were claimed as prior

period expenses and are not double accounted.


The Commission has examined other prior period expenditure and income and

accordingly, the net income is considered in the true up.

Issue – 3: Prior Period Power Purchase Cost

M/s Bihar Industries Association, M/s Bihar Chamber of Commerce & Industries and

M/s Kalyanpur Cements Limited have submitted that prior period Power Purchase

cost claimed by successor distribution companies is erroneous accounting as the

petition filed is a consolidated petition of the erstwhile BSEB and its four successor

companies and such prior period expenses have also resulted in revenue in BSEB and

both have nullifying effect.


It is submitted that true up petition is filed for all the successor companies as a

whole. The prior period power purchase expenses relates to FY 2004-05 to FY 2011-

12 which represents supplementary bills received from Central Generating Stations

and PGCIL at a later date and are legitimate expenses incurred by the companies and

need to be passed onto the consumers.


As stated by the Petitioner these are supplemental power purchase bills received

during FY 2012-13. Further, the bills pertaining to the period of BSEB i.e. up to 31st

October 2012 received by the DISCOMs were accounted as prior period expenses,



since these DISCOMs came into existence w.e.f.1st November 2012. However, the

Commission has considered the prior period power purchase cost based on detailed

verification of the bills as discussed at relevant paragraphs.

Issue – 4: Return on Equity:

M/s Bihar Industries Association and M/s Balamukund Concast Limited have

submitted that equity capital has been increased from Rs.1551.14 Crore to Rs.

6965.66 crore. Neither authorized capital, paid up capital has been increased not

fresh equity capital infused. As per transfer scheme dated 30.10.2012 “on expiry of

one year from the effective date, the transfer scheme shall become final”. The

increase in equity capital has not been notified before 1.11.2012, it cannot be given

effect now and has become invalid and in fructuous.

M/s Bihar Chamber of Commerce & Industries and M/s Kalyanpur Cements Limited

have submitted that no claims can be accepted on the basis of

anticipation/expectation of higher equity capital to be provided by the State

Government. RoE has to be determined with a prospective date and not with a

retrospective date and requested the Commission not to allow the RoE claimed by

the Petitioner.

Petitioners’ submissions:

It is submitted that the opening equity balances for the segregated entities were

considered as per revised submission made by M/s PFC, which is at Rs.6965.66 crore

as against the equity capital of Rs.1974.88 crore appearing in the audited annual

accounts of the segregated entities for FY 2012-13. Further, it is submitted that

Section 131(3) of the Electricity Act, 2003 specifies that “notwithstanding anything

contained in this section, where (b) a transaction of any description is effected in

pursuance of a transfer scheme, it shall be binding on all persons including third

parties and even if such persons or third parties have not consented to it”.




The Commission has examined the issue and considered RoE on the equity capital

considered in the MYT order. This issue is discussed appropriately in the relevant

para 4.19 in this order.

Issue – 5: Gross Fixed Assets (GFA):

M/s Bihar Industries Association, M/s Balamukund Concast Limited, Patna have

submitted that the GFA has been inflated from Rs. 6965.66 crore to Rs.11393 crore

and requested to disallow the consequential depreciation claim and other heads.

Petitioners’ submissions:

It is submitted that the opening and closing GFA for FY 2012-13 for erstwhile BSEB

and segregated entities is as per adopted annual accounts and is exclusive of

revaluation /re-classification of Land and Land Rights carried out in

restructuring/transfer scheme process.

Further it is submitted they have provided the total opening & closing GFA of new

entities only as the balance from erstwhile BSEB would have been allocated in these

companies. The depreciation claimed in audited accounts is actual and not

computed on hypothetical/assumption basis. Further, whenever the life of the asset

gets over, the value of such assets were reduced from the GFA and accumulated

depreciation.


The Commission has not considered the revalued value of the land to the extent

revalued included in the GFA by the Petitioner. The Commission has considered

depreciation as per Regulation 73(2)(a) of BERC (Terms and Conditions for

Determination of Tariff) Regulations, 2007. This issue is elaborated appropriately in

the relevant para 4.15 in this order.



Issue – 6: CTU Losses:

M/s Balamukund Concast Limited has submitted that the total power purchase of

13657 MU has been claimed for FY 2012-13 and has indicated 446 MU of losses in

CTU which works out to 3.36% at 400KV which is very high and requested the

Commission to scrutinize the complete data of source wise power purchase and

losses. The power injected by BSPHC, Sugar Mill, etc. should not be considered for

working out the loss in Central Sector. The power purchase from NTPC, NHPC, PTC

works out to 11114 MU and the loss of 446 comes to about 4%. The transmission

loss of 446 MU is erroneous and requires proper validation and justification.

Petitioners’ response

The CTU losses presented in the Audited annual accounts are actual CTU losses and

the percentage (%) worked out considering CTU losses and long term purchases. The

CTU losses are applicable for the power injected by generating stations outside the

State of Bihar and no CTU losses are applicable on power injected by state

generating stations/co-generating stations within the State. The energy inputs are

verified by the State Load Dispatch Centre (SLDC) and accordingly the same are

considered by Distribution Companies. It was stated in the petition that the

petitioner has considered the inter-state transmission loss or regional loss as per

adopted annual accounts of erstwhile BSEB, NBPDCL and SBPDCL for FY 2012-13.

Hence, the actual CTU losses as per audited accounts need to be considered and

approved by the Commission as the same are out of purview and control of

DISCOMs.

Commissions’ observations

The Commission has considered the CTU losses at 2.75% for FY 2012-13 as per the

information available in the ERPC website.

Issue – 7: Energy Balance and Transmission and Distribution losses:

M/s Balamukund Concast Limited, M/s Bihar Chamber of Commerce & Industries

and M/s Kalyanpur Cements Limited have submitted that the Transmission and



Distribution losses were shown at 6054 MU (CTU regional loss-446 MU, State

transmission loss–519 MU & Distribution loss–5089 MU) which comes to about 46%

on total power purchase of 13267 MU. If the sales to Nepal and UI are excluded

from power purchase, the loss comes to about 50%. It is prayed that the

Commission to examine in detail before allowing the T&D losses.

M/s Bihar Chamber of Commerce & Industries, Patna and M/s Kalyanpur Cements

Limited, Patna have submitted that the disallowance of cost of power due to higher

T&D loss adjusted against the State Government Grants could not be effected as

penalty on the licensee for non-adherence of directives of the Commission and also

the observations of the APTEL in T&D loss related appeals No.126/2008 and

128/2008 (Bihar Industries Association Vs BERC & others). It is requested not to

adjust the disallowed cost of power against Government grants and the total amount

of grants be treated as subsidy payable u/s.65 of the Electricity Act, 2003.


It is submitted that various capital works are taken up viz. re-conductoring of

dilapidated conductor, replacement of old transformers with star rated distribution

transformers, system metering and consumer metering for proper accounting of

energy and reduction in wastage, proper metering, billing, anti theft measures, etc.

for reduction of losses in the system. However, the burden of higher T&D loss is not

passed on to the consumers, but is borne by the DISCOM’s from the State

Government Grants.


The objections and response are noted by the Commission. The Commission has

considered the distribution losses as per the trajectory approved in the Tariff Order

for FY 2012-13 and accordingly computed the energy balance.

Issue – 8: Power purchase cost:

M/s Balamukund Concast Limited has submitted that the total power purchase in

FY 2012-13 is 13267 MU at a total cost of Rs.4152.43 crore (average cost



Rs.3.13/unit). The power purchased from DVC, Adani and NVVNL is at a higher cost

i.e. average cost of Rs.4.29/unit. If these sources cost is reduced from the total

purchases and cost thereon, the average cost works out to Rs.2.85/unit. It is stated

that they object the power purchase from DVC, Adani and NVVNL at a higher rate

than Rs.2.85/unit and the losses on this account should not be passed on to the

consumers and the state Government should compensate this amount through

resource gap grant.

M/s Bihar Chamber of Commerce & Industries, Patna and M/s Kalyanpur Cements

Limited, Patna have submitted that there has been a decrease in the average cost of

power purchased during FY 2012-13 and requested the Commission to determine

the FPPCA rate for FY 2012-13.


The power purchased by BSPHCL in FY 2012-13 includes DVC, Adani and NVVNL as

per PPA and power allocation. All the sources from where power is being procured

have been approved by the Commission in Tariff Order dated 15th March 2013.

It is submitted that the matter of FPPCA formula and its implementation is well

settled by the Commission in its various FPPCA order and hence no comments.


The Power Purchase quantum and cost from various sources is approved by the

Commission after prudence check and verification of bills at random.

Issue – 9: Disallowed Power purchase:

M/s Balamukund Concast Limited has submitted that the disallowed power has been

calculated including UI sales and sales to Nepal and accordingly, the cost of power

purchase of disallowed power is adjusted against Government resource gap. The



power purchased from DVC, Adani and NVVNL at higher rate should be disallowed

and the cost should be adjusted from resource gap grant.


It is submitted that methodology of computation of disallowance of power purchase

is in line with that approved by the Commission in previous tariff orders i.e. average

power purchase cost including PGCIL transmission charges, which is adopted for

FY 2012-13.


The additional power purchase due to excess T&D loss than that approved by the

Commission in the Tariff Order for FY 2012-13 is computed after prudence check and

the same is disallowed while arriving at the net power purchase cost.

Issue – 10: Depreciation:

M/s Balamukund Concast Limited has submitted that BSPHCL has claimed Rs.128.76

crore as depreciation for FY 2012-13 on the basis of closing GFA of Rs.11392.74

crore. It is stated that the Commission has considered closing GFA of Rs.5049.28

crore in truing up exercise for FY 2011-12 and it translate in to addition of Rs.6343.46

crore in its GFA, which appears to be erroneous and requires proper scrutiny of GFA.

Besides above the accumulated depreciation on the closing GFA of FY 2011-12 has

also to be looked in as some of the assets would have been fully depreciated.

M/s Bihar Chamber of Commerce & Industries and M/s Kalyanpur Cements Limited,

have submitted that the petitioner has claimed higher depreciation of Rs.92.16 crore

in a single year over the actual depreciation for FY 2011-12 which was only Rs.36.60

crore. Depreciation details are not given in Schedule 11 of the respective company

accounts. Depreciation claimed seem to be unrealistic and requested the

Commission not allow.




It is submitted that depreciation amount claimed in truing up for FY 2011-12 is on

actual basis on GFA as per relevant provisions of BERC Tariff Regulations/Companies

Act. Further it is submitted that only land is revalued and no other assets are re-

valued in transfer scheme. No depreciation is claimed on land and the computation

of depreciation is correct. The value of fully depreciated assets is reduced from the

value of GFA along with accumulated depreciation.

The details of depreciation are given in Schedule 19 of the annual accounts of the

erstwhile BSEB and segregated entities.


The Commission has considered the depreciation as per the Regulation 73(2) (a) of

BERC (Terms and Conditions for Determination of Tariff) Regulations, 2007. The issue

of value of GFA and Depreciation is elaborately discussed in para 4.15 of this order.

Issue – 11: Interest and Finance charges:

M/s Balamukund Concast Limited has submitted that BSPHCL have erroneously

claimed interest and finance charges. The interest charges on REC loan (RMPN and

RGGVY) is claimed, whereas, the amount sanctioned by Central Government under

these schemes contain 90% grant and 10% loan. As such the amount claimed is

erroneous and requires proper validation of the data and requested the Commission

to call for all details scheme-wise indicating the loan amount used for creation of

assets.


have submitted that the amount claimed by the petitioner is wrong as the same is

not prepared on the laid down guidelines by the Commission. Rs.46.51 crore is

shown as interest capitalised as shown in the accounts of BSEB. No interest has been

capitalised during November’12 to March’13 by any of the four companies.




It is submitted that all details were provided in the petition along with annual

accounts, however, there are certain errors in the table 16 of the true up petition

which is due to linking/formula error. The REC loans are at Rs.56.21 crore as against

Rs.92.15 crore depicted in the table 16 of the petition. Further it is stated that

interest is calculated on 10% loan amount only and same interest is by State

Government on behalf of the Company.

It is submitted that alternate method of computation of interest charges is not

followed. Post restructuring, it is unadvisable that corporate entities adopt such

method for computation of interest charges. Interest of Rs.46.51 crore capitalised by

BSPGCL and Rs.0.39 crore by BSPTCL and for DISCOMs it is nil as no interest amount

has been taken related to old loans.


The Commission has computed the interest and finance charges as per the BERC

(Terms and Conditions for determination of Tariff) Regulations, 2007 and considered

the same in the truing up order. This issue is aptly discussed at para 4.16 (A) of this

order.

Issue – 12: Other Interest and Finance charges:


and M/s Kalyanpur Cements Limited have submitted that considerable increase has

been claimed under other interest and finance charges. It is requested that the

Commission to scrutinize the interest claimed under the head other interest and

finance charges.


The other interest and finance charges include the following:



It is submitted that the interest on General Provident Fund (Sl.No.5 of table above)

shall be borne by the State Government.


The Commission has considered the amounts, except Sl.No.5 and 6 of the table

above, as per the BERC Tariff Regulations, 2007 and Tariff Principles, Design and

Tariff Schedule of the Tariff order for FY 2012-13. This issue is aptly discussed at para

4.16 of this order.

Issue – 13: Interest on working capital:


and M/s Kalyanpur Cements Limited have submitted that working capital is

erroneously calculated. The GFA requires to be substantiated for allowing

maintenance spares and payment made by State Government to NTPC is not

considered.


It is submitted that resource gap funding of approx. Rs.200 crore has been paid to

NTPC on behalf of BSEB by State Government out of resource gap to be paid to BSEB.

As such there would be no impact on proposed working capital computations.

Sl.No. Particulars Amount

(Rs. crore)

1Discount to consumers for timelypayment of bills (Rebate) 17.90

2 Power factor Rebate 37.163 Interest on Fixed Deposits (0.02)4 Interest on Group saving Scheme 0.015 Interest on Contributory Provident fund 23.82

6Late payment Surcharge to powersuppliers 4.47

7 Other Misc. and Bank charges 2.628 Total 85.96




The Commission has noted the objection and the reply of the petitioner. The

Commission has observed that the petitioner does not have to arrange working

capital for payment to NTPC in view of the payment made by State Government

directly against power purchase bills to NTPC. The cost of power purchase forms

part of receivables and is one of the components of working capital. Hence, the

amount paid to NTPC shall not be included in the receivables and shall be reduced

from the working capital requirement. Accordingly, the Commission has deducted

the amount equivalent to two months of bill amount paid to NTPC from the working

capital.

The Commission has scrutinized all revenue and expenses/cost component of the

truing up petition vis-à-vis the revenue and expenses reported in the audited annual

accounts of BSEB and segregated companies in consonance with the BERC (Terms

and Conditions for Determination of Tariff) Regulations, 2007 and approved after

prudence check. The interest on working capital computations are influenced by the

cost components and accordingly, the Commission has considered the interest on

working capital for truing up.

Issue – 14: Interest on Security Deposit:

M/s Balamukund Concast Limited, Patna has submitted that BSPHCL has claimed

interest on security deposit. The consumer category wise amount of security deposit

held and interest paid were not provided. Security Deposit is used by BSPHCL as

working capital, so claiming interest on working capital and interest on security

deposit is not proper and justified. BSPHCL is not allowing adjustment of interest on

security deposit to LT category of consumers and requested the Commission not to

allow in truing up.


have submitted that the licensees retain huge amount of money of the consumers in



the form of Security Deposit and as per provision of BESC 2007 interest is payable at

Bank Rate. It is further stated that licensee has been taking short term/overdraft

from commercial banks at higher rate and interest paid on SD to the consumers is at

bank rate. The net gain due to difference in interest on borrowed funds vis-à-vis the

interest paid on SD to consumers should have been passed on to the consumers.

The Petitioner has sought to recover the amount of interest on SD from the

consumers. There seems to be no rationale or logic for such proposal and requested

the Commission to reject the proposal.


It is submitted that interest on security deposit is promptly being paid to all the HT

consumers and stated that they are in the process of collating and updating the

information on security deposits paid by the LT consumers. It is further stated that

after full information is collected and configured, necessary action for adjustment of

interest on security deposit will be taken.


The Commission has not considered the interest and security deposit claimed by the

Petitioner. This issue is aptly discussed in para 4.18 of this order.

Issue – 15: Revenue Income:

M/s Balamukund Concast Limited, Patna has submitted that in review for FY 2012-13

(RE) in the Tariff order dated 15th March 2013, the power purchase is considered at

9568 MU. The revenue is considered at Rs.2930.08 crore from sale of power in the

State and Rs.430.98 crore from sale to Nepal and surplus/additional power. In truing

up the power purchase is indicated at 13267 MU, whereas the revenue is indicated

at Rs.3360.82 crore which is same level which the Commission has approved on

power purchase of 9568 MU. It is stated that it is evident from the facts stated

above, the revenue income has been kept minimum to increase the revenue gap and



to mis-utilise the State Government Grant. The workings of the revenue income are

objected to and requested the Commission to rework this.


It is submitted that the revenue income considered in the truing up is actual and

audited revenue for FY 2012-13 and gap resulted in true up is outcome of these

workings.


The Commission has scrutinized the sale of energy and revenue realised vis-à-vis the

approved level of T&D losses in MYT order and revenue considered in this truing up

order.

Issue – 16: Revenue Gap / Surplus of earlier years:


have submitted that the cumulative effect of truing up of past five years (FY 2006-07

to FY 2010-11) would be only Rs.148.06 crore (surplus), which was not considered in

the review of ARR for FY 2012-13 (RE). Had this amount being taken, the surplus of

Rs.950.44 crore would have a surplus of Rs.1098.50 crore (Rs.950.44 crore +

Rs.148.06 crore) during FY 2012-13 (March 2013). The petitioner in the truing up

exercise for FY 2012-13 has not taken into account the surplus of Rs.148.06 crore in

its submission and requested the Commission to correct the same.


It is submitted that the surplus of Rs.170 crore for FY 2011-12 has been considered in

the petitions of NBPDCL and SBPDCL for ARR & Tariff for FY 2013-14 & FY 2014-15.

The Revenue Gap for FY 2013-14 reflects past gap/surplus for FY 2011-12 as well as

FY 2012-13.




The Commission has considered the accumulated surplus and adjusted against the

ARR for FY 2012-13 in the Tariff Order for FY 2012-13. The accumulated surplus to

end of FY 2012-13 considered by the Commission based on truing up orders upto FY

2012-13 is aptly discussed at para 4.25 of this truing up order for FY 2012-13.

Issue – 17: Administration and General Expenses:


have submitted that the administration and general expenses have increased by Rs.

20.72 crore over FY 2011-12 and no explanation for such huge rise in the expenses

has been given. As per standard norms, the annual growth should be 10% and the

consumers could not be loaded and requested the Commission to make appropriate

deduction in the A&G expenses.


It is submitted that increase in A&G expenses is due to payment of registration

charges for new companies, restructuring expenses, own consumption of electricity

brought to books for the first time, etc. All these A&G expenses are actually

incurred and to be considered for truing up for FY 2012-13.


The Commission has noted the objection and the reply of the petitioner. The

Commission on prudence check has allowed the A&G expenses in truing up.



4. Truing-up for FY 2012-13

4.1 Background

The Commission issued the Tariff Order for FY 2012-13 dated 30th March 2012,

determining the Annual Revenue Requirement (ARR) and Retail Supply Tariff for

FY 2012-13 for the erstwhile BSEB. The Commission carried out the ‘Review’ exercise

for FY 2012-13 in the Tariff Order for FY 2013-14 dated 15th March 2013, based on

the revised estimates submitted by BSPHCL on behalf of the erstwhile BSEB.

The Bihar State Power Holding Company Limited (BSPHCL) has submitted the

petition for truing-up for FY 2012-13 on 11th November 2013, along with Audited

Annual Accounts for FY 2012-13, on behalf of the erstwhile BSEB.

BSPHCL has submitted that since unbundling is effective from 1st November 2012,

consolidated Audited Annual Accounts are available for erstwhile BSEB up to

31st October 2012 and segregated Audited Annual Accounts for the unbundled

entities for the period from 1st November 2012 to 31st March 2013. BHPHCL has

requested to allow the truing up for FY 2012-13 to be carried out on a consolidated

basis and pass on the revenue gap / (surplus) in the respective petitions of NBPDCL

and SBPDCL as per the agreed principles.

Truing up for FY 2012-13 is to be done according to the Regulation 22 (1) & 2 of the

BERC (Terms and Conditions for Determination of Tariff) Regulations, 2007 which is

reproduced below:

“The Commission shall undertake a review along with next Tariff Order of the

expenses and revenues approved by the Commission in the current year Tariff Order.

While doing so, the Commission shall consider variations between approvals and

revised estimates / pre-actuals of the sale of electricity, income and expenditure for



the relevant year and permit necessary adjustments / changes in case such variations

are for adequate and justifiable reasons. Such an exercise shall be called Review.”

“After audited accounts of the year are made available, the Commission shall

undertake a similar exercise as in sub-clause (1) above based on the final actual

figures as per the audited accounts. This exercise based on the audited accounts shall

be called ‘Truing-up’. The Truing-up exercise for any year shall not ordinarily be

considered after more than one year gap after “Review”.

Accordingly, the “Truing-up” exercise for FY 2012-13 has been undertaken by the

Commission on the basis of audited annual accounts for FY 2012-13 and BERC (Terms

and Conditions for determination of Tariff) Regulations 2007. However, wherever

deemed necessary, the Commission has considered expenses based on prudence

check and after taking into account efficiency parameters like T&D losses, generating

stations plant operating parameters, etc.

4.2 Truing-up of ARR for FY 2012-13

The BSPHCL, in its petition for truing-up for FY 2012-13, has furnished the actual

energy sales, revenue and expenditure for FY 2012-13 based on the audited annual

accounts for FY 2012-13. Accordingly the revised ARR, revenue and consequent gap

for FY 2012-13, have been claimed by the Petitioner. The Commission has analyzed

the components of actual energy sales, revenue, expenses and gap projected by the

Petitioner under truing-up for FY 2012-13 in the subsequent paragraphs.

4.3 Category wise energy sales

Petitioner’s submission:

The BSPHCL in Format – 1 of its petition, has submitted the actual energy sales of

7212.57 MU for FY 2012-13 on the basis of audited annual accounts as given in the

Table below:



Table 4.1: Category-wise actual energy sales proposed for FY 2012-13

(MU)

Sl.No

CategoryApproved in

review inTariff Orderdated 15th

March 2013

Actuals during FY 2012-13BSEB(from

Apr – Oct2012)

NBPDCL(Nov 2012-Mar 2013)

SBPDCL(Nov 2012-Mar 2013)

Total Salesduring

FY 2012-13

a b c d e F g = d+e+f1 Kutir Jyoti (Rural)- Unmetered 341.00 317.75 130.31 67.13 515.192 Kutir Jyoti (Rural)- Metered3 Kutir Jyoti (Urban)4 Domestic - I 551.00 493.51 217.13 118.02 828.665 Domestic - II 1556.00 918.41 221.36 373.57 1513.346 Domestic - III 1.00 0.38 0.39 0.07 0.847 NDS-I (Rural) 15.00 12.91 6.12 2.57 21.608 NDS-II (Urban) 725.00 423.11 105.59 178.15 706.859 NDS-III (Temples, etc.) 2.00 1.04 0.22 0.72 1.98

10 Irrigation IAS-I (Private) 272.00 102.83 5.51 83.88 192.2211 Irrigation IAS-I I (Government) 144.00 83.77 33.53 27.01 144.3112 LT Industrial LT IS-I 143.00 82.96 24.27 39.42 146.6513 LT Industrial LT IS-II 97.00 55.39 16.76 32.32 104.4714 Public water works (PWW) 54.00 30.69 8.81 13.80 53.3015 Street Light - I (Metered) 8.00 5.26 2.04 1.97 9.2716 Street Light - II (Un-Metered) 43.00 24.20 3.35 19.53 47.0817 Street Light – III - - - - -18 High Tension HTS-I 628.00 378.36 75.54 162.82 616.7219 High Tension HTS-II 184.00 130.60 22.53 61.96 215.0920 High Tension HTS-III 162.00 41.72 6.36 17.59 65.6721 HTSS (Induction furnace) 440.00 282.74 30.89 193.65 507.2822 Railway Traction RTS-I 287.00

240.76 5.14 202.74 448.6423 Railway Traction RTS-II 206.0024 Sales from additional power - - - - -

Total Sales within State 5859.00 3626.39 915.85 1596.92 6139.1625 Sales to Nepal 555.00 305.25 276.19 - 581.4426 UI Sales 468.00 456.24 12.50 23.23 491.97

Grand Total 6882.00 4387.88 1204.54 1620.15 7212.57

Commission’s analysis:

The Commission, in the Tariff Order dated 30th March 2012 for FY 2012-13, had

approved the energy sales of 8626 MU for FY 2012-13. In the Tariff Order dated 15th

March 2013, the Commission had approved the revised estimated sales of 6882 MU

for FY 2012-13 in the review for FY 2012-13.

The actual total sales of Kutir Jyoti for FY 2012-13 have been shown by the Petitioner

as 515.19 MU, which on an average works out to 32 units/month/connection.



While approving the consumption for Kutir Jyoti category for FY 2012-13, the

Commission has taken into consideration the verification report submitted by the

consultant appointed by the Commission for the purpose, which has substantiated

consumption pattern of 18 units per month per service connection for Kutir Jyoti

rural consumers. Though the Kutir Jyoti consumers in urban areas are metered, the

erstwhile BSEB has not furnished the consumption based on meter readings. Hence,

the Commission has assessed the consumption for this category at 30 units per

month per service connection.

The Commission in paragraphs 4.3 and 5.2 of the Tariff Order dated 15th March 2013

has elaborated the procedure followed for estimating the Kutir Jyoti consumption.

Further, the Commission, while reviewing the performance for FY 2012-13 (RE) in

Tariff Order for FY 2013-14 and approving the energy sales of Kutir Jyoti , has

adopted a norm of 18 units / month for Kutir Jyoti (Rural) and 30 units / month for

Kutir Jyoti (Urban).

The Commission, in the "TARIFF SCHEDULE FOR RETAIL TARIFF RATES AND TERMS

AND CONDITIONS OF SUPPLY FOR FY 2012-13" given at Appendix -1 of the Tariff

Order for FY 2012-13, had defined Kutir Jyoti connection based on the connected

load norm for Kutir Jyoti consumer and had also directed that, “in case it is detected

that norms prescribed for consumption are violated, the Kutir Jyoti tariff shall

immediately become inoperative and rates applicable to DS-I and DS-II category as

the case may be, with appropriate charge shall apply in such cases."

In view of the above direction, the Commission has no reason to change the

consumption norm of 18 units per month for Kutir Jyoti (Rural) and 30 units per

month for Kutir Jyoti (Urban) consumers. Based on the already approved norm of 18

units / month and 30 units / month for Rural and Urban Kutir Jyoti connections

respectively, the total Kutir Jyoti consumption works out to 319.52 MU as detailed

below:



Category Number ofconsumers

Consumption normkWh/month/

connection

Sales for fullyear (MU)

Kutir Jyoti (Rural) 1124885 18 242.98Kutir Jyoti (Urban) 212608 30 76.54Total 1337493 319.52

For irrigation and agriculture, the sales approved for FY 2012-13 in the tariff order

dated 30th March 2012 and now projected by the Petitioner based on audited annual

accounts for FY 2012-13 are as given below:

Category Approved in Tariff order dated30th March 2013

Now projected as per audited annualaccounts for FY 2012-13

No. ofConsumers

Connectedload (kW)

Sales(MU)

No. ofConsumers

Connectedload (kW)

Sales(MU)

IAS - I 51663 182916 272 54175 125097 192.22IAS - II 5810 87598 317 2496 59903 144.31Total 57473 270514 589 56671 185000 336.53

Number of connections and connected load were taken from audited annualaccounts of NBPDCL and SBPDCL for FY 2012-13.Total connected load given for IAS-I and IAS-II in the annual accounts issegregated to IAS-I and IAS-II considering the ratio approved in tariff order.

The details of number of connections and connected load for IAS-I and IAS-II are

captured from the annual accounts of NBPDCL and SBPDCL for FY 2012-13. Since the

total connected load (kW) for IAS-I and IAS-II are indicated in the annual accounts of

NBPDCL and SBPDCL, the same is segregated to IAS-I and IAS-II in pro-rata of the

connected load approved in the Tariff Order 30th March 2012. The sales of 192.22

MU projected for IAS-I and 144.31 MU projected for IAS-II by the Petitioner are

observed to be within the norms approved by the Commission.

For other categories, the actual energy sales furnished as per the audited accounts

are considered reasonable and accepted.



Table 4.2: Summary of Category-wise energy sales approved for FY 2012-13

(MU)

Sl.No. Category

Approved inTariff Order

forFY 2012-13

Approved inreview forFY 2012-13(RE) in T.O.dated 15th

March 2013

Actual energysales for

FY 2012-13 asper audited

accounts

Nowapproved forFY 2012-13 in

truing-up

1 Kutir Jyoti 457.40 341.00 515.19 319.522 Domestic - I 1047.74 551.00 828.66 828.663 Domestic - II 1424.91 1556.00 1513.34 1513.344 Domestic - III 0.99 1.00 0.84 0.845 NDS-I (Rural) 22.15 15.00 21.60 21.606 NDS-II (Urban) 581.79 725.00 706.85 706.857 NDS-III (Temples, etc.) 18.08 2.00 1.98 1.988 Irrigation IAS-I (Private) 271.63 272.00 192.22 192.229 Irrigation IAS-I I (Government) 317.17 144.00 144.31 144.3110 LT Industrial LT IS-I 196.62 143.00 146.65 146.6511 LT Industrial LT IS-II 126.66 97.00 104.47 104.4712 Public water works (PWW) 160.32 54.00 53.30 53.313 Street Light - I (Metered) 6.98 8.00 9.27 9.2714 Street Light - II (Un-Metered) 34.30 43.00 47.08 47.0815 High Tension HTS-I 966.94 628.00 616.72 616.7216 High Tension HTS-II 425.52 184.00 215.09 215.0917 High Tension HTS-III 221.30 162.00 65.67 65.6718 HTSS (Induction furnace) 446.52 440.00 507.28 507.2819 Railway Traction RTS-I & II 784.77 493.00 448.64 448.6420 Sales from additional power 266.00

Total Sales within State 7777.79 5859.00 6139.16 5943.4921 Sales to Nepal 555.00 555.00 581.44 581.4422 UI Sales 293.00 468.00 491.97 491.97

Grand Total 8625.79 6882.00 7212.57 7016.90

The Commission approves the category-wise energy sales for FY 2012-13 at

7016.90 MU in the truing up. The same would be used for approving the power

procurement cost.

4.4 Transmission and Distribution Losses


The BSPHCL in Format – 5 of its petition has shown the T&D Losses for FY 2012-13 at

45.49%.

The Table below summarizes the overall T&D loss levels, as proposed by the

Petitioner, for FY 2012-13.



Table 4.3: T&D Losses proposed for FY 2012-13

(MU)Particulars Approved

in TariffOrder for

FY 2012-13

Actuals as perAnnual

Accounts forBSEB (Apr -12 to

Oct-12)

Actuals asper Annual

accounts forNBPDCL

(Nov – Mar2013)


accounts forSBPDCL

(Nov – Mar2013)

Total forFY 2012-13

T & D Losses 27.50% 45.83% 35.85% 50.30% 45.49%

The BSPHCL submitted that the losses have increased due to extensive investment in

rural areas and supply to BPL categories. Both distribution companies are in the

process of putting in place better administration in high leakage areas to control

losses. It is submitted that substantial KJ connections are released during FY 2012-13

and average power supply in rural areas has also increased.


The Commission has fixed the T&D loss trajectory for FY 2012-13 at 27.50%. In the

petition for true-up of FY 2012-13, BSPHCL has claimed T&D loss for FY 2012-13,

as per annual accounts, at 45.49%.

The Commission has observed that the erstwhile BSEB and the unbundled utilities

i.e. NBPDCL and SBPDCL have not been able to meet the loss reduction target set

by the Commission. The audited accounts of erstwhile BSEB and the unbundled

DISCOMs are also reflecting increasing trend of T&D loss.

BSPHCL submitted that the losses have increased due to extensive investment in

rural areas and providing connections to BPL categories, which is not justifiable.

The Commission has noted that Central Government sponsored scheme such as

APDRP, R-APDRP and strengthening of transmission and distribution network of

the erstwhile BSEB should have reduced the overall T&D loss of the erstwhile

BSEB. In addition, the State Government has also provided plan funds for 100%

metering and replacement of old conductors. All these schemes should have

helped erstwhile BSEB to reduce T&D loss rather than increasing it. Hence, rural

electrification cannot be held responsible for high T&D loss in Bihar where funds



are flowing for network and distribution system improvement through Central

Government and multilateral funding agencies such as ADB, PFC etc.

Considering all the above aspects, the Commission has fixed the T&D loss

trajectory for FY 2012-13 at 27.50% in the Tariff Order for FY 2012-13 and in the

MYT order dated 15th March, 2013.

The Commission is of the view that the T&D loss is a controllable parameter and it

is the responsibility of the Distribution licensees to take appropriate steps to bring

down the T&D loss level. In this connection, the Commission has given number of

directives to improve the performance of the distribution licensees, which if

implemented in true spirit, should have brought down the T&D loss level

considerably.

The Commission cannot allow the burden of higher T&D loss due to non

achievement of T&D loss reduction trajectory as approved by the Commission, to

be passed on to the consumers.

Accordingly, the Commission confirms the T&D loss at 27.50% for truing up

purpose for FY 2012-13. The same has been considered for computation of the

power purchase cost of FY 2012-13 in truing up.

The T&D loss level target set by the Commission, T&D losses as per audited annual

accounts of segregated entities of BSPHCL and the level approved by the Commission

in the truing-up for FY 2012-13 is summarized in the Table below.

Table 4.4: Approved T&D Losses for FY 2012-13

Particulars Approved in TariffOrder forFY 2012-13

Approved inreview forFY 2012-13 inTariff Order dated15th March 2013

As per Auditedannual accountsfor FY 2012-13

Now approvedin truing up forFY 2012-13

T&D losses 27.50% 27.50% 45.49% 27.50%

4.5 BSEB’s Own Generation


The erstwhile BSEB owned only one power generating station (Thermal), i.e. Barauni

Power Station (BTPS), located at Barauni with two units (Unit 6 and 7) of 110 MW



each which are under Renovation and Modernisation and therefore, no generation

has been recorded for the year 2012-13.

4.6 Power Purchase


The erstwhile BSEB has firm allocations of power from thermal power plants of

NTPC, hydel Power plants of NHPC, hydel plants at Chukka and Tala through PTC and

hydel plants of BSHPC. In addition to these, there are power purchase agreements

with DVC, Adani, NVVNL & Sugar Mills and other plants.

The BSPHCL has submitted the gross power purchase of 13267 MU from all sources

in its Truing-up petition for FY 2012-13. BSPHCL has submitted that it has purchased

entire available energy from long-term sources and also purchased short-term

energy as per requirement of DISCOMs. BSPHCL has requested the Commission to

approve the net power purchase of 12821 MU for the FY 2012-13, which is as per the

audited annual accounts, as given in the Table below:

Table 4.5: Power Purchase proposed for FY 2012-13

(MU)

Sl.No. Particulars

Approved inreview forFY 2012-13

Actuals during for FY 2012-13BSEB(Apr-

Oct 12)

NBPDCL(Nov-

Mar 13)

SBPDCL(Nov-

Mar 13)

Total forFY 2012-13

NTPC1 Farakka 2834 1639 532 921 30922 Talcher 2585 1462 430 744 26353 Kahalgaon 2662 1590 465 804 28594 KBUNL - - - - -5 NVVNL - 693 - - 693

Total - NTPC 8081 5383 1427 2469 9279NHPC

6 Rangit 137 83 10 18 1117 Teesta 726 403 25 43 470

Total - NHPC 863 486 35 60 581PTC

8 Chukka 580 404 22 37 4639 Tala 1122 737 20 34 791

Total - PTC 1702 1142 41 71 1254Others

10 Nepal - - - - -11 BSHPCL 57 37 4 6 4712 New Swadeshi Sugar Mill 54 28 37 64 12913 RE Purchase Solar - - - - -14 RE Purchase Other - - - - -15 Medium Term / UI - 35 12 21 68



16 DVC 100 137 125 217 48017 Adani 1254 768 242 418 142818 NEA+ Short Term 1518 1 - - 1

Total Others 2982 1007 420 726 2153Grand Total 13629 8018 1923 3326 13267

19 Less UI Sale (1069) - - - -20 CTU(Transmission) Losses - 304 52 90 446

Net Purchase after CTULosses 12559 7714 1871 3236 12821


The Commission recognizes the sources of power purchase, as outlined by BSPHCL

based on the audited annual accounts for FY 2012-13. However, the quantum of

power purchase and the cost associated with the same would be approved after

taking into cognizance the approved energy sales and the T&D loss trajectory

approved by the Commission.

The Commission intends to use the same methodology for approval of the quantum

of power purchase and cost associated with the same, based on the information

available in the audited annual accounts for FY 2012-13. Commission approves the

quantum of power purchase on the same principles, as was done earlier during the

truing-up for FY 2006-07 to FY 2011-12.

The Summary of the approved power purchase quantum from various sources for

FY 2012-13 is given in the Table below:

Table 4.6: Source-wise Power Purchase quantum approved for FY 2012-13

(MU)

Sl.No. Particulars

Approved inTariff Orderfor FY 2012-13

Approved inreview for FY2012-13 in TariffOrder dated 15th

March 2013

Actuals as perannualaccounts forFY 2012-13

Now approvedin truing-upfor FY 2012-13

NTPC1 Farakka 2889 2834 3092 30922 Talcher 2449 2585 2635 26353 Kahalgaon 2670 2662 2859 2859

Total - NTPC 8008 8081 8586 8586NHPC

4 Rangit 119 137 111 1115 Teesta 549 726 470 470

Total - NHPC 668 863 581 581PTC



6 Chukka 543 580 463 4637 Tala 909 1122 791 791

Total - PTC 1452 1702 1254 1254Others

8 KBUNL 321 - - -9 NVVNL - - 693 693

10 BSHPCL 30 57 47 4711 Sugar Mill 29 54 129 12912 DVC - 100* 480 48013 Adani - 1254 1428 142814 NEA+Short

term 3355 1518 1 115 Medium

term/UI - (1069) 68 6816 Renewable

Energy 278 - - -17 Total Others 4013 1914 2846 284618 Grand Total 14142 12559** 13267 13267

* Kept blank by oversight in T.O. dated 15th March 2013**Wrongly typed as 12459 in T.O. dated 15th March 2013

The Commission approves the total quantum of power purchase at 13267 MU for

the purpose of working out the energy balance and computation of the power

purchase cost as part of the truing-up exercise for FY 2012-13.

4.7 Energy Balance


The BSPHCL submitted the energy balance for FY 2012-13 based on the actual energy

Sales and T&D losses as given in Table below:

Table 4.7: Energy Balance proposed for FY 2012-13

Sl.No. Particulars Unit

Approvedin review

forFY 2012-13

Actuals during FY 2012-13

BSEB(Apr-

Oct 12)

NBPDCL(Nov-

Mar 13)

SBPDCL(Nov-

Mar 13)

Total for(FY 2012-

13)Total Power Purchases

1 Own Generation MU2 Total Power Purchase

from Long Term Sources MU 9576 8018 1923 3326 13267

3 Transmission Loss inRegional transmissionsystem

%2.73% 3.79% 2.70% 2.70% * 3.36%

4 Transmission Loss inRegional transmissionsystem

MU261 304 52 90 446

5 Power available at State MU 9315 7714 1871 3236 12821



Periphery6 State Transmission Loss % 4.05% 4.05% 4.05% 4.05% 4.05%7 State Transmission Loss MU 377 312 76 131 5198 Power available at

DISCOMs peripheryMU 8938 7401 1795 3105 12302

Total Sales9 Energy Sales within state MU 5859 3626 916 1597 6139

10 Energy sale outside state(Nepal)

MU 555 305 276 - 581

11 Sale in bilateral trade / UI MU 468 456 12 23 49212 Total Energy Sales MU 6882 4388 1205 1620 721313 Distribution Losses MU 2056 3013 590 1485 508914 Distribution Losses % 24.27% 43.39% 33.13% 48.19% 43.09%

*% derived based on actual CTU Loss and considering total power purchase as per BERC methodology

The BSPHCL has requested to consider the energy balance as shown above for

FY 2012-13 and accordingly approve the power purchase cost.


From the energy balance proposed by the Petitioner in the above Table, the

Commission has noted that the CTU losses proposed in the Eastern Region System

are 446 MU which when considered on the power purchased from the sources

outside the state works out to 3.62% against 2.73% approved for FY 2012-13 (RE).

On verification from the ERPC website, the average pooled transmission loss in

Eastern Region Transmission System during FY 2012-13 was 2.75%; hence the

Commission considers the Regional Transmission System loss at 2.75% which works

out to 339 MU on power purchased of 12329 MU from sources outside the state for

FY 2012-13 in truing up.

For estimating the additional power purchase to be disallowed due to excess

distribution loss, the total purchases from the various sources has been worked out

considering the impact of average regional transmission loss

(2.56%= 339/13267*100) applicable on the total power purchase. The reason for

applying the average regional transmission loss is that the power purchase quantum

also includes sources of power on which the regional transmission losses are not

applicable i.e. Nepal, BSPHC, Sugar mills etc. Accordingly, the gross power purchase



required to be done in FY 2012-13 is 9741 MU with the regional transmission loss of

249 MU ((9741 = 9492/(1-2.56%)).

The Commission approves the energy requirement of the Petitioner at the state

periphery based on the actual sales and T&D losses. The T&D losses have not been

considered on sales in bilateral trade/UI.

The energy balance for FY 2012-13 has been computed based on the approved sales

in true up during the year, considering the approved level of T&D losses, CTU losses

and the power purchased to meet the demand from the consumers.

The details of energy requirement and energy availability during FY 2012-13 are as

given in Table below:

Table 4.8: Energy Balance approved for FY 2012-13

(MU)


Approvedin Tariff

Order forFY 2012-13

Approved inReview for FY

2012-13 inTariff Order

Dated15th March 13

Actuals asper AnnualAccounts

forFY 2012-13

Approvedin truing-

up forFY 2012-13

A Energy Requirement1 Energy sales MU 7778 5859 6139.16 5943.492 Sales outside state (Nepal) MU 555 555 581.44 581.443 Sale in bilateral trade / (UI) MU 293 468 491.99 491.994 Total Energy Sales MU 8626 6882 7212.57 7016.905 T & D Losses % 27.50% 27.50% 45.49% 27.50%6 T&D Losses MU 3161 2433 5608 24757 Energy Requirement MU 11784 9315 12821 9492

8Regional transmissionsystem loss % 2.51% 2.73% * 3.36% 2.56%

9 Regional transmission loss MU 296 261 446 24910 Total energy requirement MU 12082 9568 13267 9741B Energy Availability11 Own Generation MU 279 - - -12 Power Purchases MU 14142 12459 13267 13267

13Total Energy available fromall sources MU 14421 12459 13267 13267

14 Surplus / (Deficit) (13-10) MU 2338 2891 - 3526* % based on actual Regional transmission losses considering total power purchase



The approved total power purchase requirement (Net) based on the approved sales

to consumers and approved T&D losses is 9741 MU. As against this, the availability

of energy from all sources is 13627 MU. Thus the additional power purchase from

long term sources over and above requirement is 3526 MU. Accordingly, the

Commission disallows power purchase quantum of 3526 MU for FY 2012-13. The

power purchase cost corresponding to the same would be adjusted in the total

power purchase cost approved for the year.

The Commission disallows the power purchase quantum equivalent to 3526 MU

for the FY 2012-13 as part of truing-up process, based on the principle that excess

power purchase on account of higher T&D losses, i.e., over and above the

approved losses, shall not be permitted.

4.8 Power Purchase Cost


The BSPHCL has submitted the gross power purchase cost at Rs. 4566.08 crore from

all sources including intra-state and PGCIL transmission charges for FY 2012-13 in

truing-up.

The BSPHCL has claimed the transmission charges (PGCIL charges) of Rs. 359.99 crore

for the purchased from outside the State during FY 2012-13.

The BSPHCL has submitted the source–wise break-up of total power purchase cost

and unit, as given in Table below:

Table 4.9: Proposed Power Purchase Cost for FY 2012-13

Sl.No.

GeneratingStations

Approved in review in TariffOrder dated 15th March 2013

Claimed in the True up forFY 2012-13

MUs Rs. Cr Rs / kWh MUs Rs. Cr Rs / kWh1 Farakka 2834 1125 3.97 3092 1046.87 3.392 Talchar 2585 639 2.47 2635 614.18 2.333 Kahalgaon 2662 868 3.26 2859 901.04 3.15

Total (NTPC) 8081 2631 3.25 8586 2562.08 2.984 Rangit 137 51 3.69 111 33.68 3.035 Teesta 726 146 2.01 470 125.64 2.67

Total (NHPC) 863 196 2.28 581 159.31 2.746 Chukka 580 115 1.99 463 76.01 1.647 Tala 1122 263 2.34 791 162.38 2.05



Sl.No.

GeneratingStations

Approved in review in TariffOrder dated 15th March 2013

Claimed in the True up forFY 2012-13

MUs Rs. Cr Rs / kWh MUs Rs. Cr Rs / kWhTotal (PTC) 1702 378 2.22 1254 238.40 1.90Others

8 BSPHC 57 15 2.57 47 11.66 2.499 New Swadeshi

sugar Mill54 22 4.18 129 57.39 4.46

10 Medium Term /UI

- - - 68 8.15 1.20

11 DVC 100 38 3.83 480 195.71 4.0812 Adani 1254 542 4.32 1428 620.20 4.3413 NEA + Short term 1518 650 4.28 1 0.57 8.6814 NVVNL - - 693 298.95 4.31

Total Others 2982 1267 4.25 2846 1192.63 4.19Grand Total 13629 4473 3.28 13267 4152.43 3.13

15 Less UI Sale 1069 349 - - -16 Net Total 12559 4124 3.28 13267 4152.43 3.1317 Arrears – NHPC

(Rangit)- 43 - -

18 Power Purchasecost

12559 4167 3.32 13267 4152.43 3.13

19 Add: PGCILCharges

- 180 - 359.99 -

20 Add: BSPTCLcharges

- - - 53.66 -

21 Power PurchaseCost

12559 4347 3.46 13267 4566.08 3.44

The BSPHCL has requested to approve total power purchase cost of Rs. 4566.08

crore as per Audited Annual Accounts for FY 2012-13 in truing up.


The Commission has approved the power purchase cost of Rs. 5182 crore for

purchase of 14142 MU for FY 2012-13 in the Tariff Order dated 30th March 2012 and

revised the power purchase cost to Rs. 4347 crore for purchase of 12559 MU for

FY 2012-13 in the “Review” in the Tariff order dated 15th March 2013, as per the

revised estimate submitted by the erstwhile BSEB in the Tariff Petition for

FY 2013-14.

The Commission noted that according to audited annual accounts, BSPHCL has

incurred total power purchase cost of Rs. 4566.11 crore which include intra-state

transmission charges and PGCIL charges for purchase of 13266.65 MU which is in line

with that claimed in true up for FY 2012-13.



The Commission also noted that the actual PGCIL charges paid during FY 2012-13 as

per audited annual accounts are Rs.359.99 crore (which includes supplementary bill

amount of Rs. 63.67 crore) as against Rs.180 crore approved for FY 2012-13 (RE).

The details furnished by BSPHCL are as given below:

1) PGCIL Charges = Rs. 269.60 Crore

2) ULDC charges = Rs. 8.36 Crore

3) POSOCO charges = Rs. 4.41 crore

4) ERLDC (DVC) = Rs.13.96 crore

5) Arrears = Rs. 63.67 crore

6) Total = Rs. 360.00 crore

While approving the PGCIL charges for FY 2012-13 (RE) in the Tariff Order dated

15th March 2013, the Commission relied on the information furnished by BSPHCL in

its petition vide Table 5.6 (Tariff Order dated 15th March 2013) that the PGCIL

charges paid from April 2012 to September 2012 are Rs. 90.4 crore; hence the

Commission has considered Rs.190 crore for the full year of FY 2012-13.

The Commission has observed that due to new pricing methodology of transmission

charges i.e. point of connection charges, the PGCIL charges are on higher side than

that approved by the Commission.

The source-wise power purchase cost from different sources, intra-state

transmission charges and PGCIL transmission charges approved for FY 2012-13 based

on the actual power purchase cost as per audited annual accounts is given in the

Table below:

Table 4.10: Approved Power Purchase Cost for FY 2012-13

Sl. No. Generating Stations Approved in Truing up for FY 2012-13MUs Rs. Crore Rs / kWh

1 Farakka 3092.30 1046.87 3.392 Talchar 2635.10 614.18 2.333 Kahalgaon 2858.59 901.04 3.15

Total (NTPC) 8585.99 2562.08 2.984 Rangit 111.10 33.68 3.035 Teesta 470.11 125.64 2.67

Total (NHPC) 581.21 159.31 2.746 Chukka 463.32 76.01 1.647 Tala 790.53 162.38 2.05

Total (PTC) 1253.85 238.40 1.90



Sl. No. Generating Stations Approved in Truing up for FY 2012-13MUs Rs. Crore Rs / kWh

Others8 BSPHC 46.83 11.66 2.499 New Swadeshi sugar Mill 128.81 57.39 4.4610 Medium Term / UI 68.14 8.15 1.2011 DVC 479.81 195.71 4.0812 Adani 1428.22 620.20 4.3413 NEA + Short term 0.66 0.57 8.6814 NVVNL 693.07 298.95 4.31

Total Others 2845.60 1192.63 4.1915 Grand Total 13266.65 4152.43 3.1316 Less UI Sale - -17 Net Total 13266.65 4152.43 3.1318 Add: PGCIL Charges - 359.99 -19 Sub-Total - 4512.42 3.4020 Add: BSPTCL charges - 53.66 -21 Total Power Purchase

Cost13266.65

OrSay 13267

4566.08 3.44

The Commission approves the power purchase cost at Rs. 4566.08 crore including

transmission charges for purchase of 13267 MU for FY 2012-13 in truing-up.

4.9 Disincentive for non-achievement of T&D loss reduction target

Petitioner’s Submission

The Commission while determining ARR of erstwhile BSEB has fixed the T&D loss

achievement target for each financial year while actual losses of the erstwhile BSEB

have always remained much higher than the prescribed T&D trajectory of losses due

to various reasons including the fact that large number of consumers is unmetered

or having defective meters. Further dilapidated distribution network of erstwhile

BSEB has contributed to higher T&D losses of erstwhile BSEB. Any increase in the

quantum of power purchase also has led to enhanced T&D losses for erstwhile BSEB.

Massive and large scale electrification of villages under RGGVY scheme leading to

expansion of rural distribution network too has contributed to the T&D losses of

erstwhile BSEB to a great extent.

Through the erstwhile BSEB had taken up re-conductoring of old and dilapidated

conductors and large scale metering of unmetered consumers as mission items in a

time bound manner, even then actual T&D loss of erstwhile BSEB is much higher



than the prescribed T&D loss trajectory of erstwhile BSEB for the period of

FY 2012-13.

The difference in the actual power purchase and the power purchase requirement

approved by the Commission is disallowed at the average power purchase rate and is

treated as “Disincentive for non-achievement of T&D loss targets”.

The Petitioner is proposing that since intra-state transmission loss pertains to

Transmission Company, only Distribution loss should be compared with the target.

However, in the present petition, the Petitioner is considering target set at 27.50%

for the purpose of computing disincentive for non-achievement of T&D loss target.

Table 4.11: Disallowed Power Purchase proposed for FY 2012-13

Based on the above computed disallowed quantum, the cost of power purchase for

disallowance is worked out by BSPHCL as given in the Table below:



in T.O.dated 15th

March 2013


Accounts forFY 2012-13

Normativeas proposedby BSPHCL

forFY 2012-13

1 Energy sales within state MU 5859 6139 61392 Energy outside state (Nepal) MU 555 581 5813 Sale in bilateral trade (UI) MU 468 492 4924 Total sales MU 6882 7213 72135 Distribution loss % 24.27% 43.09% 24.27%6 Distribution losses MU 2056 5089 25497 Energy requirement at DISCOM

peripheryMU 8938 12302 9366

8 State Transmission losses % 4.05% 4.05% 4.05%9 State Transmission losses MU 377 519 39510 Total energy requirement MU 9315 12821 9762

Energy availability11 Own generation MU - - -12 Total Power purchases MU 9568 13267 1010113 Average Regional transmission

losses% 2.73% 3.36% 3.36%

14 Average Regional transmissionlosses

MU 261 446 339

15 Net power availability MU 9307 12821 976216 Disallowed power purchase MU 2891 3165



Table 4.12: Cost of Disallowed Power Purchase proposed for FY 2012-13


PowerPurchase

disallowed forFY 2012-13 inTariff Order.

Claimed byBSPHCL intrue up forFY 2012-13

1 Net power purchase disallowed – (a) MU 2957 31652 Average regional transmission loss – (b) % 2.73% 3.36%3 Average power purchase cost – (c) Rs/kWh 3.45 3.134 Grossed up average PP cost – (d) = c/(1-b) Rs/kWh 3.24

5Value of power purchase disallowede=d*a/10 Rs. Cr 1020.17 1025.22

The BSPHCL has submitted that though the Petitioner computed cost of disallowance

power purchase, the Petitioner requests the Commission to consider the actual T&D

Loss position and re-consider such disallowances.


The difference in the actual power purchase and the power purchase requirement

approved the Commission is disallowed at the average power purchase rate and is

treated as “Dis-incentive for Non-Achievement of T&D loss target.

As per the trajectory, the maximum permissible T&D loss level for FY 2012-13 was

set at 27.50%, which the Petitioner was not able to achieve. The Commission, while

computing the Energy Balance has noted that 3526 MU of energy (gross) was

additionally purchased due to not achieving the T&D Loss trajectory of 27.50 %

approved for FY 2012-13. Accordingly, the Commission has computed the

disincentive for non-achievement of T&D loss reduction target at Rs. 1198.84 crore,

for FY 2012-13, considering the average power purchase rate at Rs. 3.40 per kWh as

arrived in the Table 4.10.

Table 4.13: Disincentive for Non-achievement of T&D loss reduction target for FY 2012-13

Sl. No. Particulars Unit FY 2012-13

1 Gross Power Purchase Disallowed MU 35262 Average Power Purchase cost Rs/kWh 3.403 Cost of Power Purchase Disallowed Rs. crore 1198.84



4.10 Employee cost


The BSPHCL has submitted that the employee expenses comprise of salaries,

dearness allowance, contribution towards pension & gratuity, leave encashment and

other staff welfare expenses. The Petitioner submitted that the employee expenses,

as per audited annual accounts of BSEB (from 1st April 2012 to 30th October 2012)

and unbundled entities of BSPGCL, BSPTCL, NBPDCL and SBPDCL (from 1st November

2012 to 31st March 2013) for FY 2012-13, were Rs.456.93 crore (net of capitalization

of Rs. 12.32 crore by BSPGCL) and requested to allow the employee cost of

Rs. 456.93 crore, as per the audited annual accounts for FY 2012-13.

The employee expenses claimed in the true up for FY 2012-13 are given in the table

below:Table 4.14: Employee cost proposed for FY 2012-13

(Rs. crore)

Sl.No. Particulars

Approvedin review

for FY2012-13

T.O. dated15thMarch

2013

Actuals as per Annual Accounts for FY 2012-13

BSEB(Apr'12-Oct'12)

BSPGCL(Nov'12-Mar'13)

BSPTCL(Nov'12-Mar'13)

NorthDISCOM(Nov'12-Mar'13)

SouthDISCOM(Nov'12-Mar'13)

Total forFY

2012-13

1Salary andAllowances 451.10 236.64 10.87 30.18 54.51 83.27 415.47

2 Leave encashment 27.94 0.54 1.80 3.14 5.25 38.67

3

Terminal Benefitsfor workingemployees 8.95 0.89 1.93 4.28 6.41 13.51

4

Terminal Benefitsfor retiredemployees 663.88 663.88

5 Others 10.00 1.40 0.01 0.02 0.11 0.05 1.596 Sub-total 470.05 929.86 12.31 33.93 62.04 94.98 1133.12

7

Less: StateGovernmentsupport forterminal benefitsfor Retiredemployees 663.88 663.88

8 Total Employee cost 470.05 265.98 12.31 33.93 62.04 94.98 469.24

9Less: Employee costcapitalised 12.31 12.31

10 Net Employee cost 470.05 265.98 0.00 33.93 62.04 94.98 456.93




The Commission had approved the employee cost for FY 2012-13 at Rs.735.37 crore

in the Tariff Order dated 30th March 2012. The Commission in the review for

FY 2012-13 (RE) has approved Rs. 470.05 crore in the Tariff Order dated 15th March

2013. The Commission has noted that Rs. 10.73 crore and Rs. 13.51 crore towards

contribution to leave encashment and terminal benefits respectively have been

claimed by the segregated entities post unbundling and these costs represent the

company contributions after the date of unbundling and the same is considered by

the Commission.

Accordingly, the Commission approves the net employee cost at Rs. 456.93 crore as

claimed by the BSPHCL for FY 2012-13 as per the audited annual accounts for

FY 2012-12, which are within the approved level for FY 2012-13 (RE) in Tariff Order

dated 15th March’13 for FY 2013-14 as indicated in the Table below:-

Table 4.15: Employee Cost approved for FY 2012-13

(Rs. crore)

Particulars

Approved inTariff Orderfor FY 2012-

13

Approved inreview for FY

2012-13 inT.O. dated 15th

March 2013

Claimed inthe truing-up

forFY 2012-13

Approvedin truing-up for FY2012-13

Employee cost 735.37 470.05 456.93 456.93

The Commission approves the employee cost at Rs. 456.93 Crore for FY 2012-13 in

the truing-up.

4.11 Repairs and Maintenance (R&M) Expenses


The BSPHCL has submitted that the repairs and maintenance expenses go towards

day-to-day upkeep of generation, transmission and distribution functions of the

erstwhile BSEB and segregated entities and form an integral part of the Company’s

efforts towards providing reliable and quality power supply to its consumers and

reduction of losses in its system.



BSPHCL has requested the Commission to allow the actual R & M expenses of

Rs. 74.18 crore (net of capitalization of Rs.0.84 crore by BSPGCL) for FY 2012-13 as

per audited.

The details of R&M expenses claimed by BSPHCL are given in the Table below:

Table 4.16: Repairs and Maintenance Expenses proposed for FY 2012-13

(Rs. crore)

Sl.No. Particulars

Approvedin review

for FY 2012-13 in T.O.dated 15th

March 2013


BSEB(Apr'12-Oct'12)





Totalfor FY

2012-13

1 Repairs andMaintenanceExpenses 90.99 37.89 0.84 5.70 15.16 15.43 75.02

2 Less:Capitalized 0.84 0.84

3 Net R & MExpenses 90.99 37.89 0.00 5.70 15.16 15.43 74.18


The Commission approves the Repairs and Maintenance expenses claimed by

BSPHCL for FY 2012-13 as per the audited annual accounts, which are within the

approved level.

The summary of the R&M expenses claimed as per audited annual accounts and now

approved for FY 2012-13 in truing-up are as given in Table below:

Table 4.17: Summary of approved R&M expenses for FY 2012-13

(Rs. crore)

ParticularsApproved inTariff Order

for FY 2012-13

Approved in reviewfor FY 2012-13 inT.O. dated 15th

March 2013

Claimed inthe truing-

up forFY 2012-13

Approved intruing-up forFY 2012-13

Repairs &Maintenance

Expenses 110.27 90.99 74.18 74.18

The Commission approves the R&M expenses at Rs.74.18 crore for the FY 2012-13

in the truing-up.



4.12 Administrative & General (A&G) Expenses


The BSPHCL has submitted that the Administrative and General expenses mainly

comprise of: rents, telephone and other communication expenses, professional

charges, conveyance and traveling allowances, and other debits.

BSPHCL has requested to allow the A&G expenses of Rs. 68.57 crore for FY 2012-13,

as per audited annual accounts of the erstwhile BSEB and segregated entities.

The details of A&G expenses claimed by BSPHCL are given in the Table below:

Table 4.18: A&G expenses proposed for FY 2012-13

(Rs. crore)

Sl.No. Particulars

Approvedin review

for FY2012-13

T.O. dated15th March

2013


BSEB(Apr'12-Oct'12)



NorthDiscom

(Nov'12-Mar'13)

SouthDiscom

(Nov'12-Mar'13)

Total forFY

2012-13

1

Administrationand GeneralExpenses 49.40 40.43 4.47 4.12 9.70 6.98 65.70

2

Add:Metering,Billing &CollectionExpenses 3.04 3.25 1.05 7.34

3

TotalAdministration& GeneralExpenses 49.40 43.47 4.47 4.12 12.95 8.03 73.04

4Less:Capitalised 4.47 4.47

5

NetAdministration& GeneralExpenses 49.40 43.47 0.00 4.12 12.95 8.03 68.57


The Commission has analyzed the expenditure and noted that huge expenditure has

been incurred towards Electricity Charges (15.79 crore) and Fees and Subscription

(Rs.14.04 crore) in FY 2012-13 over and above the approved expenditure. The



Commission sought the additional information with regard to period to which the

expenditure pertains and to whom it’s paid etc. The Petitioner has furnished the

details of expenditure. As per the details, the fees and subscription includes the

registration charges of Rs. 10.01 Crore paid to the Registrar of Companies (ROC) for

registration of new companies i.e. BSPGCL, BSPTCL, NBPDCL and SBPDCL under the

companies’ act 1956 and Rs. 3.28 Crore to meet restructuring expenses. As such the

Commission has considered the expenditure actually paid/incurred by the entities in

FY 2012-13 for truing-up.

The Electricity charges represents the electricity consumption of own offices which

was brought to accounts for the first time duly charging electricity charges and

crediting revenue from sale of power up to the date of unbundling including the past

period taken into the books of BSEB. Post unbundling, the electricity consumption by

the own offices is being regularly taken into by the respective utilities.

The summary of the A&G expenses claimed as per audited annual accounts for

FY 2012-13 and now approved in truing-up are shown in Table below:

Table 4.19: Summary of approved A&G expenses for FY 2012-13

(Rs. crore)

ParticularsApproved in

Tariff Order forFY 2012-13

Approved inreview for

FY 2012-13 inT.O. dated15th March

2013


up forFY 2012-13


Rent Rates and Taxes 0.55 0.37 0.42 0.42Insurance 0.28 0.65 0.65Telephones 1.08 0.72 0.73 0.73Legal 1.07 1.14 0.95 0.95Audit fee 3.56 3.58 2.51 2.51Consultancy 0.01 0.57 0.57Technical fee 0.01Other prof. Charges 0.20 2.17 2.17Conveyance & Travel 5.47 6.42 5.74 5.74Others 36.43Fees & Subscription 3.77 14.04 14.04Books & Periodicals 0.07 0.05 0.05Print & Stationery 0.74 0.89 0.89Advertisements 1.38 1.33 1.33Water charges 0.02Electricity Charges 1.81 15.79 15.79



Entertainment 0.20 0.24 0.24Computer billing 11.59 8.88 8.88Meter reading, billing,collection, etc 28.17 3.03 7.35 7.35Home guard/Security 4.59 3.20 3.20Franchisee commission 6.04 1.60 1.60Franchisee incentive 1.35 1.06 1.06ATP machine exp 0.11Misc. exp 1.93 4.66 4.66Freight 0.19 0.05 0.21 0.21Total 76.53 49.40 73.04 73.04Less: Capitalised 1.75 4.47 4.47Net Administration andGeneral expenses 74.78 49.40 68.57 68.57

The Commission approves the A&G expenses at Rs.68.57 crore, as reflected in the

audited annual accounts for FY 2012-13, in the truing-up.

4.13 Operation and Maintenance (O&M) Costs

Based on the above approvals, the summary of the total O&M costs approved by the

Commission for FY 2012-13, as part of the Truing-up process, is outlined in Table

below:

Table 4.20: Summary of approved O&M expenses for FY 2012-13

(Rs. crore)

ParticularsApproved inTariff Order

for FY 2012-13


in T.O.dated 15th

March 2013


up forFY 2012-13

Approvedin truing-up

forFY 2012-13

Employee cost 735.37 470.05 456.93 456.93Repairs and Maintenance(R&M) Expenses 110.27 90.99 74.18 74.18Administration andGeneral (A&G) Expenses 74.78 49.40 68.57 68.57Total O&M Cost 920.42 610.44 599.68 599.68

4.14 Capital Expenditure

BSPHCL has claimed that it has incurred a capital expenditure of Rs.2742.11 crore in

the truing up for FY 2012-13 against Rs.3055 crore approved in the Tariff Order for



FY 2012-13 and Rs.3183 crore approved in the RE for FY 2012-13 in the Tariff Order

dated 15th March 2013 for FY 2013-14. BSPHCL has furnished the details of opening

and closing CWIP, along with new investment and capitalization of assets of

erstwhile BSEB and segregated entities as per audited accounts for FY 2012-13 as

shown in the table below:

Table 4.21 Details of Capital works in progress proposed by the Petitioner

(Rs. Crore)

Sl.No. Particulars

Approvedin MYTTariff

Order forFY 2012-13 (RE)


BSEB(Apr'12-Oct'12)





Total forFY

2012-13

1 OpeningCWIP 3865.00 3865.49 1218.03 312.66 1860.45 541.77

2 Add: NewInvestment 3183.00 1914.20 698.17 72.79 19.46 37.49 2742.11

3 Total 7048.00 5779.69 1916.20 385.45 1879.91 579.264 Less:

Investmentcapitalised 1889.00 1857.85 6.51 700.09 38.00 2602.45

5 ClosingCWIP 5159.00 3921.84 1916.20 378.94 1179.82 541.26 4016.21

The Petitioner has stated that they have provided the total of opening and closing

CWIP of new entities only as the balance from erstwhile BSEB would have been

allocated in these segregated companies


As mentioned by the Commission during the truing-up for the FY 2010-11, the

Capital Expenditure undertaken by the erstwhile BSEB was a very critical aspect of its

business as it supported the growth of business and helped the distribution licensee

in sustaining its operational performance.

As per para 51 of Chapter 5 of BERC (Grant of License for Distribution of electricity)

Regulations, 2007, the Petitioner is required to seek prior approval of the

Commission for making investment in the licensed business. In the absence of the



prior approval by the Commission, the Commission may disallow corresponding

depreciation and interest cost. As can be seen, the availability of capital expenditure

related information was a basic requirement for grant of the distribution license to

the erstwhile BSEB.

BSPHCL, in its Truing-up Petition for FY 2012-13, has not submitted any information

regarding the actual capital expenditure undertaken by it during the year and the

capitalisation of assets on account of projects/schemes getting commissioned during

the year.

The information relating to the capital works in progress provided by BSPHCL in the

formats (Format-11) submitted along with the true up petition also is not in a clear

and unambiguous manner for the Commission to utilize for necessary decision-

making. However, the capital works in progress was shown at Rs 4016.21 crore in the

audited annual accounts of all the segregated entities as at 31st March’13.

Accordingly, based on the limited information available with the Commission from

the audited annual accounts, the Commission has considered the actual capital

expenditure incurred by the segregated entities in FY 2012-13. The same is outlined

in the Table below:

Table 4.22: Estimation of CWIP

(Rs. crore)

Sl.No. Particulars

Approved in TariffOrder for

FY 2012-13

Proposed bythe Petitionerfor FY 2012-13


1 Opening CWIP 3865.00 3865.49 3865.492 Add: Investment during the year 3183.00 2742.11 2742.113 Total 7048.00 6607.60 6607.604 Less: Investment capitalized

during the year1889.00 2602.45 2602.45

5 Closing balance – CWIP 5159.00 4005.15 4005.15

As can be seen from the above, the net investment capitalised during the FY 2012-13

is Rs. 2602.45 crore. The same is computed based on the other information, which is

available in the audited annual accounts, e.g., Opening and Closing CWIP and the

assets capitalised during the year.



The Commission directs BSPHCL to ensure that the information like capital

expenditure and the related capitalisation of assets, etc., should be available with it

as it is basic information required by the Commission to approve expenditure related

to funding costs incurred. In the absence of such information, the Commission will

be constrained to adopt normative capital expenditure related costs and may also

not allow such expenditure at all, since such expenditure cannot be passed on to the

consumers without proper prudence check.

Based on the information available in the audited annual accounts, the capital assets

to the tune of Rs. 2602.45 crore have been capitalised in the FY 2012-13. The

Commission now approves the same for computation of the interest expenses and

depreciation charges.

BSPHCL, while segregating and transferring the assets and liabilities as per the

audited annual accounts of BSEB for FY 2012-13 (up to 30-10-2012), the closing GFA

value is at Rs.6907.12 crore (excluding revaluation of land by Rs.4793.20 crore),

whereas the opening balances adopted in the books of Segregated entities of

BSPGCL, BSPTCL, NBPDCL and SBPDCL shows a balance of Rs.6880.72 crore

(excluding revaluation). As such it is assumed that, while segregating and

transferring the assets and liabilities to the segregated entities, BSPHCL had retained

the differential value GFA of Rs 26.40 crore. The position of the Gross Fixed Assets at

the end of FY 2012-13 is as shown in Table below:

Table 4.23: Gross Fixed Assets for FY 2012-13

(Rs. crore)Sl.

No. Particulars Approved in Truing up for FY2012-13

1 Opening GFA 5049.282 Additions to GFA during the year 2602.453 Less: GFA retained in BSPHCL 26.40

4 Deductions to GFA during the year (assetsretired) 63.03

5 Closing GFA (as at 31st March 2013) 7562.30

Note: - The GFA does not include the value of land and Land Rights revalued.



4.15 Depreciation


The BSPHCL has submitted that the actual depreciation as per audited annual

accounts of segregated entities for FY 2012-13 is Rs. 223.05 crore. However, the

depreciation on the assets created out of ’grants towards cost of capital assets ‘has

been deducted to arrive at the net depreciation charge for the purpose of truing up.

The Petitioner has submitted that the depreciation on assets created out of grants,

where grant is received, is shown as “Deferred Income” in Non-tariff income and

hence the same is excluded from Non-tariff income.

BSPHCL had requested the Commission to approve the depreciation for FY 2012-13

as per the computation furnished in the Table below:

Table 4.24: Net depreciation proposed for FY 2012-13

(Rs. Crore)

Sl.No. Particulars

Approvedin Tariff

Order forFY 12-13

Actuals as per Annual accounts for FY 2012-13

BSEB(Apr'12-Oct'12)





Totalfor FY

2012-13

1 Closing GFA 11700.32 397.67 3513.07 3474.00 4007.99

2

Depreciation forthe year(as per Accounts) 105.69 3.91 16.25 49.82 47.39 223.05

3Grants andcontributions 4881.92 345.63 1622.44 1681.83 1287.14

4

Depreciation. onassets created outof grants 44.10 3.40 9.64 26.94 10.21 94.29

5Net Depreciation(2 – 4) 83.04 61.59 0.51 6.60 22.87 37.18 128.76


The GFA adopted by the Petitioner for computation of depreciation includes the

Revaluation of value of Land and Land Rights of Rs. 4793.20 crore. Regulation 73(2)

(a) (i) of the BERC (Terms and conditions for determination of Tariff) Regulations

2007, specifies that the value base for the purpose of depreciation shall be the

historical cost of the asset. Hence, the GFA values of segregated entities were



realigned to their original values duly reducing the value of revaluation of assets

(land).

Further, the closing GFA as on 31.10.2012 is at Rs. 11700.33 crore as per audited

annual accounts of BSEB as given here under;

(Rs. crore)

Particulars BSEB (Apr'12-Oct'12)

Opening GFA as on 1.4.2012 5049.28

Additions from Apr’12 to Oct’12 1857.85

GFA as on 31.10.2012 6907.13

Add: Revaluation of land 4793.20

Closing GFA as on 31.10.2012 11700.33

As per the audited annual accounts of the segregated entities, the opening GFA as on

1.11.2012 adopted by the segregated entities is Rs. 10711.17 crore. The assets

revalued (land) of Rs. 4793.20 crore against which Rs. 3830.44 crore has been

included in the opening GFA of segregated entities. The differential amount of

revaluation of assets (land) Rs. 962.76 crore (Rs. 4793.20 crore – Rs. 3830.44 Crore)

in addition to Rs. 26.40 crore assets are retained by BSPHCL.

The opening GFA as on 1.11.2012 as per the audited annual accounts of segregated

entities for FY 2012-13 is as shown here under:

Particulars BSPGCL(Nov'12-Mar'13)


NBPDCL(Nov'12-Mar'13)

SBPDCL(Nov'12-Mar'13)

Total

Opening GFAas on1.11.2012

459.70 5707.56 2773.92 3969.99 10711.17

The Commission approves the depreciation charges at Rs. 74.45 crore as per the

computations made by the Commission as given in the table 4.25 given below. As

per the audited annual accounts, the depreciation charges claimed by the Petitioner

for FY 2012-13 is Rs. 223.05 crore (Schedule 11 of the Audited Annual Accounts of

FY 2012-13).



The Commission has considered the depreciation on the assets created out of

consumer contribution and grants and deducted it from the gross depreciation to

arrive at the net depreciation charge. The computation of the depreciation on the

assets created out of consumer contribution and grant is based on the proportion of

‘Grants and contributions’ and original value of ‘GFA’ for FY 2012-13. The

methodology adopted by the Commission in MYT order dated 15th March 2013 for

computation of depreciation has been adopted in the True up order for FY 2012-13.

As per Schedule-34 of the Annual Accounts for FY 2012-13 of segregated entities

(BSPGCL, BSPTCL, NBPDCL and SBPDCL), the total contributions, grants and subsidies

towards cost of capital assets at the end of FY 2012-13 is Rs. 4937.67 crore. Out of

these grants, Rs. 0.63 crore (as per the accounts NBPDCL) pertains to subsidy against

loss due to flood/cyclone, which are of revenue nature and has therefore, excluded

from the total grant and subsidies towards cost of capital assets. Further, Rs.46.79

crore reduced from the value of Grants and adjusted against Non-tariff Income

(Deferred Income - Schedule 5 of Audited Annual Accounts for FY 2012-13) by the

Petitioner, were added back to Grants (BSPTCL – Rs.9.64 crore, NBPDCL – Rs.26.94

crore and SBPDCL – Rs.10.21 crore) for the purpose of computation of Depreciation.

Table 4.25: Depreciation approved in the truing-up for FY 2012-13

(Rs. Crore)

Particulars

Approvedin Tariff

Order forFY 12-13

Approved in Truing-up for FY 2012-13

BSEB(Apr'12-Oct'12)





Total forFY

2012-13

Opening GFA as on1.4.2012 5049.28 5049.28

Opening GFA as on1.11.2012 459.70 5707.56 2773.92 3969.99

Additions to GFA inFY 2012-13 1857.85 6.51 700.09 38.00 2602.45

Less: Assetwithdrawals/ retired 62.03 1.00 63.03

Less: Assets retainedin BSPHCL 26.40 26.40

Closing GFA 6938.00 6880.73 397.67 3513.07 3474.00 4007.99



Less: Revaluation(Land) 130.63 1255.06 965.90 1478.84

Original value of GFAas on 31.3.2013 267.04 2258.01 2508.10 2529.15 7562.30

Depreciation for theyear (as per Accounts) 105.69 3.91 16.25 49.82 47.39 223.06

Grants andcontributions 4881.92 345.63 1632.08 1708.77 1297.35

Proportion of grantsto GFA 70.68% 129.43% 72.28% 68.13% 51.30%

Depreciation onassets created out ofgrants

74.70 3.91 11.75 33.94 24.31 148.61

Net Depreciationapproved 83.04 30.99 4.50 15.88 23.08 74.45

Note:- The closing GFA and Grants shown in segregated entities of BSPGCL, BSPTCL,

NBPDCL and SBPDCL includes the balance of BSEB and hence, the total values were

not shown under Total for FY 2012-13.

Accordingly, the Commission approves depreciation expenses at Rs. 74.45 crore for

FY 2012-13 in the truing-up.

4.16 Interest and Finance Charges

A. Interest on loans


The BSPHCL has submitted that it has considered the audited accounts of all entities

for FY 2012-13 to claim the interest and finance charges. As per the provisions of the

transfer scheme 2012, the interest on State Government loans taken after effective

date 1st April 2011 only has been considered for the purpose of claim as expenses.

The interest on State Government loans taken prior to the effective date has been

taken over by the state government along with the interest and principal amount.

Hence the interest amount appearing in audited annual accounts of erstwhile BSEB is

on higher side; however the claim is made only for the loan additions in FY 2011-12

and FY 2012-13 (up to 31-10-2012).

BSPHCL has also submitted that, the interest on State Government loans against

Bonds issued to CPSU are also taken over by the State Government and will not have



any financial burden on utilities. Thus, interest & finance charges on those loans

have not been considered, while filing the Truing-up for FY 2012-13.

The Petitioner in the Format – 13 of the petition, furnished the details of interest and

finance charges for FY 2012-13 as per the audited annual accounts as given in the

Table below:

Table 4.26: Interest and finance charges claimed in the truing up for FY 2012-13

(Rs. crore)

Sl.No. Particulars

BSEBApr'12-Oct'12)




SBPDCLNov'12-Mar'13)

Total FY12-13

1Interest on Govt.loans* 55.37 16.31 4.69 7.46 8.14 91.97

2

Interest on StateGovt. loans againstBonds issued to CPSU 0.00

3 Interest on LIC loan 3.69 3.69

4Interest on REC loan(Normal/RMPN) 23.60 29.81 3.89 3.89 61.19

5Interest on REC loan(RGGVY) 9.81 14.03 7.11 30.95

6 Interest on PFC loan 3.55 5.23 8.787 Interest on ADB loan 0.41 0.41

8Other interest andfinance charges 56.74 0.01 9.13 20.08 85.96

9 Total 149.21 46.12 4.70 38.06 44.86 282.95

10

Less: State Govt.support for intereston Govt. loans 0.00

11Less: InterestCapitalised 46.12 0.39 46.51

12Net interest andfinance charges 149.21 0.00 4.31 38.06 44.86 236.44

* Interest on loan additions after cutoff date for restructuring

BSPHCL requested the Commission to approve the interest and finance charges of

Rs. 236.44 crore for FY 2012-13, as detailed in above Table.


The Commission has approved Interest & Finance charges of Rs. 191.18 crore for

FY 2012-13 in the Tariff Order dated 30th March 2012 and revised the figures to

Rs. 144.50 crore for FY 2012-13 (RE) in the Tariff Order dated 15th March 2013.



The Petitioner has not furnished the details of scheme wise capital investment made

vis-à-vis the source wise funding for the FY 2012-13.

In the absence of adequate data/information with erstwhile BSEB and now BSPHCL

regarding the details of the capital expenditure incurred during the year for the

creation of usable assets, its funding and capitalization, etc. the Commission has

adopted the same methodology for FY 2012-13 truing up as was applied in the truing

up for FY 2011-12. The Commission has used the normative closing balance of loan

(Rs. 434.89 crore) as arrived in truing up for FY 2011-12 as the opening outstanding

loans used for creation of usable assets as on 1st April, 2012 for the purpose of

computation of interest and finance charges for FY 2012-13.

The Commission, while truing up the interest and finance charges for FY 2011-12 had

observed in the Tariff order for FY 2013-14 that the loan amount also includes the

defaulted loan repayments on capital liabilities which are created on account of

default in repayments done by BSEB in the past and had observed that this burden

on account of default in making repayments should not be passed on to the

consumers. Further the Commission had also taken into cognizance the fact that the

interest booked by the erstwhile BSEB and segregated entities under the head

"Interest and Finance Charges" may also include the penal or additional interest

incurred by the entities for defaulting on making timely repayments.

The Commission has also outlined the methodology adopted for estimating the

additional borrowing for FY 2012-13 for funding the assets got capitalized, during the

year, after considering the amount available in form of consumer contributions,

grants/subsidy towards cost of capital asset during the year.

In the absence of adequate data with erstwhile BSEB and now BSPHC Ltd., the

Commission has considered the repayment during the year as deemed depreciation,

as per the Central Electricity Regulatory Commission (Terms and Conditions for

Tariff) Regulations 2009 reproduced below:



"The repayment for the year of tariff period 2009-14 shall be deemed to be equal to

the depreciation allowed for that year:"

Based on the above methodology, the opening loan as on 1st April, 2012 considered

for computing interest cost for FY 2012-13 has been taken equal to closing

normative loan of Rs. 434.89 crore arrived in the true up for FY 2011-12 in the Tariff

Order dated 15th March 2013 (para 4.19 Table-4.28).

The BERC Tariff Regulations provide for recovery of interest and finance charges on

loans have been utilized to create assets and are eligible for recovery only after the

assets have been put to use. The normative outstanding loan as on 1st April, 2012 is

considered to be used for creation of assets which have been put to use till that date

and hence the interest against this loan is considered for recovery from consumers.

In addition to this, there will be certain additional loans which will be eligible for

recovery on account of capitalization of assets achieved during FY 2012-13.

The assets capitalized during the year comprise of (i) assets created out of CWIP at

the beginning of the year and (ii) the part of the assets created out of investments

done during the year itself. This break-up is not available in the Annual Accounts.

While it is desirable to have the bifurcation of these assets created out of

capitalization of CWIP at the beginning of the year and those created through

capitalization of investment done during the year, the same is not possible from the

information made available by the petitioner.

Therefore, the Commission has considered the assets capitalized during the year as

being first funded through consumer contribution and grant/subsidy towards capital

assets received during FY 2012-13 and the remaining portion of the assets getting

capitalized during the FY 2012-13 is assumed to be funded through additional loans

received during FY 2012-13. If any amount of consumers’ contribution and grant/

subsidy towards capital assets remains available after this adjustment, the same will

be considered as funding for creation of assets to be capitalized in the subsequent

years. While the Commission understands that this methodology has its own



limitation, the Commission has no other option to adopt this methodology till the

time BSPHCL is able to improve the availability of information to enable the

Commission to approve the interest expenses based on actual information.

Assumption of loan against assets getting capitalized during FY 2012-13 is given

below:

Particulars (Rs. Crore)Total assets capitalized during the year (A) 2602.45

Less: Grants/subsidies towards cost of capital assets (B) 1208.20 1208.20

Less: Loans pertaining to Generation function (BTPS) and BSEB (C) 1071.03

PFC Loan received by BSEB for BTPS (Apr’12 to Oct’12) 382.16

State Govt. Loan received by BSEB (Apr’12 to Oct’12) 338.58

Loans received by BSPGCL (Nov’12 to Mar’13) 350.29Estimated funding through Loans {A – (B+C)} 323.22

It can be seen from the table above that out of the total assets capitalized during

FY 2012-13, Rs.2279.23 crore has been funded by contributions, grants and subsidies

towards cost of capital assets (Rs. 1208.20 crore) and loans pertaining to renovation

and modernization of BTPS (generation function) are not considered as the R&M of

BTPS assets not put to use. Thus the estimated assets funded through loans are

arrived at Rs. 323.22 crore.

The Commission, while truing up for FY 2011-12 in the Tariff Order dated 15th March

2013 has stated (section 4.19 of the Tariff Order for FY 2013-14) that a balance of

Rs.2568.03 crore of contribution, grant and subsidies remains which will be

considered for funding of assets capitalized during subsequent years. As such, the

balance estimated assets of Rs.323.22 crore is adjusted against Rs.2568.03 crore

leaving a balance of Rs.2244.81 crore of contribution, grant and subsidies for funding

of assets capitalized during subsequent years.

It is considered to compute interest based on the methodology adopted for

computing interest on funds utilized for assets capitalized in the earlier tariff orders

for truing up for FY 2012-13.

The effective interest rate for computing interest and finance charges has been

computed using the same methodology as was used in true up for FY 2011-12. The

average of all the opening and closing balance of loans (excluding State Government



funds) from different sources during FY 2012-13 and total interest accrued / paid

during the year have been considered for arriving at the effective average rate of

interest for the purpose of computing interest charges as indicated in the Table

below :

Table 4.27: Computation of effective rate of interest for FY 2012-13(Based on audited annual accounts)

(Rs. crore)

Sourceof loan

OpeningBalance

as on1-4-2012

Additionsduring

FY 12-13

Repaymentin FY 12-13

CB ason

31-3-13

Interestaccruedduring

theyear

Averageloan

duringthe year

Averagerate of

Interest

REC(RGGVY) 491.81 27.60 42.06 477.35 56.21PFC 232.94 575.31 35.63 772.62 29.96ADB 0.00 19.51 0.00 19.51 0.41Total 724.75 622.42 77.69 1269.48 86.58 997.12 8.68%

As per CERC (Terms and Conditions for Determination of Tariff) Regulations 2009,

the repayment during the year has been considered to be equal to the depreciation

allowed for the year.

On the basis of the aforesaid methodology, the Commission approves the interest

and finance charges for FY 2012-13 as given in the Table below:

Table 4.28: Approved interest and finance charges for FY 2012-13(Rs. Crore)

The Commission approves Rs. 61.55 crore towards interest and finance charges for

FY 2012-13 in truing up

ParticularsApproved in Tariff

Order forFY 2012-13

Now approved intruing up forFY 2012-13

Opening Loan(as per the closing balance of true up in Tariff Order forFY 2013-14

983.33 434.89

Additions during the year 1072.94 622.42Repayments (restricted to Depreciation) 98.33 74.45Closing Loan 1957.93 982.86Average Loan {(Opening loan + Closing loan) / 2} 1470.63 708.87Rate of Interest 13.00% 8.68%Interest and finance charges (Average loan x Rate ofinterest) 191.18 61.55



B. Other Interest and finance charges


The BSPHCL had claimed Rs.236.44 crore (refer table 4.26) towards interest and

finance charges which includes Rs.85.97 crore (Sl.No.7 of table 4.26) towards other

interest and finance charges. However, no breakup details for Rs.85.97 crore were

furnished in the petition. The other interest and finance charges claimed are as

detailed in the table below:

Table 4.29 Other interest and finance charges for FY 2012-13

(Rs. crore)

ParticularsBSEB

(Apr'12-Oct'12)

BSPTCLov'12-

Mar'13)



Total FY12-13

Other interest and financecharges 56.74 0.01 9.13 20.08 85.97

The BSPHCL had requested to approve the other interest and finance charges of

Rs.85.97 crore for FY 2012-13 as per the audited annual accounts.


BSPHCL claimed Rs.85.97 crore against Rs.85.96 crore, difference is due to rounding

off.

The Petitioner has not furnished the details of the other interest and finance charges

separately component wise in the petition. However, the details of the amounts

were extracted from the audited annual accounts of the segregated entities which

are as detailed in the table:

Table 4.30: Other Interest and Finance Charges for FY 2012-13(Rs. Crore)

Sl.No. Particulars

BSEB(Apr'12-Oct'12)




TotalFY 12-13

1Discount to consumers fortimely payment of bills(Rebate)

10.59 1.68 5.63 17.90

2 Power factor Rebate 20.71 2.66 13.79 37.16

3 Interest on ContributoryProvident fund 23.81 23.81



4

Interest to suppliers/contractors (Late paymentSurcharge to powersuppliers)

4.47 4.47

5 Other charges 1.63 0.01 0.32 0.66 2.626 Total 56.74 0.01 9.13 20.08 85.96

Discount to consumers for timely payment of bills (Rebate)

The Clause 85 (I) – Definitions of Income of the BERC (Terms and Conditions for

Determination of Tariff) Regulation 2007 specifies that the income shall include all

income from any source but shall not be limited to sale of energy or gross receipts

from sale of energy less discounts / rebates given based on the orders of the

Commission for determination of tariffs.

Power Factor Rebate

The Commission in the Tariff Orders issued year on year, specifies in the Tariff

Principles, Design and Tariff Schedule that Rebate for prompt payment of energy bills

on or before due date by the LT and HT consumers and Power factor Rebate to the HT

consumers shall be allowed as per the rates prescribed in the tariff orders.

Interest on Contributory Provident fund

The Commission in the tariff order for FY 2012-13 has stated that “the contribution

of the employees towards GPF and GSS is not a part of employee cost. This amount

is deducted from the salary of the employees and should be deposited in a separate

fund to be governed by a Trust. Any investment out of this fund has to be with the

approval of the Trust”.

The Commission further stated that BSEB has utilized the amounts available in the

fund created towards GPF and GSS towards meeting its day to day expenses i.e. for

the purpose of funding its working capital requirements. Accordingly, permitting

these expenses to be passed on to the consumers shall mean that the consumers

have to bear the burden for the past financial mismanagement by the Board. The

Commission is of the view that such liabilities on account of past issues should be

funded by BSEB through its own means and should not be passed on to the



consumers. The Regulations provide for interest on normative working capital to be

passed on to the consumers thus meeting the working capital requirements of the

licensee for the year.

Accordingly, the interest on GPF, as claimed by the petitioner is not considered for

truing up for FY 2012-13.

Interest to suppliers/contractors (Late Payment Surcharge to Power Suppliers)

As per Clause 85 (ii) (5) of the BERC (Terms and Conditions for Determination of

Tariff) Regulations 2007, the penal charges are not considered.

Other Charges

The other charges were considered by the Commission as they represent the other

finance charges towards bank collection charges etc.

Accordingly, the Commission approves the Discount allowed to consumers for timely

payment of energy bills and the power factor rebate, which were specified by the

Commission in the Tariff Orders issued year on year as detailed in the table below:

Table 4.31: Approved interest and finance charges for FY 2012-13

(Rs. crore)

Sl.No. Particulars

Claimed byBSPHCL forFY 2012-13

Approved intruing up forFY 2012-13

1 Discount to consumers for timely payment of bills(Rebate) 17.90 17.90

2 Power factor Rebate 37.16 37.163 Interest on Contributory Provident fund 23.81

4 Interest to suppliers/contractors(Late payment Surcharge to power suppliers) 4.47

5 Other charges 2.62 2.626 Total 85.96 57.68

The Commission approves Rs.57.68 crore towards other interest and

finance charges for FY 2012-13 in the truing up.

The Commission approves the total interest and fiancé charges at Rs.119.23

(Rs.61.55 + Rs.57.68) crore in the truing up for FY 2012-13.



4.17 Interest on working Capital


BSPHCL has claimed Rs.159.52 crore towards interest on working capital in the truing

up for FY 2012-13 against Rs.93.28 crore considered in the RE for FY 2012-13 in the

Tariff Order dated 15th March 2013 as detailed in the Table below:

Table 4.32: Proposed Interest on Working Capital for FY 2012-13

(Rs. Crore)

Sl No. Interest on working capital


FY 2012-13 inT.O. dated 15th

March 2013

Claimed byBSPHCL fortrue up forFY 2012-13

1 O&M exp. (1 month) 50.87 49.972 Receivables - 2 months 888.04 918.013 Maintenance spares @1% of opening GFA 53.51 113.544 Total working capital 992.42 1081.52

5 Less: Power purchase bills paid to NTPC byState Govt. (2 months) 360 0

6 Net working capital 632.42 1081.527 Rate of interest 14.75% 14.75%8 Interest on working capital 93.28 159.52

The BSPHCL has submitted that interest on working capital is computed as per the

BERC (Terms and Conditions for Determination of Tariff) Regulations, 2007 for

recovery of the interest on working capital from the consumers on a normative basis.

The principles for this normative computation have been specified in the tariff

regulations and are different for generation function and transmission & distribution

functions. BSPHCL further submitted that it has computed the working capital

requirements and interest thereon on overall basis.

BSPHCL has submitted that it has calculated the interest on working capital based on

the normative principles outlined by the Commission in its Tariff Regulations, 2007

and sought for approval of the same from the Commission.


BSPHCL had proposed maintenance spares @1% of opening GFA of Rs.10711 core

which includes the value of Land revalued. The same is realigned to the original value

of GFA of Rs.5049 crore and accordingly considered in the computations.



The Regulation 73 (4) (ii) specifies that the rate of interest on working capital shall be

equal to the short-term PLR of SBI as on 1st April of the year. The short-term PLR of

SBI as on 1st April 2012 is @14.75% and the same is considered for computations.

Accordingly, based on the principles prescribed in the BERC (Terms and Conditions

for Determination of Tariff) Regulations 2007, the information available in the

audited annual accounts and the observation of the Commission, the Commission

approves the interest on Working Capital of Rs.97.45 crore as against Rs.159.52

crore claimed by BSPHCL for FY 2012-13 as shown in the Table below:

Table 4.33: Interest on working capital approved for FY 2012-13

(Rs. crore)

Sl.No. Particulars

Approvedin Tariff

Order forFY 2012-13


FY 2012-13 inT.O. dated15th March

2013

Claimed byBSPHCL fortrue up forFY 2012-13

Approvedin truingup for FY2012-13

1 Opening original value of assets(GFA) (incl. Revaluation of assets) 10711

2 Opening original value of assets(GFA) as on 1st April 2012 5351 5049

3 Fuel cost (2 months) 15.91 0.00 0.00 0.004 O&M expenses (1 month) 76.14 50.87 49.97 49.975 Receivables - 2 months 982.09 888.04 918.01 917.156 Maintenance spares @1% of

opening GFA with 6% escalation 56.62 53.51 113.54 53.527 Total working capital (3 to 6) 1130.76 992.42 1081.52 1020.658 Less: Resource gap grant towards

Power purchase bills paid to NTPCetc. (2 months) 360 360.00

9 Net working capital (7-8) 1130.76 632.42 1081.52 660.6510 Rate of interest 13% 14.75% 14.75% 14.75%11 Interest on working capital (9*10) 147.00 93.28 159.52 97.45

The Commission approves Rs. 97.45 crore towards interest on working capital for

FY 2012-13 in the truing up.

4.18 Interest on Security Deposit


The BSPHCL has submitted that it has paid Rs.14.60 crore towards interest on

Consumers Security Deposit for FY 2012-13 as per the audited annual accounts of

the segregated entities as detailed in the table below;



Table 4.34: Interest on Consumers Security Deposit for FY 2012-13(Rs. crore)

ParticularsBSEB

(April’12 toOctober’12)

NBPDCL(November’12to March’13)

SBPDCL(November’12to March’13)

Total forFY

2012-13Interest on Consumers securityDeposits 7.02 3.35 4.22 14.59

BSPHCL requested the Commission to approve the interest on consumers Security

Deposits for FY 2012-13, as detailed in above Table.


The Commission in the Tariff Order for FY 2011-12 has opined that the consumer

security deposits provided to the distribution licensees by the consumers should be

either be used for funding working capital requirement or should be kept with the

bank and interest earned on the amount should be passed on to the consumers. In

such a scenario, there is no additional financial implication on distribution licensees

because it is compensated for its working capital funding on a normative basis or the

interest earned can be passed on to the consumers. The BSEB and segregated

entities collecting security deposits from the consumers and using these deposits for

meeting its working capital requirement since it is paying consumers at bank rate

thereby saving on higher interest cost that may be payable on working capital loans

borrowed from market.

In view of the above, the Commission accordingly disapproves interest payable on

security deposits as an expenditure item in truing up.

4.19 Return on Equity


BSPHCL has submitted that the opening equity balances for the segregated entities

are considered as per revised submission made by M/s. PFC. It is submitted that the

total amount of equity as per revised submission in all the 4 entities (Generation,

Transmission and Distribution) is to the tune of Rs. 6965.66 crore as against the

figure of Rs.1974.88 crore appearing in the audited annual accounts for FY 2012-13.



BSPHCL has also submitted that finalization /approval of State Government to the

final transfer scheme is in process.

BSPHCL has claimed as detailed in the table below:

Table 4.35: Proposed Return on Equity for FY 2012-13

(Rs. crore)

Return on EquityBSEB

(Apr’12to Oct’12)

Figures for period from Nov’12 toMar’13 Total

BSPGCL BSPTCL NBPDCL SBPDCLOpening – Equity capital

Notapplicable

1551.14 1630.46 1642.74 2141.32 6965.66RoE – Post Tax 14.00% 14.00% 14.00% 14.00%Return on equity 217.16 228.26 229.98 299.78 975.19Return on equity for 5 Months 95.83 124.91 220.74

BSPHCL has requested the Commission to approve Return on Equity for FY 2012-13

as per above computations as against Rs.85.05 crore approved in review order.


The Commission had considered equity of Rs. 1458 crore (Generation – Rs. 344

crore, Transmission – Rs. 235 crore and Distribution – Rs. 879 crore) for FY 2012-13

(RE) in the Tariff order for FY 2013-14 based on the equity approved in the Bihar

State Electricity Reforms Transfer Scheme, 2012 and approved Rs. 85.05 crore

towards Return on Equity for 5 months.

The clause 9 of the Bihar State Electricity Reforms Transfer Scheme, 2012 specifies

that “the classification and transfer of property rights, assets, liabilities and

proceedings to be provisional in the first instance for a period of one year from the

effective date”.

The clause 9.3 of the Transfer scheme specifies that “on the expiry of the period of

one year from the effective date and subject to any directions given by the State

Government, the transfer of undertakings, properties, interests, rights, assets,

liabilities, personnel and proceedings made in accordance with the transfer scheme

shall become final”.



The Petitioner has claimed return on equity on enhanced/ revalued equity of

Rs. 6965.66 crore of segregated entities. As per the audited annual accounts, the

equity shown by the entities is Rs. 1974.88 crore. Further, as could be seen from the

audited accounts of the entities, the government has not infused any equity during

FY 2012-13.

The Commission has considered based on the provisional transfer scheme dated 1st

November 2012, an equity of Rs. 1458 crore equity in the MYT order dated 15th

March 2013 in respect of generation, transmission and distribution functions and

accordingly considered return on equity (RoE). The currency of the provisional

transfer scheme is one year from the date of notification of provisional transfer

scheme and the final transfer scheme shall be notified before completion of the one

year period.

The Commission has observed that final transfer scheme has not been notified by

the Government before 1st November 2013 i.e. one year from the effective date of

notifying the provisional transfer scheme. It is informed by the Petitioner that the

approval/order to the final transfer scheme by the State Government is in process.

Further, it is noticed that the State Government has not infused any equity in the

BSEB/segregated companies during the FY 2012-13. As such, in the absence of

clear/specific orders of the Government within the prescribed time limit and in view

of no fresh equity infusion by the State Government during FY 2012-13, the

Commission does not find any reason to consider the enhanced/revised equity

capital adopted by the Petitioner. However, the Commission has considered the

equity based on the provisional transfer scheme adopted in the Tariff Order for

FY 2013-14 for computation of return on equity for true up for FY 2012-13.

The Petitioner has not claimed return on equity in respect of Generation and

Transmission functions. Accordingly, the Commission has considered return on

equity in respect of Distribution (Rs. 879 crore) function only for FY 2012-13 for

truing up.



In absence of the final transfer scheme, the Commission has now considered return

on equity on Rs. 879 crore for 5 months as detailed below:

Table 4.36: Return on equity approved for FY 2012-13

(Rs. crore)

Particulars

Approved in reviewfor FY 2012-13 inT.O. dated 15th

March 2013

Claimed byBSPHCL for true

up forFY 2012-13

Approved intruing up forFY 2012-13

Equity 1458 6965.66 879Rate of Return 14% 14% 14%Return per year 204.12 975.19 123.06Return for 5 months (Nov'12to 31st Mar'13) 85.05 220.74 51.28

The Commission, therefore, approves Return on Equity at Rs.51.28 crore for

FY 2012-13 in the truing up.

4.20 Non-Tariff Income


The BSPHCL has submitted that the Non-tariff income of all the entities is considered

as per audited annual accounts at Rs.268.43 crore for FY 2012-13, the details of

which are furnished in Format 16 of the petition as given in the table below:

Table 4.37 Non-tariff income proposed for FY 2012-13

(Rs. crore)

Sl.No

ParticularsApprovedin Tariff

Order forFY

2012-13


BSEB(Apr'12-Oct'12)





Total FY2012-13

1DPS as per actuals(@1.5%/pm) (A) 41.96 103.11 31.44 24.12 158.67

2

Principal amount onwhich DPS wascharged (B = A/18%) 233.11 572.83 0.00 0.00 174.65 134.00 881.48

3

Interest rate forfunding Principal ofDPS 14.75% 14.75% 14.75% 14.75% 14.75% 14.75%

4

Interest on fundingof Principal amountof DPS 34.38 84.49 0.00 0.00 25.76 19.77 130.02

5 Non-tariff income 107.14 160.04 0.51 1.02 50.48 56.37 268.43

6

Less: above financialcost/capitalisationof BSPGCL 34.38 84.49 0.51 0.00 25.76 19.77 130.53

7Net Non-tariffincome 72.76 75.55 0.00 1.02 24.72 36.61 137.90



The petitioner has further submitted that the funding cost of principal amount of

Delayed Payment Surcharge (DPS) is adjusted as per the methodology adopted by

the Commission in the previous tariff orders and net non-tariff income.

The Petitioner requested for approval of Non-tariff income of Rs.137.90 crore for

FY 2012-13, as given in the above Table.


The Commission had approved the total non-tariff income as Rs.127.16 crore in

Tariff order dated 30th March, 2012 and Rs.72.76 crore (RE) in Tariff Order dated

15th March 2013 for FY 2012-13.

The Commission has adopted the approach on Non-Tariff income in line with the

judgment of Hon’ble Appellate Tribunal for Electricity (APTEL) dated 12.07.2011 in

case no. 142 & 147 of 2009. The relevant extracts of the Judgment are reproduced

below:

“The normative working capital compensates the distribution company in delay for

the 2 months credit period which is given to the consumers. The late payment

surcharge is only if the delay is more than the normative credit period. For the

period of delay beyond normative period, the distribution company has to be

compensated with the cost of such additional financing. It is not the case of the

Appellant that the late payment surcharge should not be treated as a non- tariff

income. The Appellant is only praying that the financing cost is involved due to late

payment and as such the Appellant is entitled to the compensation to incur such

additional financing cost. Therefore, the financing cost of outstanding dues, i.e. the

entire principal amount, should be allowed and it should not be limited to late

payment surcharge amount alone. Further, the interest rate which is fixed as 9% is

not the prevalent market Lending Rate due to increase in Prime Lending Rate since

2004-05. Therefore, the State Commission is directed to rectify its computation of

the financing cost relating to the late payment surcharge for the FY 2007-08 at the

prevalent market lending rate during that period keeping in view the prevailing

Prime Lending Rate”.



As per audited annual accounts of the segregated entities for FY 2012-13, the Non-

Tariff income is Rs.268.43 crore, out of which, the Delayed Payment Surcharge from

consumers is at Rs. 158.67 crore. As the petitioner charges DPS @ 18% per annum

(1.5% per month), the principal amount on which DPS has been charged will be

Rs.881.50 crore.

The Commission has allowed 14.75% being the prevailing SBI PLR as on 1st April 2012

towards the financing cost for DPS. The financing cost approved by the Commission

is shown in Table below:

Table 4.38: Funding of DPS(Rs. crore)

Sl.No. Particulars

Approved in TariffOrder FY 2012-13

Now approved for FY2012-13 in truing up

1 DPS as per actuals (@1.5%/pm) 30.84 158.672 Principal amount on which DPS charged 171.35 881.503 Interest rate for funding Principal of DPS 13.00% 14.75%4 Interest on funding of Principal of DPS 22.28 130.02

The non-tariff income of Rs. 0.51 Crore as per Annual Accounts of BSPGCL for

FY 2012-13 capitalized is added to interest on funding of principal amount of DPS

and adjusted against non-tariff income.

Accordingly, the Commission has computed the amount of Non -Tariff Income as

summarized in the table below:

Table 4.39: Non-tariff Income approved for FY 2012-13

(Rs. crore)

Sl. No. Particulars

Approved inTariff Order

forFY 2012-13


in T.O.dated 15th

March 2013

Claimedby BSPHCLin true up

for FY2012-13

Approvedin truing

up forFY 2012-

13

1 Total Non-tariff income 149.44 107.14 268.43 268.43

2 Less: Interest on funding ofPrincipal amount of DPS 22.28 34.38 130.53 130.53

3 Net Non-tariff income 127.16 72.76 137.90 137.90

The Deferred income shown in the audited annual accounts of BSPTCL, NBPDCL and

SBPDCL represents the depreciation on the assets created out of Grants/Subsidies is



not included in the total NTI, as the depreciation is considered separately in

proportion to the GFA and Grants (Sec.4.18).

Therefore, the Commission approves Rs. 137.90 crore as Non-Tariff Income in

truing up for FY 2012-13.

4.21 Net Prior Period Credits / Charges


The BSPHCL in the true up petition has proposed net prior period charges of Rs.

745.87 crore for FY 2012-13. The Petitioner has submitted that subsidy amount

taken as prior period income has been presented in the subsidy received from State

Government and hence net prior period charges to the effect would increase. The

summary of net prior period charges claimed by the petitioner are as detailed in the

table below:

Table 4.40 Net prior period charges proposed for FY 2012-13(Rs. crore)

The Petitioner requested the Commission to approve the same for FY 2012-13.


The Commission has addressed the Petitioner through letters dated 19th and 27th of

November 2013 to furnish the complete particulars of the claims giving details of (i)

nature of claim, (ii) period for which the claim relates, (iii) Source of claim i.e. from

whom the claim is received, and (iv) whether the claims were discharged as on date.

The Petitioner vide letter dated 6-1-2014 had submitted that there are certain

elements which come up for adjustments including expenses and income after the

annual accounts are audited and closed. Such elements are treated in next year as

prior period expenses/income and hence need to be considered at appropriate time

based on audited accounts in that financial year. The details furnished by the

Petitioner are given in the Tables below:

Sl. No. Particulars Amount1 Prior period income (40.12)2 Prior period expenses 785.993 Net prior period expenses / (Income) 745.87



Table -A

Particulars

Net Prior Period Credits/(Charges)

Respective

Period

Bihar State Electricity Board1-Apr-2012 to 31-Oct-2012

Closing BalanceDebit Credit

Income Relating to Previous Year 46,000 28,65,60,755

For FY 2011-12

Other Income Related to PriorPeriod

4,02,819

Other Excess Provision in PriorPeriod

12,86,126

Prior Period Sale of Power 28,48,25,810Prior Period Expenses/losses 7,22,25,74,223 99,10,42,409Prior Period Power Purchase 29,36,66,070 Correction EntryPrior Period Adjustment ofConsumer's Dues

88,19,68,829 69,73,76,339

For FY 2011-12

Interest & Finance Charges toPrevious Year

28,83,572

Operating Expenses of PreviousYear

2,36,79,497

Depreciation Underprovided inPrevious Year

35,04,578

Employee Cost Related to PreviousYear

5,75,46,37,811

Other Charges Related to PreviousYear

25,23,81,963

Short Provision for PP in PreviousYear

30,35,17,972 For FY 2008-2012*

Grand Total 7,22,26,20,223 1,27,76,03,164Net Total 5945017058

*Detailed year wise bi-furcation is provided in separate Table - B

Table – B

Net Prior PeriodCredits/(Charges)

RespectivePeriod

Bihar State Electricity BoardParticulars 1-Apr-2012 to 31-Oct-2012


Short Provision for PPin Previous Years

30,35,17,972 -7,43,55,354 - 2008-20091,88,59,709 - 2009-20104,16,86,890 - 2010-2011

16,86,16,019 - 2011-2012



Table – C

*Detailed year wise bi-furcation is provided in separate Table - D

Table – D


RespectivePeriod

NBPDCLParticulars 1-Nov-2012 to 31-Mar-2013


Short Provision forPP in PreviousYears

77,92,72,364 -1,38,372 - 2004-2005

15,02,823 - 2005-20062,02,44,648 - 2006-20074,91,92,552 - 2007-2008

76055150 - 2008-200928764197 - 2009-201017236038 - 2010-2011

462511517 - 2011-2012123627067 - 2012-2013

Net Prior Period Credits/(Charges)

RespectivePeriod

North Bihar Power Distribution Co.Ltd.

Particulars 1-Nov-2012 to 31-Mar-2013Closing Balance

Debit CreditIncome Relating toPrevious Year

27,61,180 11,17,13,774 For FY 2011-12

Other Income Related toPrior Period

2,37,356 For FY 2011-12

Prior Period Sale of Power 10,87,15,238Prior PeriodExpenses/losses

78,26,22,605 48,03,058

Other Prior PeriodExpenses/losses

30,33,125 For FY 2011-12

Prior Period PowerPurchase

77,92,72,364 For FY 2004-13*

Employee Cost Related toPrevious Year

44,85,942 For FY 2011-12

Grand Total 78,53,83,785 11,65,16,832Net Total 668866954



Table – E


Respective PeriodSouth Bihar Power Distribution

Co. Ltd.Particulars 1-Nov-2012 to 31-Mar-2013


Income Relating toPrevious Year

57,24,814

For FY 2011-12Other Excess Provision inPrior Period

57,24,814

Prior PeriodExpenses/losses

85,05,44,142

For FY 2004-13*Prior Period PowerPurchase

85,05,44,142

Grand Total 85,05,44,142 57,24,814Net Total 844819328

* Detailed year wise bi-furcation is provided in separate Table-F

Table - FNet Prior Period

Credits/(Charges)

RespectivePeriod

SBPDCLParticulars 1-Nov-2012 to 31-Mar-2013


Short Provision for PPin Previous Years

85,05,44,142 -56,577 - 2004-2005

1,57,652 - 2005-200630,10,339 - 2006-200796,94,898 - 2007-200840008043 - 2008-2009

4267041 - 2009-20104418529 - 2010-2011

583484739 - 2011-2012205446323 - 2012-2013

The Commission has examined the above details furnished by the Petitioner and

observed that the Petitioner had not furnished the details of prior period

income/expenses separately for each component and the period for which the

income and expenses related to, and nature of income/expenses etc. As per the

annual accounts of the segregated entities for FY 2012-13, the total prior period

charges are as detailed below:



Table 4.41: Prior period charges as per annual accounts for FY 2012-13

(Rs. crore)

Sl.No. Particulars

BSEB(April '12 toOctober'12)

NBPDCL(Nov –

Mar 13)

SBPDCL(Nov –

Mar 13)

Total forFY 2012-13

1 Short provision forPurchase of power 30.35

2 Prior period powerpurchase (29.37) 77.92 85.05

3 Net prior period purchaseof power (1+2) 0.98 77.92 85.05 163.95

4 Net Prior periodadjustment of consumerdues 88.20

5 Net Prior periodadjustment of consumerdues (69.74)

6 Prior period sale of power (28.48)7 Net prior period sale of

power (4 to 6) (10.02) (10.02)8 Other charges related to

prior period 25.24 (0.14)9 Operating expenses of prior

period 2.3710 Other income related to

prior period (0.04) (24.49) (24.09)11 Other excess provisions (0.13)12 Net other prior period

income/expense(8 to 11) 27.44 (24.63) (24.09) (21.28)

13 Interest & Finance charges 0.29 0.2914 Depreciation under

provided 0.35 0.3515 sub-total (3+7+12 to 14) 19.04 53.29 60.96 133.2916 Employee cost related to

prior period 575.46 575.4617 Total prior period charges

(15+16) 594.50 53.29 60.96 708.75

The Commission has observed that as per audited annual accounts of BSEB for

FY 2012-13 (from Aprl’12 to October’12), the subsidy received from State

Government is at Rs.1980.00 crore. It is stated by the Petitioner that the actual

subsidy receivable is Rs.2017.11 crore against which Rs.1980.00 crore received and

the difference amount of Rs.37.11 crore is taken into accounts by making



adjustments to the prior period expenses. Thus the total prior period expenses are

shown at Rs.745.87 crore (Rs.708.75 crore + Rs.37.11 crore).

The Commission has not considered Rs.37.11 crore, adjustment made by the

Petitioner towards prior period expenses as the adjustment cannot be considered as

expenditure as no cash outflow is involved.

The Petitioner had claimed Rs. 575.46 crore towards Employee cost related to prior

period. The amount represents the accrued liability towards employee’s terminal

benefits taken into accounts based on the actuarial valuation as on the date of the

unbundling.

As per the Bihar State Electricity Reforms Transfer Scheme 2012 vide Notification No.

Proc. /Board No.31/2008/17/ Patna dated 30.10.2012, wherein clause 6.14 provides

that the liability in respect of existing pensioners of the Board (based on actuarial

valuation as on 31.3.2011) shall be the liability of the State Government. Further, the

liability as assessed on actuarial valuation, in respect of the retirement dues of

existing employees as on the effective date (i.e. 01.11.2012), to the extent they are

unfunded, shall also be the liability of the State Government. Relevant extract of

Bihar State Electricity Reforms Transfer Scheme 2012 is quoted below:

"6.14 The liability in respect of existing pensioners of the Board (based on actuarial

valuation as on 31.03.2011) shall be the liability of the State Government. Further the

liability, as assessed on actuarial valuation, in respect of the retiral dues of the

existing employees, as on the effective date, to the extent they are unfunded, shall

also be the liability of the State Government. As per actuarial valuation carried out by

registered actuary, the net present value of the total terminal benefit liabilities is

Rs. 4613 crores (discounted at 8% per annum) out of which total unfunded liability is

approximately Rs. 4438 Crores as on 31.03.2011.



“6.15 The unfunded liabilities accumulated in respect of terminal benefits of the

employees, covered under State Govt.'s policies and directions, will be borne by the

State Govt. The unfunded liability upto the cut-off date will be treated as covered

under State Govt. policies and directions. The energy department will obtain the

detailed statement in respect thereof from the Board/holding Company and will

submit after due analysis for decision of the State Govt. and thereafter on this point

the transfer scheme will be considered final. The above unfunded terminal benefit

liability will be determined on yearly basis by the actuary considering the impact of

inflation, pay revisions etc. After the effective date, the liability on account of service

in the subsequent periods shall be borne by the respective successor companies. The

disbursal of terminal benefits will be through a master trust administered by the

holding company. The contribution from the State Govt. will be paid in advance in

two installments every year i.e. by 31st May and 30th November and the successor

companies will be contributing on monthly basis by 7th of the following month. The

State Government and the transferee shall be jointly and severally liable for

payments arising thereon till such notification, establishment of master trust and

proper funding."

As per the State Government notification on Bihar State Electricity Reforms Transfer

Scheme 2012, the entire terminal benefit of the existing pensioners based on the

actuarial valuation as on effective date i.e. 31st October 2012, shall be the liability of

the State Govt. The Transfer Scheme further states that the entire terminal benefit

of the existing employees till the effective date (1st November, 2012) based on

actuarial valuation shall also be the liability of the State Govt. Therefore, whatever

provision for terminal benefit was made in the accounts for FY 2012-13 shall be

liability of the State Government. Thus, the amount of Rs. 575.46 crore on account of

terminal benefits is to the account of the State Govt.

In view of the commitment given by the State Government in "Bihar State

Electricity Reforms Transfer Scheme 2012" amount of Rs. 575.46 crore claimed in



true up petition for FY 2012-13 by BSPHC Ltd., is not considered by the

Commission.

The Petitioner had claimed Rs. 163.95 crore (Rs.0.98 crore in BSEB, Rs. 77.92 crore in

NBPDCL and Rs.85.05 crore in SBPDCL) towards prior period power purchase cost.

The Commission has examined the details of prior period power purchases and

observed that these claims relates to Central Generating Stations (CGS), PGCIL etc.

towards fixed cost and variable cost etc. The Petitioner has intimated that these

claims/bills have been admitted by NBPDCL and SBPDCL. Accordingly, the

Commission, based on verification of the bills, has considered the prior period power

purchase cost of Rs. 163.95 crore.

As could be seen from the table 4.42, there is a net other prior period income of

Rs. 31.30 crore (Rs. 10.02 crore + Rs. 21.28 Crore) and accordingly the Commission

has considered the prior period income.

The Petitioner claimed prior period interest and finance charges Rs. 0.29 crore and

Depreciation under provided Rs. 0.35 crore for FY 2012-13. The Commission

considers different parameters/methodology for computing the interest and finance

charges, which is based on average closing balance of loan and effective interest rate

of the relevant tariff year. Similarly, for Depreciation, the Commission considers the

GFA vis-à-vis the proportionate Grants used for GFA for computing Depreciation. As

such there can be no short fall of expenditure under these heads of expenditure and

hence, the Commission has not considered the amounts.

Accordingly the Commission approves Rs. 132.65 crore towards prior period

charges pertaining to adjustment made for subsidy from State Government for

FY 2012-13 in the truing up for FY 2012-13



4.22 Revenue from Sale of Power at existing Tariff for FY 2012-13


The BSPHCL has reported revenue from sale of power at Rs. 3307.16 crore for the

FY 2012-13 as per audited annual accounts and requested for considering the

revenue from sale of power at Rs. 3307.16 for FY 2012-13 in the Truing-up as

detailed in the Table below:

Table 4.42 Revenue from sale of power for FY 2012-13

(Rs. crore)

Particulars Apr'12 toOct'12 (BSEB)

Nov’12 to March’13 Total forFY 2012-13NBPDCL SBPDCL

Domestic 501.18 139.60 170.52 811.30Kutir Jyoti 49.56 20.17 11.56 81.29Domestic – I 98.69 41.64 24.56 164.89Domestic – II 352.76 77.61 134.37 564.74Domestic – III 0.17 0.18 0.03 0.38Commercial 272.98 76.27 119.11 468.36NDS-I 3.32 1.56 0.69 5.57NDS-II 269.12 74.59 118.06 461.77NDS-III 0.54 0.12 0.36 1.02Public Lighting 16.33 3.21 7.98 27.52Street Light – I 3.82 1.48 0.66 5.96Street Light - II 12.51 1.73 7.32 21.56Irrigation 51.91 15.36 23.10 90.37Irrigation IAS-I 13.87 0.74 8.63 23.24Irrigation IAS-I I 38.04 14.62 14.48 67.14Public water works 23.17 6.50 10.33 40.00Industrial LT 80.76 22.49 42.79 146.04LTIS – I 47.08 13.83 22.82 83.73LTIS – II 33.68 8.66 19.97 62.31

Industrial HT 591.43 89.61 297.72 978.76HTS-I 294.79 51.78 118.90 465.47HTS-II 81.58 15.05 47.45 144.08HTS-III 31.44 6.30 13.83 51.57HTSS 183.62 16.48 117.54 317.64Railway 185.26 4.93 124.64 314.82Nepal 137.83 129.88 267.71U I 155.87 2.24 4.17 162.28Total 2016.71 490.08 800.37 3307.16


The Commission has approved the revenue from sale of power, as stated below, in

the Tariff Order dated 30th March 2012 for FY 2012-13 and in Tariff Order dated 15th

March 2013 for FY 2012-13 (RE).



Table 4.43: Estimated Revenue from Sale of Power for FY 2012-13

(Rs. crore)

Against the above estimated revenue, BSPHCL has achieved the performance as

stated below, as per the Audited Annual Accounts for FY 2012-13.

Table 4.44: Actual Revenue received as per the audited Annual Accounts for FY 2012-13

(Rs. crore)

The Commission approves the revenue from sale of power at Rs. 3307.16 crore for

FY 2012-13, as per audited annual accounts in truing-up.

4.23 Resource gap funding received from the State Government for FY 2012-13


The BSPHCL has submitted that since the erstwhile BSEB was a Government of Bihar

entity, the un-bridged expenditure gap has to be met either by revenue income from

the tariff fixed by the Commission for the different categories of consumers, or as

subsidy/resource gap funding by the Government of Bihar.

Sl. No. Particulars Approved inTariff Order for

FY 2012-13

Approved inreview for FY

2012-13 in T.O.dated 15th

March 20131 Revenue from sale of power at existing

tariffs 3418.68 2930.08

2 Sale of power to Nepal 258.63 258.633 Sale of power through bilateral / UI 107.76 107.764 Sale of additional power 120.995 Total 3906.06 3296.47

Sl. No. ParticularsActual revenue as

per audited accountsfor FY 2012-13

1 Revenue from sale of power at existing tariffs 2877.172 Sale of power to Nepal 267.713 Sale of power through bilateral / UI 162.284 Total 3307.16



BSPHCL has submitted that the State Government in its letter No.21/2010-285 dated

16th January 2013 had informed the Commission that the resources gap funding

support for FY 2012-13 would be Rs. 2880 crore.

The Petitioner has furnished subsidy receivable and actual subsidy received during

FY 2012-13 as detailed in the Table below:

Table 4.45: Details of Subsidy and Grant received during FY 2012-13

(Rs. crore)

Particulars

FY 2012-13Total for

FY 2012-13BSEB(Apr’12 toOctober’12)

NBPDCL(November’12to March’13)

SBPDCL(November’12to March’13)

Subsidy to be receivedfor the year 2017.11 339.38 587.13 2943.61

Details of Subsidy and Grant received Quarter-wise during FY 2012-13

Particulars Q1 Q2 Q3 Q4 TotalSubsidy received for FY2012-13 1120.00 679.80 540.20 603.61 2943.61

The BSPHCL also submitted that it has worked out likely disallowance in the power

purchase cost of Rs. 1025.22 crore because of higher T&D losses, as compared to the

approved trajectory by the Commission and has reduced the same amount from the

Aggregate Revenue Requirement. At the same time, it has also reduced resource

gap funding to the same tune and only the remaining amount of Rs. 1918.21 crore is

considered as available for reducing the Aggregate Revenue Requirement to arrive at

the revenue gap for FY 2012-13 as detailed in Table below.

Table 4.46: Allocation of Resource Gap for FY 2012-13.

(Rs. crore)

Particulars Approved forFY 2012-13

Now proposedfor True up by

BSPHCLResource Gap funding from State Government 2880.00 2943.61Less: Disallowed power purchase cost 1020.17 1025.22Balance Resource gap funding available with BSPHCL 1859.83 1918.39



BSPHCL requested that Rs 2943.61 crore be considered as the resource gap funding

for reducing the Aggregate Revenue Requirement to arrive at the revenue gap for

FY 2012-13.


The actual resources gap assistance received for FY 2012-13 is Rs. 2943.61 crore and

the same is considered by the Commission in the truing up for FY 2012-13 against

Rs. 2880.00 crore considered in the review for FY 2012-13 in T.O. dated 15th March

2013.

The Commission in paragraph 4.9 has disallowed an amount of Rs.1198.84 crore

towards power purchase cost for FY 2012-13. Accordingly, out of Rs.2943.61 core of

resource gap assistance received for the year FY 2012-13, Rs. 1198.84 crore is

adjusted towards financial loss caused due to higher T&D loss. Thus Rs.1744.77 crore

is available as resource gap grant for reducing ARR gap approved in the truing up for

FY 2012-13.

The details of adjustment of resource gap assistance are given below:

Table 4.47: Details of State Government Resource Gap Assistance/Subsidy for FY 2012-13

(Rs. crore)Sl.

No. Particulars Amount

1 Resource gap assistance for State Government 2943.61

2

Less: Resource gap grant adjusted towards disallowed powerpurchase cost on account of high T&D loss with respect to BERCtarget 1198.84

3Balance Resource gap grant available for reducing ARR gap forFY 2012-13 1744.77

4.24 Approved ARR and Revenue Gap for FY 2012-13

Based on the above analysis, the annual revenue requirement, along with the

revenues at existing tariffs and revenue gap for FY 2012-13, is as shown below:



Table 4.48: Summary of Trued-up ARR and Revenue gap/surplus for FY 2012-13

(Rs. crore)

Sl.No. Particulars

Approvedin Tariff

Order forFY 2012-13

Approvedin review

for FY2012-13 in

TariffOrder for

FY2013-14

BSPHCLproposal intruing up

forFY 2012-13

Nowapprovedin truing

up forFY

2012-13

1 Power Purchase Cost 5181.71 4167.07 4152.44 4152.432 PGCIL Transmission charges 180.00 359.99 359.993 BSPTCL Transmission charges 53.66 53.664 Own Generation Cost - Fuel 103.525 Repairs and Maintenance Expenses 110.27 90.99 74.18 74.186 Employees' Cost 735.37 470.05 456.93 456.937 Administration and General Expenses 74.78 49.40 68.57 68.578 Depreciation 159.77 83.04 128.25 74.459 Interest and Finance Charges 191.18 144.50 236.44 61.55

10Other charges (Power factor Rebate, Disc.To consumers, other fin. Charges) 57.68

11 Interest on Working Capital 147.00 93.28 159.52 97.4512 Interest on SD 14.6013 Return on Equity 0.00 85.05 220.74 51.2814 Prior Period Charges / (Credits) 745.88 132.6515 Total Revenue Requirement (1 to 14) 6703.60 5363.38 6671.20 5640.8216 Less: Non-Tariff Income 127.16 72.76 137.90 137.90

17Less: Expenditure Disallowed due tohigher T&D losses 1006.52 1020.17 1025.22 1198.84

18 Net Revenue Requirement [15 -(16+17)] 5569.92 4270.45 5508.08 4304.08

19Less: Recovery of revenue Gap /(Surplus) of previous year (822.69)

20

Revenue Requirement after consideringtrued-up Gap/(Surplus) from FY 2006-07 toFY 2011-12 (18 - 19) 4747.23 4270.45 5508.08 4304.08

21 Revenue from existing Tariff 3070.63 2930.08 2877.17 2877.1722 Revenue from sale to Nepal 258.63 430.98 267.71 267.7123 Revenue from UI 107.76 162.28 162.2824 Revenue from sale of additional power 120.9925 BSPTCL Transmission charges 53.66 53.6626 Net Revenue Gap [20 -(21+22+23+24+25)] 1189.22 909.39 2147.26 943.26

27Less: Resource gap grant from StateGovernment 0.00 1859.83 1918.39 1744.77

28Less: Additional resource gap available withBSPHCL

29 Net Gap / (Surplus) [26 -(27+28)] 1189.22 (950.44) 228.87 (801.51)



The Trued up revenue surplus as approved by the Commission for FY 2012-13 is at

Rs. 801.51 crore, as against revenue gap of Rs.228.87 crore projected by the

Petitioner in the Truing up Petition for FY 2012-13.

The BERC Tariff Regulations, 2007 provide for revenue gap of the following year to

be adjusted as a result of truing-up exercise for FY 2012-13. While approving

adjustments towards revenue / expenses in subsequent years, arising out of review /

truing-up exercise, the Commission will allow this surplus during FY 2012-13.

Accordingly, the revenue surplus arising out of the truing up for FY 2012-13 is to be

adjusted in the ARR for FY 2014-15. The Commission approves interest for one and

half year (for the entire FY 2013-14 and for half of the FY 2014-15 assuming that the

recovery would have been done over the year) amounting to Rs. 173.73 crore on the

revenue surplus for FY 2012-13 arising on account of the truing-up exercise.

Table 4.49: Summary of the interest on revenue surplus of FY 2012-13 permitted to becarried forward to ARR of FY 2014-15

(Rs. crore)Particulars Approved

surplus truingup for

FY 2012-13

Revenue Loss (surplus) approved for FY 2012-13 to be carried forward 801.51Interest for FY 2013-14 (SBI PLR @ 14.45%) for 1 year 115.82Interest for FY 2014-15 (SBI PLR @14.45%) for 6 months 57.91Total Surplus with interest 975.24

The trued up revenue surplus, as approved by the Commission for FY 2012-13,

amounts to Rs. 975.24 crore, as against revenue gap of Rs. 261.92 crore (including

carrying cost) proposed by the Petitioner in the truing-up petition of FY 2012-13.

Accordingly, the surplus would be carried forward to the ARR of the FY 2014-15 for

adjustment.

4.25 Past Recoveries

The Commission has passed its truing up order for FY 2006-07 to FY 2008-09 on

4th January 2012, true up order for FY 2009-10 on 27th January 2012 and for FY 2010-



11 on 30th March 2012. The summary of the true up of FY 2006-07 to FY 2010-11 is

as detailed in the table below:

Year Particulars Amount(Rs. crore)

2006-07 Revenue Gap/(Surplus) 7.232007-08 Revenue Gap/(Surplus) 86.562008-09 Revenue Gap/(Surplus) 123.412009-10 Revenue Gap/(Surplus) 274.672010-11 Revenue Gap/(Surplus) (639.93)Total (148.06)

In the Tariff Order for FY 2012-13 dated 30th March 2012; the amount of Rs. 148.06

Crore was fully considered and adjusted in FY 2012-13 while arriving at the ARR and

the gap for FY 2012-13.

Further, in the Tariff order for FY 2012-13, the revenue surplus arrived at Rs. 674.63

crore, based on Annual Performance Review for FY 2011-12 (RE), is also considered

along with Rs.148.06 Crore in the final true up orders thereby a total amount of Rs.

822.69 crore (Rs.148.06 crore + Rs. 674.63 crore) is considered and adjusted against

the ARR for the FY 2012-13.

The Commission had issued its true up order FY 2011-12 vide Tariff Order dated 15th

March 2013 wherein the Commission had arrived at net surplus of Rs.170.33 crore

(surplus Rs.139.64 crore + carrying cost of Rs.30.69 crore) for adjustment in ARR for

FY 2013-14.

However, the Commission has considered the Surplus for truing up in FY 2012-13

itself and accordingly carrying cost for half year (i.e. six (6) months) of FY 2012-13 is

considered amounting to Rs.10.30 crore. Thus the surplus and carrying cost is revised

to Rs.149.94 crore (Rs.139.64 crore + Rs.10.30 crore) against Rs.170.33 crore

considered in Tariff Order dated 15th March 2013. There by the actual revenue

surplus based on the true up orders issued by the Commission from FY 2006-07 to

FY 2011-12 is Rs. 298.00 Crore (Rs. 148.06 crore + Rs.149.94 crore). However in the

Tariff Order (table 147) for FY 2012-13, an amount of Rs. 822.69 crore was adjusted

against the ARR for FY 2012-13 and tariffs finalized and Tariff Order issued for

FY 2012-13.



The truing up for FY 2012-13 as resulted in a revenue surplus of Rs. 975.24 crore

(Rs. 801.51 crore + Rs. 173.73 crore carrying cost)

As per the final true-up orders issued by the Commission from FY 2006-07 to

FY 2012-13, the actual adjustment of surplus to be made in the Tariff Order vis-à-vis

the adjustment made in the Tariff Order for FY 2012-13 is furnished in the table

below:

Table 4:50: Approved Revenue Gap/ (Surplus) based on true-up to end of FY 2012-13

(Rs. Crore)

Sl.No.

Particulars

As per TariffOrder of FY

2012-13

Actuals based on thefinal True-up for FY

2012-13

1 Revenue Requirement for FY 2012-13after adjustment of NTI and disallowanceof power due higher T&D losses

5569.92 4304.08

2 Less: BSPTCL Transmission charges 53.663 Net Revenue Requirement (1-2) 5569.92 4250.424 Less: Revenue from energy sales within

the State3070.63 2877.17

5 Less: Revenue from sale of Power to Nepal 258.63 267.716 Less: Revenue from UI sales 107.76 162.287 Less: Revenue from the sale of additional

power120.99 --

8 Total Revenue (4 to 7) 3558.01 3307.169 Net Revenue Gap for FY 2012-13 (3-8) 2011.91 943.2610 Less: Additional Revenue from Tariff

revision for FY 2012-13348.06 --

11 Less: Subsidy Adjustment 683.90 1744.7712 Net Gap/ (Surplus) (9-(10+11)) 979.95 (801.51)13 Carrying cost for on gap/(surplus) (on 12) (173.73)14 Gap/(Surplus) (12+13) 979.95 (975.24)15 Less: Gap/(Surplus) considered based on

true-up for FY 2006-07 to FY 2010-11 andFY 2011-12

(822.69) (298.00)

16 Net Gap / (Surplus) carried forward for FY2012-13 (14-15)

157.26 (1273.24)

The net revenue surplus arrived as based on truing up based on the audited annual

accounts to end of the tariff year 2012-13 is Rs. 1273.24 crore, which is carried

forward.



ANNEXURE-I

Bihar Electricity Regulatory Commission (BERC)

Proceedings of State Advisory Committee (SAC) meeting held on 23.01.2014 at

11:30 A.M. in BERC Office.

1. At the outset, Sri U.N. Panjiar, Chairman BERC and Chairman SAC welcomed all the

participants. The list of participants is annexed.

Chairman, BERC and SAC informed the Committee that Bihar State Power (Holding)

Company Limited (BSPHCL) has submitted the petition for True up of FY 2012-13 on

behalf of erstwhile Bihar State Electricity Board (BSEB) and unbundled entities Bihar

State Power Generation Company Ltd. (BSPGCL), Bihar State Power Transmission

Company Ltd. (BSPTCL), North Bihar Power Distribution Company Ltd. (NBPDCL) and

South Bihar Power Distribution Company Ltd. (SBPDCL). Also the four subsidiary

companies of BSPHCL i.e. BSPGCL, BSPTCL, NBPDCL and SBPDCL have filed separate

petitions for Annual Performance Review (APR) for FY 2013-14, revised Annual

Revenue Requirement (ARR) and Tariff for FY 2014-15. The suggestions/objections

on the petitions have been invited from the stakeholders and general public through

notices in newspapers and website of the respective companies. Public hearing has

also been held so far at Bhagalpur, Munger, Patna, Saharsa, Purnea, Darbhanga and

Muzaffarpur. Public hearing is also scheduled at Chapra, Gaya and Patna during the

month of February, 2014.

This meeting of State Advisory Committee was called to discuss and seek the advice

and suggestions from the members.

2. Sri S.K. Singh, C.E (Comml.) NBPDCL welcomed the members of SAC and made a

power point presentation giving the summary of true up, APR, ARR and Tariff

petitions.

3. During the presentation, Chairman made the following observations and

representatives of the company gave the following clarifications:-

3.1 Transmission & Distribution (T&D) Losses- Actual T&D loss reported by BSPHCL

during the FY 12-13 is 45.49% against approved loss of 27.50%. In the previous tariff

orders, a trajectory was given to reduce the T&D losses in a phased manner.

Therefore, the high T&D losses in excess of approved levels are not justified.



3.2 Shri N. K. Jha, DGM (F), BSPHCL clarified that equity and return on equity figures

based on accounts and other are based on the revaluation of the assets by Power

Finance Corporation (PFC) submitted to the State Government and not on the actual

equity infused and approved by the Government and other figures are based on

accounts. He also clarified that the accounts have been audited by the statutory

auditors, the Accountant General but are still to be certified by the A.G.

3.3 During the presentation of Transmission Company, Chairman asked for the

availability factor of the transmission lines. C.E (Comml.) NBPDCL assured that he will

revert back on this issue.

3.4 R&M expenses of BSPTCL for FY 2013-14 were projected as Rs. 115.10 crore. The

chairman asked the actual expenditure accrued till December, 2013. It was informed

that actual expenditure up to December, 2013 was Rs. 20 crore. On this Chairman

said that the figure of Rs. 115 crore is not realistic consider the progress made so far

and the capacity to spend.

4. Suggestions by other members of the SAC:-

4.1 Shri Sanjay Bharatiya, Secretary General Bihar Industries Association raised the

following points:

4.1.1 BSPHCL has claimed Rs. 745.87 crore as prior period charges. As a matter of fact

there should not be any prior period charges as the truing up exercise for FY 2011-12

has already been completed and the account for the year 2011-12 has already been

closed. So it was not proper for the petitioner to again claim prior period charge in

FY 2012-13.

4.1.2 It was the responsibility of BSPHCL to finalize the transfer scheme within one year of

issue of the provisional transfer scheme in November, 2012. Since the final transfer

scheme has not been notified so far, the provisional scheme has to be treated as

final.

4.1.3 Additional petitions for capitalization of transmission assets should not be

entertained as hearing has already been completed.

4.1.4 The BSPHCL has claimed Rs. 220.74 crore as RoE. In this context it was stated that

the equity approved by the state government in the successor companies after

reorganization of erstwhile BSEB has already been approved by the State



Government in the provisional transfer scheme which has not yet been revised and

therefore, has become final after November, 2013. There was also no additional

equity infusion by the state government in the successor companies. For allowing

RoE there had to be actual infusion of equity and it cannot be allowed on the basis of

expected equity.

4.2 Shri A. K. P. Sinha, Bihar Chamber of Commerce & Industries observed that there has

been decrease in average cost of power purchase during FY 2012-13.

It was suggested to determine the FPPCA for the FY 2012-13 on the basis of data

supplied by the petitioner licensees as in the previous year’s tariff order, it is

mentioned that “variation of FPPCA charges will be allowed only when it is five (5)

paise or more per unit”.

4.3 Shri S. K. Patwari, Vice President, BCCI suggested that the actual annual fixed charge

may be ascertained by the Commission and fixed charges for different categories of

consumers may be determined on that basis.

4.3.1 Demand charge should be in proportion to hours of supply given to consumers.

4.4 Shri Umesh Poddar of BIA suggested that T&D loss is very high. All efforts may be

made to minimize this loss.

4.4.1 He also suggested that MMC may be abolished for all categories of consumers.

4.4.2 It was suggested that DT wise regulation of power can be done for the area from

where revenue collection is low.

4.5 Shri S. K. P. Singh, C.E (Comml.) SBPDCL raised the following issues and sought the

direction of the Commission:

4.5.1 There is a provision in the supply code that in case a meter becomes defective, the

consumer has to be billed on the basis of average consumption of previous three

months. However, in the tariff order for FY 2013-14, it is mentioned that

consumption will be assed and billed on an average consumption of last 12 months

from the date of meter going out of order. Thus there are two contradictory

provisions. It was suggested that this is to be taken care of in next tariff order.

4.5.2 Sri. S.K.P. Singh further mentioned that there are two different demand charges for

induction furnace in the tariff order 2013-14. One tariff for existing furnaces for

which contract demand will be determined on the basis of 600 KVA per metric tone.



However for new connection and if furnace is replaced with a new one for the

existing connections, the contract demand shall be based on total capacity of the

furnace and equipment as per manufacturer technical specifications, and in case of

difference of opinion, the provision of Bihar Electricity supply Code (Clause 6.39 &

6.40) shall apply.

4.6 Sri Vikram Singh, Vice President, Indian Energy Exchange raised the following issues:

4.6.1 In the present UI regime when under drawl is also penalised, the role of State Load

Despatch Centre (SLDC) has increased manyfold. Hence there should be separate

manpower earmarked for the SLDC and it should be strengthened. Also out of total

ARR of Transmission Company, certain amount may be earmarked for SLDC as

separate ARR.

4.6.2 In Renewable Purchase Obligation (RPO), carry forward should not be allowed.

4.7 Sri. N.K. Jha, Dy. Chief Electrical Engineer, E.C. Railway, Hajipur raised the following

issues:-

4.7.1 Billing demand is more than the actual demand. Shri Vikram Singh of IEE informed

that in some other states maximum instantaneous demand is considered as contract

demand. Shri Jha requested the Chairman to consider sympathetically while fixing

the tariff for Railway traction.

The meeting ended with a vote of thanks to all the participants for taking active part

in discussions and suggestions.



List of Participants who attended the meeting of State Advisory Committee

Held on 23rd January, 2014 in BERC office at Patna

Sl. No. Name Designation Organisation1. Shri U.N. Panjiar Chairman BERC2. Shri S.C. Jha Member BERC3. Shri Sanjay Kr. Agrawal Managing Director NBPDCL4. Shri S.K.P. Singh Chief Engineer (Com) SBPDCL5. Shri Vijay Kumar FCI NBPDCL6. Shri N. K. Jha DGM BSPHCL7. Shri Arvind Kumar DGM (F) BSPHCL8. Shri Arun Agrawal President BIA9. Shri Umesh Kr. Poddar Energy Sub-

CommitteeBIA

10. Shri A.K.P. Sinha Sec. General, Bihar Chamber ofCommerce

11. Shri S.K. Patwari Vice-president BCCI12. Shri Sanjay Bhartiya Secretary General BIA13. Shri Nadeem Ahmad EEE/Com. SBPDCL14. Shri D.N.Pandey Director BREDA15. Shri N. K. Jha Dy. Chief Elec. Eng. E.C. Rly, Hajipur16. Shri Surya Sekhar Panda Regional Manager Indian Energy

Exchange Ltd.17. Shri Bikram Singh Vice-president Indian Energy

Exchange Ltd.18. Shri S. K. Singh C.E/Com NBPDCL19. Shri R.C. Singh ESE (Com) SBPDCL20. Shri Jayant Kumar Dubey EEE (Com) NBPDCL21. Prabhat Kumar Sr. SB/TRD/DMR ECR, Hajipur22. Shri Parmanand Singh Secretary BERC23. Shri Ganesh Prasad Consultant BERC24. Shri R. P. Kanth Consultant BERC25. Shri P. Ranjan Consultant BERC26. Shri Lakshman Bhakta Dy. Director BERC27. Shri Jayesh Chauhan Tariff consultant BSPHCL28. Shri Souvik Das Consultant ASCI, Hyderabad



ANNEXURE-II

I. List of consumers/consumer organizations who filed their objections

1. Balamukund Concast Ltd.

2. Bihar Industries Association

3. Bihar Chamber of Commerce

4. Kalyanpur Cements Ltd.

II. List of Objectors who have participated in the Public Hearing

Sl.No.

Name Designation Organization

On Behalf of Board1 S.K. Singh Chief Engineer

(Commercial)NBPDCL

2 J.K. Dubey EEE (Commercial) NBPDCL3 Manish Shakya AEE (Commercial) NBPDCL4 R. C. Singh ESE (Commercial) SBPDCL5 Nadeem Ahmed EEE (Commercial) SBPDCL6 N.K. Jha DGM (F&A) BSPHCL7 Arvind Kumar DGM (Finance) BSPGCL8 Pramod Tiwari DGM (F&A) BSPTCL9 Neeraj Verma Consultant,

FeedbackinfraBSPTCL

10 Jayesh Chauhan Consultant,Feedbackinfra

BSPTCL

On Behalf of Consumers/Consumer Organization11 Sanjay Kumar Bhartiya General Secretary Bihar Industries

Association12 S.K. Patwari Vice- President Bihar Chamber of

Commerce13 Sanjay Kanodiya Exec. Officer Balamukund Concast

Ltd.14 Doman Singh Consumer -

On Behalf Of Commission15 Parmanand Singh Secretary BERC16 Lakshman Bhakt Dy. Secretary BERC17 Ganesh Prasad Consultant BERC17 Nand Sharma Consultant BERC18 Priya Ranjan Consultant BERC19 R.P. Kanth Consultant (Finance) BERC20 Sanjeev Kumar Singh Dy. Director (Finance) BERC

bihar state power holding company limited (bsphcl… tariff-order... · 4.17 interest on working...

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